HY23 Results
VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by Northwest Healthcare
Properties Management Limited
Page 1 of 4
MARKET RELEASE
23 February 2023
Northwest Healthcare Properties Management Limited, the Manager of Vital Healthcare Property
Trust (Vital), is pleased to report Vital’s results for the six months ended 31 December 2022 (the
Half Year).
Vital’s Fund Manager. Aaron Hockly said:
“Given the backdrop of global equity markets the Half Year was a period of consolidation for
Vital. Terms have been agreed to renew and extend debt facilities, interest rate hedging has
been increased, developments (committed and potential) have been reviewed and assets for
potential divestment have been identified and progressed.
This period of consolidation has allowed us to adjust to changing market conditions, particularly a
higher cost of capital. Our core strategy of delivering 2-3% growth in adjusted funds from
operations (AFFO) and distributions per unit per annum, over the medium term, remains
unchanged.”
Other key achievements over the Half Year include:
Credit approved terms have been agreed and accepted
1
to:
(1) refinance all of Vital’s debt which was due to mature in October 2023 and March 2024
so that no debt is maturing before March 2025;
(2) increase debt liquidity head room to ~NZ$250m, an increase of ~NZ$110m; and
(3) extend the weighted average debt maturity to 4.2 years (pro forma at 31 December
2022) from 3.3 years.
Interest rate hedging has been increased to 67.2% (pro-forma at 31 December 2022 to
include transactions entered into post balance date) for a weighted average term of 2.9
years.
2.6% increase in distributions per unit from the prior corresponding period, 4.75 cents per
unit (cpu) to 4.875 cpu. This is within Vital’s target range whilst maintaining a conservative
payout ratio of 85% of AFFO. FY23 distribution guidance is 9.75cpu. This is expected to
1
Subsequent to 31 December 2022, Vital has accepted credit approve offers from lenders to increase facility
limits by A$100m and extend the duration to 4.2 years, with no expiry until 2025. The credit approved offers
are subject to customary terms associated with credit approved offers, and documentation is progressing.
Closing, subject to customary conditions, is expected to be finalised by March 2023.
VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by Northwest Healthcare
Properties Management Limited
result in a 1.3% increase in distributions per unit from FY22 and a 9.8% increase from
FY21.
17.8% increase in AFFO from NZ$32.0 million in the prior corresponding period to
NZ$37.7m. AFFO per unit declined by 2.5% from 5.91 cpu to 5.76 cpu due to equity being
raised ahead of full deployment on income earning property acquisitions and
developments. Income is expected to further increase over coming periods as CPI / market
rent reviews flow to future rent and developments complete and become income producing.
We remain focused on delivering 2-3% growth in AFFO and distributions per unit per
annum over the medium term.
2.9% increase in total assets from NZ$3.4 billion to NZ$3.5 billion despite unfavourable
movements in the AUD:NZD. This unfavourable exchange rate, noting that Vital’s functional
currency is in NZD but most of Vital’s assets are located in Australia and valued in AUD,
coupled with a reduction in property valuations, resulted in Net Tangible Assets (NTA) per
unit declining by 5% from NZ$3.34 to NZ$3.17 per unit. NTA per unit remains 1.6% higher
than that at 31 December 2021.
An asset sale programme of >NZ$200m commenced with net sales proceeds to be used to
fund Vital’s development pipeline.
Committed developments adjusted through the pausing of the A$98.6m Tasman Medical
Centre fund through in Tasmania and the commitment to fund a new 6-Star Green Star
A$140m
2
life sciences facility in the Gold Coast Health and Knowledge Precinct. The
combination of the revised development pipeline and the proposed asset sales is forecast
to increase Vital’s exposure to key health precincts, greener buildings and a younger
average building age. These changes are all consistent with Vital’s previously announced
5-year portfolio strategy.
Capital management
At 31 December 2022, balance sheet gearing was 33.7%, all-in weighted cost of debt was 4.57%
(based on drawn debt only including the cost of hedging).
Post 31 December 2022, credit approved terms were agreed and accepted, and documentation
has commenced to extend Vital’s average debt duration to 4.2 years, debt headroom to
~NZ$250m, fixed debt to 67% of drawn debt and weighted average hedging maturity debt of 2.9
years (all pro-forma at 31 December 2022).
Acquisitions and divestments
NZ$156m of acquisitions were completed during the Half Year, including Kawarau Park Health
Hub, New Zealand (~NZ$95m pre-costs), Campbelltown development land in New South Wales (~
A$22m, pre-costs) and Tasman Medical Centre, Tasmania (~A$13m, pre costs) which were
announced in the previous period.
No significant divestments were undertaken during the Half Year. However, a process to raise at
least NZ$200m from asset sales before 30 September 2023 has commenced to fund Vital’s
development pipeline.
2
Land and construction cost.
VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by Northwest Healthcare
Properties Management Limited
Sustainability / ESG
Sustainability remains a core focus for Vital and Northwest with significant resources devoted to
enhancing performance across a range of ESG measures.
During the Half Year, Vital achieved a 5-Star rating for developments from independent standards
organization GRESB (formerly the Global Real Estate Sustainability Benchmark). GRESB
benchmarks ESG performance of property and infrastructure entities with an aggregate investment
value of US$5.3 trillion. Vital’s GRESB results included scoring second place for listed healthcare
entities globally, third place for standing investments against peers globally, and being ranked in
the top quartile for developments for all listed entities in Oceania.
Vital also received a B- for its CDP (formerly Carbon Disclosure Project) submission. This is an
improvement from C the previous year, reflecting the Manager’s significant ongoing efforts in the
collection and disclosure of environmental data and the establishment of a pathway to reducing
greenhouse gas emissions.
Portfolio
Vital owns a high-quality ~NZ$3.5 billion portfolio of 47 healthcare investment properties,
diversified across all mainland Australian States and New Zealand. The portfolio comprises 26
private hospitals (representing 78% of the portfolio value), 13 ambulatory care facilities (18%) and
eight aged care facilities (4%).
At 17.2 years, Vital’s WALE remains the longest of any NZX listed REIT providing a high level of
income security for Unit Holders. Successful leasing negotiations contributed to maintain
occupancy above 98%, maintain the long WALE and increase net property income as noted
above.
Developments
Developments are a key component of Vital’s strategy to continue to deliver attractive risk adjusted
earnings and capital growth and further enhance the quality of the portfolio. In particular, we are
seeking to increase Vital’s exposure to green credentialed properties in core healthcare precincts.
As at 31 December 2022, Vital had a committed development pipeline of NZ$410.0 million across
eleven projects of which NZ$302.5 million was left to complete. In addition, two fund-through
projects totalling NZ$99.8million were committed to during the Half Year with NZ$66.5 million of
spend remaining.
During the Half Year NZ$85.7million was spent on developments, ~NZ$2.6 million spent on value-
add capital works and ~NZ$11 million on maintenance and tenant incentives
3
.
Vital also has ~$1.9 billion of potential development opportunities. These are opportunities being
actively considered on land already owned, but are not yet committed or approved. These potential
developments will be carefully reviewed as market conditions change (particularly constructions
costs and rent), as part of Vital’s wider funding, portfolio and precinct strategies.
3
~A$10m attributable to early release of tenant incentive as part of Epworth Camberwell acquisition. This
was initially forecast to be paid in Year 3 post acquisition.
VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by Northwest Healthcare
Properties Management Limited
Outlook
In uncertain times investors gravitate towards less risky assets. These assets include property. In
particular, rental income for high quality health care property like that within the Vital portfolio is
less affected by business or economic cycles than income generated by other asset classes. Vital
continues to provide a stable and growing earnings stream sourced from a defensive sector, with
~81% of its leases linked to CPI growth in some way.
Conference call and webcast
An interim results conference call and webcast is scheduled for 9:00am (NZDT) today (Thursday,
23 February 2023).
Participants can register for the conference call by navigating to:
https://s1.c-conf.com/diamondpass/10028760-lo97nb.html
Presentation slides and audio can be viewed by copying the following URL into your internet
browser:
https://services.choruscall.com/mediaframe/webcast.html?webcastid=aJc8hSjM
You will be required to input your name, email address and company name to register for the
webcast.
A copy of the webcast will be available on Vital’s website later today at: www.vhpt.co.nz
-ENDS-
ENQUIRIES
Aaron Hockly. Fund Manager, Vital Healthcare Property Trust
Tel 09 973 7301, Email aaron.hockly@nwhreit.com
Michael Groth, CFO, 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 (~78%* of portfolio value),
ambulatory care facilities (~18%* of portfolio value) and aged care (~4%* of portfolio value).
Vital is the leading specialist listed landlord of healthcare property in Australasia.
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
_________________________________
* All figures are indicative, as at 31 December 2022
---
Interim
Report
For the six months
ended 31 December 2022
DEFENSIVE SECTOR AND
STRATEGY CONTINUES TO
DELIVER FOR UNIT HOLDERS
CONTENTS
Overview of Vital 4
Short (1 year), medium (3 years) and
longer (10 years) term enhancements 6
Manager’s report 8
Strategic initiatives to further
enhance returns to Unit Holders 12
Our Board 14
Our Executive Team 16
Sustainability 18
Financial statements 20
Directory 50
2
|
VITAL HEALTHCARE PROPERTY TRUST
Investing in healthcare
infrastructure in New
Zealand and Australia
~NZ$3.5bn
9.75 cpu
17.2 years
PROPERTY PORTFOLIO
FY23 DISTRIBUTION
GUIDANCE
WEIGHTED AVERAGE LEASE
TERM (WALE)
INTERIM REPORT
|
3
Overview of Vital
as at 31 December 2022
Vital is the only specialist healthcare landlord on the NZX.
~NZ$2.5bn~NZ$1.0bn
31
‡
PROPERTIES (AUS)16
‡
PROPERTIES (NZ)
Vital Portfolio by Geography
AUSTRALIA
—
NEW ZEALAND
—
26%
WESTERN
AUSTRALIA
NORTHERN
TERRITORY
SOUTH
AUSTRALIA
NEW SOUTH
WALES
TASMANIA
VICTORIA
QUEENSLAND
5%
7%
22%
12 %
24%
~NZ$3.5bn
47
‡†
PROPERTIES
(AUS & NZ)
NZ$137m
NET ANNUAL PROPERTY
INCOME (CY22)
‡
Income Producing Property (excludes strategic assets)
* Average building age = the later of the date of construction or last significant capital works.
†
Figures may not sum due to rounding.
4.72%
WEIGHTED AVERAGE
CAP RATE (IPP)
‡
( A U S
4.61%, NZ 4.97%)
4%
4
|
VITAL HEALTHCARE PROPERTY TRUST
Tenant Diversification
(% of Rent)
Healthe Care Surgical 15%
Norfolk Southern 4%
Cross Limited
Evolution Group 11%
Epworth 15%
Hall & Prior 3%
Bolton Clarke 3%
Sportsmed 3%
Mercy Ascot 3%
Ramsay 2%
Other 23%
Sub-sector Diversity
(% of Value)
Acute Hospitals 53%
Ambulatory Care 18%
Specialty Hospitals
(mental health & rehabilitation) 25%
Aged Care 4%
17.2 years
WEIGHTED AVERAGE
LEASE EXPIRY (WALE)
11.1 years
AVERAGE
BUILDING AGE*
98.4%
PORTFOLIO
OCCUPANCY
Aurora Healthcare 18%
H
O
S
P
I
T
A
L
7
8
%
O
T
H
E
R
2
2
%
INTERIM REPORT
|
5
1
Average building age = the later of the date of construction or the last significant
capital works
2
Committed and potential development pipeline
All as at 31 December of the year shown unless otherwise indicated
Short (1 year), medium (3 years)
and longer (10 years) term
enhancements
Market leading WALE
growth
(HY13-HY23)
growth
(HY13-HY23)
WALETOTAL PROPERTY VALUE
465%
Younger buildings reduce
maintenance capex requirements
NET PROPERTY INCOME (HALF YEAR)AVERAGE BUILDING AGE
1
157 %
Enhance earnings and valuation
growth and support portfolio
quality
Concentration risk reduced
LARGEST SINGLE TENANT EXPOSUREDEVELOPMENT PIPELINE
Healthcare now considered a
core real estate investment
Diversity of assets reduces risk
and enhances earnings
WEIGHTED AVERAGE CAP RATESECTOR SPLIT
~NZ$0.62bn
(AUS: 72%,
NZ: 28%)
2 012
Data not
available
2 012
~NZ$60m
2 012
Hospital 90%,
Ambulatory Care 10%,
Aged Care 0%
2 012
40%
2 012
9.30%
2 012
12.1 years
2 012
NZ$28m
H Y 13
~NZ$1.93bn
(AUS: 75%,
NZ: 25%)
2 019
~NZ$3.5bn
(AUS: 70%,
NZ: 30%)
2022
14.0 years
2 019
11.1 years
2022
NZ$266m
2 019
NZ$2.4bn
2
2022
Hospital 86%,
Ambulatory Care 11%,
Aged Care 3%
2 019
Hospital 78%,
Ambulatory Care 18%,
Aged Care 4%
2022
48%
2 019
18 %
2022
5.52%
2 019
4.72%
2022
17.9 years
2 019
17.2 years
2022
NZ$50m
HY20
NZ$72m
HY23
increase
(HY13-HY23)
6
|
VITAL HEALTHCARE PROPERTY TRUST
Portfolio enhancements
support target of
growing AFFO and
distributions by 2–3%
per unit per annum
over the medium term.
27% growth
IN DISTRIBUTIONS OVER THE 10 YEARS
FROM HY13 TO HY23 OR 2.7% PER ANNUM
INTERIM REPORT
|
7
>NZ$200m
ASSET SALE PROGRAMME
COMMENCED
Tēnā koutou,
Northwest Healthcare Properties
Management Limited, the Manager of
Vital Healthcare Property Trust (Vital), is
pleased to report Vital’s results for the
six months ended 31 December 2022
(the Half Year).
• Credit approved terms received to refinance
October 2023 and March 2024 expiries,
increase debt liquidity head room to ~NZ$250m
and extend weighted average debt maturity to
4.2 years (pro forma at 31 December 2022)
leaving Vital with no refinance risk until March
2025.
1
• Interest rate hedging increased to 67.2% at
31 December 2022 (pro-forma to include
transactions entered into post balance date).
• 2.6% increase in distributions per unit from the
prior corresponding period or 4.75 cents per unit
(cpu) to 4.875 cpu; within our target range whilst
maintaining a conservative payout ratio of 85%.
• 17.8% increase in AFFO from NZ$32.0 million
in the prior corresponding period to NZ$37.7m.
AFFO per unit declined by 2.5% from 5.91 cpu
to 5.76 cpu primarily due to equity being raised
Manager’s
report
Changed market conditions resulted
in the Manager’s focus shifting during
the Half Year from acquisitions to
developments majority funded by
proposed divestments. This does not
represent a change in strategy for Vital
but the expediting of several previously
announced strategies to enable us to
continue to deliver growing returns for
Unit Holders over the medium term.
Other key achievements over
the Half Year include:
The Half Year was a period of consolidation for Vital.
Debt facilities are being renewed and extended,
interest rate hedging increased, developments
(committed and potential) have been reviewed and
assets for potential divestment have been identified
and progressed. This period of consolidation has
allowed us to adjust to changing market conditions,
particularly higher capital costs. Our core goal
of delivering 2-3% growth in adjusted funds from
operations (AFFO) and distributions per unit per
annum, over the medium term, remains unchanged.
20.3%
1.6%
GROWTH IN NET PROPERTY
INCOME (EX FX) FOR THE
TWELVE MONTHS ENDED
31 DECEMBER 2022
GROWTH IN NTA PER UNIT
FOR THE 12 MONTHS ENDED
31 DECEMBER 2022
8
|
VITAL HEALTHCARE PROPERTY TRUST
31 Dec 202231 Dec 2021% Change
NTA per unit (NZ$)3 .173 .121.6%
Investment portfolio value (NZ$m)3,454.7 2,941.217.4%
Investment properties (No.)47439.3%
Avg. property value (NZ$m)73. 568.40 7.5%
Avg. building age (years)11 . 110 . 73.7%
WALE (years)17. 217. 8(3.4%)
Occupancy (%)98.499.0 (0.6%)
AFFO - 6 months (NZ$m)3 7. 732.0 17.8%
AFFO - 6 months per unit (cpu)5. 765 . 91(2.5%)
ahead of full deployment on income earning property
acquisitions and developments. Income is expected to
further increase over coming periods as CPI / market
rent reviews flow to future rent and developments
complete and become income producing.
