Vital announces interim FY2019 results
1 March 2019
Vital announces interim results & update on strategic
initiatives
Vital Healthcare Property Trust (Vital) today released its interim results for the six
months ended 31 December 2018. It also confirmed a second quarter cash
distribution of 2.1875 cents per unit will be paid to unitholders on 29 March 2019, an
increase of 2.9% over the prior period.
Half year result highlights
Gross rental income of $50.5m, up 12.9%, driven by investment activity and organic growth;
Net distributable income of 4.19 cpu;
Cash earnings (or AFFO
1
) of $19.7m, representing a 98% payout ratio;
LVR at 39.5%
2
, post balance date completed bank facility expansion of A$150m;
Portfolio independently assessed at $1.77bn, WACR
3
firmed 3bps to 5.73%;
NTA of $2.24, down $0.02/unit from 30 June 2018 due to the impact of foreign exchange;
99.4% occupancy, now maintained at over 99% for 9 years;
Market leading WALE of 18.0 years;
Invested $17.8m in brownfield projects, $223m to be completed over next 3 years;
Agreement for A$126.2m brownfield development at Epworth Eastern Hospital, completion late-2021;
Forecast weighted average brownfield development yields of ~6.70%, a spread of approximately 100bps to
Vital’s WACR
3
;
Board reconfirmed FY19 cash distribution guidance of 8.75 cpu, up 2.2% from FY18.
Strategic update
On 1 February 2019, NorthWest Healthcare Properties Management Limited, as manager of Vital Healthcare
Property Trust (Vital), announced that its related company, NorthWest Healthcare Properties Real Estate Investment
Trust (NorthWest) had entered into a conditional contract to acquire 11 freehold hospital property assets for A$1,258
million from ASX listed Healthscope Limited (Healthscope) (the Portfolio) as part of a sale and lease back
transaction. This transaction is conditional on Brookfield’s acquisition of Healthscope.
Claire Higgins, Independent Chair of Vital’s Manager said “Vital is not currently a party to the potential transaction,
however views it as potentially an attractive opportunity and the Independent Directors are optimistic they will be
able to agree terms with NorthWest that sees Vital participate in the Healthscope transaction to the benefit of
unitholders. Discussions with NorthWest remain ongoing and a non-binding term sheet is well advanced. However,
there can be no guarantee that an agreement will be able to be reached”.
Mrs Higgins also said “We have made good progress on the previously announced fee review, and have engaged
EY to prepare an independent research report and conduct direct unitholder engagement on our behalf. At this
stage the Board expects to be in a position to provide an update on both Healthscope and the fee and governance
review by 31 March 2019.”
1
Adjusted Funds from Operations
2
Trust deed LVR is based on total borrowings as a percentage of the gross asset value of the Trust
3
Weighted average capitalisation rate
David Carr, Chief Executive of the Manager said, “In addition to focussing on near term strategic initiatives the team
continues to proactively deal with all aspects of the business. Core occupancy remains at 99.4% and our portfolio
WALE at an industry leading 18 years. We continue with the brownfield development program, adding capacity and
improving asset quality, ultimately driving value and earnings accretion.
Despite some short term private healthcare sector headwinds, our investment and development activities continue
to be supported by positive long term trends including a growing and ageing population and increasing demand for
healthcare services.”
Interim valuations and portfolio activity
At the half year to 31 December 2018, the incumbent independent valuers from 30 June 2018 were commissioned
to provide external desktop property asset reviews. As a result, Vital recorded an increase of $43.5m in the fair value
of its portfolio to $1.77bn, or 2.4% over carrying book value. The increase is over and above acquisitions and
development expenditure incurred in the period. The valuation uplift was driven by post development revaluation
gains on the spread between rentalisation and market yields at Lingard Private and Toronto Private and supported
by rent reviews over the period.
Vital’s WACR for the six months to 31 December 2018 firmed approximately 3 bps to 5.73%. The Australian portfolio
reported a 3bps firming to 5.70% and the New Zealand portfolio firmed 1 bps to 5.82%.
A total of 47 rent reviews (approximately 25% of total income) were completed to 31 December 2018, resulting in
annualised rent growth of 3.0%. With around 53% of Vital’s total income remaining subject to review to 30 June
2019, we expect these reviews will contribute to forecast income growth approximately in line with inflation.
Vital’s WALE was 18.0 years, supported by favourable lease renewals at Ascot Central and Epworth Eastern Medical
Centre. With a very low lease expiry profile at the start of FY19 representing 3.9% of total income, approximately
50% of these renewals or expiries are now completed, with an 84% retention rate.
We look to resolve the remaining expiries over the next six months with a high expectation of renewal and we
continue to proactively seek to secure future renewals well ahead of actual lease expiry dates.
Financial performance
Gross rental income grew 12.9% during the period. After property expenses, net income grew at 13.2%.
This operating result was driven by same-property income growth of 1.4% (or 2.2% on a same currency basis) and
over NZ$210m of property acquisitions and approximately NZ$50m of developments over the last 18 months.
Finance expense of $16.0m was up 52% from the prior year resulting from higher overall average debt levels within
the respective half year periods. This reflects the timing of acquisitions (eg. Acurity properties $147m in Dec 2017)
and development activity and the related party loan. Contributing to the increased finance expense was an increase
in Vital’s weighted average cost of debt to 4.50% (including bank line and margin fees) compared to the prior year
of 4.09%.
Net distributable income for the period was $18.5m (or 4.19 cents per unit). AFFO, which adjusts for maintenance
capex, lease incentives and non-recurring items, was $19.7m (or 4.46 cents per unit) down 17.4% versus the prior
year period. This was primarily due to $1.8m (0.41 cents per unit) of higher income tax expense, reflecting tax on
unrealised foreign exchange gains, and $1.4m (or 0.33 cents per unit) of higher maintenance capex and lease
incentives versus the prior year period.
For the six months to 31 December 2018, Vital’s AFFO pay-out ratio was 98%.
Treasury & capital management
Vital’s loan-to-value ratio (LVR) was 39.5% at 31 December 2018 for Trust Deed purposes, up from 36.4% the same
time last year. For the purposes of the bank covenant the LVR was 43.7% as adjustments are made removing the
interim desktop revaluations and the related party loan. The LVR remains well below bank and Trust Deed covenants
of 50%. At year end Vital had a hedged interest rate position of 68% with a 6.7 year average duration.
Accordingly, the Trust maintains an appropriate level of flexibility to finance announced development commitments
over the next three years. We are actively considering portfolio recycling opportunities and recently received multiple
qualified offers on a number of properties with an aggregate book value of approximately NZ$100m.
Acquisitions
Vital acquired two significant future development properties and a number of small strategic land holdings in the
period for a total cost of NZ$23.6m.
In September 2018, by way of an off-market transaction, Vital acquired an additional ~5,500sqm of vacant land for
NZ$9.3m which is located adjacent to Vital’s Ormiston Hospital in Auckland. Existing facilities include a six theatre,
31 bed private hospital in one of Auckland’s strongest population growth corridors. Ormiston is the only private
hospital in this area, which has a population estimated at 540,000.
In November 2018, Vital and NorthWest jointly acquired a significant development site for A$13.75m (Vital’s half
share ~A$7.0m) which is located adjacent to Lyell McEwin Public Hospital, the third largest public hospital in
metropolitan South Australia. The 16,700 sqm site is currently occupied by a retail centre of approximately 2,200
sqm with 100% occupancy on short lease terms with relocation and/or termination rights. The acquisition provides
a significant opportunity for development of a private healthcare precinct co-located with a major public hospital.
Epworth Eastern Hospital expansion
Epworth Eastern Hospital, original built in 2005, is a six-level, 227 bed private hospital located in the Box Hill suburb
of Melbourne, approximately 14 kilometres east of Melbourne’s CBD and operated by Epworth Foundation. The
Hospital is adjoined by Vital’s Epworth Eastern Medical Centre, which provides 3,000 square metres of consulting
suites across two levels to 24 healthcare tenants.
In 2014, Vital purchased an adjacent site as a strategic property held for development to facilitate future expansion
of the Epworth campus. Epworth Eastern Hospital is currently near capacity and generating strong operating
performance. Epworth Eastern Executive Director, Louise O’Connor commented that Epworth has “a waiting list of
doctors who want to operate.”
Accordingly, Vital has entered into an agreement to lease with Epworth Eastern to build a new 14 storey tower on
the adjacent site. A planning permit has been received, developed design is complete, and a preferred construction
contractor is expected to be appointed shortly.
Architect’s impression of new 14 level tower development adjacent Epworth Eastern Hospital
Approximately half of the new building is to be utilised by Epworth for clinical services (adding 63 beds and 5
operating theatres) and the remaining area would provide new consulting suites (approximately 4,200 sqm), of which
Epworth has agreed to head-lease just under half of the consulting space.
The development is 80% pre-committed, with strong and growing demand from associated healthcare practitioners,
many of whom will decant from the adjacent medical centre which will be refurbished to provide theatre recovery
space and a new emergency department. At completion the building is forecast to be 100% occupied. Epworth will
reset its lease term for the existing hospital and new areas leased to a new 30 year lease term with rental reviews
based on the greater of 3% or CPI.
