q3 2019 investor update - nwhreit.com 2019 - investor present… · this presentation provides a...
TRANSCRIPT
Q3 2019 INVESTOR UPDATE
November 18, 2019
1
DISCLAIMER
This presentation provides a summary description of Northwest Healthcare Properties Real Estate Investment Trust (“NWH” or the “REIT”). This presentation should be read in conjunction with and is qualified in its entirety by reference to the REIT’s most recently filed financial statements, management’s discussion and analysis, management information circular (the “Circular”) and annual information form (the “AIF”).
This presentation contains forward-looking statements. These statements generally can be identified by the use of words such as “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”, “strive”, “will”, “may”, “would”, “might”, “potential”, “should”, “stabilized”, “contracted”, “guidance”, “normalized”, or “run rate” or variations of such words and phrases. Examples of such statements in this presentation may include statements concerning: (i) the REIT’s financial position and future performance, including, normalized financial results, in-place and contracted run rates, payout ratios and other metrics; (ii) the REIT’s property portfolio, cash flow and growth prospects, (iii) liquidity, leverage ratios, future refinancings, fees earned by the asset manager to Vital Trust, anticipated capital expenditures, future general and administrative expenses, including estimated synergies and contracted acquisition and development opportunities, and (iv) the REIT’s intention and ability to distribute available cash to security holders.
Such forward-looking information reflects current beliefs of the REIT and is based on information currently available to the REIT. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of the REIT. Forward-looking information involves significant risks and uncertainties should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not, or the times at which, or by which, such performance or results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this presentation are based on numerous assumptions which may prove incorrect and which could cause actual results or events to differ materially from the forward-looking statements. Although these forward-looking statements are based upon what the REIT believes are reasonable assumptions, the REIT cannot assure investors that actual results will be consistent with this forward-looking information. Such assumptions include, but are not limited to, the assumptions set forth in this presentation, as well as assumptions relating to (i) the REIT successfully realizing the operational and financial benefits described herein, including the realization of synergies, completion of anticipated acquisition and development opportunities, and generation of cash flow; and (ii) general economic and market factors, including exchange rates, local real estate conditions, interest rates and the availability of equity and debt financing to the REIT. These forward-looking statements may be affected by risks and uncertainties in the business of the REIT and market conditions, including that the assumptions upon which the forward-looking statements in this presentation may be incorrect in whole or in part, as well as risks related to increases or decreases in the prices of real estate; currency risk; project development, expansion targets and operational delays; marketability; additional funding requirements; governmental regulations, licenses and permits; environmental regulation and liability; competition; uninsured risks; contingent liabilities and guarantees, including the outcome of pending litigation; litigation; health and safety; trustees’ and officers’ conflicts of interest; the ability of the REIT to integrate the operations of NWI; the ability of the REIT to continue to develop and grow; and management of the REIT’s success in anticipating and managing the foregoing factors, as well as the risks described in the Circular and the AIF. The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect forward-looking statements. Other risks and uncertainties not presently known to the REIT or that the REIT presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional information on these and other factors that could affect the operations or financial results of the REIT are included in reports filed by the REIT with applicable securities regulatory authorities.
These forward-looking statements, which reflect the REIT’s expectations only as of the date of this presentation. The REIT disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Certain information concerning Vital Trust contained in this presentation has been taken from, or is based upon, publicly available documents and records on file with regulatory bodies. Although the REIT has no knowledge that would indicate that any of such information is untrue or incomplete, the REIT was not involved in the preparation of any such publicly available documents and neither the REIT, nor any of their officers or trustees, assumes any responsibility for the accuracy or completeness of such information or the failure by Vital Trust to disclose events which may have occurred or may affect the completeness or accuracy of such information but which are unknown to the REIT.
Funds from operations (“FFO”), adjusted funds from operations (“AFFO”), net operating income (“NOI”) and net asset value (“NAV”) are not measures recognized under International Financial Reporting Standards (“IFRS”) and do not have standardized meanings prescribed by IFRS. FFO, AFFO, NOI, and NAV are supplemental measures of a real estate investment trust’s performance and the REIT believes that FFO, AFFO, NOI, and NAV are relevant measures of its ability to earn and distribute cash returns to unitholders. The IFRS measurement most directly comparable to FFO, AFFO and NOI is net income. The IFRS measurement most directly comparable to NAV is net equity. A reconciliation of NAV, NOI, FFO, AFFO and Normalized AFFO to net income is presented in the REIT’s management’s discussion and analysis of financial condition and results of operations of the REIT for the period ended September 30, 2019, as filed on SEDAR.
