ING Medical Properties Trust (NZX: IMP)Annual results presentation to 30 June 2010D id C G l M d St t H i Chi f Fi i l Offi 20 A t 2010

www.ingmedicalproperties.co.nz

David Carr, General Manager and Stuart Harrison, Chief Financial Officer - 20 August 2010

www.ingmedicalproperties.co.nz

Agenda

Napier Health Centre, Napier

Agenda

1. Key messages

2. IMP performance

3 Financial results3. Financial results

4. Capital management and financial covenants

5. Portfolio overview

6. Property and health sector summary

7. Summary and outlook

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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 2010.

Key messagesy g

Taylors Laundry and Sterilisation Facility, Auckland

Key messages

• Active management generating strong operating result • Final quarter cash distribution 2.125cpu, imputation credits of 0.51cpu• FY10 net distribution of 8.5cpu, in line with guidance• Operating profit before tax of $13.4m, up 14% • IMP 1 year total return 7.5%, equivalent to NZX Gross 50 Index• Proven investment asset class with defensive characteristics• Bank facility secured to September 2013, funding costs increased• Tax changes will impact on future returns• Tax changes will impact on future returns• Portfolio resiliently positioned and stabilised for opportunities• Forecast FY11 cash distribution range of 8 0 – 8 2cpuForecast FY11 cash distribution range of 8.0 – 8.2cpu• Announce new brand

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IMP performance

Kensington Hospital, Whangarei

Unit price performance to 30 June 2010

130

120

125

130

105

110

115

d to

100

95

100

105

Pric

es -

Inde

xed

80

85

90

Uni

t / In

dex

P

80

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

ING Medical Properties Trust NZX Property Gross Index NZX 50 Index

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Source: IRESS

IMP annualised total return to 30 June 2010

Investment Horizon 1 year 3 year 5 year 7 year

ING Medical Properties Trust +7.5% +2.5% +9.9% +11.4%

NZX G P I d * 11 % 8 % 2 % 6 %NZX Gross Property Index* +11.7% -8.5% +2.7% +6.5%

NZX50 Gross Index* +7.5% -9.8% -0.2% +5.5%

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Source: Forsyth Barr Research / IRESS* with imputation credits

Financial results

9Foyer, Ascot Central, Auckland

Financial performance to 30 June 2010

FY10 FY09 %• Gross property income impact FY10

$000sFY09$000s

% Change

Gross property income - rentals

- expense recovery

25,158

3,216

23,817

2,846

+ 5.6%

+13.0%

p p y pof increased occupancy and rent reviews.

• Year end exchange rate 0 8141 Interest Expense (7,634) (7,564)

Operating profit (excl. unrealised items) 13,385 11,777 +13.7%

Unrealised FX gain 259 403

• Year end exchange rate 0.8141 (2009: 0.8013).

• Interest rates less volatile inUnrealised interest rate swaps (loss) (51) (8,736)

Unrealised revaluation gain/(loss) 10,476 (7,078)

Interest rates less volatile in SWAPs, mainly AUD denominated debt with 92.1% hedged.

Taxation - current

- deferred

1,816

14,815

1,657

(3,110)

Profit/(loss) after income tax 7,438 (2,161) +444%

• Effective current tax rate 13.6% (2009: 14.1%).

Earnings per unit - cents 5.22 (1.53)

• Deferred tax impacted by removal of building depreciation allowance and change in corporate tax rate effective

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p1 July 2011.

Distributable income as at 30 June 2010

FY10 FY09 %• Revaluation gains in FY10

offsetting the losses of FY09 FY10$000s

FY09$000s

% Change

Profit/(loss) before income tax 24,069 (3,614)

Revaluation (gains)/losses on (10,476) 7,078

offsetting the losses of FY09.

• Incentive Fee payable to the investment properties

Unrealised gain on construction - (20)

Unrealised foreign exchange (gain) (259) (403)

• Incentive Fee payable to the Manager based on average increase in Gross Value of Trust Fund.