The development is budgeted to cost approximately A$126.2m (including land currently held by Vital for
development). On completion, expected in late 2021, this project is forecast to be approximately 1% accretive to
AFFO per unit excluding development profit.
David Carr said “the Epworth Eastern development is another example of Vital’s strong tenant relationships and our
commitment to work with our hospital operating partners. The development will improve the quality and value of the
asset and help drive operational benefits and efficiencies for Epworth to meet rising demand for healthcare services
in their community. Furthermore, it presents another opportunity for Vital to demonstrate its execution capabilities to
enhance portfolio performance and deliver secure and stable returns to unitholders.”
Development update
In the first half of the year, Vital completed brownfield developments at NorthWest in Burnie, Tasmania, and a further
Stage at Lingard Private Hospital in Newcastle, New South Wales, representing value-add investments of
approximately A$21m.
Five further projects, totalling approximately NZ$240.9m remain in various stages of development. These five
projects are forecast for completion between early 2019 and 2023, with approximately NZ$223.4m in costs to
complete, at a forecast development yield on completion of approximately 6.70%, a spread of approximately 100
bps to Vital’s weighted average capitalisation rate.
About Vital Healthcare Property Trust
Vital Healthcare Property Trust (NZX: VHP) is Australasia’s largest listed investor in healthcare real estate. Tenants include hospital
operators and healthcare practitioners who deliver a wide range of medical and healthcare related services. The Manager of Vital
Healthcare Property Trust is NorthWest Healthcare Properties Management Limited.
vhpt.co.nz
Longer term, Vital’s brownfield development programme remains a core part of Vital’s scale and diversification
strategy. Brownfield projects not only directly underpin earnings sustainability and long-term value creation but
materially improves asset quality, supporting operator performance.
Distribution
The Board confirmed that investors will receive a second quarter distribution of 2.1875 cents per unit with 0.3477
cents per unit of imputation credits attached. The record date is 15 March 2019 and payment will be made on 29
March 2019.
Vital’s Distribution Reinvestment Plan remains available to investors for this distribution with a 1.0% discount being
applied when determining the strike price.
The Board has also reconfirmed its full year guidance for a cash distribution of 8.75 cents per unit.
Outlook
Mr Carr said “Notwithstanding the last six months being an exceptionally intense period working through a number
of important strategic matters, Vital’s continued underlying portfolio performance is sound as we continue to deliver
on the Board’s stated scale and diversification strategy and further enhance Vital’s overall position as a market
leader focused solely on healthcare real estate”.
Vital’s management team will present these results via a live webcast from 11:30am NZ time today. Please refer to
our market release dated 25 February 2019 for details or click here.
- ENDS -
ENQUIRIES
David Carr, Chief Executive Officer
NorthWest Healthcare Properties Management Limited, Telephone 09 973 7301, Email dcarr@vhpt.co.nz
Stuart Harrison, Chief Financial Officer
NorthWest Healthcare Properties Management Limited, Telephone 09 973 7302, Email sharrison@vhpt.co.nz
Jason Kepecs, Director, Investments & Investor Relations
NorthWest Healthcare Properties Management Limited, Telephone 09 973 7303, Email jkepecs@vhpt.co.nz
---
Interim Results
3 1 D E C E M B E R 2 0 1 8
VITALHEALTHCAREPROPERTYTRUST
01 MARCH 2019
Contents
Presented by :
David Carr
Chief Executive Officer
Stuart Harrison
Chief Financial Officer
2
•H I G H L I G H T S
•P O R T F O L I O
•I N V E S T M E N T A C T I V I T Y
•S T R A T E G I C I N I T I A T I V E S U P D A T E
•S E C T O R D R I V E R S & T R E N D S
•F I N A N C I A L S
•C A P I T A L M A N A G E M E N T
•2 0 1 9 F O C U S
Highlights
Highlights
Gross rental income of $50.5m, +12.9%
NDI of 4.19 cpu, payout ratio of 104%
AFFO of 4.46 cpu, payout ratio of 98%
NTA of $2.24 per unit
LVR
1
of 39.5%, up from 37.5% at 30 June 2018
2
nd
quarter distribution of 2.1875 cents
F I N A N C I A L S
Positive demographic trend, ageing population
+65yr cohort utilises4x healthcare services
Public infrastructure & funding under pressure
Operators exploring partnership funding model
Challenging dynamic in Australian health sector
NZ private health insurance participation higher
S T R A T E G Y & D R I V E R S
Highlights
FINANCIAL AND PORTFOLIO PERFORMANCE DELIVERING ON STRATEGY
Like-for-like NOI growth of 2.2% on same currency basis
18.0 year WALE, 99.4% occupancy
1.6% p.a. avg. lease expiry over next 10 years
NZ$223.4m development pipeline next 3 years
Significant expansion at Epworth Eastern
Portfolio WACR firmed 3bps to 5.73%
P O R T F O L I O2 0 1 9 F O C U S
Maintain low risk portfolio profile & metrics
Execution of brownfield pipeline at attractive yield on cost
Focus on long-term value creation
Increased FY2019 cash distribution by 2.2% to 8.75 cpu
Strategic opportunity Healthscope real estate WIP
EY engaged to prepare fee research report
(1)Calculated in accordance with Vital’sTrust Deed
Note: Refer to glossary for explanation of abbreviated terms
4
Portfolio
Portfolio overview
$1.77B PORTFOLIO OF HEALTHCARE REAL ESTATE COMPRISING 42 INVESTMENT PROPERTIES AND ~2,600 BEDS
6
Portfolio composition
PORTFOLIO DIVERSIFIED ACROSS GEOGRAPHY AND HEALTH CARE SUB-SECTORS
Geographic Diversification
Sector Diversification
Top Ten Tenants
Tenant
% of
revenueLocations
1HealtheCare49%18
2Epworth Foundation10%3
3AcurityGroup7%3
4Hall& Prior5%5
5Sportsmed4%3
6Mercy Ascot4%2
7Ramsay Health Care2%1
8Ormiston Surgical2%1
9Castlereagh Imaging1%1
10Kensington Hospital1%1
Total85%38
7
* Top Ten Tenants based on revenue earned in the last 6 months
Core portfolio metrics
PORTFOLIO IN GREAT SHAPE -UNDERPINS LONG-TERM PERFORMANCE
8
1.6% p.a.
average lease
expiry over the
next 10 years
Lease expiry profile
Lease expiry
LOW RISK EXPIRY PROFILE SUPPORTS SUSTAINABLE, PREDICTABLE AND DEFENSIVE CASH FLOWS
Lease expiries in FY2019 and FY2020 primarily reflect smaller tenancies at multi-tenant properties,
with a high expectation of renewal, including: Ascot Hospital, Ascot Central, Ormiston Hospital,
Epworth Eastern Medical Centre, Gold Coast Surgery, and EkeraMedical Centre.
In terms of the largest single lease expiries over the next 5 years, the current estimated probability
of renewal is over 90%.
In the first six months of FY2019, Vital renewed 13 leases at higher rents increasing annualised
rental income by $155k.
9
Previous Rent
New Rent
Annualised
Increase
Annualised
Growth
HY2019
Growth
($000s)
#
(NZD)
(NZD)
(NZD)
(local F/X)
(local F/X)
Australia
18
11,311
11,656
344
2.5%
0.5%
New Zealand
29
13,135
13,590
456
3.5%
0.8%
Pending
79
51,859
TBD
TBD
TBD
TBD
Total
126
76,305
25,246
800
3.0%
0.7%
Previous Rent
New Rent
Annualised
Increase
Annualised
Growth
HY2018
Growth
($000s)
#
(NZD)
(NZD)
(NZD)
(local F/X)
(local F/X)
C PI
27
20,192
20,708
516
2.3%
0.4%
Fixed
10
1,691
1,763
72
3.9%
1.0%
Market
10
2,563
2,775
213
8.3%
2.2%
Pending
79
51,859
TBD
TBD
TBD
TBD
Total
126
76,305
25,246
800
3.0%
0.7%
Rent Reviews
HIGH PERCENTAGE OF TOTAL RENT IS REVIEWED ANNUALLY WITH CPI OR STRUCTURED REVIEW MECHANISMS
Reviews by Geography
In HY2019, reviews were completed on 32% of FY2019 rent reviews resulting in a 3.0%
annualisedincrease in rents.
Rents representing ~79% of the portfolio are subject to review during FY2019 of which
93% are subject to a structured review.
Reviews by Type
10
* Pending expiries refers to those leases that fall due during the year where new rents have not yet been settled.
