Q2 2016 INVESTOR UPDATE
August 11, 2016
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 NOI, FFO and 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 June 30, 2016, as filed on SEDAR and a reconciliation of NAV is presented herein.
22
CORE HEALTHCARE INFRASTRUCTURE IN MAJOR MARKETS
NWH AT A GLANCE
ASSET MIXREGIONS
9.3M 139 $3.5BNSQUARE FEET (3)
T O R O N T O
S Ã O P A U L O
B E R L I N
A U C K L A N D
PROPERTIES (3) TOTAL ASSETS (3)
96.2% 11.1OCCUPANCY (3) YEAR WALE (3)
$910M 7.7%MARKET CAP (1) DISTRIBUTION YIELD (1)
ESTABLISHED RELATIONSHIPS WITH LEADING HEALTHCARE OPERATORS
7.3%
NOI DIVERSIFICATION (3)
IFRS CAP RATE (3)
87.0%PAYOUT RATIO (2)
S Y D N E Y
NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) is a specialist healthcare real estate investor that owns a high quality portfolio of medical office and hospital properties located throughout major markets in Canada, Brazil, Germany, Australia and New Zealand.
3
DASHBOARD
As Reported Run Rate
$0.88/unit
48.1% / 54.2%
$10.70/unit
~$0.95/unit
~$11.00/unit
AFFO/unit (4)
LTV (5)
NAV (6)
Adjustments relate to H2-16 contracted rent indexation and completion of announced acquisitions & planned financings during Q4-16
Deliver stable property operating performance, cash flow and distributions
Track to management run rate and guidance
Normalized
$0.92/unit
$10.73/unit
Reflects impact of the July 2016 $145M equity and convertible financing, GHC investment, Hospital Ifor acquisition and Q2-16 non-recurring items
PortfolioQuality
Occupancy / WALE (7)
48.1% / 54.2% ~50.0%
95.7%10.1 years
96.2%11.1 years
~96.0%~11.0 years
4
$0.92$572m
$2,700m
5x increase since inception(10) 15% increase since inception(10)
International Portfolio above 98% Long‐term Stability
At inception (3) FY2015
At inception(3) Q4‐2015At inception(3) Q4‐2015
At inception(3) Q4‐2015 Q2‐2016 Normalized
$3,500m
$0.80$0.82
95.9%90.7%
10.04.0
DASHBOARD
GROSS BOOK VALUE (8) NORMALIZED AFFO / UNIT (9)
WEIGHTED AVERAGE LEASE EXPIRYOCCUPANCY
Q2‐2016 Normalized
Q2‐2016 Normalized
Q2‐2016 Normalized
96.2% 11.1
5
TRANSFORMATIONAL GROWTH
Improved Market Profile
Defensive High Quality Portfolio
Positioned for Growth
Core Healthcare Focus
Major Global Markets
Asset & Capital Diversification
Improved Portfolio Metrics
Increase in Market cap.
Reduced Payout Ratio
Reduced Leverage
Increased NAV
Aligned & Integrated Global Platform
Leverage Institutional Relationships
Identified Expansions and Developments
Actionable Acquisition Pipeline
Strategic International Growth
Operational Strength
Scalable Platform
Defensive Healthcare Assets
Canadian Medical Office Building (MOB) Consolidation
$3,500
6
NAV has increased from $9.64 to $10.73, a ~11% increase
LTV has decreased from ~57% (Q3-15) to ~52% (Q2-16 Normalized)
FINANCIAL PROFILE CAPITLIZATION
PORTFOLIO QUALITY CAPITAL MARKETS AND LIQUIDITY
Portfolio Quality improved - occupancy up from ~94% to ~96% with longer lease terms from ~9 years to ~11 years.
AFFO / Unit has increased from $0.80 to $0.92, a 15.0% increase. Payout Ratio has reduced from ~100% to 87%.
POST MERGER -12 MONTHS IN REVIEW
7
POST MERGER -$350M OF INTERNATIONAL ACQUISITIONS
July 2016
GHM closed on June 27, 2016 for A$58.5M
Under contract to acquire up to 19.9% of GHC REIT at A$2.20/unit for a total investment of $C92M (A$95.5M) during Q3 2016.
