Invesque Inc · TSX:IVQ
Invesque — Mainstreet Health Investments — Investor Day (September 2017)
28 slides from Invesque's investor day presentation, Sep 12, 2017
Slide 1: Investor Day
ge] Mee INVESTOR DAY San Antonio + TEXAS + September 12-13 - 2017
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, performance and business prospects and opportunities of Mainstreet Health Investments Inc. (the “Company” or “HLP”).
Slide 3: Agenda
AGENDA 1. INTRODUCTION Scott White, Chief Executive Officer 2. ASSET MANAGEMENT Dennis Dechow, Vice President of Asset Management Services 3. INVESTMENTS Matt Monson, Vice President of Acquisitions and Business Development 4. FINANCIAL OVERVIEW Scott Higgs, Chief Financial Officer 5. CLOSING Scott W
Slide 4: Mission
MISSION At Mainstreet Health Investments, our focus is to transform health care and create long- term shareholder value. Mainstreet Health Investments acquires high quality health care properties and partners with best-in- class health care providers. These exceptional partnerships serve the health
Slide 5: Strategy
STRATEGY Our strategy is to build a diversified portfolio of income-producing health care and senior living properties throughout North America to generate stable and growing cash flows to our investors. We focus on a holistic approach to diversifying our portfolio by geography, operator, property t
Slide 6: Asset Management Overview
ASSET MANAGEMENT OVERVIEW
Slide 7: Purpose
PURPOSE • Monitor Asset Condition • Key Initiatives • Communication 7
Slide 8: Enhanced Due Diligence
ENHANCED DUE DILIGENCE COORDINATION ORDER AND DOCUMENT OF INTERNAL REVIEW 3RD REVIEW AND 3RD PARTY PARTY REPORTS SITE VISITS Title Commitment Environmental Site Assessments (ESAs) ALTA Survey Property Conditions Assessments (PSAs) Building Site Plans and Photos Certificates and Permits ESAs and PCAs
Slide 9: Professional Onboarding
PROFESSIONAL ONBOARDING FIVE STEPS TO SUCCESS #1 ACCOUNTABILITY Asset Manager assigned to tenant #2 ESTABLISH RELATIONSHIP Welcome gift sent to operator executive contacts #3 INITIATE ONBOARDING Interactive onboarding packet sent to corporate and regional contacts #4 FLOW OF INFO Contact information
Slide 10: Five Areas of Focus
FIVE AREAS OF FOCUS 01. 02. 03. 04. 05. LEASE DATA COLLECTION AND ANNUAL ON-SITE PROPERTY ENVIRONMENTAL MANAGEMENT TRACKING OF INSPECTIONS CONDITION SITE CRITICAL DATA ASSESSMENTS ASSESSMENTS (“PCA”) (“ESA”) 10
Slide 11: RealPage Portal
REALPAGE PORTAL Internal and External Connection Point • PIPELINE MANAGEMENT • PHOTOS • PORTFOLIO DATA • CONSITENT ANALYSIS • TASK MANAGEMENT • DOCUMENT SHARING • SITE VISIT RECORDING • OPERATING AND FINANCIAL DATA • CRITICAL METRICS • CUSTOM REPORTING 11
Slide 12: CapEx Program Management
CAPEX PROGRAM MANAGEMENT Project submission packet Asset Management Benefits team completes on-site inspections of work progress, schedule, and impact of operations 12
Slide 13: New Developments
NEW DEVELOPMENTS • Review and approval of Project Approval Letter (“PAL”) • Monthly Monitoring Report completed and submitted to Asset Management team • On-site inspections every 60-90 days • Project management consultants hired as needed • Warranty inspections with operator at 6 and 12 months 13
Slide 14: Investments
INVESTMENTS
Slide 15: Outsized Industry Performance
OUTSIZED INDUSTRY PERFORMANCE NCREIF Annualized Total Returns By Property Type (Period Ending 3/31/2017) 16 14 12 10 8 6 4 2 0 One Year Three Years Five Years Ten Years NPI Apartment Hotel Industrial Office Retail Seniors Housing 15 Source: NIC MAP® Data Service
Slide 16: Compelling Industry Appeal