Interim revaluation
POTENTIAL FOR FURTHER CAP RATE COMPRESSION
11
Revaluation summary
Revaluation gain of $43.5m, +2.4% above book value
Values supported by external independent desktop reviews
Majority of increase from gains in the Australian portfolio
Australian WACR firmed ~3 bps to 5.70%, New Zealand ~1 bps to 5.82%
Portfolio WACR firmed ~3 bps to 5.73%
Drivers
Firming cap rates for institutional quality healthcare assets
Increased interest in healthcare infrastructure assets from global investment
managers
Low interest rate environment, unique and attractive lease terms
Investment
activity
Committed development update
BROWNFIELDS DRIVING VALUE-ADD OUTCOMES, UNDERPINS EARNINGS SUSTAINABILITY, IMPROVES ASSET QUALITY & PERFORMANCE
Construction of new Intensive Care Unit and seven chair chemotherapy unit at Maitland
Private follows the addition of two operating theatres in September 2017.
Development pipeline at spreads of ~100bps over Vital’s weighted average capitalisation
rate.
13
Epworth Eastern (East Tower) Expansion
PARTNERING WITH AN EXISTING TENANT TO EXPAND A PREMIER MELBOURNE HEALTHCARE FACILITY
14
Artist’s impression of Epworth Eastern Hospital expansion
Commenced development of a modern, purpose-built
14-storey tower on existing land held by Vital.
Epworth Foundation to lease approx. half of the new
building for clinical services, consulting suites to
comprise remaining area (4,200 sqm). Epworth has
agreed to head-lease approximately half of the
consulting space.
Existing consulting tenants at the Medical Centre
expected to relocate to East Tower suites. Medical
Centre to be refurbished to provide theatre recovery
space and a new emergency department.
New 30 year lease term with rental escalators based on
the greater of 3% or CPI.
TenantEpworth Foundation
Operating theatres5
Beds63
Status
Planning permit received /
Developeddesign complete
Budgeted cost (inc’lland)A$126.2m
Rentalisationyield~6%
Expected completionLate-2021
Greater Melbourne Area
10KM RADIUS OF EPWORTH
EASTERN HOSPITAL
Epworth Eastern (East Tower) Expansion
INVESTING IN A HIGH GROWTH, METROPOLITAN HEALTHCARE PRECINCT
15
EPWORTH EASTERN EXPANSION
BOX HILL PUBLIC HOSPITAL
EPWORTH EASTERN HOSPITAL
(VITAL OWNED)
EKERA MEDICAL CENTRE
(VITAL OWNED)
MEDICAL CENTRE
(VITAL OWNED)
BOX HILL INSTITUTE
Major public hospital
completed A$448m
redevelopment in 2015
Epworth Eastern Private
Hospital operating at
capacity with a waiting list
of doctors that want
to operate
Box Hill Institute (education) has
collaboration arrangements with
Epworth Eastern
BOX HILL INSTITUTE
CAMPUS
EASTERN HEALTH ADMIN
Recent investment in local healthcare infrastructure (Epworth Eastern and Box Hill Public Hospital) has
increased the supply of high quality visiting medical officers seeking to practice at these facilities.
Ongoing unmet demand and strong forecast population growth in Epworth Eastern’sprimary catchment
continues to drive demand for additional acute care patient facilities to service local healthcare needs.
Strategic
Initiatives
Strategic initiatives update
HEALTHSCOPE (HSO) PROPERTY OPPORTUNITY AND CORPORATE GOVERNANCE
Tactical use of derivatives to execute on HSO initiative has delivered strategic property opportunity.
Vital isoptimistic it will be able to agree terms with NorthWest that facilitates participation to the benefit
of unitholders in the HSO real estate transaction.
Discussions with NorthWest remain ongoing and a non-binding term sheet is well advanced. However,
there can be no guarantee that an agreement will be able to be reached.
Recognising the progress to date, Vital has agreed to certain work fees payable to the Manager, which are
refundable, in certain circumstances, should Vital not participate in the HSO real estate opportunity.
EY engaged to prepare an independent research report on fees and conduct unitholder engagement.
The Board expects to be in a position to provide an update on both HSO and the fee and governance
review by 31 March 2019.
17
Properties11
Asset value~A$1.3m
DevelopmentpipelineA$500m+
Capitalisationrate (‘quad net’ lease structure)5.0%
Annual rental escalation2.5%
Occupancy100%
WALE20 years
Above details refer to the opportunity secured by NorthWest
Sector drivers
& trends
Sector drivers and trends
PERIODIC REGULATORY REFORM, LONG TERM TRENDS UNDENIABLE
E C O N O M I C & M A R K E T I N F L U E N C E S
REGULATORY
PUBLIC SYSTEM
PRESSURE
RELATIVELY
INSULATED
reform relatively constant,
diversification critical
private system
critical component
from macro financial,
economic and market
conditions
S T R O N G F O R E C A S T D E M A N D, U N D E N I A B L E T R E N D S
2x
~4x
80%
>65 year demographic
forecast over the next
40 years
>65 year demographic
have at least
one chronic disease
utilisationof
healthcare services
by >65 year demographic
19
Financials
Financial performance
CORE BUSINESS AND STRATEGIC FOCUS DELIVERING RESULTS
Gross rental income increased 12.9% due to contribution from ~$260m of acquisition and
development activity over the last 18 months and 1.4% of like-for-like rental growth on a
currency adjusted basis.
Other expenses includes $1.9m of net strategic transaction costs related to the
Healthscope opportunity, a ~$1.3m increase in the Manager’s base fee on higher AUM,
partially offset by a ~$0.7m decrease in the Manager’s incentive fee accrual.
Net finance expenses increased on higher drawdown of bank facility to fund investment
activity and higher funding costs on floating rate debt.
Property revaluations and other income includes $43.5m of fair value gains on property
and $2.7m of fair values losses on strategic transaction derivatives.
21
Actual
Actual
change
change
HY2019
HY2018
$
%
Gross rental income
50,537
44,752
5,785
12.9%
Net rental income
48,835
43,153
5,683
13.2%
Other income and expenses
(15,396)
(12,794)
(2,602)
20.3%
Net finance expenses
(14,994)
(10,483)
(4,511)
43.0%
Operating profit before tax and other income
18,445
19,876
(1,431)
(7.2%)
Property revaluations and other income
37,983
41,240
(3,257)
(7.9%)
Profit before income tax
56,428
61,116
(4,688)
(7.7%)
Weighted average NZD/AUD exchange rate
0.9247
0.9162
(in 000s of $NZ, except per unit amounts)
Net distributable income
NET DISTRIBUTABLE INCOME PAYOUT
Net distributable income declined versus the prior period due to:
Strategic transaction costs of $1.9
(1)
incurred in the period, and
Current tax expense includes ~$1.4m increase in the current year and ~$0.4m
decrease in prior year period, due to the impact of unrealisedforeign exchange
gains/(losses) (-$5.1m and $1.4m, respectively) at a rate of 28%.
22
(1) See ‘Healthscope strategic opportunity’ slide on page 28 for further details
ActualActualchangechange
HY2019HY2018$%
Profit before income tax56,42861,116(4,688)(7.7%)
Revaluation (gains)/losses(43,482)(42,774)(708) 1.7%
Unrealised FX (gains)/losses(5,162)1,366(6,528)(477.9%)
Unrealised FX (gains)/losses on derivatives(318)284(601)(211.9%)
Derivative FV adjustment (gains)/losses8,262(116)8,377 n.a.
Strategic transaction FV adjustment (gains)/losses2,71702,717 n.a.
Manager's incentive fee5,1125,803(691)(11.9%)
Gross distributable income23,557 25,679 (2,122)(8.3%)
Income tax expense (current)(5,034)(2,890)(2,145) 74.2%
Effective tax rate21.4%11.3%
Net distributable income18,524 22,790 (4,266)(18.7%)
Net distributable income per unit (earned) (cpu)4.19c5.27c(1.07c)(20.4%)
Distribution per unit (cpu)4.38c4.00c
Net distributable income payout ratio104%81%
(in 000s of $NZ, except per unit amounts)
Adjusted funds from operations
CONSERVATIVE PAYOUT RATIOS
23
AFFO declined versus the prior period due to:
Current tax expense (see previous page for details),
Actual capex and leasing costs in the prior year were negligible producing a low comparable
base,
Unhedged foreign exchange gains/(losses) of ($0.1m) and $0.4m in the current and prior year
period, respectively, and
One-off public company costs of $0.2m reflecting non-recurring expenses in late CY2018.
Adjusting for these non-recurring items, Vital’s‘core AFFO’ per unit would have been flat year over
year.
Actual
Actual
change
change
HY2019
HY2018
$
%
Net distributable income
18,524
22,790
(4,266)
(18.7%)
Amortisation of deferred financing charges
289
216
72
33.4%
Amortisation of leasing costs & tenant inducements
528
455
73
16.1%
Funds from operations (FFO)
19,340
23,460
(4,121)
(17.6%)
Strategic transaction costs
1,872
-
1,872
n.a.
Actual capex & leasing from continuing operations
(1,493)
(54)
(1,439)
n.a.
