Full year results release
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management Limited
vhpt.co.nz
MARKET RELEASE
Managed by NorthWest Healthcare
Pr operties Management Ltd
12 August 2021
FY21 Annual Results Release
NorthWest Healthcare Properties Management Limited (NorthWest), the Manager of Vital
Healthcare Property Trust (Vital), released Vital’s results for the year ended 30 June 2021
(FY21) today.
Vital has continued to deliver on its strategies to develop and grow its unique healthcare
portfolio in Australia and New Zealand, while providing significant growth in returns for its
unitholders.
FY21 highlights included:
10.4% increase in AFFO per unit from 10.45 cents per unit (cpu) to11.54 cpu.
21.4% increase in net tangible assets (NTA) per unit from $2.38 to $2.89.
Distributions of 8.875 cpu paid or payable; a prudent 76.9% AFFO pay-out ratio.
27.7% total return
1
exceeding the S&P/NZX REIT Index by 7.4%.
Appointment of an Independent Chair to lead a majority independent board and
replacement of long-standing director Bernard Crotty with Craig Mitchell.
Vital's Fund Manager, Aaron Hockly, said:
"FY21 was a year of significant achievements for Vital with growth in both earnings and
distributions.
We undertook $387m of property transactions
2
in line with our previously announced 5-
year portfolio strategy, including securing a number of attractive future development
sites, and delivered over 60,000
3
square metres of leasing improving the portfolio across
a range of metrics including extending Vital’s WALE
4
to 18.7 years.
Developments are a core part of Vital's strategy. They provide both future earnings and
value growth for unitholders and support / complement new and existing tenants to
take advantage of changes in healthcare delivery, including an increased focus on
ambulatory care."
1
Calculated as distributions (reinvested) plus unit price appreciation. Source: Forsyth Barr.
2
Comprising $286m of acquisitions and $101m of divestments
3
Includes new leasing, renewals, extensions and development pre-commitments
4
Weighted average lease expiry term.
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management Limited
vhpt.co.nz
Page 2 of 6
Portfolio Overview
Vital’s portfolio remains high quality, high acuity with a market-leading WALE and limited
upcoming expiries (on average 1.6% of the portfolio's rent expires per annum over the next
10 years).
Vital’s WALE was 18.7 years at 30 June 2021 over 7 months longer than at 30 June 2020
despite 12 months passing reflecting acquisitions, disposals, leasing, development and
other portfolio improvements. Vital's WALE remains the longest of any ASX or NZX-listed
property group.
The average building age has been maintained at a young 11 years consistent with the
Manager's strategy to maintain or lower this key metric as a means of maintaining relatively
low capital expenditure and ensure Vital's assets continue to meet tenant / patient
demand.
Significant work on ESG / sustainability was undertaken by the Manager over FY21. This
included Vital reporting its greenhouse gas emissions to CDP for the first time and
preparation for a second submission which occurred post-balance date in July 2021. Also
post-balance date, Vital and NorthWest group participated in GRESB for the first time with
expectations that there will be on an on-going, annual submission for both entities. Vital's
annual report, released contemporaneously with this release, includes details of
sustainability achievements and future targets.
Net Property Income
Net property income increased by 8.0% from FY20 (excluding foreign exchange impacts),
reflecting contributions from the structured rent reviews within the portfolio, developments
and acquisitions. After adjusting for foreign exchange, net property income increased by
9.4%.
Acquisitions
Vital acquired the following hospitals in FY21:
1. Grace Hospital, a 51-bed, 11-theatre facility purpose-built in 2007 and expanded in
2020 located in Tauranga, New Zealand for $95.0m (plus transaction costs). The
property is fully leased to a joint venture between New Zealand’s largest hospital
operator, Southern Cross Hospitals, and New Zealand’s third largest private hospital
operator, Evolution Healthcare for 30 years.
2. Epworth Camberwell, a 4-level,147-bed private mental health and specialist
rehabilitation facility for A$82.7m (plus transaction costs but inclusive of a tenant
incentive to be paid following the third anniversary of the commencement of the
lease). The property is fully leased to Epworth Foundation, the largest not-for-profit
private hospital operator in Victoria, for 20 years.
In addition, Vital acquired five properties for future development for $68.8m (plus
transaction costs) in Adelaide, Auckland, Brisbane, the Gold Coast and Melbourne. These
properties will enable Vital to deliver on its strategy of having 10-15% of the portfolio under
development. In turn, this will support earnings and valuation growth for unitholders and
ensure Vital can continue to respond to tenant / market demand for healthcare properties.
Post balance date, Vital has unconditionally agreed to acquire the Lower Hutt Health Hub,
a purpose-built seismically resilient medical office building and out-patient facility
for $46.5m (plus transaction costs). The existing building was completed in late 2019
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management Limited
vhpt.co.nz
Page 3 of 6
consistent with the Manager's focus on developing and acquiring new and recently
constructed buildings. The acquisition will increase Vitals' future expansion land holding to
~3,200 square metres to meet both public and private healthcare demand. The property
adjoins Vital's existing asset, Boulcott Hospital, as well as the main public hospital for the
region, Hutt Hospital. Post settlement Vital’s yield for the campus will reflect ~4.5% across
the Lower Hutt Health Hub and Boulcott Hospital. Settlement is expected to occur between
September 2021 and March 2022, subject to finalisation of title amalgamation for the
development land.
Divestments
Three mature regional Australian hospitals were sold for $100.4m during the year, with the
proceeds reinvested to acquire Grace Hospital noted above. The properties sold were:
1. Mayo Private Hospital, Taree, New South Wales;
2. Dubbo Private Hospital, Dubbo, New South Wales; and
3. North West Private Hospital, Burnie, Tasmania.
Developments
In addition to asset enhancing and maintenance capital expenditure, Vital had ~$300m
development projects underway in New Zealand and Australia with ~$130m remaining to
spend.
The following developments completed during FY21:
1. Upgrade and expansion of Royston Hospital in Hastings at a total cost of $9.9m,
progressively contributing additional rental income throughout the project and a
total annual income of ~$590k in year one. The adjoining day surgery unit is
expected to complete in October 2021.
2. A new oncology centre at South Eastern Private Hospital in Melbourne at a total cost
of A$9.2m, contributing ~A$540k of additional rental income in year one.
3. Stage 1 of the ~$130m redevelopment and expansion of the Wakefield Hospital in
Wellington at a total cost of ~$60m, progressively contributing additional rental
income throughout the project and a total annual rental income of ~$3.4m to date.
The balance of this development is expected to commence shortly and is expected
to complete in 2023. Total project costs include ~$20m of operator funded works.
Developments (in progress and completed during FY21) delivered strong incremental
returns for unitholders, with an additional $4.4m in net property income from FY20 as well
as $30.4m of development margins recognised
5
.
Financial Results
Cash from operations available to unitholders, measured by AFFO, increased 21.8% to
$57.5m. AFFO per unit was 11.54 cents; a 10.4% increase from FY20.
Expenses were $58.6m, 13.6% higher than FY20 notwithstanding a 26.3% increase in assets.
5
Includes development margins booked at Epworth Eastern, with additional net property income to be
captured in FY22
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management Limited
vhpt.co.nz
Page 4 of 6
Vital’s NTA per unit increased by 21.4% to $2.89 primarily due to $235m of property
revaluation gains. These revaluation gains included ~$30m in development margins and
~$17m due to rental increases and leasing.
Capital Management
Achievements during FY21 include a rewriting of Vital’s debt facilities to allow future debt
capital markets issuance and an expansion of the financier syndicate.
The debt to total assets ratio was 35.0% at 30 June 2021 (30 June 2020: 38.7%). Given the
defensive nature of Vital’s portfolio, the Board and Management remain comfortable with
both the current and projected levels of debt. Vital currently has approximately A$144m
of headroom under its debt facilities and has asset recycling planned to cover some of its
development expenditure.
Vital’s all-in weighted average cost of debt at 30 June 2021 was 3.32% (30 June 2020:
3.59%). Weighted average debt maturity at 30 June 2021 was 2.46 years. Although this is
an improvement on the 30 June 2020 figure of 1.81 years, it remains below where the Board
and Management would like this to be, particularly in light of Vital’s industry leading WALE.
Measures to extend Vital’s debt tenor are underway.
Board Renewal
Graham Stuart was appointed as Independent Chair to lead a majority independent
board following his re-election at Vital’s general meeting in November 2020.
In June 2021, long-standing director Bernard Crotty retired from the Board and was
replaced by Craig Mitchell who serves as NorthWest’s President as well as CEO for the
Australia and New Zealand region. His previous roles include Executive Director and Chief
Operating Officer of Dexus, an ASX top 50 listed REIT, (with responsibility for finance, funds
management and risk) and senior finance roles for Stockland and Westfield.
FY22 Guidance
The Board and Management are pleased to provide the following FY22 guidance:
At least 11.8 cpu AFFO; at least 2.0% above FY21.
9.5 cpu distributions (payable quarterly); 5.6% above previous annualised
distribution guidance maintaining a prudent ~80% payout ratio.
Outlook
Healthcare property remains a defensive asset class, underpinned by growing demand.
Institutional investor recognition and appetite for this asset class continues to accelerate
and is highlighted by recent and proposed transactions in New Zealand and Australia
(both direct property acquisitions and corporate activity).
As Australasia’s leading listed owner of high quality, high acuity healthcare real estate,
supported by NorthWest’s unmatched development and management expertise, Vital
remains well positioned to take advantage of opportunities in this sector.
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management Limited
vhpt.co.nz
Page 5 of 6
Our plan for the short to medium term is:
Continue to deploy Vital’s 5-year portfolio strategy (announced previously)
including asset recycling to continue to grow earnings and distributions for
unitholders whilst maintaining a prudent pay-out ratio of ~80%.
Focus on the current and potential development pipeline in New Zealand and
Australia to provide new and upgraded health facilities for communities across our
region.
Pursue acquisition opportunities across New Zealand and Australia to grow and
enhance Vital’s existing portfolio and earnings.
Extend Vital’s debt maturity profile and diversify sources of debt to secure returns for
Vital's unitholders.
Consolidate and expand sustainability initiatives as part of NorthWest’s
comprehensive ESG program to play our part in protecting and enhancing the
environment, the communities in which we operate and the stakeholders we serve.
– ENDS –
ENQUIRIES
Aaron Hockly
Fund Manager, Vital Healthcare Property Trust
Tel 09 973 7301, Email aaron.hockly@nwhreit.com
Michael Groth
Chief Financial Officer, NorthWest Healthcare Properties Management Limited
Tel +61 409 936 104, Email michael.groth@nwhreit.com
About Vital (NZX code VHP):
Vital Healthcare Property Trust is an NZX-listed fund that invests in high-quality healthcare
properties in New Zealand and Australia including private hospitals (~85% of portfolio
value), out-patient facilities (~10% of portfolio value) and aged care (~5% of portfolio
value).
Vital is the leading specialist listed landlord of healthcare property in Australasia and
currently has a portfolio valued at over $2.6 billion.
Vital is managed by NorthWest Healthcare Properties Management Limited, a subsidiary
of Toronto Stock Exchange listed NorthWest Healthcare Properties REIT, a global owner and
manager of healthcare property.
For more information, visit our website: www.vhpt.co.nz
Disclaimer:
This announcement 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 announcement provide general information only. It is not intended as
investment, legal, tax or financial advice or recommendation to any person and must not
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management Limited
vhpt.co.nz
Page 6 of 6
be relied on as such. You should obtain independent professional advice prior to making
any decision relating to your investment or financial needs.
All references to $ are to New Zealand dollars unless otherwise indicated.
This announcement may contain forward-looking statements. Forward-looking statements
can include words such as “expect”, “intend”, “plan”, “believe”, “continue” or similar
words in connection with discussions of future operating or financial performance or
conditions. The forward-looking statements are based on management's and directors’
current expectations and assumptions regarding the Trust’s business, assets and
performance and other future conditions, circumstances and results. As with any
projection or forecast, forward-looking statements are inherently susceptible to uncertainty
and to any changes in circumstances. The Trust’s actual results may vary materially from
those expressed or implied in the forward-looking statements. The Manager, the Trust, and
its or their directors, employees and/or shareholders have no liability whatsoever to any
person for any loss arising from this announcement or any information supplied in
connection with it. The Manager and the Trust are under no obligation to update this
announcement or the information contained in it after it has been released. Past
performance is no indication of future performance.
---
DELIVERING
ON STRATEGY
ANNUAL REPORT 2021
*Artist's impression of
Playford Health Hub
(Elizabeth Vale, SA)
3
CONTENTS
5HIGHLIGHTS
6MANAGER'S REPORT
9FINANCIAL SUMMARY AND PORTFOLIO METRICS
10ABOUT VITAL AND NORTHWEST
11SUSTAINABILITY
22ACQUISITIONS
24DEVELOPMENTS
26PORTFOLIO OVERVIEW
28AUSTRALIAN PORTFOLIO
35NEW ZEALAND PORTFOLIO
38ASSET ALLOCATION
40GOVERNANCE AND MANAGEMENT
48FINANCIAL STATEMENTS
83INDEPENDENT AUDITOR'S REPORT
86UNITHOLDER STATISTICS
87DIRECTORY
INVESTING IN
H
E
ALTHCARE
INFRASTRUCTURE IN NEW
ZEALAND AND AUSTRALIA
VALUE OF INVESTMENT PORTFOLIO
$2.
63B
WEIGHTED AVERAGE LEASE EXPIRY (WALE)
18
.7 years
FY21 TOTAL RETURN
27
.7%
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
4
Vital Healthcare Property TrustBrand Identity Guidelines Version 1
Vision
Be the leading global diversified healthcare
real estate company.
Mission
Provide best in-class real estate solutions to
the healthcare industry and deliver
exceptional shareholder value to investors.
Values
Excellence (delivering exceptional outcomes),
integrity (doing what’s right), and partnership
(succeeding together).
Vision
To be Australia and New Zealand’s
leading listed healthcare property fund.
Mission
Deliver stable and growing total unitholder
returns, including an attractive risk-adjusted
income distribution, majority sourced from
healthcare real estate.
TSX listed owner and manager of
$9.5 billion of healthcare
property across four continents.
NZX listed property trust which owns
$2.63 billion of healthcare property
in New Zealand and Australia.
•
Manager of Vital
• Over 45 professionals in the region across 2+
investment platforms
• Offices in Auckland, Melbourne and Sydney
We value
Hard work, integrity, collaboration, drive,
flexibility, team work, fun and results.
NorthWest
(Australia and New Zealand)
NorthWest
REIT
5
Vital Healthcare Property TrustBrand Identity Guidelines Version 1
Vital recorded another successful year of
delivering on strategy, growing earnings and
distributions and improving the property portfolio.
Development acquisitions will help Vital continue
to grow earnings and further improve the portfolio
in future periods.
NPI Growth
8.0%
AFFO Growth
10.4%
Divestments
$101m
NTA Per Unit
$2.89
Up 21.4%(Net Property Income)Per Unit
(committed and potential)(completed and committed)to improve the property portfolio
down from 38.7%
as at 30 June 2020
Development Pipeline
~$1b
Acquisitions
$286m
Balance Sheet
Gearing
35%
1.5% above FY20
FY21
Distributions
8.875cpu
New and
Extended Leasing
60,000sqm
FY21
Hi
ghlights
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
6
MANAGER'S REPORT
Manager’s Report
As Australasia’s leading listed owner of healthcare property, Vital has an unmatched
portfolio of healthcare assets and over 20 years of continued operation in this highly
specialised investment class.
Tēnā koutou
North
West Healthcare P
roperties Management Limited, the Manager of
Vital Healthcare Property Trust (Vital), is pleased to report Vital’s results for
the year ended 30 June 2021 (FY21).
Key achievements include:
•21.8% increase in adjusted funds from operations (AFFO) from
$47.2m to $57.5m;
•10.4% increase in AFFO per unit from 10.45 cents per unit (cpu) to
11.54 cpu;
•27.7% total return
*
exceeding the S&P/NZX REIT Index by 7.4%;
•21.4% increase in net tangible assets (NTA) per unit from $2.38
to $2.89;
•Distributions of 8.875 cpu paid or payable; on a prudent 76.9% AFFO
pay-out ratio;
•Extension of market-leading weighted average lease expiry term
(WALE) from 18.1 to 18.7 years;
•$286m acquisitions ($269m of completed and $17m committed);
•Significant development progress including practical completion of the
expansion and upgrade at Royston Hospital (Hastings), a new
oncology centre at South Eastern Private Hospital (Melbourne), and
Stage 1 of Wakefield Hospital (Wellington);
•$182.4m of new equity raised through a placement, UPP, 4 x DRPs and
issue of incentive units;
•Appointment of an Independent Chair to lead a majority
independent Board; and
•Replacement of long-standing Director Bernard Crotty with
Craig Mitchell.
Movements in Vital’s key metrics over the 12 months ended 30 June
2021:
30-Jun-2130-Jun-20% change
Unit price ($)3.102.5023.8%
NTA per unit ($)2.892.3821.4%
Investment Property Value
($m)
2,6352,08626.3%
Investment Properties (no.)41
1
44-
Avg. Property Value ($m)64.247.435.5%
WALE (yrs)18.718.1-
Occupancy99.2%99.4%-
AFFO ($m)57.547.221.8%
AFFO per unit (cpu)11.5410.4510.4%
1Reflecting two acquisitions (Grace Hospital in Tauranga and Epworth Camberwell Hospital
in Melbourne), three divestments (Dubbo Private Hospital, Mayo P
rivate Hospital and North
West Private Hospital) and two property consolidations (Epworth Medical Centre into
Epworth Eastern Hospital and Sportsmed Office property into Sportsmed Hospital asset).
*
Calculated as distributions (reinvested) plus unit price appreciation. Source: F
orsyth Barr
.
PORTFOLIO OVERVIEW
Vital’
s port
folio remains high quality, high acuity with a market-leading
WALE and limited upcoming expiries (on average 1.6% of the portfolio's
rent expires per annum over the next 10 years).
Vital’s WALE was 18.7 years at 30 June 2021. This is over 7 months longer
than at 30 June 2020 despite 12 months passing reflecting acquisitions,
disposals, 60,000sqm of leasing, development and other portfolio
improvements. Vital's WALE remains the longest of any ASX or NZX-listed
property group.
Vital's average building age has been maintained at a young
11 years consistent with the Manager's strategy to lower this key metric as
a means of maintaining relatively low capital expenditure and ensure
Vital's assets continue to meet tenant / patient demand.
NET PROPERTY INCOME
Net property income increased by 8.0% from FY20 (excluding foreign
exchange impacts), reflecting contributions from the structured rent reviews
within the portfolio, developments and acquisitions. After adjusting for
foreign exchange, net property income increased by 9.5%.
ACQUISITIONS
Vital acquired the following hospitals in FY21:
1.Grace Hospital, a 51-bed, 11-theatre facility purpose-built in 2007
and expanded in 2020 located in Tauranga, New Zealand for
$95.0m (plus transaction costs). Grace is Tauranga's only private
inpatient hospital and is located on a ~4-hectare site providing
significant future expansion opportunities. The property is fully leased to
a joint venture between New Zealand’s largest hospital operator,
Southern Cross Hospitals, and New Zealand’s third largest private
hospital operator, Evolution Healthcare (formerly Acurity Health Group)
for 30 years providing a stabilised rental yield of 5.25% (from year 2).
Subject to suitable business case support, Vital will look to support
Grace Hospital's $50m Master Plan over the next 5 years.
2.Epworth Camberwell, a 4 level, 147 bed private mental health and
specialist rehabilitation facility for A$82.7m (plus transaction costs but
including provision for a tenant incentive payable following the third
anniversary of the commencement of the lease). The hospital is situated
on a 7,453 square metre site located 9km east of Melbourne’s CBD.
The property is fully leased to Epworth Foundation, the largest not-for-
profit private hospital operator in Victoria, for 20 years. The lease
includes a deferred tenant incentive payable following the third
anniversary of the lease at which time the lease term resets to 20 years
(a three-year lease extension). The lease provides a 4.78% initial
passing yield reducing to 4.28% after adjusting for the tenant incentive.
DIVESTMENTS
To fund the acquisition of Grace Hospital noted above, Vital sold three
regional Australian hospitals for $100.4m being:
1.Mayo Private Hospital, Taree, New South Wales.
2.Dubbo Private Hospital, Dubbo, New South Wales.
3.North West Private Hospital, Burnie, Tasmania.
7
These sales and recycling the sale proceeds into the hospital acqusitions
above, helped achie
ve the following targets under Vital’
s 5-year portfolio
strategy:
1.Reduction of single-tenant exposure.
2.Increase in metropolitan assets.
3.Increase in average property value.
4.Reduction of average building age.
5.Increase in WALE.
The existing high quality portfolio is
e
xpected to be enhanced by
de
velopments (committed and
potential), drawing on NorthWest’s
unmatched experience in healthcare
developments in New Zealand and
Australia.
DEVELOPMENT ACQUISITIONS
In addition to the two hospital acquisitions referred to above, Vital
acquired five properties for future development, being:
1
.50% of Elizabeth Vale Shopping Centre in Adelaide, South Australia
for A$7.6m (plus transaction costs). Vital already owned the other 50%
and is developing this site into a staged, purpose-built health centre to
be known as “Playford Health Hub”.
2.A 5,330 square metre strategic development site at 17-23 Nelson Rd,
Box Hill, Melbourne, Victoria, approximately 14kms east of
Melbourne's CBD for A$29m (plus transaction costs). The property
adjoins Vital's existing Epworth Eastern Hospital and Medical Centre
assets and is leased to Epworth providing an income yield of 2.9%.
The property is expected to be developed on a staged basis over the
medium term, with a potential gross floor area in excess of 42,000
square metres.
3.3,036 square metres of developable land at 7-17 Wolseley Street,
Woolloongabba, Brisbane for A$11.4m (plus transaction costs). This
property is located in the Princess Alexandra Hospital precinct, one of
Queensland’s largest health precincts that includes a 1,050-bed public
hospital as well as teaching and research facilities. The property is not
currently income producing but provides significant scope via existing
development authorisations which permit up to 15 levels for healthcare
purposes.
4.20,131 square metres of developable land at 195 Foxwell Road,
Coomera, Gold Coast for A$9.4m (plus transaction costs). This site
forms part of the proposed “Coomera Health Precinct” a key health
precinct identified by Queensland Health as the location of a new
public hospital to meet the needs of one of South-East Queensland’s
fastest growing areas. The property is not currently income producing
but the Manager will undertake a master planning process which is
expected to be activated via a medical office building of
approximately 6,000 square metres as Stage 1.
5.A 749 square metre property at 61-71 Park Road, Grafton for NZ
$7.25m (plus transaction costs). This property is opposite Auckland City
Hospital (New Zealand’s largest hospital) and is surrounded by
buildings occupied by the University of Auckland’s Medical and Health
Sciences Faculty. The site forms part of New Zealand’s premium
healthcare precinct. The property is currently leased to a variety of
tenants providing holding income neutral to Vital’s AFFO.
The acquisition is e
xpected to complete in September 20
21.
Refer to page 23 for more details on these acquisitions.
DEVELOPMENTS
In addition to asset enhancing and maintenance capital expenditure, Vital
had significant development projects underway in New Zealand and
Australia as shown on page 25.
The following developments completed during FY21:
1.Upgrade and expansion of Royston Hospital in Hastings at a total cost
of $9.9m. The adjoining day surgery unit is expected to complete in
October 2021.
2.A new oncology centre at South Eastern Private Hospital in Melbourne
at a total cost of A$9.2m.
3.Stage 1 of the ~$113m redevelopment and expansion of the Wakefield
Hospital in Wellington at a total cost of ~$60m. The balance of this
development is expected to commence shortly and is expected to
complete in 2023. Project costs include ~$20m of operator funded
works.
Developments are an important driver of Vital’s assets, earnings and
portfolio construction as they typically:
•Provide an accretive return on cost for Vital;
•Enhance Vital's NTA and WALE;
•Respond to our tenants’ business and operating requirements (reducing
their costs and / or increasing their revenues);
•Ensure Vital’s assets are modern, fit-for-purpose and accord with
community / patient expectations; and
•Strengthen our relationships with key operators.
To highlight this contribution, during FY21 Vital's developments provided
an additional $4.4m in net property income from FY20 and provided
development margins for Vital of $30.4m.
**
PROPERTY VALUES
The portfolio value increased by $548m over FY21 as follows:
All values reflected in $m
Opening Valuation (30/06/20)2,086
Acquisitions269
Capital Expenditure127
1
Property Revaluations235
Disposals-88
Foreign Exchange5
Closing Balance (30/06/21)2,635
2
1 Includes development expenditure, capitalised interest and capitalised incentives
2F
igures may not sum due to rounding.
Property revaluations include ~$30m
due to development margins and
~$1
7m due to rental growth and
leasing.
**
Includes development margins booked at Epworth Eastern, with additional net property income to be
captured in FY2
2.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
8
MANAGER'S REPORT
The weighted average capitalisation rate (WACR) across Vital’s port
folio
firmed by 66 basis points over FY21 as shown in the table below:
Location
WACR –
30 June 2020
WACR –
30 June 2021
Change
Australia5.50%4.84%-66bps
New Zealand5.66%4.99%-67bps
Total5.54%4.88%-66bps
FINANCIAL RESULTS
Cash from operations available to unitholders, measured by AFFO,
increased 2
1.8% to $57.5m. AFFO per unit was 11.54 cents; a 10.4%
increase from FY20.
Expenses were $58.6m, 13.6% higher than FY20 notwithstanding a
26.3% increase in assets. Expenses comprised:
•$27.7m net finance expenses, -2.1% down on FY20 primarily due to
lower base rates and increased development activity partly offset by
higher total borrowings;
•$25.4m management expenses (including incentive fees distributed in
units and therefore not part of AFFO), 35.8% above FY20 primarily due
to higher incentive fees; and
•$5.5m corporate expenses, 19.6% above from FY20 consistent with a
larger asset base.
Vital’s NTA per unit increased by 21.4% to $2.89 primarily due to $235m
of property revaluation gains.
CAPITAL MANAGEMENT
Achievements during FY21 include a rewriting of Vital’s debt facilities to
allow future debt capital markets issuance and an expansion of the
financier syndicate.
The debt to total assets ratio was 35.0% at 30 June 2021 (30 June 2020:
38.7%). Given the defensive nature of Vital’s portfolio, the Board and
Management remain comfortable with both the current and projected
levels of debt. Vital currently has approximately A$144m of headroom
under its current debt facilities and has asset recycling planned to cover
some of its development expenditure.
Vital’s all-in weighted average cost of debt as at 30 June 2021 was
3.32% (30 June 2020: 3.59%). This decrease was primarily a result of a
decline in floating rates.
Vital’s average debt maturity at 30 June 2021 was 2.46 years. Although
this is materially above the 30 June 2020 figure of 1.81 years following
the expansion of Vital’s debt syndicate, it remains below where the Board
and Management would like this to be, particularly in light of Vital’s
industry leading WALE. Measures to extend Vital’s debt tenor remain
underway.
BOARD RENEWAL
Graham Stuart was appointed as Independent Chair to lead a majority
independent Board following his re-election at Vital’s general meeting in
November 2020.
In June 2021, long-standing Director Bernard Crotty retired from the
Board. Bernard was replaced with Craig Mitchell who serves as
NorthWest’s President as well as CEO for the Australia and New Zealand
region. His previous roles include Executive Director and Chief Operating
Officer of Dexus, an ASX top 50 listed REIT, (with responsibility for finance,
funds management and risk) and senior finance roles for Stockland and
Westfield.
Vital’s focus during FY21 has been
improving the port
folio through capital
recycling and e
xpanding our
development pipeline to grow future
earnings.
OUTLOOK
Healthcare property remains a defensive asset class underpinned by
growing demand and institutional interest highlighted by recent and
proposed transactions in New Zealand and Australia (both direct
property acquisitions and corporate activity). As Australasia’s leading
listed owner of healthcare real estate, Vital remains well positioned to take
advantage of opportunities in this sector, particularly given Vital’s
unmatched private hospital exposure and NorthWest’s unmatched
development expertise.
Our plan for the short to medium term is:
•Continue to deploy Vital’s 5-year portfolio plan (announced previously)
including asset recycling to continue to grow earnings and
distributions for unitholders whilst maintaining a prudent pay-out
ratio of ~80%;
•Focus on the current and potential development pipeline in New
Zealand and Australia to provide new and upgraded health facilities
for communities across our region;
•Consider further acquisition opportunities across New Zealand and
Australia to grow and enhance Vital’s existing portfolio;
•Extend Vital’s debt maturity profile and diversify sources of debt to
secure returns for Vital’s unitholders; and
•Consolidate and expand sustainability initiatives as part of NorthWest’s
comprehensive ESG programme to play our part in protecting and
enhancing the environment, the communities in which we operate
and the stakeholders we serve.
FY22 GUIDANCE
The Board and Management are pleased to provide the following FY22
guidance:
•At least 11.8 cpu AFFO; at least 2.0% above FY21.
•9.5 cpu distributions (payable quarterly); 5.6% above previous
annualised distribution guidance maintaining a prudent ~80%
payout ratio.
On behalf of your Board and Management, thank you for your on-going
support.
Nā māua noa, nā
Graham Stuart, ChairAaron Hockly, Fund Manager
9
Financial Summary
All figures are in New Zealand dollars (NZD) unless otherwise stated
2017
$000s
2018
$000s
2019
$000s
2020
$000s
2021
$000s
FINANCIAL PERFORMANCE
Net property income89,65790,65997,683100,147109,663
Revaluation gain/(loss) on investment properties168,54985,461103,55645,703235,383
AFFO and DISTRIBUTIONS
Adjusted Funds From Operations
1
n/a47,074
2
43,89747,21157,457
AFFO - cents per unit
3
n/a10.849.9010.4511.54
Cash distribution to unitholders - cents per unit8.508.508.758.758.88
FINANCIAL POSITION
Total assets1,392,2281,786,8281,931,5432,105,2182,662,560
Borrowings402,649670,124734,211813,515929,300
Total equity879,821987,9761,029,7451,078,9791,503,451
Debt to total assets ratio29.3%38.7%35.3%38.7%35.0%
Net tangible assets - dollars per unit2.052.262.312.382.89
1 2017 data not readily available to calculate on a consistent basis
2AFF
O for FY18 has been restated to include the notional impact of the 1 July 2018 introduction of Attributed FIF tax rule changes
3 As above
Portfolio Metrics
20172018201920202021
Investment properties ($m)1,376.201,731.201,836.402,086.302,634.60
Number of investment properties
1
3742424441
2
Occupancy (%)99.199.399.499.499.2
Weighted average lease term to expiry (years)17.718.218.118.118.7
12 month lease expiry (% of income)1.71.81.71.41.7
1 Excludes properties held for development.
2Additions include Grace Hospital, Tauranga and Epworth Camberwell, Melbourne. Deductions include three asset disposals of Dubbo Private Hospital, Mayo P
rivate Hospital and North West
Private Hospital, whilst two property consolidations have occurred, being Epworth Eastern Medical Centre into Epworth Eastern Hospital asset and Sportsmed Office into Sportsmed Hospital asset.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
1
0ABOUT VITAL AND NORTHWEST
About Vital and NorthWest
Vital benefits from being managed by a global healthcare property owner and manger.
