generationreit.com.au

™

GENERATION HEALTHCARE REIT (ASX CODE: GHC)

HALF YEAR RESULTS PRESENTATION

31 DECEMBER 2013

For

per

sona

l use

onl

y

2

AGENDA

For

per

sona

l use

onl

y

3

➤ Generation Healthcare REIT overview

➤ Half year highlights

➤ Financial results

➤ Portfolio review

➤ Capital management

➤ Organic growth pipeline

➤ Summary and outlook

➤ Appendices

AGENDA

For

per

sona

l use

onl

y

4

GHC Overview

For

per

sona

l use

onl

y

5

GENERATION HEALTHCARE REIT – OVERVIEW

Only dedicated healthcare property entity listed on ASX

➤ Fund established in 2006

➤ High quality portfolio of properties includes

hospitals, medical centres, laboratories and other

purpose-built healthcare facilities

➤ High quality tenants

➤ Strong total return outperformance

➤ Strong organic growth profile

➤ Experienced management

210 208 180 199 208 236 246

11.8

16.0 15.2

14.5 15.0

16.0

18.3

$10

$15

$20

$150

$200

$250

FY08 FY09 FY10 FY11 FY12 FY13 Dec. 13

Gross Assets (bar) & Rent (line) $M QUEENSLAND

ARCBS, Kelvin Grove, QLD

Pacific Private Clinic, QLD

NEW SOUTH WALES

Westmead Rehabilitation

Waratah Private Hospital (debt)

VICTORIA

Epworth Freemasons Victoria Pde

Epworth Freemasons Clarendon St

Frankston Private & Development Land

Harvester Centre

Leading Healthcare Bendigo

Casey Development

Property & Geographical Diversity

* Dec. 2013 rent is annualised

For

per

sona

l use

onl

y

6

HEALTH SECTOR IN AUSTRALIA - SNAPSHOT

Scale and Growth of the Health Sector

➤ Expenditure on healthcare in Australia was estimated to be $140.2 billion in 2011-12 1:

➤ up from $82.9 billion in 2001-02 1

➤ Expenditure on healthcare was 9.5% of GDP in 2011-12 1:

➤ up from 9.3% in 2010-11 1; and

➤ up from 8.4% in 2001-02 1

➤ Expenditure growing at 5.8% 1 per annum driven by unique demand drivers:

➤ Rapidly ageing and growing population

➤ Advances in technology generating more health solutions

➤ Increase in non-age related diseases (e.g. obesity and diabetes)

Recent changes in healthcare

➤ National Disability Insurance Scheme

➤ Fully operational by 2019

➤ Estimated cost of $19 billion over 7 years

➤ Increased desire of government to partner with the private sector

1 Australian Institute of Health and Welfare – “Health Expenditure in Australia 2011-2012”

For

per

sona

l use

onl

y

7

HALF YEAR HIGHLIGHTS

For

per

sona

l use

onl

y

8

HALF YEAR HIGHLIGHTS

Fund highlights during first half of the Financial Year

Strategic

Measure Highlight

UOI ➤ Underlying Operating Income (UOI) of $4.7 million1 up 47% on the prior

corresponding period (pcp)

Distributions ➤ 4.0 cpu, up 9% on pcp

Rent & Leases ➤ Like-for-like rental growth of 7.03% on pcp

➤ WALTE increased to 11.7 yrs (pcp was 10.8 yrs)

Acquisitions ➤ Investment (secured debt) in Waratah Private Hospital, formerly Medica Centre –

GHM as property manager in conjunction with hospital operator, Evolution

Healthcare, have commenced a significant restructure of the facility

Organic

Growth

➤ Casey – stage 1 project commenced in December 2013

➤ Frankston Private joint venture – progressing expansion options

Capital Management

➤ Debt – renegotiated with lower margins, increased limit & longer maturity

➤ Equity - $18m equity raised via a placement and UPP at $1.14

GHC Performance

➤ GHC total return (change in unit price + distributions) for the 6 months was 16%,

significantly outperforming the S&P ASX 300 Property Accumulation Index, (1)%

1 UOI excludes: property revaluations, Manger’s performance fees and movements in derivatives – refer Appendix 1

For

per

sona

l use

onl

y

9

PERFORMANCE AND COMPARISON

Significant outperformance over the short, medium and longer term

Strategic

➤ GHC outperformed the S&P/ASX 300 Property

Accumulation Index by 17% in the first half of

FY14.