22
GLOBAL HEALTHCARE TRENDS
3
GLOBAL HEALTHCARE MARKET
4
TRENDS DRIVING GLOBAL HEALTHCARE
1. Population growth
2. Aging population
3. Increase in obesity, addictions
4. Growing middle class in emerging markets
5. Increase in urban migration
1. Consolidation
2. Rise in health awareness and spending
3. Higher quality / value care
4. Shortage of qualified healthcare professionals
5. Changing funding models
1. Emergence of new treatments
2. Rise and new approaches for chronic diseases
3. Early prevention and detection
4. Increasing digitalization of the hospital
5. Emergence of remote medicine
Aging Population
$332B
Consolidation
Global healthcare M&A deals in 2017
623deals in the US
alone
$2M
Emergence of New Treatments
Surgical robot cost (per robot)
↑5.2%Same-day hospitalizations
(vs ↑ 2.6% overnight)
5
HEALTHCARE REAL ESTATE - CURE VS CARE
CURE CARE
GLOBAL Healthcare Real Estate is estimated to be >$3T in value.
NORTHWEST focuses on the CURE segment of Healthcare Real Estate.
NWH FOCUS
Life SciencesHospital Outpatient MOB
Higher Acuity Lower Acuity
Skilled Nursing/Aged
Care
Assisted Living
Independent Living
Post-acute Rehab
6
HEALTHCARE TRENDS IMPACT ON HEALTHCARE REAL ESTATE
HEALTHCARE TRENDS are driving positive effects in HEALTHCARE REAL ESTATE.
77
NWH PLATFORM
8
NORTHWEST OVERVIEW
9
CASH FLOW STABILITY
DIFFERENTIATED STRATEGY
Management Expertise
Deep Relationships
Aligned leadership with a team of healthcare real estate experts
Leading operator relationships
97%+ Occupancy
72%+ Indexed
International portfolio occupancy of 98%+
Contracted organic growth
13.7 year WALECash flow stability
Accretive high quality portfolio
EXPERIENCED AND ALIGNED MANAGEMENT TEAM
Healthcare Real Estate Specialists
Pure play healthcare real estate and infrastructure
EMBEDDED GROWTH
$402MnDevelopment Pipeline
$6.2Bn+ Platform
28% CAGR from 2015-2019
$1.6Bn Un-deployed Capital
$3.6Bn of 3rd Party Fee Bearing Capital
JV Partnership and Vital Trust Investment
SCALED
Target $10 Bn total commitments
200+ Professionals
Operating in the largest global private healthcare markets
10
BUSINESS MODEL
SPNOI (Levered)+5.8%
Development Accretion+0.4%
Asset Management+3.0%
Financial Optimization
+3.5%
+19% Total Return+15% Recurring
▪ WALE: 13.7 Years / Occupancy: 97.1%
▪ Inflation Indexed Leases: 72%
▪ Committed Fee Bearing Capital: $3.6 Bn
▪ Target Capital Commitments: $10 Bn
▪ Committed Developments: $402M
▪ Development Yield: 100bps spread
▪ Accretive Debt Optimization: $600M
▪ Portfolio Management & Capital Recycling: $400M
+13% Annualized Return
+6% Distribution Yield
11
AVENUES FOR FUTURE GROWTH
1212
QUARTERLY HIGHLIGHTS
13
Capital Deployed Debt Repayment
HIGHLIGHTS OF THE QUARTER
Normalized AFFO/Unit
SPNOI Growth: CAD/Source
Occupancy0.92 2.0%/3.6% +97.1%
Equity Financing
$53M $120M
$173M
RE-FINANCINGS:▪ Brazil: New $190M facility (3.88%) was used to repay $112M facility
(7.84%)▪ ANZ: New $110M facility (4.3%) used to repay $96M facility (6.9%)▪ Europe: $82M Refinancing of 7 German MOBs at 1.4% (1.7%)▪ New $218M RCF at 3.5% (3.8%)
Investment Activity Financing Activity
3357
133
0
40
80
120
160
Europe Canada Post Quarter- End
ACQUISITIONS ($M)
6.1% Cap Rate
5.5% Cap Rate
~5.7% Cap rate
DEVELOPMENTS AND JOINT VENTURE ACTIVITIES:▪ Agreement reached to increase the size of the Australian Joint
Venture by $1.6 B to $3.1 B▪ $402M of committed developments including $360M under
construction▪ Anticipated development project yields average ~6.4%
Executing on Strategic Investment Priorities
Stable and Improving Operating Results
14
As Reported Target
$0.88/unit
45.4% / 52.8%
$11.84/unit
+$1.00/unit
+$13.00/unit
AFFO/unit (5)
LTV (6)
NAV (7)
Normalized
$0.92/unit
~$12.06/unit
Portfolio Quality
Occupancy / WALE
45.4% / 52.8% <40% / <50%
97.1%13.7 years