AB
OUT VITAL
Vital Healthcare P
roperty Trust (Vital, the Trust) is an NZX-listed investment
fund (NZX:VHP) that invests in high-quality healthcare properties in New
Zealand and Australia. The Trust is e
xternally managed by NorthWest
Healthcare Properties Management Limited.
Vital's portfolio of 41 properties is valued at more than NZ$2.63B with
73% (by value) located in Australia and the balance in New Zealand. The
portfolio has over 140 tenants and over 3,000 beds.
Vital’s tenants include hospital operators and healthcare providers who
deliver a wide range of services across the full spectrum of health services.
Further information is available at vhpt.co.nz
Vital is the only NZX listed specialist
landlord of healthcare property and
the fourth largest NZX listed property
vehicle.
ABOUT THE MANAGER
North
West Healthcare P
roperties Management Limited (NWHPM, the
Manager) is an external manager that provides management services to
Vital and its unitholders. The Manager’s primary responsibilities include the
day-to-day administration of Vital, portfolio management, sourcing new
opportunities and conducting due diligence on potential acquisitions. The
Manager is also responsible for providing specialist property
management, project management, development management and
leasing services to the Trust.
Our Structure - A Unit Trust
The Manager’s board of five comprises three independent directors and
two NorthWest appointees. Refer to pages 40-4
1 for more details.
Vital's leadership team is led by Aaron Hockly (Fund Manager), and
draws on the skills and experience of over 45 real estate professionals
across New Zealand and Australia with offices in Auckland, Melbourne
and Sydney. Refer to pages 42-43 for more details.
NORTHWEST REIT
NWHPM is a subsidiary of Toronto Stock Exchange-listed NorthWest
Healthcare Properties REIT (NorthWest REIT). NorthWest REIT operates
across six countries in four continents and was founded by its current CEO,
Paul Dalla Lana, in 2004. Among other roles, Paul is a Director of Vital's
Manager.
NorthWest REIT has NZ$9.5bn of AUM globally and over 230 real
estate professionals including 45 professionals across New Zealand and
Australia. In Australia and New Zealand, NorthWest is led by regional
CEO, Craig Mitchell. Among other roles, Craig is a Director of Vital's
Manager.
NorthWest REIT is a global healthcare
real estate investor and manager with
over NZ$9.5B of assets under
management.
$2.63 billion portfolio of
healthcare real estate
in Australia and NZ
26.0%
Other Unitholders
74.0%
11
Introduction
Vital's vision is to be the leading listed
healthcare property fund in Australasia
and to be a leader in Environmental,
Social and Governance sustainability
management, achieving sustainable
unitholder returns in line with targets.
P
L
A
C
E
S
P
E
O
P
L
E
P
R
A
C
T
I
C
E
INTERACTION WITH NORTHWEST REIT
NorthWest Healthcare Properties REIT (TSX: NWH.UN,
“NorthWest”) seeks to be the global leader in healthcare
real estate for its tenants, namely healthcare practitioners
and hospital operator partners. Sustainability and ESG
goals are a core part of this mission. NorthWest is
establishing a comprehensive sustainability framework,
which will be developed drawing on input from employees,
investors and joint-venture partners, tenants and patients, in
line with prudent corporate risk management guidelines.
To highlight its commitment to ESG, NorthWest recently
created the new role of Chief Administrative Officer
(“CAO”) to oversee global initiatives such as ESG, branding
and risk management, and appointed a long-serving
member of its global leadership team to this role.
Vital is a strategic investment for NorthWest REIT and
represents 27% of NorthWest’s assets under management
and 10% of assets on its balance sheet.
Vital aspires to incorporate sustainability in all parts of its operations:
how we
1
appoint, engage with, de
velop, protect and
reward our employees and how we protect, support and
engage with our tenants, patients and other building users as
well as the communities in which we operate.
how we
1
manage Vital across investor relations, fund
management, asset management, risk management, finance,
compliance, de
velopment and other functional areas.
how we
1
ensure Vital’
s property port
folio responds to the
needs and aspirations of our unitholders, tenants, patients
and other building users as well the broader community and
the health ecosystems in which we operate.
1 NorthWest as Vital's Manager
We have set short, medium and long-term targets for our People, Practice
and Places to ensure we are helping to deliver better outcomes for
individuals, tenants and communities. As a specialist healthcare property
owner we are seeking to ensure sustainability of the Trust and its asset
base. This is consistent with our strategy of holding assets for long-term
rental return and capital growth rather than viewing them as trading assets.
Our short term (FY22) sustainability goals are summarised on page 1
3.
Our medium term sustainability goals are to:
•Reduce GHG emissions from Vital’s portfolio and NorthWest REIT’s
operations;
•Increase the “green” attributes, such as solar energy use, waste and
water use reduction;
•Prefer green buildings for acquisitions and ensure that new
developments adopt green principles;
•Support our tenants to improve patient outcomes, employee amenities
and reduce their environmental impacts;
•Support our host communities through charitable giving, volunteering
and the provision of key infrastructure that accords with their healthcare,
environmental and economic needs and aspirations; and
•Ensure a majority of our portfolio meets a framework of standards
denoting green building status.
MEASUREMENT
Vital’s commitment to ESG is demonstrated through our participation in
CDP (Carbon Disclosure Project) and GRESB (Global Real Estate
Sustainability Benchmark) reporting.
We first participated in CDP reporting in 2020. We expect to utilise
learnings from 2020 to improve reporting and metrics for 2021 which will
be reported on in 2022.
Vital and NorthWest are participating in pilot GRESB reporting for the
2020 calendar year and will be publicly releasing results in 2022 for the
2021 calendar year.
INDUSTRY LEADERSHIP
Vital is a member (Industry Leader) of the Property Council of New
Zealand which enables the organisation and its manager, NorthWest, to
gain insights into the sustainability trends that impact real estate while also
providing the opportunity to collaborate with institutional real estate
investors, owners and managers including attendance at the 2021 Green
Building Summit.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
1
2SUSTAINABILITY
F Y 21
SUSTAINABILITY
HIGHLIGHTS
Inaugural CDP
participation:
Vital’s Carbon Disclosure
Project (CDP) score and the
learnings from its involvement
will be used to lift and improve
the Trust’s future performance.
Achievement of
business goals:
Vital was able to maintain
and achieve its market
guidance targets including
unitholder distributions
despite COVID-19.
New website:
Vital launched a new, more
informative and easier-to-
access website for investors,
tenants and other key
stakeholders.
External
assessment:
Vital sought the assistance
of independent external
consultants to help
measure and improve
sustainability performance,
particularly around the
environment.
Charitable
initiatives:
NorthWest made
charitable donations
totalling $60,000.
Employees also
volunteered for several
community groups in
New Zealand and
Australia.
Diversity:
Women comprise 45% of
NorthWest global senior
management. Our diversity
policies and practices
continue to evolve across
our global operations.
Professional
development:
~14 hours of professional
development per
employee was undertaken,
focusing on mentoring,
‘stretch’ goal setting and
project management.
Environmental
improvements:
Program developed to
improve environmental
measures at all standing
assets and continue
to ensure developments
include sustainable design
initiatives.
Sustainability
committees:
Our sustainability
programme was
strengthened with the
establishment of regional
and global sustainability
committees to develop
a comprehensive
sustainability framework.
Tenant
sustainability
initiatives:
Formed strategic alliance
with tenant operator
of Vital’s largest asset,
Epworth Foundation, to
share information and
improve sustainability
outcomes.
Sustainability
peer review:
A robust peer review
process was established,
drawing on both internal
and external stakeholders,
to determine Vital’s
sustainability
priorities.
13
FY22
SUSTAINABILITY
TARGETS
*as part of wider renewal/recruitment processes.
• Continue to improve diversity on the Board and in Management
*
• Focus on mentoring and career progression
• Encourage greater community involvement
•
Continue e
xisting professional development
• Participate in third-party assessments through GRESB and CDP
• Improve our CDP score
• Deploy sustainability initiatives with key stakeholders including tenants
•
Continue to pr
ogress investigation of additional solar installations
• Establish baseline environmental reporting
• Meet distribution guidance and AFFO target
• Maintain prudent payout ratio
•
Continue charitable and communit
y support programs
•
Extend and div
ersify debt
Example of our intelligent
energy approach
We are working with our contractor partners to
undertake our fit out and construction works using
environmentally conscious building products and works
methodologies. We look to install carbon neutral carpet
tiles, LED lighting, and efficient heating and cooling
design in our consulting and office refurbishments, while
recycling older materials. At Ascot Hospital we have
recycled 96.4% of the materials removed whilst replacing
aluminium composite panelling (ACP), guttering and roof
linings.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
1
4SUSTAINABILITY
People
Vital is managed by a subsidiary of NorthWest on behalf of Vital’s
unitholders. Approximately 45 NorthWest employees work either solely or
predominantly on Vital’
s operations in Australia and New Zealand.
FY21 was subject to significant COVID-19 disruption. The pandemic and
our responses to it influenced many of the initiatives undertaken by Vital
during the year.
HEALTH AND SAFETY
Given the pandemic’s global reach, NorthWest's Human Resources team
initiated several activities across the company’s operations world-wide to
ensure the health and safety of our employees. These included the
establishment of a global Health and Safety Committee at the outset to
track employee health and travel, and mitigate and manage exposure to
the virus at our sites.
A programme of enhanced health benefits was also developed, including
expanded healthcare access and mental health support programmes for
employees and their families affected by COVID-19.
NorthWest set up a COVID-19 employee intranet for easy access to
contact information, quarantine/isolation procedures, FAQs, articles and
other related materials. In total, 96% of employees in Australasia and
Canada returning to work after pandemic lockdowns completed
COVID-19 health and safety compliance training. Flexible working from
home arrangements have been made with all employees in Australasia,
including a financial contribution to the home office set up.
EMPLOYEE ENGAGEMENT
NorthWest conducted two key employee sentiment surveys related to
working from home and returning to the office, each with a 94%
participation rate organisation wide.
Other initiatives included:
•KPI's and goal setting for all staff;
•Regular all team meeetings;
•Regular staff off-site events including remote/virtual events during
COVID-19;
•Mental health checks by leadership team of all staff; and
•Presentations by functional teams to the full region.
DIVERSITY AND INCLUSION
NorthWest values diversity in the workforce, is an equal opportunity
employer and welcomes applications from people with disabilities.
At year end, 45% of NorthWest employees were female compared to
47% in the ANZ region. The median age of the workforce at NorthWest
was 45 years old as compared to 41 years old in Australasian region.
Our people come from a diverse range of linguistic, ethnic and cultural
backgrounds as well as nationalities.
NorthWest will continue to make meaningful investments on our Diversity
and Inclusion programme with respect to the development of policies,
programmes and educational opportunities for our employees across the
company.
There was no significant gender pay gap identified across the
organisation.
He aha te mea nui o te ao
What is the most important thing in the world?
He tangata, he tangata, he tangata
It is the people, it is the people, it is the people
Whakatauki
(Maori proverb)
Key management employees include long term employees and more
recent hires, all of whom hav
e significant healthcare real estate
experience.
15
• Continue to improve diversity on the Board
and in Management
*
• Focus on mentoring and career progression
• Encourage greater community involvement
• Continue existing professional development
PEOPLE
FY22 TARGETS
*as part of wider renewal / recruitment processes.
BUSINESS CONTINUITY
A new Global Business Continuity Committee was established by
North
West to support our operating teams with pandemic planning, rent
deferral, employee policies, IT tools and collaboration software.
Resources de
veloped for employees included a Return to Office Re-
Onboarding package outlining office protocols and procedures for
employee safety which was provided to all employees.
CORPORATE DEVELOPMENT
In May and December 2020, NorthWest held global management team
retreats for executives to advance the company’s strategic priorities and
identify "big pitch” ideas for improving the organisation; with ESG chosen
as a key focus for improvement.
POLICIES AND TRAINING
We recognised the importance of an inclusive corporate culture which
values diversity and engagement in our workforce by adopting a wide-
ranging programme of employee training in FY21, including training on:
•Our “whistle-blower” policies, which support employees in speaking
out on perceived issues or wrongs;
•Maintaining good mental health, in conjunction with the Employee
Assistance Programme (EAP);
•Working from home in a Covid-19 environment; (ongoing flexible work
from home);
•Maximising productivity in a demanding work environment; and
•Cyber-security risks and the best ways to protect data integrity and
ensure continuity of business.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
1
6SUSTAINABILITY
Practice
CODE OF CONDUCT
In recognition of Vital’s role in the communities in which we operate, and
where our investors live, we continue to implement and
refine policies and
practices which encourage responsible investment practices and
compliance with all legal and regulatory requirements.
All Vital Directors and employees must abide by Vital’s Code of Conduct,
which documents policies on conflicts of interest, fair dealing, compliance
with applicable laws and regulations, maintaining confidentiality of
information, dealing with Vital’s assets and use of Vital’s information. The
Code recognises the importance of a work environment which actively
promotes best practice and does not compromise business ethics or
principles, and the Code’s purpose is to uphold the highest ethical
standards, acting in good faith and in the best interests of unitholders at all
times.
POLICY REVISIONS
Governance is very important to long-term value creation for Vital’s
unitholders, and in FY21 the Board reviewed the Board Charter, Audit
Committee Charter, Security Trading Policy and Joint Investment Policy –
all available on Vital’s new website. In FY22, we will review the Code of
Conduct to ensure our business practices and code of ethical conduct
continue to align with best practice corporate governance in New
Zealand.
Vital refreshed the Trust’s privacy policy in 2020 to address changes
made to the Privacy Act 2020; as part of the review, employees
underwent a privacy “health check” to help management evaluate the
possible risk areas.
MODERN SLAVERY
In FY20, the Australian manager of the Vital trusts, NorthWest Healthcare
Australian Property Limited published a statement under the Australian
Modern Slavery Act 2018, which underpinned Vital’s philosophical
approach and commitment to ensuring our operations have sufficient risk-
mitigation strategies to address supply-chain risks.
Vital committed to training employees to identify these risks. Our entire
organisation has engaged with tenants and suppliers to conduct further
and ongoing due diligence to identity possible modern slavery supply-
chain risks. Vital will continue to assess the potential modern slavery risks in
our operations and develop and review company policies on these
possible impacts. We have also committed to reviewing supplier contracts
to ensure they contain terms consistent with the principles underlying the
Act.
• Establish baseline environmental reporting
•
Meet distribution guidance and
AFFO target
• Maintain prudent payout ratio
• Continue charitable and community
support programs
• Extend and diversify debt
PRACTICE
Targets for FY2022
Vital's ESG commitments are consistent with NorthWest core values:
E
X
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Core
Values
P
A
R
T
N
E
R
S
H
I
P
17
“We are working with tenants and
other key stakeholders to improve
sustainability and societal impacts.”
RICHARD ROOS, EXECUTIVE DIRECTOR - PORTFOLIO (NORTHWEST)
NorthWest Key Stakeholders:
1
.Employees;
2.Investors & Joint Venture P
artners; and
3.Tenants & Patients.
EPWORTH STRATEGIC ALLIANCE
Both Vital and leading Victorian healthcare operator
Epworth Healthcare are committed to improving
sustainability and societal impacts. Recognising this
alignment of interests, we signed an ESG Alliance
agreement with Epworth Healthcare to facilitate active
collaboration, information-sharing and improved
sustainable outcomes at both a property and operating
level.
The Alliance has set up a steering committee to identify core
ESG priorities and opportunities, agree joint goals for 2022
consistent with corporate vision, approach and targets,
and implement a framework for measuring and monitoring
progress against goals and targets.
INVESTOR DAY 2021
Evolution Healthcare's CFO, Matthew Clarke and CEO, Sue Channon.
25 analysts, investors and debt providers visited two of Vital's assets and
heard from two of Vital's operating partners.
CAPITAL
Vital’
s sustainability depends on its ability to attract and retain capital, both
equity and debt, which support Vital’
s operations and strategy on
reasonable commercial terms (including pricing).
As a result, we are working on enhancing our transparency and access to
unitholders and debt providers. Key initiatives included:
1.A new, more informative and easier-to-access website for investors,
tenants and other key stakeholders;
2.An Investor Day held in late June 2021; and
3.The Fund Manager presenting at key retail unitholder events including
the NZSA branch meetings in Auckland, Tauranga, Wellington,
Taranaki and Christchurch.
Equity
$182.4m of new equity was raised in FY21 via a placement ($125m), UPP
($32.5m), DRPs ($18.9m), and incentive units ($6.5m)
***
.
In FY21, we announced a core target of increasing AFFO by 2-3% per
unit per annum. AFFO increased by 10.4%. We also increased
distributions per unit by 1.4% from FY20 to FY21 (8.75 cpu to 8.88 cpu)
and have provided guidance for a 7% increase from FY21 to FY22 (8.88
cpu to 9.5 cpu).
Debt
In FY21, Vital’s debt facilities were revised to enable the issuance of long-
term debt. We have commenced a process to issue longer term debt.
In addition, Vital’s banking syndicate was expanded from two to five
lenders and the average tenure of debt was extended by ~1.5 years.
Our tenants remain some of the largest
healthcare providers in New Zealand
and Australia including government,
not-for-profit and for-profit entities.
SUPPORTING THE COMMUNITY
As an e
xample of our commitment to the community as part of our
de
velopment process, in concert with Evolution Healthcare, a residential
house removed as part of the recently completed Royston Hospital
development was sold with the proceeds donated to two local charities.
As a result, $25,000 was raised with the proceeds split between Cranford
Hospice and Hawke's Bay Brain Injury Association and the environmental
impact of the development was reduced through repurposing the removed
house.
***
F
igures may not sum due to rounding and ~$2.6m of issue costs.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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8SUSTAINABILITY
Places
• Participate in third-party assessments
through GRESB and CDP
• Improve our CDP score
• Deploy sustainability initiatives with key
stakeholders including tenants
• Continue to progress investigation of
additional solar installations
PLACES
FY22 TARGETS
“The land owns us.”
AUSTRALIAN ABORIGINAL SAYING
NorthWest acknowledges the traditional custodians of the land on which
Vital’
s properties are located and pays respects to their elders past,
present and emerging.
Initiatives under Vital's Places pillar are intended to
maximise building
efficiency and minimise environmental impacts.
GREEN BUILDINGS
With our focus on delivering and maintaining facilities that improve patient
outcomes, Vital is undertaking port
folio-wide environmental data-
collection to set baseline environmental information across all assets and
identify opportunities to improve environmental impacts.
The review encompasses both existing assets and development projects
including strategies to achieve a green building environment such as:
1.Intelligent approaches to energy supply and use;
2.Creating resilient and flexible built structures;
3.Promoting health and wellbeing within buildings; and
4.Exploring other environmental protection measures.
INTELLIGENT ENERGY APPROACHES
Healthcare facilities are energy-intensive buildings. The equipment and
systems that serve the buildings and their medical needs are complex,
often requiring continuous operation. Vital recognises the importance of
reducing electricity and emissions and, while this can be challenging for
healthcare assets, Vital is committed to identifying and actioning
improvements.
Vital and its key tenants continue to invest in efficiency projects including
renewable energy, LED light upgrades, smart energy monitoring and
chiller upgrades.
Almost half of our Australian assets have solar installations generating
more than 1,000KW and actively reducing our carbon emissions. While
the percentage of grid electricity consumption of
fset by solar generation
varies across the properties, offsets range from 5% to 20% based on size,
location and energy profile.
LED light installation in hospitals assists with both energy efficiency and
quality of lighting, while substantially improving patient, visitor, and
hospital staff well-being. Epworth Healthcare installed more than 1,500
LED lights at Epworth Eastern Hospital in FY21, resulting in a 79% reduction
of lighting energy consumption and reduction in GHG emissions.
Smart monitoring measures introduced, at Ascot Hospital in Auckland
through BMS upgrades, has improved the hospital’s ability to measure
and control usage. One million dollars was also invested across
Kensington Hospital, Napier Health Centre and Royston Hospital to
upgrade chillers, materially improving operating efficiency and reducing
emissions.
Traditional custodians
“Traditional custodian” is a term used to describe the
original Aboriginal or Torres Strait Islander peoples
who inhabited an area. Traditional custodians today
are descendants of these original inhabitants and have
continuing spiritual, cultural, political and often physical
connection with particular land where their ancestors lived.
Why is NorthWest making an
acknowledgement?
A majority of Vital’s properties are located in Australia.
NorthWest respects all people regardless of their ethnic,
cultural or linguistic background and respects the unique and
unbroken connection of Australia’s first peoples to its land.
19
RESILIENT AND FLEXIBLE STRUCTURES
Vital’
s Board and management belie
ves it is important to ensure building
resilience to earthquakes, fire and flooding to preserve the ongoing safety
of both the asset and the occupants, particularly in the face of climate
change creating more frequent and damaging adverse weather events.
All Vital assets have been reviewed for their exposure to risk from seismic
activity (primarily New Zealand assets), bush fires (primarily Australian
assets) and flooding resulting from both rising sea levels and major storms.
Seismic upgrades, involving the installation of seismically resilient base-
isolation structures, have been completed at both Grace Hospital
(Tauranga) and Wakefield Hospital (Wellington), while additional
seismic resilience works will begin at Napier Health Centre in FY22.
To prevent building obsolescence and promote flexibility, Vital is also
designing dynamic spaces that can respond to, and accommodate, an
operator’s changing functional needs over time, mitigating demolition
requirements and further enhancing building resilience.
Vital has committed $15.7m to improve building safety via façade
replacement works. During FY21, Vital completed a programme of
cladding replacement, including identification and replacement of all
high-risk combustible façade products, at Ascot and Ormiston (South
Auckland) Hospitals and Mons Road Medical Centre. Similar works are
also in progress at Ascot Central and Epworth Eastern Hospital.
HEALTH AND WELLBEING
Green healthcare facilities positively impact patient care by enabling
significant reductions in hospital stays, secondary infections and pain
relief
****
. The following green measures are adopted in Vital's buildings.
•Delivering good indoor air flow and quality through improved
ventilation;
•Avoiding materials and chemicals that create harmful or toxic emissions;
•Incorporating natural light and views to ensure building users’ comfort
and enjoyment of surroundings;
•Designing for ears as well as eyes through improved acoustics and
proper sound insulation which help concentration, recuperation, and
peaceful enjoyment of a building; and
•Ensuring people are comfortable in their everyday environments by
creating the right indoor temperature through passive design or building
management and monitoring systems.
During the COVID-19 pandemic, programmes were implemented across
all Vital's assets protecting the safety of building users, including patients
and frontline staff.
SUSTAINABLE DEVELOPMENTS
Exsisting buildings
We are working with our contractor partners to undertake our fit out and
construction works using environmentally conscious building products and
works methodologies. We look to install carbon neutral carpet tiles, LED
lighting and efficient heating and cooling design in our consulting and
office refurbishments, while recycling older materials. At Ascot Hospital
(Auckland) we recycled 96.4% of the materials removed whilst replacing
aluminium composite panelling (ACP), guttering and roof linings. We
engaged consultants to review environmentally sustainable design (ESD)
initiatives for Ormiston Hospital (Auckland) which could be retrofitted into
the building and incorporated into end of life replacement of plant items.
****
20
1
3 “Business Case for Green Building”, the World Green Building Council
Key attributes for each of Vital's assets
are included on pages 30 to 37
. We
will look to expand these measures as
part of our on-going sustainability
programme.
79%
reduction in lighting energy
consumption at Epworth
Eastern following LED light
installation.
Healthy
hospitals
lead to healthy
patient outcomes.
New buildings
All of Vital's current developments include sustainable design initiatives.
We are committed to delivering greener developments, aligned with
green leases for all future projects. The development team is actively
implementing policies to reflect this.
Working closely with our operators and consultants on each development
project, we have identified key sustainability initiatives to improve building
performance within the portfolio.
While specifications for each project differ, key target initiatives include:
•Electrical sub-metering to monitor and measure energy consumption;
•Carbon dioxide sensors within basement car parks;
•Automated LED lighting to reduce energy consumption;
•Solar panel installation;
•Drought-tolerant, native landscaping to conserve water;
•Rainwater harvesting and reuse where appropriate to reduce water
consumption; and
•End-of-trip facilities such as staff showers and bicycle storage to
encourage health and wellbeing.
“All of Vital's current developments
include sustainable design initiatives
and continue to push the bar higher
on all future projects.”
CHRIS ADAMS, EXECUTIVE DIRECTOR - DEVELOPMENT (NORTHWEST)
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
20
SUSTAINABILITY
Epworth Eastern Redevelopment
Box Hill, VIC
The redevelopment of Epworth Eastern, co-located with Box
Hill Public Hospital in Melbourne, Victoria is on track to
deliver five new operating theatres, three new endoscopy
suites, 63 beds and six levels of specialist consulting suites.
The sustainability strategy developed during the design phase for the
project utilises the Green Star tool as a reference guide, focusing on
environmental initiatives associated with the management, indoor
environment quality, water and materials categories. Using the Green
Star Design tool to benchmark the project’s ESD performance, the
development currently targets a four star self-assessment, being
Australian Best Practice.
Recognising Vital and Epworth’s commitment to improve sustainable
outcomes, the sustainability advisory scope has been expanded to
include a gap analysis of current project deliverables and additional
opportunities to improve on the original four star target.
Initiatives currently adopted within the project include:
• Renewable energy through installation of solar panels;
• Rainwater harvesting for toilet flushing and irrigation;
•
Motion sensor lighting;
• Low volatile organic compounds or VOC products;
• Energy efficient plant and equipment;
• Automatic monitoring of electricity of water and energy;
• Energy efficient facade design;
• Responsibly sourced steel and sustainably sourced timber; and
•
Building tuning following practical completion.
Case Studies
21
Playford Health Hub
Elizabeth Vale, SA
The second stage of development at the Playford Health Hub
in Elizabeth Vale, South Australia will deliver a ~6,000sqm
specialist medical building, providing radiology, oncology,
pharmacy, pathology and consulting services.
Located within the Playford Health Precinct and co-located with major
tertiary hospital Lyell McEwin Hospital, delivering a best practice
facility that positively contributes to the environment of the community
is key to the long-term success of this asset. Development approval
has been received for the project and detailed design is currently in
progress.
Reflective of Vital’s commitment to sustainable
development, sustainability goals for the project have been
set including:
• Providing an energy efficient building;
•
P
reventing pollution, reducing waste and consumption;
•
Maximising user wellbeing – including health, comfort and
happiness;
• Producing low emissions and minimising ecological impact; and
•
A
dopting a high-performance building fabric that is
maintainable and durable.
Vital is targeting a minimum of 4 Star Green Star Design and As Built
certifications at completion.
The building design will prioritise categories including indoor environment
quality, energy and materials, while being supported by detailed
management plans capturing the building’s lifecycle.
In partnership with the building contractor we will ensure positive
engagement with the community is promoted throughout the construction
phase and beyond.
*Artist's impression.
*Artist's impression.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
22
ACQUISITIONS
Acquisition of two premium
hospitals during FY21 added to
Vital's existing private hospital
portfolio which is unmatched in
either New Zealand or Australia.
In FY21 Vital spent ~NZ$185m acquiring two hospitals from
existing tenants Southern Cross, Evolution Healthcare and
Epworth providing ~NZ$8.8m of additional property
revenue per annum.
This 51-bed, 11-theatre facility was purpose-built in 2007
and expanded in 2020. It is Tauranga's only private inpatient
hospital and is located on a ~4-hectare site providing
significant future expansion opportunities. Vital will support
Grace Hospital's <$50m Master Plan to be built over the
next 5 years
1
. The property is fully leased to a joint venture
between Evolution Healthcare (formerly Acurity Health
Group) and Southern Cross Hospitals for 30 years from
settlement and provides a rental yield of 5.25%.
Acquired for NZ$95.0m, reflecting a 5.25% yield
30.0yr WALE
This property comprises a 4 level, 147 bed private mental
health and specialist rehabilitation hospital that has excellent
referral patterns from nearby Epworth surgical hospitals. The
hospital is situated on a 7,453 square metre site located 9km
east of Melbourne's CBD. The property is subject to a new
20-year "triple net" lease to existing Vital tenant, Epworth
Foundation, the largest not-for-profit private hospital operator
in Victoria. The lease includes a deferred tenant incentive
payable at the start of year four at which time the lease term
resets to 20 years (a three year lease extension). The lease
provides a 4.78% initial passing yield reducing to 4.28% after
adjusting for the tenant incentive. The lease includes annual
CPI rent increases and a market review at year 15 of the initial
term.
Acquired for A$82.7m
2
, reflecting a 4.78% yield
20+yr WALE
GRACE HOSPITAL
Tauranga, NZ
EPWORTH CAMBERWELL
Melbourne, VIC
1. Any future funding from Vital is subject to business case support
among other conditions.
2. Including a tenant incentive to be paid following the third
anniversary of the commencement of the lease.
*Indicative boundary.
Acquisitions
23
Acquisition of five
development
properties for $68.8m
to renew and extend
Vital's development
pipeline.
195 FOXWELL ROAD
Coomera, QLD
61-71 PARK ROAD, GRAFTON
Auckland, NZ
17-23 NELSON RD, BOX HILL
Melbourne, VIC
7-17 WOLSELEY STREET
Woolloongabba, QLD
PLAYFORD HEALTH HUB
Adelaide, SA
Vital has acquired 20,131 square metres of
developable land at 195 Foxwell Road,
Coomera, Gold Coast for A$9.4m (plus
costs). This property forms part of the
proposed "Coomera Health Precinct" a
key health precinct identified by
Queensland Health as the location of a
new public hospital to meet the needs of
one of South-East Queensland's fastest
growing areas. The property is not
currently income producing but the
Manager will undertake a master planning
process which is expected to be activated
via a medical office building of
approximately 6,000 square metres as
Stage 1. The acquisition settled on 15 July
2 0 21 .
Vital acquired a 749 square metre property
at 61-71 Park Road, Grafton for NZ$7.25m
(plus transaction costs). This property is
opposite Auckland City Hospital (New
Zealand's largest hospital) and is surrounded
by buildings occupied by the University of
Auckland's Medical and Health Sciences
Faculty. The property forms part of New
Zealand's premium healthcare precinct. The
property is currently leased short term to a
variety of tenants providing holding income
neutral to Vital's AFFO. The acquisition is
expected to complete in September 2021.
In January 2021, Vital settled the acquisition
of 17-23 Nelson Rd, Box Hill, a strategic
5,330 square metre property adjacent the
already Vital owned Epworth Eastern asset.
The property can support a gross floor area
of over 42,000 square metres and has
been strategically acquired to support the
ongoing expansion of Epworth Eastern as
well as potential ancillary uses including
aged care and life sciences. Any
development will be in accordance with a
master plan for the site to be prepared in
conjunction with Epworth Foundation and
external consultants.
Vital has acquired 3,036 square metres of
developable land at 7-17 Wolseley Street,
Woolloongabba, Brisbane for A$11.4m (plus
costs). This property is located in the Princess
Alexandra Hospital precinct, one of
Queensland's largest health precincts that
includes a 1,050-bed public hospital as well
as teaching and research facilities. The
property is not currently income producing
but provides significant scope via existing
development controls which permit up to 15
levels for healthcare purposes.
