Vital Healthcare Property Trust : HY25 Interim Report

FOR THE SIX MONTHS

ENDED 31 DECEMBER 2024

Interim

Report

PROVIDING INCOME SECURIT Y

FOR OUR UNIT HOLDERS

Ormiston Hospital (Stage 1), Auckland

C O N T E N TS
Defensive Australasian healthcare
property portfolio	4
Delivering for Unit Holders over time	8
Manager's report	10
Sustainability	16
Our Board	18
Our Executive Team	20
Financial Statements	22
Directory	53

9.75 cpu

~NZ$3.2bn 19.1 years

FY25 DISTRIBUTION	PROPERT Y	WEIGHTED AVERAGE LEASE
GUIDANCE	PORTFOLIO	EXPIRY (WALE)

Prime Minister and local MP, RT Hon. Christopher Luxon officially opened the Ormiston Hospital Expansion in October 2024

During HY25, Vital celebrated 25 years of being listed on the NZX. Click herefor a video commemorating this milestone.

4  |VITAL HEALTHCARE PROPERTY TRUST

Defensive Australasian healthcare property portfolio

as at 31 December 2024

Geographic diversity (by portfolio value)

	NORTHERN
	TERRITORY
		QUEENSLAND
WESTERN		12%
AUSTRALIA
4%	SOUTH
AUSTRALIA
	9%	NEW SOUTH
	WALES

22%

	VICTORIA
AU ST R A L I A	22%
-

~NZ$2.2bn TASMANIA

20‡ PROPERTIES (AUS)

27%

NEW ZEALAND

-4%

~NZ$1.0bn

14‡ PROPERTIES (NZ)

INTERIM REPORT 2025 |  5

Vital is the only specialist healthcare landlord on the NZX.

%

2

E

2

R

A

C

Y

R

O

%

T

A

2

U

L

2

R

B

E

M

H

A

O

T

Tenant

Diversification

(% of Portfolio Rent)

S

P

E

C

I

A

L

T

Y

H

O

S

P I T A L S 2 0%

Sub-sector

Diversity

(% of Value)

					7	8	%
				L
			TA
	S	I					L
H		P				A
O						IT
							P
					S
				O
				H
			E
		T
	U
C
A

5

8

%

Aurora Healthcare	19%		Mercy Ascot	3%		Acute Hospitals	58%
Healthe Care Surgical	17%		GenesisCare	2%		Specialty Hospitals (mental health & rehabilitation)	20%
Epworth Healthcare	14%		Boulcott Hospital	2%		Ambulatory Care	22%
Evolution Healthcare	14%		I-MED Radiology Network	1%
Southern Cross	4%		Other	21%
Burnside	3%

~NZ$3.2bn

34‡† PROPERTIES (AUS & NZ)

NZ$146m

NET ANNUAL PROPERT Y INCOME (CY24)

5.46%

WEIGHTED AVERAGE CAP RATE (IPP)‡ (AUS 5.35%, NZ 5.67%)

9.2 years

AVERAGE

BUILDING AGE*

*measured through the latter of date of construction or last significant development

19.1 years

WEIGHTED AVERAGE LEASE EXPIRY (WALE)1

97.7%

PORTFOLIO OCCUPANCY

1 Inclusive of landlord options	‡ Income Producing Property (excludes strategic assets)
	† Figures may not sum due to rounding

6 |  VITAL HEALTHCARE PROPERTY TRUST

Investing in healthcare property across Australia and New Zealand

INCOME STABILIT Y

Consistently growing net property income reflecting tenant quality and improving industry dynamics

Improving rent: EBITDAR for Vital's tenants (lowered from 60% to 53% over the last 12 months1) reflecting tenant quality and improved industry dynamics Diversified tenant base with no tenant accounting for more than 19% of income

GROWING DEMAND

Ageing demographics and growing populations

Rising life expectancy Increased offerings due to technological advances Increasing demand from the public sector due to capacity and / or fiscal constraints

HIGH QUALITY

PORTFOLIO

Focused on healthcare precincts across Australia and New Zealand Divestments and developments have helped improve portfolio including increasing the WALE to 19.1 years 97.7% occupancy

Average building age2: 9.2 years

DEVELOPMENT

UPSIDE

NZ$77.5m remaining spend on existing developments to be substantially complete by September 2025

Embedded opportunities in Vital's potential development pipeline exist but will only be pursued if value accretive

Vital has an unmatched development team in healthcare property across Australia and New Zealand with ~NZ$277m of developments completed over CY24

EARNINGS GROWTH

96% of leases increase annually by CPI or a fixed % Strong underlying NPI growth enhanced by developments

AFFO growth per unit below medium term target due to on-going interest rate head winds

1. Vital's hospital tenants only who provide ~78% of Vital's revenue
2. Average building age = the later of the date of construction or the last significant capital works, typically calculated as impacting >50% of floor area

INTERIM REPORT 2025  |  7

New Zealand

Property Council

(PCNZ) Conference

Wakefield Hospital, Wellington

In September 2024, the PCNZ conference was held in Wellington. We took the opportunity to showcase Wakefield Hospital, Wellington's latest state-of-the-art private hospital and specialist facility.

