Investor presentation April & May 2012 Agenda Agenda Vital in - - PDF document

Investor presentation April & May 2012

Agenda

Agenda

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Vital in context

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Financial review

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Capital management

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Health sector

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Portfolio overview

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Summary & outlook

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Vital in context

Largest listed healthcare trust in NZ & Australia AuM of NZD$550m Founding member of IPD Australian Healthcare Index

Vital in context

Largest listed healthcare LPT in NZ & Australia

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Invests in medical and healthcare properties in Australasia

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Portfolio diversification by value is ~68% Australia & ~32% NZ

Market Capitalisation NZ$360m

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5th largest NZ LPT by market capitalisation

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Average monthly volume ~4.3m units (NZ$5.1m value)

Assets under Management of NZ$550m

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6th largest LPT by AuM

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25 properties, 99% occupancy

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WALT 11.2 years (longest in NZ sector)

New manager strongly aligned with unitholders

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Canadian based NorthWest Value Partners Inc. (“NorthWest”) acquired the management company in December 2011 and a 20% interest in the Trust

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NorthWest is a long term investor with a strong track record of acquiring, developing, managing and owning healthcare real estate on an international scale

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Large trading premium to NTA and long WALT are two key features distinguishing VHP in the NZ market

Vital in context

Source: Forsyth Barr Property Update April, IRESS

• 20%
• 15%
• 10%
• 5%

0% 5% 10% 15% 20% VHP GMT ANO PFI NPT KIP ARG DNZ AUG

Prem / Disc to NTA

Avg.

• 2

4 6 8 10 12 VHP ANO AUG GMT DNZ ARG PFI NPT KIP

W eighted Average Lease Expiry ( yrs)

Avg. 0% 10% 20% 30% 40% 50% ARG DNZ VHP NPT GMT KIP AUG PFI ANO

Gearing

Avg. 35% 30% 28% 7.1%

NZ Sector Breakdow n ( AuM)

• ffice

industrial retail health

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Source: IRESS. Note: unit price is adjusted for Nov 2010 rights issue

5 year history

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Step-change growth has primarily come via Australian portfolio acquisition Supplemented with value-add developments to existing assets

Source: Annual Reports. YTD = @ 31 March 2012

Vital in context

100 200 300 400 500 600 700 2007 2008 2009 2010 2011 YTD

I nvestm ent Assets ( NZ$ m )

0% 10% 20% 30% 40% 50% 2007 2008 2009 2010 2011 YTD

Gearing ( % )

2 4 6 8 10 12 2007 2008 2009 2010 2011 YTD

W ALT ( years)

91% 92% 93% 94% 95% 96% 97% 98% 99% 100% 2007 2008 2009 2010 2011 YTD

Occupancy

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Outperformance against New Zealand indices

Source: Craigs Investment Partners. Returns shown to period ending 31 March 2012. Note: Assumes distributions are reinvested and an adjustment made for the November 2010 rights issue.

Performance

• 40%
• 20%

0% 20% 40% 60% 80% 100% 120% 140% 1yr 3yr 5yr 7yr

Total returns

VHP NZX Property NZ50 Gross

• 5%

0% 5% 10% 15% 20% 25% 1yr 3yr 5yr 7yr

Com pound annual grow th rate ( CAGR)

VHP NZX Property NZ50 Gross

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Financial review

Gross property income higher than 2010 due to acquired properties and rent reviews Revaluation loss – 2010 write-off of acquired properties stamp duty and acquisition costs Period end exchange rate 0.7609 (30 June 2011: 0.7714) Effective current tax rate 12.1% (2010: 19.1%)

HY1 2 Actual $ 0 0 0 s FY1 2 SDP $ 0 0 0 s HY1 1 Restated $ 0 0 0 s

Gross property income - rentals 24,442 50,464 13,508 Interest Expense (8,508) (17,510) (4,416) Unrealised revaluation loss (68)

• (12,316)

Profit/ ( loss) before incom e tax ( PBT) 5 ,8 7 4 2 7 ,4 5 1 ( 2 ,4 8 3 ) Taxation (current & deferred combined) 677 2,128 1,094 Profit/ ( loss) after incom e tax 5 ,1 9 7 2 4 ,4 9 5 ( 3 ,5 7 7 ) Earnings per unit – cents 1.79 8.49 (2.32)

Financial performance

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Australian acquisition, New Zealand disposals