QUARTERLY DASHBOARD
97.1%13.7 years
97.1%13.7 years
15
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER
TARGET $10BN OF GLOBAL
CAPITAL COMMITMENTS
INCLUDING $3BN IN THE
NEAR TERM DRIVING
SIGNIFICANT VALUE
CREATION IN THE REIT’S
GLOBAL ASSET MANAGER
AUM ($B)
Stabilized Fees ($M)
$3.1
$30
$1.9
$10
$5.0
$40
$5.0
$35
$10.0
$75
Status
Target AUM ($B)
Available Capacity
($B)NWH
Ownership TermStabilized Fees ($M)
Australian Core Hospital JV
Active $3.4 $1.6 30% Perpetuity $20
Vital Active $1.6 Open 25% Perpetuity $20
Australian JVSidecar
Committed $1.8 $1.8 25% - 30% Perpetuity $10
Americas & Europe
UnderNegotiation
$3.2 $3.2 25% - 30% Perpetuity $25
Target $10.0 $6.6 $75
Active
Under Negotiation
$400M
$720M$130M
$320M
$270M
$0
$200
$400
$600
$800
Q2-19 Valuation Recent Developments Q3-19 Valuation Under Negotiation Target
16
$0.92
($0.10)$0.09
$0.05
$0.88
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
Q3-19 Reported AFFO/Unit Debt Repayment/Refinancing Acquisitions Non-Recurring Items Q3-19 Normalized AFFO/Unit
FINANCIAL HIGHLIGHTS - PROFITABILITY
Key Metrics (Reported)
$69.8M NOI $ 26.5M FFO $31.3M AFFO
150.230M Units
$0.88 AFFO/Unit Annualized
87% Payout Ratio
AFFO Normalization
AFFO/Unit and Payout Ratio
0.88 0.88 0.90 0.92 0.92
90% 91%
88%87% 87%
80%
100%
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Normalized AFFO per Unit AFFO Payout Ratio
$223M of contracted/completed acquisitions at a 6% cap rate
~$600M of high cost debt repaid or refinanced with annual interest savings of
$13M
Relates to an income pick-up as a result of a non-recurring annual tax
adjustment
17
FINANCIAL HIGHLIGHTS - CAPITALIZATION
ANZ Manager valuation increased as a result of the $1.6B ANZ joint venture upsize
Quarterly NAV / Unit Bridge
The Canadian dollar appreciated by ~4% QoQ vs. the weighted basket of the REIT’s foreign currency exposure
Leverage trending lower Net Asset Value
1,342 1,492
1,573 1,591
1,779
11.09
12.30
11.65 11.76 11.84
8
10
12
14
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
0
400
800
1,200
1,600
2,000
NAV/UnitNAV ($,000)
18
LTV (11) ~50% ~25% ~60% ~45% to 65%
Market Interest Rates (12)
~3.5% ~4.0% ~2.0% ~3.0%
Typical Amortization
25 years 12 years 50 years Interest Only
IMPACT OF RECENT FINANCING ACTIVITY
BALANCE SHEET OPTIMIZATION AND REGIONAL DEBT STRATEGY
DEBT MATURITY PROFILE (9) REGIONAL DEBT STRATEGIES~$203M RCF refinanced post
quarter with a 3 year maturity
Cost of capital Source of Funds
($8.8M)
Incremental earnings Use of
Funds
AFFO impact
$11.4M
EARNINGS IMPACT
AFFO impact+$0.02/un
+$2.6M
LEVERAGE IMPACT
Gross Asset Value
+$54.9M to $5,256M
Net debt +$28.4M to $2,776M
Debt to GBV Flat at 52.8%
19
96.3%96.7% 96.8%
97.2% 97.1%
12.5 12.6
13.0
14.013.7
11.5
12.0
12.5
13.0
13.5
14.0
14.5
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
90.0%
92.0%
94.0%
96.0%
98.0%
Occupancy +1.2 yrs YoY
OPERATING METRICS
PORTFOLIO QUALITY
SP NOI INDEXATION
72.5% 71.9% 72.4% 72.8% 72.2%
95.2% 94.9% 95.3% 95.1% 95.1%
0%
20%
40%
60%
80%
100%
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
% indexation Consolidated % indexation International
BROWNFIELD DEVELOPMENTS
WALE
266.4
344.3312.9
413.5 401.8
6.0%
6.2%
6.4%
6.6%
6.8%
0
100
200
300
400
500
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
Spent to Date Cost to Complete
-2.6%
0.4%
-0.9% -0.7%
2.0%
3.1% 3.2%
2.5%1.8%
3.6%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
% in C$ % in source $SP NOI Growth YoY
20
OVER A 10 YEAR PERIOD,
FOREIGN EXCHANGE
INDEX HAS REMAINED
IN-LINE WITH ITS BASE
VALUE
RENTAL INDEXATION
ACTS AS NATURAL
CURRENCY HEDGE
LOCAL CURRENCY
PROPERTY / CORPORATE
DEBT TO REDUCE
INVESTMENT RISK
RISK MANAGEMENT – FOREIGN EXCHANGE
LTM Currency Impact
(4.8%)
($0.04) AFFO/Unit
($0.56) NAV/Unit
NOI Var. %
Weight QoQ YoY 6-Nov-19 Var. %
