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HealthLease Properties REIT
Forward-Looking Statements
This presentation contains forward-looking statements which reflect management’s expectations regarding objectives, plans, goals,strategies, future growth, results of operations, performance and business prospects and opportunities of the REIT. The words “plans”,“expects”, “does not expect”, “scheduled”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projects”, “believes” or variationsof such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”,“occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. Some of the specific forward-lookingstatements in this presentation include, but are not limited to, statements with respect to the following: the intention of the REIT to paystable and growing distributions; the ability of the REIT to execute its growth strategies; the forecasted financial results of the REIT for theperiods set out in the financial forecast section of this presentation and the REIT’s prospectus; the expected tax treatment of the REIT andof the REIT’s distributions to Unitholders; and the expected seniors housing and care industry and demographic trends. Forward-lookingstatements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of theREIT as of the date of this presentation, are inherently subject to significant business, economic and competitive uncertainties andcontingencies. The REIT’s estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forthherein, including, but not limited to, the REIT’s future growth potential, results of operations, future prospects and opportunities, thedemographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, thetax laws as currently in effect remaining unchanged, the continual availability of capital and the current economic conditions remainingunchanged. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance onthese statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of futureperformance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance orresults will be achieved. A number of factors could cause actual results to differ materially from the results discussed in theforward-looking statements, including, but not limited to, the factors discussed under the “Risk Factors” section of the REIT’s prospectus.These forward-looking statements are made as of the date of this presentation and, except as expressly required by applicable law, theREIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, futureevents or otherwise.
2
HealthLease Properties REIT
HealthLease Properties REIT
High-quality seniors housing and care facilitiesUNDER
triple-net leasesTO
experienced tenant operators
Unique, cross-border, seniors housing and care investment opportunity
15 U.S. and Canadian properties 1,931 beds/suites
FOCUSED ON
need-driven care skilled nursing, long-term care and assisted living
3
Beverly Centre - Lake MidnaporeCalgary, Alberta
HealthLease Properties REIT
Portfolio of high-quality facilities in the U.S. and Canada
focused on need-driven care
Favourable demographicsand industry dynamics
Triple-net lease structureproviding stable cash flows
Proven and de-riskedpre-leased development model
offering measured growth
Leading regional tenant operatorswith high-quality payor sources and
robust occupancies
Attractive investmentand leverage metrics
Investment Highlights
Experienced and aligned management team and board
4
HealthLease Properties REIT
Growing Healthcare Industry
17.4%of GDP
11.7%
Growth in healthcare spending expected to outpace broader economy
of GDP
4.2%Growth in 2011
6.5%CAGR
(2005 - 2010)
U.S.
$2.8 Trillion $193 BillionCanada
National Healthcare Spending
HIGHEST HEALTHCARE SPENDPER-CAPITA GLOBALLY
3RD HIGHEST HEALTHCARE SPENDPER-CAPITA GLOBALLY
5
HealthLease Properties REIT
Seniors Housing and Care - Spectrum of Care
REAL ESTATE COMPONENT SERVICES COMPONENT
Shelter Activities, Recreation
Transport, Laundry
Meals Care Services Short-Term Post Acute Care
Long-Term Chronic Care
Independent Living Facilities (ILFs)
Assisted Living Facilities (ALFs)
Skilled Nursing Facilities (SNFs) / Long-Term Care Facilities (LTCs)
Continuing Care Retirement Communities (CCRCs)
LOW ACUITY
HIGH ACUITY
PRIVATE PAY GOVERNMENT PAY
>90% of the REIT’s portfolio is focused on need-driven care
6
HealthLease Properties REIT
Seniors Housing and Care
Revenue Stability• Need-driven services• Stable occupancy
(historical occupancy ~90%)• Favourable funding sources
Barriers to Entry
Cost-Effective Care Alternative
Ownership Fragmentation
Supply/Demand Imbalance
By 2031, seniors population expected to reach
73.3MU.S.
