Lead Manager and Underwriter VITAL HEALTHCARE PROPERTY TRUST INVESTMENT ACTIVITIES UPDATE AND $160M CAPITAL RAISING David Carr – Chief Executive Officer Stuart Harrison – Chief Financial Officer 21 June 2016 NZX ticker: VHP www.vhpt.co.nz
CONTENTS Executive summary Vital snapshot & track record Acquisition & development activity Renounceable rights offer Please note: A person should also read and consider the Offer Document (scheduled to be released by Vital on 28 June 2016) in conjunction with this presentation, before deciding to acquire Units. 2
Executive summary
EXECUTIVE SUMMARY Vital is the largest listed healthcare REIT in Australasia. Over the last five years it has: Delivered consistently strong operational, capital management and financial results Demonstrated a proven ability to execute on its strategy Executed ~A$413m of value add developments & acquisitions to support operator growth A proven track record in managing and investing in high quality healthcare real estate Established strong partnerships that will support long term scale & diversification Delivered a 14.0% p.a. average total return over the past 10 years 1 Vital will continue to apply its market leading position, strong relationships and access to capital to seek to deliver sustainable and attractive returns to investors Following recent acquisitions and announced pipeline of value-add developments, Vital will raise $160m through a pro rata 2-for-9 renounceable rights offer 4 1. Source: Bloomberg, Forsyth Barr. Calculated as capital gains plus cash distributions and rights entitlements (which are assumed to be reinvested) from 31 May 2006 to 31 May 2016
EXECUTIVE SUMMARY Investment activities and rights offer Recent acquisitions and developments include: A$44.1m portfolio acquisition of residential aged care assets $31.7m conditional acquisition of Boulcott Hospital in New Zealand ~A$87.6m pipeline of brownfield development projects in Australia 1 ~A$20m expected strategic acquisitions 2 over coming months to further support various scale & diversification initiatives in Australia Underwritten renounceable rights offer ~$160m pro rata renounceable rights offer 2 for 9 Offer at an Issue Price of $2.08, reflecting a discount to TERP 3 of 5.2% NorthWest 4 and Vital Directors will take up their rights for $39.3m Forsyth Barr Group Limited has underwritten the balance of $120.6m Outcome Offer enables Vital to reduce bank debt and pursue development, acquisition and growth opportunities that are continually being evaluated Post Offer, the annualised cash distribution will be retained at 8.5 cents per unit effective from the third quarter 1. Refer to page 13 of this document 2. As per market release on 01/06/16 3. TERP is the theoretical ex rights price of $2.195 which is equal to the average price of 2 New Units at the Application Price of $2.08 and 9 Existing Units at $2.22 being the closing price 5 as at 20 June 2016 4. NorthWest Healthcare Properties Real Estate Investment Trust and its associated/related entities (“NorthWest”)
Hurstville Private Hospital, Sydney Vital snapshot and track record
VITAL SNAPSHOT Deliver sustainable returns to investors #1 $767m 14.0% p.a. Market largest listed healthcare market average total return over capitalisation 1 the past 10 years 2 REIT in Australasia ~$230m +62% 10.4% brownfield commitments Financials revenue growth DPU growth over last 5 years, FY 2011-2015 2012-2017f ~9% yield on cost 16.9 year WALE >99% < 3% p.a. Portfolio 3 delivering long-term 6 year avg. average income expiry income certainty occupancy over next ten years 4x Over 65’s demographic Public sector pressure utilisation of healthcare Sector drivers doubling over the next Private system critical services by over 65’s vs 30-40 years component general population Sustainable and Scale & Relationship Strategy attractive returns to diversification focused investors 1. Based on Vital’s unit price of $2.22 and 345.7m units on issue as at 20 June 2016 2. Source: Bloomberg, Forsyth Barr. Calculated as capital gains plus cash distributions and rights entitlements (which are assumed to be reinvested) from 31 May 2006 to 31 May 2016 7 3. As at 31 March 2016