Comparison period movements

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Distributable income

HY1 2 Actual $ 0 0 0 s FY1 2 SDP $ 0 0 0 s HY1 1 Actual $ 0 0 0 s

Gross distributable incom e 1 1 ,8 1 8 2 6 ,0 6 5 6 ,9 7 0 Current Tax -NZ & Australia / (HY11 Imputation Credits)

• NZ Other Comprehensive Income

2,182 (808) 3,834

• 1,330
• Net distributable incom e ( NDI )

1 0 ,4 4 4 2 2 ,2 3 1 5 ,6 4 0 Gross distributable income per unit 4.1c 9.0c 4.5c Net distributable income per unit 3.6c 7.7c 3.7c (Based on weighted average number of units on issue) 290.8m 288.4m 154.5m 13

Acquisition of Mayo Private Capitalised costs $15.9m Units on issue increased under DRP Financial position

HY1 2 Actual FY1 2 SDP HY1 1 Restated

Net tangible assets per unit ( NTA) 1 0 2 c 1 0 9 c Investment properties $551.2m $535.4m $517.5m Total assets $555.0m $542.5m $534.4m Bank debt (excl. Finance Costs) $216.6m $205.8m $200.8m Unitholders’ funds $297.4m $289.1m $301.7m Securities on issue 292.1m 289.0m 287.4m Debt / total asset (TD covenant < 50% ) 39.0% 37.9% 37.6% Debt / investment properties (Bank facility covenant < 45% ) 39.3% 38.4% 38.8% 14

Capital management

Debt management

As at 31 March 2012

Renewal of bank facility

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Longer term, lower cost and more favourable covenants

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Bank covenant now aligned with Trust Deed (both 50%)

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Tranche 1: 5yr A$125m through to 31 March 2017

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Tranche 2: 3yr A$100m & NZ$20m through to 31 March 2015

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Circa A$57m and NZ$14m of headroom available under new facility

Gearing position

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Debt drawn to NZ$218.3m

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LVR 39.8% compared to bank covenant of 50%

Hedging

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Debt 69.5% hedged

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Swaps have, on average, 3.9 years until expiry

Weighted average cost of debt 7.07%

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Translation hedging

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Aim is to minimise the effect of adverse currency movements on the balance sheet over time.

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Policy adopted to have the natural hedge supplemented by entering into Forward Exchange Contracts to take hedging to between 90% and 100% of the value of net assets in Australia.

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Contracts entered into align with the Trust’s interim and annual balance date.

Transaction hedging

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Aim to decrease volatility in AUD denominated income flows that need to be converted into NZD to meet unitholder distribution requirements.

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Managed on a rolling 12 month basis against projected net Australian dollar

• perating cash flows.

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Contracts entered into will align with the Trust’s quarterly unitholder distributions.

As at 3 1 March 2 0 1 2 A$ m Net Assets 2 7 7 .1 Borrowings 1 6 7 .7 Natural Currency Hedge 6 1 % Borrowings Hedged 1 6 0 .0 Forward Exchange Contracts 8 8 .7 Effective Currency Hedge 9 2 .5 % Forward Exchange Contracts 2 July 2 0 1 2 0 .7 6 6 8

Currency management

A$ m 2 nd Half to 3 0 June 2 0 1 2 FX Collars 3 .0 FEC’s 2 .1 Average Exchange Rate 0 .7 7 9 6 to 0 .8 0 8 9 17

Health Sector

Inaugural launch on 21 February 2012 VHP founding member

IPD Australian Healthcare Index

Purpose

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To provide the first Australian healthcare index

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Benchmarking of healthcare performance vs other property assets

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Educate the wider investment market of investing in healthcare assets

Market index at December 2011

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Size: 49 assets

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Value: ~A$950m

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Frequency: Quarterly

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Series length: September 2005 to September 2011

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Target pool: >A$1.0bn assets by Q2 2012

Current index participants

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Vital Healthcare Property Trust

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Australian Unity

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Generation Healthcare Fund

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Healthfield Development and Management

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Orchard Funds Management

Media and marketing outputs

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Produced each quarter with the release of updated index numbers

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Distributed to key media outlets

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Topics include investment performance and healthcare sector drivers

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IPD Australian Healthcare Index

Defensive income returns Capital returns impacted by GFC, fast recovery

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IPD Australian Healthcare Index

Mixed use medical centres most impacted over cycle

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IPD Australian Healthcare Index

Healthcare index clearly

• utperforms at cycle trough

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NZ Health Insurance Trends

Source: Health Funds Association of New Zealand based on lives covered by health insurance (Dec 2011)

NZ health insurance membership in decline

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Source: Private Health Insurance Administration Council, Quarterly Statistics, September 2011, PHIAC, Canberra, 2010.