9.6MCanada
70% of U.S. seniors will require some type of long-term care
Favourable Industry Dynamics
7
>40% of U.S. seniorswill need care in anursing home
HealthLease Properties REIT
TOTAL U.S. POPULATION >65(M) TOTAL CANADIAN POPULATION >65(M)
Demographics Driving Demand
Aging population and increasing life expectancy
Changing family dynamics
Changes in consumer preference
40.246.8
56.665.7
73.3
% OF TOTAL POPULATION
4.85.8
7.1
9.68.4
% OF TOTAL POPULATION
Seniors population growing 3X FASTER than overall population
8
13%14%
16%18% 20%
14%16%
18%21%
23%
HealthLease Properties REIT
Significant Supply/Demand Imbalance
U.S. Current supply: 15,622 SNFstotaling 1.7 million beds
Number of facilities declined by 5% (2001 to 2011)
Annual new construction starts represent 0.3% of existing supply (since 2008)
Number of facilities not keeping pace with seniors population growth
CanadaCurrent supply: 7,951 facilities totaling 390,600 suites
Current LTC waiting list:
• Ontario: >20,000 beds, representing~26% of current bed stock
• Alberta: 1,700 beds, representing~11% of current bed stock
>315,000new LTC & ALF beds/suites needed
(next 20 years)new construction needed
(next 35 years)
>US$400B
9
HealthLease Properties REIT
HealthLease Properties REIT
10
Well-positioned to capitalize on expected growth in
seniors housing and care
HealthLease Properties REIT
Miller’s Merry Manor of MarionMarion, Indiana
HealthLease Properties REITHealthLease Properties REIT
Business Model
High-Quality Facilities
Focused on Need-Driven Care
Long-Term Triple-Net Leases
Leading Regional Tenant Operators with High-Quality Pay Sources
and Robust Occupancies
LEASEDUNDER
TO
11HealthLease Properties REIT
Valleyview Care CentreMedicine Hat, Alberta
Harmony Court Care CentreBurnaby, British Columbia
Avalon Springs Health CampusValparaiso, Indiana
HealthLease Properties REIT
High-Quality Portfolio
15 properties 1,931 beds/suites
Hotel-Like Design and Hospitality-Inspired Amenities
Current and Next Generation™ Facilities
High-Quality Construction
Quality assets drive strong margins for tenant operators
12
Average Age:
8 years(including major renovations)
Private Rooms:
~70%
72%High-QualityOccupancy Payor Mix
(non-Medicaid)
2.0xPortfolio EBITDARto Rent Coverage(weighted average)
88.4%Portfolio
Occupancy (weighted average)
HealthLease Properties REIT
6 properties in Canadatotaling 1,002 beds/suites acquired from Northern Properties REIT
• Owned by NPR since 2006
• Stable NOI: CAGR of 1.8% (since 2007)
Initial Portfolio
9 properties in the U.S.totaling 929 beds/suites acquired from Mainstreet
• 6 properties (654 beds/suites)
• 3 pre-leased Next Generation™development properties (275 beds/suites)
BEDS/SUITES SNF/LTC ALF/ILF Total
U.S. 754 175 929
Canada 572 430 1,002
13
~$265M appraised value(inclusive of U.S. portfolio premium of 5.3%)
HealthLease Properties REIT
Key Portfolio Statistics
BEDS/SUITES BY TYPE OF SERVICE PROVIDED
7%ILF134
69%SNF/LTC1,326
24%ALF471
RENTS BY GEOGRAPHY1
9%British Columbia
34%Indiana
6%Illinois
51%Alberta
1. Based on contractual rent for 2013.
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Quality assets drive strong margins for tenant operatorsNeed-driven care in diverse geographies
HealthLease Properties REIT 15HealthLease Properties REIT
Beverly Centre - Glenmore Calgary, Alberta
Harmony Court Care CentreBurnaby, British Columbia
Avalon Springs Health CampusValparaiso, Indiana
Superior Finishes
Hotel-Like Design, Hospitality-Inspired Amenities
HealthLease Properties REIT
Hotel-Like Design, Hospitality-Inspired Amenities
16HealthLease Properties REIT
Spacious Private Rooms and Baths
Harmony Court Care CentreBurnaby, British Columbia
Columbia Assisted LivingLethbridge, Alberta
Marion Rehabilitation and Assisted Living Marion, Indiana
HealthLease Properties REIT
Hotel-Like Design, Hospitality-Inspired Amenities
17HealthLease Properties REIT
Large Common Areas and Social Destinations
Beverly Centre - Glenmore Calgary, Alberta
Harmony Court Care Centre Burnaby, British Columbia
Marion Rehabilitation and Assisted Living Marion, Indiana
HealthLease Properties REIT
0%
17.4%
0% 1.5%
81.1%
Long-Term Triple-Net Leases
Tenant operatorsassume operational risk
• Operators pay all operating expenses and most capital expenditures• Fixed rent escalators1
• Corporate or personal guarantees (with respect to most leases)• Significant landlord rights and remedies• Regular tenant reporting requirements
