Vital Healthcare Property Trust · NZX:VHP
Vital Healthcare Property Trust — FY2023 Earnings Presentation
45 slides from Vital Healthcare Property Trust's earnings presentation, Aug 10, 2023
Slide 1: FY23 Annual Results Presentation
FY23 Annual Results Presentation 10 AU G U S T 2 0 23 Artist Impression of RDX
Slide 2: Contents
Contents Overview of Vital 3 Presenters FY23 highlights 4 Financial results and capital management 7 Aaron Hockly Portfolio and divestments 12 Fund Manager & SVP Developments17 Future focus 22 Michael Groth Appendices24 Chief Financial Officer 5 largest assets and asset groupings 26 Richard Roos Add
Slide 3: Overview of Vital: Why invest in Vital
Overview of Vital1 W HY I NVE ST I N VI TA L VITAL IS THE ONLY SPECIALIST HEALTHCARE LANDLORD LISTED ON THE NZX DE FE NS IVE H IG H 17.8 years NT SE C TOR DE MA ND WA L E 12% 5% QLD ~$1.0bn H IG H QUA L IT Y PORTFOL IO E A RNING S G RO W TH ~$3.4bn WA 7% 15 P R O P E R T I E S ( N Z ) SA 4 51 P R O
Slide 4: FY23 highlights
FY23 highlights
Slide 5: Continuing to deliver for Unit Holders
Continuing to deliver for Unit Holders Resilient property portfolio Enables delivery of core purpose 18.1% net property income growth; 3.6% like-for-like 9.75cpu distributions for FY23; consistent with guidance constant currency Payout ratio ~90% >99% rent collected for FY23 Strong underlying net pr
Slide 6: Sustainability highlights
Sustainability highlights Moving from data collection Thriving 2nd place globally for listed healthcare to implementation partners B- (up from C in 2021) Preparing lasting tenant spaces for health and healing ACHIEVEMEN TS Data Baseline Year Commitment to Net Zero Inclusive NORTHWEST'S Healthy Cultu
Slide 7: Financial results and capital management
Financial results and capital management
Slide 8: Financial performance
Financial performance P RO P ERT Y E A R N I N GS G R O W TH HAS FAC IL ITATE D AFFO G RO WTH ($) (%) FY23 FY22 C HA N GE C HA N GE Like-for-like growth of 5.3%1 Net property income 145,224 123,018 22,206 18.1% Full year contribution from FY22 acquisitions and developments Expenses ex. finance (38,1
Slide 9: Net property income
Net property income NP I G R O W T H (E XC L F X) INC R E ASE D F R O M AC Q UIS ITIO NS, D EV ELO PM ENTS AND RENT REV IEWS Acquisitions – full year contribution from N E T P R O P ER T Y IN C O M E B R ID GE ($M) FY22 acquisitions +18.1% growth (incl FX) / +16.1% (excl FX) Development income – dev
Slide 10: Balance sheet
Balance sheet REM AINS WE LL P OS I T IO NE D W IT H NO D E BT E X PIRING IN FY24 AC T UA L AC T UA L ($) (%) FY23 FY22 C HA N GE C HA N GE Increase due to: Cash 10,855 22,055 (11,170) (50.6%) Settlement of FY22 acquisitions for $154m Investment properties1 3,380,720 3,339,169 41,551 1.2% Developmen
Slide 11: Debt duration
Debt duration W EIG HT E D AVE R AGE D E BT D U R AT IO N MA INTA IN ED / P RUD ENT H EAD RO O M AVAIL ABLE B A NK FAC ILITIES 30 JUNE 2023 30 JUNE 2022 Debt to gross assets (Trust Deed)1 36.3% 30.0% Bank loan to value ratio - actual 2 36.5% 32.1% Bank loan to value ratio - covenant 55.0% 55.0% Head
Slide 12: Portfolio and divestments
Portfolio and divestments