Unrealised interest swaps (gain)/loss 51 8,736

Incentive Fee 120 253

Gross distributable income 13,505 12,030 12.26%• Imputation credits attached to

Quarters 1 2 and 4 distribution G oss d s bu ab e co e 3,505 ,030 6%

Current Tax

Imputation credits

1,816

1,389

1,657

-

Net distributable income - adjusted 12,116 12,030 0.72%

Quarters 1, 2 and 4 distribution. No imputation credits available in 2009.

j

Gross distributable income per unit 9.48c 8.53c

Net distributable income per unit 8.50c 8.53c• Payout ratio of 95.5% of net

cash from operating activities

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Financial position as at 30 June 2010

%• Removal of allowance for

depreciation of buildings FY10 FY09%

Change

Net tangible assets per unit - cents 108c 112c -3.1%

Net tangible assets per unit - cents 127c 117c +8.4%

depreciation of buildings triggered a Deferred Tax adjustment – impacts:-

• Deferred Tax liability increases (excluding deferred tax on revaluation

gains)

Investment properties $292.0m $286.2m +2.0%

increases• Unitholders’ fund

decreases• NTA adjusted

Total assets $299.5m $295.3m +1.4%

Bank debt $97.7m $105.7m +7.0%

NTA adjusted.• Trading* at a Price to 30 June

2010 adjusted NTA of 98.4%, relative to sector 82.4% (as at 31 July)

Unitholders’ funds $155.2m $158.4m -2.1%

Securities on issue 143.3m 141.8m +1.1%

31 July)• Investment properties –

excludes held for sale.• Units on Issue increased with

Debt to asset ratio 32.6% 35.8%Distribution Reinvestment Plan re-investing 10.4% (Quarter 3)

* Unit price of $1.25 as at 18 August 2010

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Unit price of $1.25 as at 18 August 2010

Tax reforms

• 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%

• IRD and the Treasury have released their findings of the review of• IRD and the Treasury have released their findings of the review of building fit-out proposing the law be clarified.

• IMP partly insulated due to 37% of the portfolio in AustraliaAs at 30 June 2010 Investment

propertiesDebtAUD

DebtNZD

Australia $107.2m $61.4m $0.0m

All figures in NZD

New Zealand $184.8m $32.9m $3.4m

$292.0m $94.3m $3.4m

• Forecasts of CPI increase following implementation of changes• Focus now on understanding and mitigating any impact• Likely impact on development pipeline affordability and returns

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• Likely impact on development pipeline, affordability and returns

Capital management and financial covenants

14Epworth Eastern, Melbourne

Trust Deed and Bank key covenants

Trust Deed FY10• Bank loan facility - existing Total money borrowed $97.7m

Borrowing limitation:- based on:-

Gross value of Trust fund $299.5m

y g• Facility limit NZ$135.0m • Expiry 31 March 2011 - a

current liabilityGross value of Trust fund $299.5m

Not to exceed 50% 32.6%

Bank loan facility ANZ National & ANZ Banking

• Debt drawn - AU$76.7m- NZ$3.4m

Bank loan facility – ANZ National & ANZ Banking Group

Loan to valuation ratio:- based on:-

Investment properties $296.2m

• Investment properties• All properties independently

l d b i t d l Not to exceed 50 % 33.0%

Interest cover ratio:- based on 12 months:-

Net interest expense $7.5m

valued by registered valuers. • No property can be valued by the

same valuer for more than two consecutive valuations.

Operating surplus $20.8m

Equal or exceed 2.25 times 2.77 x

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Capital management

• Benefit of existing facility at lower cost through the GFC• Board decision to mitigate current liability, giving Trust ongoing

security• Renewed bank loan facility:• Renewed bank loan facility:

• ANZ National Bank Limited• Commencement expected 30 September 2010p p• Expiry 1 September 2013• Facility - Tranche AUD 100 million and• - Tranche NZD 20 million• Covenants - Financial Undertaking similar to existing

• Funding costs reflective of current market lending conditions• Funding costs reflective of current market lending conditions

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Interest rate management

Hedge expiry by year

• Currently 92.1% of the Trust’s debt is hedged

g p y y y

15%13%17%

15%

19%20%

25%

30%

• The Trust’s weighted average effective interest rate is 7.5% at

10%

15%

5%

13%

5%

0%0%

5%

10%

15%

year end0%

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Average Swap rate9.0%

• The swaps have, on average, 4.2 years until expiry

4.0%

5.0%

6.0%

7.0%

8.0%

0.0%

1.0%

2.0%

3.0%

%

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

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Portfolio overview

Pitman House, Auckland

Portfolio metrics solid and resiliently positioned

• Total portfolio value of $296.2m, 14 properties and 106 tenants• Occupancy at 99.6%, 250 sqm to be leased• Ascot Central occupancy at 97%• New leases securing $493k net rental income per annum• 100% tenant retention rate, WALT of 8.6 years• 2.6% lease expiry profile to 30 June 2011 • 9.4% aggregate lease expiry profile over next 3 years• 70 rent reviews to 30 June 2010 (75% CPI) average increase 4 2%• 70 rent reviews to 30 June 2010 (75% CPI), average increase 4.2%• 82 rent reviews due to 30 June 2011, with ~90% reviewed by CPI• Napier lease secured to 2019 terms reflect market conditionsNapier lease secured to 2019, terms reflect market conditions• Unconditional sale of Waipukurau ~6% above BV• Over 90 day arrears of less than $10,000

