HealthCo Healthcare and Wellness REIT : HCW Records 4% Net Valuation Gain

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HealthCo Healthcare and Wellness REIT

ARSN 652 057 639

HCW Funds Management Limited

ACN 104 438 100, AFSL 239882

ASX RELEASE

7 June 2022

HEALTHCO HEALTHCARE AND WELLNESS REIT RECORDS 4% NET VALUATION GAIN

Key highlights

• June 2022 preliminary unaudited net valuation gain of $25m, a 4.1% increase on December 2021 representing 8cpu of NTA uplift
• Portfolio occupancy of 99% maintained with strong leasing momentum at Ballarat & Springfield Health Hubs
• Unadjusted cash rent collection of 100% since IPO
• $140m active development pipeline is progressing on schedule and on budget
• Reaffirmed FY22 FFO guidance of 5.0cpu
• Dividend of 2.25cpu for the quarter ended 30 June 2022 declared

HCW Senior Portfolio Manager Sam Morris, said: "HealthCo continues to deliver against its core objective to provide investors with stable and growing income from a diversified healthcare portfolio underpinned by favourable long-term megatrends.

"We have continued to unlock the significant embedded value in our portfolio and development pipeline where we can generate attractive total returns. HealthCo has the potential to significantly grow its net operating income over the medium-term through the successful delivery of its committed development pipeline, the previously announced acquisitions and increased occupancy across the portfolio."

HCW Chief Financial Officer Christian Soberg said: "The preliminary unaudited valuation result provides strong validation for HealthCo's high quality and well-located portfolio which is benefitting from strong investor appetite for the healthcare sector and healthcare tenant demand. The portfolio continues to perform with 100% unadjusted cash rent collection since listing. Finally, we reaffirm our FY22 FFO per unit guidance of 5.0 cents."

Level 7	HCW Funds Management Limited
Gateway	(ACN 104 438 100; AFSL 239882) as
1 Macquarie Place	responsible entity of the HealthCo Healthcare
Sydney NSW 2000	& Wellness REIT (ARSN 652 057 639)
1300 466 326
[e-mail]

JUNE 2022 PRELIMINARY UNAUDITED PORTFOLIO VALUATION

Net valuation gain of +4.1%

For personal use only

In accordance with the stated valuation policy of HealthCo Healthcare and Wellness REIT (ASX: HCW)

(HealthCo), preliminary unaudited valuations for all 27 owned properties in the portfolio have been completed. This comprised 13 independent valuations representing 48% of the properties by number with the remaining 14 properties completed by internal valuation.

The preliminary unaudited portfolio valuation, which remains subject to year-end audit, has increased by $47m million (+7.8%) to $647 million (from 31 December 2021 to 30 June 2022). Net of capital expenditure incurred during the period of $22 million, this represents a net valuation increase of $25 million (+4.1%).

	Preliminary unaudited			Independent			Internal valuation			Total ($m)1			Portfolio
	portfolio valuation			valuations ($m)			($m)					WACR %
	# of properties	13		14	27
	31 December 2021 valuation			379			221			600			5.11%
	Capital expenditure2	6		16	22
	Net valuation increase	25		-	25
	30 June 2022 valuation			410			237			647			4.94%
	Gross increase			+8.2%			+7.2%			+7.8%
	Net increase			+6.5%			+0.1%			+4.1%

ACQUISITIONS

• Settlement of the previously announced $108m portfolio acquisition of 13 newly developed metro-located childcare centres continues to progress.
• • As at 3 June 2022, 4 centres have settled with a further 2 on-track to complete by the end of FY22. The remaining 7 centres are scheduled to settle in FY23.
  • The capitalisation rate of 5.0% for HCW's recent childcare acquistions compares favourably to market observed pricing for metro-located assets on long term leases with national tenants.

Seaford Childcare, VIC

1. Excluding contracted acquisitions of $100m. Includes 31 December 2021 Investment property balance of $547.3m, equity-accounted investments of $20.5m (Camden) and settled acquisitions in H2 FY22.
2. Balances to 30 June 2022 are unaudited and subject to change. Excludes adjustments relating to straight lining and capitalised management fees.

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DEVELOPMENT UPDATE

Camden Stage 1 - The George Private Hospital (NSW)

• The George will be a new 783 bed private hospital, operated by Acurio Healthcare Group, specialising in paediatrics and maternity to address the unique needs of young families in the Camden catchment.
• The development of The George, under a fixed price D&C contract, is on schedule and on track for completion in early CY23.
• The project is on track to achieve its target ROIC in excess of 5%.

The George Private Hospital, NSW

Springfield (QLD)

• Pre-commitmentsat HealthCo's integrated health hub at Springfield have increased to 99% 4 and construction is well advanced.
• The pre-commitments have supported a material independent valuation increase of $10.8m.

• 57 overnight beds and 21 day beds
  4 Including signed MOUs.

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Springfield Health Hub, QLD

Proxima (QLD)

• The Proxima health hub development in the emerging Gold Coast Health and Knowledge precinct is well progressed, and broadly in line with the estimated completion date of mid CY2023.
• Pre-commitmentsexceed 65%, including from the Queensland Government, Griffith University, Sanctuary Early Learning, Mater Pathology and Queensland's first privately owned integrated Cancer Imaging and Therapy Clinic (CITC).

Proxima Health Hub, QLD

Ballarat (VIC)

• Occupancy at HealthCo's integrated health hub in Ballarat has increased to 99%5, an increase from 85% occupancy as reported in the H1 FY22 announcement.
• The occupancy increase has supported a independent valuation increase of $6.3m.

5 Including signed MOUs.

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Ballarat Health Hub, VIC

NEW DEVELOPMENTS - CAMDEN STAGE 2 (NSW)

• HealthCo is developing an integrated Heath and Innovation Precinct in Camden. Camden is one of Australia's fastest growing LGAs, with the Precinct being developed to provide much needed integrated health care infrastructure to Sydney's south west growth corridor.
• Stage 2 of the Precinct is a general private hospital to complement The George. Discussions with leading national hospital operators are ongoing and detailed planning and design for stage 2 is progressing well.

Camden Integrated Health Precinct, NSW (render)

JUNE 2022 DISTRIBUTION DECLARATION

HCW Funds Management Limited as Responsible Entity of HCW has declared the quarterly distribution for the period 1 April 2022 to 30 June 2022 of 2.25 cents per unit.