Managed Investment Scheme 2022 Annual Report

FMCA Compliance Annual
Report 2022
Managed by NorthWest Healthcare
Pr operties Management Ltd

www.vhpt.co.nz
DETAILS OF THE SCHEME

The Scheme is the Vital Healthcare Property Trust (Scheme or Vital) which is a managed
investment scheme for the purposes of the Financial Markets Conduct Act 2013 (FMCA).

The Scheme is managed by NorthWest Healthcare Properties Management Limited
(Manager) and supervised by Trustees Executors Limited, a supervisor licensed under the
Financial Markets Supervisors Act 2011 (Supervisor).

The offer of interests in the Scheme was originally made under the Unit Trust Act 1960.
The Scheme transitioned to compliance with the FMCA on 30 November 2016.
Accordingly, a Product Disclosure Statement has not been prepared for the Scheme as
no regulated offers of units have been made pursuant to the FMCA. The Scheme units are
listed on the New Zealand Stock Exchange (NZX code: VHP).

Vital’s latest financial statements and the auditor’s report for those statements were
lodged with the Disclose Register on 11 August 2022.

DESCRIPTION OF THE SCHEME

The Scheme is a unit trust established under the Unit Trust Act 1960 by a Trust Deed dated
11 February 1994, as amended by subsequent Deeds of Variation and Restatement. Vital
became a registered Managed Investment Scheme under the Financial Markets Conduct
Act 2013 on 29 November 2016.

Vital is a long-term investor in healthcare real estate. This means Vital is focused on
investing directly in real property, or in companies or trusts (listed on a recognised stock
exchange or unlisted) through financial products, other types of financial instruments or
the provision of debt, which themselves own, directly or indirectly, real property with
healthcare related qualities.

From time to time, Vital may invest at earlier stages of the development process, including
undertaking the design, refurbishment or development of healthcare properties for
particular health service operators. Vital does not operate healthcare facilities itself –
instead, it receives rental income via leasing its properties primarily to healthcare
operators and/or tenants with healthcare characteristics and/or it earns investment
income from any healthcare related investments it may undertake.

INFORMATION ON COMPOSITION OF THE SCHEME

This Annual Report covers the accounting period from 1 July 2021 to 30 June 2022.

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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The number of managed investment products, being units in the Scheme (Units) on issue
at the start of the accounting period was 519,752,625. The number of Units on issue at the
end of the accounting period was 649,155,196.

CHANGES RELATING TO THE SCHEME

Material changes to the nature of the Scheme, the Scheme property, the investment
objectives and strategy, or the management of the Scheme over the accounting period
are as follows:

TRUST DEED

There have been no amendments to the Trust Deed made during the current accounting
period.

A copy of the current version of the Trust Deed is available on Vital’s website
www.vhpt.co.nz
under the section About/Governance. It is also available on the Disclose
Register accessible on the Companies Office website at (https://disclose-
register.companiesoffice.govt.nz/disclose).

TERMS OF THE OFFER OF UNITS

Vital continues to be a closed ended fund and does not continuously offer units for
subscription. Vital offers units for subscription from time to time to raise equity capital.
During the period 1 July 2021 to 30 June 2022, the following offers were made:

• an underwritten 1 for 8.54 pro rata accelerated entitlement offer launched on 28
April 2022 that raised gross proceeds of approximately $200 million;
• an underwritten placement and non-underwritten unit purchase plan launched on
13 October 2021 that raised gross proceeds of $115 million and $27.8 million
respectively; and
• an active dividend reinvestment plan, the terms of which remained unchanged
during the current accounting period.
STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES (SIPO)

The SIPO was lodged on the Disclose Register on 9 August 2018 and amended and
lodged on 6 December 2021. The material amendments made to the SIPO lodged on 6
December 2021 were to ensure financial strategies currently or potentially used by Vital for
foreign exchange and interest rate risks were referenced and to include social
infrastructure and ancillary healthcare assets as potential asset classes.

A copy of the current SIPO is available on Vital’s website www.vhpt.co.nz
under the
section About/Governance.

RELATED PARTY TRANSACTIONS

During the period 1 July 2021 to 30 June 2022 there were no changes to the nature and
scale of related party transactions.

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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There were no related party transactions that were not on arm’s-length terms.

Further details of the related party fees paid by Vital to the Manager and its related
parties can be found in note 22 of Vital’s financial statements which have been lodged
with the Registrar.

VALUATION AND PRICING METHODOLOGIES

There was no change to the valuation and pricing methodologies, as outlined in the Trust
Deed, for the Scheme during the current accounting period.

FINANCIAL CONDITION AND PERFORMANCE OF THE SCHEME

Despite increased economic uncertainty and rising debt costs, the Manager has
continued to deliver earnings and distribution growth for Vital's Unit Holders whilst also
continuing to enhance the property portfolio and embed sustainability into all parts of
Manager and Vital.

Vital’s ~$3.3 billion property portfolio remains high quality, high acuity with a long WALE
and limited upcoming expiries (on average 1.7% of the portfolio's rent expires per annum
over the next 10 years).