June to August 2016
Rede D'Or Investment (1) – Hospital Ifor in Sao Paulo for C$26M (R$65M) at a ~10.75% cap rate
Long-term quadruple net lease for 25 years and indexation to inflation
Continued Rede D'Or Investment (2) – Hospital Santa Helena in Brasilia for $117M at a ~9.50% cap rate
Long-term quadruple net lease for 25 years and indexation to inflation
September 2016
Germany Australia Brazil (1) Vital Trust Brazil (2) Total
Size (C$M) ~$20.0 ~$150.0 ~$25.0 ~$35.0 ~$120.0 ~$350.0
GLA (Square Feet) 0.1 1.1 0.1 - 0.4 ~1.7
Cap Rate ~7.0% ~7.6% ~10.75% ~7.2% ~9.5% ~8.4%
Occupancy ~97.3% ~98.6% 100.0% 99.4% 100.0% ~99.0%
WALE (yrs) ~4.0 ~12.4 ~25.0 ~18.1 ~25.0 ~15.6
Vital Rights Offering for NZ$160M – NorthWest to participate in its pro rata share of NZ$40M
Rights price at NZ$2.08, price before offering closing of NZ$2.22
July 2016
Acquisition of a Medical Office Building complex consisting of 2 buildings in Berlin for EUR$13.5M.
April 2016
8
2016GOALS
• Provide Stable & Defensive Results‐ Inflation indexed triple-net rents ‐ Stable & improving occupancy‐ Focus on core healthcare tenancies‐ Improved financial profile
• Grow leading international platforms:‐ Australasia: Strategic growth ‐ Brazil: Focus on AAA assets ‐ Canada: Asset mgmt. + development‐ Germany: MOB consolidation
• Establish institutional capital relationships ‐ A “healthcare moment” ‐ Leverage leading mgmt. platform ‐ Drive incremental fee revenue
~80%Payout Ratio
$11.00NAV/Unit
~40%LTV
YTD 2016 RESULTS
2016 GOALS
TARGET
On Plan & Ahead of Schedule ‐ Inflation indexed triple-net rents ‐ Stable & improving occupancy‐ Focus on core healthcare tenancies
$350M of YTD Accretive Growth:‐ Australasia: GHC Investment, Vital
Trust capital raise ‐ Brazil: $140M acquisitions (Ifor &
Santa Helena) ‐ Canada: Development projects
substantially complete ‐ Germany: Mehrower Allee
acquisition
$225M of public financings ‐ $150M of equity issuance ‐ Increased institutional participation
$5.0BN Portfolio‐ Leading position in each core
market ‐ Increased focus on core
healthcare infrastructure
Achieve differentiated valuation ‐ Capital markets seasoning ‐ Improve market profile ‐ Healthcare real estate warrants
a premium valuation – US experience
Defensive financial profile ‐ Target ~80% AFFO payout‐ Target ~40% LTV
87%Payout Ratio
$10.73NAV/Unit
48.1%LTV
~85%Payout Ratio
$10.50NAV/Unit
~50%LTV
99
F I N A N C I A L O V E R V I E W
10
FINANCIAL HIGHLIGHTS
POSITIVE FINANCIAL OPERATING RESULTS IN LINE WITH MANAGEMENT GUIDANCE
NORMALIZED RESULTS HAVE BEEN ADJUSTED TO REFLECT THE IMPACT OF RECENTLY COMPLETED TRANSACTIONS
NORMALIZATION ADJUSTMENTS
Normalization adjustments principally relate to:
‐ Acquisition of the Generation Healthcare Manager and corresponding ~20% investment in the REIT Units
‐ Acquisition of the Brazil Hospital Ifor, which closed in July 2016
‐ Redeployment of net proceeds from the July 2016 offering to complete the contracted acquisition of Santa Helena
‐ Refinancing of eligible Canadian properties to a lower weighted average interest rate of ~3.0% from ~5.0%
‐ Accrued rent to Q2 2016 based on contract rental indexation adjustments in Brazil
‐ Partial repayment of the FCC Acquisition facility
‐ Non-recurring items that will not have an on-going impact in future quarters
Q2-16 As Reported
Q2-16 Normalized
NOI $46.0M $48.2M
FFO $17.7M $20.7M
AFFO $17.3M $20.3M
W.A Units Outstanding
78,983 88,194
AFFO / Unit (4) $0.22/unit $0.23/unit
Payout Ratio 91.2% 87.0%
LTV (5) 48.1% / 54.2% 46.6% / 52.5%
NAV / Unit (6) $10.70/unit $10.73/unit
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REGIONAL DASHBOARD
C A N A D A B R A Z I L
A U S T R A L A S I A G E R M A N Y