Slide 13: Portfolio update
Portfolio update1 4 3 CORE H E A LT H C A R E PR O PE R TIE S W IT H OV E R 2,800 BED S AND OV ER 120 S EPARATE TENANTS Income G EO G RAP H IC D IV ERS IFIC ATION (BY NUMB ER OF INCOME P R ODU C ING PRO PERT IE S) 5.3% like-for-like, same property rental growth FY22 to FY23 (3.6% on a constant curre
Slide 14: Portfolio update (cont'd)
Portfolio update (cont'd) Diversification TENANT D IV ERS IFIC ATIO N 2 % OF R ENT Largest single tenant exposure Aurora Healthcare 18% continues to reduce Healthe Care Surgical 16% 17% 18% Vital has a diverse portfolio Epworth Foundation 16% and income stream by Evolution Group (NZ) 15% 2% location
Slide 15: Movement in investment property
Movement in investment property WELL -LEAS E D H E A LT H C A R E ASSE TS C O NT INU E TO P ERFO RM WELL IN A S O FTENING M ARK E T I N VE STM ENT PROPERT Y B RI DG E (FY23) 1 (N Z MI L L I O N S) K EY P OIN TS $4,000 (209) Continued delivery of development pipeline 192 163 (62) (43) contributed ~$1
Slide 16: Disposals
Disposals DI VESTM E N T P R OGR A MME U ND E R WAY W IT H $155M ALREADY TRANSAC TED ~NZ$100m of assets sold during FY23 at a 8.4% discount to book value ~NZ$55m of assets sold or under contract FY24 (to date) at a 7.1% discount to book value ~NZ$100m of additional non-core assets targeted for sale
Slide 17: Developments
Developments
Slide 18: Development strategy and value-add
Development strategy and value-add TAR GE T I N G 10–15% O F T H E PO R T F O L IO (BY VA LUE) TO BE UND ER D EV ELO PM ENT F OCUS Creating the next generation of assets to deliver long-term earnings growth Developments are key for: for Unit Holders and high quality facilities for our operating part
Slide 19: FY23 Development Milestones
FY23 Development Milestones Commenced Ormiston Hospital Main Works1 Playford Health Hub (Stage 2) RDX Macarthur Health Precinct (Stage 1) Mount Eliza Completed Epworth Eastern Belmont Private Hospital Abbotsford Private Hospital2 Royston Hospital (Stage 2) Discontinued Tasman Medical Centre due to u
Slide 20: Update on current developments
Update on current developments DEVELOPM E N TS R E M A IN O N T R AC K RDX QU EENSL AND RDX will be a leading Life Sciences building delivering specialised health- orientated uses. Proposed to be connected to Gold Coast Private Hospital via a link bridge. Artist impression RDX is the first 6 Star Gr
Slide 21: Update on current developments (cont'd)
Update on current developments (cont'd) Playford Ormiston SOU TH A U STR A LIA AUC KL AND, NZ A three stage health precinct development opposite Lyell McEwin Public Hospital, the third Hospital expansion and consulting suites with a new three storey largest hospital in South Australia. Stage 2 of wo
Slide 22: Future focus
Ehara tāku toa I te toa takitahi, engari he toa takitini. My strength is not as an individual, but as a collective. Whakataukī Māori proverb Future focus
Slide 23: Outlook and guidance
Outlook and guidance C ONTINU E D DE LI V E RY A ND F O C U S O N E A R NINGS G RO WTH FY24 distribution guidance of 9.75 cpu; Significant development pipeline Healthcare assets (businesses consistent with FY23 and real property) remain in high ~NZ$545m committed developments Conservative ~90% pay-o