➤ Outperformance in short, medium and longer

term:

➤ 1 year - 28%

➤ 3 years - 5%

➤ 5 years - 15%

➤ Inception - 15%

➤ The outperformance in the first half of FY14

gave rise to a performance fee entitlement to

the Manager of $4.2 million. This will be satisfied

by the issue of units in GHC at $1.2278.

➤ The Manager will undertake a review of the

performance fee to ensure that:

➤ It is aligned with GHC unitholders; and

➤ It continues to incentivise the Manager to

outperform. 1 Six month return is for the 6 month period, not annualised

GHC p.a. total return v. benchmark index

12%

24%

17%

35%

16%

-3%

9%

12%

7%

-1%

-10%

0%

10%

20%

30%

40%

Since

inception

5 years 3 years 1 year 6 months

GHC S&P / ASX300 Prop

1

For

per

sona

l use

onl

y

10

FINANCIAL RESULTS

For

per

sona

l use

onl

y

11

SUMMARY P&L AND BALANCE SHEET

1 Net debt to gross assets (excl. restatement of ground lease at ARCBS as a finance lease) 2 Statutory NTA excluding the interest rate derivatives

Refer to Appendix 1 to 3 for details of financial statements

P&L H1 FY14 H1 FY13 Change

UOI $4.7m $3.2m 47%

UOI per unit 4.60c 4.40c 5%

Statutory profit $3.2m $1.3m 146%

Distributions per unit 4.00c 3.67c 9%

Balance Sheet Dec.

2013

June

2013 Change

Gross assets $246.5m $236.3m 4%

Gearing 1 41.0% 47.6% 6.6%

Statutory NTA / unit $0.98 $0.98 nil

“Property” NTA /

unit2 $1.03 $1.05 (2)%

Strong operating result

➤ Underlying Operating Income (UOI) – increased by 47% as a result of rental growth and rent from the Westmead Rehabilitation acquisition

➤ Statutory profit – positively impacted by property revaluations but reduced by Manager performance fees

Robust balance sheet

➤ Gross assets – up $10.2 million as a result of revaluation increases of $2.3 million, expansion capex of $0.6 million at Casey and investment in Waratah Private Hospital (formerly Medica Centre) of $7.1 million

➤ Gearing – reduced to 41.0% as a result of higher valuations and an equity raising applied to paying down debt, creating capacity for Casey stage 1.

For

per

sona

l use

onl

y

12

PROFIT BRIDGES

UOI Bridge $M UOI Bridge from H1 FY13 to H1 FY14

➤ Key drivers of the movement between H1 FY13 and H1 FY14 UOI:

➤ Net property income - $1.5 million

➤ Small cost increases were offset by other income

Reconciliation of UOI to Statutory Profit

➤ Key differences between UOI and Statutory Profit:

➤ Property revaluations - $2.0 million1

➤ Other income - $0.7 million, including derivatives

➤ Manager performance fees - $(4.2) million, this is a non cash item settled by the issue of units

FY14 H1 Statutory Profit Bridge $M

1 After adjustments for straight lining of rents

$3.2

$1.5 $0.1 $(0.1) $4.7

$0.0

$2.0

$4.0

$6.0

FY13 H1 Net

propety

income

Interest Manager's

fee

FY14 H1

$4.7

$2.0 $0.7 $(4.2)

$3.2

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

UOI Property

revals

Other

income

Mgr perf.