LEADING MEDICAL OFFICE PLATFORM
CONSOLIDATION OF MEDICAL OFFICE BUIDLINGS
STRONG RELATIONSHIPS WITH LEADING OPERATORS
1.6%NOI Growth (11)
91.5%Occupancy
4.7YRWALE
LEADING PUBLICLY LISTED HEALTHCARE TRUST 2.5%NOI Growth (11)
95.1%Occupancy
4.9YRWALE
NOI Growth (11)
100%Occupancy
20.7YRWALE
3.8%NOI Growth (11)
99.4%Occupancy
18.1YRWALE
10.4%
12
SEGMENTED FINANCIAL INFORMATION
Canada Brazil Germany Australasia(12) Vital Mgr. GenerationMgr. (13) Corporate (14) Combined
NORMALIZED INCOME SUMMARY:
NOI $19.3 $8.3 $2.7 $15.7 - - - $46.0
FFO $13.4 $6.3 $1.6 $2.1 $1.9 - ($7.0) $17.7
AFFO $10.4 $6.9 $1.4 $2.1 $2.1 - ($5.2) $17.3
BALANCE SHEET SUMMARY:
Gross Assets $1,229.5 $438.5 $184.7 $902.5 $60.3 $64.7 $48.0 $2,914.7
Total Liabilities (15) $725.9 $140.8 $94.7 $758.2 - $5.8 $337.3 $2,062.6
Net Assets $503.5 $297.6 $90.0 $144.3 $60.3 $58.9 ($289.3) $865.4
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CAPITALIZATION
DEBT MATURITY PROFILE (16)Market
Capitalization$910M
Enterprise Value $2.2BN
Gross Book Value (17)
LTV (Excluding
Convertibles)48.1%
LTV (Including
Convertibles)54.2%
W.A. Interest Rate 4.70%
% Unsecured 13%
% Fixed 87%
REGIONAL DEBT STRATEGIES
Type Asset LevelTerm Debt
Bank Loans and Securitization
Asset Level Term Debt
Asset Level Revolving Debt
LTV (18) ~55.7% ~31.2% ~50.7% ~35.2%
Interest Rates (18) ~3.9% ~9.2% ~1.9% ~4.4%
Typical Amortization 25 years 10 years 50 years Interest Only
% of debt maturing
4.9% 12.9% 23.3% 19.4% 25.9%13.6%
$3.5BN
14
QUARTERLY NAV/UNIT IMPACT
International Growth‐ Canada: Strength in core GTA assets,
partially offset by weakness in Alberta
‐ Brazil: S&P credit rating upgrades for its major tenant Rede D’Or, on the back of US$2BN of private equity investment from the Carlyle Group/GIC and improved rental coverage ratios. NOI increases due to annual indexed leases based on three months of inflation at ~1.75%.
‐ Australasia: Completion of expansion projects during the fiscal year, annual inflation indexed rents and strong market reviews, continue to drive NOI growth. Demand for healthcare properties has increased and has led to a firming of 45 bps from 7.64% to 7.18% during H1 2016.
Positive currency environment‐ Strong currency gains reflecting
diversified capital exposure during the quarter ‐ Brazil Real (BRL) appreciated by
8.3%‐ New Zealand (NZD) appreciated by
2.6%‐ Euro (EUR) depreciated by 2.5%
millions Canada Brazil Germany Australasia Vital Mgr. Total
Value Attributable To:
NOI changes ($20.6M) $7.4M - $17.0M - $3.8M
Implied cap rate changes - - $8.8M $28.6M - $37.4M
Other (19) - ($0.5M) ($2.3M) - - ($2.8M)
Total ($20.6M) $6.9M $6.5M $45.6M - $38.4M
Per Unit ($0.25) $0.09 $0.08 $0.14 - $0.06
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RISK MANAGEMENT – FOREIGN EXCHANGE
RENTAL INDEXATION ACTS AS NATURAL CURRENCY HEDGE
LOCAL CURRENCY PROPERTY / CORPORATE DEBT TO REDUCE INVESTMENT RISK
OVER A 10 YEAR PERIOD, PORTFOLIO INDEX HAS REMAINED RELATIVELY IN-LINE WITH ITS BASE VALUE
Currency depreciation in Brazil has been positively
offset by annual rental indexation
+7.7%
+1.0%
CAGR
BRAZIL – SAME PROPERTY NOI GROWTH
Jun-16
105.7
88.2
97.2
89.6
1616
P O R T F O L I O OV E R V I E W
17
BRAZIL
5 Hospitals /~900 Beds
2 Committed Acquisitions
S&P Rated Tenants
CANADA
61 Medical Office Buildings
1,200 tenants
2 Active Developments
VITAL PROPERTY TRUST
GERMANY
New Zealand Listed Entity
34 Properties
7 Contracted Developments
20 Medical Office Buildings
350 Tenants
2 Development Sites
PORTFOLIO OVERVIEW
$3.5BN International Platform Canada / Brazil / Germany / Australia & NZ
Berlin
São Paulo
Toronto
Melbourne
Auckland
GENERATION HEALTHCARE
Australian Listed Entity
17 Properties
3 Contracted Developments
