Managed Investment Scheme 2024 Annual Report

VITAL HEALTHCARE PROPERTY TRUST vhpt.co.nz
Managed by Northwest Healthcare
Properties Management Limited
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MARKET RELEASE
9 August 2024
Managed Investment Scheme 2024 Annual Report
On 8 August 2024 Vital Healthcare Property Trust (Vital) released to the NZX the 2024 Annual
Report. That report contained information which includes the Financial Statements of Vital and
other information consistent with Vital's status as an NZX Listed Issuer.
Vital is a managed investment scheme for the purposes of the Financial Markets Conduct Act 2013
(FMCA). As a managed investment scheme Vital is required to produce an annual report in a
format consistent with the FMCA and in accordance with Listing Rule 3.12.1.
An electronic copy of the FMCA compliant annual report has been registered on the New Zealand
Companies Office - Disclose Register and is provided to the NZX as an attachment to this
announcement.
– ENDS –
ENQUIRIES
Aaron Hockly
Fund Manager, Vital Healthcare Property Trust
Tel 09 973 7301, Email aaron.hockly@nwhreit.com
Michael Groth
Chief Financial Officer, Northwest Healthcare Properties Management Limited
Tel +61 409 936 104, Email michael.groth@nwhreit.com
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 (~80%* of portfolio value), ambulatory care facilities (~20%*
of portfolio value) and aged care (~0%* 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 30 June 2024

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VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 1 of 10
















DETAILS OF THE SCHEME

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

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

The offer of interests in the Scheme was originally made under the Unit Trust Act 1960.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

Vital’s latest financial statements and the auditor’s report for those statements were lodged
with the Disclose Register on 8 August 2024.

DESCRIPTION OF THE SCHEME

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

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

From time to time, Vital may invest at earlier stages of the development process, including
undertaking the design, refurbishment or development of healthcare properties for particular
health service operators or entities engaged in health related activities. Vital seeks to earn
investment income from the real estate it owns and leases (including by providing ancillary
activities such as car parking) to health related tenants who operate the facilities.

INFORMATION ON COMPOSITION OF THE SCHEME

This Annual Report covers the accounting period from 1 July 2023 to 30 June 2024. The
number of managed investment products, being units in the Scheme (Units) on issue at






FMCA Compliance
Annual Report 2024

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 2 of 10

the start of the accounting period was 661,013,614. The number of Units on issue at the end of
the accounting period was 671,923,373.

CHANGES RELATING TO THE SCHEME

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

TRUST DEED

Clause 32 of the Trust Deed provides that the Trust Deed may be varied by a deed executed
by the Supervisor and the Manager if the amendment is authorised pursuant to section 139 of
the FMCA.

On 25 June 2024 the Supervisor and the Manager entered into a Deed of Amendment of the
Trust Deed and the Supervisor, for the purposes of section 139(2)(a)(ii) of the FMCA, certified
that the amendment and restatement of the Trust Deed did not have a material adverse
effect on the Unit Holders and that the amended and restated Trust Deed would comply
with the requirements of the FMCA on the basis set out in the certificate.

A summary of the key variations to the Trust Deed is set out below
1
:

Variation Explanatory Note
Notices (clauses 34.1,
34.2 and 34.4)
In line with sustainability efforts, changes have been
made to allow all materials to be sent to Unit Holders
electronically, rather than by post. The general rule will be
that annual and interim reports will be sent to Unit Holders
electronically. Other materials can be sent electronically
or by post.
In any case, a Unit Holder can elect to receive all materials
by post at any time by notifying the Manager.
1
Capitalised words used, but not otherwise defined in the table have the meanings given to them in the Trust Deed. The summary is
of key variations (not all variations) and is not intended to replace a detailed review of the amended Trust Deed.

There have been no further amendments to the Trust Deed made during the current
accounting period.
A copy of the current version of the Trust Deed is available on Vital’s website www.vhpt.co.nz

under the section About/Governance. It is also available on the Disclose Register accessible
on the Companies Office website at (
https://disclose-
register.companiesoffice.govt.nz/disclose).

TERMS OF THE OFFER OF UNITS

Vital continues to be a closed ended fund and does not continuously offer units for
subscription. Vital offers units for subscription from time to time to raise equity capital. During
the period 1 July 2023 to 30 June 2024, the following offer was made:

 an active dividend reinvestment plan, the terms of which remained unchanged
during the current accounting period.