Fees

Statutory

profit

For

per

sona

l use

onl

y

13

MOVEMENT IN NTA

NTA per Unit1 Bridge Movement in NTA per unit

➤ Key drivers of the movement between June 2013 and December 2013:

➤ UOI and Distribution - $0.04 and $0.04 cents per unit, respectively

➤ Property revaluations - $2.3 million or $0.02 per unit

➤ Other: Placement and UPP - units issued at a premium to NTA, $0.02 per unit

➤ Manager performance fees - $(4.2)

million or $(0.04) per unit; this is a non cash item and is settled by way of an issue of units

1 Based on 116m units on issue 2 Effect of units issued at a premium to NTA

2

$0.98

$0.04 $(0.04)

$0.02 $0.02 $(0.04)

$0.98

$0.80

$0.90

$1.00

$1.10

For

per

sona

l use

onl

y

14

PORTFOLIO REVIEW

For

per

sona

l use

onl

y

15

Characterised by long leases, high tenant retention & stable income

PORTFOLIO METRICS

➤ Net property income – grew by 19.5% mainly due to:

➤ Epworth Clarendon St market review (Mar. ‘13);

➤ Baulderstone market review (ARCBS expansion space) (Apr. ‘13); and

➤ a full six month rental income from Leading Healthcare Bendigo and Westmead

Rehabilitation Hospital.

➤ Occupancy – remains strong at 98.7%

➤ Tenant retention – remains high at 88%

➤ WALTE – one of the longest in the sector at 11.7 years

➤ Like-for-like rental growth – strong at 7.03%, driven

by market reviews (refer above)

➤ Key lease renewals:

➤ Healthscope at Pacific Private – new 3 year lease1. Represents 3.7% of portfolio income.

➤ Genesis Care at Frankston Private – early

renewal of a 10 year lease. Represents 1.44% of portfolio income.

Portfolio metrics HY 2014 HY FY13

Net property income $9.2m $7.7m

Occupancy (by income) 98.7% 98.8%

Tenant retention (by expiring

income) 88% 90%

WALTE 11.7 yrs 10.8 yrs21

Like-for-like rental growth 7.03% 2.8%

Number of properties 10 7

Number of tenancies 85 1 99

Includes restructure and consolidation of 12 Healthscope

leases into one single lease at Pacific Private.

June 2013 WALTE was 11.9 years.

1

2

For

per

sona

l use

onl

y

16

DIVERSITY

Net

Income 1 %

Epworth Foundation $4.35m 22.0%

Australian Red Cross Blood Service $2.82m 14.3%

Baulderstone Pty Ltd $1.80m 9.1%

Pulse Health Limited $1.80m 9.1%

Healthscope Ltd $1.70m 8.5%

Queensland University of Technology $0.76m 3.8%

Sonic Healthcare Limited $0.67m 3.4%

Melbourne Health $0.56m 2.8%

Primary Healthcare Ltd $0.33m 1.7%

Frankston Private Day Surgery $0.33m 1.7%

Total $15.10m 76.4%

Property portfolio geographic diversity Net Income by state

Portfolio tenant quality and diversity Top 10 tenants by net income (annualised)

VIC, 47%

QLD, 44%

NSW, 9%

Diversification by: geography and number of properties and tenants

1 Annualised

For

per

sona

l use

onl

y

17

LEASE EXPIRY AND RENT REVIEWS

Long dated lease expiry

➤ No material lease expiries until:

➤ FY16 - Melbourne Health 2.4% of

income (Harvester Centre) and Q-Scan 1.4% of income (Pacific Private)

➤ FY17 – Baulderstone 9.1% of income (ARCBS), Healthscope 3.7% of income (Pacific Private), Frankston Private Day

Surgery 1.7% of income (Frankston)

Growth underpinned by rent review profile

➤ 99% and 98% of rent reviews in FY14 and FY15, respectively, are either CPI, fixed or the greater of CPI or fixed

➤ Upcoming material market rent reviews:

➤ FY16 – Epworth Head Lease (Victoria Pde) and Melbourne Health (Harvester). These tenancies are marginally under-rented

Expiries - % of income & number of tenants

Rent review profile - by Income

1% 2% 22%

31% 31% 9%

18% 17% 19%

50% 50% 50%

0%

20%

40%

60%

80%

100%

FY14 FY15 FY16

Market CPI Fixed > CPI or Fixed

6 9

18

18

11 4 1 0

3

15

0%

10%

20%

30%

40%

50%

60%

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

+

For

per

sona

l use

onl

y

18

VALUATIONS

Property valuations increase

➤ Robust property valuations supported by

defensive nature of health sector

➤ Three assets externally revalued in December 2013 representing 28.5% of Fund by value, increased by 0.28% in aggregate