Insert GHC logo
18
Tenant Region % of Gross Rent
Rede D'Or SL 21.1%
Healthe Care 3.6%
Bantrel Corporation 2.9%
CLSC/CSSS 2.7%
Hospital Sabara 1.8%
Shoppers Drug Mart 1.5%
Epworth Foundation 1.5%
Lawton’s Drug Mart 1.4%
Winnipeg Regional Health 1.3%
Healthscope 1.3%
Top 10 Tenants 39.2%
PORTFOLIO DIVERSIFICATION
DIVERSIFIED PORTFOLIO IN STRATEGIC INTERNATIONAL MARKETS AND STABLE, CORE HEALTHCARE REAL ESTATE ASSET CLASSES
DIVERSIFIED TENANT BASE WITH STRATEGIC PARTNERSHIPS WITH LEADING HEALTHCARE OPERATORS IN LOCAL MARKETS
TOP 10 TENANTS BY GROSS RENT (21)
1
2
3
6
7
8
9
10
4
5
NOI DIVERSIFICATION BY GEOGRAPHY (20)
NOI DIVERSIFICATION BY ASSET MIX (20)
19
Assets MOB + Hospital Admins / Traditional Office
Size ~410k Square Feet
TenantsProvince of Ontario, Sick Kids Hospital, and other
medical tenancies
Cap Rate (23) ~6.0%
Occ. ~94%
Lease Term ~6 Years
Rental Increase Contract Rents
Acquisition Date Jan 2011
Assets 3 Hospitals
Size 446 Beds / ~573k Square Feet
TenantsHospital Operator Rede D’Or
S.L.S&P “A-” Rated
Cap Rate (23) ~9.2%
Occ. 100%
Lease Term ~25 Years
Rental Increase Annual Inflation Index
Acquisition Date Dec 2013
Assets 1 Hospital
Size 38 beds / expansion potential
Tenants Pulse (ASX Listed)
Cap Rate (23) ~6.9%
Occ. 100%
Lease Term ~22 Years
Rental Increase Annual Inflation Index
Acquisition Date July 2016
Assets 2 MOBs
Size ~82k Square Feet
Tenants ~53 Medical Practitioners & Related Services
Cap Rate (23) ~6.9%
Occ. ~97%
Lease Term ~4 Years
Rental Increase Annual Inflation Index
Acquisition Date April 2016
REPRESENTATIVE INVESTMENTS
Rede D’Or Hospital Portfolio
Mehrower Allee Boulcott Private Hospital
Dundas-Edward Centre
20
The REIT currently has identified 17 non-core asset dispositions – Combined IFRS value of ~$100M; Outstanding mortgages of ~$70M– Estimated net proceeds of ~$30M after transaction costs
During the quarter the REIT made significant progress on its disposition program– Sold 1 assets in Q2-16 for ~$5M– 4 remaining assets under binding contracts closing in Q3-2016
NON-CORE ASSET DISPOSITIONS IN CANADA
THE REIT CONTINUES TO FOCUS ON BUILDING SCALABLE PORTFOLIOS IN GLOBAL GATEWAY CITIES
RENEWED EMPHASIS ON CAPITAL ALLOCATION AND GEOGRAPHIC DIVERSIFICATION
CANADAQ2-2016
CANADAProforma
SP NOI Growth 1.6% 2.0%
Occupancy 91.5% 92.9%
WALE 4.7 4.6
40bps
EXISTING PORTFOLIO (22) POST DISPOSITION PORTFOLIO (22)
140bps
21
$192.0M of committed low risk development & expansions – $84.4M Australian hospital expansions to be funded through existing resources – $55.4M Brazil hospital expansions to be funded through a combination of existing resources and property financing – $52.1M Canadian development to be funded through property level financing
$16.1M of stabilized net operating income– Potential to generate up to an incremental $0.04 of AFFO/Unit (23)
$18.2M of stabilized value accretion – Potential to generate up to an incremental $0.15 of NAV/Unit (23)
ACCRETIVE DEVELOPMENT & EXPANSIONS
WITH A TRACK RECORD OF COMPLETING MORE THAN $325M OF DEVELOPMENT AND EXPANSIONS, THE REIT IS LEVERAGING ITS EXPERIENCE TO DELIVER AN ADDITIONAL $192M OF INCOME AND VALUE ENHANCING PROJECTS TO ITS PORTFOLIO
Country (24) Projects Est. Completion
Project Cost
Cost to Complete
Pre-LeasedOccupancy
Project Yield
ProjectNOI
Potential Value
Accretion
7 Q2 2016 to Q4 2017 84.4 72.4 100.0% 8.5% 6.7 6.1
2 Q4 2017 / Q4 2018 55.4 55.4 100.0% 10.5% 5.8 8.1
2 Q4 2016 52.1 6.4 77.1% 7.0% 3.6 4.0
11 192.0 134.2 16.1 18.2
22
Acquired in early 2015
Project cost ~$26.7M
Stabilized Yield 6.5%
Acquired in early 2015
Project cost ~$25.4M
Stabilized Yield 6.5%
Ground-up development of a new ~80,000 SFmedical office building to house the Barrie Family Health Team.
