Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties Real Estate Investment Trust — Q4 2020 Earnings Presentation
48 slides from Vital Infrastructure Property Trust's earnings presentation, Mar 11, 2021
Slide 1: Q4 2020 Investor Update
Q4 2020 INVESTOR UPDATE March 11, 2021
Slide 2: Disclaimer
DISCLAIMER This presentation provides a summary description of Northwest Healthcare Properties Real Estate Investment Trust (“NWH” or the “REIT”). This presentation should be read in conjunction with and is qualified in its entirety by reference to the REIT’s most recently filed financial statements
Slide 3: NWH at a Glance
TORONTO Focused Healthcare Real Estate Investment Partner ✓ Global scale, local relationships Partner of choice for leading operators LONDON SÃO PAULO ✓ Defensive operating fundamentals Cure focus underpinned by government funding ✓ A proven track record 10+ year total shareholder return of 159% (10
Slide 4: Healthcare Real Estate - Cure vs Care
HEALTHCARE REAL ESTATE - CURE VS CARE GLOBAL Healthcare Real Estate is estimated to be >$3T in value. NORTHWEST focuses on the CURE segment of Healthcare Real Estate. CURE CARE Higher Acuity Lower Acuity Hospital Post-acute Rehab Outpatient Life Sciences Skilled Assisted Living Independent MOB Nursi
Slide 5: Healthcare Real Estate in the Spotlight
HEALTHCARE REAL ESTATE IN THE SPOTLIGHT 2020 RELATIVE TOTAL SHAREHOLDER RETURN PROJECTED OPERATING PERFORMANCE BY SECTOR ’20E – ’24E GSA NOI Growth Projections 6.2% 6.2% 6.0% 4.1% 3.6% 2.2% 1.3% 1.1% Office Mall Industrial Stu. Housing Healthcare Apartment Life Science Net Lease SELECT ACUTE CARE &
Slide 6: Defensive Underlying Portfolio
DEFENSIVE UNDERLYING PORTFOLIO Operating Metrics Diversification 97% 15 yr 7 >2,000 Portfolio Occupancy WALE Countries Tenants 73% Inflation Indexed Acute & Primary Rents STABLE Healthcare Focus OPERATING FUNDAMENTALS > 80% Tenants with Australia’s Leading Government Support Hospital Operator >$350B
Slide 7: COVID-19: Operational KPIs
COVID-19: OPERATIONAL KPIs Rent Collection Business Impact 98.1% 93.0% 100% Q4 Cash Q3 Cash Properties Open Collections Collections 98.2% 97.6% >80% Q4 Total Q3 Total Tenants with Collections Collections Government Support COVID-19: STRONG KPIs • Enhanced government funding to • Reversal of decline
Slide 8: Achievement of 2020 Strategic Priorities
ACHIEVEMENT OF 2020 STRATEGIC PRIORITIES ADVANCING STRATEGIC INITIATIVES: GROWTH OF ASSET MANAGEMENT PLATFORM ✓ EUROPEAN EXPANSION ✓ AUSTRALASIAN SIMPLIFICATION ✓ SCALING THIRD PARTY • $3.1B (€2.0B) JV to invest in • European platform exceeds • Completed the sale of MANAGEMENT PLATFORM European heal
Slide 9: Evolution of Asset Management Platform
EVOLUTION OF ASSET MANAGEMENT PLATFORM DUE TO THE GROWTH HISTORICAL CHART OF AUM AND OWNERSHIP OF THE GLOBAL ASSET $9B $7.8B 100% $8B 90% MANAGEMENT 75% 73% $6.5B 80% $7B 70% $3.4B PLATFORM OVER THE $6B 61% 70% 56% 60% PAST 5 YEARS, TOTAL $5B $4.1B $4.1B $2.5B 50% AUM HAS INCREASED $4B $3.0B $1.1B $
Slide 10: Achieving Scale in Europe
ACHIEVING SCALE IN EUROPE PORTFOLIO OVERVIEW & GROWTH Asset Mix by % of Total AUM Historical AUM ($M) 1,663 15% 479% 45% 1,054 773 40% 599 268 MOBs Hospitals Clinics 2017 2018 2019 Q2 2020 Q4 2020 HIGH QUALITY PORTFOLIO KEY RELATIONSHIPS OPERATOR CAPITAL EQUITY DEBT 9
Slide 11: Strategic Transaction Complete: European Joint Venture