Vital acquired the remaining 50% of Elizabeth
Vale Shopping Centre in Adelaide, South
Australia for A$7.6m (plus transaction costs) in
mid 2020. The property is situated directly
opposite the Lyell McEwin Hospital, a major
tertiary hospital and the third largest public
hospital in South Australia. Vital has received
Development Approval for Stages 1 and 2 of
what will be known as “Playford Health Hub”
encompassing a retail precinct and multideck
car park (Stage 1) and specialist medical
consulting building (Stage 2). Construction has
commenced for stage 1 and master planning
for a private hospital (Stage 3 of the
development) is also underway. Development
is expected to occur over a 3 to 5-year period
with an estimated end value of ~$125m.
*Artist's impression.*Artist's impression.
*Artist's impression.
The acquisitions align with Vital's
5-year portfolio strategy and will
allow Vital to deliver hospital,
consulting and other healthcare
facilities to communities in
New Zealand and Australia.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
2
4DEVELOPMENTS
Two developments completed
during FY21.
Vital’s manager, NorthWest, has unmatched expertise in
developing healthcare property in New Zealand and Australia.
Developments are a key way for Vital to achieve earnings and
NTA growth as well as enhancing the overall portfolio.
Royston Hospital is a single-level hospital facility and
two-level consulting centre, located in the city of Hastings.
Royston is the only private hospital in Hastings and one of
two hospitals in the Hawke’s Bay region serving 160,000
residents. Originally constructed in 1931, the facility has
undergone major upgrades with an extension completed in
early 2021 which included two new shell operating theatres
for future expansion, along with upgrades to reception and
admission areas.
A development to construct a stand-alone Orthopaedic
Day Surgery Unit is also currently underway. The facility
will have one operating theatre initially and provision for an
additional theatre to be commissioned at a later date. The
day surgery facility is located on existing land formerly used
for carparking and the unit will be operated as a joint venture
between Evolution Healthcare and leading Hawke’s Bay
orthopaedic surgeons.
Works are well advanced with day surgery which is
scheduled to be completed in Q4 2021.
Royston Hospital expansion reached practical
completion in early 2021, total cost of $9.9m.
South Eastern Private Hospital is located in Noble Park,
Victoria approximately 35km south-east of the Melbourne
CBD. It has 158 beds and offers mental health, rehabilitation,
and general medical services.
Vital recently completed a $10m development to increase
the day oncology capacity through the construction of a new
wing with 18 Day Oncology chairs at Level 1, as well as the
construction of 10 new single rooms at ground level and the
conversion of seven existing shared rooms to single rooms.
New consulting spaces for consulting doctors have also be
added to the facility as well as a general upgrade of the main
entrance and public areas also undertaken.
South Eastern Private Hospital development completed
early 2021, total cost of A$9.2m.
ROYSTON HOSPITAL
Hastings, NZ
SOUTH EASTERN PRIVATE HOSPITAL
Noble Park, VIC
Developments
25
Vital has seven
developments currently
underway with a total
forecast development
spend of ~$300m and
~$130m remaining.
All developments are
substantially on time
and on budget.
EDEN REHABILITATION
Cooroy, QLD
DEVELOPMENT COST A$12.4m
FORECAST COMPLETION DATE Mid 2021
STAGE Under Construction
SPEND TO DATE A$2.9m
COST TO COMPLETE A$9.5m
Developments underway as at 30 June 2021
Vital is targeting having 10-15% of the
portfolio under development at any
time. In addition to the committed
pipeline, being the projects listed on this
page, Vital is actively working on over
$739m of potential developments to
fulfil its development strategy.
EPWORTH EASTERN HOSPITAL
Box Hill, VIC
DEVELOPMENT COST A$96.5m
FORECAST COMPLETION DATE Early 2022
STAGE Under Construction
SPEND TO DATE A$83.9m
COST TO COMPLETE A$12.6m
*Artist's impression.
WAKEFIELD HOSPITAL
Wellington, NZ
DEVELOPMENT COST $112.8m
FORECAST COMPLETION DATE Staged 2021-2023
STAGE Under Construction (Stage 1 complete)
SPEND TO DATE $59.3m
COST TO COMPLETE $53.5m
*Artist's impression.
ROYSTON DAY SURGERY UNIT
Hastings, NZ
DEVELOPMENT COST $8.1m
FORECAST COMPLETION DATE Late 2021
STAGE Under Construction
SPEND TO DATE $4.8m
COST TO COMPLETE $3.3m
*Artist's impression.
PLAYFORD HEALTH HUB (Stage 1)
Elizabeth Vale, SA
DEVELOPMENT COST A$20.7m
FORECAST COMPLETION DATE Late 2021
STAGE Under Construction
SPEND TO DATE A$11.6m
COST TO COMPLETE A$9.1m
*Artist's impression.
BELMONT PRIVATE HOSPITAL
Carina, QLD
DEVELOPMENT COST A$22.6m
FORECAST COMPLETION DATE Late 2022
STAGE Under Construction
SPEND TO DATE A$2.6m
COST TO COMPLETE A$20.0m
*Artist's impression.
ABBOTSFORD PRIVATE HOSPITAL
Perth, WA
DEVELOPMENT COST A$18.6m
FORECAST COMPLETION DATE Mid 2022
STAGE Under Construction
SPEND TO DATE A$3.3m
COST TO COMPLETE A$15.3m
*Artist's impression.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
2
6PORTFOLIO OVERVIEW
Portfolio Overview
at 30 June 2021
Vital Portfolio by Geography
AUSTRALIANEW ZEALAND
Vital is the fourth largest listed property vehicle, and only specialist
healthcare landlord, on the NZX.
NZ$11 0m
NET PROPERTY INCOME
PER ANNUM
NZ$1.93bn
29* PROPERTIES (AUS)
NZ$701m
12* PROPERTIES (NZ)
4.88%
WEIGHTED AVERAGE CAP RATE
(4.84% - AUSTRALIA, 4.99% - NZ)
*Excludes strategic assets.
WESTERN
AUSTRALIA
SOUTH
AUSTRALIA
4
1
NEW SOUTH
WALES
12
VICTORIA
5
TASMANIA
QUEENSLAND
7
NORTHERN
TERRITORY
12
27
Sub-sector Diversity
(% of Value)
Tenant Diversification
(% of Rent)
NZ$2.63bn
†
41* PROPERTIES (AUS/NZ)
NZ$701m
12* PROPERTIES (NZ)
18.7YRS
WALE
11 . 3YRS
AVERAGE BUILDING AGEˆ
99.2%
PORTFOLIO OCCUPANCY
ˆAverage building age = the later of the date of
construction or last significant capital works.
† Figures may not sum due to rounding.
Aged Care
Specialty
Hospital
Medical
Office
Buildings
10
%
15
%
5
%
Other
Ramsay
Mercy Ascot
Bolton Clarke
Sportsmed
Norfolk Southern
Cross Limited
Hall & Prior
Healthe Care
Specialty
Healthe Care
Acute
Epworth
Evolution
28
%
27
%
Acute
Hospital
58
%
85
%
Hospital
Other
15
%
14
%
13
%
2
%
3
%
3
%
4
%
4
%
4
%
10
%
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
2
8 AUSTRALIAN PORTFOLIO
VICTORIA
• Ekera Medical Centre
•
Epwor
th Camberwell
•
Epwor
th Eastern Hospital & Medical Centre
•
Epworth Rehabilitation Hospital
•
South Eastern Private Hospital
SOUTH AUSTRALIA
• Sportsmed Hospital, Clinic, Consulting & Office
WESTERN AUSTRALIA
• Abbotsford Private Hospital
• Hamersley Aged Care
•
Marian Clinic
•
R
ockingham Aged Care
4
5
Australian
Portfolio Overview
1
29
QUEENSLAND
• Baycrest Aged Care
•
Belmont Private Hospital
•
Eden R
ehabilitation
• Gold Coast Surgery Centre
• Palm Beach Currumbin Clinic
• Tantula Rise Aged Care
•
T
he Southport Private Hospital
NEW SOUTH WALES
• Clover Lea Aged Care
• Darlington Aged Care
• Fairfield Aged Care
• Grafton Aged Care
• Hirondelle Private Hospital
• Hurstville Private Hospital
•
Lingar
d Day Centre
•
Lingar
d Private Hospital
•
Maitland Private Hospital
•
Mons R
oad Medical Clinic
• The Hills Clinic
•
T
oronto Private Hospital
Australian
Portfolio Overview
12
7
PRIVATE HOSPITALS (AUS)
17
hospitals (acute and specialty -
rehabilitation and mental health)
4 hospital operators
62% of portfolio value; 58% of rent
WALE:
19.6 years
AGED CARE
8 facilities
2 operators
5% of portfolio value; 7% of rent
WALE:
15.0 years
OUT-PATIENT FACILITIES
/ MEDICAL OFFICE
BUILDINGS
4 assets
7% of portfolio value; 6% of rent
WALE:
8.6 years
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
30
AUSTRALIAN PORTFOLIO
Australian Portfolio
LINGARD PRIVATE HOSPITAL
Newcastle / New South Wales
MARKET VALUE A$180,500,000
MARKET CAPITALISATION RATE 4.50%
WALE 24.7
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kW solar system
140-bed, 10 theatre acute medical and
surgical hospital. Recent redevelopment
included a new 40-bed ward, two
additional operating theatres and improved
diagnostic imaging areas.
MAITLAND PRIVATE HOSPITAL
Newcastle / New South Wales
MARKET VALUE A$11
0,100,000
MARKET CAPITALISATION RATE 5.13%
WALE 16.5
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kW Solar sytem
156-bed private hospital offering a
comprehensive range of specialities and on-
site medical, surgical, mental health,
rehabilitation and allied health services, all
supported by the latest technology and
facilities.
HURSTVILLE PRIVATE HOSPITAL
Sydney / New South Wales
MARKET VALUE A$75,000,000
MARKET CAPITALISATION RATE 5.75%
WALE 20.8
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kW solar system
94-bed private hospital specialising in
surgical services and obstetrics.
THE HILLS CLINIC
Sydney / New South Wales
MARKET VALUE A$50,600,000
MARKET CAPITALISATION RATE 4.50%
WALE 26.0
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kW solar system
Two-level purpose-built mental health
hospital offering specialist inpatient
programs. Comprises 8
5 beds and a
medical clinic with 8 consulting rooms and
approximately 30 referring clinicians.
TORONTO PRIVATE HOSPITAL
Newcastle / New South Wales
MARKET VALUE A$44,400,000
MARKET CAPITALISATION RATE 5.3
5%
WALE 21.1
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
85-bed, three-level private hospital
specialising in rehabilitation, medical,
palliative care and mental health ser
vices.
MONS ROAD MEDICAL CENTRE
Sydney / New South Wales
MARKET VALUE A$37
,000,000
MARKET CAPITALISATION RATE 5.38%
WALE 3.6
OCCUPANCY 94.5%
MAJOR TENANT Castlereagh
SUSTAINABILITY FEATURESRain water harvesting
A modern, multi-tenanted, four-level
medical office building within the
Westmead medical precinct, which is
considered Australia’s largest health
ser
vices precinct.
31
LINGARD DAY CENTRE
Newcastle / New South Wales
MARKET VALUE A$37
,750,000
MARKET CAPITALISATION RATE 4.50%
WALE 24.7
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kW Solar system
Stand-alone day surgery unit, comprising
three theatres, consulting suites and
basement carpaking. This facility was
constructed in June 202
0.
HIRONDELLE PRIVATE HOSPITAL
Sydney / New South Wales
MARKET VALUE A$28,1
50,000
MARKET CAPITALISATION RATE 5.25%
WALE 20.9
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
53-bed private rehabilitation hospital
including hydrotherapy pool.
FAIRFIELD AGED CARE
Sydney / New South Wales
MARKET VALUE A$18,000,000
MARKET CAPITALISATION RATE 6.25%
WALE 14.7
OCCUPANCY 100.0%
MAJOR TENANT Hall & Prior
Two-level high-care facility with 93 beds
including an 18-bed secure dementia unit.
DARLINGTON AGED CARE
Banora P
oint / Nsew South Wales
MARKET VALUE A$17
,000,000
MARKET CAPITALISATION RATE 6.2
5%
WALE 15.3
OCCUPANCY 100.0%
MAJOR TENANT Bolton Clarke
A one and two level, purpose-built nursing
home that provides 90 beds in single bed
room configurations with private ensuites.
CLOVER LEA AGED CARE
Sydney / New South Wales
MARKET VALUE A$13,1
00,000
MARKET CAPITALISATION RATE 6.2
5%
WALE 14.7
OCCUPANCY 100.0%
MAJOR TENANT Hall & Prior
High-care, single level facility with 64 beds.
GRAFTON AGED CARE
Sydney / New South Wales
MARKET VALUE A$11
,100,000
MARKET CAPITALISATION RATE 7
.00%
WALE 15.8
OCCUPANCY 100.0%
MAJOR TENANT Hall & Prior
The facility comprises 83 beds across a mix
of single, double and triple rooms with
uninterrupted views of the Clarence River
.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
3
2AUSTRALIAN PORTFOLIO
EPWORTH EASTERN HOSPITAL
Melbourne / Victoria
MARKET VALUE A$34
9,254,774
MARKET CAPITALISATION RATE 4.25%
WALE 17.8
OCCUPANCY 100.0%
MAJOR TENANT Epworth Foundation
SUSTAINABILITY FEATURESRecent chiller upgrade
Completed in 2005 with significant
expansion underway. Upon completion of
expansion, the hospital will accommodate
1
2 theatres, 286 beds, consulting and 284
car parks.
EPWORTH CAMBERWELL
Melbourne / Victoria
MARKET VALUE A$72,7
00,000
MARKET CAPITALISATION RATE 4.28%
WALE 20.0
OCCUPANCY 100.0%
MAJOR TENANT Epworth Foundation
A four-level, 147-bed private mental health
and specialist rehabilitation hospital.
SOUTH EASTERN PRIVATE HOSPITAL
Melbourne / Victoria
MARKET VALUE A$80,100,000
MARKET CAPITALISATION RATE 4.75%
WALE 19.7
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kw solar system
Two-storey 187-bed hospital providing
general medicine and rehabilitation
services. Recent redevelopment added 30
rehabilitation beds, 30 mental health beds
and 7
9 car parks.
EKERA MEDICAL CENTRE
Melbourne / Victoria
MARKET VALUE A$31
,000,000
MARKET CAPITALISATION RATE 5.2
5%
WALE 3.3
OCCUPANCY 100.0%
MAJOR TENANT Imaging Associates
SUSTAINABILITY FEATURES75kW Solar system
Modern, multi-tenanted four-level strata
medical office building comprising a total
area of 3,605 sqm with basement parking
for 13
3 cars.
EPWORTH REHABILITATION
Melbourne / Victoria
MARKET VALUE A$27
,000,000
MARKET CAPITALISATION RATE 5.50%
WALE 2.6
OCCUPANCY 100.0%
MAJOR TENANT Epworth Foundation
Purpose-built rehabilitation facility
comprising 6
7 beds of
fering specialised
rehabilitation units for orthopaedic/
musculo-skeletal, neurological and cardiac
patients.
BELMONT PRIVATE HOSPITAL
Brisbane / Queensland
MARKET VALUE A$12
4,282,916
MARKET CAPITALISATION RATE 4.2
5%
WALE 24.2
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
150-bed general psychiatric hospital
of
fering a range of specialist acute mental
health ser
vices catering for both inpatient
and day patients.
33
PALM BEACH CURRUMBIN CLINIC
Gold Coast / Queensland
MARKET VALUE A$64,400,000
MARKET CAPITALISATION RATE 4.75%
WALE 14.2
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES90kW solar System
104-bed private hospital providing
psychiatric services, including rehabilitation.
THE SOUTHPORT PRIVATE HOSPITAL
Gold Coast / Queensland
MARKET VALUE A$47
,850,000
MARKET CAPITALISATION RATE 5.00%
WALE 23.7
OCCUPANCY 100.0%
MAJOR TENANT Ramsay
SUSTAINABILITY FEATURESRecent efficient upgrade to
air conditioning
A 44-bed rehabilitation unit and a 22-bed
private inpatient mental health clinic.
EDEN REHABILITATION
Sunshine Coast / Queensland
MARKET VALUE A$30,695,688
MARKET CAPITALISATION RATE 5.25%
WALE 16.4
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES100kW solar system
48-bed private inpatient rehabilitation
hospital and medical centre, the only sub-
acute stand-alone private rehabilitation
hospital between Brisbane and Cairns.
TANTULA RISE AGED CARE
Alexandra Headland / Queensland
MARKET VALUE A$23,000,000
MARKET CAPITALISATION RATE 6.2
5%
WALE 15.0
OCCUPANCY 100.0%
MAJOR TENANT Bolton Clarke
Three-level, purpose-built aged care facility
that provides 1
2
0 beds in single bedroom
configurations with private ensuites.
BAYCREST AGED CARE
Her
vey Bay / Queensland
MARKET VALUE A$18,400,000
MARKET CAPITALISATION RATE 6.2
5%
WALE 15.0
OCCUPANCY 100.0%
MAJOR TENANT Bolton Clarke
Baycrest comprises a one and two level,
purpose-built aged care facility that
provides 1
0
1 beds within a number of
interconnected buildings.
GOLD COAST SURGERY CENTRE
Gold Coast / Queensland
MARKET VALUE A$11
,400,000
MARKET CAPITALISATION RATE 7
.50%
WALE 1.4
OCCUPANCY 88.9%
MAJOR TENANT South Coast Radiology
Multi-tenanted medical office building,
comprising of three levels with podium and
basement car parking. It is home to various
practitioners operating in radiology,
pathology, psychology and
pharmaceuticals.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
3
4AUSTRALIAN PORTFOLIO
MARIAN CENTRE
Perth / Western Australia
MARKET VALUE A$53,800,000
MARKET CAPITALISATION RATE 4.63%
WALE 13.1
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES15kW Solar system
69-bed stand-alone private psychiatric
hospital providing both inpatient and
outpatient services along with a range of
therapy programs.
ABBOTSFORD PRIVATE HOSPITAL
Perth / Western Australia
MARKET VALUE A$35,2
57,849
MARKET CAPITALISATION RATE 4.50%
WALE 20.6
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
SUSTAINABILITY FEATURES40kw Solar system
A modern 30-bed inpatient private mental
health hospital with a focus on drug and
alcohol rehabilitation services.
HAMERSLEY AGED CARE
Perth / Western Australia
MARKET VALUE A$12,550,000
MARKET CAPITALISATION RATE 6.75%
WALE 14.7
OCCUPANCY 100.0%
MAJOR TENANT Hall & Prior
A high-care, two-level aged care facility
with 78 beds.
ROCKINGHAM AGED CARE
Perth / Western Australia
MARKET VALUE A$6,800,000
MARKET CAPITALISATION RATE 7
.00%
WALE 14.7
OCCUPANCY 100.0%
MAJOR TENANT Hall & Prior
A high-care, single level 40-bed aged care
facility
.
SPORTSMED HOSPITAL, CLINICS &
CONSULTING
Adelaide / South Australia
MARKET VALUE A$77
,500,000
MARKET CAPITALISATION RATE 5.2
5%
WALE 14.6
OCCUPANCY 100.0%
MAJOR TENANT Sportsmed SA
SUSTAINABILITY FEATURES330kW Solar system.
Recent LED light replacement in warehouse and clinic.
A state of the art dedicated orthopaedic
facility, with five operating theatres and 45
private rooms. Precinct integrated with
consulting, clinic & office buildings.
35
WELLINGTON
• Boulcott Hospital
•
Bowen Hospital
•
W
akefield Hospital
HAWKE'S BAY
• Napier Health Centre
• Royston Hospital
New Zealand
Portfolio Overview
PRIVATE HOSPITALS
9 hospitals (all acute)
*
6 hospital operators
23% of portfolio; 24% of rent
WALE:
22.4 years
AUCKLAND
• Apollo Health and Wellness
• Ascot Central
• Ascot Carpark (right of use)
• Ascot Hospital & Clinics
• Ormiston Hospital
5
NORTHLAND
• Kensington Hospital
BAY OF PLENTY
• Grace Hospital
2
3
OUT-PATIENT FACILITIES
/ MEDICAL OFFICE
BUILDINGS
3 assets
3% of portfolio; 4% of rent
WALE:
8.6 years
*includes Ascot Carpark (right of use).
1
1
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
36
NEW ZEALAND PORTFOLIO
New Zealand Portfolio
ASCOT HOSPITAL
Auckland
MARKET VALUE $12
6,250,000
MARKET CAPITALISATION RATE 4.63%
WALE 17.0
OCCUPANCY 99.5%
MAJOR TENANT Ascot Hospital and Clinics Limited
SUSTAINABILITY FEATURESRemoval of ACP panels
underway. New
efficient chillers recently installed.
Private surgical and medical facilities, with
12 operating theatres, 88 inpatient beds,
and a 2
4-hour accident and emergency
clinic.
GRACE HOSPITAL
Tauranga
MARKET VALUE $10
4,500,000
MARKET CAPITALISATION RATE 4.75%
WALE 29.5
OCCUPANCY 100.0%
MAJOR TENANT Norfolk Southern Cross Limited
A purpose built 51-bed, 11-theatre facility
completed in 200
7 and expanded in 2020.
JV between major hospital operators
Southern Cross Hospitals, and Evolution
Healthcare.
WAKEFIELD HOSPITAL
Wellington
MARKET VALUE $99,590,71
1
MARKET CAPITALISATION RATE 4.88%
WALE 26.4
OCCUPANCY 100.0%
MAJOR TENANT Evolution Healthcare
SUSTAINABILITY FEATURESBase isolation - earthquake
resilience improvement underway
.
Wellington's largest private hospital.
Current redevelopment will result in a
seismically resilient, modern and functional
facility, eight operating theatres, 42 beds
and a 3,000sqm medical consulting
building.
ROYSTON HOSPITAL
Hastings
MARKET VALUE $81
,304,716
MARKET CAPITALISATION RATE 5.00%
WALE 28.4
OCCUPANCY 100.0%
MAJOR TENANT Evolution Healthcare
SUSTAINABILITY FEATURESReplacement of chiller with
more efficient modern unit. Inground stabilisation
works to increase seismic resilience to expansion.
Single-level hospital facility and two-level
consulting centre. Only private hospital
within the regional hub of the Hawkes Bay
and one of two hospitals in the region
serving 1
60,000 residents.
BOWEN HOSPITAL
Wellington
MARKET VALUE $63,500,000
MARKET CAPITALISATION RATE 4.7
5%
WALE 28.4
OCCUPANCY 100.0%
MAJOR TENANT Evolution Healthcare
Two-level hospital facility and five-level
specialist consulting buiding. Recent
redevelopment has brought a new theatre
and procedure room on line.
BOULCOTT HOSPITAL
Lower Hutt
MARKET VALUE $47
,000,000
MARKET CAPITALISATION RATE 5.00%
WALE 17.0
OCCUPANCY 100.0%
MAJOR TENANT Healthe Care
38-bed private surgical hospital with three
operating theatres and is located directly
adjacent to the Hutt public hospital.
37
ORMISTON HOSPITAL
Auckland
MARKET VALUE $45,400,000
MARKET CAPITALISATION RATE 5.25%
WALE 2.6
OCCUPANCY 100.0%
MAJOR TENANT Ormiston Surgical and Endoscopy
Limited
SUSTAINABILITY FEATURESRecent removal of ACP,
sustainability review underway with dedicated
specialists.
Ormiston is anchored by Ormiston Surgical
and Endoscopy Limited, a business whose
cornerstone shareholder is Southern Cross
Hospitals Limited, New Zealand’s largest
private hospital operator
.
ASCOT CENTRAL
Auckland
MARKET VALUE $43,300,000
MARKET CAPITALISATION RATE 5.25%
WALE 6.5
OCCUPANCY 80.9%
MAJOR TENANT Fertility Associates Limited
SUSTAINABILITY FEATURESRemoval of ACP underway.
ESD rating 4 Star Greenstar (by design).
Ascot Central is a high-quality, five-level
medical office building located next to
Ascot Hospital.
APOLLO HEALTH & WELLNESS CENTRE
Auckland
MARKET VALUE $27
,600,000
MARKET CAPITALISATION RATE 5.75%
WALE 8.1
OCCUPANCY 84.0%
MAJOR TENANT Apollo Medical Limited
SUSTAINABILITY FEATURESEarthquake strengthening
underway
.
New energy efficient chiller planned for 2022.
Apollo is home to a diverse range of
specialist healthcare tenants including
audiologists, physiotherapists, laboratory
and radiology providers, fertility specialists
and GPs.
KENSINGTON HOSPITAL
Whangarei
MARKET VALUE $23,2
00,000
MARKET CAPITALISATION RATE 5.2
5%
WALE 25.0
OCCUPANCY 100.0%
MAJOR TENANT Kensington Hospital Limited
SUSTAINABILITY FEATURESNew efficient air cooled
chiller recently undertaken.
Two-level building utilised for both inpatient
and day-stay surgery, comprising three
theatres and 19 beds, along with an
adjoining building containing consulting
and support ser
vices.
NAPIER HEALTH CENTRE
Napier
MARKET VALUE $16,2
50,000
MARKET CAPITALISATION RATE 6.00%
WALE 12.5
OCCUPANCY 100.0%
MAJOR TENANT Hawke's Bay District Health Board
SUSTAINABILITY FEATURESPlanning underway to
improve seismic resilience.
The first comprehensive ambulatory facility
in the Hawke's Bay and provides day-
patient and outpatient services. Lease
recently extended with Hawke's Bay DHB to
secure commitment through to Dec 2
033.
ASCOT CARPARK (RIGHT OF USE)
Auckland
MARKET VALUE $7,860,650
MARKET CAPITALISATION RATE 8.8
2%
WALE 14.6
OCCUPANCY 89.8%
MAJOR TENANT Ascot Hospital and Clinics Limited
Ground lease tenure. Comprises Ascot
Central Carparks (1
7
6 carparks) and Ascot
Hospital Carparks (273 carparks).
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
38
ASSET ALLOCATION
Investments are targeted to provide earnings growth
from a diversified and defensive asset base.
*Healthcare precinct = area or hub for healthcare delivery typically including at least two of a public hospital, major private
hospital, health teaching facility or health research facility. † The initial focus for this sub-sector will be New Zealand. Hospitals and
aged care are the priority for Vital's growth in Australia at least in the near-term.
Asset Allocation
Vital invests in health ecosystems in New Zealand and Australia.
The precinct strategy will create new opportunities for Vital to build out assets in health-related precincts where public, private,
education, aged care and research uses are closely agglomerated and interrelated.
Target Portfolio Weightings:
HOSPITALS
COMPRISES:
Public, private, speciality,
rehabilitation and mental health
hospitals
TARGETING:
Government supported or high
private health insurance catchments
with growing populations
TARGET PORTFOLIO
WEIGHTING:
50 - 70%
(30 June 2021: 85%)
OUT-PATIENT/MEDICAL OFFICE BUILDINGS
COMPRISES:
Administration, diagnostic services
and specialist consulting, primary
care out-patient facilities
TARGETING:
Facilities located in a healthcare
precinct* and/or from where
healthcare is delivered
TARGET PORTFOLIO
WEIGHTING:
10 - 20%
(30 June 2021: 10%)
AGED CARE
COMPRISES:
Residential aged care facilities
(excluding retirement facilities)
TARGETING:
High quality operators with
substantial balance sheets and
<45% Rent/EBITDAR and
high-quality infrastructure
TARGET PORTFOLIO
WEIGHTING:
10 - 20%
(30 June 2021: 5%)
LIFE SCIENCES/RESEARCH
COMPRISES:
Biotechnology, pharmaceutical,
biomedical, university, health
education and other research
facilities
TARGETING:
Specialised facilities and/or
facilities located in a healthcare
precinct*
TARGET PORTFOLIO
WEIGHTING:
5-15%
(30 June 2021: 0%)
†
39
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
40
GOVERNANCE AND MANAGEMENT
Our Board
The Board comprises five highly qualified Directors located in four cities;
three Directors are independent.
GRAHAM STUART
Independent Chair
(64, Auckland)
Graham Stuart is an experienced corporate
Director with an established track record of
performance in governance and in prior
e
xecutive roles. He is currently the Independent
Chairman of EROAD Limited and an
Independent Director and Chair of the Audit
Committee at Tower, and an Independent
Director of Metro P
erformance Glass. He served
for 7 years as the Chief Executive Officer of
Sealord Group and prior to that was Director,
Strategy and Growth and Chief Financial
Officer of Fonterra Co-operative Group.
Graham is a Fellow of Chartered Accountants
Australia & New Zealand (CAANZ). Graham
has a Masters of Science from Massachusetts
Institute of Technology and a Bachelor of
Commerce with first class honours from the
University of Otago.
PAUL DALLA LANA
Director
(55, Toronto)
Paul Dalla Lana is the founder and Chief
Executive Officer of North
West Healthcare
P
roperties REIT – the 100% owner of NorthWest
Healthcare Properties Management Limited, the
Manager of Vital Healthcare Property Trust.
Over the past 25 years, Paul has led NorthWest
in the acquisition and development of over
$7.0 billion worth of real estate transactions, with
a significant focus on healthcare properties.
Prior to founding NorthWest, Paul was a
professional in the Real Estate Capital Markets
Group of Citibank, N.A. and an economist with
B.C. Central Credit Union. Paul received his BA
(Economics) and his MBA (Finance and Real
Estate) from The University of British Columbia.
Paul serves as Chairman of the Board of
NorthWest Healthcare Properties REIT.
Additionally, he is actively involved in
addressing public health and education issues in
Canada and around the world. He is an
Advisory Board member of the Dalla Lana
School of Public Health and on the President’s
Advisory Council at the University of Toronto.
ANDREW EVANS
Independent Director
(57, Auckland)
Andrew E
vans has over 25 years’ experience in
commercial real estate and asset management,
previously holding e
xecutive positions in listed
and unlisted real estate investment businesses.
Andrew is Chairperson of Accessible Properties
NZ Limited and Infinity Investment Group
Holdings Limited, is a Director of Holmes Group
Limited, Holmes GP Fire Limited and Trust
Investments Management Limited, and is a
former director of Argosy Property Limited.
In addition, Andrew is a past National President
of the Property Council of New Zealand, a
fellow of the New Zealand Property Institute,
and a government appointee to the Land
Valuation Tribunal (Waikato No.1). He is a
Chartered Fellow of the Institute of Directors of
New Zealand and is on the Auckland Branch
Committee.
Andrew has a Bachelor of Business Studies and
MBA (with distinctions) from Massey University
and a Diploma in Finance from Auckland
University.
41
Directors are based
in Auckland, Toronto
Sydney and Melbourne.
Their current and
prior executive
experience includes
healthcare, property
and finance.
CRAIG MITCHELL
Director
(53, Sydney)
Craig Mitchell has more than 20 years'
experience specialising in the property industry
in Australia. His pre
vious roles include Executive
Director and Chief Operating Officer of Dexus,
an ASX top 50 listed REIT.
Craig is President of the NorthWest Group,
having joined in 2018 as CEO of Australia and
New Zealand. He is responsible for funds
management globally including establishment of
new funds, providing strategic direction as part
of the REIT’s global leadership team, and has
overall accountability for the Australian and
New Zealand region, including strategy,
performance and leading the team of over 40
real estate professionals.
Craig has a Master of Business Administration
(Executive) from the Australian Graduate School
of Management, a Bachelor of Commerce and
is a Fellow of CPA Australia. He has also
completed the Advanced Management
Program at Harvard University, Boston.
