ING Medical Properties Trust (NZSX: IMP)

Transcription

1 ING Medical Properties Trust (NZSX: IMP) Investor roadshow presentation May/June 2010 David Carr, General Manager and Stuart Harrison, Chief Financial Officer

2 Columba, Ascot Hospital and Clinics, Auckland Agenda

3 Agenda 1. Global markets and IMP performance 2. Financial overview 3. Financial covenants 4. Portfolio overview 5. Property and health sector review 6. Strategy and opportunities 7. Summary and outlook ING Medical Properties Management Limited (the 'Manager'), which is wholly owned by ANZ National Bank Limited, is the manager of the ING Medical Properties Trust (the 'Trust'). The Manager and the Trust have a licence from ING Corporate Services Pty Limited enabling them and related companies of the Manager to use the ING brand and certain trademarks owned by ING Group or its subsidiaries while transitioning to a new brand, which is expected to be by the end of

4 Global markets and IMP performance Apollo Health and Wellness, Auckland 4

5 Global and local markets stabilisation??? Offshore Re-capitalisation of global equity markets continues Euro debt crisis, started with the Greek bailout Jitters continue Dow Jones down approx 12% over the last month Credit more accessible, but expensive relative to pre GFC Global real estate investment market largely intact One year global equity returns +50%, over two years +5% New Zealand Exited technical recession in March 2009 Sustained period of lower OCR, offset by higher bank margins Fiscal stimulus full steam ahead, monetary stimulus forecast to ease Government 20 May Budget knock on effect One year NZX50 return +28%, over two years +2% 5

6 One year global returns to 31 March 2010* UK % Australia (S&P200) % US (S&P500) % Latin America (MSCI) % World (MSCI) % -44.0% Asia Pacific (ex Japan) (MSCI) % Europe (ex UK) (MSCI) % Australian Listed Property Sector (200) % -57.6% Source: Forsyth Barr Research * Local currency 6

7 IMP annualised total return to 31 March 2010 Investment Horizon 1 year 3 year 5 year 7 year ING Medical Properties Trust +13.1% +0.2% +11.4% +12.9% NZX Gross Property Index* +17.8% -7.8% +4.7% +7.9% NZX50 Gross Index* +27.6% -5.9% +3.0% +9.0% * with imputation credits Source: Forsyth Barr Research / IRESS 7

8 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% Cumulative Return % Apr-09 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Aug-09 Dec-09 Apr-10 Five year cumulative performance ING Medical Properties Trust NZX Property Gross Index NZX 50 Index Source: IRESS 8

9 Financial overview Napier Health Centre, Napier 9

10 Financial position and highlights Gross rental income up 4.9% to $12.36m Operating profit before tax increased by 15.3% to $6.76m NTA remained at $1.17 since 30 June 2009 Gearing at 34.0% 92.1% of the Trust s debt is hedged The Trust s effective interest rate paid (including bank fees) is 7.4% Bank facility committed to March 2011 FY10 cash distributions guidance reaffirmed at cents per unit, with target of 8.5 cents per unit December 2009 quarter distribution of cents plus imputation credits of cents. DRP applied with 1% discount. All NZD unless otherwise stated 10

11 Financial performance to 31 December 2009 HY10 HY09 $000s $000s % Change Gross rental income 12,361 11, % Operating profit (excluding unrealised items) 6,760 5, % Unrealised FX gain 388 4,658 Unrealised interest rate swaps gain/(loss) 1,748 (15,734) Taxation (2,120) 2,384 Profit/(loss) after income tax 6,776 (2,827) 339.7% Earnings per unit - cents 4.77 (2.01) Total comprehensive income/(loss) after tax 6,493 (7,043) 11

12 NZD AUD exchange rates 10 Year NZDAUD Price Distribution 8.0% 7.0% 7.7% The NZDAUD rate has been below on 5.6% of occasions 6.0% 5.0% 6.3% 6.3% 6.1% 5.6% 5.4% 5.4% 5.2% 5.2% 5.0% 4.8%4.8% 4.8% 4.6% 4.0% 3.6% 3.3% 3.3% 3.0% 2.5% 2.5% 2.0% 2.1% 1.3% 1.3% 1.0% 1.0% 0.8% 0.6% 0.0% 0.2%0.2%0.2% 0.2% 0.0%