• 2.9% increase in total assets from NZ$3.4 billion to
NZ$3.5 billion despite unfavorable movements in the
AUD:NZD. This unfavorable exchange rate, noting that
Vital’s functional currency is in NZD but most of Vital’s
assets are in AUD, coupled with a reduction in property
valuations, resulted in NTA per unit declining by 5% from
NZ$3.34 to NZ$3.17 per unit.
• >NZ$200m asset sale programme commenced with net sales
proceeds to be used to fund Vital’s development pipeline.
• Committed developments were adjusted through the
pausing of a A$98.6m Tasman Medical Centre fund-
through in Tasmania and the commitment to fund a new
6-Star Green Star A$140m
2
life sciences facility in
the Gold Coast Health and Knowledge Precinct. The
combination of the revised development pipeline and
the proposed asset sales is expected to increase Vital’s
exposure to key health precincts, greener buildings and
a younger average building age. These changes are
all consistent with Vital’s previously announced 5-year
portfolio strategy.
AFFO
AFFO (a proxy for cash profit for Unit Holders)
increased by 17.8% from the prior corresponding
period (NZ$32.0 million to NZ$37.7 million). This
equates to a 2.5% decrease in cents per unit (5.91cpu
to 5.76cpu). This decline in AFFO per unit is due
to equity being raised ahead of full deployment
on income earning property acquisitions and
developments. Income is expected to further increase
over coming periods as CPI / market rent reviews
flow to future rent and developments complete and
become income producing. We remain focused on
delivering 2-3% growth in AFFO and distributions
per unit per annum over the medium term.
Distributions
Distributions paid / payable for the Half Year were
2.6% above the prior corresponding period at 4.875
cpu (2.4375 cpu per quarter) on a conservative payout
ratio of 85%. This conservative payout ratio has enabled
maintenance of Vital’s increased distribution despite
a modest fall in AFFO per unit as noted above.
Net tangible assets
Net tangible assets fell 5% per unit from NZ$3.34 at
30 June 2022 to NZ$3.17 at 31 December 2022. This
fall was primarily attributable to property revaluations
and negative foreign exchange movements, both of
which are unrealised. Taking a slightly longer term view,
NTA is 1.6% higher than at 31 December 2021.
1
The credit approved offers are subject to customary terms associated with credit approved offers, and documentation
is progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023.
2
Including land and construction costs.
INTERIM REPORT
|
9
“FY23 distribution guidance is
9.75cpu. This is expected to result
in a 1.3% increase in distributions
per unit from FY22 and a 9.8%
increase from FY21.”
Capital management
At 31 December 2022, balance sheet gearing was
33.7%, all-in weighted cost of debt was 4.57% (based
on drawn debt only and includes the cost of hedging)
and Vital had debt headroom in its existing facilities of
A$129 million. Post 31 December 2022, credit approved
terms have been accepted and documentation has
commenced to extend Vital’s average debt duration
to 4.2 years, expand debt headroom to ~NZ$250m,
increase the percentage of fixed rate debt to 67%
and deliver a weighted average hedging term of
2.9 years (all proforma at 31 December 2022).
Portfolio overview
Vital owns a high-quality ~NZ$3.5 billion portfolio of
47 healthcare investment properties, diversified across
all mainland Australian States and New Zealand. The
portfolio comprises 26 private hospitals (representing
78% of the portfolio value), 13 ambulatory care
facilities (18%) and eight aged care facilities (4%).
At 17.2 years, Vital’s WALE remains the longest
of any NZX listed REIT providing a high level
of income security for unitholders.
Leasing
Over 1,600 square metres of new or extended leasing
was undertaken across Vital ‘s portfolio during the
Half Year. Leasing helped to maintain occupancy
above 98%, maintain the long WALE and contribute
to the net property income growth noted below.
Net property income
Net property income increased by 24.4% compared
to the prior corresponding period from NZ$57.9m
million to NZ$72.1 million for the Half Year.
~81% of Vital’s income is linked to CPI (albeit with varied
caps as detailed in the Investor Presentation we have
released today). Under Vital’s leases, rent for future
periods is determined by CPI from previous periods so
Vital’s future income is expected to be supported by
current and previous periods of heightened inflation.
“Over the 10 years ended 31
December 2022, Vital has provided
a total return of 10.9% per annum,
2.9% per annum above the S&P/
NZX All Real Estate Index.”
Acquisitions and divestments
$156m of acquisitions completed during the
Half Year predominantly comprising, Kawarau
Park Health Hub, NZ (~NZ$95m pre-costs),
which was announced in previous period.
No significant divestments were undertaken during
the Half Year. However, a process targeting at least
NZ$200m from asset sales before 30 September 2023
has commenced to fund Vital’s development pipeline.
Developments
Developments are a key component of Vital’s
strategy to continue to deliver earnings and capital
growth and improve the quality of the portfolio. In
particular we are aiming to increase Vital’s exposure
to green properties in core healthcare precincts.
As at 31 December 2022, Vital had a committed
development pipeline of NZ$410.0 million across eleven
projects of which NZ$302.5 million was left to complete. In
addition, two fund-through projects totaling NZ$99.8million
have been approved with NZ$66.5 million left to complete.
During the Half Year ~NZ$83.2 million was
spent on developments, ~NZ$2.6 million spent
on value-add capital works and ~NZ$11 million
on maintenance and tenant incentives.
1
Significant development milestones during
the Half Year were as follows:
1. A$133.6m 6-Star Green Star RDX building
received Development Approval in December
2022 and construction to commence in February
2023. Refer to page 13 for more detail.
2. A$96.5 Epworth Eastern reached final Practical
Completion (Consulting Suites) in December 2022.
10
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VITAL HEALTHCARE PROPERTY TRUST
3. A$39.3m Playford Health Hub (Stage 2)
commenced construction in July 2022.
4. NZ$38.1m Ormiston Hospital expansion commenced
main works construction in October 2022.
5. A$28.5m Mt Eliza fund-through project received
Development Approval in January 2023.
6. A$22.6m Belmont Private Hospital expansion
received Certificate of Occupancy in December
2022 and Practical Completion in February 2023.
7. A$2.4m South Eastern Private Hospital refurbishment
commenced construction in November 2022.
Vital also has ~NZ$1.9 billion of potential development
opportunities. These are opportunities being actively
considered on land already owned, but are not yet
committed or approved. We will be highly selective about
which opportunities to pursue and when to pursue them.
Sustainability / ESG
Sustainability remains a core focus for Vital and
Northwest with significant resources devoted to improving
performance across a range of ESG measures.
During the Half Year, Vital achieved a 5-Star rating for
developments from independent standards organisation
GRESB (formerly the Global Real Estate Sustainability
Benchmark). GRESB benchmarks ESG performance of
property and infrastructure entities with an aggregate
investment value of US$5.3 trillion. Vital’s GRESB results
included scoring second place for listed healthcare entities
globally, third place for standing investments against
peers globally and being ranked in the top quartile
for developments for all listed entities in Oceania.
Vital also received a B- for its CDP (formerly Carbon
Disclosure Project) submission. This is an improvement
from C the previous year reflecting the Manager’s
ongoing efforts in the collection and disclosure
on environmental data and the establishment of a
pathway to reducing greenhouse gas emissions.
Vital joined the Green Building Councils of New
Zealand and Australia reflecting our commitment
to sustainable developments in particular.
More details will be provided as part of Vital’s third
sustainability report to be released later this year.
“Vital recorded growth in earnings,
distributions to unitholders and assets
during HY23 as our strategy continues
to demonstrably benefit unitholders.”
1
A ~$10m attributable to early release of tenant incentive as part of Epworth Camberwell acquisition.
This was initially forecast to be paid in Year 3, post acquisition.
Graham Stuart
Independent Chair
23 February 2023
Northwest Healthcare Properties Management Limited,
the Manager of Vital Healthcare Property Trust
Aaron Hockly
Fund Manager
Nā māua noa, nā
Outlook
In uncertain times investors gravitate towards less risky
assets. These assets include property and healthcare
property in particular as rental income is considered to
be less impacted by business or economic cycles than
other asset classes. Vital continues to provide a stable
earnings stream sourced from a defensive sector with
~81% of its leases linked to CPI growth in some way.
On behalf of your Board and Management,
thank you for your ongoing support.
INTERIM REPORT
|
11
Divestments and development changes
• The sale of >NZ$200m of existing non-core,
older assets without development potential
• Delay of the development pipeline (committed
and potential), including the proposed A$98.6m
Tasman Medical Centre fund-through pending
the outcome of a procurement review.
RDX Development
• Development of a new ~A$140m 6-Star
Green Star, life sciences centre, Research and
Inovation building (RDX) in heart of the Gold
Coast Health and Knowledge Precinct.
• This represents a great opportunity, not only to own
Vital’s first Life Science building, but to take a large
step forward in building a sustainable portfolio.
• Construction is expected to commence early 2023
and complete early / mid 2025. Costs are expected
to total ~A$140m including ~A$7.1m for land.
Strategic initiatives to
further enhance returns
to Unit Holders
Vital has commenced a process to further enhance
its portfolio consistent with its previously announced
strategies around precincts, asset weightings and green
buildings, by strategically recycling capital.
This process includes:
12
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VITAL HEALTHCARE PROPERTY TRUST
INTERIM REPORT
|
13
The board comprises five highly qualified
directors; three of whom are independent. Both
the Chair of the Board and the Chair of the Audit
Committee are independent directors.
Our
Board
Graham Stuart
INDEPENDENT CHAIR AND MEMBER OF THE AUDIT COMMITTEE
(65, Auckland)
Graham Stuart is an experienced corporate director
with an established track record of performance
in governance and in prior executive roles.
He is currently the Independent Chair of EROAD Limited
and an Independent Director and Chair of the Audit
Committee at Tower and Metro Performance Glass Limited.
He was previously the CEO of Sealord Group from 2007
to 2014 and Director, Strategy and Growth and CFO of
Fonterra Co-operative Group from 2001 to 2007.
Paul Dalla Lana
DIRECTOR AND MEMBER OF THE AUDIT COMMITTEE
(57, Toronto)
Paul Dalla Lana is the founder and CEO of Northwest
Healthcare Properties 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 $10 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 and his MBA from The University of British Columbia.
Craig Mitchell
DIRECTOR AND MEMBER OF THE AUDIT COMMITTEE
(55, Sydney)
Craig Mitchell has more than 20 years’ experience
specialising in the property industry in Australia. His
previous 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.
Angela Bull
INDEPENDENT DIRECTOR AND MEMBER OF THE AUDIT COMMITTEE
(47, Auckland)
Angela is an independent director of the Real Estate Institute of
New Zealand, realestate.co.nz, Property For Industry Limited
(NZX:PFI), Foodstuffs South Island Ltd and Foodstuffs NZ Ltd.
She is also on the Trust Board of St Cuthbert’s College and a
Board member of the Property Council of New Zealand.
She holds a Bachelor of Laws and a Bachelor of Arts (Political
Science) and practised property and environmental law prior
to her executive career. Previously, Angela held a number of
senior positions over a 10-year period with Foodstuffs Auckland
and Foodstuffs North Island Ltd, most recently being General
Manager Property Development for Foodstuffs North Island.
14
|
VITAL HEALTHCARE PROPERTY TRUST
Dr Michael Stanford AM
INDEPENDENT DIRECTOR AND CHAIR OF THE AUDIT COMMITTEE
(63, Melbourne)
Dr Michael Stanford has more than 30 years’ experience
in the health sector in either Group CEO or Board roles.
Michael’s current Board roles include Australian Clinical Labs
(ASX:ACL), Australia’s third largest private pathology provider;
Nucleus Networks, one of the world’s largest Phase one clinical
research organisations , board chair of Karringal St Laurence Limited
(genU) and Diabetes Australia, a significant Not-for-Profit of which
Michael is President and Board Chair. Other Board roles in the
last three years have included Healthscope (ASX:HSO), Australia’s
second largest hospital operator; and Virtus Health (ASX:VRT ), one
of the world’s top five providers of Assisted Reproductive Services.
GRACE HOSPITAL, TAURANGA, NEW ZEALAND
INTERIM REPORT | 15
PALM BEACH CURRUMBIN CLINIC, QUEENSLAND
Aaron Hockly
SENIOR VICE PRESIDENT - NEW ZEALAND
& FUND MANAGER - VITAL
(44, Auckland)
Aaron Hockly has over 20 years experience
in financial services, property and law.
Originally from New Zealand, Aaron spent 17 years in
the UK and Australia until returning in 2018. Aaron was
Chief Operating Officer for a large ASX listed real estate
investment trust for nearly 10 years where he was responsible
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) and is
a Chartered Member of the Institute of Directors (NZ).
Chris Adams
EXECUTIVE DIRECTOR – PROJECTS
(53, Melbourne)
Chris Adams has extensive experience in the property industry
in New Zealand, Australia and the United Kingdom, including
over 20 years’ experience in health sector property acquisitions,
transaction structuring and large-scale hospital development.
Responsibilities with respect to Northwest include overseeing
development management and joint responsibility for
acquisitions undertaken by the business. He was one of the
founding Executives at Generation Healthcare REIT. Prior
to joining Generation, Chris established Vital’s presence in
Australia in 1999 and served as General Manager – Australia
following various roles with the group in New Zealand.
Vital’s executive team comprises real
estate professionals with extensive
experience in New Zealand,
Australia and beyond.
Our Executive
Team
16
|
VITAL HEALTHCARE PROPERTY TRUST
EPWORTH EASTERN HOSPITAL, BOX HILL, VICTORIA
Vanessa Flax
REGIONAL GENERAL COUNSEL ANZ AND
COMPANY SECRETARY
(52, Melbourne)
Vanessa Flax joined the team on 1 May 2019, prior to
which she was a special counsel at Ashurst Australia.
Vanessa has 25 years of deep and broad ranging property
law experience in Australia and New Zealand, including
acting as primary legal adviser (for approximately 15 years)
for Vital and Northwest. Vanessa’s legal experience covers
all aspects of real estate property transactions, including
acquisitions, divestments and sales, leasing and Crown
leasing, development transactions and due diligence.
Michael Groth
CHIEF FINANCIAL OFFICER – ANZ REGION
(49, Melbourne)
Michael Groth has over 13 years’ experience as
a senior finance executive in the listed and unlisted
property funds and funds management industry.
Prior to joining the team in October 2019, Michael’s most
recent position was as Group Chief Financial Officer
of the Melbourne based and ASX-listed real estate
fund manager, APN Property Group Limited.
Michael has extensive experience in financial management
and reporting, taxation, treasury and capital management,
corporate structuring, acquisitions, disposals and equity raisings.
Alex Belcastro
SENIOR VICE PRESIDENT – MEDICAL PRECINCTS
(34, 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.
Richard Roos
EXECUTIVE DIRECTOR - PORTFOLIO
(58, 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.
INTERIM REPORT | 17
Sustainability
First 6-star Green Star Registered
building in the Gold Coast
Health & Knowledge Precinct
Construction is expected to commence for
the strategically located ~A$140m research
innovation hub development in early 2023
and complete early/mid 2025.
Upon completion the development will be carbon
neutral ready and powered by 100% renewables.
In October 2022, Vital achieved
a 5-star rating from independent
standards organisation GRESB
(formerly known as the Global Real
Estate Sustainability Benchmark)
among other notable achievements.
NWH released its first Sustainability
Report for its global operations
including Vital. View the report at:
https://nwhreit.wpengine.com/
wp-content/uploads/2022/08/
nwh-sustainability-report.pdf
Vital acknowledged as a
leader in sustainability for listed
healthcare real estate globally
Vital has also participated in the Carbon Disclosure
Project (CDP) as a commitment to tracking Scope 1
and Scope 2 emissions in line with GHG Protocol
definitions. Vital achieved a B- for the 2022
submission, with score improvement occurring year
on year. By understanding our complete carbon
footprint we can identify ways to actively reduce our
emissions, positioning us to reach our net-zero goals.
Vital’s GRESB results
include being ranked
second place globally
for listed healthcare.