STRATEGIC TRANSACTION COMPLETE: EUROPEAN JOINT VENTURE VENDING WHOLLY OWNED ASSETS INTO THE JV GENERATES PROMOTED RETURNS WHOLLY OWNED NWH CAPITAL PLATFORMS German Total 13 assets €305M $473M 70% Sold to European Joint Venture Clinics +8 assets +$278M Status: ✓ Closed Q3 • Capital generated: $150M o
Slide 12: Strategic Transaction: UK JV
STRATEGIC TRANSACTION: UK JV POTENTIAL TO Active Asset Management JV Funds Formation GENERATE NET • Tenant diversification: Potential to diversify • Attractive seed portfolio: Attractive PROCEEDS OF $260M current tenant relationships through NMC ~$620M seed portfolio. Represents almost administratio
Slide 13: Strategic Transaction: Australian Unity
STRATEGIC TRANSACTION: AUSTRALIAN UNITY CORE HEALTHCARE INFRASTRUCTURE IN MAJOR MARKETS ➢ The REIT, together with a capital partner, has entered into an option agreement to acquire a strategic 16% stake of the units in Australian Unity Healthcare Property Trust (AUHPT) ➢ AUHPT is a high quality $2.4
Slide 14: Global Debt & Liquidity Strategy
GLOBAL DEBT & LIQUIDITY STRATEGY 2021 DEBT MATURITIES $0.6B OF DEBT IS 2021 Debt Maturities $644M Comments MATURING IN 2021, Completed Repayment ($125M) Tranche C facility repaid with equity raise 25% HAS ALREADY BEEN REPAID, Active Refinancing ($32M) Canadian mortgages maturing in Q2-Q3 Remaining D
Slide 15: Path to Investment Grade Metrics Remains Intact
PATH TO INVESTMENT GRADE METRICS REMAINS INTACT LTV Trend Proportionate Net Debt/EBITDA Bridge (0.86x) Forecast (0.61x) 57.6% 57.0% (1.35x) 56.5% 55.9% 56.4% 52.3% 49.0% 52.6% 46.9% 49.6% 49.5% 49.6% 10.06x 48.0% 9.20x 7.24x 44.2% 41.5% 38.3% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Equity Raise* Convert UK JV
Slide 16: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 17: Global Healthcare Market
GLOBAL HEALTHCARE MARKET Trillion Annual Global Healthcare Spend ($US) 10.4% Global Healthcare Expenditure (% GDP) 4-7% Annual Growth $ NORTHWEST HEALTHCARE PROPERTIES
Slide 18: Trends Driving Global Healthcare
TRENDS DRIVING GLOBAL HEALTHCARE 1. Population growth Aging Population 2. Aging population 3. Increase in obesity, addictions 4. Growing middle class in emerging markets 5. Increase in urban migration 1. Consolidation Consolidation 2. Rise in health awareness and spending 3. Higher quality / value c
Slide 19: Healthcare Trends Impact on Healthcare Real Estate
HEALTHCARE TRENDS IMPACT ON HEALTHCARE REAL ESTATE HEALTHCARE TRENDS are driving real estate opportunities. Outpatient / Increased Aging Operator Increasing Urbanization funding population home care consolidation asset size needs Limited Positive Positive Positive Positive Positive Hospitals impact
Slide 20: NWH Platform
NWH PLATFORM ) 1] | ins ih
Slide 21: Differentiated Strategy
DIFFERENTIATED STRATEGY SCALED $7.8B+ $8.8B $4.1B Platform Fee Bearing Capital* Un-deployed Capital 24% CAGR from 2015-2020 JV Partnerships and Vital Trust To be deployed in EUR and ANZ Investment CASH FLOW STABILITY EMBEDDED GROWTH 97%+ 14.5 Year 73%+ $414M Occupancy WALE Indexed Development Pipeli
Slide 22: Business Model
BUSINESS MODEL • WALE: 14.5 Years / Occupancy: 97.1% SPNOI (Levered) +5.8% • Inflation Indexed Leases: 73% • Fee Bearing Capital*: $8.8B Asset Management +3.6% • Target Capital Commitments: $12.3B Development Accretion • Committed Developments: $414M +0.4% • Development Yield: 100bps spread +10% Ann
Slide 23: Financial Highlights
FINANCIAL HIGHLIGHTS 22
Slide 24: Financial Dashboard
FINANCIAL DASHBOARD As Reported Normalized AFFO/unit (5) $0.85/unit $0.92/unit LTV (6)/ 48.0% / 57.0% ~45%/~50% Proportionate LTV $13.27/unit ~$14.50/unit NAV (7) Accretive JV Debt Developments Deployment Repayment 23