1. Other than the lease in respect of Highland Manor Health and Living.
Weighted average lease maturity of 13.5 years
0% 0% 0% 0% 0% 0% 0% 0% 0%
PERCENTAGE OF PORTFOLIO RENTAL REVENUE MATURING IN A PARTICULAR YEAR
+
18
HealthLease Properties REIT
Leading Regional Tenant Operators
19
Financially strong
Operate in multiple states and provinces
Local market knowledge
Proven track records
Emphasis on high-quality patient care
$285M
2.0x
88.4%
Consolidated annual EBITDAR
Portfolio EBITDAR to rent coverage (weighted average)
Portfolio occupancy (weighted average)
EBITDAR coverage compares favourably to industry average
HealthLease Properties REIT
Leading Regional Tenant Operators
OPERATOR NUMBER OFFACILITIES MANAGED
NUMBER OF BEDS/ SUITES MANAGED
GEOGRAPHIC FOOTPRINT % OF 2013CONTRACTUAL RENT
AgeCare 13 >1,000 Western Canada 60.0%
Life Care Services LLC1 >100 >29,000 Continental U.S. 6.6%
Sprenger Health Systems 11 >1,600 Midwest U.S. 6.3%
Platinum Health Care 29 3,335 Midwest U.S. 6.0%
Covenant Care >50 5,787 Midwest & Western U.S. 5.5%
Miller’s Health Systems 32 3,369 Indiana 5.3%
Trilogy Health Services 67 >7,200 Midwest U.S. 4.9%
Magnolia Health Systems 31 >2,800 Indiana 4.2%
MS Senior I LLC2 1 52 Indiana 1.2%
Total >334 >54,143 100.0%
>200 years combined operating history
1. An entity that is owned, 50% by an affiliate of Life Care Services, LLC, which is the managing member, and 50% by an affiliate of Mainstreet. 2. An affiliate of Mainstreet. The Partnership is in negotiations to lease Highland Manor Health and Living, which is currently operated by Mainstreet Senior I, LLC, to an unrelated third-party operator.
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HealthLease Properties REIT
U.S.
MedicaidState funding assistance for basic care services
Long-term stayIndiana rates average $145 per day
Private InsuranceReimbursement rates are negotiated with insurers
based on patient level of care and local market rates
MedicareFederal health insurance program
Estimated average 2013 Medicare Rates:approximately $455 per day
Private FundsResidents privately pay full rate as determined
by level of care and market need
Funding Environment
Triple-net lease structure and experienced operators mitigates funding variabilityInitially, 60% of 2013 contractual rent generated in Canada
21
Canada
Alberta and British ColumbiaGoverned by regional health authorities
Cost shared between province and resident
HealthLease Properties REITHealthLease Properties REIT
Growth Strategy
Organic Growth• Rent step-ups• Financing opportunities• Tenant retention and growth
Construction of Pre-Leased Development Facilities
Strategic and Accretive Acquisitions • Focus on high-quality
facilities and operators
+ +
22HealthLease Properties REIT
Avalon Springs Health CampusValparaiso, Indiana Mainstreet Next GenerationTM Campus
Beverly Centre - Lake Midnapore Calgary, Alberta
HealthLease Properties REIT
De-Risked, Pre-Leased Development Model
• Pre-leased prior to construction (limited lease-up risk)
• Bonded contractors
• Guaranteed maximum price construction contracts
• Binding timelines for project completion (~9 to 12 months)
• Rent commences upon certificate of occupancy
• Internal development activity limited to 20% of GBV
Pipeline of external properties with a value of >US$150M10 properties, representing 1,000 bed/suites over the next 24 months
23
Mitigates normal risks associated with development
Next Generation™ properties
Marion Rehabilitation and Assisted Living Marion, Indiana
HealthLease Properties REIT
80% Occupancy
2.0x EBITDAR to rent coverage
On-time: Average construction time of 10 months
On-budget: Within 1% of total cost
Track Record of Pre-Leased Development
Successfully financed, developed and leased
9 facilities(including 5 of the initial properties)
representing a total value of
~US$130M(since 2008)
24
1. Represents results of Lafeyette and Noblesville, two stabilized properties developed by Mainstreet. These properties do not form part of the Initial Properties as they are expected to be purchased by the tenant operator.