BRL:CAD 17.0% -6.4% -0.1% 0.3228 1.4%
EUR:CAD 12.3% -3.1% -3.7% 1.4587 1.1%
NZD:CAD 39.1% -5.8% -3.0% 0.8396 1.2%
AUD:CAD 10.5% -2.8% -4.1% 0.9074 1.5%
CAD:CAD 21.1% 0.0% 0.0% 1.0000 0.0%
Portfolio Weighted Avg. 100.0% -4.0% -2.1% 1.0%
2121
P O R T F O L I O OV E RV I E W
22
57PROPERTIES
92.2%OCCUPANCY
5.0YEAR WALE
$1.2BGROSS ASSETS
6.4%CAP RATE
35PROPERTIES
97.1%OCCUPANCY
14.8YEAR WALE
$0.7BGROSS ASSETS
5.7%CAP RATE
71PROPERTIES
99.6%OCCUPANCY
17.3YEAR WALE
$3.5BGROSS ASSETS
5.5%CAP RATE
8PROPERTIES
100%OCCUPANCY
19.6YEAR WALE
$0.8BGROSS ASSETS
7.0%CAP RATE
GLOBAL PORTFOLIO
1.7%SP NOI
4.0%SP NOI
4.7%SP NOI
2.9%SP NOI
$6.2BTOTAL ASSETS
13.7WALE
97.1%Occupancy
171Total Properties
3.6%SPNOI(8)
23
ASSET MIX BY REGION AND SEGMENT
ON A PROPORTIONATE
BASIS HOSPITALS
ACCOUNT FOR 55% OF NET
OPERATING INCOME
INCREASING FOCUS ON
HEALTHCARE
INFRASTRUCTURE,
INCLUDING ACUTE/POST
ACUTE HOSPITALS AND
RELATED BUILDINGS IN
EACH OF ITS MARKETS
Proportionate NOI Diversification
AUS NZ BRL CAD GER NL
Acute hospitals
Post-acute hospitals
MOBs
Aged care
High Priority Low Priority
Detailed Segment Breakdown
24
STRATEGIC RELATIONSHIPS AND TENANT DIVERSIFCATION
STRATEGIC RELATIONSHIPS ALLOWING FOR BEST-IN-CLASS PERFORMANCE
✓ Median (5 Transactions): Germany’s largest private provider of rehabilitation services
✓ Epworth Foundation (5 transactions):The largest not-for profit hospital operator in the Australian state of Victoria
✓ Rede D’Or (7 transactions): Brazil’s leading hospital operator
✓ Alberta Health Services (6 Locations):Largest provincial healthcare provider to 4.3 M Albertans
TOP 10 TENANTS BY GROSS RENT(10)
TENANT REGION % GROSS RENT
Healthscope Limited 15.6%
Rede D'Or 12.5%
Healthe Care 11.4%
Epworth Foundation 4.3%
Acurity Group 1.7%
St John of God Healthcare Inc.
1.4%
CISSS / CIUSSS 1.3%
Bolton Clarke 1.3%
Median Kliniken 1.2%
Hospital Sabara 1.0%
Top 10 Tenants 51.8%
1
2
3
6
7
8
4
5
9
10
25
HEALTHSCOPE – STRATEGIC TRANSACTION
CORE HEALTHCARE INFRASTRUCTURE IN MAJOR MARKETS
57OPERATING THEATRES
▪ Transformational 11 property, $1.2BN transaction solidifies the REIT as
the leader in Australian healthcare real estate
▪ Highly complimentary to NWH’s existing portfolio
▪ Deepens relationship with Australia’s 2nd largest private operator
▪ Excellent risk adjusted returns from long term “absolute quadruple net”
lease structure, 2.5% annual fixed rent increases strong 2.2x EBITDAR
coverage on new 20 year leases
▪ ~$525M pipeline of brownfield developments and capital projects with
attractive development spreads of 100 bps
▪ Expected to be immediately accretive to reported annualized AFFOPU
1,539BEDS
11PROPERTIES ACQUIRED
100%OCCUPANCY
2.5%ANNUAL RENT INDEXATION
20YEAR WALE
INITIAL RENT
$1.2BNACQUISITION PRICE
5.0%CAP RATE1
$60M
MELBOURNE CLINIC
N O R W E S T
Notes:(1) Based on purchase price excluding transaction costs(2) Based on base rent at completion
BRISBANEP R I V A T E
NEWCASTLE PRIVATE
26
✓ ~$402M (fully consolidated; $165M proportionate) of committed low risk development & expansions in Australasia, Brazil and Canada to be funded through a combination of existing resources and property financing
– $320.8M ($84.1M proportionate) of Australasian hospital and MOB expansions at Vital and NWAUS
– $43.5M of Brazilian hospital expansions
– $37.5M of Canadian MOB development
✓ ~$45.8M ($18.7M proportionate) of stabilized value accretion on a proportionate basis
– Potential to generate up to an incremental ~$0.30 NAV/Unit ($0.11 NAV/Unit proportionate)
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE
WITH A TRACK RECORD
OF COMPLETING MORE
THAN $500M OF
DEVELOPMENTS AND
EXPANSIONS, THE REIT
IS LEVERAGING ITS
EXPERIENCE TO DELIVER
AN ADDITIONAL $402M
OF VALUE ENHANCING
PROJECTS TO ITS
PORTFOLIO
Country (13) ProjectsEst.