VITAL’S TRACK RECORD Strong execution on scale & diversification strategy driving material outperformance Source: Bloomberg, Forsyth Barr. Calculated as capital gains plus cash distributions and rights entitlements (which are assumed to be reinvested) from 31 May 2006 to 31 May 8 2016
LOW RISK, DIVERSIFIED PORTFOLIO Low risk expiry profile underpins earnings sustainability. Core portfolio has strong operator & asset diversification. 2.7% p.a. average lease expiry over the next ten years ~70% of income expires after 2025 Jun-25 : Epworth Eastern Hospital lease (6.6% of income) now expires 1 in 2035 Data as at 31 March 2016 9 1. As per market release on 01/06/16
development activity Acquisition &
ACQUISITION & DEVELOPMENT TRACK RECORD Attractive incremental value-creating development and acquisition pipeline forecast to continue 11 1. Based on preliminary portfolio revaluation announced 9 June 2016
RECENT ACQUISITIONS Diversified by geography, asset type and strategic value Boulcott Hospital, Lower Hutt, NZ $31.7m conditional acquisition of 38-bed Boulcott Hospital in New Zealand 6.85% cap rate, settlement subject to regulatory approvals Approximately 45 specialist consultants and surgeons provide services Directly adjacent to Hutt Hospital, the major public facility for the region Acquisition of adjacent property for future development opportunities Rockingham Aged Care, WA A$44.1m portfolio acquisition of four residential aged care assets 8.00% cap rate, structured rent growth, 20 year lease Hall & Prior are highly regarded operators in the Australian market Aged care sector has similar sector drivers as hospitals Sector has significant capital requirements over the next ten years Sportsmed SA Hospital & Clinics Acquisition of Sportsmed in 2012 with potential for brownfield development A$5.2m strategic acquisition in 2016 of two adjacent parcels of land Development of medical consulting building to commence in 2016 12
DEVELOPMENT UPDATE The success of the core+ strategy continues to deliver value add results and supports long term earnings sustainability 13 1. Data as at 31 May 2016
Renounceable Rights Offer
RIGHTS OFFER OVERVIEW Vital to raise $160m through a pro rata renounceable rights offer 2-for-9 pro rata renounceable rights offer, underwritten at an Issue Price of $2.08 per New Unit Traditional rights offer, with Rights trading – provides all Eligible Unitholders with the opportunity to participate NorthWest and Vital Directors will take up all of their rights, representing 24.6% of the total rights on offer Forsyth Barr Group Limited has underwritten the balance of $120.6m Impact of the rights offer and acquisition and development programme Pro forma gearing 1 to reduce from 37.1% to 20.3% based on 31 March 2016 Post Offer, the annualised cash distribution will be retained at 8.5 cents per unit effective from the third quarter Offer enables Vital to continue to pursue development, acquisition and growth opportunities that are continually being evaluated, and for general corporate purposes New Units issued under the Offer will be entitled to the distribution payable in respect of the fourth quarter to June 2016 (payable ~ September 2016) 15 Note 1: Assumes all Rights are taken up and utilising an exchange rate of NZD:AUD 0.9017
OFFER STRUCTURE Traditional rights offer, with Rights trading Rights offer Provides all Eligible Unitholders with the opportunity to participate pro rata Each Eligible Unitholder may take the following actions under the Offer: take up all or some of your Rights; or • sell all or some of your Rights; or • take up some of your Rights and sell all or some of the balance; or • do nothing with all or some of your Rights. If you do nothing, your Rights will • lapse and you will not be able to subscribe for any New Units or realise any other value for your Rights. Available to persons recorded on Vital’s Unit register at 5:00pm on the record date, with a registered address in New Zealand or Australia or certain unitholders who are Eligibility “accredited investors” under applicable Canadian laws (Eligible Unitholder) DRP units allotted on 24 June are eligible to participate in the Offer 16
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