8  |VITAL HEALTHCARE PROPERTY TRUST

Delivering for Unit

Holders over time

Short (1 year), medium (3 years) and longer (10 years) term enhancements

All as at 31 December of the year shown unless otherwise indicated.

Minister of Health the Hon. Simeon Brown officially opened stage 2 of the redevelopment of Wakefield Hospital in February 2025

TOTAL PROPERTY VALUE
		2014	~NZ$0.63bn
		(AUS: 76%, NZ: 24%)
413%		2021	~NZ$3bn
	(AUS: 73%, NZ: 27%)
		Market leading
	~NZ$3.23bn
growth		2024	WALE
(HY15-HY25)		(AUS: 68%, NZ: 32%)

WALE

2014	15.2 years
2021	17.8 years
2024	19.1 years

AVERAGE BUILDING AGE1		NET PROPERTY INCOME (HALF YEAR)
		2014	Data not available				HY15	NZ$30m
						148%
		2021	10.7 years				HY22	NZ$58m
Younger buildings
reduce maintenance		2024	9.2 years			increase		HY25	NZ$74m
capex requirements			(HY15-HY25)

1 Average building age = the later of the date of construction or the last significant capital works

2 Committed and potential development pipeline

INTERIM REPORT 2025 |  9

NZ$225m of assets in due diligence or being actively considered for sale with further asset sales being considered to reduce balance sheet gearing

DEVELOPMENT PIPELINE2		LARGEST SINGLE TENANT EXPOSURE

Enhance earnings and valuation growth and support portfolio quality

2014 ~NZ$70.0m

2021 ~NZ$1.4bn

2024 ~NZ$2.3bn

Concentration risk

reduced

2014 44%

2021 20%

2024 19%

SECTOR SPLIT		WEIGHTED AVERAGE CAP RATE
	2014	Hospital 87%,
	Ambulatory Care 13%				2014	8.75%
			Hospital 82%,
	2021					4.67%
Diversity of assets	Ambulatory Care 13%,				2021
	Aged Care 5%		Healthcare now
reduces risk and						considered a core real		2024	5.46%
	Hospital 78%,
enhances earnings	2024		estate investment
	Ambulatory Care 22%,
			Aged Care N/A

10 |  VITAL HEALTHCARE PROPERTY TRUST

Manager's report

Vital remains the leading healthcare property investment platform in Australasia.

Vital has a high-quality portfolio of geographically diversified healthcare assets and a growing net property income stream, primarily due to its well capitalised healthcare operator tenants who continue to experience strong demand for their services.

This demand has led to increased revenue for Vital's hospital tenants evidenced by improved rental affordability.1 Vital's hospital tenants earn profits of around two times the rent payable to Vital providing a significant buffer in case of unforeseen expenses or changes in earnings.

Our recent returns have not been in line with our targets. There are two main reasons for this: (1) higher interest rates have caused declines in property values and AFFO per unit; and (2) during HY25, Vital fell out of a two global share market indices leading to a fall in Vital's unit price.

Tēnā koutou,

Northwest Healthcare Properties Management Limited, the Manager of Vital Healthcare Property Trust (Vital), is pleased to report Vital's results for the six months ended 31 December 2024 (HY25 or the Half Year).

During the Half Year we continued to focus on improving the portfolio through divestments and developments and undertook a significant consultation with Unit Holders and other stakeholders around a Dual Listed Trust Structure (DLT). Earlier this year, we announced that we are not proceeding with the DLT at this time due to feedback around transitional risks from the DLT and current market conditions. However, Unit Holders generally liked the end state of the DLT so we will continue to consult with Unit Holders. More details on the DLT are provided below.

Whilst we believe the DLT provides potential future upside for Unit Holders, it is by no means our sole focus. Other key achievements over the Half Year include:

• Over 47,000 square metres of space leased, extended or renewed during HY25 representing 18% of Vital's total property portfolio by net lettable area and 21% by income. This leasing helped to further extend Vital's long weighted average lease expiry (WALE) to 19.1 years at 31 December 2024 (versus 18.3 years at 30 June 2024).
• NZ$47.9 million of non-core assets were sold. Proceeds have been recycled into Vital's development pipeline as we continue to improve the portfolio across a range of metrics.
• Wakefield Hospital (stage 2A) development

in Wellington officially opened and Maitland Private Hospital in Newcastle achieved Practical

1 Vital's hospital portfolio (~78% of income) rent:EBITDAR ratio improved from 60% for the 12 months to 30 September 2023 to 53% for the 12 months to 30 September 2024