CompletionProject
CostCost to
CompletePre-LeasedOccupancy
Project Yield
Project NOI
Potential Value
Accretion
6Q4 2019 to
Q4 2021320.8 218.2 100% ~6.1% 19.5 37.1
2 Q4 2019 43.5 43.5 100% ~7.5% 3.3 2.9
2Q1 2020 to Q1
202137.5 29.0 61% ~7.5% 2.8 5.8
10 Q4 2021 401.8 290.7 92% ~6.4% 25.6 45.8
27
2003-05 2014-17 2017-21
▪ Development of Epworth Eastern Hospital (private)
▪ Establishes operator relationship with Victoria’s largest not-for-profit private healthcare group
▪ Public and private hospital co-location further attracts specialists
▪ Begins to drive early stage precinct formation
▪ $125m expansion of Epworth Eastern Hospital
▪ Adjacent site available for next stage expansion
▪ Epworth Eastern Hospital at capacity for 3 years
▪ New 30-year lease term over entire expanded hospital
▪ Acquisition of Ekera Medical Centre increases NorthWest assets in precinct
▪ Strategic acquisition of adjacent site for private hospital expansion
▪ Public hospital major expansion ▪ Council designated ‘Education and
Health precinct’ – targeted as a high growth area with increased density
Eastern Private Hospital announces major expansion
CASE STUDY #1 – EPWORTH EASTERN HOSPITAL, MELBOURNE
NorthWest has supported Epworth over 15+ years with expansion opportunities, advice and capital. Developments have added to the quality & value of assets, driving operational benefits & efficiencies that attract practitioners.
Public and private hospitals drive health precinct
Private hospital development leads to formation of precinct
NON-FOR-PROFIT PRIVATE
HEALTHCARE GROUP THAT
RAISES FUNDS TO
PURCHASE ADVANCED
MEDICAL EQUIPMENT,
FUND RESEARCH AND
PROVIDE BEST POSSIBLE
CARE TO PATIENTS
EPWORTH EASTERN IS A
LEADING HOSPITAL WITH
223 BEDS AND STATE OF
THE ART EQUIPMENT AND
TECHNOLOGY
28
Market Leader
~230,000 Patients p.a.
~€940 M Revenue
120 Facilities
~18,200 Beds/Places
~15,000Employees
CASE STUDY #2 – MEDIAN, GERMANY
MEDIAN seeking reliable real estate partners
Supporting ongoing MEDIAN expansion with SLB
transactions
Partnership is foundation for continuous acquisition
pipeline
2017
▪ NorthWest bought the first clinics from MEDIAN
▪ The SLB transaction is based on a master lease with institutional market standards
▪ Total market value of current MEDIAN clinics: €75m
▪ MEDIAN is continuously growing through acquiring new clinics and operators
▪ NorthWest has bought the underlying real estate at the time of MEDIAN‘s acquisition
▪ MEDIAN’s growth strategy and their existing assets ensure a strong pipeline (forecast 5+ clinics per annum (€100m+))
▪ International expansion opportunities likely
▪ Agreed key terms (master lease agreement) ensures competitive advantage and efficiency in transactions
Present Future
LARGEST PRIVATE
REHABILITATION
PROVIDER WITH 120+
FACILITIES ACROSS
GERMANY
IN 2014 MEDIAN WAS
ACQUIRED BY
WATERLAND PRIVATE
EQUITY
AFTER SEVERAL
ACQUISITIONS MEDIAN IS
THE CLEAR MARKET
LEADER IN THE GERMAN
REHABILITATION MARKET
29
CASE STUDY #3 – REDE D’OR, BRAZIL
Top 5 Global Healthcare Market▪ Third largest private healthcare market: $180BN p.a.