Barrie Medical CentreBarrie, ON
Toronto West Health CentreEtobicoke, ON
Existing redevelopment of a medical building complex, consisting of two buildings of ~80,000 SF. Redevelopmentwill be home to the Etobicoke Family Health Team.
DEVELOPMENT PROJECTS – CANADA
Family Health Team Opened May 10, 2016 Completion Date Fall 2016
Pre-Leased: ~60% Pre-Leased: ~90%
2323
S T R A T E G Y & O U T L O O K
24
2.0% 1.7% 1.5%
4.9% 3.7% 4.2%
3.3% 3.8% 3.0%
(4.0%)
(2.0%)
--
2.0%
4.0%
6.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015E
Big 3 HC REITs Major Sectors
THE U.S. EXPERIENCE
$1 Trillion Estimated U.S. Healthcare Real Estate Market Exceeds $1 Trillion
$100 Billion &< 15%
Largest Healthcare REITs Acquired More Than $100 Billion over Last 10 Years, But Still Owns Less than 15% of the Market
Return & Stability Large U.S Healthcare REITs Historically Generated Better Returns with Less Volatility
HISTORICAL NOI GROWTH OF “BIG 3 HEALTHCARE REITS (1)
Source: Green Street Advisors (November 2015)
HEALTHCARE REAL ESTATE OPPORTUNITIES
25
RELATIVE VALUATION
THE REIT IS TRADING AT A SIGNIFICANT DISCOUNT TO ITS PEERS ON BOTH AN AFFO MULTIPLE AND NET ASSET VALUE BASIS
AFFO MULTIPLE
$14.63 •
$18.86•
11.2x
15.9x
12.0x
20.5x
0
20x
15x
10x
$10.56 •
$13,46 •(3.4%)
0
5%
NWH.UN Canadian REITS(EV > $1BN)
Internationally Focused Canadian
REITSUS Healthcare REITS (Top 5)
• Implied Share Price
$10.34
$10.34
- Based on NWH.UN’s closing unit price of $10.34/unit as of August 9, 2016 and normalized AFFO/Unit of $0.92 per year ($0.23/unit for the quarter) - NAV is based on Q2 2016 reported of $10.70
(1.3%)(4.7%)
PREMIUM / (DISCOUNT) TO NAV
$11.04•
25.8%
$10.20 •
26
INVESTOR FACTSHEET
Ticker NWH.UN
Listed Exchange TSX
Distribution Payable Monthly
Distribution Type 100% Return of Capital for 2015
Unit Price $10.34 (August 9, 2016)
Market Capitalization ~$910M
Distribution Yield ~7.7%
52‐Week Trading Range $7.45 ‐ $10.47
Volume Weighted Avg. Price (VWAP) (20‐day) $10.06
Average Daily Volume (20‐day) 278,000
NAV (Q2‐2016) $10.70
27
CONTACT INFORMATION
Paul Dalla Lana, Chairman & CEO416-366-2000 Ext. 1001
Vincent Cozzi, President & CIO 416-366-2000 Ext. 1005
Shailen Chande, VP – Investments 416-366-2000 Ext. 1106
NORTHWEST HEALTHCARE PROPERTIES REIT
2828
I N V E S T M E N T T H E S I SA P P E N D I X 1
29
Aging Population
>65 population cohort growing rapidly in developed countries
580mm people worldwide over 65 by 2018, ~10% of global population
Consolidation & Cost Savings
Scale required for efficiency and quality
Rise of Public Private partnerships
Growing Populations and Wealth Creation
Emerging economies demanding better access to quality care
Patients seeking more choice and control
The Rise of Private Healthcare
Budget pressures affecting the sustainability of public healthcare funding
Governments mandating lower costs and improved quality
Increased Healthcare Spending
$7.2 trillion global healthcare spending 10.6% of global GDP
Growing at 5.2% per annum
COMPELLING NEED FOR CAPITAL, FACILITIES AND REAL ESTATE SOLUTIONSSource: Deloitte 2015 Global Healthcare sector outlook
KEY DRIVERS OF HEALTH CARE REAL ESTATE
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DEFENSIVE, HIGH YIELDING SECURITY WITH GROWTH POTENTIAL
Supportive Fundamentals
Favourable demographics and industry trends including aging populations and rising healthcare expenditures
Attractive Asset Class
Defensive portfolio comprising core healthcare infrastructure located in global gateway cities supported by robust healthcare systems and leading operators
Growth Opportunities
Significant internal and external growth prospects underpinned by inflation indexed leases, accretive captive expansions and industry consolidation
