VITAL HEALTHCARE PROPERTY TRUST INVESTMENT ACTIVITIES UPDATE AND - - PowerPoint PPT Presentation
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
21 June 2016 NZX ticker: VHP www.vhpt.co.nz
David Carr – Chief Executive Officer Stuart Harrison – Chief Financial Officer
Lead Manager and Underwriter
CONTENTS
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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.
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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 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 Delivered a 14.0% p.a. average total return over the past 10 years1
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
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EXECUTIVE SUMMARY
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 Australia1
~A$20m expected strategic acquisitions2 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 TERP3 of 5.2%
NorthWest4 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
Investment activities and rights offer
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 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
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Market
#1 largest listed healthcare REIT in Australasia $767m market capitalisation1 14.0% p.a. average total return over the past 10 years2
Financials
+62% revenue growth FY 2011-2015 ~$230m brownfield commitments
~9% yield on cost 10.4% DPU growth 2012-2017f
Portfolio3
16.9 year WALE delivering long-term income certainty >99% 6 year avg.
< 3% p.a. average income expiry
Sector drivers
Over 65’s demographic doubling over the next 30-40 years Public sector pressure Private system critical component 4x utilisation of healthcare services by over 65’s vs general population
Strategy Scale & diversification Sustainable and attractive returns to investors Relationship focused
Deliver sustainable returns to 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 3. As at 31 March 2016
VITAL’S TRACK RECORD
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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 2016
LOW RISK, DIVERSIFIED PORTFOLIO
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Low risk expiry profile underpins earnings
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 expires1 in 2035
Data as at 31 March 2016 1. As per market release on 01/06/16
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ACQUISITION & DEVELOPMENT TRACK RECORD
Attractive incremental value-creating development and acquisition pipeline forecast to continue
RECENT ACQUISITIONS
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Diversified by geography, asset type and strategic value 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
Rockingham Aged Care, WA 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 $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
Boulcott Hospital, Lower Hutt, NZ
DEVELOPMENT UPDATE
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The success of the core+ strategy continues to deliver value add results and supports long term earnings sustainability
RIGHTS OFFER OVERVIEW
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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
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 gearing1 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
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)
Note 1: Assumes all Rights are taken up and utilising an exchange rate of NZD:AUD 0.9017
OFFER STRUCTURE
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Rights offer
Traditional rights offer, with Rights trading
Provides all Eligible Unitholders with the opportunity to participate pro rata
Each Eligible Unitholder may take the following actions under the Offer:
lapse and you will not be able to subscribe for any New Units or realise any
Eligibility
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 “accredited investors” under applicable Canadian laws (Eligible Unitholder)
DRP units allotted on 24 June are eligible to participate in the Offer
EQUITY RAISING TERMS
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Entitlement ratio
2 New Units for every 9 Existing Units held at 5:00pm on 29 June 2016 Offer size
Approximately NZ$160m Maximum New Units to be issued
76,888,405 (subject to rounding) Issue price
$2.08 Offer discount
5.2% to TERP1 Ranking
New Units issued on completion of the rights offer will rank equally with Existing Units and will be quoted on the NZX Main Board. Structure
The rights offer is renounceable. If you do not wish to take up all or some of your Rights, you can sell those Rights through the NZX Main Board Underwriting
The Offer (excluding commitments by NorthWest and Vital Directors and their respective affiliates) is underwritten by Forsyth Barr Group Limited
1. 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 as at 20 June 2016
UNITHOLDER OPTIONS
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Take up all or some Rights
You will be able to acquire New Units at the Issue Price of $2.08 which is at a discount to the market price immediately prior to the announcement of the rights offer
You will maintain your proportional ownership of Vital after the rights offer if you take up all of your Rights Sell all or some Rights
If you wish to sell your Rights, you should contact an NZX Broker
You will receive value for any Rights sold on-market
You may be required to pay brokerage on the sale of your Rights Let Rights lapse
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.
The Vital Board encourages you to either take up your Rights in full or sell your Rights on market
TIMETABLE¹
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Announcement of the rights offer 21 June 2016 Units quoted “ex-rights” on the NZX Main Board 28 June 2016 Rights trading commences 28 June 2016 Record Date 29 June 2016 Expected mailing of Offer Document, Entitlement and Acceptance Forms 1 July 2016 Rights trading ceases 13 July 2016 Rights offer closes (and last date for receipt of applications or renunciations) 19 July 2016 Allotment of New Units 25 July 2016 New Units expected to commence trading 25 July 2016 Expected mailing of holding statements 1 August 2016
SUMMARY
Delivering on scale & diversification strategy, providing defensive growth
Vital has demonstrated a track record of performance and delivered on its scale & diversification strategy
Supported by positive sector fundamentals and strong relationships, Vital continues to assess a range of opportunities across the market
The $160m pro-rata rights offer allows Vital to reduce bank debt and pursue development, acquisitions 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
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GLOSSARY
21 APPLICATION PRICE $2.08 per New Unit ELIGIBLE UNITHOLDERS Persons recorded on the Unit register as Unitholders at 5.00pm on the Record Date with a registered address in New Zealand or Australia or certain Unitholders who are “accredited investors” under applicable Canadian laws EXISTING UNIT A Unit on issue at 5.00pm on the Record Date NEW UNIT A Unit to be issued under the Offer NORTHWEST NorthWest Healthcare Properties Real Estate Investment Trust RECORD DATE 29 June 2016 RIGHTS The right of each Unitholder under the Offer to subscribe for 2 New Units for every 9 Existing Units held at 5.00pm on the Record Date UNIT A Unit in Vital UNITHOLDER A person for the time being entered on the register of Vital either alone or joining with others as the holder of a Unit VITAL Vital Healthcare Property Trust
This presentation has been prepared by Vital Healthcare Management Limited (the “Manager”) as manager of the Vital Healthcare Property Trust (the “Trust”). Information in this presentation This presentation contains summary information about the Trust and its activities. The information in this presentation is of a general nature only. It does not purport to be complete, nor does it contain all the information which a prospective investor may require in evaluating a possible investment in the Trust or that would be required in a product disclosure statement under the Financial Markets Conduct Act 2013. Except as may be required by law, the Manager, the Trust, Forsyth Barr Limited and Forsyth Barr Group Limited and their respective related companies and affiliates and the officers, directors, employees and agents of those entities do not assume any obligation to any prospective investor to update any of the information provided in this presentation. Past performance is no indication of future performance. No offer of Units and no financial advice This presentation is not an invitation, recommendation or offer of Units in the Trust for subscription, purchase or sale in any jurisdiction. It is not intended as investment, financial or other advice and must not be relied on by any prospective investor. This presentation does not take into account any particular prospective investor’s objectives, financial situation, circumstances or needs. Any prospective investor who is considering an investment in Units in the Trust should obtain independent professional advice prior to making an investment decision, and should make any investment decision having regard to the prospective investor’s own objectives, financial situation, circumstances and needs. Forward looking statements Some of the information contained in this presentation may constitute forward looking statements or relate to proposed transactions that are to occur in the
descriptions contained in this presentation. Nothing in this presentation is a promise or representation as to the future or a promise or representation that a transaction or outcome referred to in this presentation will proceed or occur on the basis described in this presentation. Statements or assumptions in this presentation as to future matters may prove to be incorrect. No warranties No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness or correctness of the information, opinions and conclusions contained in this presentation. NZX NZX accepts no responsibility for any statement in this presentation. 21 June 2016
DISCLAIMER
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