RDX will be Vital's third
major development
targeting 5-Star Green
Star or higher
18
|
VITAL HEALTHCARE PROPERTY TRUST
INTERIM REPORT | 19
Financial
Statements
20
|
VITAL HEALTHCARE PROPERTY TRUST
INTERIM REPORT 2023|21
Contents
Consolidated Statement of Comprehensive Income22
Consolidated Statement of Financial Position23
Consolidated Statement of Changes in Equity24
Consolidated Statement of Cash Flows25
Notes to the Consolidated Financial Statements26
ABOUT THIS REPORT26
1. Reporting Entity26
2. Basis of Preparation26
3. Significant Accounting Policies27
PERFORMANCE28
4. Segment Information28
5. Taxation30
6. Investment Properties30
CAPITAL STRUCTURE, FINANCING AND RISK MANAGEMENT37
7. Units on Issue37
8. Earnings per Unit37
9. Distributable Income38
10. Borrowings38
11. Derivatives40
12. Commitments and Contingencies42
13. Trade and Other Receivables42
OTHER NOTES43
14. Subsequent Events43
15. Related Party Transactions43
22|VITAL HEALTHCARE PROPERTY TRUST
Consolidated Statement of
Comprehensive Income
For the six months ended 31 December 2022
Note
6 months
Dec-22
$000s
6 months
Dec-21
$000s
Gross property income from rentals74,48660,014
Gross property income from expense recoveries9,2036,677
Property expenses(11,621)(8,767)
Net property income472,06857,924
Other expenses(18,796)(16,113)
Strategic transaction expenses-(283)
Finance income15927
Finance expense10(17,543)(13,740)
Operating profit35,88827,815
Other gains/(loss)
Revaluation gain/(loss) on investment property6(56,225)153,170
Net gain/(loss) on disposal of investment property6(16)281
Fair value gain/(loss) on foreign exchange derivatives1,069(150)
Fair value gain/(loss) on interest rate derivatives95716,548
Realised gain/(loss) on foreign exchange53
Unrealised gain/(loss) on foreign exchange353(242)
(53,857)169,610
Profit/(loss) before income tax(17,969)197,425
Taxation expense5(13,005)(27,194)
Profit/(loss) attributable to unit holders of the Trust(30,974)170,231
Other comprehensive income
Items that may be reclassified subsequently to profit and loss:
Movement in foreign currency translation reserve(33,804)(8,767)
Total other comprehensive income/(loss) after tax(33,804)(8,767)
Total comprehensive income/(loss) after tax(64,778)161,464
Earnings per unit
Basic and diluted earnings per unit (cents)8(4.74)31.41
The notes on pages 26 to 47 form part of and are to be read in conjunction with these financial statements.
INTERIM REPORT 2023|23
Consolidated Statement of
Financial Position
As at 31 December 2022
Note
Dec-22
$000s
Jun-22
$000s
Non-current assets
Investment properties63,423,4223,339,169
Derivative financial instruments1121,09420,692
Total non-current assets3,444,5163,359,861
Current assets
Investment properties held for sale631,253-
Cash and cash equivalents12,43122,055
Trade and other receivables132,9302,442
Other current assets5,05615,451
Derivative financial instruments111,01925
Total current assets52,68939,973
Total assets3,497,2053,399,834
Unit holders' funds
Units on issue71,173,5121,150,881
Reserves2,34744,590
Retained earnings907,267970,405
Total unit holders' funds2,083,1262,165,876
Non-current liabilities
Borrowings101,027,8081,012,952
Lease liability - ground lease3,8143,903
Derivative financial instruments1147150
Deferred tax5178,425178,316
Total non-current liabilities1,210,0941,195,321
Current liabilities
Trade and other payables48,09631,946
Income in advance2,955621
Derivative financial instruments11-535
Lease liability - ground lease174170
Taxation payable6,5095,365
Borrowings10146,250-
Total current liabilities203,98438,637
Total liabilities1,414,0781,233,958
Total unit holders' funds and liabilities3,497,2043,399,834
For and on behalf of the Manager, NorthWest Healthcare Properties Management Limited.
G Stuart, Independent Chair
23 February 2023
M Stanford, Independent Director &
Chair of the Audit Committee
The notes on pages 26 to 47 form part of and are to be read in conjunction with these financial statements.
24|VITAL HEALTHCARE PROPERTY TRUST
Consolidated Statement of Changes in Equity
For the six months ended 31 December 2022
Units on issue
$000s
Retained
earnings
$000s
Translation
of foreign
operations
$000s
Foreign
exchange
hedges
$000s
Share based
payments
$000s
Total
unit holders'
funds
$000s
For the six months ended
31 December 2021
Balance at the start of the six months777,199722,044(71,291)63,07312,4271,503,452
Changes in unitholders' funds165,722---(12,427)153,295
Manager's incentive fee----6,8236,823
Profit for the period-170,231---170,231
Distributions to unitholders-(25,496)---(25,496)
Other comprehensive income for
the period
Movement in foreign currency
translation reserve--(8,767)--(8,767)
Balance at the end of the six months942,921866,779(80,058)63,0736,8231,799,538
For the six months ended
31 December 2022
Balance at the start of the period1,150,881970,405(34,736)63,41115,9152,165,876
Changes in unit holders' funds22,631---(15,915)6,716
Manager's incentive fee----7,4767,476
Profit for the period-(30,974)---(30,974)
Distributions to unit holders-(32,164)---(32,164)
Other comprehensive income for
the period
Movement in foreign currency
translation reserve--(33,804)--(33,804)
Balance at the end of the six months1,173,512907,267(68,540)63,4117,4762,083,126
The notes on pages 26 to 47 form part of and are to be read in conjunction with these financial statements.
INTERIM REPORT 2023|25
Consolidated Statement of Cash Flows
For the six months ended 31 December 2022
6 months
Dec-22
$000s
6 months
Dec-21
$000s
Cash flows from operating activities
Property income77,14560,429
Recovery of property expenses8,7716,709
Interest received15927
Property expenses(15,366)(7,971)
Management and trustee fees(10,211)(8,134)
Interest paid(15,447)(13,190)
Tax paid(6,674)(14,576)
Other trust expenses(444)(1,267)
Net cash provided by/(used in) operating activities37,93322,027
Cash flows from investing activities
Receipts from foreign exchange derivatives230475
Payments for foreign exchange derivatives(238)(950)
Capital additions on investment properties(82,125)(69,798)
Purchase of properties(136,501)(133,919)
Deposits and acquisiton costs paid – Investment Property(340)(14,233)
Proceeds from disposal of properties31812,991
Tenant fitout reimbursement proceeds-(13,240)
Strategic transaction expenses-(68)
Net cash provided by/(used in) investing activities(218,656)(218,742)
Cash flows from financing activities
Debt drawdown196,687461,096
Repayment of debt(85)(389,419)
Issue of units-142,719
Loan issue costs(22)(1,831)
Costs associated with new equity raised(53)(1,722)
Distributions paid to unit holders(25,428)(13,198)
Net cash from/(used in) financing activities171,099197,645
Net increase/(decrease) in cash and cash equivalents(9,624)930
Cash and cash equivalents at the beginning of the period22,0556,880
Cash and cash equivalents at the end of the six months12,4317,810
The notes on pages 26 to 47 form part of and are to be read in conjunction with these financial statements.
26|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
About this Report
1. Reporting Entity
Vital Healthcare Property Trust (“VHP” or the “Trust”) is a unit trust established under the Unit Trusts Act 1960 by a Trust Deed dated
11 February 1994 (as subsequently amended and replaced), domiciled in New Zealand. The Trust is managed by NorthWest Healthcare
Properties Management Limited (the “Manager”), with its registered office at HSBC Tower, Level 17, 188 Quay Street, Auckland.
The condensed consolidated interim financial statements of VHP for the six months ended 31 December 2022 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 condensed consolidated interim financial statements were approved by the Board of Directors of the Manager on 23 February 2023.
The condensed consolidated interim financial statements for the six months ended 31 December 2022 (including comparative balances)
have been reviewed by the auditor. The 30 June 2022 comparatives were subject to independent audit.
2.
Basis of Preparation
(a) Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted Accounting
Practice in New Zealand (NZ GAAP), NZ IAS 34 and IAS 34 Interim Financial Reporting, and do not include notes of the type normally
included in an Annual Report. Therefore this report should be read in conjunction with the Group's most recent Annual Report. The
accounting policies have been consistently applied, when compared to those used in the 2022 Annual Report. The 2022 Annual Report
complies with New Zealand equivalents to International Financial Reporting Standards (NZIFRS) and other applicable Financial Reporting
Standards issued and effective at the time of preparing those statements.
(b)
Basis of consolidation
The Group’s financial statements incorporate the financial statements of the Trust and entities controlled by the Trust (its subsidiaries). 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 significant 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.
(e)
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 relevant and material 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;
INTERIM REPORT 2023|27
•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
experience and other factors that are believed 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 15Related party transactions
28|VITAL HEALTHCARE PROPERTY TRUST
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, expenses 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 six months ended 31 December 2022:
Gross property income from rentals51,05123,43574,486
Gross property income from expense recoveries4,6564,5479,203
Property expenses(6,520)(5,101)(11,621)
Net property income49,18722,88172,068
Other expenses(7,260)(11,536)(18,796)
Net finance expense(16,316)(1,068)(17,384)
Operating profit25,61110,27735,888
Fair value gain/(losses) on interest rate derivatives455502957
Revaluation gains on investment properties743(56,968)(56,225)
Net gain/(loss) on disposal of investment property(16)-(16)
Other foreign exchange gains/(losses)3221,1051,427
Total segment profit before income tax27,115(45,084)(17,969)
Taxation expense(13,005)
Profit for the six months(30,974)
Segment profit/(loss) for the six months ended 31 December 2021:
Gross property income from rentals43,30316,71160,014
Gross property income from expense recoveries2,6124,0656,677
Property expenses(4,251)(4,516)(8,767)
Net property income41,66416,26057,924
Other expenses(6,757)(9,356)(16,113)
Net strategic transaction expenses-(283)(283)
Net finance expense(6,185)(7,528)(13,713)
Operating Profit28,722(907)27,815
Fair value gain/(losses) on interest rate derivatives-16,54816,548
Revaluation gains on investment properties107,81845,352153,170
Net gain/(loss) on disposal of investment property281-281
Other foreign exchange gains/(losses)(2)(387)(389)
Total segment profit before income tax136,81960,606197,425
Taxation expense(27,194)
Profit for the six months170,231
INTERIM REPORT 2023|29
Net property income comprises rental income and expense recoveries from tenants less property expenses. The Group has three Australian
tenants and one New Zealand tenant that contributed $42.6m of gross property income (31 December 2021: three Australian tenants that
contributed $31.6m).
There were no inter-segment sales during the six months (31 December 2021: nil).
Australia
$000s
New Zealand
$000s
Total
$000s
Segment assets at 31 December 2022:
Investment properties2,402,8141,020,6083,423,422
Other non-current assets49520,59921,094
Current assets47,2975,39252,689
Consolidated assets2,450,6061,046,5993,497,205
Segment assets at 30 June 2022:
Investment properties2,391,228947,9413,339,169
Other non-current assets-20,69220,692
Current assets18,78221,19139,973
Consolidated assets2,410,010989,8243,399,834
Segment liabilities at 31 December 2022:
Borrowings1,142,75731,3011,174,058
Other liabilities204,66835,352240,020
Consolidated liabilities1,347,42566,6531,414,078
Segment liabilities at 30 June 2022:
Borrowings993,23419,7181,012,952
Other liabilities190,10630,900221,006
Consolidated liabilities1,183,34050,6181,233,958
All assets and liabilities have been allocated to reportable segments.
30|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
5. Taxation
Income tax recognised in the consolidated statement of comprehensive income
6 months
Dec-22
$000s
6 months
Dec-21
$000s
Profit/(loss) before tax for the period(17,969)197,425
Taxation (charge)/credit - 28% on profit before income tax5,031(55,279)
Effect of different tax rates in foreign jurisdictions3,52517,967
Tax exempt income/(expense)(14,768)13,288
Tax impact of leasing deals(5)(59)
Foreign tax credits6642,515
Tax charges on overseas investments(7,120)(5,656)
Other adjustments(332)30
Taxation expense(13,005)(27,194)
The taxation (charge)/credit is made up as follows:
Current taxation(7,916)(4,352)
Deferred taxation(5,089)(22,842)
Total taxation expense(13,005)(27,194)
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.
(6.a)
Reconciliation of Carrying Amounts
Dec-22
$000s
Jun-22
$000s
Carrying value of investment property at the beginning of the six months3,339,1692,634,588
Acquisition of properties145,132298,745
Capitalised costs82,01994,549
Capitalised interest costs8,1915,921
Net capitalised incentives10,904(382)
Disposal of properties(795)(13,186)
Classified as held for sale(31,253)-
Foreign exchange translation difference(73,721)74,695
Revaluation gain/(losses) on investment property(56,225)244,239
Carrying value of investment property at the end of the six months3,423,4213,339,169
The Group holds the freehold title 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 16.3 years (30 June 2022: 16.8 years). As at
reporting date the fair value of this right-of-use asset totals $8.4m (30 June 2022: $8.1m).
In December 2022, and as part of the acquisition arrangements when Epworth Camberwell was purchased in June 2021, the Group paid
A$10m in return for Epworth's early exercise of its 3 year lease extension.
INTERIM REPORT 2023|31
(6.b) Acquisition of Property
During the period the Group:
•acquired a 7,693 sqm parcel of land in Newtown, Hobart, Australia for A$9.5m (excluding transaction costs) on 6 July 2022 for
future development.
•settled the acquisition of the Kawarau Park Health Precinct, a newly developed health precinct comprising 6 separate buildings including
Queenstown's only private hospital, situated in Kawarau Park in Queenstown, New Zealand for NZ$94m (excluding transaction costs)
on 7 July 2022.
•completed the acquisition a multi-stage development site in the Campbelltown Health Precinct (NSW) via a fund-through acquisition
on 15 July 2022. Stage 1 has been acquired for an agreed price of A$54.4m (excluding transaction costs) and is currently under
construction. Development rights to stages 2 and 3 have been acquired for A$22.2m (excluding transaction costs). Leasehold title to
stage 1 is to be transferred on practical completion of the fund-through arrangements.
•acquired a residential property on 1 August 2022 to be held for potential future development in Meadowbrook, Queensland, Australia
for A$0.7m (excluding transaction costs).
•acquired a strata lot at 1/173 Chisholm Road, Ashtonfield, NSW Australia adjoining East Maitland Private Hospital for A$3.97m
(excluding transaction costs) on 1 September 2022.
•acquired a residential property on 24 November 2022 at 24 Kipling Ave, Epsom, Auckland to be used for future development for
NZ$2.9m (excluding transaction costs).
•acquired a residential property on 13 December 2022 at 1303 Heatherton Road, Noble Park, Victoria for A$2.65m (excluding
transaction costs) to be used for future development.
•entered into an agreement with NorthWest Healthcare Australia RE Limited as trustee for NorthWest Healthcare Australia Lumina Trust
(Lumina) in relation to the land at 15 Nexus Way, Southport, Queensland Australia (Land) to facilitate the development of a new state
of the art, 6-Star Green Star health, research and innovation building to be known as “RDX”. Consideration payable, based on an
independent valuation, totals A$6.9m, comprising A$4.3m payable to Lumina and A$2.6m to MEDQ (refer note 15).
(6.c)
Disposal of Property
During the period the Group:
•reclassified Eden Rehabilitation to investment properties held for sale as its carrying value is expected to be recovered principally through
a sale transaction.