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y $ ,

Solid 2010 revaluation result

• All properties independently valued as at 30 June 2010*• Strong relative result, overall increase of 3.7%, or $10.5m• Total $292m, $184.8m in New Zealand, $107.2m in Australia• Weighted market capitalisation rate of 8.7%• Valuations recognised the defensive nature of the sector

I d l l t bl l t lid t d• Improved occupancy levels, stable lease term, solid covenants and consistent rent growth protected and enhanced value

• Key increases in three largest hospital assets (Ascot +NZ$2.7m, y g p ( $ ,Epworth +AU$5.8m and Kensington +NZ$1.3m)

• Portfolio under-renting circa 2%• Post revaluations gearing fell to 32.6%

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* Excludes Waipukurau (Held for Sale)

Trans-Tasman asset diversification

37%63%

37%

21

Auckland and Northland

22

Hawkes Bay

(pending settlement)

23

Melbourne, Australia

24

Portfolio occupancy at 99.6%

25

IMP - longest NZ listed property sector WALT

8.6ING Medical Properties Trust

5 4

5.8

Kermadec Property Fund

Goodman Property Trust

5.0

5.4

ING Property Trust

Kermadec Property Fund

4.3

4.5

Kiwi Income Property Trust

AMP NZ Office Trust

2.9

4.1

National Property Trust

Property for Industry

5.0

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

Sector Average

Years

26

Years

Source: Forsyth Barr Monthly Property Update - 5 July 2010

Benign lease expiry profile over next 3 years

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Property andProperty and health sector overview

Apollo Health and Wellness, Auckland

Property market stabilising

• Economy in hesitant recovery mode• Cap rates showing signs of stability in some sectors and markets• Lag effect of recession impacting negatively on occupancy and rents• N t ff ti t i k d t i i l i ti• Net effective rents remain weak due to increasing lease incentives• Shorter lease terms, giving tenants ultimate flexibility• Must work constructively and proactively with tenants• Must work constructively and proactively with tenants • Credit markets ‘opening up’ to support investment activity• Rent arrears a key focusRent arrears a key focus • Speculative development activity subdued• Tax reforms likely to impact on development, affordability and returnsy p p y• Construction sector and pricing remains under pressure

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Health sector robust, some near term pressure

• New Zealand– $13 6b public health spend in 2010/11 + $2 1b over next 4 years$13.6b public health spend in 2010/11 + $2.1b over next 4 years – By 2050, 65+ age group forecast to double in NZ – 31.9% private health insurance coverage, 0.4% decline YoY*– Private health insurance claims $797m, +9.9%, premiums $895m, +8.5%* – ACC co-payment entitlements decreased

• Australia**Australia– Health expenditure 2007/08 of A$103.6b, 9.1% of GDP– Government funds ~70% of total health expenditure– Hospital admissions rose 37% in the decade to 2008– 44.6% hospital treatment private insurance coverage, 2.3% increase YoY

• Demand for medical and healthcare assets is driven by demand for• Demand for medical and healthcare assets is driven by demand for healthcare services, which is largely underpinned by demographic trends, not economic conditions

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Sources: * Health Funds Association of New Zealand August 2010. ** Australian Institute of Health & Welfare 2010 – Australia’s health 2010.*** Private Health Insurance Administration Council, Quarterly Statistics June 2010, PHIAC, Canberra, 2010

Summary and outlook

Eastmed St Heliers, Auckland

Summary and outlook

• Economy in tentative recovery mode, property market subdued, some traction• Through active management Trust’s portfolio resiliently positioned with:

– stable rental growth, – low risk lease expiry profile,– long WALT, – sound tenant covenants,– high occupancy levels

S h fl i l d b k f ili d S b 2013• Strong cash flows, conservatively geared, bank facility secured to September 2013• Underlying health sector relatively defensive• Continued consideration of non-core asset salesContinued consideration of non core asset sales• Target early resolution of material lease expiries• Acquisition opportunities considered to provide scale and diversification

T f ill i t fi i l f FY12• Tax reforms will impact on financial performance FY12• Forecast FY11 cash distribution of 8.0 - 8.2cpu, subject to economic conditions• Announce new brand

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Thank you

Epworth Rehabilitation, Melbourne

Disclaimer

This presentation has been prepared by ING Medical Properties Limited on behalf of ING Medical Properties Trust The details in this presentationbehalf 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 p p p g y gyour 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.

20 August 2010

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