Adjusted funds from operations (AFFO)
19,718
23,406
(3,688)
(15.8%)
AFFO (cpu)
4.46c
5.41c
(0.94c)
(17.4%)
AFFO payout ratio
98%
79%
Units on issue (weighted average, millions)
441,711
432,849
(in 000s of $NZ, except per unit amounts)
Gross rental income
ACQUISITIONS, DEVELOPMENTS AND RENT REVIEWS WERE KEY DRIVERS OF GROWTH
Rental income bridge
Acquired ~$211m of property
in the last 18 months at a
weighted average yield of ~6%
Invested ~$49m in
developments over last 18
months at a weighted average
yield of ~7%
Rent reviews completed at
annualisedrate of 3.0% in
HY2019 on strong market rent
reviews at our NZ properties
(see rent review slide for
further details)
(NZ 000’s)
24
Like for like operating results
STRONG REVENUE GROWTH DRIVING POSITIVE CORE PORTFOLIO PEFORMANCE
Note:
Revenue includes passing rent and expense recoveries as agreed to under the terms of respective leases
In the like for like portfolio:
•Revenue increased 1.4% (2.2%
on a same currency basis)
•Expenses increased 3.0% (3.3%
on same currency basis)
•Net operating income
increased 1.4% (2.2% on a same
currency basis)
Comparative like-for-like performance
25
Geography
(in 000s of NZ$)
HY2019
HY2018
Variance
Change
Revenue
48,294
47,614
679
1.4%
Expenses
(6,659)
(6,467)
(193)
3.0%
Non-recurring R&M
271
194
76
39.3%
Like-for-like net operating income
41,905
41,342
563
1.4%
Non-recurring R&M
(271)
(194)
Acquisitions
5,225
1,163
4,063
Developments
1,976
843
1,133
Total net operating income
48,835
43,153
Balance sheet
CAPITAL RECYCLING AVAILABLE TO MANAGE FUTURE COMMITMENTS
Gearing remains
within bank and Trust
Deed covenants
NTA per unit
moderately down on
unrealisedforeign
exchange losses
partially offset by
higher revaluations
NTA per unit bridge
26
Actual
Actual
change
change
(in 000s of $NZ, except per unit amounts)
1H19
FY18
$
%
Investment properties
1,765,974
1,731,247
34,727
2.0%
Bank debt drawn
743,188
670,124
73,064
10.9%
LVR (bank covenant)
43.7%
38.7%
501 bps
Unitholder funds
998,452
987,976
10,476
1.1%
Units on issue (m)
444,823
436,893
7,931
1.8%
Net Tangible Assets
2.24
2.26
-0.02
-0.7%
Period end NZD/AUD exchange rate
0.9513
0.9159
Investment property
ACQUISITIONS AND REVALUATIONS KEY DRIVERS OF GROWTH
Investment property bridge
Acquisitions: Purchased
Ormiston Land (NZ$9.3m),
Elizabeth Vale (NZ$7.5m), and
Strategic land (NZ$6.8m)
Capital additions: Spent $17.0m on
active developments, $0.2m on net
tenant incentives and $1.3m on
maintenance capital expenditures
Fair Value: Crystalisedgains on
development post-completion, cap
rate compressed 3bps (see valuation
section for further details)
Foreign Exchange:Period end
NZD/AUD exchange rate increased to
0.9513 from (0.9159 in the prior year).
(NZ 000’s)
All figures in NZD unless otherwise noted
27
Healthscope strategic opportunity
FAIR VALUE OF DERIVATIVE AND TRANSACTION COSTS
On 14 February 2019, Healthscope announced an interim dividend payment of 3.5c would be paid
on 26 March 2019 which is expected to reduce strategic transaction costs by ~A$4m.
Based on a Healthscope’s(HSO; ASX) closing share price of A$2.23 at 31 December 2018, Vital’s
share of the strategic transaction derivatives was valued at (NZ$2.8m).
Following Healthscope’ssupport of Brookfield’s proposal to purchase the Company,
Healthscope’sshares have traded to Brookfield’s offer price of A$2.40 -A$2.50, which positively
impacts the fair value of the strategic transaction derivatives.
28
Capital
management
Debt maturity
UTILISING THE AVAILABLE HEADROOM AND ADDING CAPACITY
Post balance date, expanded
existing bank facility
Added Tranche F of A$150m
with expiry of January 2022.
Trust deed LVR is based on total
borrowings as a percentage of
the gross asset value of the Trust
Bank covenant LVR is based on
total borrowings as a percentage
of the secured property value as
determined by external valuers
Bank Facilities31 Dec 201830 Jun 2018
LVR (Trustdeed)39.5%37.5%
LVR(Bank covenant)43.7%38.7%
Duration2.6 years3.1 years
Headroom available*$13m$114m
Debt maturity schedule
30
Tranche F (post balance date)
* Headroom was increased to ~$180m subsequent to the interim balance date following expansion of existing bank facilities.
Hedging profile
FLEXIBILITY FOR THE RIGHT ACQUISITION AND DEVELOPMENT OPPORTUNITIES
Rates
30 Dec
2018
30 Jun
2018
31 Dec
2017
Weightedaverage cost of total debt4.50%4.60%4.09%
Weightedaverage fixed rate (exc’lline and margin)3.22%3.21%3.40%
Weightedaverage fixed rate duration6.7 years7.0 years5.8 years
% of drawn debt fixed68%80%52%
* Fixed rates exclude line fees and margin
Hedging profile
31
Outlook
2019 Focus
Continued proactive asset management to support operating and financial results
Execute brownfield pipeline, assess and generate additional value-add opportunities
Prudent capital management, assess and utiliseall the ‘tools in the toolkit’ as required
Leveragetrackrecordofdelivery,performanceandglobalexpertise
Strategic approach to opportunities, including Healthscope real estate
Continue to position Vital to execute on long-term unitholder value creation
Deliver and maintain sustainable distribution of 8.75 cpu
Progressing fee review research report, engaged EY
33
Disclaimer
This presentation has been prepared by NorthWest Healthcare Properties
Management Limited (the "Manager") as manager of the Vital Healthcare Property
Trust (the "Trust"). The details in this presentation provide general information only. 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.
1
st
March 2019
34
Glossary
35
---
Reporting Period6 months to 31 December 2018
Previous Reporting Period6 months to 31 December 2017
Amount
NZ$000s
Percentage
change
Revenue from ordinary activities
13.2%
Profit (loss) from ordinary activities after tax
attributable to security holder
-11.5%
Net profit (loss) attributable to security holders
46,798-11.5%
Interim/Final DividendAmount per
security
Imputed
amount per
security
NZ$0.021875NZ$0.003477
Record Date
Dividend Payment Date
Comments:Refer
announcement
48,835
46,798
VITAL HEALTHCARE PROPERTY TRUST
Results for announcement to the market
15 March 2019
29 March 2019
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
0FINANCIAL STATEMENTS
FINANCIAL
STATEMENTS
FOR THE PERIOD
ENDED
31 DECEMBER
2018
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-1FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 31 December 2018
Note
Unaudited
6 months
Dec-18
$000s
Unaudited
6 months
Dec-17
$000s
Gross property income from rentals50,53744,752
Gross property income from expense recoveries5,2935,183
Property expenses(6,995)(6,782)
Net property income348,83543,153
Other income and expenses(13,524)(12,794)
Net strategic transaction costs13(1,872)-
Finance income1,04157
Finance expense(16,035)(10,540)
Operating Profit18,44519,876
Other gains/(losses)
Revaluation gain/(loss) on investment property643,48242,774
Fair value gain/(loss) on foreign exchange derivatives318(284)
Fair value gain/(loss) on interest rate derivatives(8,262)116
Fair value gain/(loss) on strategic transaction derivatives13(2,717)-
Unrealised gain/(loss) on foreign exchange5,162(1,366)
37,98341,240
Profit before income tax56,42861,116
Taxation expense4(9,630)(8,236)
Profit for the period attributable to unitholders of the Trust46,79852,880
Other comprehensive income
Items that may be reclassified subsequently to profit and loss:
Movement in foreign currency translation reserve(33,561)34,020
Realised foreign exchange gain/(loss) on hedges191,634
Current taxation (expense)/credit(5)(458)
Unrealised foreign exchange gain/(loss) on hedges7,042(3,656)
Deferred taxation (expense)/credit(1,972)1,024
Fair value gain/(loss) on net investment hedges4,876(4,445)
Deferred taxation (expense)/credit(1,365)1,244
Total other comprehensive income/(loss) after tax(24,966)29,363
Total comprehensive income after tax21,83282,243
Earnings per unit
Basic and diluted earnings per unit (cents)510.5912.22
The notes on pages FIN-5 to FIN-19 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-2FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2018
Note
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
Non-current assets
Investment properties61,765,9751,731,247
Derivative financial instruments7-856
Other non-current assets1384,72843,984
Total non-current assets1,850,7031,776,087
Current assets
Cash and cash equivalents8,5135,388
Trade and other receivables3,4241,189
Other current assets1311,9103,801
Derivative financial instruments77,307363
Total current assets31,15410,741
Total assets1,881,8571,786,828
Unitholders' funds
Units on issue8572,918556,878
Reserves(17,320)15,629
Retained earnings442,854415,469
Total unitholders' funds998,452987,976
Non-current liabilities
Borrowings9742,100668,712
Derivative financial instruments720,91514,444
Deferred tax91,70986,796
Total non-current liabilities854,724769,952
Current liabilities
Trade and other payables1315,34316,965
Income in advance1,5532,281
Derivative financial instruments7980460
Taxation payable10,8059,194
Total current liabilities28,68128,900
Total liabilities883,405798,852
Total unitholders' funds and liabilities1,881,8571,786,828
For and on behalf of the Manager, NorthWest Healthcare Properties Management Limited
C Higgins, ChairB Crotty, Director
1 March 2019
The notes on pages FIN-5 to FIN-19 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-3FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 31 December 2018
Units on issue
$000s
Retained
earnings
$000s
Translation
of foreign
operations
$000s
Foreign
exchange
hedges
$000s
Share based
payments
$000s
Total
unitholders'
funds
$000s
For the six months ended
31 December 2017 (Unaudited)
Balance at the start of the period538,469352,647(83,713)60,10412,314879,821
Changes in unitholders' funds15,355---(12,314)3,041
