20 FEBRUARY 2025
HY25 interim results presentation
Providing income security for our Unit Holders
Ormiston Hospital (Stage 1), Auckland
Contents
Defensive Australasian healthcare property portfolio 3
HY25 highlights | 4 |
Financial results and capital
management8
Portfolio | 14 |
Health sector overview | 17 |
Developments | 20 |
Future focus | 24 |
Appendices | 26 |
Presenters
Aaron Hockly
SENIOR VICE PRESIDENT AND FUND MANAGER
Michael Groth
CHIEF FINANCIAL OFFICER
Richard Roos
CO-HEAD ANZ REGION
Chris Adams
CO-HEAD ANZ REGION
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 2
Defensive Australasian healthcare property portfolio
VITAL IS THE ONLY SPECIALIST HEALTHCARE LANDLORD LISTED ON THE NZX
N T | |
Q L D | |
WA | 12% |
INCOME STABILITY
Consistently growing net property income reflecting tenant quality and improving industry dynamics Improving rent: EBITDAR for Vital's tenants (lowered from 60% to 53% over the last 12 months3) reflecting tenant quality and improved industry dynamics Diversified tenant base with no tenant accounting for more than 19% of income
GROWING
DEMAND
Ageing demographics and growing populations
Rising life expectancy Increased offerings due to technological advances Increasing demand from the public sector due to capacity and / or fiscal constraints
19.1 year | 4% | |
9% | ||
SA | ||
N SW | ||
WA L E2 | 22% | |
~NZ$3.2bn | V I C | |
22% | 27% |
34* PROPERTIES (AUS & NZ)
TAS
HIGH QUALITY
PORTFOLIO
Focused on healthcare precincts across Australia and New Zealand Divestments and developments have helped improve portfolio including increasing the WALE to 19.1 years 97.7% occupancy
Average building age1: 9.2 years
DEVELOPMENT
UPSIDE
NZ$77.5m remaining spend on existing developments to be substantially complete by September 2025 Embedded opportunities in Vital's potential development pipeline exist but will only be pursued if value accretive Vital has an unmatched development team in healthcare property across Australia and New Zealand with ~NZ$277m of developments completed over CY24
AUS ~NZ$2.2bn
20* PROPERTIES
NZ ~NZ$1.0bn | 4% |
14* PROPERTIES |
EARNINGS GROWTH
96% of leases increase annually by CPI or a fixed %
Strong underlying net property income (NPI) growth enhanced by developments
*Excludes strategic land held for development
1 Average building age = the later of the date of construction or last significant capital works
- Weighted Average Lease Expiry (WALE) - Inclusive of landlord options
- Vital's hospital tenants only who provide ~78% of Vital's revenue
AFFO growth per unit below medium term target due to on-going interest rate headwinds
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 3
HY25 highlights
Prime Minister and local MP, RT Hon. Christopher Luxon officially opened the Ormiston Hospital Expansion in October 2024
HY25 highlights
NON-CORE ASSET SALES AND DEVELOPMENTS HAVE HELPED IMPROVE THE RESILIENCE OF THE PORTFOLIO
18%
OF VITAL' S NET LET TABLE AREA LEASED OR RENEWED
NZ$47.9m
NON - CORE ASSET
SALES OVER HY25
4.0%
LIKE - FOR - LIKE NET PROPERT Y INCOME GROWTH 1
4 developments
UNDERWAY WITH NZ $77.5M
SPEND REMAINING (FULLY FUNDED FROM EXISTING DEBT CAPACIT Y)
NZ$74.2m
OF DEVELOPMENT AND CAPITAL EXPENDITURE WORKS UNDERTAKEN 2
1 | Compared with the prior corresponding period on a same property, constant currency basis | Ormiston Hospital (Stage 1), Auckland |
2 | Includes ~$73.2m of developments and ~$0.9m of value add capex |
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 5
Sustainability
Climate Related
Disclosure
To assist Vital's stakeholders to better understand Vital's strategy and investments, Vital's first Climate Related Disclosure was released in October 2024.
The disclosure provides:
Three plausible but challenging potential futures across short, medium and long-term horizons based on relevant industry scenarios.
Details on Vital's governance framework, business model and sustainability strategy, risk management and emissions profile.
GRESB
Vital was again acknowledged as a Sector Leader in October 2024, for developments in listed healthcare both globally.
1ST | 1ST | 2ND | |
PLACE | PLACE | PLACE | |
LISTED HEALTHCARE | PERFORMANCE | ||
(BOTH GLOBALLY | SCORE WITHIN | ||
AND IN OCEANIA) IN | LISTED HEALTHCARE | ||
DEVELOPMENTS | (GLOBALLY) |
R E A L E S T A T E
sector leader 2024 | 2 0 2 4 |
GLOBAL SECTOR LEADER | 5 STAR |
IN DEVELOPMENT | DEVELOPMENT |
BENCHMARK | RATING |
CDP
Vital submitted to CDP again in 2024, achieving a score of B. This marks an improvement from the B- score received in the previous year and reflects Vital's continued focus on climate risk management, emissions reductions and transparency in environmental reporting.
BScore
2024 CDP CLIMATE
CHANGE SCORE
First 6 Star Green Star Certified Development
GenesisCare Integrated Cancer Centre (Campbelltown, NSW) has achieved a 6 Star Design & As Built v1.3 certified rating from the Green Building Council of Australia.
First property in the Vital portfolio to achieve the certification and confirms our commitment to taking a leading position on sustainability.
Master Builders Association award recognising
project's achievement in sustainability.