healthcare spending (9% of GDP)▪ Population over 200M, rapidly ageing, with a growing
middle class▪ Many old / obsolete private hospitals, with
unsophisticated operators▪ Brazil coming out of recession
1,009
1,5781,796
20152012
851
20172013 2014 20182016
R$M
340
885
2,124+36% p.a.NorthWest's Brazilian Portfolio has
Scaled Significantly
▪ NorthWest owns 8 hospitals totaling R$2.1B (C$750M)
▪ Ongoing collaboration with partner for win-win opportunities
Top Facilities ‘AAA‘ Strategy ▪ Major acute-care assets ▪ Leading cities ▪ Highly capable operator ▪ A-typical lease structures – no rent reviews,
inflation escalation
LARGEST PRIVATE
HOSPITAL OPERATOR IN
BRAZIL WITH 39
HOSPITALS AND 5,900
BEDS
BACKED BY GLOBAL
INVESTORS GIC (26%)
AND CARLYLE GROUP
(12%)
PLATFORM GROWTH HAS
ALLOWED NWH TO
REMAIN A KEY CAPITAL
PARTNER AND EXPAND
ALONGSIDE OUR
OPERATING PARTNERS
3030
INVESTMENT OPPORTUNITY
3131
NWH AT A GLANCE
14.0MSQUARE FEET
T O R O N T O
S Ã O PA U L O
B E R L I N
A U C K L A N D
ESTABLISHED RELATIONSHIPS WITH LEADING HEALTHCARE OPERATORS
CONSOLIDATED NOI DIVERSIFICATION(4)
S Y D N E YMELBOURNE
171PROPERTIES
$6.2BNTOTAL ASSETS(3)
97.1%OCCUPANCY
$1.6BNMARKET CAP (1)
13.7YEAR WALE
6.0%IFRS CAP RATE
6.7%DISTRIBUTION YIELD (1)
87%PAYOUT RATIO (2)
Global scale, local relationshipsPartner of choice for leading operators in each market we invest
Deep healthcare real estate expertise200+ healthcare professionals based in 3 of the largest global healthcare markets
Execution excellence15+ years of healthcare real estate investment, management and development
Entrepreneurial culture, institutional capabilities10+ year public company track record
A proven track recordTrack record of delivering exceptional risk-adjusted returns for investors; 8x increase in book value since inception
Scalable platform with embedded growthOur operator relationships and existing portfolio provide a robust acquisition and development pipeline
Focused Healthcare Real Estate Investment Partner
65% GLOBAL GATEWAY CITY EXPOSURE
32
RELATIVE VALUATION
THE REIT IS TRADING AT
SIGNIFICANT DISCOUNT
TO ITS PEERS ON AN
AFFO MULTIPLE BASIS
- Based on NWH.UN’s closing unit price of $12.00/unit as of November 14 2019, and normalized AFFO/Unit of $0.92 per year; NWH.UN’s NAV is based on Q3-19 of $11.84.
$12.00
$12.00
33
INVESTOR FACTSHEET
Ticker NWH.UN
Listed Exchange TSX
Distribution Payable Monthly
Distribution Type55% Capital Gains/45% Return on Capital
Unit Price (November 14, 2019) $12.00
Market Capitalization ~$1.6Bn
Distribution Yield 6.7%
52-Week Trading Range $9.27- $12.35
Volume Weighted Avg. Price (VWAP) (20-day) $11.89
Average Daily Volume (90-days) ~258,000
NAV (Q3-2019/Current Currency)(7) $11.84/$12.06
3434
R E G I O N A L P O R T F O L I OA P P E N D I X 1
O V E R V I E W S
35
PORTFOLIO PROFILE
GLOBAL HEALTHCARE REAL ESTATE INFRASTRUCTURE PORTFOLIO COMPRISES
171 PROPERTIES
TOTALING 14.0M
SQUARE FEET OF GLA
IN SIX COUNTRIES
STRONG OPERATING
FUNDAMENTALS WITH
OCCUPANCY OF 97.1%,
WALE OF 13.7 YEARS
AND 47% MOB 53%
HOSPITAL AND OTHER
HEALTHCARE FACILITIES
MIX
Q3 2019 Canada Brazil Europe Vital Trust NWAUS Platform*
Number of Properties
57 8 35 45 26 171
Asset Mix by GLA 100% MOB100%
Hospital
86% MOB & 14% Hospital
and other Healthcare
Facilities
21% MOB &79% Hospital
and Other Healthcare
Facilities
23% MOB & 77% Hospital
and Other Healthcare
Facilities
47% MOB & 54% Hospital
and Other Healthcare
Facilities
GLA (Million Square Feet)
3.6 1.7 3.2 2.6 2.8 14.0
Gross Assets $1,197 $808 $699 $1,586 $1,891 $6.2B
Occupancy 92.2% 100.0% 97.1% 99.9% 99.1 97.1%
WALE (Years) 5.0 19.6 14.8 18.2 15.9 13.7
Avg. Building (Years)
~30 ~15 ~27 ~31 ~29 ~28
Weighted Cap Rate 6.4% 7.0% 5.7% 5.5% 5.5% 6.0%
* All metrics are shown on a 100% consolidated basis and excludes non-real estate metrics: Corporate and Vital Manager
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CANADA: LARGEST PORTFOLIO OF MOB ASSETS
Hys CentreEdmonton, AB
YT
SK
QC
ON
NU
NT
NL
MB
BC AB
NB
PE
NS
Winnipeg (2)
Edmonton (4)
Calgary (7)
Airdrie (1)
Spruce Grove (1)
INVESTMENT AND MARKET OVERVIEW⚫ Canada’s largest non-government owner/manager of MOBs and