Manager's incentive fee----5,8035,803
Profit for the period-52,880---52,880
Distributions to unitholders-(18,594)---(18,594)
Other comprehensive income for
the period
Movement in foreign currency
translation reserve--34,020--34,020
Realised foreign exchange gains
on hedges---1,176-1,176
Unrealised foreign exchange gains/
(losses) on hedges---(2,632)-(2,632)
Fair value gains on net investment
hedges---(3,201)-(3,201)
Balance at the end of the period553,824386,933(49,693)55,4475,803952,314
For the six months ended
31 December 2018 (Unaudited)
Balance at the start of the period556,878415,469(54,911)57,44513,095987,976
Changes in unitholders' funds16,040---(13,095)2,945
Manager's incentive fee----5,1125,112
Profit for the period-46,798---46,798
Distributions to unitholders-(19,413)---(19,413)
Other comprehensive income for
the period
Movement in foreign currency
translation reserve--(33,561)--(33,561)
Realised foreign exchange gains on
hedges---14-14
Unrealised foreign exchange gains/
(losses) on hedges---5,070-5,070
Fair value losses on net investment
hedges---3,511-3,511
Balance at the end of the period572,918442,854(88,472)66,0405,112998,452
The notes on pages FIN-5 to FIN-19 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-4FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31 December 2018
Note
Unaudited
6 months
Dec-18
$000s
Unaudited
6 months
Dec-17
$000s
Cash flows from operating activities
Property income49,39144,942
Recovery of property expenses4,4794,308
Interest received3843
Property expenses(5,235)(6,167)
Management and trustee fees(7,147)(5,575)
Interest paid(15,447)(9,620)
Tax (paid)/refund(3,376)755
Other trust expenses(1,334)(1,014)
Net cash provided by/(used in) operating activities21,36927,672
Cash flows from investing activities
Receipts from foreign exchange derivatives3091,634
Capital additions on investment properties(20,270)(9,801)
Purchase of properties(21,885)(182,510)
Prepaid acquistion costs(10,788)(1,003)
Tenant incentives-(2,314)
Advances provided to related parties(42,400)(171)
Strategic transaction costs(4,515)-
Net cash provided by/(used in) investing activities(99,549)(194,165)
Cash flows from financing activities
Debt drawdown97,787189,168
Costs associated with Distribution Reinvestment Plan(14)(14)
Distributions paid to unitholders(16,468)(15,553)
Net cash from/(used in) financing activities81,305173,601
Net increase/(decrease) in cash and cash equivalents3,1257,108
Effect of exchange rate changes on cash and cash equivalents-(7)
Cash and cash equivalents at the beginning of the period5,3883,352
Cash and cash equivalents at the end of the period8,51310,453
The notes on pages FIN-5 to FIN-19 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-5FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 December 2018
1 GENERAL INFORMATION
Vital Healthcare Property Trust ("VHP" or the "Trust") is a unit trust established under the Unit Trusts Act 1960 by
a Trust Deed dated 11 February 1994 as subsequently amended and replaced, domiciled in New Zealand. The
Trust is managed by NorthWest Healthcare Properties Management Limited (the Manager). The Manager is a
registered managed investment scheme manager under the Financial Markets Conduct Act.
The condensed consolidated interim financial statements of VHP for the period ended 31 December 2018
comprise VHP and its subsidiaries (together referred to as the Group). VHP is listed on the New Zealand Stock
Exchange (NZX) and is a FMC reporting entity for the purpose of the Financial Markets Conduct Act 2013.
The Trust's principal activity is the investment in health sector related properties.
The condensed consolidated interim financial statements are presented in New Zealand Dollars ($) which is the
Trust's functional and presentation currency. All information has been rounded to the nearest thousand dollars
($000), unless stated otherwise.
These condensed consolidated interim financial statements were approved by the Board of Directors of the
Manager on 1 March 2019.
2 BASIS OF PREPARATION
Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with Generally
Accepted Accounting Practice in New Zealand (NZ GAAP), NZ IAS 34 and IAS 34 Interim Financial Reporting. The
accounting policies have been consistently applied, when compared to those used in the 2018 Annual Report
except as described below under the heading "change in accounting policies". The 2018 Annual Report complies
with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable
Financial Reporting Standards issued and effective at the time of preparing those statements.
Basis of measurement
The condensed consolidated interim financial statements have been prepared on the historical cost basis except
for derivative financial instruments and investment properties which are measured at fair value.
Use of estimates and judgements
The preparation of financial statements in conformity with NZ IAS 34 requires the use of certain critical
accounting estimates and judgements that affect the application of policies and reported amount of assets and
liabilities, income and expenses. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are as follows:
•
Note 4 - Taxation
•
Note 6 - Valuation of investment property
•
Note 13 - Related party transactions
Change in accounting policies
Accounting policies have been applied consistently to all periods with the exception of the mandatory adoption of
NZ IFRS 9 Financial instruments and NZ IFRS 15 Revenue from Contracts with Customers, which are effective for
annual reporting periods beginning on or after 1 January 2018.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-6FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
2 BASIS OF PREPARATION (continued)
NZ IFRS 9 Financial Instruments
Classification and measurement
From 1 July 2018, the Group classifies its financial assets and financial liabilities in the following measurement
categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit
or loss), and
- those to be measured at amortised cost.
The classification of financial instruments has not resulted in any reclassification between measurement
categories for the Group's financial assets and liabilities. Derivative financial instruments designated as hedges of
a net investment in a foreign operation (net investment hedge) remain measured at fair value through other
comprehensive income. All other derivative financial instruments the Group uses to manage its foreign exchange
and interest rate risk will continue to be measured at fair value through profit or loss. The Group's other financial
instruments (including cash and cash equivalents, trade and other receivables, trade payables, related party loans,
bank borrowings and the NZX bond) are measured at amortised cost.
Impairment
Under NZIFRS 9, on initial recognition of a financial asset, the Group assesses on a forward looking basis, the
expected credit loss associated with its financial assets and related party loans carried at amortised cost. At each
reporting date, the credit risk on a financial asset, apart from trade receivables, is assessed to determine whether
there has been a significant increase in the credit risk. In assessing whether there has been a significant increase in
credit risk, the Group considers both forward looking information and the financial history of counterparties to
assess the probability of default or the likelihood that full settlement is not received. For trade receivables, the
simplified approach to measuring expected credit loss is adopted, which uses a lifetime expected loss allowance.
Consistent with the assessment disclosed in the annual report for the financial year ended 30 June 2018, the
Group has concluded that the impact of the expected credit loss model is not material for the interim financial
statements.
Hedge Accounting
Derivative financial instruments designated as hedges of a net investment in a foreign operation (net investment
hedge) continue to meet the requirements under NZ IFRS 9. The Group's risk management strategies and hedge
documentation are aligned with the requirements of NZ IFRS 9 and are therefore treated as continuing hedges.
NZ IFRS 15 Revenue from contracts with customers
The majority of the revenues of the Group are derived from rental income from lease agreements with tenants of
the investment properties. Accounting for lease income is out of the scope of NZ IFRS 15 Revenue from contracts
with customers. However, certain non-rental income streams such as recovery of property operating expenses, are
within the scope of NZ IFRS 15. The Group has separately identified the significant performance obligations and
revenue streams within gross property income from expense recoveries and determined that there is no change to
the timing and measurement of these revenue streams. Hence, no cumulative opening balance adjustment is
required for the interim financial statements.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-7FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
2 BASIS OF PREPARATION (continued)
Standards and interpretations in issue not yet effective
At the date of authorisation of these interim financial statements the following relevant Standards and
Interpretations were in issue but not yet effective and have not been applied in preparing these interim financial
statements:
NZ IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) eliminates the
distinction between operating and finance leases for lessees and will result in lessees bringing most leases onto
their balance sheet, with the exception of certain short-term leases and leases of low value assets. There are
minimal changes from the current NZ IAS 17 requirements for lessors.