•disposed of its property at 22-24 McCourt Street, West Leederville (WA) for A$0.75m (excluding transaction costs) on
23 November 2022.
(6.d)
Individual Valuations and Carrying Amounts
The details of the New Zealand and Australian investment property portfolio, including its location, sub sector, fair value, market
capitalisation rate, occupancy and weighted average lease expiry term are as follows:
32|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
Latest
independent
valuationFair valueMarket capitalisation rateOccupancyWALE
PropertiesLocationSub sectorMajor TenantDate
$M
Dec-22
$M
Jun-22
%
Dec-22
%
Jun-22
%
Dec-22
%
Jun-22
Years
Dec-22
Years
Jun-22
Australia
New South Wales
Lingard Private HospitalMerewether, New South WalesHospital (Acute)Healthe CareJun-22213.3224.64.34.1100.0100.023.223.7
Maitland Private HospitalEast Maitland, New South WalesHospital (Acute/Specialty)Healthe CareJun-22135.3133.95.04.8100.0100.014.815.5
Hurstville Private HospitalHurstville, New South WalesHospital (Acute)Healthe CareDec-2288.991.35.85.8100.0100.019.319.8
The Hills ClinicKellyville, New South WalesHosptial (Specialty)AuroraDec-2262.864.24.34.0100.0100.024.525.0
Toronto Private HospitalToronto, New South WalesHospital (Acute/Specialty)AuroraJun-2252.654.05.35.0100.0100.019.620.1
Mons Road Medical CentreWestmead, New South WalesAmbulatory CareCastlereagh ImagingJun-2246.748.74.84.894.594.52.42.9
Lingard Day CentreMerewether, New South WalesAmbulatory CareHealthe CareJun-2244.847.34.34.1100.0100.023.223.7
Hirondelle Private HospitalChatswood, New South WalesHospital (Specialty)AuroraJun-2233.034.05.05.0100.0100.019.419.9
Fairfield Aged CareFairfield, New South WalesAged CareHall & PriorDec-2220.921.66.56.3100.0100.013.213.7
Darlington Aged CareBanora Point, New South WalesAged CareBolton ClarkeJun-2219.319.96.06.0100.0100.013.814.3
Clover Lea Aged CareBurwood Heights, New South WalesAged CareHall & PriorDec-2215.015.46.86.3100.0100.013.213.7
Grafton Aged CareSouth Grafton, New South WalesAged CareHall & PriorDec-2212.612.87.07.0100.0100.014.314.8
Victoria
Epworth Eastern HospitalBox Hill, VictoriaHospital (Acute)Epworth FoundationDec-22442.3448.84.04.092.095.018.720.5
South Eastern Private HospitalNoble Park, VictoriaHospital (Specialty)AuroraJun-2297.3100.14.34.3100.0100.018.218.7
Epworth CamberwellCamberwell, VictoriaHospital (Specialty)Epworth FoundationJun-2292.984.74.34.2100.0100.021.519.0
Ekera Medical CentreBox Hill, VictoriaAmbulatory CareImaging AssociatesDec-2234.936.55.35.097.8100.02.52.9
Epworth RehabilitationBrighton, VictoriaHospital (Specialty)Epworth FoundationJun-2229.029.95.35.3100.0100.01.11.6
120 Thames StreetBox Hill, VictoriaAmbulatory CareEpworth FoundationDec-2211.813.36.05.525.559.60.72.5
Queensland
Belmont Private HospitalCarina Heights, QueenslandHospital (Specialty)AuroraDec-22171.8161.84.14.0100.0100.022.723.2
Palm Beach Currumbin ClinicCurrumbin, QueenslandHospital (Specialty)AuroraJun-2279.581.94.34.3100.0100.012.713.2
The Southport Private HospitalSouthport, QueenslandHospital (Acute/Specialty)Ramsay Health CareDec-2254.857.55.04.8100.0100.022.222.7
Eden Rehabilitation
1
Cooroy, QueenslandHospital (Acute/Specialty)AuroraJun-22-35.7-5.3-100.0-15.4
Baycrest Aged CareHervey Bay, QueenslandAged CareBolton ClarkeJun-2220.921.66.06.0100.0100.013.514.0
Tantula Rise Aged CareAlexandra Headland, QueenslandAged CareBolton ClarkeJun-2226.026.86.06.0100.0100.013.514.0
Western Australia
Marian CentreWembley, Western AustraliaHospital (Specialty)AuroraDec-2267.766.34.44.4100.0100.011.612.1
Abbotsford Private HospitalWest Leederville, Western AustraliaHospital (Specialty)AuroraDec-2268.754.74.34.3100.0100.019.119.6
Hamersley Aged CareSubiaco, Western AustraliaAged CareHall & PriorDec-2214.514.96.86.5100.0100.013.213.7
Rockingham Aged CareRockingham, Western AustraliaAged CareHall & PriorDec-227.98.16.86.8100.0100.013.213.7
South Australia
Tennyson CentreKurralta Park, South AustraliaAmbulatory CareICON Cancer CareJun-22101.2106.84.64.599.8100.02.83.8
Sportsmed Hospital, Clinic & Cons.Stepney, South AustraliaHospital (Acute)Sportsmed SAJun-2289.792.45.15.0100.0100.013.113.6
Playford Health - Retail & CarparkElizabeth Vale, South AustraliaAmbulatory CareSA HealthJun-2224.024.35.55.579.153.99.09.5
Total Australia2,180.12,233.84.64.597.998.616.617.1
1Classified as investment property held for sale at 31st December 2022
INTERIM REPORT 2023|33
Latest
independent
valuationFair valueMarket capitalisation rateOccupancyWALE
PropertiesLocationSub sectorMajor TenantDate
$M
Dec-22
$M
Jun-22
%
Dec-22
%
Jun-22
%
Dec-22
%
Jun-22
Years
Dec-22
Years
Jun-22
Australia
New South Wales
Lingard Private HospitalMerewether, New South WalesHospital (Acute)Healthe CareJun-22213.3224.64.34.1100.0100.023.223.7
Maitland Private HospitalEast Maitland, New South WalesHospital (Acute/Specialty)Healthe CareJun-22135.3133.95.04.8100.0100.014.815.5
Hurstville Private HospitalHurstville, New South WalesHospital (Acute)Healthe CareDec-2288.991.35.85.8100.0100.019.319.8
The Hills ClinicKellyville, New South WalesHosptial (Specialty)AuroraDec-2262.864.24.34.0100.0100.024.525.0
Toronto Private HospitalToronto, New South WalesHospital (Acute/Specialty)AuroraJun-2252.654.05.35.0100.0100.019.620.1
Mons Road Medical CentreWestmead, New South WalesAmbulatory CareCastlereagh ImagingJun-2246.748.74.84.894.594.52.42.9
Lingard Day CentreMerewether, New South WalesAmbulatory CareHealthe CareJun-2244.847.34.34.1100.0100.023.223.7
Hirondelle Private HospitalChatswood, New South WalesHospital (Specialty)AuroraJun-2233.034.05.05.0100.0100.019.419.9
Fairfield Aged CareFairfield, New South WalesAged CareHall & PriorDec-2220.921.66.56.3100.0100.013.213.7
Darlington Aged CareBanora Point, New South WalesAged CareBolton ClarkeJun-2219.319.96.06.0100.0100.013.814.3
Clover Lea Aged CareBurwood Heights, New South WalesAged CareHall & PriorDec-2215.015.46.86.3100.0100.013.213.7
Grafton Aged CareSouth Grafton, New South WalesAged CareHall & PriorDec-2212.612.87.07.0100.0100.014.314.8
Victoria
Epworth Eastern HospitalBox Hill, VictoriaHospital (Acute)Epworth FoundationDec-22442.3448.84.04.092.095.018.720.5
South Eastern Private HospitalNoble Park, VictoriaHospital (Specialty)AuroraJun-2297.3100.14.34.3100.0100.018.218.7
Epworth CamberwellCamberwell, VictoriaHospital (Specialty)Epworth FoundationJun-2292.984.74.34.2100.0100.021.519.0
Ekera Medical CentreBox Hill, VictoriaAmbulatory CareImaging AssociatesDec-2234.936.55.35.097.8100.02.52.9
Epworth RehabilitationBrighton, VictoriaHospital (Specialty)Epworth FoundationJun-2229.029.95.35.3100.0100.01.11.6
120 Thames StreetBox Hill, VictoriaAmbulatory CareEpworth FoundationDec-2211.813.36.05.525.559.60.72.5
Queensland
Belmont Private HospitalCarina Heights, QueenslandHospital (Specialty)AuroraDec-22171.8161.84.14.0100.0100.022.723.2
Palm Beach Currumbin ClinicCurrumbin, QueenslandHospital (Specialty)AuroraJun-2279.581.94.34.3100.0100.012.713.2
The Southport Private HospitalSouthport, QueenslandHospital (Acute/Specialty)Ramsay Health CareDec-2254.857.55.04.8100.0100.022.222.7
Eden Rehabilitation
1
Cooroy, QueenslandHospital (Acute/Specialty)AuroraJun-22-35.7-5.3-100.0-15.4
Baycrest Aged CareHervey Bay, QueenslandAged CareBolton ClarkeJun-2220.921.66.06.0100.0100.013.514.0
Tantula Rise Aged CareAlexandra Headland, QueenslandAged CareBolton ClarkeJun-2226.026.86.06.0100.0100.013.514.0
Western Australia
Marian CentreWembley, Western AustraliaHospital (Specialty)AuroraDec-2267.766.34.44.4100.0100.011.612.1
Abbotsford Private HospitalWest Leederville, Western AustraliaHospital (Specialty)AuroraDec-2268.754.74.34.3100.0100.019.119.6
Hamersley Aged CareSubiaco, Western AustraliaAged CareHall & PriorDec-2214.514.96.86.5100.0100.013.213.7
Rockingham Aged CareRockingham, Western AustraliaAged CareHall & PriorDec-227.98.16.86.8100.0100.013.213.7
South Australia
Tennyson CentreKurralta Park, South AustraliaAmbulatory CareICON Cancer CareJun-22101.2106.84.64.599.8100.02.83.8
Sportsmed Hospital, Clinic & Cons.Stepney, South AustraliaHospital (Acute)Sportsmed SAJun-2289.792.45.15.0100.0100.013.113.6
Playford Health - Retail & CarparkElizabeth Vale, South AustraliaAmbulatory CareSA HealthJun-2224.024.35.55.579.153.99.09.5
Total Australia2,180.12,233.84.64.597.998.616.617.1
1Classified as investment property held for sale at 31st December 2022
34|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
Latest
independent
valuationFair valueMarket capitalisation rateOccupancyWALE
PropertiesLocationSub sectorMajor TenantDate
$M
Dec-22
$M
Jun-22
%
Dec-22
%
Jun-22
%
Dec-22
%
Jun-22
Years
Dec-22
Years
Jun-22
New Zealand
Ascot Hospital & ClinicsGreenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedDec-22137.5140.54.64.4100.0100.015.515.8
Grace HospitalTauranga, Bay of PlentyHospital (Acute)Norfolk Southern Cross LimitedDec-22116.0115.54.84.6100.0100.028.028.5
Wakefield HospitalNewtown, WellingtonHospital (Acute)Evolution HealthcareDec-22143.8128.14.94.8100.0100.024.925.4
Royston HospitalHastings, Hawkes BayHospital (Acute)Evolution HealthcareDec-2292.298.35.34.8100.0100.026.927.4
Kawarau ParkQueenstown, OtagoHospital (Acute)Southern Cross CLT LimitedJun-2285.8-4.7-100.0-8.6-
Bowen HospitalCrofton Downs, WellingtonHospital (Acute)Evolution HealthcareJun-2270.578.24.84.5100.0100.026.927.4
Ormiston HospitalFlatbush, AucklandHospital (Acute)
Ormiston Surgical and
Endoscopy LimitedDec-2255.852.65.14.8100.0100.01.41.9
68 Saint Asaph StChristchurch Central, ChristchurchAmbulatory CareSyft Technologies LimitedJun-2249.352.24.84.5100.0100.09.97.8
Boulcott HospitalLower Hutt, WellingtonHospital (Acute)Boulcott Pulse Health LimitedDec-2248.451.55.14.8100.0100.015.516.0
Ascot CentralGreenlane, AucklandAmbulatory CareFertility Associates LimitedDec-2142.544.85.34.8100.0100.05.46.7
Hutt Valley Health HubLower Hutt, WellingtonAmbulatory CareRopata Health LimitedDec-2238.641.74.64.3100.0100.013.313.7
Apollo Health & Wellness CentreAlbany, AucklandAmbulatory CareApollo Medical LimitedDec-2230.032.35.85.390.184.86.67.2
Kensington HospitalWhangarei, NorthlandHospital (Acute)Kensington Hospital LimitedDec-2224.327.55.65.1100.0100.023.524.0
Endoscopy AucklandEpsom, AucklandAmbulatory CareEvolution HealthcareJun-2224.320.34.84.5100.0100.019.419.9
Napier Health CentreNapier, Hawkes BayAmbulatory CareHawke's Bay District Health BoardDec-2117.318.06.35.9100.0100.011.011.5
Ascot Carpark (right of use asset)Greenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedDec-228.48.19.58.492.292.212.813.5
Total New Zealand984.7909.65.04.799.599.218.518.7
Properties held for development258.7195.8
Investment properties - non current3,423.53,339.24.74.698.498.817.217.6
Investment properties held for sale31.3-5.3-100.0-14.9-
TOTAL FAIR VALUE OF
INVESTMENT PROPERTIES3,454.73,339.24.74.698.498.817.217.6
INTERIM REPORT 2023|35
Latest
independent
valuationFair valueMarket capitalisation rateOccupancyWALE
PropertiesLocationSub sectorMajor TenantDate
$M
Dec-22
$M
Jun-22
%
Dec-22
%
Jun-22
%
Dec-22
%
Jun-22
Years
Dec-22
Years
Jun-22
New Zealand
Ascot Hospital & ClinicsGreenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedDec-22137.5140.54.64.4100.0100.015.515.8
Grace HospitalTauranga, Bay of PlentyHospital (Acute)Norfolk Southern Cross LimitedDec-22116.0115.54.84.6100.0100.028.028.5
Wakefield HospitalNewtown, WellingtonHospital (Acute)Evolution HealthcareDec-22143.8128.14.94.8100.0100.024.925.4
Royston HospitalHastings, Hawkes BayHospital (Acute)Evolution HealthcareDec-2292.298.35.34.8100.0100.026.927.4
Kawarau ParkQueenstown, OtagoHospital (Acute)Southern Cross CLT LimitedJun-2285.8-4.7-100.0-8.6-
Bowen HospitalCrofton Downs, WellingtonHospital (Acute)Evolution HealthcareJun-2270.578.24.84.5100.0100.026.927.4
Ormiston HospitalFlatbush, AucklandHospital (Acute)
Ormiston Surgical and
Endoscopy LimitedDec-2255.852.65.14.8100.0100.01.41.9
68 Saint Asaph StChristchurch Central, ChristchurchAmbulatory CareSyft Technologies LimitedJun-2249.352.24.84.5100.0100.09.97.8
Boulcott HospitalLower Hutt, WellingtonHospital (Acute)Boulcott Pulse Health LimitedDec-2248.451.55.14.8100.0100.015.516.0
Ascot CentralGreenlane, AucklandAmbulatory CareFertility Associates LimitedDec-2142.544.85.34.8100.0100.05.46.7
Hutt Valley Health HubLower Hutt, WellingtonAmbulatory CareRopata Health LimitedDec-2238.641.74.64.3100.0100.013.313.7
Apollo Health & Wellness CentreAlbany, AucklandAmbulatory CareApollo Medical LimitedDec-2230.032.35.85.390.184.86.67.2
Kensington HospitalWhangarei, NorthlandHospital (Acute)Kensington Hospital LimitedDec-2224.327.55.65.1100.0100.023.524.0
Endoscopy AucklandEpsom, AucklandAmbulatory CareEvolution HealthcareJun-2224.320.34.84.5100.0100.019.419.9
Napier Health CentreNapier, Hawkes BayAmbulatory CareHawke's Bay District Health BoardDec-2117.318.06.35.9100.0100.011.011.5
Ascot Carpark (right of use asset)Greenlane, AucklandHospital (Acute)Ascot Hospital and Clinics LimitedDec-228.48.19.58.492.292.212.813.5
Total New Zealand984.7909.65.04.799.599.218.518.7
Properties held for development258.7195.8
Investment properties - non current3,423.53,339.24.74.698.498.817.217.6
Investment properties held for sale31.3-5.3-100.0-14.9-
TOTAL FAIR VALUE OF
INVESTMENT PROPERTIES3,454.73,339.24.74.698.498.817.217.6
36|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
(6.e) Contractual Arrangements
The Group was party to contracts to purchase or construct property or provide fitout loans to tenants which are not recognised in the
financial statements for the following amounts:
Dec-22
$000s
Jun-22
$000s
Capital expenditure commitments302,502214,878
Property acquisition commitments58,633109,701
Tenant fitout loan commitments18,740-
Tenant incentive commitments-11,066
•the Group has entered into agreements to purchase land at 15 Nexus Way, Southport, Queensland, Australia for A$6.9m (refer
note 6b).