Slide 25: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT ~1% AFFO PER UNIT 2020 CONSTANT CURRENCY AFFO/UNIT INCREASED BY ~5% TO $0.88 GROWTH DRIVEN BY SPNOI GROWTH, For the Year Ended December 31 C$M 2019 2020 % change INCREASED SPNOI growth & Net Operating Income 223.1 238.1 6.7% accretive investment activity MANAGEMENT FEE
Slide 26: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET ~1% NAV PER UNIT 2020 CONSTANT CURRENCY NAV/UNIT INCREASED BY ~3% TO $13.59 GROWTH DRIVEN BY IMPROVED PROPERTY VALUATIONS ~$160M Fair Value Gain CONSTANT CURRENCY +$400M NAV/UNIT INCREASED UK Portfolio Acquisition Debt BY ~3% TO $13.59 3.3% 3.8 yrs +11.3% WAIR WATM Portfo
Slide 27: NAV Growth
NAV GROWTH HISTORICAL NAV TREND NAV/UNIT BRIDGE $1.28 $0.91 ($0.32) 32% CAGR ($0.30) ($0.18) 2,256 2,359 $14.55 $13.17 $13.27 1,312 1,391 866 519 2015 2016 2017 2018 2019 2020 Q4-19 IPP revaluation FX Transaction costs Other Q4-20 Manager reval Target & FV uplift Access to Value Creation WACR SPNOI
Slide 28: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Available AUM NWH Stabilized $8.8B OF GLOBAL Status ($B) Capacity ($B) Ownership Term Fees ($M) CAPITAL Active Australian Core Active $3.6 $1.5 30% Perpetuity $20 COMMITMENTS Hospital JV DRIVING SIGNIFICANT Vital Active $2.1 Open 26% Perpetuity $25
Slide 29: Risk Management – Foreign Exchange
RISK MANAGEMENT – FOREIGN EXCHANGE OVER A 15 YEAR PERIOD, THE REIT’S NOI WEIGHTED FOREIGN EXCHANGE INDEX HAS REMAINED RELATIVELY STABLE RENTAL INDEXATION ACTS AS NATURAL CURRENCY HEDGE PORTFOLIO SECURED WITH LOCAL CURRENCY DEBT WHEREVER POSSIBLE TO MINIMIZE FX RISK • Canada: FX • Europe: FX volatili
Slide 30: Investment Activity
INVESTMENT ACTIVITY 29
Slide 31: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY 2020 TRANSACTIONS EUROPEAN AUM ($M) TRANSACTION TYPE REGION C$M 1,800 1,663 1,600 178% German & Dutch Assets Acquisition GER/NL 88 1,400 1,200 1,054 1,000 Vital Acquisitions Acquisition NL 116 773 800 599 600 Australian Life Sciences Acquisition AUS 93 400 200 UK Hos
Slide 32: Accretive Development & Expansion Pipeline
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE • ~$414.2M (fully consolidated; $148.4M proportionate) of committed low risk development & WITH A TRACK expansions in Australasia, Europe, Brazil and Canada to be funded through a combination of existing resources and property financing RECORD OF ▪ $343.9M
Slide 33: Portfolio Overview
PORTFOLIO OVERVIEW 32
Slide 34: Asset Mix by Region and Segment
ASSET MIX BY REGION AND SEGMENT ON A PROPORTIONATE Proportionate NOI Diversification BASIS HOSPITALS Q4 2020 Q4 2020 ACCOUNT FOR 63% OF Canada Australasia 21% Hospital and MOB NET OPERATING Healthcare Facilities INCOME Q4 2019 29% Q4 2019 37% 40% 34% INCREASING FOCUS REGIONS 50% ASSET MIX 50% 13% Br
Slide 35: Strategic Relationships and Tenant Diversification
STRATEGIC RELATIONSHIPS AND TENANT DIVERSIFCATION STRATEGIC RELATIONSHIPS ALLOWING FOR BEST- TOP 10 TENANTS BY GROSS RENT(9) IN-CLASS PERFORMANCE TENANT REGION % GROSS RENT • Alberta Health Services (6 Locations): Largest provincial 1 healthcare provider to 4.3 M Healthscope Limited 14.2% Albertans
Slide 36: Case Study #1: London Portfolio Acquisition
CASE STUDY #1: LONDON PORTFOLIO ACQUISITION THE LONDON Transaction Overview PORTFOLIO • Transaction overview: On August 21st, the REIT completed the acquisition of four high quality hospitals located in the Greater London Area for $452M (£260M; the “London Portfolio”) at a 6.2% initial ACQUISITION S