6 Star Green Star As Built certification underway for Playford Health Hub Stage 2 (Elizabeth Vale, SA).
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 6
Dual Listed Trust (DLT) update
What have we done? | What have we heard? | What happens next? | ||||||||
Consultation on a proposal to | Positive feedback particularly for | Not proceeding with DLT | ||||||||
restructure Vital into separate New | the objectives of providing earnings | proposal at this time. | ||||||||
Zealand and Australia trusts with | accretion, a broader investor base | |||||||||
independently traded primary listings | and governance enhancements. | Will continue to consider ways | ||||||||
on the NZX and ASX commenced | ||||||||||
in late November 2024. | to create a more attractive and | |||||||||
Stakeholders also supported retaining | efficient investment vehicle, | |||||||||
Vital's PIE status, NZX listing, strategy, | including potentially a DLT structure, | |||||||||
Consultation undertaken with Vital's | portfolio and development pipeline. | over the course of 2025. | ||||||||
largest institutional Unit Holders, retail | ||||||||||
investor representatives including | Although Unit Holders generally support | Any future proposal, including the | ||||||||
NZSA and several wealth managers. | ||||||||||
the end state of the DLT, concerns were | DLT, would only be undertaken with | |||||||||
raised around transitional matters, | significant Unit Holder support. | |||||||||
including the ASX units issued as part | ||||||||||
of this proposal, given current market | ||||||||||
conditions. The Manager also heard | ||||||||||
concerns from Unit Holders regarding | ||||||||||
the impact of the DLT proposal on | ||||||||||
Vital's NZX-listed entity's scale, | ||||||||||
liquidity and index weighting. | ||||||||||
Why are we doing this?
DLT was expected to be earnings accretive at an entity level. Further, improving Vital's structure, including facilitating international capital investment into Vital to drive improved Unit Holder returns, remains a strategic priority.
Additional capital sources are also required to help unlock the significant embedded value for Unit Holders from Vital's development pipeline across the in-demand New Zealand and Australian healthcare sectors.
Avive Clinic, VIC
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 7
Financial results and capital management
Minister of Health the Hon. Simeon Brown officially opened stage 2 of the redevelopment of Wakefield Hospital in February 2025
Financial performance
SOLID ABSOLUTE NET PROPERTY INCOME GROWTH DESPITE PORTFOLIO ENHANCING NON-CORE ASSET SALES
AC TUAL | ACTUAL | (%) | |||||
HY2025 | HY2024 | CHANGE | |||||
Net property income | 74,308 | 72,399 | 2.6% | ||||
Corporate expenses | (5,846) | (2,664) | (119.4%) | ||||
Management fees | (8,888) | (12,464) | 28.7% | ||||
Realised transaction gains / (losses) on FX derivatives | 21 | 284 | (92.6%) | ||||
Net finance expenses | (23,120) | (20,075) | (15.2%) | ||||
Operating profit before tax and other income | 36,475 | 37,480 | (2.7%) | ||||
Property revaluations and other income | (79,323) | (161,192) | 50.8% | ||||
Profit before income tax | (42,848) | (123,712) | 65.4% | ||||
Adjusted funds from operations (AFFO) | 33,448 | 36,953 | (9.5%) | ||||
Adjusted funds from operations (cpu) | 4.96 | 5.54 | (10.6%) | ||||
Distributions per unit (cpu) | 4.88 | 4.88 | - | ||||
All values shown as $m | |||||||
Average NZD/AUD exchange rate in the period | 0.9092 | 0.9251 |
Like-for-like rental growth strong at 4.0%. Lower absolute rental growth reflective of portfolio enhancing divestments
Includes $2.9m relating to the DLT and other strategic related initiatives
Net finance expenses up reflecting completion of developments and interest rate headwinds
AFFO impacted by the above factors and higher tax expense on Australian operations and timing delay on New Zealand tax deductions
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 9
Net property income | |||
Headline growth impacted by non-core assets sales | |||
4.0% NPI LIKE-FOR-LIKE GROWTH DUE TO LEASING, DEVELOPMENTS AND RENT REVIEWS | which have improved Vital's overall property portfolio | ||
+2.6% growth (incl FX) / +1.5% (excl. FX) |
Income from completed developments - Both projects rentalised as incurred and those that earn income from practical completion
Disposals - Strategic disposal of non-core assets in HY25 totaling NZ$47.9m
Rent Reviews & Leasing Activity - Market and other reviews up 3.6% or $2.4m versus HY24 with the remainder due to improvements in portfolio occupancy
NET PROPERTY INCOME BRIDGE | ||||||
($M) | ||||||
90 | ||||||
Income from completed | 80 | 5.1 | 3.0 | |||
0.8 | 74.3 | |||||
developments & | 72.4 | |||||
70 | (6.5) | (0.5) | ||||
rentalised spend | ||||||
on CAPEX | 60 | |||||
50 | ||||||
40 | ||||||
30 | ||||||
20 | ||||||
10 |
HY25 property income growth of +4.0% (like-for-like, constant currency basis)
HY24 | Development | Rent Reviews & | Disposals 2 | Amortisations | Foreign | HY25 |
Income 1 | Leasing Activity | & Other 3 | exchange |
86% of Vital's leases (by income) are indexed to CPI in some way
1 Incremental development income contributed from GenesisCare Cancer Centre, Playford Health Hub Stage 2, Avive Clinic, Ormiston, Wakefield, Abbotsford, Grace Hospital
- Disposals of non-core assets: H&P portfolio, Bolton Clarke, Epworth Brighton, Napier Health Centre and Southport Private.
- Amortisation, non-recurring Repairs and Maintenance (R&M) and abatements
VITAL HEALTHCARE PROPERTY TRUST | INTERIM RESULTS HY25 | 10