COMPELLING INDUSTRY APPEAL RESILIENCE 1 • Robust consumer demand 1 INDUSTRY STRENGTH 2 • Position in GDP • Job Growth 3 2 3 PROVIDER FUNDAMENTALS • Increasing life expectancy • Population growth • Consumer preferences • Cost-efficient care 16
Slide 17: Unprecedented Opportunity Driven by Target Population Growth
UNPRECEDENTED OPPORTUNITY DRIVEN BY TARGET POPULATION GROWTH 160 25% 22.4% 24% 140 21.0% 20.7% 23% 65+ Population (% of Total Population) 120 19.5% 22% Population (in millions) 100 15.7% 21% 80 20% 19% 60 18% 40 17% 20 16% - 15% 2020 2030 2040 2050 2060 Ages 56 to 65 Ages 66 to 75 Ages 76 to 85 Ages
Slide 18: Snapshot of Current Market Activity
SNAPSHOT OF CURRENT MARKET ACTIVITY Transaction Volume by Buyer Type $20 2,000 US MARKETS $18.7B $18 $17.2B 1,800 $16 34% decline in transaction $14 $12.6B7% 1,600 volume 1,400 $12 Properties Billions $10 1,200 66% decrease in public $8 1,000 buyer transactions $6 $4.8B 10% 800 $4 $3.6 billion from
Slide 19: Snapshot of Market Activity
SNAPSHOT OF MARKET ACTIVITY Average Price Per Unit/Bed 200,000 Senior Living & Care 150,000 Transaction Price Per Unit (year/year) 100,000 14.9% increase for 50,000 seniors housing - 2Q12 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 Seniors Housing Skilled Nursing No change for nursing care Ave
Slide 20: Strong Fundamentals
STRONG FUNDAMENTALS Rental Rates (year/year) 4.0% US MARKETS 3.0% Rent Growth (Year/Year) 2.0% 3.4% increase for seniors 1.0% housing 0.0% 2Q13 2Q16 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 4Q13 2Q14 4Q14 2Q15 4Q15 4Q16 2Q17 Seniors Housing Nursing Care 2.6% increase for nursing care Occupancy Rates 92.0% Occu
Slide 21: What's on the Horizon for Health Care Real Estate?
WHAT’S ON THE HORIZON FOR HEALTH CARE REAL ESTATE? Industry Disruptors Medical Innovations Advances in Transportation Market & Economic Considerations Real Estate Investments 21
Slide 22: Very Robust Pipeline
VERY ROBUST PIPELINE $2 – 3 BILLION PRELIMINARY ASSESSMENT 10 – 30% REVIEWED INITIAL ANALYSIS DESKTOP 30 – 50% UNDERWRITING CONSIDERED FOR FULL INVESTMENT APPROVALS & UNDERWRITING 22
Slide 23: Disciplined Approach to Underwriting
DISCIPLINED APPROACH TO UNDERWRITING INVESTMENT OBJECTIVES Yield after impact of any commissions, G&A, and capex NOI growth specifically from rent or joint venture income Earnings volatility Unleveraged & leveraged returns Risk considering payment coverage and operating margins Lease gua
Slide 24: Financial Overview
wee =e me 7 r \ sh y X b A s FINANCIAL —
Slide 25: Successful Growth of Portfolio
SUCCESSFUL GROWTH OF PORTFOLIO $680m 39 Properties $642m 36 Properties $598m 33 Properties $575m 31 Properties $443m 24 Properties $303m 11 Properties October 2015 / June 2016 October 2016 November 2016* December 2016 May 2017 April 2016 Execute $109m Execute $74m Acquire Canadian Assets Execute $45
Slide 26: 2nd Quarter 2017 Financial Metrics
2ND QUARTER 2017 FINANCIAL METRICS GBV $ 729m Debt / GBV (%) 55.1% AFFO (Q2) $ .26/share Dividend (Q2) $.18/share Payout Ratio 72% Structure Provides for Long-term Cash Flow Growth With High Visibility 26
Slide 27: Focus on Debt Profile and Strategy
FOCUS ON DEBT PROFILE AND STRATEGY Blend of Borrowing Base Credit Facility, Commercial Mortgage Debt, and Agency Debt Fixed Rate Debt of 82% 27
Slide 28: Stay in Touch With Us
STAY IN TOUCH WITH US ADDRESS Our Phone Email / Website 14390 Clay Terrace (317) 582-6200 ir@mainstreethealthinvestments.com Boulevard, Suite 205 www.mainstreethealthinvestments.com Carmel, In 46032
Mainstreet Health Investments — Investor Day (September 2017) on 6ix