Six years of growth Means testing of rebate imminent

Australian Health Insurance Trends

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Portfolio overview

Portfolio Profile @ 31 March 2012

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25 properties

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125 tenants

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NZ$547.9m investment property value

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9.3% weighted average capitalisation rate*

* As at 30 June 2011

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Highly diversified portfolio

Portfolio geographic composition

@ 31 March 2012 27

Diversified healthcare sub-sector covenants

Portfolio sector composition

@ 31 March 2012 28

Portfolio occupancy at >99% for over 2 years

Portfolio occupancy

@ 31 March 2012 29

Highly structured rent review profile

Rent review profile

@ 31 March 2012

131 rent reviews due in FY12, ~95% structured or fixed 91 rent reviews YTD, 3.4% increase on passing rent

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VHP WALT twice NZ sector average

20 year lease expiry profile

@ 31 March 2012 31

Value add developments

Attractive forecast average yield of over 10% Property (Hospital) Development works Project cost (A$) % complete (31 March 2012) Target practical completion date

Belmont Major redevelopment and modernisation, increasing total beds to 120, with additional car‐parks and consultancy suites $12.2m1 90% May 2012 Maitland Additional 24 bed rehabilitation unit, 30 new car‐parks, hydrotherapy pool and 4th theatre $9.9m1 100% Completed ‐ January 2012 Lingard New 40‐bed ward and diagnostic imaging areas, 2 additional theatres (to 6), upgrade of patient recovery areas $22.0m 60% August 2012 Toronto Eight new beds to the existing rehabilitation unit, theatre plant upgrade and lift replacement $2.8m 65% November 2012 South Eastern Development of rehabilitation centre, including hydrotherapy pool, gymnasium and consulting suites $3.1m 20% August 2012 Palm Beach Two‐storey ward extension with 34 new beds and additional consulting suites and car‐parks $9.1m 25% August 2012

Total $59.1m2

Notes: 1. Amounts inclusive of contractually committed development capital expenditure on settlement in December 2010

• 2. Includes settlement contracted capex of A$17.5m. Development capex approved post settlement equates to A$41.4m

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Lingard Private Hospital, Newcastle, NSW

Attractive forecast return

• n cost of ~10.5% p.a.

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Unmet catchment demand for ~35,000 operations p.a.

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Capital spend ~A$22m

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Delivering new 40 bed ward, two new theatres, patient recovery ward and expanded diagnostic imaging areas

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Started May 2011, targeted completion August 2012

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Strong partnerships and profile presenting opportunities

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61 bed hospital, two theatres, specialist consulting and rehabilitation

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Built 1997, Mayo Private is a modern, highly functional hospital

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A$13m acquisition on a net initial yield of ~10%

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New 20 year net lease to Healthe Care, annual CPI reviews

Mayo Private Hospital, Taree, NSW

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Summary & outlook

Summary and outlook

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Strategy entrenched, enhanced diversification, scale and liquidity

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Core portfolio metrics resilient, value add initiatives crystallise through FY12/13

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FY12 cash distribution confirmed at 7.7 cpu

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Outline transition to AFFO1 based payout ratio in FY13

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Australian insurance reforms uncertain, ageing demographic positive

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Continued dialogue with key tenants about long term operational requirements

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Profile, scale and execution capability leading to value-add opportunities

Portfolio well positioned, outlook stable

1AFFO ‐ Available Funds from Operations can be generally defined as “Cash flows from operating activities less an adjustment for non‐revenue generating capital additions on

Investment Properties. Total interest expense incurred would form part of the calculation without any deduction of capitalised interest on development”.

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Disclaimer

This presentation has been prepared by Vital Healthcare Management Limited (the "Manager") as manager of the Vital Healthcare Property Trust (the "Trust"). The details in this presentation provide general information

• nly. It is not intended as investment or financial advice and must not be

relied on as such. You should obtain independent professional advice prior to making any decision relating to your investment or financial needs. The provision of this presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase units in the Trust. Past performance is no indication of future performance. No money is currently being sought, and no applications for units will be accepted, or money received, unless the unitholders have received an investment statement and a registered prospectus from the Trust. April 2012

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