➤ 94.3% of the portfolio has been externally

valued since December 2012

➤ Weighted average capitalisation rates firmed from 8.60% at June 2013 to 8.52% at December 2013

➤ Property values increased by in excess of

2%, excluding Pacific Private

➤ Pacific Private experienced a decline in value as a result of the structural change occurring in the market and a softening of market rental assumptions

Dec ‘13

Cap rate

Dec ‘13

Book value

($m)

Change in

Book value

($m)

Epworth Freemasons Victoria Pde,

VIC

8.50% 43.8 0.8

Epworth Freemasons Clarendon

St, VIC

7.75% 19.3 0.5

Frankston Private, VIC 8.25% 17.6 1.5

Harvester Centre, VIC 9.75% 12.7 0.2

Leading Healthcare Bendigo, VIC 8.25% 8.6 0.0

ARCBS, Kelvin Grove, QLD 8.00% 71.7 0.8

Pacific Private Clinic, QLD 9.75% 28.0 (1.8)

Westmead Rehabilitation, NSW 9.00% 20.4 0.4

Casey – Specialist Centre

Development, VIC 3

NA 1.6 3 0.6

Casey – Development Land, VIC NA 1.8 0.0

Frankston Private – Development

Land, VIC

NA 2.1 0.0

Total / Weighted average 8.52% 227.6 3.0 2

1 Full details in Appendix 5 2 Change in book value includes: revals, capex, finance lease

movements & leasing costs 3 Project costs to 31 December 2013

For

per

sona

l use

onl

y

19

CAPITAL MANAGEMENT

For

per

sona

l use

onl

y

20

CAPITAL MANAGEMENT - EQUITY

Item Outcome

Unit Price ➤ Strong unit price performance with a 12.3% increase from $1.10 to $1.235 over the half year

Equity Raising ➤ Placement and Unitholder Purchase Plan (UPP) in November / December

that raised $18m at $1.14 per unit (and entitlement to full 4.0 cent half year distribution) to fund stage 1 of Casey

Distribution ➤ Distribution of 4.0 cents per unit for the first half (up 9% on pcp)

Payout Ratio ➤ Normalised payout ratio of 87% for the half year (based on UOI and after adjusting for Placement and UPP units issued part way through the period that received full distribution entitlements)

DRP ➤ DRP will remain open until further notice with a 2% discount

For

per

sona

l use

onl

y

21

CAPITAL MANAGEMENT - DEBT

Item Outcome

Debt limits ➤ Facility 1 debt limit increased by $6.9 million to fund stage 1 of Casey

Margins ➤ Renegotiated lower margins on facility 1 and 2 which total $86.3 million of debt limit at December 2013

Maturity ➤ Facility 1, with a debt limit of $77.8 million at December 2013, has extended the maturity of 50% to 2017 and 50% to 2018

➤ First debt maturity not until September 2015

Funding lines

available

➤ Facility 1 has an undrawn debt capacity of $29.3 million. Facilities 2 and 3

are fully drawn.

Bank relationships

➤ Strong existing bank support and a high level of interest expressed by new lenders F

or p

erso

nal u

se o

nly

22

DEBT POSITION

Debt position

➤ Extending the maturity date of debt facility 1 has increased the weighted average term to expiry to 3.5 years (pcp 2.5 years)

➤ Diversification of maturity risk profile achieved

➤ Strong bank support

➤ Additional forward dated hedging contracted to manage interest rate risk

➤ Current level of available undrawn debt lines is $29.3 million

Debt (limits) maturity profile $m

Key debt indicators Dec. 2013 June 2013

Gearing – look through 41.0% 47.6%

Weighted average facility term 3.5 yrs 2.5 yrs

Weighted average hedged term1 3.0 yrs 3.2 yrs

Weighted average cost of debt 7.02% 7.19%

% fixed/hedged 76% 77%

8.5

41.2 38.9 38.9

$0

$10

$20

$30

$40

$50

H2

FY14

H1

FY15

H2

FY15

H1

FY16

H2

FY16

H1

FY17

H2

FY17

H1

FY18

H2

FY18

H1

FY19

H2

FY19

1 Excludes forward start hedges which are included in the graph

on slide 23

For

per

sona

l use

onl

y

23

DEBT HEDGING

Amount of debt hedged $75m

Weighted average interest rate of hedged debt (ex line & margin)