Development / Construction
Property Performance1
Marion Rehabilitation and Assisted Living Marion, Indiana
The Legacy at Creasy SpringsLafayette, Indiana
Avalon Springs Health CampusValparaiso, Indiana
HealthLease Properties REIT
Development Agreement• REIT has preferential right to develop internally
on all Mainstreet development activity
• REIT reserves right to purchase non-internally developed projects
• Mainstreet to take back equity(pro rata to a max of 40%)
• REIT may undertake third-party development opportunities
• 5-year term (with renewals, subject to no material default)
Asset Management Agreement• 3% of REIT gross revenue
• 5-year term (with renewal, subject tono material default)
• Internalize at no cost to REIT at $500 million market cap
Non-Competition Agreement• Restricted from, developing, acquiring or
investing in senior housing properties, except as per Development Agreement, or create another REIT/seniors housing pubco in U.S./Canada
Asset Manager and Developer
25
Principals with over 35 years experience
focused on seniors housing and care properties
HealthLease Properties REIT
Paul Ezekiel “Zeke” Turner Chairman andChief Executive Officer
Adlai Chester, CPAChief Financial Officer
V. Edward GroggPresident, Mainstreet
Senior Management
26
Retaining ~18% ownership position in REIT
Increased ownership through equity consideration from external development
HealthLease Properties REIT
David BeirnesPrincipal, CBG Seniors Realty AdvisorsFormer CFO, Retirement Residences REIT
Aida TammerDirector, Tricon Capital Group
James BremnerPresident, Healthcare of Duke Realty Corporation
Richard Turner President & CEO, TitanStar Investment Group Trustee, Pure Industrial Real Estate TrustFormer Trustee, Sunrise Senior Living REIT
Neil LabattePresident, Global Dimension CapitalFormer CEO, Legacy Hotels REIT
Michael SalterCFO, Medical Facilities Corporation
Paul Ezekiel “Zeke” TurnerChairman and CEO, HealthLease Properties REIT
Founder and CEO, Mainstreet
Board of Trustees
27
Experience inMajorityIndependent
Real estate capital marketsHealthcare & seniors housing and careU.S. & Canada
HealthLease Properties REIT 28
FACILITY LEASE WITH OPERATOR EXPECTED COMPLETION OF CONSTRUCTION AND
MAINSTREETDEVELOPMENT LEASE
MATURITY
CONSTRUCTIONCONTRACT
DURATION OF DEVELOPMENT/
LEASE PAYMENTS1
(months)
MAINSTREETDEVELOPMENT
LEASE
The Bridge Care Suites, Illinois
Platinum Health Care, LLC
February 2013 Fixed price 8 $572,193
Mishawaka, Indiana
Sprenger Health Systems
December 2012 Fixed price 6 $341,768
Wabash, Indiana
Life Care Services LLC2 December 2012 Fixed price 6 $333,039
Total $1,247,000
1. Assumes Mainstreet Development Lease payments commence in June 2012 and end the month leading up to the issuance of a Certificate of Occupancy.2. An entity that is owned, 50% by an affiliate of Life Care Services, LLC, which is the managing member, and 50% by an affiliate of Mainstreet.
Mainstreet has pledged certain class B units and their related distributions until tenant occupancy
Mainstreet Development Lease
HealthLease Properties REIT
Debt Strategy
29
DEBT MATURITY
NO DEBT MATURITIES UNTIL 2016
Chart represents maturities on debt outstanding as at December 31, 2011 pro forma the IPO. Additional principal payments (not included in above chart) on maturity for anticipated debt incurred in connection with the three preleased development properties is $18.8 million for 2016.
SUMMARY
Debt/GBVat Closing of IPO 52%Debt/GBV(upon completion of pre-leased properties)
55%
Allowed Amountper Indenture
Up to 65%(incl. converts)
HIGHLIGHTS
Weighted Average Rate 5.04%
Average Maturity (no maturities until 2016) 8.6 years
Term Loan Facility US$25M
0.0% 0.0% 0.0% 0.0% 34.0% 66.0%% OF TOTALMATURITIES
(MILLIONS)
HealthLease Properties REIT
Proven and de-risked pre-leased development modeloffering measured growth
Favourable demographicsand industry dynamics
Experienced and alignedmanagement team and board
Attractive investmentand leverage metrics
Investment Highlights
High-Quality Facilities
Focused on Need-Driven Care
Long-Term Triple-Net Leases
Leading Regional Tenant Operators with High-Quality Pay Sources
and Robust Occupancies
LEASEDUNDER
TO
30