Given the Group is primarily a lessor, this standard is not expected to significantly impact on the financial
statements. However, a ground lease exists over the Ascot carparks at Ascot Avenue, Auckland and as the lessee,
the Group will recognise a "right-of-use" asset and corresponding lease liability (representing the obligation to
make lease payments) in the Statement of Financial Position.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-8FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
3 SEGMENT INFORMATION
The principal business activity of the Group is to invest in Health Sector related properties. NZ IFRS 8 requires
operating segments to be identified on the basis of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker, which is the Board of Directors of the Manager in order to
allocate resources to the segments and to assess their performance.
The information reported to the Group's chief operating decision maker is based on primarily one industry sector,
investing in Health Sector related properties. The Group operates in both Australia and New Zealand.
The following is an analysis of the Group's revenue and results from continuing operations by reportable segment.
Australia
$000s
New Zealand
$000s
Total
$000s
Segment profit for the period ended
31 December 2018 (Unaudited):
Net property income36,56912,26648,835
Other expense(6,111)(7,413)(13,524)
Net strategic transaction costs(1,872)-(1,872)
Net finance expense(9,212)(5,782)(14,994)
19,374(929)18,445
Fair value gain/(loss) on interest rate derivatives-(8,262)(8,262)
Fair value gain/(loss) on strategic transaction derivatives(2,717)-(2,717)
Revaluation gains on investment properties37,5775,90543,482
Other foreign exchange gains/(losses)-5,4805,480
Total segment profit before income tax54,2342,19456,428
Taxation (expense)--(9,630)
Profit for the period--46,798
Segment profit for the period ended
31 December 2017 (Unaudited):
Net property income34,4378,71643,153
Other expense(5,004)(7,790)(12,794)
Net finance expense(5,548)(4,935)(10,483)
23,885(4,009)19,876
Fair value gain/(loss) on interest rate derivatives-116116
Revaluation gains on investment properties37,8074,96742,774
Other foreign exchange gains/(losses)-(1,650)(1,650)
Total segment profit before income tax61,692(576)61,116
Taxation (expense)--(8,236)
Profit for the period--52,880
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-9FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
3 SEGMENT INFORMATION (continued)
Net property income consists of revenue generated from external tenants less property operating expenditure.
The Group has two tenants with over 10% of gross property income from rentals totalling $28m, all in Australia
(31 December 2017: two tenants totalling $25.4m).
Segment profit represents the profit earned by each segment including allocation of identifiable administration
costs, finance costs, revaluation gains/(losses) on investment properties, and gains/(losses) on disposal of
investment properties. This is the measure reported to the chief operating decision maker for the purposes of
resource allocation and assessment of segment performance.
Australia
$000s
New Zealand
$000s
Total
$000s
Segment assets at 31 December 2018 (Unaudited):
Investment properties1,341,510424,4651,765,975
Other non-current assets84,6874184,728
Current assets19,87611,27831,154
Consolidated assets1,446,073435,7841,881,857
Segment assets at 30 June 2018 (Audited):
Investment properties1,327,104404,1431,731,247
Other non-current assets43,95788344,840
Current assets4,9685,77310,741
Consolidated assets1,376,029410,7991,786,828
Segment liabilities at 31 December 2018 (Unaudited):
Borrowings594,158147,942742,100
Other liabilities98,27343,032141,305
Consolidated liabilities692,431190,974883,405
Segment liabilities at 30 June 2018 (Audited):
Borrowings526,811141,901668,712
Other liabilities98,07532,065130,140
Consolidated liabilities624,886173,966798,852
For the purposes of monitoring segment performance and allocating resources between segments:
•
All assets are allocated to reportable segments
•
All liabilities are allocated to reportable segments
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-10FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
4 TAXATION
Unaudited
6 months
Dec-18
$000s
Unaudited
6 months
Dec-17
$000s
Profit before tax for the period56,42861,116
Taxation expense - 28% on profit before income tax(15,800)(17,113)
Effect of different tax rates in foreign jurisdictions7,3608,020
Tax exempt income2,3401,796
Foreign tax credits1,0891,763
Tax charges on overseas investments(4,811)(4,279)
Over/(under) provided in prior periods-1,263
Other adjustments192314
Taxation (expense)(9,630)(8,236)
The taxation (expense) is made up as follows:
Current taxation(5,034)(2,890)
Deferred taxation(4,596)(5,346)
Total taxation (expense)(9,630)(8,236)
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-11FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
5 EARNINGS PER UNIT
Basic and diluted earnings per unit is calculated by dividing the profit attributable to unitholders of the Trust by the
weighted average number of ordinary units on issue during the period.
Unaudited
Dec-18
Unaudited
Dec-17
Profit attributable to unitholders of the Trust ($000s)46,79852,880
Weighted average number of units on issue (000's of units)441,711432,849
Basic and diluted earnings per unit (cents)10.5912.22
Unaudited
Dec-18
$000's
Unaudited
Dec-17
$000's
Distributable income
Profit before income tax56,42861,116
Revaluation (gains)(43,482)(42,774)
Unrealised foreign exchange (gain)/loss(5,162)1,366
Unrealised foreign exchange (gain)/loss derivatives(318)284
Unrealised interest rate (gain)/loss derivatives8,262(116)
Unrealised (gain)/loss on strategic transaction derivatives2,717-
Manager's incentive fee5,1125,803
Profit used in calculating gross distributable income23,55725,679
Current tax charge5,0342,890
Profit used in calculating net distributable income18,52322,789
Gross distributable income (cpu) *5.335.93
Net distributable income (cpu) *4.195.26
* Based on weighted average number of units on issue.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-12FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
6 INVESTMENT PROPERTIES
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
Carrying value of investment property at the beginning of the period1,731,2471,376,243
Acquisition of properties23,575194,696
Capitalised costs17,70826,134
Capitalised interest costs376952
Net capitalised incentives(328)2,249
Foreign exchange translation difference(50,085)45,512
Change in fair value43,48285,461
Carrying value of investment property at the end of the period1,765,9751,731,247
Carrying value of investment property includes:
Fair value of investment properties1,765,4991,729,705
Income in advance4761,542
Carrying value of investment property at the end of the period1,765,9751,731,247
Investment Properties Valuation
The Group's policy is for investment property to be measured at fair value for which the Group completes property
valuations at least annually by independent registered valuers. All investment property was valued by independent
registered valuers as at 30 June 2018. The fair value of investment property as at 31 December 2018 was
determined by the Manager, using market data provided by independent valuers and based on independent
valuation advice. This follows recent comparable transactional evidence of market property sale transactions and
a review of leasing activity undertaken in the period.
The Group holds the freehold to all properties except the car parks at the rear of Ascot Hospital and Ascot
Central. The total value of leasehold property at 31 December 2018 was $3.2m (30 June 2018: $3.2m)
representing 0.2% of the total investment property portfolio (30 June 2018: 0.2%). The weighted average lease
length of leasehold property at 31 December 2018 was 20.1 years (30 June 2018: 0.8 years).
Acquisition of properties
In New Zealand, strategic development land was purchased adjacent to Ormiston Hospital in Auckland and
Royston Hospital in Hastings . In Australia, the Group purchased strategic development properties at 9 Abbotsford
Street WA, adjacent to Abbotsford Private Hospital and six properties in Molucca Close, Maitland NSW, adjacent to
Maitland private hospital.
The Group also purchased a 50% share of an investment property for future development in Elizabeth Vale, SA.
The property has been purchased as Tenants in Common with NorthWest Healthcare Properties Australia Real
Estate Investment Trust and is subject to a Co-ownership Deed. The arrangement constitutes a joint operation
whereby the Group recognises in relation to its interest in the joint operation its share of assets and liabilities in the
consolidated statement of financial position and share of revenue earned and expenses incurred in the
consolidated statement of comprehensive income. The Group accounts for the assets, liabilities, revenues and
expenses relating to its interest in the joint operation in accordance with the NZ IFRSs applicable to the particular
assets, liabilities, revenues and expenses.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-13FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
7 DERIVATIVE FINANCIAL INSTRUMENTS
Hedge Accounting
The Group is exposed to foreign exchange risk on its net investment in its Australian functional currency
subsidiaries and hedges this risk using Australian denominated borrowings and foreign exchange derivatives in
accordance with formal policy documents approved by the Board.
The Group has designated Australian denominated borrowings and foreign exchange derivatives as hedges of a net
investment in a foreign operation (net investment hedge). The Group prospectively performs an effectiveness
assessment of the hedges on a semi-annual basis. The portion of the foreign exchange differences arising on the
hedging instruments determined to be an effective hedge is recognised in other comprehensive income. Any
ineffective portion is recognised in profit or loss. For a derivative instrument to be classified and accounted for as a
hedge, it must be highly correlated with, and effective as a hedge of the underlying risk being managed. This
relationship is documented from inception of the hedge.
The face value of hedging instruments designated in net investment hedges is:
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
Borrowings126,143131,019
Forward exchange contracts (nominal amount)210,239163,773
Interest rate swaps
Interest rate swaps are measured using a valuation model based on the present value of estimated future cash
flows and discounted based on the applicable yield curves derived from observable market interest rates. The
Group has determined the interest rate swaps are Level 2 fair value measurements. The fair value of interest rate
swaps is a liability of $21,885,291.