Value Opportunity
Currently trading at a discounted AFFO multiple and P/NAV relative to Canadian REITs and healthcare real estate peers
Proven & Aligned
10+ year public company history with highly aligned founder and management team
INVESTMENT HIGHLIGHTS
3131
R E G I O N A L P O R T F O L I OO V E R V I E W S
A P P E N D I X 2
32
PORTFOLIO PROFILE
GLOBAL HEALTHCARE REAL ESTATE INFRASTRUCTURE PROFORMA PORTFOLIO COMPRISES 139 PROPERTIES TOTALING 9.3M SQUARE FEET OF GLA IN FIVE COUNTRIES
STRONG OPERATING FUNDAMENTALS WITH OCCUPANCY OF ~96%, WALE OF ~11 YEARS AND 54% / 46% MOB/HOSPITAL MIX
Q2 2016 Normalized (25) Canada Brazil Germany Vital Trust Proforma
GHCProformaRede D’Or
Proforma Platform
Number of Properties 61 5 20 34 17 2 139
Asset Mix (26) 100% MOB 100% Hospital 100% MOB ~15% MOB /
~85% Hospital~33% MOB /
~66% Hospital 100% Hospital 54% MOB / 46% Hospital
GLA (Million Square Feet) 4.1 1.0 0.8 1.8 1.1 0.4 9.3
Gross Assets (27) $1,229 $438 $185 $911 $417 $145 $3.5B
Occupancy 92.9% 100.0% 95.1% 99.4% 98.4% 100.0% 96.2%
WALE (Years) 4.6 20.7 4.8 18.1 12.3 25.0 11.1
Avg. Building Age (Years) ~33 ~12 ~14 ~19 [~] [~] ~25
WeightedAverage Cap Rate (27)
6.6% 9.2% 6.1% 7.2% 7.6% 9.7% 7.3%
33
CANADA: LARGEST PORTFOLIO OF MOB ASSETS
Dundas-Edward Centre Toronto, ON
Le Carrefour MedicalLaval, QC
YT
SK
QC
ON
NU
NT
NL
MB
BC AB
NBPE
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 61 properties comprising GLA of 4.1 million sf and
~1,200 tenants 91.5% occupancy and ~4.7 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)
Chatham (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)
Windsor (2)
Whitby (1)
Vaudreuil-Dorion (1)
Toronto (10)
St. Thomas (1)
Montreal (1)Saint Hubert (1)
CANADA
34
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 Janiero 100.0% occupancy and ~20.7 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. (S&P National Rating: AA-)
Hospital Caxias D’OrRio de Janeiro
Hospital Infantil SabaráSão Paulo
Manaus Belem Fortaleza
Natal
Recife
Macieo
Salvador
Brasilia
Rio De JaneiroSão Paulo
Port Alegre
Hospital CoraçãoHospital Santa Luzia
Hospital CaxiasHospital 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
Announced Acquisitions
Existing Assets
35
GERMANY: STRATEGICALLY LOCATED MOB ASSETS
6
1
1
11
Berlin Assets
Leipzig Portfolio
Ingolstadt
Fulda
NORDRHEIN-WESTFALEN
NIEDERSACHSEN
BADEN-WÜRTTEMBERG
SAXONY-ASPHALT
HESSEN
RHINELAND-PFALZ
BERLIN
SACHSEN
HAMBURG
SCHLESWIG-HOLSTEIN
BRANDENBURG
BAYERN
MECKLENBURG-VORPOMMERN
SAARLAND
BREMEN
THURINGIA
INVESTMENT AND MARKET OVERVIEW
High quality MOB assets located in the major markets including Berlin, Frankfurt, Ingolstadt and Leipzig 95.1% occupancy and ~4.8 year WALE
Highly fragmented MOBs market in Germany presents a unique opportunity to consolidate healthcare infrastructure assets accretively
Fully integrated property management and asset management capabilities allow efficient operation and deal sourcing
PolimedicaBerlin
Adlershof 1Berlin
Hollis CentreIngolstadt
Berlin NeukollnBerlin
Munich
Frankfurt
36
AUSTRALASIA (1): STRATEGIC INVESTMENT IN VITAL TRUST
WESTERN AUSTRALIA
NORTHERNTERRITORY
QUEENSLAND
SOUTH AUSTRALIA
NEW SOUTH WALES
VICTORIA
TASMANIA
1
1
4
6
6
1
NEW ZEALAND
6
AUSTRALIA
Marian CentrePerth, AU
Epworth Eastern Medical CentreMelbourne, AU
Ascot HospitalAuckland, NZ
Epworth Eastern HospitalMelbourne, AU
INVESTMENT AND MARKET OVERVIEW
Manager and 24.5% strategic shareholder of Vital Trust (NZX:VHP), Australasia’s largest listed healthcare real estate owner with 17 private hospitals, 7 MOBs, 4 aged care assets and 6 development lots 99.4% occupancy and ~18.1 year WALE
Stable and growing cash flows underpinned by tenancies of high quality hospital and healthcare operators with long-term, inflation-indexed leases