13 Distributable income as at 31 December 2009 HY10 $000s HY09 $000s % Change Profit/(loss) before income tax 8,896 (5,211) Unrealised FX gain (388) (4,658) Unrealised interest swaps (gain)/loss (1,748) 15,734 Realised loss on sale of properties 14 nil Gross distributable income 6,774 5,865 Imputation credits 670 nil Net distributable income 6,104 5, % Gross distributable income per unit 4.77c 4.20c Net distributable income per unit 4.30c 4.20c 2.3% 13

14 Kensington 14 Hospital, Whangarei Financial covenants

15 Covenants Trust Deed HY10 Total money borrowed $98.1m Borrowing limitation: based on: Gross value of Trust fund $288.5m Not to exceed 50% 34.0% Bank loan facility ANZ Loan to valuation ratio: based on: Investment properties $286.4m Not to exceed 50 % 34.2% Interest cover ratio: based on 12 months: Net interest expense $3.8m Operating surplus $10.5m Equal or exceed 2.25 times 2.80 x 15

16 May Budget initial thoughts. Tax reforms impact Effective 20 May 2010 removed 20% accelerated depreciation on PP&E. Effective 1 October 2010 GST increased to 15% Effective 1 July 2011: Removal of depreciation allowances on building structures Corporate tax rate reduced to 28% Tax rate for PIEs (Portfolio Investment Entities) cut to 28% from 30%. Speculation that CPI may increase following implementation of changes Focus now on understanding and mitigating any impact 16

17 New Zealand and Australia based IMP partly insulated due to approx 35% of the portfolio in Australia and balance date of 30 June As at 31 December 2009 Investment properties Debt AUD Debt NZD Depreciation for tax Australia $101.3m $61.8m $0.0m $0.7m New Zealand $185.1m $33.0m $3.3m $2.4m $286.4m $94.8m $3.3m $3.1m All figures in NZD *Translated at exchange rate of at 31 December 2009

18 Portfolio overview Ascot Central, Auckland

19 Portfolio overview as at 31 March 2010 Total portfolio value of $291.4m, 14 properties and 105 tenants Occupancy at 99.6%, < 300m 2 remains vacant, Ascot Central 97% occupied 100% retention rate, renewals & new leases securing $1.15m rental income p.a. Weighted average lease term (WALT) of 8.3 years 2.4% lease expiry profile for 12 months to 30 June rent reviews completed (30 CPI based), average increase 2.8% 32 rent reviews due to 30 June 2010, with 20 reviewed by CPI Settlement of sale of Thames Street and Biomed properties Unconditional sale of Waipukurau property Hawkes Bay DHB lease extended to 2019 at the Napier Health Centre Portfolio over 90 day arrears just 0.2% of total annual income No speculative land bank All NZD unless otherwise stated 19

20 Trans-Tasman asset diversification 35% 65% 20

21 Auckland and Northland 21

22 Hawkes Bay (Sold, settlement mid 2010) 22

23 Melbourne, Australia 23

24 Occupancy profile as at 31 March 2010 Ascot Hospital 100% Ascot Central 96% Central Haw kes Bay Health Centre 100% Kensington Hospital 100% Napier Health Centre 100% Hibiscus Coast Community Health Centre 100% Hospital Laundry & Sterilisation Facility 100% Pitman House 100% Eastmed 95% Apollo Health & Wellness Centre 100% Epw orth Rehabilitation Brighton 100% Epw orth Eastern Medical Centre 100% Epw orth Eastern Hospital 100% Total Portfolio 99.6% 100% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 24

25 NZ listed property sector lease expiry profile* ING Medical Properties Trust 8.3 Goodman Property Trust 5.7 Kermadec Property Fund 5.6 ING Property Trust 4.9 AMP NZ Office Trust 4.5 Property for Industry 4.4 Kiw i Income Property Trust 4.1 National Property Trust 3.1 Sector Average Years Source: Forsyth Barr Monthly Property Update - 25 March 2010 *As at 31 March