DR MICHAEL STANFORD
Independent Director
(62, Melbourne)
Michael Stanford is an e
xperienced Non-
Executive Director (“NED”) and health services
advisor having moved into NED roles following
a distinguished 30 year senior e
xecutive career
in the health care sector, including 23 years in
Group Chief Executive Officer roles across the
private and public health sectors.
His current Board roles include:
Virtus Health (ASX:VRT), the market leading
provider of Assisted Reproductive Services in
Australia, Ireland and Denmark, with a growing
presence in the UK and Singapore; and
Nucleus Networks, the first global, multi-site,
early phase clinical trial organisation with
facilities in Australia and the USA. Nucleus
Networks is owned by the private equity group
Crescent Capital Partners.
In the last 3 years Michael’s other Board roles
have been with Healthscope (ASX:HSO),
Australia’s second largest hospital group with 43
facilities, which was acquired by Brookfield
Private Equity in June 2019, and Australian
Clinical Laboratories, Australia’s third largest
diagnostic services provider (private equity
owned).
In 2018 Michael was awarded a Member of
the Order of Australia for significant service to
the health sector through executive roles, to
tertiary education and the WA community. In
2010 he received the WA Citizen of the Year
Award – Industry and Commerce category.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
42
GOVERNANCE AND MANAGEMENT
Our Executive Team
Vital's executive team comprises real estate professionals with
extensive e
xperience in New Zealand, Australia and beyond.
AARON HOCKLY
Fund Manager – Vital Healthcare
P
roperty Trust
(43, Auckland)
Aaron Hockly returned to New Zealand in 2018
after 17 years in senior management and
advisory roles in Australia. He has an e
xtensive
property, funds management and legal
background with his last role in Australia being
the Chief Operating Officer for Growthpoint
Properties Australia. Growthpoint is a A$4.1bn
ASX listed real estate investment trust with a
portfolio of quality office and industrial
properties. At Growthpoint Aaron had direct
management responsibility for strategy,
transaction structuring and execution (property,
debt and equity), reporting and investor
relations.
Among other qualifications, Aaron has a
Masters in Applied Finance and a BA/LLB from
the University of Auckland. He is a Fellow of
both Governance New Zealand and the
Financial Services Institute of Australasia
(FINSIA).
Aaron currently serves on the board of Mercy
Healthcare (Auckland).
CHRIS ADAMS
Executive Director - Developments
(5
1, Melbourne)
Chris Adams has extensive experience in the
property industry in Australia, New Zealand and
the United Kingdom, including over 20 years'
experience in health sector property acquisitions,
transaction structuring and large scale hospital
de
velopment.
Responsibilities with respect to NorthWest
include overseeing development management
and joint responsibility for acquisitions
undertaken by the business. Chris was one of the
founding Executives at Generation Healthcare
REIT (now NorthWest Healthcare Properties
Australia REIT).
Prior to joining Generation, Chris established
Vital Health Care’s presence in Australia in 1999
and served as General Manager – Australia
following various roles with the group in New
Zealand. Chris holds a Bachelor of Property
from Auckland University.
ALEX BELCASTRO
Senior Vice President - Medical P
recincts
(33, Sydney)
Alex Belcastro joined the team in April 2021,
prior to which she was the Chief Business
Development
Officer at Ramsay Health Care,
where she managed a multi-billion-dollar
portfolio of 73 hospital assets in Australia.
Alex has over 13 years of specialised healthcare
real estate experience across the public and
private sectors, having been involved in over
$8b of hospital, laboratory, and research
projects.
Alex holds a Master of Construction
Management, and a Bachelor of Planning and
Design (Property and Construction) from the
University of Melbourne. Alex has undertaken
executive education at Harvard Business School.
43
VANESSA FLAX
Regional General Counsel A/NZ
and Company Secretary
(50, Melbourne)
Vanessa Flax joined the team on 1 May 2019,
prior to which she was a special counsel at
Ashurst Australia. Vanessa has 2
5 years of deep
and broad ranging property law e
xperience in
Australia and New Zealand, including acting
(for approximately 15 years) for Vital and
NorthWest. Vanessa's experience covers all
aspects of real property transactions, including
acquisitions, divestments and sales, leasing and
Crown leasing, development transactions and
due diligence.
MICHAEL GROTH
Chief Financial
Officer
(47, Melbourne)
Michael Groth is a qualified Chartered
Accountant, has over thirteen years’ experience
in senior
finance roles in the listed and unlisted
property funds and funds management industry.
His most recent role has been as the Group
Chief Financial Officer of the Melbourne based
and ASX listed APN Property Group Limited
(APN). APN is a specialist real estate investment
manager currently managing 2 ASX listed and
10 unlisted funds, with total Funds under
Management of A$2.8bn.
Michael has over 5 years’ experience in
healthcare property funds management through
his involvement with Generation Healthcare
REIT, which was in the APN stable of funds
before it was privatised and delisted from the
ASX.
RICHARD ROOS
Executive Director - Port
folio
(56, Melbourne)
Richard Roos has over 20 years’ career
experience in commercial real estate
financing,
acquisitions and property management, 14
years of which have been in healthcare real
estate.
In his role as Executive Director, Richard is
responsible along with his Melbourne and
Auckland-based teams for the asset
management of the NorthWest Group’s
Australian and New Zealand portfolio, including
leasing and tenant relationships, and joint
responsibility for acquisitions and business
development. In particular, Richard’s strong
relationships with healthcare operators are a
crucial element of NorthWest’s success in
sustainability achieving its growth targets.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
44
GOVERNANCE AND MANAGEMENT
Corporate
G
o
vernance
JOINT INVESTMENT POLICY
Under the terms of the Joint Investment Policy, which applies to NWH REIT
and its owned and controlled entities (including the Manager), an
Investment Committee has been established to avoid, manage and
resolve actual or perceived
conflicts of interests between members of the
NWH REIT group in a manner which complies with any relevant legal
obligations and is equitable to each party. The Joint Investment Policy can
be found on Vital’s website, www.vhpt.co.nz.
THE BOARD OF DIRECTORS
The role of the Board of Directors is to set the strategic direction of Vital
and to support management in monitoring the delivery of this against
specific performance objectives. The Board also ensures all business risks
are appropriately identified and managed and compliance with all
applicable regulatory, statutory, financial, health and safety and social
responsibilities of the Manager.
Board Composition
The Manager is committed to having an effective Board providing a
balance of independent skills, knowledge, experience and perspectives.
All Directors bring a significant breadth and depth of expertise and have
the composite skills to optimise the financial and portfolio performance of
Vital and returns to unitholders.
Attendance at Board
Meetings
Eligible to
Attend /
AttendedDate of Appointment
Bernard Crotty6/616 January 2012
1
Paul Dalla Lana6/616 January 2012
Andrew Evans6/620 August 2007
Craig Mitchell
Michael Stanford
0/0
6/6
29 June 2021
19 November 20
19
Graham Stuart6/612 November 2018
(Appointed Chair
17 November 2020)
1 Retired 29 June 2021
The Board does not impose a restriction on the tenure of any Director as it
considers such a restriction may lead to the loss of experience and
e
xpertise.
Appointment
Unitholders have the opportunity to appoint two of the Independent
Directors of the Manager. Unitholders are able to nominate and vote on
one Independent Director of the Manager each year. The nominee
receiving the most votes will be approved as a Director of the Manager
by the Manager’s shareholders, and will hold the position for a two year
term.
As the Manager is a wholly owned subsidiary of NWH REIT, appointment
of other Directors is made by NWH REIT.
The terms of a Director’s appointment are contained in the Board Charter.
The purpose of the Charter is to set out the role, composition and
responsibilities of the Board, and how its powers and responsibilities will
be exercised and discharged. The Charter reaffirms Directors must comply
with their duties as set out in the Companies Act 1993, including to act in
good faith, together with other duties which include (but are not limited to)
conducting themselves in an appropriate manner
. The Charter can be
found on Vital’
s website, www.vhpt.co.nz.
The table below shows all relevant interests of Directors and Officers in
units, which include legal and beneficial interests in Vital units as at the
financial year end date.
Directors
Holdings (number of
units) non-beneficial
Holdings (number of units)
beneficial
Paul Dalla Lana
1
Andrew Evans
-
64,77
5
135,184,688
605,859
Bernard Crotty--
Michael Stanford--
Graham Stuart-30,000
Officers
Aaron Hockly
2
-68,502
1 Paul Dalla Lana is the founder, Chairman, CEO, Trustee and largest unitholder of NorthWest Healthcare Properties Real Estate
Investment Trust (a trust organised under the laws of Ontario, Canada, Corporation). NorthWest Healthcare P
roperties Real Estate
Investment Trust directly or indirectly holds approximately 135.2 million units in Vital Healthcare Property Trust, in respect of which Mr
Dalla Lana is considered to have a relevant interest. Mr Bernard Crotty is the former President and a Trustee of NorthWest
Healthcare Properties Real Estate Investment Trust, but is not considered to have a relevant interest in its units in Vital.
2 Aaron Hockly makes a voluntary disclosure that members of his immediate family own an additional 85,000 units in Vital.
Independent Directors
The Manager recognises that Independent Directors are important in
assuring unitholders that the Board is properly fulfilling its role and is
diligent in holding management accountable for its performance. The
procedures in place for determining independence is whether the director
is independent of management and free of any business or other
relationship which might materially interfere with, or might reasonably be
perceived to materially interfere with, the exercise of their independent
judgement. Biographies of each Board member including their skills,
experience and expertise are included in the Board of Directors section on
pages 40-41.
Chair
On 17 November 2020, Graham Stuart was appointed Chair of the
Manager. Graham's role as Chair is to provide leadership to the Board of
Directors and as Chair he is accountable to the Board.
AUDIT COMMITTEE
The Audit Committee is responsible for overseeing the financial and
reporting practices of Vital. The minimum number of members on the Audit
Committee is three members who must be Directors. The majority of
members must be Independent Directors and at least one member must
have an accounting or financial background.
The Audit Committee Charter is available on Vital’s website
www.vhpt.co.nz.
On 17 November 2020 Michael Stanford was appointed Chair of the
Audit Committee.
The members of the Audit Committee are Craig Mitchell, Andrew Evans,
Michael Stanford (Chair), Graham Stuart and Paul Dalla Lana.
45
At financial year end and at the date of this report, the Audit Committee
assists the Board in fulfilling its corporate governance and disclosure
responsibilities with particular reference to financial matters, and internal
and e
xternal audit, and is
specifically responsible for:
•Recommending to the Board the appointment / removal of Vital’s
external auditor; and
•Reviewing the performance of the external auditor.
Attendance at Audit Committee
Meetings
Eligible to
Attend /
AttendedDate of Appointment
Bernard Crotty4/416 January 2012
Paul Dalla Lana4/46 October 2020
Andrew Evans4/414 November 2011
Craig Mitchell
Michael Stanford
0/0
4/4
29 June 2021
6 October 20
20
Graham Stuart4/49 May 2019
CONTINUOUS DISCLOSURE
It is important that the market and investors feel confident in the timing or
manner of any buying or selling of Vital units. As a NZX issuer, the
Manager is acutely aware of the need to ensure the market, investors and
regulators remain fully informed of any material or price sensitive
information relevant to Vital. The Board and all management employees
are aware of the NZX Continuous Disclosure requirements and Vital has
internal procedures in place to ensure compliance.
Management contract
North
West manages Vital in accordance with Vital’s Trust Deed in return
for which NorthWest receives management fees. From these management
fees, NorthWest pays salaries and other people related costs (including
taxes, rent, IT, travel and training) to its employees approximately 45 of
whom are solely or majority engaged with managing Vital, as well as the
Directors not appointed by all unitholders (three at the date of this report).
As a result, the details in this section relate to NorthWest’s employees
rather than Vital’s employees (as there are none).
Remuneration
As noted above, Vital does not have any direct employees. Instead,
NorthWest receives management fees to manage Vital from which it
provides remuneration to employees. As a result, there is no reporting on
individual employee salaries.
Notwithstanding the above, the following is provided to enhance
transparency:
1.Details of the holdings in Vital by Directors and officers as at 30 June
2021 is provided on page the previous page.
2.As at the date of this report, all New Zealand based Directors and
executives own units. Currently the tax regime for Vital makes it
uneconomic for the offshore based Directors and officers to hold units
in Vital.
3.As at the date of this report, Vital’s most senior executive officer, Fund
Manager Aaron Hockly, holds units in Vital and is voluntarily seeking to
hold units equivalent to at least 100% of his base salary by 2023. This is
expected to be achieved by on-market acquisitions, participation in
DRPs and capital raisings (if there are any). It is proposed to confirm this
in future Annual Reports.
4.Details of the costs of Independent Directors appointed by unitholders
and, as a result, paid for from Vital are included in note 22 to the
accounts in this report.
5.Over two thirds of the F
und Manager’
s annual potential bonus, and
over 1/6
th
of other key personnel, directly relates to the performance of
Vital. In addition, all NorthWest’s executive bonuses globally are linked
to NorthWest’s unit price as 100% of these bonuses are paid in
NorthWest units. Vital represents approximately 27% of NorthWest’s
assets under management and 10% of its assets on balance sheet
(accounting for its 26% stake in Vital). As a result, NorthWest REIT’s
investment in Vital is material to the REIT and, accordingly all executive
remuneration is aligned with Vital’s success.
6.The following clawback / malus provisions are included in the bonus
plans for all NorthWest executives globally (including Vital’s Fund
Manager, CFO and other key personnel):
•Where the Participant (i) has been terminated for cause, or (ii)
voluntarily resigns from his or her position with the Trust then any
Deferred Units granted on a discretionary basis pursuant to Section
7.04 which have not yet vested at the time of the termination for
cause or voluntary resignation, shall be immediately forfeited by such
Participant.
•NorthWest will be undertaking a gender pay analysis in 2021.
SUSTAINABILITY/ COMMUNITY / SOCIAL RESPONSIBILITY
Please refer to pages 11-21 of this report for details.
MANAGER'S REMUNERATION
The basis on which the Manager is entitled to receive management fees
and incentive fees is stipulated in the Trust Deed which was amended
following an annual meeting on 31 October 2019.
Base management fees are charged at:
•0.65% per annum of the monthly average of the gross value of the
assets of the Trust up to $1 billion;
•0.55% per annum of the monthly average of the gross value of the
assets of the Trust between $1 billion and $2 billion;
•0.45% per annum of the monthly average of the gross value of the
assets of the Trust between $2 billion and $3 billion; and
•0.40% per annum of the monthly average of the gross value of the
assets of the Trust over $3 billion.
Activity services and activity fees are charged based on the following
categories:
a) Leasing
Vital pays the Manager leasing fees where the Manager has negotiated
leases instead of or alongside a real estate agent. Consistent with general
market rates, these fees are charged at 11% of the annual rental for terms
of 3 years or less (to a minimum of $2,500).
12% of the annual rental for terms of 3 years, and 12% plus an additional
1% for each year greater than three years (to a maximum of 20%).
Lease renewals are charged at 50% of a new lease.
Structured rent reviews or market reviews which do not result in a rental
increase are charged an administration fee of $1,000. Open market
reviews are charged at 10% of the rental increase achieved in the first
year.
Leasing fees are capitalised to the respective investment or development
property in the Statement of Financial Position and amortised over the term
of the life of the lease.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
46
GOVERNANCE AND MANAGEMENT
b) Property management
Vital pays the Manager property management fees where the Manager
acts as the property manager instead of or alongside a real estate agent.
These fees are charged at 1% - 2% of gross income depending on the
type of property. These fees are e
xpensed through direct operating
expenses in the year in which they arise.
c) Facilities management
Vital pays a facilities management fee on a cost recovery basis to the
Manager. These fees are expensed through direct operating expenses in
the year in which they arise.
d) Acquisitions
Vital pays fees to the Manager for managing the due diligence, financing,
legal aspects and settlement of the purchase of properties instead of or
alongside a real estate agent. These fees are charged at 1.5% of the
purchase price. Acquisition fees are capitalised to the respective
investment or development property in the Statement of Financial Position.
e) Development management
Vital pays development management fees where the Manager acts as a
development manager on Vital developments. These fees are charged at
4% of the committed spend, exclusive of land. Development management
fees are capitalised to the respective investment or development property
in the Statement of Financial Position.
f) Project management
Vital pays project management fees to the Manager for managing capital
expenditure projects, instead of engaging an external project manager.
These fees are charged at 2% of the committed spend where the
Manager is the project lead and 1% of committed spend where the
Manager has an oversight role. Project management fees are capitalised
to the respective property in the Statement of Financial Position.
Incentive Fee
The incentive fee is an amount equal to 10% of the average annual
increase in the Net Tangible Assets of Vital over the relevant financial year
and two preceding financial years subject to a three year high-water
mark.
The Manager and the Supervisor are both entitled to be reimbursed out of
the Trust Fund for all expenses, costs or liabilities incurred by them
respectively in acting as Manager and Supervisor.
Supervisor’s Remuneration
The Supervisor is entitled to receive fees in respect of its services based on
the average gross value of the assets of Vital as follows: 0.10% per annum
on the first $100m, then 0.08% per annum on the next $25m, then 0.05%
per annum on the next $25m and 0.03% per annum on any amount over
$151m. The Supervisor is also entitled to reasonable reimbursement for
special attendances.
Insurance and Indemnities
In accordance with the Board Charter, the Manager has provided
insurance and indemnities to its Directors and officers for any liability /
losses arising in respect of actions or omissions occurring during the
normal carrying out of their duties.
SECURITY TRADING POLICY
The Manager’s Directors, officers and employees, their families and
related parties must comply with the Security Trading Policy. The Manager
is committed to ensuring compliance with legal and regulatory
requirements with respect to insider trading and restricted persons trading.
To assist with such compliance, the Manager’s Security Trading Policy
identifies circumstances where directors, officers and other restricted
persons are permitted to trade or are prohibited from trading units in Vital.
Compliance with these policies is monitored by the Board. In addition, all
trading by Directors and officers of the Manager is required to be
reported to NZX in accordance with the F
inancial Markets Conduct Act
20
13. The holdings of Directors of the Manager are disclosed on page
44.
The Manager’s Security Trading Policy is available on Vital’s website
www.vhpt.co.nz.
EXTERNAL AUDITORS
The Audit Committee Charter sets out the procedures to be followed to
ensure the independence of the Trust’s external auditor.
The Audit Committee is responsible for recommending the appointment of
the external auditor and maintaining procedures for the rotation of the
external audit engagement partner. Under the Audit Committee
Charter, the external audit engagement partner must be rotated at least
every five years.
The Audit Committee Charter covers provision of non-audit services with
the general principle being that the external auditor should not have any
involvement in the production of financial information or preparation of
financial statements such that they might be perceived to be auditing their
own work.
To maximise the effectiveness of communication at the Annual Meeting,
the Manager also requires its external auditors to attend the meeting and
be prepared to answer unitholders’ questions about the conduct of the
audit, as well as the preparation and content of the independent auditor’s
report.
Vital undertakes an annual audit engagement with its external auditor. As
part of the process the Audit Committee identifies any key areas of focus
and reporting required of the auditors. Management is required to attend
the meeting to discuss the findings of the report and respond to queries.
Any recommendations for improvement are discussed and management is
required to agree a timetable for the implementation of the changes.
Following careful consideration and recommendation from the Audit
Committee, the Board appointed the firm of Deloitte as the Trust’s statutory
auditor. The firm of KPMG has been appointed as the auditor of the
Manager.
COMMUNICATION WITH UNITHOLDERS
A key focus of investor relations is to ensure the market and investors are
informed of all details necessary to assess their investment and Vital’s
performance as specified by NZX Listing Rules.
The Board aims to foster constructive communications and encourages all
stakeholders to engage with Vital.
A key element of corporate communication is the Trust’s website at
www.vhpt.co.nz. Vital’s website was recently refreshed and updated to
make it easier for unitholders to locate and understand key information.
The website enables all existing and potential unitholders to view
information including: an overview of the business and corporate structure,
a history of financial and investment performance, key calendar dates and
the ability to access and download all NZX announcements,
presentations and investor forms.
The website also includes key corporate governance documents including
the Board Charter, Statement of Investment Policies and Objectives (SIPO)
and other key policy documentation.
47
The Manager also actively encourages engagement through a
communication strategy which includes:
•The Annual Meeting for the unitholders to meet with and ask questions
of the Board, the Super
visor, management and e
xternal auditors;
•Any other meetings called to obtain approval for the Manager’s action
as appropriate;
•Results webcasting providing all investors with the ability to listen and
ask questions of Management; and
•Various investor communications including Annual and Interim Report.
RISK MANAGEMENT
The Board of Directors maintains a sound understanding of key risks faced
by Vital. Effective management of all financial and non-financial risks is
fundamental to the delivery of the Board’s strategy.
As part of its framework, the Board and Audit Committee work closely with
Management and external auditors to support the identification,
management and reporting of certain financial and non-financial risks to
Vital. In addition, the Manager will engage other external advisers as
appropriate to deal with specific risks.
Vital and the Manager have a risk management framework which is
integrated into day-to-day operations. This is part of Vital’s overall
compliance assurance programme which is audited on an annual basis
with risk groups reviewed annually.
BOARD DIVERSITY AND RELEVANT SKILLS
For more details on diversity see page 14.
At a Board level, diversity of experience is critical to ensure a healthy
e
xchange of ideas and opinions to deliver higher quality decision making
and outcomes. All Board appointments are always based on merit and
diversity (including gender and ethnicity).
A majority of the Directors are members of professional organisations such
as the Institute of Directors (or equivalent) or other industry
specific and
relevant organisations which support the ongoing education and training
of professional directors.
Healthcare real estate is a specialised sector and the Board believes it is
important to have members with a diverse range of backgrounds, skills
and experience to ensure robust discussion. It is also important to balance
skills and knowledge gained through length of tenure and the value of
fresh ideas in decision making. The table below summarises the skills,
experience and length of service of the current Board.
HEALTH AND SAFETY
For more details on health and safety see page 14.
The Directors and Manager are committed to ensuring that as far as
practical, a safe and healthy working environment is provided for all
employees, tenants, contractors and others who may visit our properties.
The Trust’s Health and Safety policy aims to reflect this commitment. Vital
and the Manager have implemented site specific hazard registers in New
Zealand which can be updated in real time and similar processes apply in
Australia. The Manager has implemented an Operational Risk and
Compliance Committee which meets on a regular basis and a standing
agenda item is Health and Safety.
Skills & Experience
Graham
Stuart
Bernard
Crotty
1
Paul
Dalla Lana
Andrew
Ev
ans
Craig
Mitchell
Michael
Stanford
Accounting/finance/economics●
●●●●●
Commercial real estate /asset management/valuation●●●●●
Corporate governance●●●●●●
Legal / regulatory●●●
International business●●●●●●
Healthcare practitioner●
Tenure (years)3101014<12
1 Retired on 29 June 2021.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
0
Financial Statements
Consolidated Statement of Comprehensive IncomeFIN-1
Consolidated Statement of Financial PositionFIN-2
Consolidated Statement of Changes in EquityFIN-3
Consolidated Statement of Cash FlowsFIN-4
Notes to the Consolidated Financial StatementsFIN-5
ABOUT THIS REPORTFIN-5
1Reporting EntityFIN-5
2Basis of PreparationFIN-5
3Significant Accounting PoliciesFIN-6
PERFORMANCEFIN-7
4Segment InformationFIN-7
5TaxationFIN-8
6Investment PropertiesFIN-10
7Other Income and ExpensesFIN-15
CAPITAL STRUCTURE , FINANCING AND RISK MANAGEMENTFIN-16
8Units on IssueFIN-16
9Earnings per UnitFIN-17
10Distributable IncomeFIN-17
11BorrowingsFIN-18
12Lease LiabilitiesFIN-19
13DerivativesFIN-20
14Financial and Risk ManagementFIN-21
15Commitments and ContingenciesFIN-26
EFFICIENCY OF OPERATIONSFIN-27
16Statement of Cash Flows Reconciliation from Operating ActivitiesFIN-27
17Trade and Other ReceivablesFIN-28
18Other AssetsFIN-29
19Trade and Other PayablesFIN-29
OTHER NOTESFIN-30
20Investment in SubsidiariesFIN-30
21Subsequent EventsFIN-30
22Related Party TransactionsFIN-31
Independent Auditor's Report83
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 20
21
Note
2021
$000s
2020
$000s
Gross property income from rentals113,622103,306
Gross property income from expense recoveries12,52211,113
Property expenses(16,481)(14,272)
Net property income4109,663100,147
Other income and expenses7(30,915)(23,268)
Net strategic transaction expenses22-(7,764)
Strategic transaction interest income22-268
Finance income3566
Finance expense11(27,719)(28,317)
Operating profit51,06441,132
Other gains/(losses)
Revaluation gain on investment property6235,38345,703
Net gain/(loss) on disposal of investment property611,310-
Fair value gain/(loss) on foreign exchange derivatives280(75)
Fair value gain/(loss) on interest rate derivatives22,375(13,456)
Realised gain/(loss) on foreign exchange(4,399)(6)
Unrealised gain/(loss) on foreign exchange2,454(2,997)
267,40329,169
Profit before income tax318,46770,301
Taxation expense5(40,075)(12,175)
Profit for the year attributable to unitholders of the Trust278,39258,126
Other comprehensive income
Items that may be reclassified subsequently to profit and loss:
Movement in foreign currency translation reserve1,71120,319
Realised foreign exchange gain/(loss) on hedges14E46,613-
Current taxation (expense)/credit(6,921)-
Fair value gain/(loss) on net investment hedges14E(46,352)(2,940)
Deferred taxation (expense)/credit7,074823
Total other comprehensive income/(loss) after tax2,12518,202
Total comprehensive income after tax280,51776,328
Earnings per unit
Basic and diluted earnings per unit (cents)955.9112.87
The notes on pages FIN 5 to FIN 34 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 202
1
Note
2021
$000s
2020
$000s
Non-current assets
Investment properties62,634,5882,086,309
Other non-current assets-756
Deferred tax56,4776,792
Total non-current assets2,641,0652,093,857
Current assets
Cash and cash equivalents166,8805,265
Trade and other receivables171,6345,202
Other current assets1812,736852
Derivative financial instruments1324542
Total current assets21,49511,361
Total assets2,662,5602,105,218
Unitholders' funds
Units on issue8777,199594,752
Reserves4,208(3,869)
Retained earnings722,044488,096
Total unitholders' funds1,503,4511,078,979
Non-current liabilities
Borrowings11814,895699,527
Lease liability - ground lease124,0943,675
Other payables19-10,268
Derivative financial instruments1340,37963,238
Deferred tax5129,361104,150
Total non-current liabilities988,729880,858
Current liabilities
Trade and other payables1941,00519,002
Income in advance854870
Derivative financial instruments13640232
Lease liability - ground lease12142136
Taxation payable13,33411,153
Borrowings11114,405113,988
Total current liabilities170,380145,381
Total liabilities1,159,1091,026,239
Total unitholders' funds and liabilities2,662,5602,105,218
For and on behalf of the Manager, NorthWest Healthcare Properties Management Limited.
G Stuart, Chairman
1
2 August 20
21
M Stanford, Director
The notes on pages FIN 5 to FIN 34 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 20
21
Units on issue
$000s
Retained
earnings
$000s
Translation
of foreign
operations
$000s
Foreign
e
xchange
hedges
$000s
Share based
payments
$000s
Total
unitholders'
funds
$000s
For the year ended
30 June 2020
Balance at the start of the period576,300469,914(93,322)64,77612,0771,029,745
Changes in unitholders' funds18,452---(12,077)6,375
Manager's incentive fee----6,4756,475
Profit for the period-58,126---58,126
Distributions to unitholders-(39,944)---(39,944)
Other comprehensive income for
the period
Movement in foreign currency
translation reser
ve--
20,319--20,319
Fair value gains on net investment
hedges---(2,117)-(2,117)
Balance at the end of the year594,752488,096(73,003)62,6596,4751,078,979
For the year ended
30 June 202
1
Balance at the start of the period5
94,752488,096(73,003)62,6596,4751,078,979
Changes in unitholders' funds182,447---(6,475)175,972
Manager's incentive fee----12,42712,427
Profit for the period-278,392---278,392
Distributions to unitholders-(44,444)---(44,444)
Other comprehensive income for
the period
Movement in foreign currency
translation reser
ve--
1,711--1,711
Realised foreign exchange gains on
hedges---39,692-39,692
Fair value gains on net investment
hedges---(39,278)-(39,278)
Balance at the end of the year777,199722,044(71,292)63,07312,4271,503,451
The notes on pages FIN 5 to FIN 34 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-4
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 20
21
Note
2021
$000s
2020
$000s
Cash flows from operating activities
Property income118,19699,165
Recovery of property expenses11,81411,651
Interest received3566
Property expenses(13,139)(13,051)
Management and trustee fees(14,610)(14,464)
Interest paid(28,089)(27,795)
Tax paid(13,776)(9,681)
Tax received-1,212
Other trust expenses(3,855)(2,667)
Net cash provided by/(used in) operating activities1656,57644,436
Cash flows from in
v
esting activities
Receipts from foreign exchange derivatives1,296182
Capital additions on investment properties(147,586)(84,929)
Purchase of properties(242,784)(65,261)
Prepaid transaction costs(2,539)(59)
Proceeds from disposal of properties99,05664
Repayment of loan provided to related parties-84,495
Payments for foreign exchange derivatives(2,026)(190)
Strategic transaction expenses(925)(5,427)
Strategic transaction third party interest-268
Net cash provided by/(used in) investing activities(295,508)(70,857)
Cash flows from financing activities
Debt drawdown1,204,354142,978
Repayment of debt(1,092,839)(83,382)
Issue of units159,652-
Loan issue costs(2,523)(409)
Costs associated with new equity raised(2,637)(58)
Distributions paid to unitholders(25,460)(33,511)
Net cash from/(used in) financing activities240,54725,618
Net increase/(decrease) in cash and cash equivalents1,615(803)
Cash and cash equivalents at the beginning of the period5,2656,068
Cash and cash equivalents at the end of the year6,8805,265
The notes on pages FIN 5 to FIN 34 form part of and are to be read in conjunction with these financial statements.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ABOUT THIS REPORT
1 REPORTING ENTITY
Vital Healthcare P
roperty 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, with its registered office at C/- Bell Gully, Level 22, Vero Centre, 48 Shortland
Street, Auckland 1010. The Trust is managed by NorthWest Healthcare Properties Management Limited (the “Manager”).
The consolidated financial statements of VHP for the year ended 30 June 2021 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
Group's principal activity is investment in high quality Health Sector related properties.
These consolidated financial statements were approved by the Board of Directors of the Manager on 12 August 2021.
2 BASIS OF PREPARATION
(a) Statement of compliance
These financial statements have been prepared in accordance with Generally Accepted Accounting P
ractice in New Zealand (NZ GAAP) and comply
with New Zealand equivalents to International F
inancial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as
appropriate for profit-oriented entities. Accordingly these financial statements comply with International Financial Reporting Standards (IFRS).
(b) Basis of consolidation
The Group’s financial statements incorporate the financial statements of the Trust and entities controlled by the Trust (its subsidiaries) as set out in Note
20. Control is achieved where the Trust has power over the investees; is exposed, or has rights, to variable returns from its involvement with the investees;
and has the ability to use its power to affect its returns. The results of subsidiaries are included in the consolidated financial statements from the date of
acquisition to the date of disposal. All intra-group transactions, balances, cashflows, income and expenses are eliminated on consolidation.