Vital’s weighted average lease expiry (WALE) was 17.6 years at 30 June 2022 compared to
18.7 years at 30 June 2021 despite 12 months passing reflecting acquisitions, disposals,
leasing, development and other portfolio improvements.

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
Unit Holders.

FY22 Highlights

• 3.3% increase in AFFO per unit from 11.54 cents per unit (cpu) to 11.92 cpu;
• 8.5% increase in distributions per unit from 8.875 cpu to 9.625 cpu on a prudent 81%
AFFO pay-out ratio;
• 15.3% increase in net tangible assets (NTA) per unit from $2.89 to $3.34;
• $287 million of property acquisitions and $15 million of disposals undertaken (before
transaction costs);
• $100m of capital expenditure undertaken comprising $86m for developments,
~$12m for value-add works and ~$2m for maintenance and tenant incentive
related works;
• Commencement of $240m of new developments including Ormiston Hospital
expansion in Auckland and Stage 2 of both Wakefield Hospital in Wellington and
Playford Health Hub in Adelaide;
• Replenishment of potential development pipeline to provide future earnings and
valuation upside for Unit Holders;
• Release of inaugural Sustainability Reports for both Vital and NorthWest as well as
participation in both the Carbon Disclosure Project (CDP) and the Global Real
Estate Sustainability Benchmark (GRESB). Results are due to be publicly released
later in 2022;

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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• $379m (before costs) of equity raised primarily via a $143m placement and UPP in
late 2021 and a $200m entitlement offer in early 2022. Equity was raised to support
the acquisitions and developments referred to above and to keep balance sheet
gearing below 35%; and
• Appointment of Angela Bull as an Independent Director, completing a two-year
process of Board renewal.
As at 30 June 2022 Vital had net assets of $2,165.9 million (2021 : $1,503. 5 million),
comprising total current assets of $40.0 million (2021: $21.5 million), total non-current assets
of $3,359.9 million (2021: $2,641.1 million) and total liabilities of $1,234.0 million (2021:
$1,159.1 million).


Total comprehensive income for the 12 month period to 30 June 2022 was $340.4 million
(2021: $280.5 million), and total distributions relating to the period to Unit Holders were
$55.2 million (2021 : $44.4 million), representing 9.625 cents per Unit (2021: 8.875 cents per
Unit).

You can find a copy of Vital’s financial statements, including information on distributions
made by the Scheme on the Disclose Register at:
https://disclose-
register.companiesoffice.govt.nz/disclose Scheme number SCH11214. Further information
on the financial results is provided in Vital’s Annual Report at: www.vhpt.co.nz.

FEES

The following fees and expenses were charged in respect of the Scheme in dollars and as
a percentage of the Scheme’s property for the 12 month period to 30 June 2022.


2022
$000s
Percentage
of Scheme’s
Property
1

Total fees and expenses incurred

Management fees
15,737 0.46%
Manager’s incentive fee
15,914 0.47%
Leasing / Licencing fees
157 0.00%
Property management fees
1,541 0.05%
AFSL fee
1,210 0.04%

34,559 1.02%


Service fees capitalised

Acquisition fees
7,864 0.23%
Leasing / Licencing fees 3,136 0.09%
Project management fees 157 0.00%
Development management fees
4,356 0.13%
Total fees charged by the Manager and associated persons
50,072 1.47%


Auditor’s remuneration
200 0.01%
Supervisor’s fees
532 0.02%
Other operating income/expenses
4,072 0.12%
Total fees & expenses
54,876 1.61%
1: Totals may not add due to rounding

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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MANAGER’S FEES

Remuneration of the Manager

Vital pays fees to the Manager in accordance with the arrangements set out in the
amended Trust Deed approved by Unit Holders on 31 October 2019.

Current Fee Arrangements

Base Fee

The Base Fee structure is as follows:
• 0.65% per annum of the gross value of the assets of the Scheme up to $1 billion;
• 0.55% per annum of the gross value of the assets of the Scheme between $1 billion
and $2 billion;
• 0.45% per annum of the gross value of the assets of the Scheme between $2 billion
and $3 billion; and
• 0.40% per annum of the gross value of the assets of the Scheme over $3 billion.

Incentive Fee

The incentive fee is an amount equal to 10% per annum of the average annual increase
in the Net Tangible Assets (as defined in the Trust Deed) of the Scheme over the relevant
financial year and two preceding financial years, subject to a three year high-water mark,
with payment being made by way of subscribing for new units in Vital.

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 instead of, or alongside, a real estate agent. These 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.

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 number of tenants at the
property and may be recovered from tenants if permitted under lease agreements.

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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c) Facilities management
Vital pays the Manager a facilities management fee where the Manager acts as
the property facilities manager. These fees are charged at market rates and may
be recovered from tenants if permitted under lease agreements.
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 extend 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.
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 real estate agent. These fees are charged at 1.5% of the purchase
price and related capitalised acquisition costs.

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 real
estate agent. These fees are charged at 1% of the contracted sale price of the
relevant investment or property actually received, provided that, if a real estate
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.

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, the fee
payable to the Manager will be reduced by the non-rentalisable third party costs
paid.