26 28% 26% 24% 22% 20% 18% 16% 25 14% 12% 10% 8% % % % 4 1 0% Vacant Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Percentage of portfolio (by income) Jun-23 Jun-24 Jun-25 Lease expiry profile to Year The number above each bar denotes the total tenant expiries per year Total expiry Largest single expiry

27 Property and health sector overview Hibiscus 27 Coast Community Health Centre, Auckland

28 Property market overview Capitalisation rates stabilising Lag effect of recession impacting negatively on occupancy and rents Lease incentives increasing to attract and retain tenants Shorter lease terms on new deals, giving tenants ultimate flexibility Must work constructively and proactively with tenants Credit markets opening up to support transactional activity Deleveraging still a focus in some sectors and markets Rent arrears a key focus Speculative development activity subdued Construction pricing remains under pressure 28

29 Health sector overview $13.6b public health spend in 2010/11 + extra $2.1b for next 4 years By 2035, 65+ age group forecast to double in NZ 33% of New Zealand & 45% of Australia have private health insurance NZ private health insurance coverage decreased 0.3%* NZ health insurance claim payouts of $764m, 9.8% increase* NZ health insurance premiums $895m, up $57m or 6.9%* ACC entitlements reduced or limited Demand for medical and healthcare assets is driven by demand for healthcare services, which is largely underpinned by demographic trends, not economic conditions *Source: 29

30 Strategy and opportunities Specialist Consulting, Ascot Central, Auckland 30

31 Strategy and opportunities Ongoing consideration of non-core or lower value assets Immediate organic development limited, medium term opportunities under consideration Quality assets resulting in strong leasing and investment referrals Healthcare consortia now selected to deliver on better, sooner, more convenient primary healthcare policy mandate Partnering with operators looking to deliver health services via newly developed IFHC s (Integrated Family Health Centres) Target early conclusion of substantive lease renewals Trans-Tasman acquisition opportunities to further diversify and enhance the Trust s portfolio Competitive and tightly held investment market for similar quality assets to those of the Trust 31

32 Update - ANZ acquisition and re-branding ING NZ and its subsidiaries will be given its own specialist brand ING NZ currently working with ANZ to develop the new brand, including logo and visual identity A formal announcement of the new brand can be expected in the coming months What does this mean for the Trust? It is definitely business as usual Trust strategy unchanged Our name and therefore our NZX ticker code (now IMP) will change The cost of the re-branding exercise will be borne by the Manager, not the Trust/unitholders A communication will be sent to every unitholder about the brand changes when they occur 32

33 Summary and outlook Epworth Eastern, Melbourne 33

34 Summary and outlook Equity markets positive but cautious, IMP remains defensive and stable Core portfolio well positioned, stable rental growth, low risk lease expiry profile, long dated WALT, sound tenant covenants and high occupancy levels Focus on maintaining stable financial position, bank funding due March 2011 Budget tax reforms will impact on financial performance, health spend up Capitalisation rates stabilising - pressure now on rent and occupancy levels Demand for healthcare assets largely underpinned by demographic trends, not economic conditions, but sector is not totally resilient to any fallout Active consideration of opportunities in New Zealand and Australia to further strengthen and diversify the portfolio Announce new brand in the coming months Well established, defensive portfolio, positioned for low risk to earnings Forecast FY10 cash distribution range of cpu, with a target of 8.5cpu 34

35 Epworth Rehabilitation, Melbourne 35 Thank you

36 Disclaimer This presentation has been prepared by ING Medical Properties Limited on behalf of ING Medical Properties Trust. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain independent professional advice prior to making any decision relating to your investment or financial needs. This presentation is not an offer or invitation for subscription or purchase of securities or other financial products. Past performance is no indication of future performance. All values are expressed in New Zealand currency unless otherwise stated. May / June

37 Questions Eastmed, Auckland 37