(c) Basis of measurement
The Group uses the historical cost basis except for derivative financial instruments and investment properties which are measured at fair value. Historical
cost is based on the fair value of the consideration given or received in exchange for assets or liabilities. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price
is directly observable or estimated using another valuation technique.
(d) Functional and presentation currency
These 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.
In preparing the financial statements, transactions in currencies other than an entity’s functional currency (i.e. a foreign currency transaction) are recorded
at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency denominated monetary items
are retranslated at the rate of exchange prevailing at that time. Exchange differences are recognised in profit or loss in the period in which they arise,
except for exchange differences on transactions entered into to hedge foreign currency exposure.
The assets and liabilities of the Group’s foreign operations are translated to New Zealand Dollars using exchange rates prevailing at the end of the
reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising on translation are
recognised in other comprehensive income and the foreign currency translation reserve.
(e) Changes in accounting policy and presentation
All accounting policies have been applied on a basis consistent with the prior year's financial statements.
(f) Standards and Interpretations in issue not yet effective
At the date of authorisation of these financial statements, the Group has not applied new and revised NZ IFRS standards and amendments that have
been issued but are not yet effective. It is not expected that the adoption of these standards and amendments will have a material impact on the financial
statements of the Group.
(g) Other accounting policies
Significant accounting policies that summarise the measurement basis used and are relevant to an understanding of the consolidated financial statements
are provided throughout the notes to the consolidated financial statements.
(h) Impact of COVID-19
In March 2020 the World Health Organisation declared the outbreak of a novel coronavirus (‘COVID-19’) as a pandemic, which spread throughout
New Zealand, Australia and the world. Governments in New Zealand and Australia responded with lock-downs, business trading restrictions and
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
social distancing measures all of which impacted large parts of the economy, including the ability for the Group’s tenants to operate on a business as
usual basis. In recent times, while COVID-19 vaccination programs have commenced and community transmissions of COVID-1
9 in New Zealand and
Australia have abated, there are periodic outbreaks that interrupt business as usual activity.
In response to these challenging economic conditions the Group supported some tenants with rent abatement and/or rent deferral arrangements. While
Government restrictions have eased and 'COVID normal' operating conditions have been established (including lock-downs to respond to periodic
outbreaks), as at the reporting date, trade receivables and loss allowances related to deferral arrangements with tenants impacted by previous lock-
downs and trading restrictions remain.
COVID-19 continues to create transactional market uncertainty in the evidence used by some, but not all, independent professionally qualified valuers to
inform assumptions and opinions that determine the fair value of investment property in the markets the Group operates (refer Note 6g for further details).
Currently there remains a risk of further community transmission outbreaks caused by COVID-19 mutations and/or further waves that would likely
adversely impact the viability of the Group’s tenants and therefore potentially the operating performance and the financial position of the Group if the
Governments in New Zealand and Australia were to respond with prolonged lock-downs and business trading restrictions. However the New Zealand
and Australian Governments appear to have taken a more localised approach to community outbreaks to date.
(i) The notes to the consolidated financial statements
The following notes include information required to understand these financial statements that is relevant and material to the operations, financial position
and performance of the Group. The notes have been collated into sections to help users find and understand inter-related information. Information is
considered material and relevant if, for example:
•the amount in question is significant by virtue of its size or nature;
•it is important to understand the results of the Group;
•it helps explain the impact of significant changes in the Group's business; or
•it relates to an aspect of the Group's operations that is important to its future performance.
3 SIGNIFICANT ACCOUNTING POLICIES
Critical accounting estimates and judgements
In the application of NZ IFRS, the Board and management are required to make judgements, estimates and assumptions about carrying values of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on e
xperience and other factors
that are belie
ved to be reasonable under the circumstances, however actual results may differ from these estimates and assumptions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
The critical judgements, estimates and assumptions made in the current period are contained in the following notes:
NoteDescription
Note 5Current and deferred taxation
Note 6Valuation of investment properties
Note 22Related party transactions
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PERFORMANCE
This section shows the results and performance of the Group and its reporting segments and includes detailed information in respect to its revenues,
e
xpenses and profitability. It also provides information on the investment properties that underpin the Group's performance.
4 SEGMENT INFORMATION
The principal business activity of the Group is to invest in Health Sector related properties. 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 Board, who are the chief operating decision makers for the purposes of resource
allocation and assessment of segment performance. The Group operates in both Australia and New Zealand.
The following is an analysis of the Group’
s results by reportable segment.
Australia
$000s
New Zealand
$000s
Total
$000s
Segment profit/(loss) for the year ended 30 June 2021:
Gross property income from rentals83,60530,017113,622
Gross property income from expense recoveries6,3056,21712,522
Property expenses(9,325)(7,156)(16,481)
Net property income80,58529,078109,663
Other expenses(12,607)(18,308)(30,915)
Net finance e
xpense(8,2
97)(19,387)(27,684)
59,681(8,617)51,064
Fair value gain/(loss) on interest rate derivatives-22,37522,375
Revaluation gains on investment properties162,64772,736235,383
Net gain/(loss) on disposal of investment property11,310-11,310
Other foreign exchange gains/(losses)(3)(1,662)(1,665)
Total segment profit before income tax233,63584,832318,467
Taxation expense(40,075)
Profit for the year278,392
Segment profit/(loss) for the year ended 30 June 2020:
Gross property income from rentals77,84125,465103,306
Gross property income from expense recoveries5,0156,09811,113
Property expenses(7,756)(6,516)(14,272)
Net property income75,10025,047100,147
Other expenses(11,256)(12,012)(23,268)
Net strategic transaction expenses(648)(7,116)(7,764)
Strategic transaction interest income268-268
Net finance e
xpense(9,8
25)(18,426)(28,251)
53,639(12,507)41,132
Fair value gain/(loss) on interest rate derivatives-(13,456)(13,456)
Revaluation gains on investment properties38,7856,91845,703
Other foreign exchange gains/(losses)-(3,078)(3,078)
Total segment profit before income tax92,424(22,123)70,301
Taxation expense(12,175)
Profit for the year58,126
Net property income comprises rental income and expense recoveries from tenants less property expenses. The Group has three Australian tenants that
contributed $77
.4m of gross property income (2020: two Australian tenants that contributed $56.5m).
There were no inter-segment sales during the year (2020: nil).
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4 SEGMENT INFORMATION (continued)
Australia
$000s
New Zealand
$000s
Total
$000s
Segment assets at 30 June 2021:
Investment properties1,933,502701,0862,634,588
Other non-current assets-6,4776,477
Current assets16,3695,12621,495
Consolidated assets1,949,871712,6892,662,560
Segment assets at 30 June 2020:
Investment properties1,594,519491,7902,086,309
Other non-current assets6146,9347,548
Current assets8,6822,67911,361
Consolidated assets1,603,815501,4032,105,218
Segment liabilities at 30 June 2021:
Borrowings800,950128,350929,300
Other liabilities173,31356,496229,809
Consolidated liabilities974,263184,8461,159,109
Segment liabilities at 30 June 2020:
Borrowings516,680296,835813,515
Other liabilities132,44380,281212,724
Consolidated liabilities649,123377,1161,026,239
All assets and liabilities have been allocated to reportable segments.
5 TAXATION
Income tax recognised in the consolidated statement of comprehensive income
202
1
$000s
2020
$000s
Profit/(loss) before tax for the period318,46770,301
Taxation (charge)/credit - 28% on profit before income tax(89,171)(19,684)
Effect of different tax rates in foreign jurisdictions30,39312,015
Tax exempt income21,8992,980
Tax impact of leasing deals4,653-
Tax impact of profit on property sales(1,880)-
Foreign tax credits9,8904,968
Tax charges on overseas investments(13,494)(12,031)
Over/(under) provided in prior periods(470)39
Other adjustments(1,895)(462)
Taxation (expense)/credit(40,075)(12,175)
The taxation (charge)/credit is made up as follows:
Current taxation(7,858)(7,238)
Deferred taxation(32,217)(4,937)
Total taxation (expense)(40,075)(12,175)
The key assumptions used in the preparation of the Group’s tax calculation are as follows:
Tax rate:
The Group's New Zealand entities are subject to New Zealand tax on assessable income at a rate of 28% while its Australian subsidiary trusts are
subject to Australian witholding tax on assessable income at a rate of 1
0% for interest income or 1
5% for 'fund payment' amounts as they are Australian
Managed Investment Trusts (MIT).
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Attributable Foreign Investment Fund Income:
Distributions received by Vital Healthcare Property Limited from Vital Healthcare Australian P
roperty Trust are no longer eligible for the foreign dividend
exemption provided by section CW 9 of the Income Tax Act 2007 and are therefore treated as a taxable distribution.
Deferred Tax balances
Interest rate
swaps
$000s
Revaluation
of investment
properties
$000s
Borrowings
$000s
Other
$000s
Total
$000s
At 1 July 201913,982(97,123)(7,897)171(90,867)
Charge to profit and loss for the year3,768(8,756)-11(4,937)
Change in exchange rate-(2,382)-5(2,377)
Charge to other comprehensive income--823-823
At 30 June 202017,750(108,221)(7,074)187(97,358)
At 1 July 202017,750(108,221)(7,074)187(97,358)
Charge to profit and loss for the year(6,265)(25,899)(38)(15)(32,217)
Change in exchange rate-(383)--(383)
Charge to other comprehensive income--7,074-7,074
At 30 June 202111,485(134,503)(38)172(122,884)
2021
$000s
2020
$000s
Deferred tax asset6,4776,792
Deferred tax liability(129,361)(104,150)
Total deferred tax(122,884)(97,358)
Imputation credits
2021
$000s
2020
$000s
Imputation (deficit)/credits at end of year(2,534)(2,183)
Recognition and measurement
Income tax comprises current and deferred tax for the Group. It is recognised in the consolidated profit or loss unless it relates to items recognised in
other comprehensive income, in which case the current or deferred tax is recognised in other comprehensive income.
Current tax
Current tax is the e
xpected tax payable on the taxable income of the Group for the
financial year, determined using tax rates enacted or substantively
enacted at the reporting date in the countries where the Group operates, and any adjustments to tax payable in respect of previous financial years.
Management periodically evaluates positions taken in tax returns where the applicable tax regulation is subject to interpretation and establishes
appropriate provisions on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is provided using the balance sheet liability method, recognising temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their amounts for taxation purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences
and carried forward tax losses, to the extent that it is probable that taxable profit will be available to utilise them.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to utilise them.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset or liability giving rise to them is
realised or settled, based on the tax rates and laws enacted or substantively enacted at balance date.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off, they relate to the same taxation authority, and the Group
intends to settle its obligations on a net basis.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Significant estimates and judgements
Significant estimates and judgements made in the determination of deferred tax include:
•Deferred tax on depreciation – deferred tax is provided in respect of New Zealand based properties for the depreciation e
xpected to be recovered
on the sale of investment property
.
•Deferred tax on changes in fair value of investment properties – deferred tax for Australian based properties is provided on the capital gain expected
to be assessable on the land and building component from the sale of investment properties at fair value.
•Deferred tax on fixtures and fittings – it is assumed that all fixtures and fittings will be sold at their tax book value.
6 INVESTMENT PROPERTIES
Investment properties comprise real estate predominately leased, or targeted to be leased, to health sector tenants that is held for either deriving rental
income, for capital appreciation or both.
6A RECONCILIATION OF CARRYING AMOUNTS
2021
$000s
2020
$000s
Carrying value of investment property at the beginning of the year2,086,3091,836,430
Acquisition of properties237,07275,419
Capitalised costs121,64284,169
Capitalised interest costs4,8523,624
Net capitalised incentives
1
31,631753
Disposal of properties(87,771)-
Foreign exchange translation difference4,90136,256
Revaluation gain on investment property235,38345,703
Right of use asset recognised5693,955
Carrying value of investment property at the end of the year2,634,5882,086,309
1 Includes payments associated with the Belmont Private Hospital rent being rebased to market and lease extension.
The Group holds the freehold to all properties except the car parks at the rear of Ascot Hospital and Ascot Central, which are the subject of a ground
lease ("right-of-use" asset) that has a weighted average term remaining of 1
7
.8 years (2020: 18.8 years). As at reporting date the fair value of this right-
of-use asset totals $7.9m (2020: $7.4m).
6B JOINT ARRANGEMENTS
During 2019 the Group purchased a 50% tenants-in-common interest in an investment property in Elizabeth Vale, South Australia (now re-named
Playford Health Hub). Subject to a Co-ownership Deed, this arrangement constituted a joint operation whereby the Group recognised 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. On 21 August 2020 the Group purchased the remaining 50% interest in the investment property and ceased the joint
arrangement.
No new joint arrangements have been entered into in the current year.
6C ACQUISITION OF PROPERTY
During the year the Group acquired:
•the remaining 50% share in Playford Health Hub in Adelaide, South Australia for A$7
.4m (excluding transaction costs) on 21 August 2020.
•Grace Hospital located in Tauranga, New Zealand for $95m (excluding transaction costs) on 16 December 2020.
•A 5,330 square metre strategic development site at 17-23 Nelson Rd, Box Hill, Melbourne, Victoria, approximately 14kms east of Melbourne's CBD
for A$29m (excluding transaction costs) on 2 February 2021.
•Epworth Camberwell located in Melbourne, Victoria for A$82.7m (including a tenant incentive to be paid following the third anniversary of the
commencement of the lease but excluding transaction costs). This was settled on 30 June 2021.
•3,036 square metres of developable land at 7-17 Wolseley Street, Woolloongabba, Brisbane for A$11.4m (excluding transaction costs) on 7 June
2021.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6D DISPOSAL OF PROPERTY
During the period the Group:
•Sold 3 regional assets, being Dubbo Private Hospital (NSW), Mayo P
rivate Hospital (NSW) and North West Private Hospital (TAS) for a total of A
$94.3m (excluding transaction costs) on 21 December 2020. These assets had a carrying value of A$82.4m.
•Sold a development site at 142 Brighton Ave, Toronto, NSW for A$0.3m (excluding transactions costs) on 9 December 2020. This site had a
carrying value of A$0.3m.
6E LEASING ARRANGEMENTS
The majority of the investment properties are leased to tenants under long term operating leases. Rentals are receivable from tenants monthly
.
Minimum lease payments to be received under non-cancellable operating leases of investment properties not recognised in the consolidated
financial
statements as receivable are as follows:
2021
$000s
2020
$000s
Not later than one year110,304111,093
Later than one year and not later than five years514,869475,619
Later than five years1,191,333920,164
1,816,5061,506,876
6F CONTRACTUAL ARRANGEMENTS
The Group was party to contracts to purchase or construct property (including in respect to Epworth Eastern, Victoria and Wakefield Hospital,
Wellington) or provide lease incentives to tenants which are not recognised in the financial statements for the following amounts:
2021
$000s
2020
$000s
Capital expenditure commitments135,952208,198
Property acquisition commitments18,593-
Tenant incentive commitments10,742-
At 30 June 2021 the Group was committed to acquiring the following properties:
•A development site of 20,1
31 square metres at 187 - 195 Foxwell Rd, Coomera, Queensland, Australia for an acquistion price of A$9.4m (plus
transaction costs), which was settled on 15 July 2021.
•A development site of 749 square metres at 61-71 Park Road, Grafton, Auckland, New Zealand for NZ$7.25m (plus transaction costs), expected to
settle in September 2021.
An incentive of A$10m (plus GST) is payable to Epworth in return for a term extension of 3 years on the 3
rd
anniversary of the commencement of the
lease on the Epworth Camberwell property.
6G INDIVIDUAL VALUATIONS AND CARRYING AMOUNTS
The details of the New Zealand and Australian investment property port
folio, including its location, sub sector, fair value, market capitalisation rate,
occupancy and weighted average lease e
xpiry term are as follows (note that MOB is a Medical Office Building):
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-12
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Latest independent valuationFair valueMarket capitalisation rateOccupancyWALE
PropertiesLocationSub sectorMajor TenantDate$M
$M
Jun-2
1
$M
Jun-20
%
Jun-21
%
Jun-20
%
Jun-21
%
Jun-20
Years
Jun-21
Years
Jun-20
Australia
Lingard P
rivate Hospital
1
Merewether, New South WalesHospital (Acute)Healthe CareJun-21193.9193.9162.74.55.3100.0100.024.725.7
Maitland Private HospitalEast Maitland, New South WalesHospital (Acute/Specialty)Healthe CareJun-21118.3118.3109.45.15.5100.0100.016.517.5
Hurstville Private HospitalHurstville, New South WalesHospital (Acute)Healthe CareDec 2080.680.679.45.86.3100.0100.020.821.8
The Hills Clinic
1
Kellyville, New South WalesHosptial (Specialty)Healthe CareDec 2054.454.448.04.55.0100.0100.026.027.0
Toronto Private HospitalToronto, New South WalesHospital (Acute/Specialty)Healthe CareJun-2147.747.744.05.45.8100.0100.021.122.5
Mayo Private Hospital
2
Taree, New South WalesHospital (Acute)Healthe CareJun 200.0-42.8-6.0-100.0-11.5
Mons Road Medical CentreWestmead, New South WalesMOBCastlereaghJun-2139.739.736.75.45.894.594.53.64.5
Lingard Day Centre
1
Merewether, New South WalesMOBHealthe CareJun-2140.640.634.94.55.3100.0100.024.725.7
Hirondelle Private Hospital
1
Chatswood, New South WalesHospital (Specialty)Healthe CareJun-2130.230.227.85.35.5100.0100.020.921.9
Dubbo Private Hospital
2
Dubbo, New South WalesHospital (Acute)Healthe CareJun 200.0-19.5-6.0-100.0-11.6
Fairfield Aged CareFairfield, New South WalesAged CareHall & PriorDec 2019.319.318.56.37.0100.0100.014.715.7
Darlington Aged Care
1
Banora Point, New South WalesAged CareBolton ClarkeJun-2118.318.318.16.36.5100.0100.015.316.3
Clover Lea Aged CareBurwood Heights, New South WalesAged CareHall & PriorDec-2014.114.113.86.37.0100.0100.014.715.7
Grafton Aged CareSouth Grafton, New South WalesAged CareHall & PriorDec 2011.911.911.47.07.2100.0100.015.816.8
Epworth Eastern Hospital
3
Box Hill, VictoriaHospital (Acute)Epworth FoundationJun-21375.2375.2209.44.35.0100.0100.017.820.7
South Eastern Private HospitalNoble Park, VictoriaHospital (Specialty)Healthe CareJun-2186.086.071.14.85.1100.0100.019.720.7
Epworth CamberwellCamberwell, VictoriaHospital (Specialty)Epworth FoundationJun-2178.178.1-4.3-100.0-20.0-
Ekera Medical CentreBox Hill, VictoriaMOBImaging AssociatesJun-2133.333.332.55.35.5100.097.13.34.1
Epworth Rehabilitation
1
Brighton, VictoriaHospital (Specialty)Epworth FoundationJun-2129.029.027.85.55.5100.0100.02.63.6
Belmont Private HospitalCarina Heights, QueenslandHospital (Specialty)Healthe CareJun-21130.9133.583.34.35.0100.0100.024.215.7
Palm Beach Currumbin Clinic
1
Currumbin, QueenslandHospital (Specialty)Healthe CareDec 2069.269.261.54.85.3100.0100.014.211.6
The Southport Private Hospital
1
Southport, QueenslandHospital (Acute/Specialty)RamsayDec 2051.451.449.15.05.3100.0100.023.724.7
Eden Rehabilitation
1
Cooroy, QueenslandHospital (Acute/Specialty)Healthe CareJun-2130.033.029.25.35.5100.0100.016.417.4
Baycrest Aged Care
1
Hervey Bay, QueenslandAged CareBolton ClarkeJun-2119.819.819.86.36.5100.0100.015.016.0
Gold Coast Surgery Centre
1
Southport, QueenslandMOBSouth Coast RadiologyDec-2012.212.213.67.57.588.988.91.43.2
Tantula Rise Aged Care
1
Alexandra Headland, QueenslandAged CareBolton ClarkeJun-2124.724.724.66.36.5100.0100.015.016.0
Marian Centre
1
Wembley, Western AustraliaHospital (Specialty)Healthe CareJun-2157.857.852.94.65.1100.0100.013.114.1
Abbotsford Private Hospital
1
West Leederville, Western AustraliaHospital (Specialty)Healthe CareJun-2134.537.930.74.55.1100.0100.020.621.7
Hamersley Aged CareSubiaco, Western AustraliaAged CareHall & PriorDec-2013.513.513.16.87.1100.0100.014.715.7
Rockingham Aged CareRockingham, Western AustraliaAged CareHall & PriorDec-207.37.37.17.07.1100.0100.014.715.7
Sportsmed Hospital, Clinic & Cons.
4
Stepney, South AustraliaHospital (Acute)Sportsmed SAJun-2183.383.373.35.35.5100.0100.014.615.3
North West Private Hospital
2
Burnie, TasmaniaHospital (Acute/Specialty)Healthe CareJun 200.00.025.1-6.0-100.0-16.4
Total Australia1814.01537.7
New Zealand
Ascot Hospital & Clinics
1
Greenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedJun-21126.3126.3117.04.65.199.599.317.018.0
Grace Hospital
1
Tauranga, Bay of PlentyHospital (Acute)Norfolk Southern Cross LimitedJun-21104.5104.50.04.8-100.0-29.5-
Wakefield HospitalNewtown, WellingtonHospital (Acute)Acurity Health GroupDec 2099.399.658.84.95.5100.0100.026.427.5
Royston HospitalHastings, Hawkes BayHospital (Acute)Acurity Health GroupDec 2077.581.364.15.05.8100.0100.028.429.5
Bowen HospitalCrofton Downs, WellingtonHospital (Acute)Acurity Health GroupDec 2063.563.553.84.85.5100.0100.028.429.5
Boulcott Private Hospital
1
Lower Hutt, WellingtonHospital (Acute)Healthe CareJun-2147.047.041.35.05.6100.0100.017.018.0
Ormiston HospitalFlatbush, AucklandHospital (Acute)Ormiston Surgical and Endoscopy LtdJun-2145.445.440.55.35.7100.0100.02.63.0
Ascot CentralGreenlane, AucklandMOBFertility Associates LimitedJun-2143.343.338.05.35.480.9100.06.56.1
Apollo Health & Wellness Centre
1
Albany, AucklandMOBApollo Medical LimitedDec 2027.627.625.85.86.584.081.98.18.5
Kensington HospitalWhangarei, NorthlandHospital (Acute)Kensington Hospital LimitedJun-2123.223.220.35.35.9100.0100.025.026.0
Napier Health CentreNapier, Hawkes BayMOBHawke's Bay District Health BoardJun-2116.316.311.06.08.0100.0100.012.53.5
Ascot Carpark (right of use asset)Greenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedJun-213.67.97.48.810.789.899.814.615.3
Total New Zealand685.8477.9
Properties held for development
1
134.570.7
TOTAL FAIR VALUE OF
INVESTMENT PROPERTIES
2634.3
2086.34.95.599.299.418.718.1
1 The independent valuer, in determining or informing the fair value for this property, has advised that the transactional market evidence used is continuing to be impacted by uncertainty caused by the COVID-19 pandemic. Therefore less certainty and a higher degree of caution should be applied to the properties reported value than normally the case.
2Disposed during the period
3
Epworth Eastern Medical Centre was combined with Epworth Eastern Hospital.
4 Sportsmed Office was combined with Sportsmed Hospital, Clinic and Consulting. The independent valuer, in determining or informing the fair value for this property, has advised that the transactional market evidence used is continuing to be impacted by uncertainty caused by the COVID-19 pandemic. Therefore less certainty and a higher degree of caution should be applied to the properties reported value than normally the case.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-13
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Latest independent valuationFair valueMarket capitalisation rateOccupancyWALE
PropertiesLocationSub sectorMajor TenantDate$M
$M
Jun-2
1
$M
Jun-20
%
Jun-21
%
Jun-20
%
Jun-21
%
Jun-20
Years
Jun-21
Years
Jun-20
Australia
Lingard P
rivate Hospital
1
Merewether, New South WalesHospital (Acute)Healthe CareJun-21193.9193.9162.74.55.3100.0100.024.725.7
Maitland Private HospitalEast Maitland, New South WalesHospital (Acute/Specialty)Healthe CareJun-21118.3118.3109.45.15.5100.0100.016.517.5
Hurstville Private HospitalHurstville, New South WalesHospital (Acute)Healthe CareDec 2080.680.679.45.86.3100.0100.020.821.8
The Hills Clinic
1
Kellyville, New South WalesHosptial (Specialty)Healthe CareDec 2054.454.448.04.55.0100.0100.026.027.0
Toronto Private HospitalToronto, New South WalesHospital (Acute/Specialty)Healthe CareJun-2147.747.744.05.45.8100.0100.021.122.5
Mayo Private Hospital
2
Taree, New South WalesHospital (Acute)Healthe CareJun 200.0-42.8-6.0-100.0-11.5
Mons Road Medical CentreWestmead, New South WalesMOBCastlereaghJun-2139.739.736.75.45.894.594.53.64.5
Lingard Day Centre
1
Merewether, New South WalesMOBHealthe CareJun-2140.640.634.94.55.3100.0100.024.725.7
Hirondelle Private Hospital
1
Chatswood, New South WalesHospital (Specialty)Healthe CareJun-2130.230.227.85.35.5100.0100.020.921.9
Dubbo Private Hospital
2
Dubbo, New South WalesHospital (Acute)Healthe CareJun 200.0-19.5-6.0-100.0-11.6
Fairfield Aged CareFairfield, New South WalesAged CareHall & PriorDec 2019.319.318.56.37.0100.0100.014.715.7
Darlington Aged Care
1
Banora Point, New South WalesAged CareBolton ClarkeJun-2118.318.318.16.36.5100.0100.015.316.3
Clover Lea Aged CareBurwood Heights, New South WalesAged CareHall & PriorDec-2014.114.113.86.37.0100.0100.014.715.7
Grafton Aged CareSouth Grafton, New South WalesAged CareHall & PriorDec 2011.911.911.47.07.2100.0100.015.816.8
Epworth Eastern Hospital
3
Box Hill, VictoriaHospital (Acute)Epworth FoundationJun-21375.2375.2209.44.35.0100.0100.017.820.7
South Eastern Private HospitalNoble Park, VictoriaHospital (Specialty)Healthe CareJun-2186.086.071.14.85.1100.0100.019.720.7
Epworth CamberwellCamberwell, VictoriaHospital (Specialty)Epworth FoundationJun-2178.178.1-4.3-100.0-20.0-
Ekera Medical CentreBox Hill, VictoriaMOBImaging AssociatesJun-2133.333.332.55.35.5100.097.13.34.1
Epworth Rehabilitation
1
Brighton, VictoriaHospital (Specialty)Epworth FoundationJun-2129.029.027.85.55.5100.0100.02.63.6
Belmont Private HospitalCarina Heights, QueenslandHospital (Specialty)Healthe CareJun-21130.9133.583.34.35.0100.0100.024.215.7
Palm Beach Currumbin Clinic
1
Currumbin, QueenslandHospital (Specialty)Healthe CareDec 2069.269.261.54.85.3100.0100.014.211.6
The Southport Private Hospital
1
Southport, QueenslandHospital (Acute/Specialty)RamsayDec 2051.451.449.15.05.3100.0100.023.724.7
Eden Rehabilitation
1
Cooroy, QueenslandHospital (Acute/Specialty)Healthe CareJun-2130.033.029.25.35.5100.0100.016.417.4
Baycrest Aged Care
1
Hervey Bay, QueenslandAged CareBolton ClarkeJun-2119.819.819.86.36.5100.0100.015.016.0
Gold Coast Surgery Centre
1
Southport, QueenslandMOBSouth Coast RadiologyDec-2012.212.213.67.57.588.988.91.43.2
Tantula Rise Aged Care
1
Alexandra Headland, QueenslandAged CareBolton ClarkeJun-2124.724.724.66.36.5100.0100.015.016.0
Marian Centre
1
Wembley, Western AustraliaHospital (Specialty)Healthe CareJun-2157.857.852.94.65.1100.0100.013.114.1
Abbotsford Private Hospital
1
West Leederville, Western AustraliaHospital (Specialty)Healthe CareJun-2134.537.930.74.55.1100.0100.020.621.7
Hamersley Aged CareSubiaco, Western AustraliaAged CareHall & PriorDec-2013.513.513.16.87.1100.0100.014.715.7
Rockingham Aged CareRockingham, Western AustraliaAged CareHall & PriorDec-207.37.37.17.07.1100.0100.014.715.7
Sportsmed Hospital, Clinic & Cons.
4
Stepney, South AustraliaHospital (Acute)Sportsmed SAJun-2183.383.373.35.35.5100.0100.014.615.3
North West Private Hospital
2
Burnie, TasmaniaHospital (Acute/Specialty)Healthe CareJun 200.00.025.1-6.0-100.0-16.4
Total Australia1814.01537.7
New Zealand
Ascot Hospital & Clinics
1
Greenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedJun-21126.3126.3117.04.65.199.599.317.018.0
Grace Hospital
1
Tauranga, Bay of PlentyHospital (Acute)Norfolk Southern Cross LimitedJun-21104.5104.50.04.8-100.0-29.5-
Wakefield HospitalNewtown, WellingtonHospital (Acute)Acurity Health GroupDec 2099.399.658.84.95.5100.0100.026.427.5
Royston HospitalHastings, Hawkes BayHospital (Acute)Acurity Health GroupDec 2077.581.364.15.05.8100.0100.028.429.5
Bowen HospitalCrofton Downs, WellingtonHospital (Acute)Acurity Health GroupDec 2063.563.553.84.85.5100.0100.028.429.5
Boulcott Private Hospital
1
Lower Hutt, WellingtonHospital (Acute)Healthe CareJun-2147.047.041.35.05.6100.0100.017.018.0
Ormiston HospitalFlatbush, AucklandHospital (Acute)Ormiston Surgical and Endoscopy LtdJun-2145.445.440.55.35.7100.0100.02.63.0
Ascot CentralGreenlane, AucklandMOBFertility Associates LimitedJun-2143.343.338.05.35.480.9100.06.56.1
Apollo Health & Wellness Centre
1
Albany, AucklandMOBApollo Medical LimitedDec 2027.627.625.85.86.584.081.98.18.5
Kensington HospitalWhangarei, NorthlandHospital (Acute)Kensington Hospital LimitedJun-2123.223.220.35.35.9100.0100.025.026.0
Napier Health CentreNapier, Hawkes BayMOBHawke's Bay District Health BoardJun-2116.316.311.06.08.0100.0100.012.53.5
Ascot Carpark (right of use asset)Greenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedJun-213.67.97.48.810.789.899.814.615.3
Total New Zealand685.8477.9
Properties held for development
1
134.570.7
TOTAL FAIR VALUE OF
INVESTMENT PROPERTIES
2634.3
2086.34.95.599.299.418.718.1
1 The independent valuer, in determining or informing the fair value for this property, has advised that the transactional market evidence used is continuing to be impacted by uncertainty caused by the COVID-19 pandemic. Therefore less certainty and a higher degree of caution should be applied to the properties reported value than normally the case.