healthcare related facilities
◼ Portfolio of 57 properties comprising GLA of 3.6 million sf and 1,067 tenants
◼ 92.2% occupancy and ~5.0 year WALE
⚫ High quality real estate with stable cash flow underpinned by tenancies supported by the Canadian publicly funded healthcare system
⚫ Provides stability and diversification to a broader international healthcare real estate portfolio
QC PEON
NS
NB
Levis (1)
Laval (1) Lachenaie (1)Joliette (1)
Hamilton (3)
Halifax (2)
Guelph (2)
Fredericton (1)
Collingwood (1)
Cambridge (1)
Richelieu (1)
Quebec City (3)
Ottawa (1)
Oakville (1)
New Glasgow (1)Moncton (1)
Mississauga (1)
Lower Sackville (1)
Longueuil (2)
London (2)
Whitby (1)
Vaudreuil-Dorion (1)
Toronto (10)
Montreal (1)Saint Hubert (1)
CANADA
Barrie (1)
Queensway Professional CenterMississauga, ON
Springbank Medical CentreLondon, ON
37
BRAZIL: NEWLY BUILT PRIVATE PAY HOSPITAL ASSETS
INVESTMENT AND MARKET OVERVIEW
⚫ Institutional quality, core healthcare infrastructure assets in strategic markets including São Paulo, Brasilia and Rio de Janeiro
◼ 100.0% occupancy and 19.6 year WALE
⚫ Stable cash flow with long-term, triple-net, inflation-indexed leases, providing consistent organic growth
⚫ Long-term relationship with one of the country’s leading hospital operators Rede D’Or São Luiz S.A. (Fitch National Rating: AAA)
Hospital Caxias D’OrRio de Janeiro
Hospital Infantil SabaráSão Paulo
ManausBelem
Fortaleza
Natal
Recife
Macieo
Salvador
Brasilia
Rio De JaneiroSão Paulo
Port Alegre
Hospital Coração
Hospital Santa Luzia
Hospital Caxias
Hospital Brasil
Hospital Sabará
PARA
GOIAS
FEDERAL DISTRICT
AMAZONAS
BAHIA
SÃO PAULO RIO DE JANEIRO
RIO GRANDE DO SUL
CEARARIO GRANDE
DO NORTE
ALAGOAS
PERNAMBUCO
AMAPÁ
MINAS GERAIS
RORAIMA
MARANHÃO
PIAUI
TOCANTINSRONDÔNIA
ACRE
MATO GROSSODO SUL
PARANÁ SANTACATARINA
Hospital Ifor
Hospital Santa Helena
Existing Assets
Hospital São Luiz Morumbi
38
EUROPE: STRATEGICALLY LOCATED MOB ASSETS
INVESTMENT AND MARKET OVERVIEW
⚫ High quality MOB assets located in the major markets including Berlin, Hamburg, Frankfurt, Ingolstadt, Leipzig and Rotterdam
◼ 97.1% occupancy and ~14.8 year WALE
⚫ Expansion into rehabilitation clinics presents a unique opportunity to acquire assets with infrastructure-like characteristics.
⚫ Fully integrated property management and asset management capabilities allow efficient operation and deal sourcing
MedimallRotterdam
Adlershof 1Berlin
Hollis CentreIngolstadt
Berlin NeukollnBerlin
2
1
11
Berlin Assets
Leipzig Assets
Ingolstadt
Fulda
NORTH RHINE-WESTPHALIA
LOWER SAXONY
BADEN-WUERTTEMBERG
SAXONY-ANHALT
HESSE
RHINELAND-PALATINATE
BERLIN
SAXONY
SCHLESWIG-HOLSTEIN
BRANDENBURG
BAYERN
MECKLENBURG-WESTERN POMERANIA
SAARLAND
BREMEN
THURINGIA
Munich
Frankfurt 1
Bad Kissingen
1
Hamburg
Wilhelmshaven
12
The Netherlands2
1
Bernkastel-Kues
2Ratzeburg
1
1
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AUSTRALASIA (1): MAJOR MARKET HOSPITAL AND MOB PORTFOLIO
Epworth Freemasons Private Hospital Melbourne CBD, Victoria
Epworth Victoria Parade HospitalMelbourne CBD, Victoria
Australian Red Cross Blood ClinicBrisbane, Queensland
✓ Major Market Focus
− The portfolio is centered around Australia’s three largest cities: Sydney (pop: ~4.6m), Melbourne (pop: 4.4m), and Brisbane (pop: ~2.3m)
✓ Stable, Growing & Accretive Cashflow
− Long-term inflation indexed leases to some of the region’s largest hospital operators
− Track record of earnings growth through accretive acquisitions, expansions, and developments
✓ Core Healthcare Strategy
− 10+ years of dedicated healthcare focus− Strong healthcare operator relationships Healthscope, Epworth
Foundation and St. John of God
STRATEGIC FIT
WESTERN AUSTRALIA
NORTHERNTERRITORY
QUEENSLAND
SOUTH AUSTRALIA
NEW SOUTH WALES
VICTORIA
TASMANIA
9
9
6
PORTFOLIO OVERVIEW
✓ Northwest Healthcare Properties Australia REIT “NWHP AUS” owns a leading Australian healthcare real estate portfolio with ~$1.9Bn in existing assets
✓ Portfolio of 26 Properties of ~2.8M Square Feet ▪ 17 hospitals, 6 medical centers, 3 residential aged care
✓ Strong occupancy and long-term lease expiry profile▪ 99.1% occupancy and ~15.9 year WALE