EXPENSES CHARGED BY THE MANAGER & ASSOCIATED PERSONS

The Manager and the Supervisor are entitled to be reimbursed by Vital for all expenses,
costs or liabilities incurred in acting as Manager or Supervisor as the case may be. Certain
services are provided by the Manager in lieu of using external providers.

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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Any changes to fees and expenses charged by any person in respect of the Scheme
during the accounting period require the approval of the Supervisor (or in certain
circumstances, Unit Holders) and would be advised to Unit Holders via the NZX.

For more information in respect to the Fees, please refer to Vital’s financial statements, on
the Disclose register at https://disclose-register.companiesoffice.govt.nz/disclose
, scheme
number SCH11214.

SCHEME PROPERTY

The table below contains the assets of the Scheme extracted from the Consolidated
Statement of Financial Position:


2022
$000s
2021
$000s


Non-current assets
Investment Properties 3,339,169 2,634,588
Derivative financial instruments 20,692 -
Other non-current assets - 6,477
Total non-current assets 3,359,861 2,641,065


Current assets
Cash and cash equivalents 22,055 6,880
Trade and other receivables 2,442 1,634
Other current assets 15,451 12,736
Derivative financial instruments 25 245
Total current assets 39,973 21,495
Total assets 3,399,834 2,662,560

CHANGES TO PERSONS INVOLVED IN THE SCHEME

Andrew Evans resigned as director of the Manager effective 30 June 2022. The Manager
appointed Angela Bull as a Director of the Manager effective 26 April 2022.

There have been no changes to the Supervisor involved in the Scheme during the
accounting period.

There have been no changes to the Registrar or the auditors involved in the Scheme during
the accounting period.

HOW TO FIND FURTHER INFORMATION

Copies of documents relating to the Scheme, such as the Trust Deed, SIPO and the annual
financial statements are available on the Disclose Register at
https://disclose-
register.companiesoffice.govt.nz/disclose, scheme number SCH11214, on Vital’s website
www.vhpt.co.nz or on request from the Manager.

You have the right, free of charge and during normal office hours, to inspect that part of
the Unit register that relates to your Units on giving 5 working days’ notice to the Manager.

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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You also have the right, free of charge, on giving 5 working days’ notice and during
normal office hours, to inspect a copy of the Trust Deed, SIPO and annual financial
statements at the Manager’s registered office, which is located at: HSBC Tower, Level 17,
188 Quay Street, Auckland Central. Alternatively, you can obtain a copy free of charge
by writing to us at: PO Box 6945, Victoria Street West, Auckland 1142.

CONTACT DETAILS AND COMPLAINTS
Manager
NorthWest Healthcare Properties Management Limited
PO Box 6945, Victoria Street West, Auckland 1142
Attn: Company Secretary
Telephone: 0800 225 264
Email: enquiries@vhpt.co.nz
Website: www.vhpt.co.nz

Trustee and Supervisor
Trustees Executors Limited
Level 11, 51 Shortland Street, Auckland 1010
PO Box 4197, Auckland 1140
Attn: Client Services Manager – Corporate Trustee Services
Telephone:
0800 878 783
Email: cts@trustees.co.nz

Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna 0622
Private Bag 92119, Auckland 1142
Telephone: +64 9 488 8777
Facsimile: +64 9 488 8787
Email: vital@computershare.co.nz

Complaints
Complaints may be made to the Manager or the Supervisor at the contact details above.
In addition, as a financial service provider registered under the Financial Service Providers
(Registration and Dispute Resolution) Act 2008, the Manager is a member of an approved
dispute resolution scheme (registration number FSP33302) to which complaints may be
made.
Insurance & Financial Services Ombudsman Scheme Inc.
Level 2, Solnet House
70 The Terrace
Wellington 6011
Telephone: +64 4 499 7612 or 0800 888 202
Email: info@ifso.nz

VITAL HEALTHCARE PROPERTY TRUST
Managed by NorthWest Healthcare Properties Management L
vhpt.co.nz
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There will be no fee charged to any complainant in connection with investigation or
resolution of a complaint.

---

VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by NorthWest Healthcare
Properties Management Limited


Managed by NorthWest Healthcare
Pr operties Management Ltd
MARKET RELEASE

15 August 2022


Managed Investment Scheme 2022 Annual Report
On 11 August 2022 Vital Healthcare Property Trust (Vital) released to the NZX the 2022
Annual Report. That report contained information required under the NZX Listing Rules and
included the Manager’s Report, details on the Property Portfolio in New Zealand and
Australia, Corporate Governance, Financial Statements and Auditor’s Report.
Vital is a managed investment scheme for the purposes of the Financial Markets Conduct
Act 2013 (FMCA). As a managed investment scheme Vital is required to produce a
second annual report in a format consistent with the FMCA and in accordance with Listing
Rule 3.12.1.
An electronic copy of the FMCA compliant annual report has been registered on the New
Zealand Companies Office - Disclose Register and is provided to the NZX as an
attachment to this announcement.

– 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

VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by NorthWest Healthcare
Properties Management Limited


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), ambulatory care 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 $3.3 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