2Disposed during the period
3
Epworth Eastern Medical Centre was combined with Epworth Eastern Hospital.
4 Sportsmed Office was combined with Sportsmed Hospital, Clinic and Consulting. The independent valuer, in determining or informing the fair value for this property, has advised that the transactional market evidence used is continuing to be impacted by uncertainty caused by the COVID-19 pandemic. Therefore less certainty and a higher degree of caution should be applied to the properties reported value than normally the case.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-14
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Recognition and measurement
Inv
estment Property
Investment properties are initially measured at cost, including any related transaction costs. Expenditure is capitalised to a property's carrying value only
when its cost can be measured reliably and it is probable that future economic benefits will flow to the Group. All other repairs and maintenance
expenditure is charged to the statement of comprehensive income.
Subsequent to initial recognition, investment properties, including investment properties held for sale, are measured at fair value (inclusive of adjustments
for straight line rental revenue recognition, unamortised lease incentives and costs, and capital expenditure obligations) with any gains or losses arising
on re-measurement recognised in profit or loss.
Lessee arrangements and Right of Use assets
Following the adoption of NZ IFRS 16 on 1 July 2019, the right-of-use asset and investment were recognised on the ground lease that exists over the
carparks at Ascot Avenue, Greenlane, Auckland.
Development of investment property
Investment property that is being developed is measured at cost until either its fair value becomes reliably measurable or the development reaches
practical completion. Borrowing costs are capitalised from when activities to prepare the property for development commence, until the property is
substantially ready for use.
Rental income
Rental income from investment properties is comprised of lease components (including base rent, recoveries of property taxes and insurance) and non-
lease components (including property outgoings recoveries). Rental income is recognised at the fair value of consideration receivable (excluding GST).
Rental income relating to lease components is recognised on a straight-line basis over the term of the lease for the period where the rental income is
fixed and determinable. For leases where the rental income is determined based on unknown future variables such as inflation, market reviews or other
factors, rental income is recognised on an accruals basis in accordance with the terms of the lease.
Rental income from property outgoing recoveries is recognised as the costs are incurred, which is typically when the services are provided.
Rental income not received at reporting date is reflected in the consolidated statement of financial position as a receivable or, if paid in advance, as
income in advance.
Lease incentives, commissions and other costs
Lease incentives provided to tenants, such as fit-outs or rent free periods, and leasing commissions and other costs incurred when entering into a lease
are recognised as a reduction of net property income on a straight-line basis over the non-cancellable term of the lease.
Derecognition
An investment property is derecognised upon disposal or when no future economic benefits are expected from use. The gain or loss arising on
derecognition of the property is measured as the difference between the net proceeds from disposal and the carrying amount at disposal date and is
recognised in the consolidated statement of comprehensive income in the period in which the property is derecognised.
Valuation process
The purpose of the valuation process is to ensure that investment properties are held at fair value. In accordance with the Group's valuation policy,
external valuations are performed by independent professionally qualified valuers who hold a recognised and relevant professional qualification and
have specialised expertise in the type of investment property being valued. The valuation policy requires that a valuer may not value the same property
for more than two consecutive valuations. All valuations are reviewed by the Manager and approved by the Board.
The fair value of investment property as at 30 June 2021 was determined through independent professional valuers for approximately 66% of the
portfolio and the remainder was determined by the Manager. The Manager's valuations were informed by market data and valuation advice provided
by independent valuers, comparable transactional evidence and current period leasing activities. The valuers of properties which have been
independently valued at 30 June 2021 included: Ernst & Young, Colliers International, Jones Lang LaSalle Australia, Valued Care, Absolute Value and
CBRE. The properties which have been independently valued at 30 June 2021 are disclosed above in Note 6g.
The methods used for assessing the fair value of investment property are the Direct Comparison, Discounted Cash Flow (using a risk adjusted discount
rate), Capitalisation of Contract and Market Income approaches and are unchanged from the prior year. The principal assumptions in establishing the
valuation include the market capitalisation/discount rates, occupancy, market rent assessments and the weighted average lease term to expiry (WALE).
COVID-19 impact
In determining the fair value of investment properties at 30 June 2021, independent professionally qualified valuers advise that due to the continued
uncertainty caused by the COVID-19 pandemic, asset values could change quickly if market circumstances change, and therefore general caution
should be exercised when relying on reported valuations.
Some independent professionally qualified valuers still advise that the valuations are reported on the basis of significant valuation uncertainty because
they consider transactional market evidence is being impacted by the continued uncertainty caused by the COVID-19 pandemic.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The investment properties subject to this significant valuation uncertainty are identified in Note 6g therefore less certainty and a higher degree of caution
should be attached to these valuations than would normally be the case. The Managers’ valuations at 30 June 202
1 have been informed by recent
valuation evidence from independent valuers and, to the extent required, where this evidence is subject to COVID-19 uncertainty this has also been
identified in Note 6g.
Fair Value Hierarchy
As the valuation methods use assumptions and judgements that are not based on observable market data, investment properties are classified as Level 3
under the fair value hierarchy. Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
Significant estimates and judgements
Generally, as:
•occupancy and weighted average lease term, term to expiry increase, yields firm, resulting in increased fair values for investment properties and vice
versa;
•capitalisation rates and discount rates used in the valuation approaches decrease (firm), the fair value of the investment property will increase, and
vice versa.
7 OTHER INCOME AND EXPENSES
2021
$000s
2020
$000s
Expenses
Auditor's remuneration:
Audit and review of financial statements197218
Manager's fees13,01412,233
Manager's incentive fee12,4026,475
Trustee fees654588
Other operating income/expenses4,6483,754
Total other income and expenses30,91523,268
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-16
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAPITAL STRUCTURE , FINANCING AND RISK MANAGEMENT
This section outlines how the Group manages its capital structure and related financing activities and presents the resultant returns delivered to unitholders
via distributions and earnings per unit.
8 UNITS ON ISSUE
2021
$000s
2020
$000s
Balance at the beginning of the year594,752576,300
Issue of units under Distribution Reinvestment Plan18,9836,434
Issue of units under placement and unit purchase plan159,650-
Issue of units to satisfy Manager's incentive fee6,45012,077
Issue costs of units(2,636)(59)
Balance at the end of the year777,199594,752
2021
000s
2020
000s
Reconciliation of number of units
Balance at the beginning of the year453,783446,346
Issue of units under the Distribution Reinvestment Plan6,3882,517
Issue of units under placement and unit purchase plan57,017-
Units issued to satisfy Manager's incentive fee2,5654,920
Balance at the end of the year519,753453,783
Distributions for the financial year were 8.87
5 cents per unit (2020: 8.75 cents per unit) including the final quarter distribution of 2.25 cents per unit
(2020: 2.1875 cents per unit) declared subsequent to the reporting date. Refer Note 21 for details.
On 13 October 2020, 44,642,858 units were issued for a price of $2.80 per unit under an underwritten placement and on 4 November 2020,
11,607,176 units were issued for a price of $2.80 per unit under a unit purchase plan. On 25 March 2021, an additional 767,184 units were issued for a
price of $2.80 per units pursuant to the October placement.
Recognition and measurement
Issued capital
Issued and paid up units are recognised at the fair value of the consideration received by the Group, net of directly incurred transaction costs. Fully paid
ordinary units carry one vote per unit and carry the right to distributions.
Distributions are recognised as a liability in the Group’s financial statements in the period in which the distributions are declared.
Share based payments (Managers incentive fee)
Subject to the Trust Deed, the Manager is entitled to an incentive fee that is settled in newly issued units (i.e. a share based payment). As such, the
incentive fee expense is recognised in the share based payment reserve as the services are provided until such a time as it is settled via the issuance of
new units, at which point the amount is reclassifed to units on issue.
On 28 August 2020, 2,565,076 units were issued against the 2020 Manager’s incentive fee of $6.5m (2020: 4,919,883 were issued against the 2019
Manager’s incentive fee).
Capital risk management
The Manager's objective when managing the capital of the Group is to ensure compliance with the capital requirements under the Trust Deed (i.e. total
borrowings do not exceed 50% of the gross value of the Trust Fund) and that the Group will be able to continue as a going concern while maximising
the return to investors through the optimisation of the Group's cost of capital. The Manager maintains or adjusts the capital of the Group through various
methods including by adjusting the quantum of distributions paid, raising or repaying debt, issuing or buying back units, or buying or selling assets.
As at reporting date, the Group's total borrowings to the Gross Value of the Group (as defined in the Trust Deed) was 35.0% (2020: 38.7%).
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Directors. There have been no material
changes in the Group’s overall capital risk management strategy during the year.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9 EARNINGS PER UNIT
20212020
Profit attributable to unitholders of the Trust ($000s)278,39258,126
Weighted average number of units on issue (000's of units)497,892451,563
Basic and diluted earnings per unit (cents)55.9112.87
Recognition and measurement
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 year.
10 DISTRIBUTABLE INCOME
Statutory profit attributable to unitholders is determined in accordance with NZ GAAP and includes a number of non-cash items including fair value
movements, straight line lease accounting adjustments and amortisation of borrowing and leasing costs and incentives.
The Manager uses Adjusted F
unds from Operations (AFF
O) and AFFO per unit as the Group's key performance metric, representative of the Group's
underlying performance, and as a guide to informing the Group's distribution policy. AFFO adjusts statutory profit attributable to unitholders for certain
items that are non-cash, unrealised, capital in nature or are one-off or non-recurring (i.e. outside the Group's ordinary operations or not reflective of its
underlying performance). As AFFO is a non GAAP measure it may not be directly comparable with the Group's peers.
A reconciliation of statutory profit attributable to unitholders to AFFO and AFFO per unit is outlined as follows:
2021
$000s
2020
$000s
Adjusted funds from operations
Operating profit before tax and other income51,06441,132
Add/(deduct):
Current tax expense(7,858)(7,238)
Incentive fee12,4026,475
Net strategic transaction expenses-7,764
Realised foreign exchange on borrowings (net of tax)227(1,234)
Amortisation of borrowing costs878611
Amortisation of leasing costs & tenant inducements2,4211,084
IFRS 16 Operating lease accounting(144)(144)
Funds from operations (FFO)58,99048,450
Add/(deduct):
Non-recurring corporate costs-323
Actual capex from continuing operations(1,533)(1,562)
Adjusted funds from operations (AFFO)57,45747,211
AFFO (cpu)11.5410.45
Distribution per unit (cpu)8.8758.750
AFFO payout ratio77%84%
Units on issue (weighted average, 000s)497,892451,563
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11 BORROWINGS
2021
$000s
2020
$000s
AUD denominated loans807,377790,037
NZD denominated loans125,00024,500
Borrowing costs(3,077)(1,022)
Total borrowings929,300813,515
Current liability114,405113,988
Non current liability814,895699,527
Total borrowings929,300813,515
2021
$000s
2020
$000s
Total borrowings at the beginning of the year813,515734,211
Drawdowns during the year1,204,354142,978
Repayments during the year(1,092,839)(83,382)
Additional facility refinancing fee(2,523)(409)
Facility refinancing fee amortised during the year878611
Foreign exchange movement5,91519,506
Total borrowings at the end of the year929,300813,515
Recognition and measurement
Borrowings are initially measured at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost
using the effective interest rate method. Gains and losses on derecognition are recognised in the consolidated statement of comprehensive income in the
period in which they arise. The carrying values of these balances are approximately equivalent to their fair values because the loans have
floating rates
of interest that reset every 90 days.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the facility for at least 12 months after the
reporting date.
11A SUMMARY OF BORROWING ARRANGEMENTS
On 25th F
ebruary 2021 the Group replaced its syndicated revolving multi-currency facility with borrowings subject to a common terms deed and bi-
lateral facility agreements. Three new banking groups were also introduced into its lending relationships to provide financier diversity. The facilities' expiry
profile and undrawn limits are as follows:
2021
Common Terms Deed - AUDA$m LimitA$m UndrawnExpiry
Facility B162.5-Jul-22
Facility B2137.5-Jul-22
Facility C125.0-Oct-23
Facility E150.050.0Nov-21
Facility E250.022.8Nov-21
Facility F175.070.7Jan-22
Facility F175.0-Jan-22
Facility H62.5-Feb-25
Facility I62.5-Feb-26
Facility J125.0-Feb-26
Facility K
70.1-
Feb-26
Total AUD Facility
895.1143.5
NZ$m LimitNZ$m Undrawn
Facility A50.0-Oct-23
Facility B
75.0-
Feb-26
Total NZD Facility
125.0-
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2020
Syndicated Facility - AUDA$m LimitA$m UndrawnExpiry
Facility A125.018.5Mar-21
Facility B200.0-Jul-22
Facility C125.025.0Oct-23
Facility D115.015.0Oct-21
Facility E175.091.6Nov-21
Facility F150.01.7Jan-22
Facility G
35.035.0
Sep-21
Total AUD Facility
925.0186.8
Total NZD Facility50.025.5Oct-23
The facilities governed by the common terms deed are secured and cross collateralised over the Group's investment properties (by first ranking real
property mortgages) and other assets (via a first ranking general 'all assets' security agreement).
The common terms deed contains both financial and non-financial covenants and undertakings that are customary for secured facilities of this nature. The
key financial covenants (with capitalised terms being defined terms in the common terms deed) are as follows:
Covenant
2021
Actual
2020
Actual
Banking Covenants
Loan to value ratio< 55%38.0%40.2%
Interest cover> 2.00x2.882.44
Weighted average lease term> 3.5 yearsn.a.18.1
Total EBITDA of Obligors v total EBITDA of GroupNot < 95%100%100%
Total assets of Obligors v total assets of GroupNot < 95%100%100%
Total value of unmortgaged properties v total assets of GroupNot > 10%4.8%1.7%
The 2020 banking covenants were calculated under the terms defined in the Syndicated Agreement which was replaced with the Common Terms Deed
on 2
5 F
ebruary 2021 and accordingly differences in calculations of some covenants exist.
The Group has received indicative offers of finance, subject to customary conditions including credit committee approval, from existing and new
financiers for limits exceeding those that mature within 12 months. As at the date of issuing the financial statements, credit committee approval has been
received (which is capable of acceptance) for some but not all indicative offers of finance. Credit committee approval processes are continuing for the
remainder.
11B FINANCE EXPENSE
2021
$000s
2020
$000s
Expenses
Interest expense32,57131,941
Borrowing costs capitalised(4,852)(3,624)
Total finance e
xpenses
27,71928,317
The effective interest rate on the borrowings, incorporating interest rate hedges, as at the reporting date was 3.32% per annum (2020: 3.59%).
Recognition and measurement
Interest expense is recognised in the consolidated statement of comprehensive income using the ef
fective interest rate method except where it is incurred
in relation to any qualifying assets, where it is capitalised during the period of time that is required to hold, complete and/or prepare the asset for its
intended use. It comprises interest payable on borrowings and interest paid on interest rate hedging instruments.
The effective interest rate method calculates the amount to be recognised over the relevant period at the rate that exactly discounts estimated future cash
payments through the expected life of the financial instrument or a shorter period where appropriate, to the net carrying amount on initial recognition.
12 LEASE LIABILITIES
The Group holds a ground lease over the car parks at the rear of Ascot Hospital and Ascot Central that has a weighted average term remaining of 1
7
.8
years (2020: 18.8 years).
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13 DERIVATIVES
13A INTEREST RATE SWAPS
The Group has exposure to debt facilities that are subject to
floating interest rates. The Group uses derivative financial instruments, on a portfolio basis, to
manage its exposure to interest rates such as interest rate swaps (to lock-in fixed interest rates) and/or interest rate caps (to limit exposure to rising
floating interest rates). At the reporting date, 49.0% of borrowings were at fixed rates (2020: 60.4%). Refer Note 14C for further information on the
Group's exposure to interest rate risk.
All derivative financial instrument providers receive the benefit of pari-passu security and cross collateralisation rights over the Group’s investment
properties (via first registered real property mortgages) and other assets (via a first ranking general 'all assets' security agreement).
Generally, interest rate contracts settle on a quarterly basis coinciding with the dates on which the interest is payable on the underlying debt. The floating
rate incurred on the debt is based on New Zealand BKBM or Australian BBSW. The difference between the fixed and floating interest rate is generally
settled on a net basis by the relevant counterparty. The interest rate contracts have not been identified as hedging instruments and any movements in the
fair value are recognised immediately in the consolidated statement of comprehensive income.
2021
$000s
2020
$000s
Current liabilities
Interest rate derivative liabilities(640)(155)
Non-current liabilities
Interest rate derivative liabilities(40,379)(63,238)
Total(41,019)(63,393)
During the period the Group recognised a fair value gain of $22.4m (2020: $13.5m loss] on interest rate contracts. The Group's interest rate swaps
outstanding at the reporting date are as follows:
2021
$000s
2020
$000s
Nominal value of interest rate swaps - AUD425,000460,000
Average fixed interest rate2.94%3.01%
Floating rates based on AUD BBSW0.12%0.15%
Interest rate derivatives mature over the next eight years and have fixed interest rates ranging from 1.5
4% to 4.35% (2020: from 1.54% to 4.99%).
Recognition and measurement
Derivatives are categorised as financial instruments at fair value through profit or loss and are initially recognised and subsequently measured at fair
value derived from counterparty bank valuations. Counterparty bank valuations are tested for reasonableness by discounting the estimated future
cashflows and using market interest rates for a substitute instrument at the measurement date. The resulting gain or loss is recognised immediately in the
consolidated statement of comprehensive income as hedge accounting has not been applied.
13B FORWARD EXCHANGE CONTRACTS
The Group has exposure to foreign currency risk arising from owning investment property in Australia. Derivative
financial instruments, such as forward
exchange contracts, may be used to reduce its exposure to foreign exchange risk by locking in the conversion of Australian dollar denominated income
(transaction hedging) or net assets (translation hedging) to New Zealand dollars. Refer Note 14C for further details on the Group's exposure to foreign
exchange risk.
Transaction hedging arrangements generally settle on a quarterly basis while translation hedging arrangements settle on a periodic basis depending on
the term of the contract. At reporting date forward exchange contracts have not been designated as hedging instruments and any movements in the fair
value are recognised immediately in the consolidated statement of comprehensive income.
2021
$000s
2020
$000s
Current assets
Foreign exchange derivative assets24542
Current liabilities
Foreign exchange derivative liabilities-(77)
Total245(35)
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During the period the Group recognised a fair value gain of $0.28m (2020: $0.08m loss) on forward exchange contracts. The Group's forward
exchange contracts outstanding at the reporting date are as follows:
202
1
$000s
2020
$000s
Nominal value of foreign exchange contracts - AUD18,10018,100
Average foreign exchange rate0.91990.9362
Recognition and measurement
Derivatives are categorised as financial instruments at fair value through profit or loss and are initially recognised and subsequently measured at fair
value derived from counterparty bank valuations. Counterparty bank valuations are tested for reasonableness by using a valuation model based on the
applicable forward price cur
ves derived from obser
vable forward prices. As hedge accounting has not been applied any resulting gain or loss is
recognised immediately in the consolidated statement of comprehensive income.
13C FAIR VALUE HIERARCHY
The following table provides an analysis of derivatives that are measured at fair value at reporting date, grouped into Levels 1 to 3 based on the degree
to which the fair value inputs are obser
vable:
Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The Group has determined that interest rate swaps and foreign exchange contract derivatives are Level 2 fair value measurement instruments, that are
measured using observable prices of similar instruments. There have been no reclassifications between levels in the current year (2020: nil).
14 FINANCIAL AND RISK MANAGEMENT
The Group’
s activities e
xpose it primarily to credit risk, market risk (interest rate risk and foreign exchange risk) and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance. The Group uses financial derivatives to manage market risks. The use of financial derivatives is governed by the Group’s policies approved
by the Board, which provide written principles that are consistent with the Group’s risk management strategy. The Group does not use derivative financial
instruments for speculative purposes.
14A FINANCIAL INSTRUMENTS
The Group has the following financial instruments:
•cash and cash equivalents;
•receivables;
•payables;
•borrowings; and
•derivative financial instruments.
Transactions in these instruments e
xpose the Group to a variety of
financial risks including market risk (which includes interest rate risk, foreign exchange
risk and other price risks), credit risk and liquidity risks.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Categories of financial instruments
The Group’s
financial instruments are classified as:
Financial assets at
amortised cost
$000s
Financial
liabilities at
amortised cost
$000s
Financial
assets at fair
value through
profit
or loss
$000s
Financial
liabilities at fair
value through
profit or loss
$000s
30 June 20218,514(974,542)245(41,019)
30 June 202010,467(846,596)42(63,470)
Cash, cash equivalents, trade and other receivables, trade and other payables, borrowings and related party advances
The carrying values of these financial instruments approximate their fair values because of their short terms to maturity or interest reset dates.
14B CREDIT RISK
The Group is subject to credit risk (the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group)
predominately through its trade and other receivables, derivatives and cash exposures. The maximum e
xposure to credit risk at a reporting date is the
carrying value of each financial asset as disclosed in the applicable note to the financial statements.
Credit risk is managed by:
•ensuring that at the time of entering into a contractual arrangement or acquiring a property, counterparties or tenants are of appropriate credit
worthiness, provide appropriate security or other collateral and/or do not show a history of default;
•seeking to optimise tenant mix by actively managing the property portfolio composition and leasing arrangements; and
•only entering into foreign exchange and interest rate derivative transactions and placing cash and deposits with high credit quality financial institutions.
The Group applies an expected credit losses (ECL's) model (simplified approach) that uses historical experience, external indicators and forward
looking information to calculate the expected lifetime credit loss for financial assets carried at amortised cost.
The expected lifetime credit loss of trade receivables is assessed on a collective basis (grouped based on days past due), reflecting shared credit
characteristics, and is determined based on the forecast shortfalls in contractual cash flows considering the potential for default at any point during the
life of the financial instrument. Details of the expected credit loss recognised in relation to trade receivables is disclosed in Note 17A.
14C MARKET RISK
The Group is subject to market risk (the risk that borrowings or derivatives are repriced to dif
ferent interest rate margins on
refinance or renewal arising
from changes in the debt markets), interest rate risk (the risk of a change in interest rates may impact the Group’s profitability, cashflows and/or financial
position) and foreign exchange risk (the risk of a change in foreign exchange rates on translation of foreign currency denominated assets, liabilities,
revenue and expenses) predominantly through its investment property, borrowings, derivatives and cash exposures.
The interest rates applicable to each category of financial instrument are disclosed in the relevant note to the financial statements.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Interest rate risk
The following table indicates the effective interest rates and the earliest period in which
financial instruments reprice. Fixed rate balances are presented
with the effect of hedging derivatives:
Weighted
effectiv
e
interest rate
%
Less than
1 year
$000s
1-2 years
$000s
2-3 years
$000s
3+ years
$000s
Total
$000s
30 June 2021
Cash and cash equivalents (floating rates)0.12%6,880---6,880
Borrowings (floating rates)1.28%(475,829)---(475,829)
Borrowings (fixed rates)4.10%(16,113)(21,485)(32,227)(386,723)(456,548)
(485,062)(21,485)(32,227)(386,723)(925,497)
30 June 2020
Cash and cash equivalents (floating rates)0.15%5,265---5,265
Borrowings (floating rates)1.18%(322,296)---(322,296)
Borrowings (fixed rates)4.03%(21,402)(32,103)(21,402)(417,335)(492,242)
(338,433)(32,103)(21,402)(417,335)(809,273)
Interest rate sensitivity
The Group’s sensitivity to interest rate risk can be e
xpressed in two ways:
Fair value sensitivity
A change in interest rates impacts the fair value of the Group’s fixed rate financial instruments. Fair value changes impact profit or loss or equity only
where the instruments are carried at fair value. Accordingly, the fair value sensitivity to a 100 bps movement in interest rates (based on the financial
instruments held at reporting date) is:
Impact on
profit/(loss)
202
1
$000s
Impact on
unitholders'
funds
2021
$000s
Impact on
profit/(loss)
2020
$000s
Impact on
unitholders'
funds
2020
$000s
If interest rates had been 100 bps higher:24,01824,01829,76229,762
If interest rates had been 100 bps lower:(25,591)(25,591)(31,967)(31,967)
Cash flow sensitivity analysis
A change in interest rates impacts interest income and expense on the Group’
s interest bearing floating rate financial instruments. Accordingly, the one-
year cash flow sensitivity to a 100 bps movement in interest rates (based on the financial instruments held at reporting date) is:
Impact on
profit/(loss)
2021
$000s
Impact on
unitholders'
funds
2021
$000s
Impact on
profit/(loss)
2020
$000s
Impact on
unitholders'
funds
2020
$000s
If interest rates had been 1
00 bps higher:(4,758)(4,758)(3,223)(3,223)
If interest rates had been 100 bps lower:4,7584,7583,2233,223
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Foreign exchange risk
The following table presents the foreign currency risk that the Group is exposed to arising from Australian dollar (AUD) denominated assets and liabilities:
202
1
$000s
2020
$000s
Non-financial instrument assets and liabilities denominated in Australian dollars
Investment properties1,933,5021,594,519
Other assets11,824863
Deferred tax(129,361)(104,150)
Total non-financial instrument assets and liabilities1,815,9651,491,232
Non-derivative financial instruments
Cash and cash equivalents3,2083,755
Trade and other receivables1,3374,677
Trade and other payables(43,953)(28,293)
Borrowings(807,377)(790,037)
Total exposure from non-derivative financial instruments(846,785)(809,898)
Derivative financial instruments
Foreign exchange derivatives245(35)
Interest rate swaps(41,019)(63,393)
Total exposure from derivative instruments(40,774)(63,428)
Net exposure to currency risk928,406617,906
Foreign currency sensitivity
A change in the New Zealand dollar (NZD) / AUD exchange rate impacts
profit after tax and equity on the conversion of AUD denominated assets,
liabilities, revenue and expenses. A 10% change in the exchange rate (2020: 10%), based on year end exposures, has the following effect:
2021
$000s
2020
$000s
If the New Zealand Dollar versus the Australian Dollar was 10% higher for the year:
Profit and loss4,83714,927
Other comprehensive income(90,198)(83,963)
Unitholders' funds(85,361)(69,036)
If the New Zealand Dollar versus the Australian Dollar was 10% lower for the year:
Profit and loss(5,912)(18,244)
Other comprehensive income110,242102,622
Unitholders' funds104,33084,378
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14D LIQUIDITY RISK
The Group is subject to liquidity risk (the risk that the Group will not be able to meet its contractual or other operating obligations).
Liquidity risk is managed by continuously monitoring forecast and actual cash flows, maintaining appropriate head room under debt facilities and
matching the maturity profiles of financial assets and liabilities. To help reduce liquidity risks the Group:
•has readily accessible unutilised credit facilities and other funding arrangements in place;
•seeks a debt maturity profile that limits the total debt maturing in any one 1
2-month period; and
•
seeks to maintain sufficient loan covenant headroom to ensure that the Group can withstand downward movements in investment property valuations,
a reduction in revenue and/or an increase in interest rates without breaching loan facility covenants.
Liquidity risk exposure
The following table details the Group’s exposure to liquidity risk based on the contractual undiscounted cash flows relating to financial liabilities, foreign
exchange contracts and interest rate derivatives:
Carrying
v
alue
$000s
Contractual cash
flows
$000s
Less than 1 year
$000s
1-2 years
$000s
2-3 years
$000s
3+ years
$000s
30 June 202
1
Non-derivative financial
instruments
Borrowings (excluding
borrowing costs)(932,377)(951,815)(115,660)(218,393)(189,221)(428,541)
Trade and other payables(41,006)(41,006)(41,006)---
Lease liability - ground lease(4,236)(4,236)(163)(170)(178)(3,725)
(977,619)(997,057)(156,829)(218,563)(189,399)(432,266)
Derivative financial
instruments
Interest rate swaps(41,019)(43,078)(12,858)(10,227)(7,900)(12,093)
Foreign exchange derivatives245245245---
(40,774)(42,833)(12,613)(10,227)(7,900)(12,093)
30 June 2020
Non-derivative financial
instruments
Borrowings (excluding
borrowing costs)(814,537)(817,468)(115,121)(356,058)(214,524)(131,765)
Trade and other payables(29,270)(29,270)(19,002)(10,268)--
Lease liability - ground lease(3,811)(3,812)(136)(142)(148)(3,386)
(847,618)(850,550)(134,259)(366,468)(214,672)(135,151)
Derivative financial
instruments
Interest rate swaps(63,393)(63,859)(12,646)(12,049)(10,005)(29,159)
Foreign exchange derivatives(35)(35)(35)---
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14E HEDGE ACCOUNTING
The Group is exposed to foreign e
xchange risk on its net investment in its AUD functional currency subsidiaries and seeks to hedge this risk using AUD-
denominated borrowings and foreign exchange derivatives (net investment hedges).
As a result of the February 2021 refinancing exercise the Group paid down all of its NZ domiciled AUD borrowings which it had designated a portion
as net investement hedges. The face value of financial instruments designated as net investment hedges is:
2021
$000s
2020
$000s
Borrowings-128,411
There has been no ineffectiveness gain/loss on the net investment hedges during the reporting period (2020: nil).
Recognition and measurement
For a financial instrument to be classified and accounted for as an effective hedge there must be:
•an economic relationship between the hedged item and the financial instrument;
•the effect of credit risk does not dominate the value changes that result from that economic relationship; and
•the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the
quantity of the financial instrument that the Group actually uses to hedge that quantity of hedged item.
The Group documents its hedging relationships at their inception in accordance with the requirements of NZ IFRS 9 and the Board approved risk
management strategy.
Hedge effectiveness is determined by the Group at the inception of the hedge relationship, and through semi-annual prospective effectiveness
assessments, to ensure that an economic relationship exists between the hedged item and the financial instrument. That portion of the foreign exchange
differences arising on the financial instruments determined to be an effective hedge is recognised directly in other comprehensive income. Any ineffective
portion is recognised in profit or loss.
On disposal of the foreign operation, the cumulative value of such gains or losses recognised in other comprehensive income is reclassified to the profit
and loss in the statement of comprehensive income.
15 COMMITMENTS AND CONTINGENCIES
Other than the contractual obligations disclosed in Note 6F and Note 1
5A, there are no other commitments and contingencies in ef
fect at the reporting
date (2020: nil).
15A NZSX BANK BOND
As a condition of listing on the New Zealand Stock Exchange (NZSX), NZS
X requires all issuers to provide a bank bond to NZSX under NZSX/DX
Listing Rule 1.23.2. The bank bond required by the Group for listing on the NZSX is $50,000.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EFFICIENCY OF OPERATIONS
This section presents the Group's working capital position and the efficiency in which it converts operating profits into cash available for unitholders or
reinvestment back into the operations of the Group.
16 STATEMENT OF CASH FLOWS RECONCILIATION FROM OPERATING ACTIVITIES
2021
$000s
2020
$000s
Cash and cash equivalents
Australian financial institutions3,2083,755
New Zealand financial institutions3,6721,510
Cash at bank6,8805,265
Reconciliation of profit after income tax to net cash flows from operating activities
Profit after tax for the year278,39258,126
Adjustments for non-cash items
Change in fair value of investment properties(235,383)(45,703)
Fair value (gain)/loss on derivative financial instruments(22,655)13,531
Unrealised foreign exchange (gain)/loss(2,454)2,997
Realised foreign exchange (gain)/loss4,3996
Deferred taxation32,2174,937
Income in advance(16)217
Manager's incentive fee12,4026,475
Other9031,554
Operating cash flow before changes in working capital67,80542,140
Change in trade and other payables1,4671,895
Change in taxation payable2,181(1,124)
Change in trade and other receivables(2,876)(3,902)
Items classified as investing activities(12,001)5,427
Net cash from operating activities56,57644,436
Excluded from investing and financing activities are distributions paid during the year of $19.0m (20
20: $6.4m) that have been reinvested under the
Distribution Reinvestment Plan (DRP).