•the Group entered into a fund-through acqusition agreement for the redevelopment of a vacant aged care facility into a 61 bed mental
health facility at Mt Eliza, Victoria, Australia.
•the Group entered into a fund-through acqusition agreement for Stage 1, a four storey GenesisCare Comprehensive Cancer Centre, of
a multi-stage health precinct in Campbelltown, South West Sydney, Australia.
•the Group has committed to providing up to A$10m as an amortising loan (for a term of 15 years) for tenant fitout works at the
Campbelltown Stage 1 project at the election of the tenant.
•the Group has committed to providing up to NZ$8m as an amortising loan (for a term of 10 years) for tenant fitout works at the 68 Saint
Asaph Street, Christchurch Central, Christchurch, at the election of the tenant.
(6.f)
Recognition and Measurement
Recognition and measurement
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 and Trust Deed, 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 31 December 2022 was determined through
independent professional valuers for approximately 55% of the portfolio (30 June 2022: 42%) 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 independent valuers used at 31 December 2022 included: Ernst & Young,
Colliers International, Jones Lang LaSalle Australia, Valued Care, Absolute Value, Urbis and CBRE. The properties which have been
independently valued at 31 December 2022 are disclosed above in note 6.d.
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 period. 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).
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.
Generally, as:
•market rent assessments, occupancy and weighted average lease 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.
INTERIM REPORT 2023|37
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.
7. Units on Issue
Dec-22
$000s
Jun-22
$000s
Balance at the beginning of the period1,150,881777,199
Issue of units under Distribution Reinvestment Plan6,73523,791
Issue of units under placement and unit purchase plan-142,803
Issue of units under rights issue-200,014
Issue of units to satisfy Manager's incentive fee15,94912,427
Issue costs of units(53)(5,353)
Balance at the end of the period1,173,5121,150,881
Dec-22
000s
Jun-22
000s
Reconciliation of number of units
Balance at the beginning of the period649,155519,753
Issue of units under the Distribution Reinvestment Plan2,7238,109
Issue of units under placement and unit purchase plan-49,401
Issue of units under rights issue-67,801
Units issued to satisfy Manager's incentive fee5,8794,091
Balance at the end of the period657,757649,155
Distributions related to the six month period to 31 December 2022 were 4.875 cents per unit (31 December 2021: 4.75 cents per unit),
including the second quarter distribution of 2.4375 cents per unit declared subsequent to the reporting date (31 December 2021: 2.375
cents per unit). Refer Note14 for details.
On 31 August 2022, 5,878,511 units were issued against the 30 June 2022 Manager’s incentive fee of $15.9 million (31 December 2021:
4,090,950 were issued against the 2021 Manager’s incentive fee of $12.4 million).
8.
Earnings per Unit
6 months
Dec-22
$000s
6 months
Dec-21
$000s
Profit attributable to unit holders of the Trust ($000s)(30,974)170,231
Weighted average number of units on issue (000's of units)653,798541,878
Basic and diluted earnings per unit (cents)(4.74)31.41
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 reporting period.
38|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
9. 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, amortisation of borrowing costs, leasing costs and tenant incentives.
The Manager uses Adjusted Funds from Operations (AFFO) 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 other entities.
A reconciliation of statutory profit attributable to unitholders to AFFO and AFFO per unit is outlined as follows:
6 months
Dec-22
$000s
6 months
Dec-21
$000s
Adjusted funds from operations
Operating profit before tax and other income35,88827,815
Add/(deduct):
Current tax expense(7,916)(4,352)
Incentive fee7,5106,823
Strategic transaction expenses-283
Current tax on translation of foreign currency funding transactions73(118)
Amortisation of borrowing costs809555
Amortisation of leasing costs & tenant inducements1,5291,238
IFRS 16 Operating lease accounting(84)(81)
Funds from operations (FFO)37,80932,163
Add/(deduct):
Actual repairs and maintenance from continuing operations(138)(128)
Adjusted funds from operations (AFFO)37,67132,035
AFFO (cpu)5.765.91
Distribution per unit (cpu)4.8754.750
AFFO payout ratio85%80%
Units on issue (weighted average, 000s)653,798541,878
10. Borrowings
Dec-22
$000s
Jun-22
$000s
AUD denominated loans1,167,0071,018,777
NZD denominated loans12,000-
Borrowing costs(4,949)(5,825)
Total borrowings1,174,0581,012,952
Current liability146,250-
Non current liability1,027,8081,012,952
Total borrowings1,174,0581,012,952
INTERIM REPORT 2023|39
Dec-22
$000s
Jun-22
$000s
Total borrowings at the beginning of the period1,012,952929,300
Drawdowns during the period194,625835,111
Repayments during the period-(780,338)
Additional facility refinancing fee22(4,018)
Facility refinancing fee amortised during the period8091,270
Foreign exchange movement(34,350)31,627
Total borrowings at the end of the period1,174,0581,012,952
(10.a) Summary of Borrowing Arrangements
The Group has structured its borrowings as a club financing arrangement governed by a common terms deed and bi-lateral facility
agreements. Currently there are six financiers (2021: 5 financiers) that provide facilities to the Group. The facilities' expiry profile and
undrawn facility limits are as follows:
Dec-22Jun-22
A$m LimitA$m UndrawnExpiryA$m LimitA$m UndrawnExpiry
Common Terms Deed - AUD
Facility A1100.0-Oct-28100.0-Oct-28
Facility A2125.0-Oct-23125.0-Oct-23
Facility A475.0-Mar-2975.075.0Mar-29
Facility A575.05.0Mar-2575.044.3Mar-25
Facility B1100.0-Apr-24100.0-Apr-24
Facility C162.5-Mar-2662.5-Mar-26
Facility C262.5-Mar-2762.5-Mar-27
Facility C3125.0-Mar-27125.0-Mar-27
Facility D1125.0-Mar-27125.0-Mar-27
Facility D275.0-Mar-2575.0-Mar-25
Facility K170.118.5Mar-2670.170.1Mar-26
Facility K221.0-Oct-2621.0-Oct-26
Facility L75.0-Sep-2875.0-Sep-28
Facility M19.0-Oct-2619.0-Oct-26
Total AUD Facility1,110.123.51,110.1189.4
Common Terms Deed - NZD
NZ$m LimitNZ$m UndrawnExpiryNZ$m LimitNZ$m UndrawnExpiry
Facility A50.038.0Oct-2350.050.0Oct-23
Facility B75.075.0Mar-2675.075.0Mar-26
Total NZD Facility125.0113.0125.0125.0
In addition to the above, the Group has available a A$5.0m (2021: A$5.0m) bank guarantee facility of which A$0.6m (2021: A$0.6m)
has been utilised at the reporting date.
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:
40|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
Covenant
Dec-22
Actual
Jun-22
Actual
Banking Covenants
Loan to value ratio< 55%35.5%32.1%
Interest cover> 2.00x3.233.20
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%4.2%3.4%
Subsequent to the reporting date the Group has received credit approved offers from lenders to increase facility limits by A$100m, extend
the duration of facilities currently scheduled to expire in October 2023 and March 2024 and add two new financiers to the Group. The
credit approved offers are subject to customary terms associated with credit approved offers, have been accepted, and documentation is
progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023.
(10.b)
Finance Expense
The effective interest rate on the borrowings, incorporating interest rate swaps, as at the reporting date was 4.57% per annum
(31 December 2021: 3.14%).
11.
Derivatives
(11.a) Interest Rate Swaps
Dec-22
$000s
Jun-22
$000s
Current assets
Interest rate derivative assets399-
Non-current assets
Interest rate derivative assets21,06720,692
Current liabilities
Interest rate derivative liabilities-(93)
Non-current liabilities
Interest rate derivative liabilities(47)(149)
Total21,41920,450
During the period the Group recognised an unrealised fair value gain of $1.0m (31 December 2021: $16.5m gain) on interest rate
contracts. The Group's interest rate swaps outstanding at the reporting date are as follows:
Dec-22
$000s
Jun-22
$000s
Nominal value of interest rate swaps - AUD737,630410,000
Average fixed interest rate2.82%2.89%
Floating rates based on AUD BBSW3.13%1.51%
Interest rate derivatives mature over the next five years and have fixed interest rates ranging from 2.41% to 4.23% (30 June 2022: from
1.54% to 4.23%).
The Group has entered into three forward start interest rate derivatives, effective March 2023 for a total nominal value of A$90m, a
weighted average fixed rate of 3.90% that mature in March 2027.
INTERIM REPORT 2023|41
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.
(11.b) Forward Exchange Contracts
Dec-22
$000s
Jun-22
$000s
Current assets
Foreign exchange derivative assets62025
Non-current assets
Foreign exchange derivative assets27-
Current liabilities
Foreign exchange derivative liabilities-(442)
Non-current liabilities
Foreign exchange derivative liabilities-(1)
Total647(418)
During the period the Group recognised an unrealised fair value gain of $1.07m (31 December 2021: $0.15m loss) on forward exchange
contracts. The Group's forward exchange contracts outstanding at the reporting date are as follows:
Dec-22
$000s
Jun-22
$000s
Nominal value of foreign exchange contracts - AUD19,50026,500
Average foreign exchange rate0.89940.9134
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 curves derived from observable forward prices. As hedge accounting has not been
applied any resulting gain or loss is recognised immediately in the consolidated statement of comprehensive income.
(11.c)
Fair value hierarchy
The following 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 observable:
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).
42|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
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 period (2021: nil).
12. Commitments and Contingencies
Other than the contractual obligations disclosed in Note 6.e and Note12.a, there are no other commitments and contingencies in effect at
the reporting date (31 December 2021: nil).
(12.a) NZSX Bank Bond
As a condition of listing on the New Zealand Stock Exchange (NZSX), NZSX requires all issuers to provide a bank bond to NZSX under
NZSX/DX Listing Rule 1.23.2. The bank bond required by the Trust for listing on the NZSX is $50,000.
13. Trade and Other Receivables
Dec-22
$000s
Jun-22
$000s
Trade receivables1,4321,931
Loss allowance(390)(291)
1,0421,640
Other receivables1,888802
Total trade and other receivables2,9302,442
INTERIM REPORT 2023|43
Other Notes
14. Subsequent Events
On 23 February 2023 a cash distribution of 2.4375 cents per unit was announced by the Trust. The Record Date for the final distribution is
9 March 2023, and payment is scheduled to unitholders on 23 March 2023. Imputation credits of 0.4974 cents per unit will be attached to
the distribution.
Subsequent to the reporting date the Group has received credit approved offers from lenders to increase facility limits by A$100m, extend
the duration of facilities currently scheduled to expire in October 2023 and March 2024 and add two new financiers to the Group. The
credit approved offers are subject to customary terms associated with credit approved offers, have been accepted, and documentation is
progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023.
15.
Related Party Transactions
Vital is managed by NorthWest Healthcare Properties Management Limited (the "Manager"), a wholly owned subsidiary of NWI
Healthcare Properties LP (NWIHLP).
The ultimate parent of NWIHLP is Toronto listed NorthWest Healthcare Properties Real Estate Investment Trust (NW REIT) that, as at
reporting date, holds a 28.2% (31 December 2021: 27.4%) interest in Vital. NW 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 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, with capitalised terms being defined terms in 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.
Fee arrangements
In accordance with the 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 Net Tangible Asset” requirement, such that for the purpose
of determining the increase in NTA for a Financial Year, the annual NTA increase for that Financial Year will reduce to zero if the actual NTA
does not exceed the High Watermark Net Tangible Asset requirement.
Activity Fees
The Activity Fee structure is as follows:
44|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
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%
pro-rata for each year or part thereof 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.
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.
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.
INTERIM REPORT 2023|45
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.
Other amounts
In accordance with the Trust Deed, the Manager is permitted to engage related parties to provide services to the Trust. The provision of these
services is subject to compliance with the restrictions on related party transactions in the Financial Markets Conduct Act 2013.
46|VITAL HEALTHCARE PROPERTY TRUST
Notes to the Consolidated Financial Statements
Transactions with related parties
Amounts charged by the Manager and related parties and owing are as follows:
31 December 2022
$000s
31 December 2021
$000s
30 June
2022
$000s
Statement
of
Comprehensive
Income
Statement
of Financial
PositionTotal
Amounts
Owing/
(Receivable)
Statement
of
Comprehensive
Income
Statement
of Financial
PositionTotal
Amounts
Owing/
(Receivable)
Base fee9,237-9,237-7,401-7,401-
Incentive Fee
1
7,510-7,5107,4766,823-6,82315,914
Activity Fees:
Leasing/licensing
2
74755829379571,8001,8571,139
Property management
3
1,123-1,123275860-860258
Project management
4
-4747205-157157161
AFSL fee687-687-564-564-
18,63180219,4338,33515,7051,95717,66217,472
Additional Costs:
Acquisitions
5
-(907)(907)1,844-3,6433,6434,446
Disposals
6
8-88128-128-
Development management
7
-3,8113,8114,380-1,3601,3602,771
82,9042,9126,2321285,0035,1317,217
Other Amounts:
Reimbursement of third
party expenses:
Other expenses131-131-46-46-
Amounts paid to directors:
8
Graham Stuart90-90-85-85-
Angela Bull8-8-----
Andrew Evans----45-45-
229-229-176-176-
18,8683,70622,57414,56716,0096,96022,96924,689
1Manager's incentive fee accrued at 31 December 2022 of $7.5m (Jun 22: $15.9m) is payable to NorthWest Healthcare Properties Management Limited
2Amounts outstanding at 31 December 2022 are: NorthWest Healthcare Properties Management Limited $0.5m (Jun 22:$1.0m); NorthWest Healthcare Australian Property Limited $0.3m
(Jun 22: $0.1m)
3Property Management and Facilities Management fees, exclusive of recoveries from tenants, incurred by the Trust totalled $1.1m and nil respectively for the 31 December 2022 period
(Jun 22: $1.5m and nil respectively).
Amounts outstanding at 31 December 2022 are: NorthWest Healthcare Properties Management Limited $0.1m (Jun 22: $0.1m); NorthWest Healthcare Australian Property Limited
$0.2m (Jun 22:$0.2m)
4Amounts outstanding at 31 December 2022 are: NorthWest Healthcare Properties Management Limited $0.1m (Jun 22: $0.1m) NorthWest Healthcare Australian Property Limited $0.1m
(Jun 22: $0.1m)
5Amounts outstanding at 31 December 2022 are: NorthWest Healthcare Properties Management Limited nil (Jun 22: $1.3m); NorthWest Healthcare Australian Property Limited $1.8m (Jun
22: $3.1m)
6Amounts outstanding at 31 December 2022 are: NorthWest Healthcare Properties Management Limited nil (Jun 22: nil); NorthWest Healthcare Australian Property Limited $0.01m (Jun
22: nil)
7Amounts outstanding at 30 June 2022 are: NorthWest Healthcare Properties Management Limited $1.2m (Jun 22: $1.6m); NorthWest Healthcare Australian Property Limited $3.4m (Jun
22: $1.2m)
8Directors' fees for Michael Stanford is currently paid by the Manager
INTERIM REPORT 2023|47
Other Related Parties
On 30 December 2022 the Group entered into an agreement with Northwest Healthcare Australia RE Limited as trustee for Northwest
Healthcare Australia Lumina Trust (Lumina) under which Vital is to purchase the land at 15 Nexus Way, Southport, Queensland Australia
(Land) to facilitate the development of a new state of the art, 6-Star Green Star health, research and innovation building to be known as
“RDX”. Consideration payable, based on an independent valuation by Jones Lang LaSalle of the Land, totals A$6.9m, including A$4.3m
payable to Lumina.
In conjunction with, and conditional on the purchase of the Land that is subject to closing conditions:
•Lumina has agreed to guarantee the net operating income of RDX will not be less than A$3.712m for the 12 months from practical
completion of RDX; and
•the Group has agreed to pay Lumina 50% of the actual net operating income in excess of A$3.712m plus 50% of any outperformance
against the leasing assumptions, capped at A$2.0m.
Independent Auditor’s Review Report
To the Unitholders of Vital Healthcare Property Trust
Conclusion
We have reviewed the condensed consolidated interim financial statements (‘interim financial statements’) of Vital
Healthcare Property Trust and its subsidiaries (‘the Group ’ or ‘the Trust’) which comprise the consolidated statement
of financial position as at 31 December 2022, and the consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the six months ended on that date, and a
summary of significant accounting policies and other explanatory information on pages 22 to 47.