37
AUSTRALASIA (2): STRATEGIC INVESTMENT IN GENERATION HEALTHCARE
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: ~4.9m), Melbourne (pop: 4.5m), 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
3
5
PORTFOLIO OVERVIEW
Generation Healthcare REIT (ASX:GHC) is a leading Australian listed healthcare REIT with over A$400M in existing assets and a A$105M+ development pipeline of yields at ~8.25% on average.
Portfolio of 17 Properties of ~1.1M Square Feet 7 hospitals, 5 medical centres, 3 residential aged care, and 2 land
development parcels currently under construction
Strong occupancy and long-term lease expiry profile 98.4% occupancy and ~12.3 year WALE
Casey Specialist CentreMelbourne Suburb, Victoria
3838
M A N A G E M E N TB I O G R A P H I E S
A P P E N D I X 3
39
Peter RigginPresident –Canada
Fully integrated real estate owner and operator
HQ in Toronto plus five regional offices
139 professionals
Gerson AmadoManaging Director –Brazil
Leading healthcare real estate asset management platform
Relationships with hospital operators Rede D’Or SL and Sabara
2 professionals
Jan KrizanManaging Director –Germany
Established platform with full property management and asset management capabilities
Office in Berlin 19 professionals
David CarrPresident -Australasia
CEO – Vital Trust
Fully integrated property management and asset management
Offices in Auckland and Melbourne
12 professionals
Paul Dalla LanaChairman &CEO
Founder of NWH REIT Largest unitholder of NWH
Vincent CozziPresident and CIO
President and CIO Previously Senior Vice
President, Acquisitions at Ventas
Teresa NetoCFO
CFO Previously CFO of KEYreit
and Retrocom REIT Chartered Accountant
Mike BradyEVP & General Counsel
EVP and General Counsel Previously a Partner at
Baker & McKenzie LLP and McLean & Kerr LLP
GLOBAL PLATFORM WITH REGIONAL CAPABILITY AND EXPERTISE
HIGHLY EXPERIENCED AND ALIGNED EXECUTIVE MANAGEMENT TEAM
FULLY ESTABLISHED, SCALABLE REGIONAL TEAMS WITH EXPERTISE IN PROPERTY MANAGEMENT, ACQUISITIONS AND DEVELOPMENT
LOCAL MARKET KNOWLEDGE AND STRONG RELATIONSHIPS WITH LEADING HEALTHCARE PROVIDERS
OVER 180 PROFESSIONALS ACROSS 9 OFFICES IN 5COUNTRIES
MANAGEMENT – COMBINED REIT REGIONAL OPERATING PLATFORM AND EXPERTISE
40
NOTES
1. Based on NWH.UN’s closing unit price of $10.34/unit as of August 9, 2016 and market cap includes the July 2016 equity issuance .2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q2-16 AFFO of $0.92/unit.3. Fully consolidated including the announced GHC Acquisition and Brazil Acquisitions and excluding Canadian assets held for sale. NOI diversification is based on 19.9% and 24.3% proportionate ownership of
Generation Healthcare REIT (“GHC”) and Vital Trust, respectively and includes management fee income from both the GHC and Vital Trust external management entities.4. Reported AFFO/Unit represents quarterly AFFO annualized for the three month period ending June 30, 2016. Normalized AFFO/unit is based on Q2-16 Reported AFFO/unit and adjusted for completed
transactions as presented in the REIT’s Q2-16 MD&A. Run Rate AFFO/unit is based on Normalized AFFO/Unit and adjusts for (i) the completion of the previously announced R$300M Hospital Santa Helena acquisition at a 9.5% cap rate; (ii) the completion of previously announced R$130M Caxias CRI financing at ~8.0%; (iii) contracted rental indexation on the REIT’s Brazilian properties at an annualized IPCA rate of 7.5% through to December 31, 2016; and (iv) the planned repayment of the R$160M Brasilia terms loans bearing interest at 10.3% expiring in December 31, 2016 on comparable terms to the previous Brazil term loan repayments.