Slide 24: Appendices
Appendices
Slide 25: Key events over FY23
Key events over FY23 Vital's high-quality existing Q1 Q3 portfolio delivered 3.6% Jul 2022 Feb 2023 Mar 2023 like-for-like net property A$47.1m1 Playford Health Hub RDX A$140m1 2.4375 cpu distribution paid (Stage 2) commenced construction construction Completion of refinancing income growth on a com
Slide 26: 5 largest assets and asset groupings
5 largest assets and asset groupings
Slide 27: Epworth Eastern Precinct, Melbourne, VIC
Epworth Eastern Precinct, Melbourne, VIC Epworth Eastern Hospital campus, 17-23 A$490m VA LU E Nelson Rd (development land), Ekera Medical Centre and 120 Thames St ASS E TS 270 ~15,000sqm ~35,000sqm PAT I E N T B E D S L AND AREA NL A 50m 15.8% 1999 P R OXI M I T Y TO O F VI TAL' S YE AR ACQU IR E D
Slide 28: Lingard Private Hospital Precinct, Newcastle, NSW
Lingard Private Hospital Precinct, Newcastle, NSW A$252m Lingard Private Hospital, Lingard Day Centre and 27 Hopkins VA LU E Street (development land) ASS E TS 140 ~15,000sqm 11,500sqm PAT I E N T B E D S L AND AREA NL A 3.6km 8.1% 2010 P R OXI M I T Y TO O F VI TAL' S YE AR ACQU IR E D P U B L I C
Slide 29: Ascot Hospital Precinct, Auckland, NZ
Ascot Hospital Precinct, Auckland, NZ Ascot Hospital, Ascot Central, $187m VA LU E 80 Ascot Ave (development land) and Ascot Carpark ASS E TS 88 ~40,000sqm ~16,000sqm PAT I E N T B E D S L AND AREA NL A 5.6km 5.5% 1997 P R OXI M I T Y TO O F VI TAL' S YE AR ACQU IR E D P U B L I C HO S P I TAL PO RT
Slide 30: Belmont Private Hospital, Brisbane, QLD
Belmont Private Hospital, Brisbane, QLD A$158m VA LU E Belmont Private Hospital ASS E TS 150 ~43,000sqm ~8,700sqm PAT I E N T B E D S L AND AREA NL A 11.0km 5.1% 2010 P R OXI M I T Y TO O F VI TAL' S YE AR ACQU IR E D P U B L I C HO S P I TAL PO RT FO LI O BY V ITAL A$22.6m expansion recently substa
Slide 31: Wakefield Hospital, Wellington, NZ
Wakefield Hospital, Wellington, NZ $156m VA LU E Wakefield Hospital and 678 High St (development land) ASS E TS 68 ~20,000sqm 14,500sqm PAT I E N T B E D S L AND AREA NL A 850m 4.6% 2017 P R OXI M I T Y TO O F VI TAL' S YE AR ACQU IR E D P U B L I C HO S P I TAL PO RT FO LI O BY V ITAL 14,500sqm of
Slide 32: Additional portfolio and development information
Additional portfolio and development information
Slide 33: Committed developments – Australia and New Zealand
Committed developments – Australia and New Zealand DEVELOPM E N TS E N H A NC E E A R NING S G R O W T H AND IM P ROV E ASS E T Q UALIT Y ALL VALUES SHOWN IN $M DESCIPTION OF WORKS DEVELOPMENT LAND SPEND COST TO FORECAST FORECAST STATUS COST1 VALUE TO DATE COMPLETE NET RETURN COMPLETION DATE AUSTRAL
Slide 34: Investment properties
Investment properties AS AT 30 JUNE 2023 ~$3.4BN P OR T FOLI O O F H E A LTH C A R E R E A L E STATE C O M P RIS ING 4 5 INV ESTM ENT P RO P ERTIES AND 2,800+ BEDS Vital also owns strategic land holdings for future development valued at ~$305m1 Auckland (5) Western Australia (4) Queensland (5) New S
Slide 35: Australian portfolio overview