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements
of the Trust do not present fairly, in all material respects, the financial position of the Group as of 31 December 2022
and its financial performance and cash flows for the six months ended on that date in accordance with NZ IAS 34
Interim Financial Reporting and IAS 34 Interim Financial Reporting.
Basis for Conclusion
We conducted our review in accordance with NZ SRE 2410 (Revised) Review of Financial Statements Performed by the
Independent Auditor of the Entity (‘NZ SRE 2410 (Revised)’). Our responsibilities are further described in the Auditor’s
Responsibilities for the Review of the Interim Financial Statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in New Zealand relating to the
audit of the annual financial statements, and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
Our firm carries out other assignments for the Group in the provision of independent assurance readiness services in
relation to upcoming climate-related disclosures reportingand as independent AGM vote scrutineer. These services
have not impaired our independence as auditor of the Group. The firm has no other relationships with, or interests in,
the Group.
Board of Directors’ responsibilities for the interim financial statements
The Board of Directors of the Manager is responsible on behalf of the Trust for the preparation and fair presentation
of the interim financial statements in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting and for such internal control as the Board of Directors of the Manager determines is necessary to
enable the preparation and fair presentation of the interim financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review. NZ SRE 2410
(Revised) requires us to conclude whether anything has come to our attention that causes us to believe that the
interim financial statements, taken as a whole, are not prepared, in all material respects, in accordance with NZ IAS 34
Interim Financial Reporting and IAS 34 Interim Financial Reporting.
A review of the interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited assurance
engagement. We perform procedures, primarily consisting of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. The procedures performed in a
review are substantially less than those performed in an audit conducted in accordance with International Standards
on Auditing (New Zealand) and consequently do not enable us to obtain assurance that we might identify in an audit.
Accordingly, we do not express an audit opinion on the interim financial statements.
48|VITAL HEALTHCARE PROPERTY TRUST
Restriction on use
This report is made solely to the Trust’s unitholders, as a body. Our review has been undertaken so that we might
state to the Trust’s unitholders those matters we are required to state to them in a review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Trust’s unitholders as a body, for our engagement, for this report, or for the conclusions we have formed.
Andrew Boivin
Partner
for Deloitte Limited
Auckland, New Zealand
23 February 2023
This review report relates to the unaudited interim financial statements of Vital Healthcare Property Trust for the six months ended 31 December 2022 included on Vital
Healthcare Property Trust’s website. The Board of Directors of the Manager is responsible for the maintenance and integrity of the Trust’s website. We have not been
engaged to report on the integrity of the Trust’s website. We accept no responsibility for any changes that may have occurred to the unaudited interim financial
statements since they were initially presented on the website. The review report refers only to the unaudited interim financial statements named above. It does not
provide an opinion on any other information which may have been hyperlinked to/from these unaudited interim 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 unaudited interim financial statements
and related review report dated 23 February 2023 to confirm the information included in the unaudited interim financial statements presented on this website.
Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
INTERIM REPORT 2023|49
Directory
MANAGER
Northwest Healthcare Properties
Management Limited
Level 17, HSBC Tower,
188 Quay Street
Auckland 1010
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
Sydney Office
Northwest Healthcare Properties REIT
Level 2, 285 George Street
Sydney, NSW 2000, Australia
Gold Coast Office
Gold Coast, QLD 4218, AU
BOARD AND OFFICERS
OF THE MANAGER
Graham Stuart – Independent Chair
Angela Bull – Independent Director
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
SUPERVISOR
Trustees Executors Limited
Level 11/51 Shortland Street
Auckland 1010
PO Box 4197
Auckland 1140
Telephone: 0800 878 783
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
ANZ Centre Melbourne, Level 9
833 Collins Street, Docklands
Victoria 3008, Australia
Bank of New Zealand
Deloitte Centre
80 Queen Street
Auckland 1010
Westpac Banking Corporation
Westpac Place
275 Kent St
Sydney NSW 2000
Australia
The Hongkong and Shanghai
Banking Corporation Limited
International Towers
100 Barangaroo Avenue
Sydney NSW 2000
Australia
Industrial and Commercial Bank
of China Limited – Australia
International Towers
100 Barangaroo Avenue
Sydney NSW 2000
Australia
Industrial and Commercial Bank of
China Limited – New Zealand
2 Queen Street,
Auckland CBD,
Auckland 1010
New Zealand
Credit Agricole CIB Australia Limited
Aurora Place
88 Phillip Street
Sydney NSW 2000
Australia
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.
50|VITAL HEALTHCARE PROPERTY TRUST
DISCLAIMER:
This document has been prepared by Northwest Healthcare Properties Management
Limited (the Manager) as manager of the Vital Healthcare Property Trust (the Trust).
This document provides general information only and is not intended as investment,
legal, tax, financial product 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.
All references to $ are to New Zealand dollars unless otherwise indicated.
This document 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. Any indications
of, or guidance or outlook on, future earnings or financial position or performance and future
distributions are also forward-looking statements. 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 document or any information supplied in connection with it. The Manager
and the Trust are under no obligation to update this document or the information contained
in it after it has been released. Past performance is no indication of future performance.
The information in this document is of general background and does not purport to
be complete. It should be read in conjunction with Vital’s market announcements
lodged with NZX, which are available at www.nzx.com/companies/VHP.
---
HY23 interim
results presentation
23 FEBRUARY 2023
Defensive sector and strategy continues to deliver for Unit Holders
All amounts are in NZD unless otherwise shown
Contents
Delivery of core business strategies 3
Overview of Vital 4
HY23 highlights 8
Financial results & capital management 11
Portfolio 17
Developments 21
Future focus 26
Appendices 28
Presenters
Aaron Hockly
Fund Manager
Richard Roos
Exec. Director, Portfolio
Michael Groth
Chief Financial Officer
Chris Adams
Exec. Director, Projects
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
2
Delivery of core business strategies
3.7% like-for-like net property income
growth over HY23
17.2 Year WALE; 78% hospital exposure
2.6% growth in distributions per unit for
HY23 from p.c.p. on a 85% payout ratio
67% of drawn debt hedged for 2.9 years
(pro forma at 31/12/22)
~NZ$200m of asset sales underway; NZ$250m
(pro-forma) of debt headroom available
1
28% of portfolio in core healthcare precincts;
to increase through developments and disposals
Three major developments targeting at
least 5-Star Green Star underway
All relevant principles of NZX Corporate
Governance Code met
Second place globally for listed healthcare
in global real estate benchmark (GRESB)
Continue to grow earnings.
Increase exposure to core and emerging
healthcare precincts
Increase exposure to green buildings.
Best practice governance
On-going sustainability enhancement
Limit earnings risk
High-quality healthcare real estate portfolio anchored
by private hospitals.
Growing AFFO and distributions by 2-3% per unit
per annum over the medium term
Development pipeline appropriately funded
DURING HY23, THE MANAGER CONTINUED TO DELIVER ON ITS STRATEGIES TO ADD VALUE FOR UNIT HOLDERS
1
Subsequent to 31 December 2022, Vital has accepted credit approved offers from lenders to increase facility limits by A$100m and extend the
duration to 4.2 years, with no expiry until 2025. The credit approved offers are subject to customary terms associated with credit approved offers,
and documentation is progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
3
~ NZ$3.5bn
17.2 year
VITAL IS THE ONLY SPECIALIST HEALTHCARE LANDLORD LISTED ON THE NZX
Overview of Vital
~NZ$2.5bn~NZ$1.0bn
31* PROPERTIES (AUS)16* PROPERTIES (NZ)
47* PROPERTIES
(AUS & NZ)
WALE
WESTERN
AUSTRALIA
NORTHERN
TERRITORY
SOUTH
AUSTRALIA
NEW SOUTH
WALES
TASMANIA
VICTORIA
QUEENSLAND
4
3
6
6
12
The owner of a ~NZ$3.5 billion healthcare
property portfolio in New Zealand (30%
of assets) and Australia (70%);
Externally managed by a subsidiary of
Toronto-listed, global healthcare real estate
owner and manager, Northwest Healthcare
Properties REIT (TSX ticker: NWH);
Underpinned by rental income that tracks
inflation with ~81% of lease income indexed
to CPI in some way; and
Targeting 2–3% AFFO and DPU growth per
annum over the medium term, whilst retaining
a conservative payout ratio.
VITAL HEALTHCARE PROPERTY TRUST (VITAL) IS:
*Excludes strategic assets held for development
14
2
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
4
Short, medium and longer term enhancements
1
PORTFOLIO ENHANCEMENTS SUPPORT TARGET OF GROWING AFFO AND DISTRIBUTIONS BY 2–3% PER UNIT PER ANNUM
1
All date references are to 31 December of that year unless otherwise stated
2
Average building age = the later of the date of construction or the last significant capital works
3
Committed and potential development pipeline
465%
growth (HY13-HY23)
Market leading WALE
TOTAL PROPERTY VALUEWALE
17.2 years
2022
12.1 years
2 012
~ NZ$0.62bn
(AUS: 72%,
NZ: 28%)
2 012
~NZ$1.93bn
(AUS: 75%,
NZ: 25%)
2 019
~NZ$3.5bn
(AUS: 70%,
NZ: 30%)
2022
2 019
17.9 years
Younger buildings reduce
maintenance capex requirements
AVERAGE BUILDING AGE
2
11.1 years
20222 012
Data not
available
157 %
increase (HY13-HY23)
NET PROPERTY INCOME (HALF YEAR)
$72m
HY23
$28m
H Y 13
Enhance earnings and
valuation growth and
support portfolio quality
DEVELOPMENT PIPELINE
NZ$2.4bn
3
2022
NZ$266m
2 019
~NZ$60m
2 012
18 %
2022
4.72%
2022
48%
2 019
5.52%
2 019
40%
2 012
9.30%
2 012
Concentration risk reduced
Diversity of assets reduces
risk and enhances earnings
LARGEST SINGLE TENANT EXPOSURESECTOR SPLIT
2022
Hospital 78%,
Ambulatory Care
18%,
Aged Care 4%
2 012
Hospital 90%,
Ambulatory Care
10%,
Aged Care 0%
Healthcare now considered
a core real estate investment
WEIGHTED AVERAGE CAP RATE
2 019
Hospital 86%,
Ambulatory Care
11%,
Aged Care 3%
14.0 years
2 019
$50m
HY20
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
5
BALANCE SHEET STRENGHTENED AND REFINANCE PROGRESSING TO DELIVER NO DEBT EXPIRY UNTIL 2025
2
220%
growth (FY13-FY23)
NTA PER UNIT
Short, medium and longer term enhancements
1
(cont'd)
NZ$3.17
2022
NZ$2.36
2 019
NZ$0.99
2 012
33.7%
2022
3 5 .1 %
2 019
44.8%
2 012
BALANCE SHEET GEARING
No debt expiring
until March 2025
2
4.2 years
2
20222 019
1.7 years
2 012
3.4 years
AVERAGE DEBT MATURITY
Significantly
extended
2
5. 76 c
HY23
4.875
HY23
4.896c
HY20
4.375
HY20
Data not
available
H Y 13
3.85
H Y 13
AFFO PER UNIT (CPU)DISTRIBUTIONS PER UNIT (CPU)
18 %
growth (HY20-HY23)
27%
growth (HY13-HY23)
1
All figures at 31 December of that year unless otherwise shown
2
Vital has received credit approved offers from lenders to increase facility limits by A$100m and extend the duration of facilities currently scheduled to expire
in October 2023 and March 2024. The credit approved offers are subject to customary terms associated with credit approved offers, and documentation is
progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023
No debt expiring until March 2025
2
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
6
ACKNOWLEDGED AS A LEADER IN SUSTAINABILITY FOR LISTED HEALTHCARE REAL ESTATE
Sustainability
Vital’s GRESB results
include being ranked
second place globally
for listed healthcare
In October 2022, Vital achieved
a 5-star rating from independent
standards organisation GRESB
(formerly known as the Global Real
Estate Sustainability Benchmark) among
other notable achievements.
Vital has also participated in the
Carbon Disclosure Project (CDP) as a
commitment to tracking Scope 1 and
Scope 2 emissions in line with GHG
Protocol definitions. Vital achieved
a B- for the 2022 submission, with
score improvement occurring year
on year. By understanding our
complete carbon footprint we can
identify ways to actively reduce our
emissions, positioning us to reach our
net-zero goals.
NWH released its first Sustainability Report for its global operations
including Vital. View the report at: https://nwhreit.wpengine.com/wp-
content/uploads/2022/08/nwh-sustainability-report.pdf
First “6-star Green Star”
Registered building in
the Gold Coast Health &
Knowledge Precinct
Construction is expected to
commence for the strategically
located ~A$140m research
innovation hub development in
Q1 2023 and complete early/
mid 2025.
Upon completion the
development will be carbon
neutral ready and powered by
100% renewables.
RDX will be Vital's third
major development
targeting 5-Star Green
Star or higher
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
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7
HY23
highlights
HY23 highlights
DEBT SECURED AND EXTENDED; ACQUISITIONS SLOWED;
CORE PORTFOLIO DELIVERING INCOME GROWTH
33.7%81 %
67%A$100m
NZ$157m
balance sheet gearing of leases (by income)
linked to CPI
of debt hedged with
a weighted term
of 2.9 years
1
additional debt
limit secured
1
Refinance progressing
to deliver no debt
expiry until 2025
1
property transactions
$156m acquisitions
& $1m disposals
1
Subsequent to 31 December 2022, Vital has accepted credit approved offers from lenders to increase facility limits by A$100m and extend the
duration to 4.2 years, with no expiry until 2025. The credit approved offers are subject to customary terms associated with credit approved offers,
and documentation is progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2022
|
9
HY23 highlights (cont'd)
VALUE ADD ACTIVITY FROM PRIOR PERIODS CONTINUES TO DELIVER FOR UNIT HOLDERS
20.3%
13
developmentsNZ$86m>NZ$200m
17.2
years
increase in underlying
income over CY22
(ex. FX)
underway with
NZ$369.0m spend
remaining
of development and
capital expenditure
works undertaken
1
asset sales commenced
WALE; market leading
1
Includes ~$83m of developments and ~$3m of value add capex
3.4%
average rent reviews
completed
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
10
Financial results &
capital management
Financial performance
PROPERTY EARNINGS GROWTH HAS FACILITATED AFFO GROWTH OVER THE MEDIUM TERM
ACTUAL
HY2023
ACTUAL
HY2022
($)
CHANGE
(%)
CHANGE
Net property income72,068 5 7, 9 2 4 14 ,14 4 24.4%
Corporate expenses(2,034)(2,365)3 31 14.0%
Management fees(16,748)(14,223)(2,525)(17.8%)
Strategic transaction expenses0 (283)283 100.0%
Realised transaction gains / (losses)(14)4 75 (489)(102.9%)
Net finance expenses(17,384)( 13 , 713 )(3,671)(26.8%)
Operating profit before tax and other income35,888 2 7, 815 8,073 29.0%
Property revaluations and other income(53,857)169,610 (223,467) (131.8%)
Profit before income tax(17,969)197,425 (215,394) (109.1%)
Adjusted funds from operations (AFFO)3 7, 6 71 32,035 5,637 17.6%
Adjusted funds from operations (cpu)5.76 5.91 (0.15)(2.5%)
Distributions per unit (cpu) 4.88 4.75 0.00 2.6%
All values shown as $000s
Average NZD/AUD exchange rate in the period0.90740.9535
Contribution from structured
rent reviews, acquisitions
and development rents
Increase primarily due to rising base
rates and increased borrowings
$56m of revaluation losses
during HY23
1
1
Gain of $1m on Australian Portfolio. Loss of $57m on New Zealand Portfolio
Non-cash loss due to property
revaluations
Reduction due to equity being
raised ahead of full deployment
on income earning property
acquisitions and developments.