5. LTV excludes/includes convertible debentures and is shown on a fully consolidated basis (Vital Trust at 100%). On a proportionate ownership basis, LTV is 52.0% / 59.9% respectively.6. NAV is based on unitholder’s equity plus add-backs of (i) $190.6M of Class B and D exchangeable units; (ii) $65.3M related to the REIT’s proportionate share of its deferred tax liability; (iii) $6.5M net derivative
financial instruments; (iv) $16.7M DUP liability; (v) $2.5M accrued Ontario LTT; and, (vi) $13.5M adjustment to the fair value of the Vital Manager. Normalized NAV is based on reported NAV adjusted for (i) F/X rates as at August 5, 2016 and (ii) issuance of 7.3M units as part of the July 2016 equity offering.
7. Occupancy and WALE metrics have been adjusted to include the announced GHC Acquisition and Brazil Acquisitions and exclude Canadian assets held for sale.8. Defined as total assets.9. Represents Reported AFFO/unit. At inception based on quarterly distributions of $0.20/unit and reflects actual payout ratio for Dec 31, 2010 of ~100%. 10. At inception represents metrics for NorthWest Healthcare Properties based on the IPO prospectus dated of March 25, 2010. 11. Represents same property NOI growth (“SPNOI”) for the three months ended June 30, 2016 in source currency. For Australia, reported same store NOI growth is ~17.0%, however, this has been adjusted to
remove the additional rent received from the completion of brownfield projects. 12. Represents Vital Trust on a fully consolidated basis. [GHC Investment in Normalized?] 13. Generation Manager represents the C$56.4M (A$58.5M) purchase price of 100% of the external management company for Generation Healthcare REIT plus deferred consideration of $8.7M for an outstanding
performance fee, less a $2.9M deferred tax liability. 14. Includes goodwill related to the business combination and Corporate debt including the issued convertible debentures.15. Total liabilities represents the REIT’s total liabilities as presented on its June 30, 2016 balance sheet adjusted for (i) $65.3M related to the REIT’s proportionate share of its deferred tax liability; (ii) $6.5M net
derivative financial instruments; (iii) $16.7M DUP liability; (iv) $2.5M accrued Ontario LTT; and, (v) $13.5M adjustment to the fair value of the Vital Manager.16. Reflects the debt maturity profile as per the REIT’s Q2-16 MD&A and does not include deferred consideration.17. Gross book value represents the $2.9B value of gross assets reported plus the fully consolidated $0.4B of the GHC unit acquisition and $0.15B for the announced Brazil acquisitions.18. Weighted average interest rates and LTV are excluding corporate debt (ie. convertible debentures and revolving credit lines) and are shown on a regional basis. 19. Other represents the adjustment to the Sabara securitization in Brazil for $0.5M and the write-off on transaction costs in Germany for $2.3M related to the Mehrower Allee acquisition in April 2016. 20. In the REIT’s Q2-2016 MD&A, the diversification charts for the countries and asset mix are based on investment value and GLA respectively. The pie charts above reflect proportionate NOI, excluding the
assets held for sale in Canada and include a) the REIT’s 19.9% proportionate ownership of GHC and b) the announced 2 Brazil acquisition and c) Vital and Generation management fee income.21. Gross rent has been adjusted to reflect the REIT’s 24.3% proportionate interest in Vital Trust as well as recording Hospital Sabara at its gross rent (before financing) and includes projected gross rent from the
REIT’s 19.9% proportionate ownership of GHC and the announced 2 Brazil acquisitions, tenanted by Rede D’Or. 22. Redeployment of disposition proceeds is assumed to be in Brazil & Germany based on a 25/75 split, respectively. 23. Assuming projects are 100% debt funded at the existing region’s financing costs and is for indicative purposes only. 24. Does not include development pipeline from announced acquisitions.25. Shown on a fully consolidated basis. NWH owns a 24.3% interest in Vital Trust26. Gross assets (IFRS) as of June 30, 2016 and includes announced GHC acquisition and Brazil acquisitions27. Based on total assets of NWH and Vital Trust and GHC on a fully consolidated basis, including corporate assets which are not shown; approximately $2.2 billion in proportionate ownership28. Per IFRS financial statements as of June 30, 2016