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 3 of 10

STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES (SIPO)

The SIPO was lodged on the Disclose Register on 9 August 2018 and amended and lodged
on 6 December 2021, 9 November 2023 and 15 March 2024. The amendments to the SIPO
lodged on 15 March 2024 were to ensure that strategies potentially to be used by Vital for
capital partnering initiatives were referenced a nd to ensure that as broad as possible
potential healthcare asset classes were also reflected.

A copy of the current SIPO is available on Vital’s website www.vhpt.co.nz under the section
About/Governance.
RELATED PARTY TRANSACTIONS
During the period 1 July 2023 to 30 June 2024 there were no changes to the nature and scale
of related party transactions.

There were no related party transactions that were not on arm’s-length terms.
Further details of the related party fees paid by Vital to the Manager and its related parties
can be found in note 22 of Vital’s financial statements which have been lodged with the
Registrar.

VALUATION AND PRICING METHODOLOGIES

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

FINANCIAL CONDITION AND PERFORMANCE OF THE SCHEME

Vital’s high-quality ~$3.2 billion property portfolio has continued to be revitalised through
~$251m in divestment of non-core and lower quartile assets and the reinvestment of sales
proceeds into new developments.
Vital’s weighted average lease expiry (WALE) was 18.3 years at 30 June 2024 compared to
17.8 years at 30 June 2023.
The average building age has been lowered to 9.5 years
consistent with the Manager’s strategy to maintain or lower this key metric as a means of
maintaining relatively low capital maintenance expenditure and ensuring Vital’s assets
continue to meet tenant / patient demand.
Net property income increased by 3.7% over FY24 (on a same property, constant currency
basis), reflecting contributions from the structured rent reviews within the portfolio and
developments.
Cash from operations available to Unit Holders, measured by adjusted funds from operations
(AFFO) decreased 0.6% to $72.9m. AFFO per unit was 10.90cpu; a 2.5% decrease from FY23,
reflecting a higher interest rate environment offset by increased net operating income (NOI)
and lower current tax expense.
Expenses were $70.6m, 6.8% lower than FY23 reflecting higher borrowings costs and higher
property related taxes in both Australia and New Zealand offset by lower management fees.
Vital’s NTA per unit decreased by 9.1% to $2.69 primarily due to $165.2m of property
revaluation losses driven by market forces. The revaluation losses recognised were largely

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 4 of 10

attributable to +27bps portfolio capitalisation rate softening, partially offset by development
margin gains, rental growth and leasing.
Vital had a weighted average debt maturity of 3.5 years at 30 June 2024, and management
continues to investigate measures to extend Vital’s debt tenor. Vital’s all-in weighted
average cost of debt was 5.15% at 30 June 2024 (30 June 2023: 4.93%) reflecting a debt cost
environment that remains challenging.
$9.2m (before costs) of equity was raised via the Distribution Reinvestment Plan (DRP) offered
to Unit Holders. The debt to total assets or balance sheet gearing ratio was 39.1% at 30 June
2024 (30 June 2023: 36.3%). Vital currently has approximately A$144m (~$158m) of headroom
under its debt facilities which is more than enough to fund the balance of Vital’s committed
development pipeline.
FY24 Highlights
 Vital was acknowledged as Sector Leader (the highest possible achievement) by
GRESB for ESG in healthcare for listed entities globally across performance,
management, and developments.
 A 3.7% increase in underlying net property income (NPI) primarily reflecting the impact
of development income and rent reviews.
 10.90 cpu in AFFO.
 Maintenance of distributions at 9.75 cpu (consistent with guidance) on a prudent 89%
AFFO pay-out ratio.
 Practical completion was reached at five developments:
 A$57.4m fund-through development of Macarthur Health Precinct (Stage 1),
Campbelltown, Sydney in February 2024. This development comprises ~2,700 square
metres of net lettable area, is 100% leased to GenesisCare and is on track to achieve
a 6 Star Green Star rating (as built).
 A$28.5m fund-through conversion of a former aged care facility into Avive Clinic,
Mornington Peninsula in December 2023. This 60-bed mental health facility is fully
leased to Avive Health.
 A$43.4m (excl land) Playford Health Hub (Stage 2), Adelaide in May 2024. This
development comprises ~6,400 square metres of net lettable area, is ~67% leased and
is on track to achieve a 6 Star Green Star rating (as built).
 $38.1m (excl land) expansion of Ormiston Hospital (Stage 1), Auckland in June 2024 to
double the size of this Southern Cross majority occupied hospital to ~9,000 square
metres of net lettable area. The property is ~94% leased.
 $5.3m expansion of Bowen Hospital, Wellington in November 2023. This development
included an operating theatre fit out and ward refurbishment. The property is fully
leased to Evolution Healthcare.