Recognition and measurement
Cash and cash equivalents comprise cash at bank and call deposits, net of outstanding bank overdrafts.
The statement of cash flows is prepared on a GST exclusive basis. The GST component of cash flows arising from investing and financing, which is
recoverable from, or payable to, the taxation authority, is classified as part of operating cash flows.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17 TRADE AND OTHER RECEIVABLES
2021
$000s
2020
$000s
Trade receivables9685,316
Loss allowance(345)(281)
6235,035
Other receivables1,011167
Total trade and other receivables1,6345,202
17A AGEING OF RECEIVABLES PAST DUE
2021
$000s
2020
$000s
0-30 days past due6561,811
31-60 days past due501,478
61-90 days past due331,448
beyond 90 days past due-13
7394,750
2021
$000s
2020
$000s
Movement in the loss allowance
Balance at the beginning of the year2814
(Decrease)/increase in allowance recognised in profit or loss64277
Balance at the end of the year345281
During the year the Group recognised bad debt write offs of $nil (2020: $nil) in the statement of comprehensive income.
The Group holds $2.3m security or other collateral (2020: $2.4m) in respect of rent receivables past due. The Group does not have
significant credit
risk exposure to any single counterparty or counterparties having similar characteristics in respect of rent receivables past due (2020: one counterparty
totalling $4.5m). There are no significant financial assets that have had renegotiated terms that would otherwise have been past due (2020: nil).
Recognition and measurement
Rent receivables
Rent receivables are recorded initially at fair value (including GST) and subsequently at amortised cost in accordance with NZ IFRS 9 Financial
Instruments (“NZ IFRS 9”).
Impairment of financial assets and rent receivables
Loss allowances for rent receivables and other financial assets (other than those measured at fair value through profit and loss) are measured using the
simplified approach based on a lifetime expected loss allowance. Refer Note 14B for further details.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 OTHER ASSETS
2021
$000s
2020
$000s
Current
Deposits paid on acquisition properties2,012-
GST refundable9,698655
Other1,026197
Total Current12,736852
19 TRADE AND OTHER PAYABLES
2021
$000s
2020
$000s
Current liabilities
Interest accrued on borrowings2,2093,457
Other creditors and accruals29,03115,545
Other payables (Thames St)9,765-
Total current liabilities41,00519,002
Non current liabilities
Other payables (Thames St)-10,268
Total trade and other payables41,00529,270
Recognition and measurement
Trade and other payables are recognised initially at fair value (inclusive of GST) and subsequently measured at amortised cost using the effective interest
method. The average credit term on purchases is generally 30 days and they are non-interest bearing. The Group has management policies in place to
ensure that all amounts are paid within the applicable credit terms.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OTHER NOTES
20 INVESTMENT IN SUBSIDIARIES
The Trust has control over the following subsidiaries:
Holding
Name of subsidiaryPrincipal activity
Place of
incorporation
and operation20212020
Vital Healthcare Australian Property TrustProperty investmentAustralia100%100%
Vital Healthcare Investment TrustProperty investmentAustralia100%100%
Vital Healthcare Property LimitedProperty investmentNew Zealand100%100%
Colma Services LimitedHolding companyNew Zealand100%100%
All subsidiaries have the same reporting date as the Trust.
21 SUBSEQUENT EVENTS
On 1
2 August 20
21 a final cash distribution of 2.25 cents per unit was announced by the Trust. The Record Date for the final distribution is 9 September
2021 and a payment is scheduled to unitholders on 23 September 2021. Imputation credits of 0.1642 cents per unit will be attached to the distribution.
The Group has received indicative offers of finance, subject to customary conditions including credit committee approval, from existing and new
financiers for limits exceeding those that mature within 12 months. As at the date of issuing the financial statements, credit committee approval has been
received (which is capable of acceptance) for some but not all indicative offers of finance. Credit committee approval processes are continuing for the
remainder.
Post 30 June 2021 the Group has unconditionally agreed to acquiring the following properties:
•Lower Hutt Health Hub, a purpose-built seismically resilient medical office building and out-patient facility situated at 135 Witako Street, Lower Hutt,
New Zealand for $46.5m (plus transaction costs). Settlement is expected to occur between September 2021 and March 2022, subject to finalisation
of title amalgamation for the development land.
•A number of small residential properties at Meadowbrook, Queensland, Australia, to be held for future development purposes for a total of A$3.7m
(plus transaction costs). Settlements are expected to occur in August and September 2021 and January 2022.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22 RELATED PARTY TRANSACTIONS
The Manager
Vital is managed by NorthWest Healthcare P
roperties Management Limited (the "Manager"), a wholly owned subsidiary of NWI Healthcare Properties
LP (NWI LP).
The ultimate parent of NWI LP is Toronto listed NorthWest Healthcare Properties Real Estate Investment Trust (NWH REIT) that, as at reporting date,
holds a 26.0% (2020:24.8%) interest in Vital. NWH REIT and its controlled entities (including the Manager) are considered related parties to Vital and
its controlled entities by virtue of common ownership and/or directorships.
Other related parties by virtue of common ownership and/or directorship to the Manager of Vital include Australian Properties Limited and NorthWest
Healthcare Australian Property Limited.
Remuneration of the Manager
Vital pays fees to the Manager in accordance with the Trust Deed. The aggregate of Base Fees, Incentive Fees and Activity Fees is capped at 1.75% per
annum of Vital's gross asset value (GAV) as at the end of a financial year.
Following unitholder approval on 31 October 2019, the Trust Deed was amended to adopt the revised basis for fees (as outlined below) in accordance
with the undertakings made in the Trusts’ Fee and Governance Review announcement of 1 April 2019.
Current fee arrangements
In accordance with and from the effective date of the amended Trust Deed, the fee arrangements are as follows:
Base Fee
The Base Fee structure is as follows:
•65 bps per annum up to $1bn of GAV:
•55 bps per annum from $1bn to $2bn of GAV;
•45 bps per annum from $2bn to $3bn of GAV; and
•40 bps per annum over $3bn of GAV.
Incentive Fee
The Incentive Fee is determined as 10% of the average annual increase in Vital’s Net Tangible Assets (NTA) (as defined by the Trust Deed) over the
respective financial year and the two preceding financial years, with payment being made by way of subscribing for new units. The incentive fee
calculations are also subject to a ‘three year high watermark”, such that the Manager will not be paid an Incentive Fee in a year where NTA grows if it is
still below where it was on the last business day of any of the past three financial years.
Activity Fees
The Activity Fee structure is as follows:
a. Leases or licences
Vital pays the Manager leasing or licence fees where the Manager has negotiated leases or licences. The fees are charged at 11% of the aggregate
annual rental for terms less than 3 years, 12% of the aggregate annual rental for terms of 3 years, and 12% plus an additional 1% for each full year (pro
rata for part years) for terms greater than three years (to a maximum of 20%), subject to a minimum fee of $2,500.
Lease or licence renewals are charged at 50% of a new lease or licence fee.
Leasing or licence fees are capitalised to the respective investment or property in the consolidated statement of financial position and amortised over the
term of the lease.
b. Property management
Vital pays the Manager property management fees where the Manager acts as the property manager. These fees are charged at 1% - 2% of gross
income depending on the number of tenants at the property and may be recovered from tenants if permitted under lease agreements.
Property management fees, net of recoveries from tenants, are expensed through the consolidated statement of comprehensive income in the year in
which they arise.
c. Facilities management
Vital pays the Manager a facilities management fee where the Manager acts as a property facilities manager based on the market rate (referenced to a
reputable and high-quality third party service provider) for similar services at similar properties. This fee may be recovered from tenants if permitted under
lease agreements.
Facilities management fees are expensed, net of recoveries from tenants, through the consolidated statement of comprehensive income in the year in
which they arise.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
F
IN-32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d. Project management
Vital pays project management fees to the Manager for managing capital expenditure projects where the purpose of the project is to upgrade, repair or
otherwise e
xtend the life of the property, including via the replacement or repair of major plant and equipment, structural items and building envelope.
Project management fees for projects with a budget of between $0.2m and $2.5m are 2% of the committed spend where the Manager is the project
lead and 1% of committed spend where the Manager has an oversight role, increasing to 4% and 2% respectively for projects with a budget greater
than $2.5m.
Project management fees are capitalised to the respective investment or property in the consolidated statement of financial position.
Additional Costs
The Additional Costs structure is as follows:
a. Acquisitions
Vital pays fees to the Manager for managing the due diligence, financing, legal aspects and settlement of the purchase of an investment or property
instead of, or alongside, a third party agent. These fees are charged at 1.5% of the capitalised cost of the relevant investment or property, being the
contracted price payable, excluding any deductions netted off the settlement price (such as rates), together with other related capitalised acquisition
costs.
Acquisition fees are capitalised to the respective investment or property in the consolidated statement of financial position.
b. Disposals
Vital pays fees to the Manager for managing the due diligence, legal aspects and settlement of the sale of an investment or property instead of, or
alongside, a third party agent. These fees are charged at 1% of the contracted sale price of the relevant investment or property actually received,
provided that, if a third party agent has been engaged to provide services for the disposal, then the fee payable to the Manager will be net of the third
party agent’s costs and commissions.
Disposal fees are expensed through the consolidated statement of comprehensive income in the year in which they arise.
c. Development Management
Vital pays fees where the Manager acts as a development manager on Vital developments. These fees are charged at 4% of the committed spend
(excluding land) approved by the Board of the Manager provided that, if a third party agent has been engaged to provide development management
services, then the fee payable to the Manager will be reduced by the non-rentalisable third party costs paid.
Development management fees are capitalised to the respective property in the consolidated statement of financial position.
Historical fee arrangements
Prior to the unitholder approved amendments to the Trust Deed, the fee arrangements were:
Base Fee
The Base Fee was 75 bps per annum of the Gross Value (as defined at the time by the Trust Deed) of the Trust.
Incentive Fee
The annual Incentive Fee was 10% of the average annual increase in the Gross Value (as defined at the time by the Trust Deed) of the Trust Fund over the
relevant financial year and the two preceeding financial years.
Other amounts
In accordance with the Trust Deed, the Manager was permitted to engage related parties to provide services to the Trust, such as development
management. The provision of these services was subject to compliance with the restrictions on related party transactions in the Financial Markets
Conduct Act 2013.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Transactions with related parties
Amounts charged by the Manager and related parties and owing are as follows:
30 June 2021
$000s
30 June 2020
$000s
Statement
of
Comprehensive
Income
Statement
of Financial
Position
Total
Amounts
Owing/
(Receivable)
Statement
of
Comprehensive
Income
Statement
of Financial
PositionTotal
Amounts
Owing/
(Receivable)
Base fee13,014-13,0145312,233-12,233-
Incentive Fee
1
12,402-12,40212,4276,475-6,4756,475
Activity Fees:
Leasing/licensing
2
1471,3451,4921,37543303346346
Property management
3
1,500-1,500326969-969194
Facilities management
3
--------
Project management
4
-158158158----
AFSL fee
995-995-898-898-
28,0581,50329,56114,33920,61830320,9217,015
Additional Costs:
Acquisitions
5
-4,0504,0501,852-980980-
Disposals1,011-1,011-----
Development management
6
-3,4473,4473,709-4,7744,774525
1,0117,4978,5085,561-5,7545,754525
Other Amounts:
Reimbursement of third party
e
xpenses:
Other e
xpenses92-92-35-35-
Amounts paid to directors:
Andrew Evans90-90-60-60-
Graham Stuart
143-143-67-67-
325-325-162-162-
29,3949,00038,39419,90020,7806,05726,8377,540
1 Manager's incentive fee outstanding at 30 June 2021 of $12.4m (Jun 20: $6.5m) is payable to NorthWest Healthcare Properties Management Limited
2
Amounts outstanding at 30 June 20
21 are: NorthWest Healthcare Properties Management Limited $0.2m (Jun 20:$0.1m); NorthWest Healthcare Australian Property Limited $1.2m (Jun 20:
$0.2m)
3 Property Management and Facilities Management fees, exclusive of recoveries from tenants, incurred by the Trust totalled $1.5m and nil respectively for the 30 June 2021 year (Jun 20: $1.0m and
nil respectively). Amounts outstanding at 30 June 2021 are: NorthWest Healthcare Properties Management Limited $0.1m (Jun 20: $0.1m); NorthWest Healthcare Australian Property Limited
$0.2m (Jun 20:$0.1m)
4 Amounts outstanding at 30 June 2021 are: NorthWest Healthcare Properties Management Limited $0.1m (Jun 20: nil) NorthWest Healthcare Australian Property Limited $0.1m (Jun 20: nil)
5 Amounts outstanding at 30 June 2021 are: NorthWest Healthcare Properties Management Limited $0.1m (Jun 20: nil); NorthWest Healthcare Australian Property Limited $1.7m (Jun 20: nil)
6 Amounts outstanding at 30 June 2021 are: NorthWest Healthcare Properties Management Limited $1.4m (Jun 20: $0.1m); NorthWest Healthcare Australian Property Limited $2.3m (Jun 20:
$0.4m)
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
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IN-34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other Related Parties
The following table summarises the transactions that occurred during the reporting period or remain outstanding at the reporting date:
2021
$000s
2020
$000s
During the period there have been transactions between the Trust and NWHAAT
Related party advance/(repayment)-(84,495)
Interest income-268
On 21 August 2020 the Group acquired the remaining 50% share in Playford Health Hub in South Australia from the NorthWest Australia Real Estate
Investment Trust for A$7.4m excluding transaction costs.
The related party advance provided by the Group to NWH Australia AssetCo Pty Limited as trustee of NWH Australia Asset Trust (NWHAAT), a wholly
owned subsidiary of NWH Healthcare Properties LP, was fully repaid on 2 August 2019.
83
Independent Auditor’s Report
To the Unitholders of Vital Healthcare Property Trust
Opinion We have audited the consolidated financial statements of Vital Healthcare Property Trust
and its controlled entities (the ‘Group’ or ‘Trust’), which comprise the consolidated
statement of financial position as at 30 June 2021, and the consolidated statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages FIN 1 to FIN
34, present fairly, in all material respects, the consolidated financial position of the Group as
at 30 June 2021, and its consolidated financial performance and cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (‘NZ IFRS’) and International Financial Reporting Standards (‘IFRS’).
Basis for opinion We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and
International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International
Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence
Standards), and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
Other than in our capacity as auditor, we have no relationship with or interests in the Group.
Audit materiality We consider materiality primarily in terms of the magnitude of misstatement in the financial
statements of the Group that in our judgement would make it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced (the
‘quantitative’ materiality). In addition, we also assess whether other matters that come to
our attention during the audit would in our judgement change or influence the decisions of
such a person (the ‘qualitative’ materiality). We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be $2,770,000.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
84
Key audit matter How our audit addressed the key audit matter
Valuation of Investment Properties
The Group’s investment properties consist of health sector
properties totalling $2,635 million as at 30 June 2021.
Revaluation gains on the Group’s investment properties for the
year ended 30 June 2021 of $235 million were recognised in
profit or loss. Information about the Group’s property portfolio
and valuation are set out in Note 6.
Investment properties are carried at fair value. Where
significant development is in progress at a property, this is
carried at cost, until either its fair value becomes reliably
measurable or the development reaches practical completion.
The valuation of investment property is highly dependent on
forecasts and estimates including a number of unobservable
inputs to take into account property-specific attributes.
The Group’s policy is to engage external valuers for no more
than two years as per the Trust Deed, to perform valuations for
each of the properties on an annual basis. Independent
registered valuers determined the fair value of approximately
66 percent of the investment properties at 30 June 2021, and
the Board of Directors of the Manager determined the fair
value of the remaining properties.
The valuation methods used for assessing the fair value include
a combination of direct comparison, discounted cash flow,
capitalisation of contract and market income approaches.
The external valuers and the Manager, amongst other matters,
take into consideration occupancy rates, weighted average
lease term to expiry (‘WALE’) and capitalisation rates.
On 11 March 2020 the World Health Organisation declared the
outbreak of COVID-19 to be a pandemic, resulting in severe
restrictions put in place by the Australian and New Zealand
governments. COVID-19 continues to cause disruption to
economies in which the Group operates.
Note 6G discloses information about the ongoing impact of
COVID-19 on the valuation of investment properties. Some
independent valuations are reported on the basis of significant
valuation uncertainty.
The valuation of investment properties is a key audit matter
due to the subjective judgements and assumptions in the
valuation models, including those that relate to the continued
impacts of COVID-19.
We have evaluated the appropriateness of the valuation of
investment property by performing the following:
• Reviewing the external valuers’ valuation reports and
the valuation reports prepared by the Board of the
Manager. We evaluated the key metrics, including
capitalisation rate, market rent and contract rent on a
property and portfolio basis for year on year
movements and assessed whether in our judgement,
the movements represented outliers to investigate.
We held discussions, on a sample basis, with the
valuers and separately, with representatives of the
Manager and challenged assumptions, including the
possible outliers identified.
• Agreeing property specific information supplied to the
external valuer and used in the Manager’s valuations,
including occupancy data, current rentals, and lease
terms, to the underlying records held by the Group.
• Evaluating the objectivity, independence and expertise
of the external valuers.
• Evaluating the expertise of the Board of Directors of
the Manager.
• With respect to significant property developments:
o where management has determined the
development has reached practical completion,
obtaining evidence supporting management’s
estimates of the expected future rental cash flows
that will apply upon completion and the costs to
complete the development;
o where property developments are carried at cost,
testing the cost incurred to date on a sample basis.
• Involving our valuation specialists to consider and
challenge, on a sample basis, the reasonableness of
the assumptions and valuation methodology applied,
including comparing assumptions to market data
where available.
• Reviewing valuation reports for continued impacts of
COVID-19 and how this was considered in the
valuation, including rental deferrals or abatements.
• Reviewing the valuations for any limitations of scope,
as a result of the continued COVID-19 pandemic, that
would impact the reliability of the valuations.
Other information The Board of Directors of the Manager is responsible on behalf of the Group for the other
information. The other information comprises the information in the Annual Report that
accompanies the consolidated financial statements and the audit report.
Our opinion on the consolidated financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and consider whether it is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If so, we are required to report that
fact. We have nothing to report in this regard.
85
Board of Directors’
responsibilities for the
consolidated financial
statements
The Board of Directors of the Manager is responsible on behalf of the Trust for the
preparation and fair presentation of the consolidated financial statements in accordance
with NZ IFRS and IFRS, and for such internal control as the Board of Directors of the Manager
determines is necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors of the Manager is
responsible on behalf of the Group for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors of the Manager either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit conducted in accordance with ISAs
and ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial
statements is located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-
responsibilities/audit-report-1
This description forms part of our auditor’s report.
Restriction on use
This report is made solely to the Trust’s unitholders, as a body. Our audit has been
undertaken so that we might state to the Trust’s unitholders those matters we are required
to state to them in an auditor’s 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 audit work, for this report, or for the opinions we have
formed.
Silvio Bruinsma
Partner
for Deloitte Limited
Wellington, New Zealand
12 August 2021
This audit report relates to the consolidated financial statements of Vital Healthcare Property Trust (the ‘Group’) for the year
ended 30 June 2021 included on the Group’s website. The Board of Directors of the Manager is responsible for the maintenance
and integrity of the Group’s website. We have not been engaged to report on the integrity of the Group’s website. We accept no
responsibility for any changes that may have occurred to the consolidated financial statements since they were initially
presented on the website. The audit report refers only to the consolidated financial statements named above. It does not
provide an opinion on any other information which may have been hyperlinked to/from these consolidated financial
statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they
should refer to the published hard copy of the audited consolidated financial statements and related audit report dated 12
August 2021 to confirm the information included in the audited consolidated financial statements presented on this website.
VITAL HEALTHCARE PROPERTY TRUST, MANAGED BY NORTHWEST PROPERTY MANAGEMENT LIMITED ANNUAL REPORT 2021
86
UNITHOLDER STATISTICS
Analysis of unitholdings as at 30 June 2021
Holding Range
Number of
unitholders
Total units
% of total units
issued
1 - 49921940,9870.01
500 - 9999565,5370.01
1,000 - 1,999295424,0970.08
2,000 - 4,9998632,916,8850.56
5,000 - 9,9991,0887,753,9081.49
10,000 - 49,9992,05044,420,8748.55
50,000 - 99,99927518,390,6193.54
100,000 - 499,99912822,981,5614.42
500,000 - 999,999159,884,4211.90
1,000,000 Over30412,873,73679.44
Rounding0
Total5,058519,752,625100
Substantial unitholders as at 30 June 2021
UnitholdersDate notice of filesNumber of units
% of total units
issued
NORTHWEST HEALTHCARE PROPERTIES REAL ESTATE INVESTMENT TRUST1-Jul-21135,184,68826.01
FORSYTH BARR INVESTMENT MANAGEMENT LIMITED7-Jul-2142,164,0318.11
ANZ NEW ZEALAND INVESTMENTS LTD15-Jul-2126,304,8415.06
ACCIDENT COMPENSATION CORPORATION8-Jul-2126,104,1595.02
Twenty largest unitholders as at 30 June 2021
UnitholdersTotal% of units
NZGT SECURITY TRUSTEE LIMITED133,644,92825.71
FORSYTH BARR CUSTODIANS LIMITED59,130,43011.38
ACCIDENT COMPENSATION CORPORATION - NZCSD25,504,1394.91
CITIBANK NOMINEES (NEW ZEALAND) LIMITED - NZCSD21,685,2634.17
HSBC NOMINEES (NEW ZEALAND) LIMITED - NZCSD21,418,5854.12
ANZ WHOLESALE TRANS-TASMAN PROPERTY SECURITIES FUND - NZCSD16,118,0403.10
CUSTODIAL SERVICES LIMITED13,426,9232.58
CUSTODIAL SERVICES LIMITED13,161,1352.53
NEW ZEALAND DEPOSITORY NOMINEE LIMITED10,853,8512.09
BNP PARIBAS NOMINEES (NZ) LIMITED - NZCSD10,552,4432.03
FNZ CUSTODIANS LIMITED9,461,7301.82
CUSTODIAL SERVICES LIMITED9,136,7821.76
JBWERE (NZ) NOMINEES LIMITED8,395,8691.62
HSBC NOMINEES (NEW ZEALAND) LIMITED A/C STATE STREET - NZCSD7,734,4111.49
INVESTMENT CUSTODIAL SERVICES LIMITED6,891,2611.33
JPMORGAN CHASE BANK NA NZ BRANCH-SEGREGATED CLIENTS ACCT - NZCSD6,752,6871.30
ANZ WHOLESALE PROPERTY SECURITIES - NZCSD4,835,4600.93
CUSTODIAL SERVICES LIMITED4,822,2830.93
TEA CUSTODIANS LIMITED CLIENT PROPERTY TRUST ACCOUNT - NZCSD4,536,0780.87
MFL MUTUAL FUND LIMITED - NZCSD4,449,5880.86
Totals: Top 20 holders of Units392,511,88675.52
Total Remaining Holders Balance127,240,73924.48
87
DIRECTORY
MANAGER
NorthWest Healthcare Properties Management Limited
PO Box 6945, Victoria Street West
Auckland 1
1
42
Telephone: 0800 225 264 (NZ freephone); +64 9 973 7300
Email: enquiry@vhpt.co.nz
NorthWest Healthcare Properties Management - Australia
Level 45, Rialto South Tower, 525 Collins Street
Melbourne 3000
BOARD AND OFFICERS OF THE MANAGER
Graham Stuart - Independent Chair
Andrew Evans - Independent Diretor
Paul Dalla Lana - Director
Craig Mitchell - Director
Dr Michael Stanford - Independent Director
Aaron Hockly - Fund Manager
Michael Groth - Chief Financial Officer
Vanessa Flax - Regional General Counsel A/NZ and Company
Secretary
AUDITOR
Deloitte Limited
Deloitte Centre
80 Queen Street
Auckland 1010
Private Bag 115-033
Auckland 1140
Telephone: +64 9 303 0700
Facsimile: +64 9 303 0701
LEGAL ADVISERS TO THE TRUST AND THE MANAGER
Bell Gully
Vero Centre
48 Shortland Street
PO Box 4199
Auckland 1140
Telephone: +64 9 916 8800
Facsimile: +64 9 916 8801
Ashurst Australia
Level 16, 80 Collins Street,
South Tower,
GPO Box 4958
Melbourne, Victoria 3001
Telephone: +61 3 9679 3000
Facsimile: +61 3 9679 3111
SUPERVISOR
Trustees Ex
ecutors Limited
Le
vel 7, 51 Shortland Street
Auckland 1010
PO Box 4197
Auckland 1140
Telephone: +64 9 308 7100
Facsimile: +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
2/100 Queen Street
Melbourne, Victoria 3000
Australia
Bank of New Zealand
Deloitte Centre
80 Queen Street
Auckland 1010
UNIT REGISTRAR
Computershare Investor Services Limited
159 Hustmere Road
Takapuna, Auckland 0622
Private Bag 92119
Auckland 1142
New Zealand
vital@computershare.co.nz
Telephone: +64 9 488 8777
Facsimile: +64 9 488 8787
This document is printed on an environmentally responsible paper,
produced using Elemental Chlorine Free (ECF), FSC(R) certified, Mixed
Source pulp from Responsible Sources, and manufactured under the strict
ISO14001 Environmental Management System.
---
FY21 ANNUAL RESULTS
PRESENTATION
12 August 2021
Managed by NorthWest Healthcare Properties Management Limited
PRESENTED BY:
CONTENTS
Page
•Overview 3
•FY21 highlights4
•Portfolio 12
•Developments17
•Financial results & capital management22
•Outlook & guidance28
•Appendices31
2
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Aaron Hockly
Fund Manager
Richard Roos
Exec. Director, Portfolio
Michael Groth
Chief Financial Officer
Chris Adams
Exec. Director, Projects
All amounts are in NZD unless otherwise shown
OVERVIEW OF VITAL
3
VITAL IS THE FOURTH LARGEST LISTED PROPERTY VEHICLE AND THE ONLYSPECIALIST HEALTHCARE LANDLORD ON THE NZX
Vital Healthcare Property Trust (Vital) is:
✓the owner of a $2.63 billion healthcare
property portfolio in New Zealand (27% of
assets) and Australia (73%);
✓the only NZX-listed specialist healthcare
landlord (NZX ticker: VHP) with no ASX-
listed equivalent;
✓externally managed by a subsidiary of
Toronto-listed, global healthcare real estate
owner and manager, NorthWest Healthcare
Properties REIT (TSX ticker: NWH);
✓the fourth-largest NZX-listed property
vehicle; and
✓targeting 2-3% AFFO and DPU growth per
annum over the medium term, whilst
retaining a conservative pay-out ratio
*Excludes strategic assets
41* properties (A/NZ)
4
1
5
12
7
11
$1.93bn
$701m
$2.63bn
12* Properties (NZ)
29* properties (AUS)
AUSTRALIA
NEW ZEALAND
12
TASMANIA
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
4
VITAL HEALTHCARE PROPERTY TRUST
FY21 HIGHLIGHTS
DELIVERY OF STRATEGY
5
DELIVERING FOR VITAL UNITHOLDERS IN ACCORDANCE WITH STRATEGY
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
1
Includes impact of acquisitions, disposals, developments and HealtheCare split of surgical and speciality businesses
Continued deployment of Vital’s 5-year portfolio strategy resulting in:
✓Earnings growth
oFY21 AFFO: 11.54cpu; 10.4% above FY20
oFY22 guidance: at least 11.80cpu; 2.0% above FY21
o6.3% average growth per annum FY20-FY22
✓Increased distributions to unitholders on a prudent
payout ratio
oFY21 distributions: 8.875cpu; 1.4% above FY20
oFY22 guidance: 9.5cpu; 7.0% above FY21
o4.2% average growth per annum FY20-FY22
✓Continued portfolio improvement:
oextension of market leading W ALE to 18.7 years
omaintenance of low average building age to keep
maintenance capex costs low and enhance tenant /
patient experience
oreduction of single tenant exposure from 45% to 28%
✓Development pipeline expansion to:
oprovide future earnings growth
omatch latest healthcare delivery trends particularly in
precincts and ambulatory care
HIGHLIGHTS
6
DELIVERING FOR UNITHOLDERS WITH A STRENGTHENED BALANCE SHEET
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
balance sheet gearing;
significantly reduced from
38.7% at 30 June 2020
35.0%
total return
7.4% above benchmark
27.7%
AFFO per unit change over FY21
10.4%
increase in NTA per unit
since 30 June 2020
21.4%
HIGHLIGHTS -PORTFOLIO
7
ENHANCED PORTFOLIO METRICS IN ALIGNMENT WITH VITAL STRATEGY
increase in underlying
income (ex. FX)
8.0%
WACR
66bps yield compression
over FY21
4.88%
new, renewed or
extended leasing
1
60,000sqm
increased WALE
18.118.7yrs
$9.7m
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
property transactions
$286m
2
acquisitions & $101m
disposals
$387m
1
Includes new leasing on standing investments and development pre-commitments
2
Includes $17m of committed acquisitions
Increase in NPI
primarily due to acquisitions and
developments
DEVELOPMENT PROGRESS
8
DEVELOPMENT CONTINUES TO DELIVER STRATEGIC AND FINANCIAL BENEFITS FOR UNITHOLDERS
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
developments
completed
$80m
developments committed
($136m spend remaining)
$312m
developments
commenced
$74m
increased potential
pipeline
~$740m
gross yield on costs
~6%
1
Development to be undertaken progressively over ~3yrs
1
Epworth Eastern Expansion (July 2021)
STABILISED ASSET ACQUISITIONS
9
TWO PREMIUM ASSET ACQUISITIONS OF SCALE COMPLETED
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Grace Hospital, Tauranga (NZ)
Epworth Camberwell, Camberwell (VIC)
1
Stabilised year 2 income
2
Initial yield which reflects 4.28% market equated yield after adjusting for a tenant incentive payable in year 4
*
Total acquisition price after including tenant incentive, payable on the 3
rd
anniversary of lease commencement
NZ$95m
acquisition price
30yr
WALE
5.25%
1
Initial yield
Up to $50m
potential expansion /
development cost
Quality Tenant
JV between 1
st
& 3
rd
largest private hospital
operators in NZ (Southern
Cross & Evolution)
A$82.7m*
acquisition price
20yr
WALE
4.78%
2
Initial yield
Quality Tenant
Victoria’s largest not-for-
profit operator
~$740M ADDED TO DEVELOPMENT PIPELINE
10
CONTINUED RESTOCKING OF DEVELOPMENT PIPELINE THROUGH FIVE STRATEGIC ACQUISITIONS
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Playford Health Hub, Elizabeth Vale (SA)
17-23 Nelson Road, Box Hill (VIC)
7-17 Wolseley Street, Woolloongabba (QLD)
A$7.4m
acquisition price
(balance 50% interest)
16,748
site area (sqm)
A$29m
acquisition price
5,330
site area (sqm)
A$11.4m
acquisition price
3,036
site area (sqm)
61-71 Park Road, Auckland (NZ)
187-195 Foxw ellRoad, Coomera (QLD)
NZ$7.25m
acquisition price
Sep-20
final settlem ent
A$9.4m
acquisition price
Jul-21
final settlem ent
*Artist’s impression
COMPARATIVE RETURNS
11
VITAL OUTPERFORMED ITS BENCHMARK FOR ALL PERIODS ON A TOTAL RETURN
(1)
BASIS
Source: Forsyth Barr
(1) Total returns measured by change in unit price plus post-tax distributions to 30 June 2021
(2) S&P/NZX All Real Estate Index and S&P/NZX 50 Index data from 31 December 2004, being the inception date of the
NZX All Real Estate Index
Total return
(1)
to 30 June 20211yr
5yr
(p.a.)