~NZ$2.3bn Australian portfolio overview1 G EO GR A P H I C A LLY D ISPE R SE D AU ST R A L IA N PO R TFO LIO C O NTINUES TO P ERFO RM WELL PRIVAT E HOSPITALS – AU ST RALIA S UB S E C TO R D IV E R SIT Y (BY VA LU E) 15 hospitals (acute and specialty – mental health, rehabilitation) 4 hospital operat
Slide 36: New Zealand portfolio overview
~NZ$1.0bn New Zealand portfolio overview K EY NE W Z E A L AN D M A R K E T PE R F O R MING STR ONG LY PRIVATE HOSPITALS – NEW ZEALAND S UB S E C TO R D IV E R SIT Y (BY VA LU E) 9 hospitals (all acute) 6 hospital operators A M B U L ATO RY CARE 81% of NZ portfolio value; 83% of NZ rent 19% WALE: 20
Slide 37: Lease expiry profile
Lease expiry profile LO W RIS K E XP I RY P R O F IL E SU PPO R TS SU STA INA BLE, P RED IC TABLE AND D EFENS IV E C AS H FLO WS CY23 EXPIRIES 1 — 3.8% of this has signed extensions or heads of agreement Total potential expiries 2 of NZ$8.7m or 5.8% of Epworth Foundation - Brighton annual rent throu
Slide 38: Rent reviews
Rent reviews HIG H P E R C E N TAGE O F TOTA L R E NT IS R E V IE W E D ANNUALLY WITH STRUC TURED 1 REV IEW M EC H ANISM S Rent reviews – FY23 (“LIK E-F OR-LI KE” E XC LU D E S D E V E LO PME NTS, AC Q UIS ITIO NS AND D IS P O SALS) Rent reviews have Jun-22 Rent p.a. Jun-23 Rent p.a. Increase Annual
Slide 39: Core portfolio metrics
Core portfolio metrics 5 Y EAR T R E N D S H I GH L IG H T PO R TF O L IO STR E NG TH AND UND ERP IN LO NG-TERM P ERFO RM ANC E O C C UPANC Y WAL E 100% 19 18.7 99.4 99.4 99.2 98.8 98.9 18.1 18.1 99% 18 17.8 17.6 98% 17 97% 16 96% Long-term track record of maintaining 95% 15 >98% occupancy 2019 2020
Slide 40: Additional financial information
Additional financial information
Slide 41: Adjusted funds from operations (AFFO)
Adjusted funds from operations (AFFO) CO NS ERVAT I VE PAY-O U T R ATIO AC T UA L F Y23 AC T UA L FY22 ($) CHA NG E (%) CHA NG E Operating profit before tax and other income 1 69,494 56,517 12,977 23.0% Add/(deduct): Current tax expense (14,787) (8,280) (6,507) 78.6% Incentive fee 14,986 15,914 (928
Slide 42: Interest rate hedging profile
Interest rate hedging profile CO ST O F D E BT W E LL H E D G E D, MA NAG ING R ISK RATE S 30 JU N E 30 J UN E H ED G ING M ATURIT Y P RO FILE ($A) 2023 2022 900 4.00% Weighted average cost of debt1 4.93% 3.73% 800 3.50% Weighted average fixed rate 3.02% 2.89% (excl line and margin) 700 3.00% Weight
Slide 43: Glossary
Glossary AFFO Adjusted Funds From Operations is an alternate measure used for assessing distributable income. Essentially adjusts net profit after tax for all non-cash items (i.e. NDI) then makes adjustments for items such as maintenance capex. Cap Rate Capitalisation Rate. Generally calculated as n
Slide 44: Disclaimer
Disclaimer This document has been prepared by Northwest Healthcare Properties Management Limited (the Manager) as manager of the Vital Healthcare Property Trust (the Trust). This document provides general information only and is not intended as investment, legal, tax, financial product or financial
Slide 45: Thank you
Thank you www.vhpt.co.nz Wakefield Hospital, Wellington
Vital Healthcare Property Trust — FY2023 Earnings Presentation on 6ix