As at 30 June 2024 Vital had net assets of $1,805.1 million (2023: $1,957.4 million), comprising
total current assets of $59.4 million (2023: $115.3 million), total non-current assets of $3,245.4
million (2023: $3,314.4 million) and total liabilities of $1,499.6 million (2023: $1,472.3 million).

Total comprehensive income for the 12-month period to 30 June 2024 was (loss $101.5 million)
(2023: loss $172.8 million), and total Unit Holder distributions paid were $66.4 million (2023:

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 5 of 10

$64.8 million), representing 9.75 cents per Unit (2023: 9.75 cents per Unit).

You can find a copy of Vital’s financial statements, including information on distributions
made by the Scheme on the Disclose Register at: https://disclose-

register.companiesoffice.govt.nz/disclose Scheme number SCH11214. Further information on
the financial results is provided in Vital’s Annual Report at: www.vhpt.co.nz.

FEES

The following fees and expenses were charged in respect of the Scheme in dollars and as a
percentage of the Scheme’s property for the 12-month period to 30 June 2024.



2024
$000s
Percentage
of Scheme’s
Property
1

Total fees and expenses incurred

Management fees
18,084 0.55%
Manager’s incentive fee
6,600 0.20%
Leasing / Licensing fees
247 0.01%
Property management fees
2,299 0.07%
Disposal fees
789 0.02%
AFSL fee
1,341 0.04%

29,360 0.89%

Service fees capitalised


Acquisition fees
(180) (0.01%)
Leasing / Licensing fees
2,544 0.08%
Project management fees
55 0.00%
Development management fees
3,745 0.11%
Total fees charged by the Manager and associated persons
35,524 1.07%


Auditor’s remuneration
219 0.01%
Supervisor’s fees
569 0.02%
Other operating income/expenses
5,008 0.15%
Total fees & expenses
5,796 0.18%
1: Totals may not add due to rounding

MANAGER’S FEES
Remuneration of the Manager

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

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 6 of 10

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

The Incentive Fee is determined as 10% of the average annual increase in Vital’s Net
Tangible Assets (NTA) (being a defined term in 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 (being a defined term in the Trust Deed), 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:
a) Leases or licences

Vital pays the Manager leasing or licence fees where the Manager has negotiated
leases or licences instead of, or alongside, a real estate agent. These fees are
charged at 11% of the aggregate annual rental for terms less than 3 years, 12% of the
aggregate annual rental for terms of 3 years, and 12% plus an additional 1% for each
full year (pro-rata for part years) for terms greater than three years (to a maximum of
20%), subject to a minimum fee of $2,500.

Lease or licence renewals are charged at 50% of a new lease or licence fee.

b) Property management

Vital pays the Manager property management fees where the Manager acts as the
property manager instead of, or alongside, a real estate agent. These fees are
charged at 1%-2% of gross income depending on the number of tenants at the
property and may be recovered from tenants if permitted under lease agreements.

c) Facilities management

Vital pays the Manager a facilities management fee where the Manager acts as the
property facilities manager. These fees are charged at market rates and may be
recovered from tenants if permitted under lease agreements.

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 7 of 10

d) Project management
Vital pays project management fees to the Manager for managing capital
expenditure projects where the purpose of the project is to upgrade, repair or
otherwise extend the life of the property, including via the replacement or repair of
major plant and equipment, structural items and building envelope. Project
management fees for projects with a budget of between $0.2m and $2.5m are 2% of
the committed spend where the Manager is the project lead and 1% of committed
spend where the Manager has an oversight role, increasing to 4% and 2% respectively
for projects with a budget greater than $2.5m.

Additional Costs
The Additional Costs structure is as follows:
a) Acquisitions
Vital pays fees to the Manager for managing the due diligence, financing, legal
aspects and settlement of the purchase of an investment or property instead of, or
alongside, a real estate agent. These fees are charged at 1.5% of the purchase price
and related capitalised acquisition costs.

b) Disposals
Vital pays fees to the Manager for managing the due diligence, legal aspects and
settlement of the sale of an investment or property instead of, or alongside, a real
estate agent. These fees are charged at 1% of the contracted sale price of the
relevant investment or property actually received, provided that, if a real estate
agent has been engaged to provide services for the disposal, then the fee payable to
the Manager will be net of the third party agent’s costs and commissions.

c) Development Management
Vital pays fees where the Manager acts as a development manager on Vital
developments. These fees are charged at 4% of the committed spend (excluding
land) approved by the Board of the Manager provided that, if a third party agent has
been engaged to provide development management services, the fee payable to
the Manager will be reduced by the non-rentalisable third party costs paid.