Foreign exchange derivatives
Foreign exchange derivatives are measured using a valuation model based on the applicable forward price curves
derived from observable forward prices. The Group has determined the foreign exchange derivatives are Level 2
fair value measurements. The fair value of foreign exchange derivatives is an asset of $7,297,780.
There have been no reclassifications of fair value instruments between levels in the period ended 31 December
2018 and 30 June 2018.
Derivatives are all carried at fair value on the Statement of Financial Position. The carrying amounts of all other
financial instruments approximate their fair value.
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
Nominal value of foreign exchange contracts - AUD50,000-
Nominal value of foreign exchange options - AUD150,000150,000
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-14FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
8 UNITS ON ISSUE
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
Balance at the beginning of the period556,878538,469
Issue of units under Distribution Reinvestment Plan2,9596,140
Issue of units to satisfy Manager's incentive fee13,09512,314
Issue costs of units(14)(45)
16,04018,409
Balance at the end of the period572,918556,878
Unaudited
Dec-18
000s
Audited
Jun-18
000s
Reconciliation of number of units
Balance at the beginning of the period436,893428,562
Issue of units under the Distribution Reinvestment Plan1,4252,891
Units issued to satisfy Manager's incentive fee6,5065,440
Balance at the end of the period444,824436,893
The number of units on issue at 31 December 2018 was 444,823,859 (30 June 2018: 436,893,108). The units have
no par value and are fully paid. Fully paid ordinary units carry one vote per unit and carry the right to distributions.
On 30 August 2018, 6,505,957 units were issued against the 2018 Manager's incentive fee of $13,095,308
(30 June 2018: $12,314,339).
Capital risk management
The Group is subject to imposed capital requirements arising from the Trust Deed, which requires the total
borrowings do not exceed 50% of the gross value of the Trust Fund.
The Group's banking covenants require that the aggregate principal amount of the loan outstanding does not
exceed 50%, (30 June 2018: 50%) of the fair market value of property at all times calculated to the Australian
dollar equivalent. All banking covenants have been met during the period.
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's
policies in respect of capital management and allocation are reviewed regularly by the Board of Directors of the
Manager. There have been no material changes in the Group's overall capital risk management strategy during the
period.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-15FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
9 BORROWINGS
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
AUD denominated loans726,438664,374
NZD denominated loans16,7505,750
Borrowing costs(1,088)(1,412)
Total borrowings742,100668,712
The Group has a syndicated revolving multi-currency facility with ANZ Bank New Zealand Limited, Australia and
New Zealand Banking Group Limited and Bank of New Zealand. The multi-currency facilities of A$700.0m and NZ
$20.0m are split between: Tranche A: A$125.0m due to expire on 31 March 2021; Tranche B: A$200.0m due to
expire on 31 July 2022; Tranche C: A$100.0m, Tranche D: A$100.0m and NZ Dollar Facility: NZ$20.0m which are
due to expire on 30 October 2020; and Tranche E: A$175m which is due to expire on 20 November 2021.
The effective interest rate on the borrowings as at 31 December 2018 was 4.50% per annum (30 June 2018:
4.60%).
Borrowings are secured by a Security Trust Deed dated 1 April 2003 and as amended and restated on 30 May
2018. The Security Provider comprises T.E.A. Custodians Limited in its capacity as nominee of the VHP Trustee as
supervisor of the Trust and the Trust's subsidiaries. Pursuant to the Deed, a security interest has been granted of
first ranking mortgages over the respective investment properties by a General Security Deed over the assets and
undertakings of Vital Healthcare Property Limited and fixed and floating charges over the assets and undertakings
of NorthWest Healthcare Australian Property Pty Limited in its capacity as trustee for Vital Healthcare Australian
Property Trust and Vital Healthcare Investment Trust.
10 COMMITMENTS
Unaudited
Dec-18
$000s
Audited
Jun-18
$000s
Capital Commitments
The Group was party to contracts to purchase or construct property for the
following amounts:223,4029,183
Lease Commitments
The property rental income expected to be earned by the Group from its investment property, all of which is
leased out under operating leases, is set out in the table below:
Not later than one year97,47198,157
Later than one year and not later than five years433,132433,381
Later than five years850,874899,911
1,381,4781,431,449
As a condition of listing on the New Zealand Stock Exchange (NZSX), NZSX requires all issuers to provide a bank
bond to NZSX under NZSX/DX Listing Rule 2.6.2. The bank bond required by the Trust for listing on the NZSX is
$50,000.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-16FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
11 CONTINGENCIES
There were no contingencies as at 31 December 2018 (30 June 2018: nil).
12 SUBSEQUENT EVENTS
On 1 March 2019 a gross distribution of 2.1875 cents per unit was announced by the Trust. The record date for the
distribution is 15 March 2019 and a payment is scheduled to unitholders on 29 March 2019. There will be 0.3477
cents per unit of imputation credits attached to the distribution.
On 15 February 2019 the Group entered into an amended syndicated revolving multi-currency facility with ANZ
Bank New Zealand Limited, Australia and New Zealand Banking Group Limited, Bank of New Zealand and National
Australia Bank Limited. An additional facility of A$150 million has been provided bringing the total facility to A
$850 million and NZ$20 million.
13 RELATED PARTY TRANSACTIONS
The Manager
The Trust is managed by NorthWest Healthcare Properties Management Limited (the "Manager"). The Manager is
a wholly owned subsidiary of NWI Healthcare Properties LP. The Manager is related to the Trust and its
subsidiaries as the Manager of the Trust.
Remuneration of the Manager
The Trust paid management fees to the Manager. The calculation of management fees and incentive fees is
stipulated in the Trust Deed. Management fees have been charged at 0.75% per annum of the monthly average of
the gross value of the assets of the Trust for the quarter ended on the last day of that month. Incentive fees are
payable when there is an average annual increase in the gross value of the assets of the Trust Fund over the
relevant financial year and the two preceding financial years. The incentive fee calculation may give rise to an
excess or deficit to be applied in the calculation of future incentive fees. The incentive fee is 10% of the amount of
the increase with payment being made by way of subscribing for new units. The management and incentive fees
shall not exceed an amount equal to 1.75% per annum of the gross value of the Trust as at the Trusts financial
year end.
Transactions with related parties include:
Unaudited
Dec-18
$000s
Unaudited
Dec-17
$000s
Total fees incurred
Management fees6,8845,589
Manager's incentive fees5,1125,803
Expenses charged by NorthWest Healthcare Properties Management Limited47392
Expenses charged by NorthWest Healthcare Australian Property Proprietary
Limited9,6331,179
22,10212,663
Expenses charged by related parties include property related costs, acquisition and development fees and other
operating expenses.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-17FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
13 RELATED PARTY TRANSACTIONS (continued)
Unaudited
Dec-18
$000s
Audited
June-18
$000s
Expenses capitalised to projects
Expenses charged by NorthWest Healthcare Properties Management Limited3731,302
Expenses charged by NorthWest Healthcare Australian Property Proprietary
Limited9,163847
9,5362,149
Properties owned by the Trust have been managed by NorthWest Healthcare Properties Management Limited, a
subsidiary of NWI Healthcare Properties LP. Property management fees charged are either included in property
expenses or capitalised. The amount paid to NorthWest Healthcare Properties Management Limited for
reimbursement of expenses was $45,075 (31 December 2017: $92,430).
Other Related Parties
NWH Australia AssetCo Pty Limited as trustee of NWH Australia Asset Trust (NWHAAT) is a wholly owned
subsidiary of NWI Healthcare Properties LP.
Acquisition of an interest in Healthscope Ltd ("HSO") by NWHAAT.
During the 2018 financial year NWHAAT entered into derivative contracts with Deutsche Bank AG ("DB") giving
NWHAAT an economic interest equivalent to 10% of the outstanding shares of HSO. The derivative contracts
include a forward contract to acquire HSO shares and an option contract that limits downside risk and upside
potential and reduces the initial margin requirements of the transaction. The forward contract gives NWHAAT the
ability to acquire, and DB the obligation to deliver, 173,970,330 to 176,111,600 shares at a price of A$2.3863 per
share on May 8 2020, or earlier, at the NWHAAT's option, if a voting meeting is scheduled for HSO or HSO receives
a formal takeover bid.
NWHAAT prepaid A$85.3m of the A$415.1m notional amount of the forward contract. The forward contract
contemplates physical settlement, but may be net settled in certain circumstances. Under the forward contract
NWHAAT is entitled to receive payments from DB equivalent to dividends declared by HSO and NWHAAT pays
variable interest to DB on the underlying embedded funding contained in the forward contract at the Bank Bill
Swap Rate plus 3%. The option contract is a zero cost collar for 173,970,330 options that limits the benefits to the
NWHAAT of HSO share price appreciation above $2.60 and limits NWHAAT's exposure to HSO share price
depreciation below A$2.00 down to A$1.25 per share.
During the period NWHAAT amended the forward derivative contracts with DB to acquire an additional 57,417,000
HSO shares. The total funding for the amended forward contract was approximately A$71.3 million. The amended
forward contract gives NWHAAT the ability to acquire, and DB the obligation to deliver, a minimum of 231,387,330
HSO shares at a price of A$2.36 per share.