Norwest Private HospitalSydney Suburb, NSW
1
1
40
AUSTRALASIA (2): STRATEGIC INVESTMENT IN VITAL TRUST
WESTERN AUSTRALIA
NORTHERNTERRITORY
QUEENSLAND
SOUTH AUSTRALIA
NEW SOUTH WALES
VICTORIA
TASMANIA
3
4
5
14
6
1
NEW ZEALAND
12
AUSTRALIA
Marian CentrePerth, AU
Epworth Eastern Medical CentreMelbourne, AU
Ascot HospitalAuckland, NZ
Epworth Eastern HospitalMelbourne, AU
INVESTMENT AND MARKET OVERVIEW
⚫ Manager and 24.9% strategic shareholder of Vital Trust (NZX:VHP), Australasia’s largest listed healthcare real estate owner with 26 private hospitals, 10 MOBs, 5 aged care assets and 4 development lots
◼ 99.9% occupancy and ~18.2 year WALE
⚫ Stable and growing cash flows underpinned by tenancies of high quality hospital and healthcare operators with long-term, inflation-indexed leases
4141
M A N A G E M E N T
B I O G R A P H I E S
A P P E N D I X 2
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GLOBAL PLATFORM WITH REGIONAL CAPABILITY AND EXPERTISE
FULLY ESTABLISHED,
SCALABLE REGIONAL TEAMS
WITH EXPERTISE IN
HEALTHCARE PROPERTY
OPERATIONS,
ACQUISITIONS AND
DEVELOPMENT
LOCAL MARKET
KNOWLEDGE AND STRONG
RELATIONSHIPS WITH
LEADING HEALTHCARE
PROVIDERS
OVER 200 PROFESSIONALS
ACROSS 9 OFFICES IN 5
COUNTRIES
Peter RigginCOO & MD Canada
⚫ Leads NWH’s real estate operations and global MOB platform
Gerson AmadoManaging Director –Brazil
⚫ Leads NWH’s Brazilian platform
⚫ Office in Sao Paulo
Jan KrizanManaging Director –Europe
⚫ Leads NHW’s European platform
⚫ Office in Berlin
Craig MitchellCEO – Australia& New Zealand
⚫ Leads NWH’s Australasian platform
⚫ Office in Melbourne
Paul Dalla LanaChairman &CEO
⚫ Founder of NWH & NWI REITs
⚫ Largest unitholder of REIT
BernardCrottyPresident
⚫ Global governance oversight and business development
⚫ Representative on NWH’s and Vital Trust’s board
Shailen ChandeCFO
⚫ Responsible for financial strategy & reporting, and capital market & corporate finance activities
⚫ Chartered Accountant
Mike BradyExecutive Vice President
⚫ EVP, General Counsel and Secretary to NWH REIT
⚫ Transaction management and leadership
CORPORATE MANAGEMENT REGIONAL OPERATING PLATFORM
43
NOTES
1. Based on NWH.UN’s closing unit price of $12.00/unit as of November 14, 2019.
2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q3-19 AFFO of $0.92/unit.
3. Based on total assets of NWH, Vital Trust on a fully consolidated basis including post-quarter acquisitions. NHW owns a 24.9% interest in Vital Trust.
4. The pie reflect fully consolidated NOI and include i) 100% of NOI from Vital Trust and ii) 100% of the NOI from the REIT’s institutional JV including the Healthscope portfolio
5. Reported AFFO/Unit represents quarterly AFFO annualized for the three month period ending September 30, 2019. Normalized AFFO/unit is based on Q3-19 Reported AFFO/unit and adjusted for completed acquisitions, and financings as presented in the REIT’s Q3-19 MD&A PART III.
6. LTV excludes/includes convertible debentures and is shown on a fully consolidated basis (Vital Trust at 100%) and includes the HSO portfolio accounted for using the equity method.
7. NAV is based on unitholder’s equity plus add-backs as set out in Part XII in the REIT’s Q3-19 MD&A. Normalized NAV is equal to the reported NAV adjusted for the impact of FX changes post quarter end.
8. Represents same property NOI growth YoY (“SPNOI”) in source currency for the three months ended September 30, 2019 and excludes non-cash amortization and non-recurring transactions.
9. Reflects the debt maturity profile as per the REIT’s Q3-19 MD&A and does not include deferred consideration.
10. Gross rent on a fully consolidated basis.
11. LTV’s are excluding corporate debt (ie. convertible debentures and revolving credit lines) and are shown on a regional basis.
12. Represent estimate of current market rates.
13. Presented on a fully consolidated basis. Assuming projects are 100% debt funded at the existing region’s financing costs and is for indicative purposes only.
44
CONTACT INFORMATION
Paul Dalla Lana, Chairman & CEO416-366-2000 Ext. 1001
Shailen Chande, CFO416-366-2000 Ext. 1002
NORTHWEST HEALTHCARE PROPERTIES REIT