Slide 37: Case Study #2: AUS JV Expansion & HSO Acquisition
CASE STUDY #2: AUS JV EXPANSION & HSO ACQUISITION Australasian JV Expansion $1.6B (JV expansion) $1.9B deployed between into seed assets, HSO, $1.8B $1.8B (initial $1.5 B and Recent acquisitions (committed commitment) expansion) $1.9 B Target 65% LTV $5.2B JV including available Deployed capacity an
Slide 38: Case Study #3 – Epworth Eastern Hospital, Melbourne
CASE STUDY #3 – EPWORTH EASTERN HOSPITAL, MELBOURNE NON-FOR-PROFIT PRIVATE HEALTHCARE GROUP THAT RAISES FUNDS TO PURCHASE ADVANCED MEDICAL EQUIPMENT, NorthWest has supported Epworth over 15+ years with expansion opportunities, advice and capital. Developments FUND RESEARCH AND have added to the qual
Slide 39: Case Study #4 – Australasian Portfolio Simplification
CASE STUDY #4 – AUSTRALASIAN PORTFOLIO SIMPLICATION DIVESTING WHOLLY OWNED AUSTRALASIAN ASSETS SIMPLIFIED PLATFORM WHOLLY OWNED NWH CAPITAL PLATFORMS Total 12 assets $480M $422M sales to capital platforms and 3rd Parties Vital +3 assets +$50M ✓ Status: Closed AUS JV +5 assets +$263M ✓ Status: Closed
Slide 40: Case Study #5 – Median, Germany
CASE STUDY #5 – MEDIAN, GERMANY Market ~230,000 Leader Patients p.a. ~€940 M 120 LARGEST PRIVATE Revenue Facilities REHABILITATION PROVIDER WITH 120+ ~18,200 ~15,000 Beds/Places Employees FACILITIES ACROSS GERMANY Supporting ongoing MEDIAN Partnership is foundation for MEDIAN seeking reliable real e
Slide 41: Case Study #6 – Rede D'Or, Brazil
CASE STUDY #6 – REDE D’OR, BRAZIL LARGEST PRIVATE HOSPITAL OPERATOR IN BRAZIL WITH 39 HOSPITALS AND 5,900 BEDS Top 5 Global Healthcare Market Top Facilities ‘AAA‘ Strategy BACKED BY GLOBAL • Third largest private healthcare market: $180B p.a. • Major acute-care assets healthcare spending (9% of GDP)
Slide 42: Investment Opportunity
INVESTMENT OPPORTUNITY 41
Slide 43: Northwest Overview
NORTHWEST OVERVIEW GLOBAL HEALTHCARE REAL ESTATE INVESTMENT PARTNER Global Dynamic Capital Capital Relationships Allocation Accretive Strategic Acquisition Opportunities NWH.UN Operator Partnerships Regional LISTED Brownfield Operating Development Platforms TSE Opportunities Healthcare Long Term Pre
Slide 44: Relative Valuation
RELATIVE VALUATION THE REIT IS TRADING AT A DISCOUNT TO ITS PEERS ON AN AFFO MULTIPLE BASIS - Based on NWH.UN’s closing unit price of $12.83/unit as of March 11, 2021, and normalized AFFO/Unit of $0.92 per year; NWH.UN’s NAV/unit is based on Q4 2020 of $13.27. 43
Slide 45: Investor Factsheet
INVESTOR FACTSHEET Ticker NWH.UN Listed Exchange TSX Distribution Payable Monthly 40% Other Income/ Distribution Type 60% Return on Capital Unit Price (March 11, 2021) $12.83 Market Capitalization ~$2.5B Distribution Yield 6.2% 52-Week Trading Range $6.27-$13.36 Volume Weighted Avg. Price (VWAP) (20
Slide 46: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $12.83/unit as of March 11, 2021. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q4 2020 AFFO of $0.92/unit. 3. Based on total assets under management of NWH, Vital Trust on a fully consolidated basis including post-
Slide 47: Contact Information
CONTACT INFORMATION NORTHWEST HEALTHCARE PROPERTIES REIT Paul Dalla Lana, Chairman & CEO 416-366-2000 Ext. 1001 Shailen Chande, CFO 416-366-2000 Ext. 1002 46
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Northwest Healthcare Properties Real Estate Investment Trust — Q4 2020 Earnings Presentation on 6ix