10yr
(p.a.)
Since 2004
(p.a.)
(2)
Vital27.7%10.7%15.5%14.1%
S&P/NZX All Real Estate Index20.4%9.6%11.1%9.5%
S&P/NZX 50 Index10.5%12.9%13.9%9.1%
Vital’s outperformance vs
NZX REIT
7.4%1.1%3.6%4.6%
Vital’s outperformance vs
NZX 50
17.2%-2.2%1.6%5.0%
VHP vs S&P NZX Real Estate Index
✓Outperformance against both the S&P/NZX All Real Estate
Index and S&P/NZX 50 Index since December 2004
✓7.4% outperformance versus NZX REIT benchmark over
last 12 months and 17.2% outperformance versus NZX 50
✓Long-term outperformance highlights the defensive nature
of healthcare real estate compared to other real estate
classes
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
12
PORTFOLIO
VITAL HEALTHCARE PROPERTY TRUST
PORTFOLIO OVERVIEW
13
ALL FOUR KEY ASSET GROUPINGS CONTINUE TO PERFORM WELL
Private hospitals -Australia
17 hospitals (acute and specialty
–mental health, rehabilitation)
Four hospital operators
62% of portfolio value; 58% of rent
W ALE: 19.6 years
Private hospitals -New Zealand
9 hospitals (all acute)
Six hospital operators
23% of portfolio value; 24% of rent
W ALE: 22.4 years
Out-patient facilities / medical
office buildings –Australia and NZ
7 assets (Australia: 4, NZ: 3)
Multiple Tenants
10% of portfolio value; 11% of rent
W ALE: 8.6 years
Aged care -Australia
8 facilities (all in Australia)
Two operators
5% of portfolio value; 7% of rent
W ALE: 15.0 years
Subsector diversity (by value)
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
NETPROPERTY INCOME
Leasing activity (exc. assets sold)
Belmont Private Hospital:
10yr lease extension (25yr W ALE) –Healthe Care
Currumbin Clinic:
4.4yr extension (15yr W ALE) –Healthe Care
Napier Health Centre:
10yr extension (12.5yr W ALE) –Hawke’s Bay DHB
Rent reviews –average rent review growth rate of 1.8%
Acquisitions –income from FY21 acquisitions
Development income –rentalisation of capital
expenditure and holding income from strategic site
acquisitions
Disposals –Strategic disposal of three regional assets
CAPEX-remains modest due to long term leases,
minimal upcoming expiries, young building age and
ability to capitalise or rentalise upgrades as part of
developments
14
9.4% NPI GROWTH AIDED BY ACQUISITIONS, DEVELOPMENTS AND RENT REVIEWS
(NZ$000’s)
Net Property Income Bridge
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
9.4% grow th (incl. FX) /
8.0% (excl. FX)
1
Acquisitions of Bolton Clarke Aged Care (x3), Grace Hospital, Nelson Rd Box Hill.
2
Incremental development income contributed from Lingard, Wakefield, The Hills, Royston & South Eastern.
3
Includes Belmont additional income $1.3m, less amortisationof incentive ($0.9m) and Hurstville rent reduction ($0.7m).
4
Includes amortisations(excl Belmont), non-recurring R&M and Fximpact.
5
Disposals of regional Healthe Care (Mayo, North West& Dubbo)
MOVEMENT IN INVESTMENT PROPERTY
15
WELL-LEASED HEALTHCARE ASSETS CONTINUE TO EXPERIENCE CAP RATE COMPRESSION
Investment Property Bridge (FY21)
Key FY21 Results:
~66% of Vital’s portfolio independently
valued (by number of properties) at30
June 2021, following 40% being
undertaken at31 December 2020
Revaluation gains include ~$17m from
rental increases and leasing activity,
~$30m of development margins and
66 basis points cap rate compression
since 30 June 2020
$12.9m gross profit realisedon
disposals
3
(NZ millions)
NZ AssetsAU Assets
1
$269m of acquisitions, including $95m for Grace Hospital, $78.3m for Epworth Camberwell and the balance for strategic / development sites, such as 50% acquisition of
Playford Health Hub, Nelson Road (VIC) and Wolseley Street (QLD). All values shown in NZ$, pre costs.
2
Period end NZD/AUD exchange rate decreased to 0.9309 from 0.9345 at30 June 2020
3
Compared to 30 June 2020 book value. Excludes ~$1.4m of disposal costs
4
Includes development expenditure and capitalised interest costs
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
1
2
4
TENANT CONCENTRATION REDUCED
16
VITAL’STOP 5 TENANTS CONTINUE TO PURSUE VALUE-ADD OPPORTUNITIES
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
PORTFOLIO
INCOME (%)
# OF
ASSETS
(TYPE)
FY21
Comments
KEY
ASSETS
TENANT
JV operator partnership with
Southern Cross Healthcare
and Evolution Healthcare.
~$50m development
pipeline.
4%
1
(ACUTE HOSPITAL)
10%
3
(ACUTE AND SPECIALTY
HOSPITALS)
Royston stage 1 completed
during FY21 and Royston
Day Surgery (Stage 2) well
progressed.
Wakefield Stage 1 is
completeand demolition
works for Stage 2 underway.
13%
3
(ACUTE AND SPECIALTY
HOSPITALS)
14-storey Epworth Eastern
Tower expansion on track for
progressive handover from
Nov-21.
Structure & façade complete.
Fitoutof clinical areas well
progressed.
28%
10
(SPECIALTY HOSPITALS)
Specialty
The specialty hospitals are
looking to list on the ASX and
expected to be rebranded
Aurora Health Care.
~$50m of committed
developments underway.
14%
4
(ACUTE HOSPITALS)
The surgical hospitals
business is in the process
of being sold.
Acute
17
VITAL HEALTHCARE PROPERTY TRUST
DEVELOPMENTS
18
DEVELOPMENT STRATEGY & VALUE-ADD
Developments are key for:
✓Earnings & capital
growth
✓Improving the
portfolio
NorthWest has specialist
healthcare development
skills in New Zealand and
Australia. Key people have
25+ years experience
individually; unmatched in
the sector
Core part of strategy
In addition to immediate financial benefits, developments
enable Vital to continue to improve the portfolio through:
Lowering average building age (reduced CAPEX)
Meeting tenant and patient demand particularly in
light oftreatment changes (e.g.ambulatory care)
Pipeline
$312m of committed developments, representing
~12% of total Portfolio Value; $136m of spend
remaining
~$740m of potential development opportunities
identified (subject to business cases, due diligence
and approvals).
TARGETING 10-15% OF THE PORTFOLIO VALUE UNDER DEVELOPMENT
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
COMPLETED DEVELOPMENTS
19
TWO DEVELOPMENTS COMPLETED IN FY21
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
AssetSouth Eastern Private Hospital
Asset TypeSpecialty Hospital
Total CostA$9.2m
Project Yield
1
6%
Completion DateJanuary 2021
DescriptionNew Day Oncology Centre
New 10 bed ward and conversion of shared rooms to
singles
Future expansion options of hospital being explored
Precinct ValueA$80m
AssetRoyston
Asset TypeAcute Hospital
Total CostNZ$9.9m (plus $8.1m for DSU project, PC in late-21)
Project Yield
1
6.3%
Completion DateFebruary 2021
DescriptionExpansion and upgrade is now complete, comprising a
new CSSD, reception upgrade, two theatre shells, one
theatre fitoutand general refurbishment.
In addition, a new DSU is anticipated to reach PC in late-
21 and comprises a standalone two theatre day surgery
unit.
Precinct ValueNZ$81m ($3.3m remaining to be spent on DSU)
South EasternPrivate Hospital Royston Private Hospital
1
Gross project yield
COMMITTED DEVELOPMENT UPDATES
20
$300M+ COMMITTED DEVELOPMENT PIPELINE
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
A$96.5m cost A$83.9m spent PC (Early-22)
A$12.4m cost
A$2.9m spent
PC (Mid-22)
1
NZ$112.8m cost NZ$59.3m spent PC (staged 21-23)
EPWORTH EASTERN, VIC
EDEN REHABILITATION, QLD
PLAYFORD HEALTH HUB, SA
ROYSTON DSU, NZ
WAKEFIELD HOSPITAL, NZ
A$20.7m cost
2
A$11.6m spent
PC (Late-21)
1
Staged project. Some works paused, pending review
2
Stage 1 –Multi-deck car park and retail.
NZ$8.1m cost
NZ$4.8m spent
PC (Late-21)
A$22.6m cost A$2.6m spent PC (Late-22)
BELMONT PRIVATE, QLD
ABBOTSFORD PRIVATE, WA
A$18.6m cost A$3.3m spent PC (Mid-22)
POTENTIAL DEVELOPMENT PIPELINE
21
~$740M POTENTIAL DEVELOPMENT PIPELINE ACROSS AUSTRALIA & NEW ZEALAND
$376m
$83m
$155m
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
$16m$50m
$60m
FINANCIAL RESULTS & CAPITAL MANAGEMENT
22
VITAL HEALTHCARE PROPERTY TRUST
FINANCIAL PERFORMANCE
23
PROPERTY EARNINGS & REVALUATIONS GROWTH HAS FACILITATED SIGNIFICANT AFFO GROWTH
Contribution from structured rent
reviews, acquisitions and
development rents
$235m of revaluation gains
during FY21, in addition to
$12.9m gross profit realisedon
disposals (pre-costs)
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Actual
Actual
($)
(%)
FY2021
FY2020
change
change
Net property income
109,663
100,147
9,516
9.5%
Corporate expenses
(4,769)
(4,559)
(210)
(4.6%)
Management fees
(25,416)
(18,709)
(6,707)
(35.8%)
Strategic transaction income and expenses
0
(7,764)
7,764
(100.0%)
Strategic transaction interest income
0
268
(268)
(100.0%)
Realised transaction gains / (losses)
(730)
22
(752)
3,418.2%
Net finance expenses
(27,684)
(28,251)
567
2.0%
Operating profit before tax and other income
51,064
41,154
9,910
24.1%
Property revaluations and other income
267,403
29,169
238,234
816.7%
Profit before income tax
318,467
70,323
248,144
352.9%
Adjusted funds from operations (AFFO)
57,457
47,211
10,247
21.7%
Adjusted funds from operations (cpu)
11.54
10.45
1.09
10.4%
All values shown as NZ$,000's
Average NZD/AUD exchange rate in the period
0.9309
0.9345
BALANCE SHEET
24
STRENGTHENED BY SIGNIFICANT REVALUATION GAINS, NEW EQUITY AND DEBT EXTENSION
1
Calculated in accordance with Trust Deed
2
Total capitalised costs, including development expenditure, capitalised interest on developments and capitalised incentives
Increase due to:
development and capital
works expenditure of $127m
2
acquisitions totaling $269m
revaluation gains of $235m
disposals of $88m
F/X impact of $5m
New equity of $182.4m raised via
placement, UPP and four DRP’s
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
ActualActual($)(%)
FY2021FY2020changechange
Investment properties2,634,5882,086,309548,27926.3%
Other assets27,97218,9099,06347.9%
Bank debt932,377814,537117,84014.5%
Other liabilities226,733211,70215,0317.1%
Debt to gross assets
1
35.0%38.7%(9.5%)
Unitholder funds1,503,4511,078,979424,47239.3%
Units on issue (000s)519,753453,78365,97014.5%
Net tangible assets ($/unit)2.892.380.5121.4%
All values shown as NZ$,000's
Period end NZD/AUD exchange rate0.93090.9345
NET TANGIBLE ASSETS
25
REVALUATION GAINS HAVE LED TO STRONG NTAGROWTH PER UNIT
NTA Per Unit Bridge
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Revaluation gain of $235m; an
11.3% increase in total portfolio
value from June 2020
69% of gain from Australian
portfolio and 31% from New
Zealand
Revaluation gains include
~$17m from rental increases
and leasing activity and ~$30m
of development margins
$12.9m gross profit realisedon
disposals
DEBT
26
GEARING REDUCED DURING FY21 TO SUPPORT FUTURE GROWTH
FY21 Overview
Strategic priorities delivered:
weighted average maturity extended to 2.5 years
expiring facilities refinanced
enhanced lending terms and conditions secured, with
support from existing financiers; and
Financier diversification; three new lenders joined Vital’s
banking group.
Near term refinancing risk solutions well advanced -offers of
finance received and undergoing credit approval process.
Long term debt program underway with inaugural issuance
targeted to be completed before 31 Dec 21.
Vital’s all-in weighted average cost of debt was 3.3% as at 30
June 2021 (based on drawn debt only).
Strong balance sheet available to support Vital’s requirements,
including developments.
35.0%
DEBT / ASSETS
Calculated in accordance with Vital’s Trust Deed
✓Debt levels considered conservative given
cashflow security: high quality tenants,
long leases, high quality properties and
defensive asset class
✓Priority focused on extending debt
weighted average maturity term, across
multiple sources, to lower funding and
interest rate risk and align to long duration
rental cashflows
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
DEBT MATURITY
27
INCREASED WEIGHTED AVERAGE DEBT DURATION AND AVAILABLE HEADROOM FOR UTILISATION
Debt Maturity Profile –30 June 2021 (A$)
Increased the weighted average debt
duration from 1.8yrs to 2.5yrs
1
Trust Deed debt ratio is based on total borrowings to gross asset value of the Trust
2
Bank LVR is based on total indebtedness to secured property value as determined by external valuers
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Headroom available under existing
facility to support future growth
1
2
Program to source long term debt
underway with inaugural issuance
targeted for 1
st
half FY22
Next expiry Nov-21 (A$100m).
Credit approval of proposals to extend
and increase facility limits well advanced
30 Jun 2021
30 Jun 2020
Debt to gross assets (Trust Deed)
35.0%
38.7%
Bank loan to value ratio - actual
38.0%
40.2%
Bank loan to value ratio - covenant
55.0%
50.0%
Weighted average duration to expiry
2.5 years
1.8 years
Undrawn facility limit (A$)
$144m
$225m
Bank Facilities
OUTLOOK AND GUIDANCE
28
VITAL HEALTHCARE PROPERTY TRUST
OUTLOOK & GUIDANCE
29
CONTINUED DELIVERY AND FOCUS ON EARNINGS GROWTH
FY22 AFFO guidance of at least
11.80 cpu; up at least 2% on FY21
FY22 distribution guidance of 9.5
cpu; 5.6% above last annualised
guidance
Conservative ~80% pay-out ratio
retained
Significant development pipeline
o$312m –committed
o$136m –remaining cost to complete
o~$740m –potential pipeline
opportunities identified
Further value-add acquisition and
development opportunities being
considered
Future asset recycling strategies
continue to be considered to
partially fund new developments and
acquisitions
Further debt diversification and
extensionof maturities continues
Sustainability achievements to be
built on including ongoing
submissions to both CDP and
GRESB
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
VITAL HEALTHCARE PROPERTY TRUST
30
APPENDICES
WHY INVEST IN VITAL
31
VITAL IS THE ONLY SPECIALIST NZX-LISTED OWNER OF HEALTHCARE PROPERTY; NO ASX-LISTED EQUIVALENT
DEFENSIVE SECTOR
HIGH DEMAND
HIGH QUALITY
PORTFOLIO
DEVELOPMENT
UPSIDE
EARNINGS
GROWTH
Private healthcare is
typically a non-
discretionary or high
priority discretionary
spend
Less impacted by
economic or business
cycles than other
property sectors
Ageing demographics
and growing population
in both Australia and
New Zealand
Rising life expectancy
Improvements in
science, technology and
healthcare increase
service offerings
$136m of remaining
spend on existing
developments and
~$740m of identified,
potential pipeline to be
partially funded by asset
recycling and existing
debt facilities
W eighted average
project yield of 6.1%;
provide value creation
and earnings growth
Targeting 2-3% AFFO
and DPU growth with a
conservative pay-out
ratio
95% of leases increase
by CPI or fixed %
Embedded earnings
growth enhanced by
acquisitions and
developments
Landlord to some of New
Zealand and Australia’s
leading private
healthcare operators
$2.63B portfolio
99.2% occupancy
W ALE: 18.7 years
Average building age*:
11.3yrs
*average building age = the later of the date of construction or last significant capital works
Vital seeks to deliver stable and growing total unitholder returns, including an attractive risk-adjusted income distribution, sourced
from healthcare property
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
VITAL’S STRATEGY
32
VITAL INVESTS IN HEALTHCARE ECOSYSTEMS IN NEW ZEALAND & AUSTRALIA
Portfolio Allocation*
Actual: 85%
Target: 50%-70%
VITAL
Earnings growth
Portfolio designed to support AFFO
target growth of 2-3%/unit per annum
Quality
Continuously improve portfolio quality
Aiming to maintain or improve (lower)
average building age
Location
Australia or New Zealand
Focus on metropolitan assets with
growing populations
Acuity
Higher acuity
Investments in core health ecosystem
Regulated and precinct offerings preferred
Investment characteristics
Screened by a range of metrics including
IRRs, impact on overall portfolio, earnings
growth and management capability
Focus on high quality, well capitalised
operators
Sub-Sector
Reduction in hospital allocation indicates an
expectation that future growth opportunities
are more likely to come from the other sub-
sectors, rather than a desire to reduce
exposure.
Hospitals
Aged Care
Outpatient Facilities
Life Sciences /
Research
Actual: 5%
Target: 10%-20%
Actual: 10%
Target: 10%-20%
Actual: 0%
Target 5%-10%
*
Based on total portfolio value and includes allocation of strategic assets to their respective property types.
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
VITAL STRUCTURE
33
VITAL IS A UNIT TRUST LISTED ON THE NZX, EXTERNALLY MANAGED BY A LEADING GLOBAL HEALTHCARE REAL ESTATE INVESTOR
AND MANAGER
Only listed specialist owner of healthcare
real estate in Australasia
Over 40 healthcare real estate
professionals in Australia and New
Zealand and 200+ globally
New Zealand’s largest specialist owner of
healthcare real estate
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
REAL ESTATE RETURNS
34
HEALTHCARE REAL ESTATE CONTINUES TO PERFORM STRONGLY AGAINST CORE PROPERTY INVESTMENT SECTORS
Vital has outperformed all three core real estate asset classes in Australia over the preceding 5 year period
Vital has significantly outperformed the Office and Retail sectors over each of the 1yr, 3yr & 5yr periods respectively.
Returns by real estate asset class in Australia versus Vital’s real estate level returns (non-compounding) year ended 30 June 2021
Source: MSCI & Vital, 2021
Returns shown are on a nominal, unlevered “all asset” basis (inclusive of development and transaction activity). Vital returns include Australian
and New Zealand Portfolio
Capital
Growth
Income
Growth
Vital Portfolio Returns
Office (Aus)Retail (Aus)
Industrial (Aus)
Total Return
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
PORTFOLIO OVERVIEW
35
$2.63B PORTFOLIO OF HEALTHCARE REAL ESTATE COMPRISING 41 INVESTMENT PROPERTIES AND 3,000+ BEDS
Epworth Camberwell, VIC
Grace Hospital, NZ
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
PORTFOLIO OVERVIEW (cont’d)
36
$2.63B INVESTED IN 41 CORE HEALTHCARE PROPERTIES WITH OVER 3,000BEDS AND 103 UNIQUE TENANTS
Income
FY21 property income growth of 1.5%
(like-for-like, same currency basis)
Strong positive rent growth achieved
during FY21 through a combination of
CPI and fixed rent increases
Diversification
As shown on this page, Vital has a
diverse portfolio by location and
tenant
Seeking to continuously improve
diversity of income
WA 5%
SA 4%
VIC 25%
NSW 27%
QLD 13%
NZ 27%
Tenant Diversification (% of rent)
Geographic Diversification (by value)
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Largest single tenant
exposure expected to be
lowered to 28% during FY22.
COMMITTED DEVELOPMENTS
37
DEVELOPMENTS ENHANCE EARNINGS GROWTH AND IMPROVE ASSET QUALITY
Structure and façade complete. Fitout
of clinical areas well progressed.
Enabling works complete. Authority
approvals received and main works
commenced.
Refurbishment works continuing.
~$9.5m of extensions works paused,
pending review.
Stage 1 practical completion reached
15th July. Demolition works for Stage 2
underway.
Project yields represent a
~400bps premium over the New
Zealand and Australian 10-year
Government bond yields.
On program with expected PC October
2021.
1
Gross project yield
2
Project cost reduced ~$28m. Epworth to fund fitoutworks
30 June 2021 Period end NZD/AUD exchange rate of 0.9309 adopted
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Construction well progressed.
Forecast complete November 2021.
Project temporarily on hold.
2
1
DISPOSALS
38
RECYCLED ~$100M FROM REGIONAL ASSET SALES TO FUND ACQUISITION OFGRACE HOSPITAL IN TAURANGA, NZ
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Regional Asset Disposals
$100m
portfolio sale price
14.7%
premium achieved on 30
June 2020 book value
Asset Portfolio Summary
✓
Recycled capital into
a scalable, prime
New Zealand hospital
asset, Grace Hospital
North WestPrivate Hospital
Dubbo Private Hospital
Mayo Private Hospital
Mayo Private Hospital, NSW
Dubbo Private Hospital, NSW
North West Private Hospital, NSW
Transaction Summary
5.65%
Initial yield
202
Inpatient beds
6
operating theatres
~175km
Distance to Newcastle CBD
(Mayo Private)
~400km
Distance to Sydney CBD
(Dubbo Private)
~140km
Distance to Launceston CBD
(North WestPrivate)
ADJUSTED FUNDS FROM OPERATIONS (AFFO)
39
CONSERVATIVE PAYOUT RATIO
1
Increase due in part to Belmont lease transaction
1
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
ActualActual($)(%)
FY2021FY2020changechange
Operating profit before tax and other income 51,064 41,132 9,932 24.1%
Add/(deduct):
Current tax expense (7,858) (7,238) (620) (8.6%)
Incentive fee 12,402 6,475 5,927 91.5%
Realised and unrealised fx on borrowings (net of tax) 227 (1,234) 1,461 (118.4%)
Amortisation of borrowing costs 878 611 267 43.7%
Amortisation of leasing costs & tenant inducements 2,421 1,084 1,338 123.4%
Net strategic transaction expenses - 7,764 (7,764) (100.0%)
IFRS 16 operating lease accounting (144) (144) - -
Funds from operations (FFO) 58,990 48,450 10,541 21.8%
Add/(deduct):
Non-recurring corporate costs - 323 (323) (100.0%)
Actual capex & leasing from continuing operations (1,533) (1,562) 29 1.9%
Adjusted funds from operations (AFFO) 57,457 47,211 10,247 21.7%
AFFO (cpu)11.54c10.45c1.09c 10.4%
Distribution per unit (cpu)8.88c8.75c0.13c 1.4%
AFFO payout ratio77%84%
All values shown in NZ$,000's
Units on issue (weighted average, 000s)497,892451,563
INTEREST RATE HEDGING PROFILE
40
COST OF DEBT WELL HEDGED, MANAGING RISK
Hedging Maturity Profile ($A)
NOTE: Fixed rates exclude line fees and margin
1
Drawn debt (excludes line fees on undrawn facility)
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
30 Jun 2021
30 Jun 2020
Weighted average cost of debt
3.32%
3.59%
Weighted average fixed rate
(excl line and margin)
2.94%
3.01%
Weighted average fixed rate duration
5.5 yrs
6.1 years
% of drawn debt fixed
49%
60%
Rates
1
LEASE EXPIRY PROFILE
Lease expiries in FY22 primarily reflect smaller tenancies at multi-tenant properties.
FY22 Expiries:
Total expiry of $2.0m or 1.7% of annual rent through to June 2022. Largest single lease expiry is Quality Life Management ($388kp.a.)
who are terminating their lease in July.
41
LOW RISK EXPIRY PROFILE SUPPORTS SUSTAINABLE, PREDICTABLE AND DEFENSIVE CASH FLOWS
10-year average annual lease
expiry of only 1.6% (as % of
total portfolio income)
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
1
Includes fixed percentage and CPI reviews
RENT REVIEWS
42
HIGH PERCENTAGE OF TOTAL RENT IS REVIEWED ANNUALLY WITH STRUCTURED
1
REVIEW MECHANISMS
Rent Reviews –FY21 (“like-for-like” excludes developments, acquisitions and disposals)
Rent reviews were
completed for 114
leases in FY21
Structured reviews
represented 95%
1
of
leases by income for
the year ending 2021.
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
Jun-20 Rent p.a.
Jun-21 Rent p.a.
Increase
Annualised
Growth
#
(NZD)
(NZD)
(NZD)
(Stable currency)
Australia
AUS
56
61,143,218
62,173,816
1,030,598
1.7%
New Zealand
NZ
58
21,002,949
21,465,825
462,876
2.2%
Total
114
82,146,168
83,639,641
1,493,474
1.8%
Jun-20 Rent p.a.
Jun-21 Rent p.a.
Increase
Annualised
Growth
#
(NZD)
(NZD)
(NZD)
(Stable currency)
CPI
CPI
77
75,177,403
76,262,442
1,085,039
1.4%
Fixed
Fixed
23
3,850,247
3,976,534
126,288
3.3%
Market
Market
13
2,421,393
2,463,391
41,997
1.7%
Turnover
Turnover
1
697,125
937,274
240,149
34.4%
Total
114
82,146,168
83,639,641
1,493,474
1.8%
99.1%
99.3%
99.4%99.4%
99.2%
95%
96%
97%
98%
99%
100%
20172018201920202021
CORE PORTFOLIO METRICS
43
5 YEAR TRENDS HIGHLIGHT PORTFOLIO STRENGTH AND UNDERPIN LONG-TERM PERFORMANCE
13
th
consecutive year of
portfolio occupancy
>99%
High degree of
confidence that future
expiries will be renewed
or replaced in advance
1
Reflects the average % of total portfolio income that expires over each of the next 10 years.
TOTAL INCOME SUBJECT TO STRUCTURED RENT REVIEWS
WALE
OCCUPANCY
AVERAGE 10 YR LEASE EXPIRY
(1)
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
17.7
18.2
18.1
18.1
18.7
15
16
17
18
19
20172018201920202021
Years
2.1%
1.8%
1.7%
1.3%
1.6%
0%
1%
2%
3%
4%
5%
6%
20172018201920202021
Percentage of income
82.9%
85.8%
90.0%
94.0%
95.0%
0%
20%
40%
60%
80%
100%
20172018201920202021
Percentage of
income
OVERVIEW OF NORTHWEST –VITAL’S MANAGER
44
NORTHWEST: A FOCUSED HEALTHCARE REAL ESTATE INVESTMENT OWNER ANDMANAGER
NZ$9.5Bn
Assets under management
Global scale, local relationships
Partner of choice for leading operators in each market it invests
Deep healthcare real estate expertise
230+ healthcare property professionals based in 3 of the largest
global healthcare markets
Execution excellence
15+ years of healthcare real estate investment, management and
development
Entrepreneurial culture, institutional capabilities
10+ year public company track record
A proven track record
Track record of delivering strong risk-adjusted returns for investors
Scalable platform with embedded growth
Its operator relationships and existing portfolio provide a robust
acquisition and development pipeline
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
GLOSSARY
45
AFFO
Adjusted Funds From Operations is an alternate measure used for assessing distributable income. Essentially adjusts NPAT for allnon-cash items
(i.e. NDI) then makes adjustments for items such as maintenance capex and lease incentives paid.
Cap Rate
Capitalisation Rate. Generally calculated as net operating income / current market value of investment property.
CPI
Consumer Price Index. An index that measures the change in the cost of a ‘basket’ of basic goods and services, showing how the cost-of-living
changes over time. The most widely accepted indicator of inflation.
FX
An abbreviation for ‘foreign exchange’ used where there is a transaction in a currency other than the local currency.
LVR
Loan to Value Ratio. Is the ratio of a loan to the value of an asset purchased or total assets. The term is commonly applied by looking at the level of
borrowings (or debt) versus the total assets, or borrowings versus the income producing properties.
NTA
Net Tangible Assets. The total assets of the Trust less total liabilities. NTA is normally divided by the number of units on issue and expressed as an
annual amount per unit.
WACR
W eighted Average Capitalisation Rate. The market cap rate for each property weighted by property value.
WALE
W eighted Average Lease term to Expiry. The weighted average lease term remaining to expire across a portfolio, sometimes alsoreferred to as
W ALT.
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
DISCLAIMER
46
This presentation has been prepared by NorthW est 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,
legal, tax or financial advice or recommendation to any person 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.
This presentation may contain forward-looking statements. Forward-looking statements can include words such as “expect”, “intend”,
“plan”, “believe”, “continue” or similar words in connection with discussions of future operating or financial performance orconditions. The
forward-looking statements are based on management's and directors’ current expectations and assumptions regarding the Trust’s
business, assets and performance and other future conditions, circumstances and results. As with any projection or forecast, forward-
looking statements are inherently susceptible to uncertainty and to any changes in circumstances. The Trust’s actual results mayvary
materially from those expressed or implied in the forward-looking statements. The Manager, the Trust, and its or their directors, employees
and/or shareholders have no liability whatsoever to any person for any loss arising from this presentation or any informationsupplied in
connection with it. The Manager and the Trust are under no obligation to update this presentation or the information contained in it after it
has been released. Past performance is no indication of future performance.
12 August 2021
VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2021
---
VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare
Properties Management Limited
vhpt.co.nz
MARKET RELEASE
Managed by NorthWest Healthcare
Properties Management Ltd
Results for announcement to the market
Name of issuerVital Healthcare Property Trust
Reporting Period12 months to 30 June 2021
Previous Reporting Period12 months to 30 June 2020
CurrencyNZD
Amount (000s)Percentage change
Revenue from continuing
operations$109,6639.50%
Total revenue$109,6639.50%
Net profit/(loss) from continuing
operations$278,392378.95%
Total net profit/(loss)$278,392378.95%
Interim/Final Dividend
Amount per Quoted Equity
Security$0.022500
Imputed amount per Quoted
Equity Security$0.001642
Record Date9 September 2021
Dividend Payment Date23 September 2021
Current periodPrior comparable period
Net tangible assets per Quoted
Equity Security$2.89$2.38
A brief explanation of any of the
figures above necessary to enable
the figures to be understoodRefer announcement
Authority for this announcement
Name of person authorised to
make this announcementMichael Groth
Contact person for this
announcementMichael Groth
Contact phone number+61 409 936 104
Contact email addressMichael.Groth@nwhreit.com
Date of release through MAP12 August 2021
The Annual Report accompanies this announcement
RESULTS ANNOUNCEMENT
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