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
12
57.9
5.6
3.8
1.9(0.2)
0.7
2.47 2 .1
40
45
50
60
55
65
75
80
70
HY22Acquisitions
1
Development
Income
2
Rent Reviews &
Leasing Activity
Disposals
3
Amortisations
& Other
4
Foreign
exchange
HY23
Net property income
20.3% NPI GROWTH (EXCL. FX) DUE TO ACQUISITIONS, DEVELOPMENTS AND RENT REVIEWS
NET PROPERTY INCOME BRIDGE
($M)
Acquisitions – income from late FY22
and HY23 acquisitions
Development income – rentalisation
of capital expenditure and holding
income from strategic site acquisitions
Disposals – Strategic disposal of two non-
core strata consulting units in HY23 for ~A$1m
and sale of Gold Coast Surgery Centre for
~A$13m in FY22 (before selling costs)
Capex – remains modest due to
long term leases, minimal upcoming expiries,
young building age and
ability to capitalise or rentalise
upgrades as part of developments
1
Acquisitions of Lower Hutt Health Hub, Tennyson Centre, 68 St. Asaph St (Christchurch), Endoscopy Auckland, and Kawarau Park Health Hub
2
Incremental development income contributed from Wakefield, Royston, Grace, Bowen, Epworth Eastern & Playford Health Hub - Retail & Carpark
3
Disposals of non-core assets; two strata units in McCourt St, WA and Gold Coast Surgery Centre in FY22.
4
Amortisation, Non-recurring R&M & abatements
81% of Vital's leases (by income) are indexed to CPI in some way
+24.4% growth (incl FX) / +20.3% (excl. FX)
HY23 property income growth of +3.7%
(like-for-like, constant currency basis)
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
13
Balance sheet
STRENGTHENED BY NEW EQUITY AND DEBT EXTENSION
ACTUAL
HY23
ACTUAL
FY22
($)
CHANGE
(%)
CHANGE
Investment properties3,454,6753,339,169 115,506 3.5%
Other assets42,53060,665 (18,135)(29.9%)
Bank debt1,179,007 1,018,777 160,230 15 . 7 %
Other liabilities2 3 5 , 0 71 215 ,18 0 19,891 9.2%
Debt to gross assets
1
33.7%30.0% 12.5%
Unitholder funds2,083,126 2,165,876 (82,750)(3.8%)
Units on issue (000s)657,757 649,155 8,602 1.3%
Net tangible assets ($/unit)3 .17 3.34 (0.17)(5.1%)
All values shown as $000s
Period end NZD/AUD exchange rate0 . 9 3 110.9037
Increase due to:
Development and capital works
expenditure of ~$90m
2
Acquisitions totalling $156m
3
Unrealised revaluation loss of
($56m)
Disposals of ($1m) (after selling
costs)
F/X impact of ($74m)
Result of raising equity to fund
future developments, (unrealised)
negative exchange rate
movements and (unrealised) fall
in property valuations.
1
Calculated in accordance with Vital's Trust Deed
2
Includes ~NZ$83m of developments and ~NZ$3m of value-add capex
3
Includes acquisition of Kawarau Park Health Hub, Queenstown for NZ$95m (pre costs) which was agreed prior to 30 June, however settled in 1H FY23.
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
14
Debt duration
INCREASED WEIGHTED AVERAGE DEBT DURATION
Refinance progressing to
increase weighted average
debt duration at 4.2 years
(pro forma)
with no expiries
until March 2025
3
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
3
Subsequent to 31 December 2022, Vital has accepted credit approved offers from lenders to increase facility limits by A$100m and extend
the duration to 4.2 years, with no expiry until 2025. The credit approved offers are subject to customary terms associated with credit approved
offers, and documentation is progressing. Closing, subject to customary conditions, is scheduled to be finalised in March 2023
DEBT EXPIRY PROFILE – 31 DECEMBER 2022 (A$)
3
0
50
100
150
200
250
300
350
Dec-23Jun-24Dec-24Jun-25Dec-25Jun-26Dec-26Jun-27Dec-27Jun-28Dec-28Jun-29
VALUE ($M)
BANK FACILITIES31 DEC 2022
3
31 DEC 2021
Debt to gross assets (Trust Deed)
1
33.7%33.2%
Bank loan to value ratio – actual
2
35.5%35.0%
Bank loan to value ratio – covenant55.0%55.0%
Weighted average duration to expiry4.2 yrs3.3 yrs
Undrawn facility limit (A$)$229m
3
$150m
Near term debt committments to
be extended through to 2028
3
Credit terms approved to replace debt
Debt unchanged
Credit terms approved for new debt
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
15
Interest rate hedging profile
COST OF DEBT WELL HEDGED, MANAGING RISK
1
Drawn debt (excludes line fees on undrawn facility)
2
Pro forma
HEDGING MATURITY PROFILE ($A)
NOTE: Fixed rates exclude line fees and margin
0.00%
1.50%
1.00%
0.50%
2.00%
2.50%
3.00%
3.50%
4.00%
0
100
200
300
400
500
600
700
800
Dec-22
Jun-23
Dec-23
Jun-24
Dec-24
Jun-25
Dec-25
Jun-26
Dec-26
VALUE ($M)
Maturity dateAverage interest rate
RATES31 DEC 202231 DEC 2021
Weighted average cost of debt
1
4.57%3 .14 %
Weighted average fixed rate
(excl line and margin)
2
2.91%2.94%
Weighted average fixed rate
duration
2
2.9 yrs5.0 yrs
% of drawn debt fixed
2
67%45%
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
16
Portfolio
Portfolio overview
~$3.5BN INVESTED IN 47 CORE HEALTHCARE PROPERTIES WITH OVER 2,800 BEDS AND OVER 150+ UNIQUE TENANTS
WA
NT
SA
NSW
TAS
VIC
QLD
NZ
GEOGRAPHIC DIVERSIFICATION
(BY VALUE)
CPI aligned leases support income growth
5%
7%
12 %
24%
22%
26%
4%
Healthe Care Surgical 15%
Hall & Prior 3%
Evolution Healthcare 11%
Epworth Healthcare 15%
Norfolk Southern Cross Limited 4%
Bolton Clarke 3%
Sportsmed 3%
MercyAscot 3%
Ramsay Health Care 2%
Other 23%
Aurora Healthcare 18%
TENANT DIVERSIFICATION
% OF RENT
occupancy
98.4%
20.3% (excl. FX) growth in net property income; 3.7% growth for
same properties on a like-for-like and constant currency basis
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
18
Portfolio overview (cont'd)
~81% of Vital's rent is linked to
CPI of which 60% has a cap
with a weighted average
of 3.54%
AFFO lags CPI increases due
to: 1-CPI being a backward
measure for future rent; and
2-Vital's rent reviews are
weighted towards the second
half of the financial year
Turnover
(0.8%)
No Review
(2.9%)
Stepped / Structured
(3.2%)
Fixed <3%
(2.4%)
Fixed 3%+
(6.3%)
Market Review
(3.5%)
CPI
(62.1%)
CPI x 1.5+
(15.9%)
Lesser of CPI
and 3%
(2.9%)
Rent Review Breakdown
(80.9%)
Other Reviews
CPI Linked Reviews
(19.1%)
CPI Linked Reviews
BREAKDOWN OF PORTFOLIO
CPI REVIEWS
TYPE%
CPI - Un-Capped 35.6%
CPI - 2.5% Cap2.9%
CPI - 3% Cap6.4%
CPI - 3.5% Cap1.6%
CPI - 4% Cap29.0%
CPI - 5% Cap1.1 %
CPI + 1% - Un-Capped 0.0%
CPI x 1.5 - Un-Capped 0.8%
CPI x 1.5 - 2.5% Cap4.6%
CPI x 1.5 - 3% Cap12.2%
CPI x 1.75 - 5% Cap2.1%
Lesser of CPI and 3%3.6%
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
19
Disposals
DIVESTMENT STRATEGY UNDERWAY WITH A TARGETED ~NZ$200M OF PROCEEDS BY 30 SEPTEMBER 2023
Targeting ~NZ$200m
net proceeds by
30 September 2023
1 Australian
asset currently
held for sale
for ~NZ$31m
Funding to be used
for development
pipeline
11 Australian assets
with a total value of
~A$300m+ being
considered for sale
2 New Zealand assets
with a total value
of ~NZ$45m being
considered for sale
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
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20
Developments
Existing development
pipeline on track
Highly selective
about additional
opportunities to
be pursued
Focus on precincts
and green buildings
Ability to drive programs and
deliver timely outcomes
Early indications of softening
of procurement challenges
in major markets
Development strategy
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
22VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
22
NZ$180m
expected to be spent over
the next 12 months
(funded through existing debt
capacity & asset sales)
5.6%
weighted average
development yield
70bps
weighted average
development yield versus in use
or expected completion yield
NZ$369m
remaining to be spent
NZ$510m
committed developments
1
Committed development pipeline
1
Including $100m in fund-through developments
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
23
Developments completed or nearing completion
Abbotsford Private Hospital, WA
Asset TypeMental Health Hospital
Total CostA$18.7m
Net Project Yield6.1%
Completion DateStaged PC and COO achieved. Final completion
of refurbishment due April 2023
Description
New tower completed, comprising a 5 storey, 47 bed mental
health expansion, group therapy rooms, administration facilities
and additional car parking
Refurbishment works of existing hospital underway
Asset ValueA$64m
Belmont Private Hospital, QLD
Asset TypeMental Health Hospital
Total CostA$22.6m
Net Project Yield5.8%
Completion DateJanuary 2023
Description
48 new mental health bed expansion (net 35), 13 private
practice and 70 new car parks
Conversion of existing shared accommodation to single
70 additional carparks
Asset ValueA$160m
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
24
A$140m
~12,000 sqm
Early 2023
construction
commencement
total projected cost
1
RDX, Gold Coast, Queensland
VITAL'S FIRST LIFE SCIENCES INVESTMENT UNDER DEVELOPMENT
912 BEDS
320 BEDS
~20K STUDENTS
1
Includes land.
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
25
Future
focus
Ko ngā tahu ā ō tapuwae inanhi, hei tauira mō āpōpō.
The footsteps we lay down in our past create the
paving stones on which we stand today.
Outlook & guidance
CONTINUED DELIVERY AND FOCUS ON ADDING VALUE AND EARNINGS GROWTH
FY23 distribution guidance of
9.75 cpu 1.2% above FY22
Conservative ~85% payout ratio
retained
Adjusting to market conditions
including pausing acquisitions and
moderating development pipeline
>NZ$200m of asset sales
underway to part-fund
development pipeline
Maintenance of strategy through
the cycle
Unit Holders benefit from lower risk
nature of Vital's portfolio
Targeting maintaining weighted
average debt duration >4 years
Sustainability achievements
to be built on, including ongoing
submissions to both CDP and
GRESB
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
27
Appendices
Committed developments – Australia & New Zealand
DEVELOPMENTS ENHANCE EARNINGS GROWTH AND IMPROVE ASSET QUALITY
ALL VALUES SHOWN IN $MDESCRIPTION OF WORKSDEVELOPMENT
COST
SPEND
TO DATE
COST TO
COMPLETE
FORECAST
NET RETURN
FORECAST
COMPLETION DATE
STATUS
Australia
GCHPK - RDX (QLD)9 level Research and development centre of excellence
and 3 level 181 bay basement car parking.
13 3 . 63.2130.45.6%Mid-25Project commenced with building contract executed
Playford Health Hub Stage
2 (SA)
Specialist Medical Centre - Radiology, Oncology,
Radiotherapy & Consulting
39.312.526.87.3%
1
Early-24Basement works are well advanced with piles and capping beams completed,
access ramps removed, shotcrete walls and inground services commenced.
Abbotsford Private (WA)47 beds, parking, therapy rooms and admin18.617. 51.16.1%Early-23Stage 1 (new facility) has achieved staged completion and awaiting final
occupancy approval from WA accreditation authority. Stage 2 (refurbishment
of existing facility) commencing early 2023.
South Eastern Refurb (VIC)Conversion of Oncology to Dialysis Unit, kitchen
and rehabilitation room reimbursement
2.40 .12.34.9%Early-23Refurbishment & conversion works commenced Nov-22
Total Australian Developments A$193 .933.3160.66.0%
Total Australian Developments NZ$208.335.8172.5
New Zealand
Wakefield Stage 2 (WGN)Second stage of hospital rebuild delivering 8 operating
theatres, 42 beds, new Day Surgery Unit and
additional expansion capacity
91. 541. 849.65.6%Late-24Structure well advanced for 50% of the site and in ground slab pouring
commenced for the balance.
Ormiston Stage 1 (AKL)Stage 1 - 3 level expansion of existing hospital
and consulting
38.19.528.65 .1 %Mid-24Foundations and ground beams fully excavated with reinforcement placed and 40%
of the ground beams poured.
Grace Stage 1 (TRG)Fitout of two theatres, new endoscopy room, additional
10 beds and redevelopment of existing clinical areas
31 . 77. 224.65.3%Staged, Late-24Defect rectification of theatres complete and detailed design phase for the Western
extension and Oropi Day Surgery centre ongoing.
Endoscopy Auckland (AKL)4 dedicated endoscopy procedure rooms, 15 car
parks, reception/waiting areas
22.62.620.05 .1 %Mid-24Early contractor involvement ongoing with contractor established on site for early works.
Royston Stage 2 (HAS)Fitout of two theatres and reconfiguration of pre and
post operative clinical areas
8.97. 21. 75.3%Early-23Works to theatres nearing completion & final services being fitted off. Inward goods
expansion foundations completed and blockwork being laid.
Bowen OT5 (WGN)Fitout of one theatre, new sterile stores and expansion
of consulting suites
8.93.35.65.3%Late-23Stage 1 of the ward ensuite upgrade commenced and demolition completed.
Boulcott (LH)Two new theatres, PACU expansion and conversion of
double rooms to singles
TBC0.0TBCTBCTBC
2
Full pricing to be obtained from contractor prior to awarding contract. Revised
business case to be submitted once pricing is received.
Total New Zealand Developments NZ$201.771 . 7130.05.2%
Total Developments in NZ$
3
410 . 0107. 5302.55.6%
VITAL HEALTHCARE PROPERTY TRUST
|
INTERIM RESULTS 2023
|
29
Committed developments – Australia & New Zealand (cont'd)
DEVELOPMENTS ENHANCE EARNINGS GROWTH AND IMPROVE ASSET QUALITY
ALL VALUES SHOWN IN $MDESCRIPTION OF WORKSDEVELOPMENT
COST
SPEND
TO DATE
COST TO
COMPLETE
FORECAST
NET RETURN
FORECAST
COMPLETION DATE
STATUS
Australia
Campbelltown Stage 1 (NSW)Four storey comprehensive cancer centre with 2
bunkers, 10 medical oncology chairs, wellness centre
& 61 on grade car parks.
64.417. 746.74.3%Mid-24Ground floor blinding slab poured and reinforcement to bunkers installed.
Mt Eliza (VIC)Conversion of 60 bed Aged Care to 61 bed Mental
Health Facility including internal refurbishment and
external landscaping enhancements
28.513 . 315 . 24.8%Mid-23Early works to commence in Feb-23. Main works forecast to begin Mar-23
with 5 month construction duration.