The derivative instruments have been valued based on market accepted valuation methodologies with market-
observable inputs, therefore are level 2 on the fair value hierarchy. The option contract is valued using the Black
Scholes model which uses market based observable inputs, including historic share price information and the risk
free rate. The forward is measured using a valuation model based on the applicable forward share prices.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-18FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
13 RELATED PARTY TRANSACTIONS (continued)
In accordance with the intention of the Joint Investment Policy, the Group has the benefit of participating in up to
fifty percent of the opportunity and have agreed to jointly pay the costs and jointly share the benefits and risks of
the mark to market risk of the arrangement with DB. During the period ended 31 December 2018 the Group has
recorded a loss of $2.7m (30 June 2018: $0.1m) in respect of the mark to market value of the derivative. Vital's
participation in the opportunity in the derivative remains proportional to its participation in the opportunity.
On 6th of May 2018, the Group entered into an agreement with NWHAAT to advance up to A$41m to NWHAAT, of
which A$40m had been advanced as at 30 June 2018. On 5th of December 2018, the Group entered into an
amended loan agreement with NWHAAT to advance up to A$81m, to NWHAAT. As at 31 December 2018 a total of
A$80.3m has been advanced under the loan agreement which is unsecured, repayable within 12 months from the
date of the amended agreement, and the Group is charging interest to NWHAAT at circa 4% p.a. on a monthly
basis.
Net strategic transaction costs incurred during the period totalled $1.9m (2017: nil). These costs comprise a
notional dividend received and commission, legal and interest expenses representing the Group's share of the cost
of the HSO derivative. These are settled on a net basis with NWHAAT.
Due to the significant nature of the proposed HSO real estate transaction an acquisition fee of A$8.2m has been
charged based on the work undertaken by the Manager. The fee recognises the significant time, complexity of
transaction and resources the Manager has appointed to pursuing this acquisition. The acquisition fee has been
capitalised as a prepayment of acquisition fees in advance for pursuing the acquisition of the HSO real estate and
is creditable against any subsequent portfolio acquisition fee to be charged on a successful acquisition. A$5.2m of
the fee is refundable if the transaction does not proceed.
The Directors have exercised judgement in determining that the amounts are capitalised as the Group continues to
make further progress on the HSO transaction, and is therefore considered appropriate. If the transaction is not
successful, the non-refundable portion will be expensed. The amount is recorded in other current assets in the
consolidated statement of financial position.
Brookfield takeover and agreement for sale and leaseback of HSO properties.
On 1st February 2019 HSO announced that it has entered into an implementation deed with Brookfield Business
Partners and its institutional partners (together "Brookfield") under which Brookfield undertakes to acquire 100%
of HSO by way of scheme arrangement and a simultaneous off-market takeover offer. The HSO Board have
unanimously recommended this transaction in the absence of a superior proposal. HSO also announced that it has
entered into agreements to sell 22 properties to NorthWest and another property investor for A$2.5 billion and
lease them back, conditional on the scheme arrangement becoming effective, or control passing to Brookfield
under the takeover offer. 11 of the properties will be acquired by NorthWest and 11 by the other property investor.
NorthWest has also agreed that it will vote its voting rights in HSO in favour of the Brookfield transaction, and to
accept the takeover offer for those shares.
NWHAAT and the Group continue to progress the HSO real estate acquisition jointly, in accordance with the Joint
Investment Policy, with scope to introduce other capital partners as appropriate.
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
FIN-19FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT.)
13 RELATED PARTY TRANSACTIONS (continued)
Unaudited
Dec-18
$000s
Unaudited
Dec-17
$000s
During the period there have been transactions between the Trust and
NWHAAT
Related party advance40,743-
Interest income1,003
Net strategic transaction costs(1,872)-
Fair value gain/(loss) on strategic transaction derivatives(2,717)
Unaudited
Dec-18
$000s
Audited
June-18
$000s
Balances outstanding at the end of the year are unsecured and on normal
trading terms
Amounts owing from related party84,41643,956
Amounts owing to related party(2,002)(3,517)
Unaudited
Dec-18
$000s
Unaudited
Dec-17
$000s
During the year there have been transactions between the Trust and
NorthWest Healthcare Properties Australia Real Estate Investment Trust
Acquisition costs recharged446-
Unaudited
Dec-18
$000s
Audited
June-18
$000s
Balances outstanding at the end of the year are unsecured and on normal
trading terms
Amounts owing from related party434-
As disclosed in note 6 Investment Properties, the Group acquired a 50% interest in an investment property as
Tenants in Common with NorthWest Healthcare Properties Australia Real Estate Investment Trust.
29
INDEPENDENT REVIEW REPORT
TO THE UNITHOLDERS OF VITAL HEALTHCARE PROPERTY TRUST
We have reviewed the condensed consolidated interim financial statements of Vital Healthcare Property Trust and its
subsidiaries (‘the Trust’) which comprise the consolidated statement of financial position as at 31 December 2018, and
the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the six month period ended on that date, and a summary of significant accounting policies
and other explanatory information on pages FIN 1 to FIN 19.
This report is made solely to the Trust’s unitholders, as a body. Our review has been undertaken so that we might state to
the Trust’s unitholders those matters we are required to state to them in a review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust’s unitholders as
a body, for our engagement, for this report, or for the opinions we have formed.
Board of Directors’ Responsibilities
The Board of Directors of the Manager are responsible for the preparation and fair presentation of the condensed
consolidated interim financial statements, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting and for such internal control as the Board of Directors of the Manager determine is necessary to
enable the preparation and fair presentation of the condensed consolidated interim financial statements that are free
from material misstatement, whether due to fraud or error.
Our Responsibilities
Our responsibility is to express a conclusion on the condensed consolidated interim financial statements based on our
review. We conducted our review in accordance with NZ SRE 2410 Review of Financial Statements Performed by the
Independent Auditor of the Entity (‘NZ SRE 2410’). NZ SRE 2410 requires us to conclude whether anything has come to
our attention that causes us to believe that the condensed consolidated interim financial statements, taken as a whole,
are not prepared, in all material respects, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting. As the auditor of Vital Healthcare Property Trust, NZ SRE 2410 requires that we comply with the
ethical requirements relevant to the audit of the annual financial statements.
A review of the condensed consolidated interim financial statements in accordance with NZ SRE 2410 is a limited
assurance engagement. The auditor performs procedures, primarily consisting of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance
with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on those
financial statements.
Other than in our capacity as auditor, we have no relationship with or interests in Vital Healthcare Property Trust or its
subsidiaries.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim
financial statements of the Trust do not present fairly, in all material respects, the financial position of the Group as at 31
December 2018 and its financial performance and cash flows for the six month period ended on that date in accordance
with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting.
01 March 2019
Chartered Accountants
AUCKLAND, NEW ZEALAND
VITAL HEALTHCARE PROPERTY TRUST INTERIM REPORT AS AT 31 DECEMBER 2018
30
DIRECTORY
MANAGER
NorthWest Healthcare Properties Managment Limited
Level 16, AIG Building
41 Shortland Street
PO Box 6945, Wellesley Street
Auckland 1141
Telephone: 0800 225 264
Facsimilie: +64 9 377 2776
Directors of the Manager
Claire Higgins - Indpendent Chair
Andrew Evans - Independent Director
Graham Stuart - Independent Director
Paul Dalla Lana - Director
Bernard Crotty - Director
AUDITOR
Deloitte
Deloitte Centre
80 Queen Street
Private Bag 115-003
Auckland 1140
Telephone: +64 9 303 0700
Facsimilie: +64 9 303 0701
LEGAL ADVISERS TO THE TRUST
Bell Gully
Vero Centre
48 Shortland Street
PO Box 4199
Auckland 1140
Telephone: +64 9 916 8800
Facsimilie: +64 9 916 8801
Ashurst Australia
Level 26
181 William Street
GPO Box 4958
Melbourne, Victoria 3001
Australia
Telephone: +61 3 9679 3000
Facsimilie: +61 3 9679 3111
SUPERVISOR (PREVIOUSLY TRUSTEE)
Trustees Executors Limited
Level 7, 51 Shortland Street
PO Box 4197
Auckland 1140
Telephone: +64 9 308 7100
Facsimilie: +64 9 308 7101
BANKERS TO THE TRUST
ANZ Bank New Zealand Limited
ANZ Centre
23-29 Albert Street
Auckland 1010
Australia and New Zealand Banking Group Limited
27/100 Queen Street
Melbourne, Victoria 3000
Australia
Bank of New Zealand
Deloitte Centre
80 Queen Street
Auckland 1010
National Australia Bank Limited
Level 22, 255 George Street
Sydney, NSW 2000
Australia
UNIT REGISTRAR
Computershare Investor Services Limited
159 Hurstmere Road
Takapuna, Auckland 0622
Private Bag 92119
Auckland 1142
New Zealand
vital@computershare.co.nz
Telephone: +64 9 488 8777
Facsimilie: +64 9 488 8787
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.