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

Any changes to fees and expenses charged by any person in respect of the Scheme during
the accounting period require the approval of the Supervisor (or in certain circumstances,
Unit Holders) and would be advised to Unit Holders via the NZX.
For more information in respect to the Fees, please refer to Vital’s financial statements,
on the Disclose register at https://disclose-register.companiesoffice.govt.nz/disclose
,
scheme number SCH11214.

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 8 of 10

SCHEME PROPERTY

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


2024
$000s
2023
$000s

Non-current assets

Investment Properties
3,213,689 3,288,356
Derivative financial instruments
17,720 26,047
Other non-current assets
13,980 -
Total non-current assets
3,245,389 3,314,403


Current assets
Non-current assets classified as held for sale
26,284 92,364
Cash and cash equivalents
18,934 10,885
Trade and other receivables
10,081 5,783
Other current assets
3,888 5,763
Derivative financial instruments
183 514
Total current assets
59,370 115,309
Total assets
3,304,759 3,429,712

CHANGES TO PERSONS INVOLVED IN THE SCHEME
Effective 9 August 2023 Paul Dalla Lana was replaced by Michael Brady as director of the
Manager. On 9 November 2023 Dr Michael Stanford was re-elected as director of the
Manager. There have been no other changes to the Manager involved in the Scheme
during the accounting period.

The following changes to the Supervisor involved in the Scheme during the accounting
period have occurred:

 The following director ceased to be a director of the Supervisor during the
accounting period:

 Richard KLIPIN - Ceased date: 31 March 2024
There have been no changes to the Registrar or the auditors involved in the Scheme during
the accounting period.

HOW TO FIND FURTHER INFORMATION

Copies of documents relating to the Scheme, such as the Trust Deed, SIPO and the annual
financial statements are available on the Disclose Register at https://disclose-

register.companiesoffice.govt.nz/disclose, scheme number SCH11214, on Vital’s website
www.vhpt.co.nz or on request from the Manager.

You have the right, free of charge and during normal office hours, to inspect that part of the
Unit Register that relates to your Units on giving written notice to the Manager in accordance
with the Financial Markets Conduction Regulations 2014.

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 9 of 10

You also have the right, free of charge, on giving written notice and during normal office
hours, to inspect a copy of the Trust Deed, SIPO and annual financial statements at the
Manager’s registered office, which is located at: HSBC Tower, Level 17, 188 Quay Street,
Auckland Central. Alternatively, you can obtain a copy free of charge by writing to us at: PO
Box 6945, Victoria Street West, Auckland 1142.
CONTACT DETAILS AND COMPLAINTS
Manager
Northwest Healthcare Properties Management
Limited PO Box 6945, Victoria Street West, Auckland
1142
Attn: Company Secretary
Telephone: 0800 225 265
Email: enquiry@vhpt.co.nz
Website: www.vhpt.co.nz

Trustee and Supervisor
Trustees Executors Limited
Level 9, Spark Central,
42-52 Willis Street,
Wellington, 6011,
New Zealand
Telephone: +64 9 308 7100

Making Complaints:
Write to us:
Trustees Executors Complaint Register
PO Box 4197
Auckland 1140
New Zealand
Email: complaints@trustees.co.nz
Phone: +64 9 308 7100
Attention: Client Manager – Trustees Corporate Supervision

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

VITAL HEALTHCARE PROPERTY TRUST
Managed by Northwest Healthcare
Properties Management Limited
vhpt.co.nz
Page 10 of 10

Complaints
Complaints may be made to the Manager or the Supervisor at the contact details
above. In addition, as a financial service provider registered under the Financial
Service Providers (Registration and Dispute Resolution) Act 2008, the Manager is a
member of an approved dispute resolution scheme (registration number FSP33302) to
which complaints may be made.

Insurance & Financial Services Ombudsman Scheme Inc.
Level 2, Solnet House 70 The Terrace
Wellington 6011
Telephone: +64 4 499 7612 or 0800 888 202 Email: info@ifso.nz
There will be no fee charged to any complainant in connection with investigation or
resolution of a complaint.