Total Australian Fund-through Developments A$92.930.962.04.5%
Total Fund-through Developments in NZ$
4
99.833.266.5
Total Committed developments including fund-through developments in NZ$
5
509.7140.8369.0
1
Stabilised 3 year yield
2
Subject to review of final business case
3
Excluding Land
4
Fund-through developments including land & operator costs
5
A$ converted at 31 December 2022 spot rate 0.9311
VITAL HEALTHCARE PROPERTY TRUST
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INTERIM RESULTS 2023
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30
Adjusted funds from operations (AFFO)
CONSERVATIVE PAYOUT RATIO
HY2023HY2022($) CHANGE(%) CHANGE
Operating profit before tax and other income 35,888 2 7, 815 8,073 29.0%
Add/(deduct):
Current tax expense(7,916) (4,352) (3,564) (81.9%)
Incentive fee 7, 510 6,823 687 10.1%
Realised and unrealised fx on borrowings (net of tax) 73 (118) 191 (161.9%)
Amortisation of borrowing costs 809 555 254 45.8%
Amortisation of leasing costs & tenant inducements 1,529 1,238 292 23.6%
Strategic transaction expenses - 283 (283) (100.0%)
IFRS 16 operating lease accounting(84) (81) (3) (3.7%)
Funds from operations (FFO) 37,809 3 2 ,16 3 5,647 17.6%
Add/(deduct):
Actual repairs and maintenance from continuing operations(138) (128) (10) (7.9%)
Adjusted funds from operations (AFFO) 3 7, 6 71 32,035 5,637 17.6%
AFFO (cpu)5.76c5.91c(0.15c)(2.5%)
Distribution per unit (cpu)4.88c4.75c0.13c 2.6%
AFFO payout ratio85%80%
All values shown in NZ$000's
Units on issue (weighted average, 000s)653,798541, 878
VITAL HEALTHCARE PROPERTY TRUST
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INTERIM RESULTS 2023
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31
Net Tangible Assets
NTA PER UNIT BRIDGE (HY23)
REVALUATION LOSS HAS LED TO SMALL NTA DECLINE PER UNIT
($0.09)
($0.05)
($0.03)
$0.00
$0.01
$3.17
$2.40
$2.50
$2.60
$2.70
$2.80
$2.90
$3.00
$ 3 .10
$3.20
$3.30
$3.40
$3.34
Interest rate swapsProperty revaluationsCurrency translationRetained earningsNew units issued31-Dec-2230-Jun-22
NZ$56m or 1.7% reduction
from June 2022
VITAL HEALTHCARE PROPERTY TRUST
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INTERIM RESULTS 2023
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32
Movement in investment property
STRONG CPI LINKED HEALTHCARE PORTFOLIO OFFSETS CAP RATE SOFTENING
TOTAL PORTFOLIO VALUE BRIDGE (1H FY23)
KEY HY22 RESULTS
(NZ$ MILLIONS)
~55% of Vital’s portfolio
independently valued (by value) at
31 December 2022
Revaluation loss includes ~NZ$110m
from 16 basis points of Cap Rate
softening since 30 June 2022 and
other valuation adjustments. This
headline loss was partly offset by
~NZ$60m of revaluation gains from
rental increases, leasing activity and
development margins
1
$156m of acquisitions, including $95m for Kawarau Park Health Hub, Queenstown, and the balance for strategic / development sites.
All values shown in NZ$, pre costs
2
Includes development expenditure and capitalised interest costs
3
Book value
4
Period end NZD/AUD exchange rate moved from 0.9037 at 30 June 2022 to 0.9311 at 31 December 2022
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
3,339
2,391m
948m
2,441m
1,021m
156
90
(56)
(1)
(74)
3,455
31-Dec-22Acquisitions
1
Capital
additions
2
Property
revaluations
Disposals
3
Foreign
exchange
4
30-Jun-22
AUS Assets
NZ Assets
VITAL HEALTHCARE PROPERTY TRUST
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Real estate returns
HEALTHCARE REAL ESTATE CONTINUES TO PERFORM STRONGLY AGAINST CORE PROPERTY INVESTMENT SECTORS
Returns by real estate asset class in Australia versus Vital’s real estate
level returns (non-compounding) year ended 30 September 2022
Vital continues to
outperform Retail and
Office real estate asset
classes in Australia over the
proceeding 1 year, 3 year
and 5 year periods.
Source: MSCI & Vital, September 2022
Returns shown are on a nominal, unlevered “all asset” basis (inclusive of development and transaction activity). Vital's returns include Australian and New Zealand Portfolio
VITAL HEALTHCARE PROPERTY TRUST
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1 year3 year
OFFICERETAILINDUSTRIALVITAL
5 year1 year3 year5 year1 year3 year5 year1 year3 year5 year
7.9 %
23.5%
52.3%
6.8%
-0.9%
-20%
0%
20%
40%
60%
80%
100%
2.6%
14.7%
16.8%
61.0%
92.7%
13 .1 %
39.4%
6 7.1 %
Comparative returns
VITAL MAINTAINS LONG-TERM OUTPERFORMANCE VS BENCHMARK ON A TOTAL RETURN
1
BASIS
TOTAL RETURN
1
TO 31 DECEMBER 20221YR5YR (P.A.)10YR (P.A.)SINCE 2004 (P.A.)
2
Vital-26.0%3.5%10.4%10.9%
S&P/NZX All Real Estate Index-22.3%3.8%7.5%7.3%
S&P/NZX 50 Index-12.0%6.4%10.9%7.6%
Vital’s performance vs NZX REIT(3.7%)(0.3%)2.9%3.6%
Vital’s performance vs NZX50(14.0%)(2.9%)(0.5%)3.3%
S&P/NZX 50 Index
Vital
S&P/NZX All Real
Estate Index
0
100
200
300
400
500
600
700
800
900
1,000
Dec-04Dec-05Dec-06Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21
Outperformance against both the S&P/
NZX All Real Estate Index and S&P/NZX 50
Index since December 2004
Long-term outperformance highlights the
defensive nature of healthcare real estate
compared to other real estate classes
Source: Forsyth Barr
1
Total returns measured by change in unit price plus post-tax distributions to 31 December 2022
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
VHP VS S&P NZX REAL ESTATE INDEX
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PRIVATE HOSPITALS
17 hospitals (acute and specialty –
mental health, rehabilitation)
Four hospital operators
78% of AUS portfolio value;
79% of AUS rent
WALE: 18.4 years
6 assets, multiple tenants
16% of AUS portfolio value;
12% of AUS rent
WALE: 6.5 years
8 facilities (all in AUS )
2 operators
6% of AUS portfolio value;
9% of AUS rent
WALE: 13.5 years
AMBULATORY CARE
AGED CARE
~NZ$2.5bn Australian portfolio overview
GEOGRAPHICALLY DISPERSED AUSTRALIAN PORTFOLIO CONTINUES TO PERFORM WELL
SUBSECTOR DIVERSITY (BY VALUE)
44%
35%
15 %
6%
H
O
S
P
I
T
A
L
7
9
%
O
T
H
E
R
2
1
%
AMBULATORY
CARE
SPECIALTY
HOSPITAL
AGED CARE
ACUTE
HOSPITAL
16.6 years
WALE
VITAL HEALTHCARE PROPERTY TRUST
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~NZ$1.0bn New Zealand portfolio overview
KEY NEW ZEALAND MARKET PERFORMING STRONGLY
PRIVATE HOSPITALS
9 hospitals (all acute)
6 hospital operators
78% of NZ portfolio value;
79% of NZ rent
WALE: 20.7 years
7 assets, multiple tenants
22% of NZ portfolio value;
21% of NZ rent
WALE: 9.9 years
AMBULATORY CARE
18.5 years
WALE
SUBSECTOR DIVERSITY (BY VALUE)
78%
22%
H
O
S
P
I
T
A
L
7
8
%
O
T
H
E
R
2
2
%
AMBULATORY
CARE
ACUTE
HOSPITAL
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WESTERN
AUSTRALIA
NORTHERN
TERRITORY
SOUTH
AUSTRALIA
NEW SOUTH
WALES
TASMANIA
VICTORIA
QUEENSLAND
4
3
6
6
12
Investment properties
~NZ$3.5BN PORTFOLIO OF HEALTHCARE REAL ESTATE COMPRISING 47 INVESTMENT PROPERTIES AND 2,800+ BEDS
AS AT 31 DECEMBER 2022
Western Australia (4)
Abbotsford Private Hospital
Hamersley Aged Care
Marian Centre
Rockingham Aged Care
South Australia (3)
Playford Health Hub – Retail & Carpark
Sportsmed Hospital, Clinic, Consulting & Office
The Tennyson Centre
Queensland (6)
Baycrest Aged Care
Belmont Private Hospital
Eden Rehabilitation
Palm Beach Currumbin Clinic
Tantula Rise Aged Care
The Southport Private Hospital
New South Wales (12)
Clover Lea Aged Care
Darlington Aged Care
Fairfield Aged Care
Grafton Aged Care
Hirondelle Private Hospital
Hurstville Private Hospital
Lingard Day Centre
Lingard Private Hospital
Maitland Private Hospital
Mons Road Medical Clinic
The Hills Clinic
Toronto Private Hospital
Victoria (6)
120 Thames Street
Ekera Medical Centre
Epworth Eastern Hospital & Medical Centre
Epworth Camberwell
Epworth Rehabilitation Hospital
South Eastern Private Hospital
Auckland (6)
Apollo Health and Wellness Centre
Ascot Central
Ascot Carparks
Ascot Hospital & Clinics
Endoscopy Auckland
Ormiston Hospital
Wellington (4)
Boulcott Hospital
Bowen Hospital
Hutt Valley Health Hub
Wakefield Hospital
Northland (1)
Kensington Hospital
Bay of Plenty (1)
Grace Hospital
Christchurch (1)
Saint Asaph Street
Hawke's Bay (2)
Napier Health Centre
Royston Hospital
Queenstown (1)
Kawarau Park
Health Hub
2
14
Dec-23
0.0%
2.5%
5.0%
7.5%
10.0%
Dec-24Dec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32
Total expiry
Largest single rent expiring10 Year Average
2.0%
Lease expiry profile
LOW RISK EXPIRY PROFILE SUPPORTS SUSTAINABLE, PREDICTABLE AND DEFENSIVE CASH FLOWS
Total potential expiries
of NZ$4.5m or 3.0% of
annual rent through to
December 2023
CY23 EXPIRIES
—
10-year average annual lease expiry of only 2.0% (as % of total portfolio income)
2.0% of this has signed extensions
or heads of agreement
1.2% in the process of being
divested and the balance have
renewal discussions underway
1.5% proposed to be divested,
0.7% has renewal terms agreed or
being discussed
Ormiston Hospital, terms pre-
agreed for a 20 year extension on
completion of hospital expansion
Epworth Foundation - Brighton
- asset in the process of being
divested
Asset being considered for
divestment
1
3
5
2
4
6
46
3
5
2
1
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Rent reviews
HIGH PERCENTAGE OF TOTAL RENT IS REVIEWED ANNUALLY WITH STRUCTURED
1
REVIEW MECHANISMS
Rent reviews have been
completed for 56 leases
in FY23 to date
Structured reviews
represent 96%
1
of leases
by income as at 31
December 2022
Significant uplift via
market and CPI rent
reviews
1
Includes fixed percentage and CPI reviews
Rent reviews – HY23
(“LIKE-FOR-LIKE” EXCLUDES DEVELOPMENTS, ACQUISITIONS AND DISPOSALS)
#
Jun-22 Rent p.a.
(NZD)
Dec-22 Rent p.a.
(NZD)
Increase
(NZD)
Annualised Growth
(Stable currency)
AustraliaAUS2312,926,58813,463,9105 3 7, 3 2 24.2%
New ZealandNZ3333,126,54134,148,6161,022,0753 .1 %
Total5646,053,13047,612,5261,559,3963.4%
#
Jun-22 Rent p.a.
(NZD)
Dec-22 Rent p.a.
(NZD)
Increase
(NZD)
Annualised Growth
(Stable currency)
CPICPI2939,634,89140,945,8561,310,9653.3%
FixedFixed214,408,5434,522,951114,4082.6%
MarketMarket5956,851999,33642,4854.4%
TurnoverTurnover11,052,8441,144,38391,5398.7%
Total5646,053,13047,612,5261,559,3963.4%
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Core portfolio metrics
5 YEAR TRENDS HIGHLIGHT PORTFOLIO STRENGTH AND UNDERPIN LONG-TERM PERFORMANCE
OCCUPANCY
AVERAGE 10 YR LEASE EXPIRY
1
WALE
TOTAL INCOME SUBJECT TO
STRUCTURED RENT REVIEWS
>98%
Occupancy
Long-term track record of maintaining
High degree of confidence
that future expiries will be
renewed or replaced with new
tenants in advance of expiry
0%
1%
2%
3%
4%
5%
6%
1.8%
1.7%
1.3%
1.9%
2.0%
20182019202020212022
PERCENTAGE OF INCOME
0%
20%
40%
60%
80%
100%
85.8%
90.0%
94.0%94.0%
96.3%
20182019202020212022
PERCENTAGE OF INCOME
90%
92%
94%
96%
98%
100%
2018
99.4%
99.5%
99.1%
99.0%
98.4%
2019202020212022
11
13
15
17
19
2018
18.0
17.9
19.0
17.8
17.2
2019202020212022
1
Reflects the average % of total portfolio income that expires over the next 10 years
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VITAL IS A UNIT TRUST LISTED ON THE NZX, EXTERNALLY MANAGED BY A LEADING GLOBAL HEALTHCARE REAL ESTATE INVESTOR AND MANAGER
Vital’s structure
Vital Unit Holders
New Zealand’s largest specialist and
only listed owner of healthcare real estate
Vital’s Manager and largest Unit Holder
Management of Vital in accordance with the Trust Deed
Majority NZ based institutions and retail investors
~NZ$3.5 billion portfolio healthcare
real estate in AUS and NZ
~28%
~72%
~NZ$11bn7
assets under
management
number of
countries in which
Northwest operates
>250
healthcare
real estate
professionals
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Why invest in vital
VITAL IS THE ONLY SPECIALIST NZX-LISTED OWNER OF HEALTHCARE PROPERTY; NO ASX-LISTED EQUIVALENT
Private healthcare is typically
a non-discretionary or high
priority discretionary spend
Considered to be 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
Landlord of New Zealand
and Australia’s leading
private healthcare operators
~NZ$3.5bn portfolio
98.4% occupancy
WALE: 17.2 years
Average building age
1
:
11.1 years
Targeting 2–3% AFFO
and DPU growth with a
conservative payout ratio
96% of leases increase by
CPI or fixed %
Embedded earnings growth
enhanced by acquisitions
and developments
NZ$369m of remaining spend
on existing developments
to be funded from existing
debt facilities and asset sales
and ~$1.9bn+
2
of identified,
potential pipeline which can
be converted to committed
developments when market
conditions support them
Weighted average project
yield of 5.6%; provide value
creation and earnings growth
DEFENSIVE SECTORHIGH DEMANDHIGH QUALITY PORTFOLIOEARNINGS GROWTHDEVELOPMENT UPSIDE
Vital seeks to deliver stable and growing total Unit Holder returns, including an attractive
risk-adjusted income distribution, sourced from healthcare property
1
Average building age = the later of the date of construction or last significant capital works
2
Development timing and therefore spend expected to be over a staged and lengthy period (at least 10 years)
VITAL HEALTHCARE PROPERTY TRUST
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Glossary
AFFO
Adjusted Funds From Operations is an alternate measure used for assessing distributable income. Essentially adjusts net profit
after tax for all non-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.
NPI
Net Property Income.
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.
WALE
Weighted Average Lease term to Expiry. The weighted average lease term remaining to expire across a portfolio, sometimes
also referred to as WALT.
VITAL HEALTHCARE PROPERTY TRUST
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Disclaimer
This document has been prepared by NorthWest Healthcare Properties Management Limited (the Manager) as manager of the Vital
Healthcare Property Trust (the Trust). This document provides general information only and is not intended as investment, legal, tax, financial
product 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.
All references to $ are to New Zealand dollars unless otherwise indicated.
This document 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. Any
indications of, or guidance or outlook on, future earnings or financial position or performance and future distributions are also forward-
looking statements. 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 document or any information
supplied in connection with it. The Manager and the Trust are under no obligation to update this document or the information contained in it
after it has been released. Past performance is no indication of future performance.
The information in this document is of general background and does not purport to be complete. It should be read in conjunction with Vital’s
market announcements lodged with NZX, which are available at www.nzx.com/companies/VHP.
23 February 2023
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www.vhpt.co.nz
Thank you
RDX, Gold Coast, Australia
Artist's Impression
---
VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by Northwest Healthcare
Properties Management Limited
MARKET RELEASE
Results for announcement to the market
Name of issuer
Vital Healthcare Property Trust
Reporting Period
6 months to 31 December 2022
Previous Reporting Period6 months to 31 December 2021
Currency
NZD
Amount (000s)Percentage change
Revenue from continuing operations$72,068
24.42%
Total revenue$72,068
24.42%
Net profit/(loss) from continuing
operations-$30,974-118.20%
Total net profit/(loss)-$30,974-118.20%
Interim/Final Dividend
Amount per Quoted Equity Security$0.02437500
Imputed amount per Quoted Equity
Security$0.00497396
Record Date9 March 2023
Distribution Payment Date23 March 2023
Current periodPrior comparable period
Net tangible assets per Quoted
Equity Security
$3.17
$3.12
A brief explanation of any of the
figures above necessary to enable the
figures to be understood
Refer 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 MAP23/2/2023
Interim financial statements accompany this announcement
RESULTS ANNOUNCEMENT
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.