5.7%

Weighted average maturity of hedges excluding forward starts

3.0 yrs

Hedging profile as at 31 December 2013 Hedging profile by financial year

75 80 85 80

60

35 20

5.70% 5.51% 5.33% 5.48% 5.36%

4.77% 4.60%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

$0

$20

$40

$60

$80

$100

FY14 FY15 FY16 FY17 FY18 FY19 FY20

Debt hedged $M

Average hedged interest rate

Interest rate hedges contracted to manage risk

For

per

sona

l use

onl

y

24

ORGANIC GROWTH PIPELINE

For

per

sona

l use

onl

y

25

ORGANIC GROWTH PIPELINE

Casey Specialist Centre

➤ Specialist centre with a focus on cancer services

➤ Located directly opposite the public hospital in one of Victoria’s largest and fastest growing Local Government Areas

➤ 3,500 sqm of net lettable area across 4 levels

➤ Contracted agreements for lease for 63% of total forecast income and strong expressions of interest / offers for an additional 11%

➤ Key tenants : St. John of God, GenesisCare and MIA Radiology

➤ $19.2 million forecast total project cost

➤ Commenced in December 2013 with forecast practical completion December 2014, followed

by tenant fitout period. Rent producing in February 2015.

➤ Forecast return of 9% on cost

Stage 1 Artists Impression

Stage 1 works commenced

For

per

sona

l use

onl

y

26

ORGANIC GROWTH PIPELINE

Casey Stages 2 and 3

➤ Circa 7,500 sqm of available land

➤ Strategically located directly opposite the public hospital

➤ Stage 2 – scale private hospital

➤ Stage 3 – hospital expansion of theatres, beds and consulting suites

➤ Currently master planning the site and in discussions with a major hospital operator

➤ Material opportunity with control around timing and low holding costs Feasibility work for Stage 2 being a

private hospital is underway

Stage 1 Specialist Centre

Stage 3 Hospital Expansion

For

per

sona

l use

onl

y

27

ORGANIC GROWTH PIPELINE

Frankston Private brownfield expansion

➤ Proposed brownfield expansion to Frankston Private to provide 96 inpatient beds

➤ Estimated project cost of circa $35 million (minimum 50% being for GHC, i.e. $17.5m)

➤ A planning permit was approved at the July 2013 Frankston City Council meeting

➤ Adjoining land for the expansion is secured by

way of an option

➤ Additional strategic land holding of 2,775sqm adjacent to the existing Frankston Private was acquired by the joint venture in June 2013 to enhance the development options over the medium term

➤ Currently considering redevelopment, including operator options for expansion of the hospital

Acquired 21 June 2013

Frankston Private

Controlled1

One of the Fund’s joint venture partners owns the site with the GHC having a 5 year option over it

1

For

per

sona

l use

onl

y

28

ORGANIC GROWTH PIPELINE

Waratah Private Hospital (previously known as Medica Centre)

➤ The Fund has made an investment into the facility by way of an interest in secured debt

➤ High quality building completed in 2010

➤ Operations struggled during the ramp up and were placed in receivership in September 2013

➤ Evolution Healthcare contracted as hospital operator

➤ Generation Healthcare Management contracted as property manager

➤ Major restructure of the facility is well advanced

➤ Provision of inpatient beds underway

➤ Business partnering with leading cancer service providers

For

per

sona

l use

onl

y

SUMMARY AND OUTLOOK

For

per

sona

l use

onl

y

30

FY14 GUIDANCE

Forecast UOI per unit

➤ Re-affirm full year guidance of 8.90 cpu

Forecast Distribution per unit

➤ Guidance for half year to 30 June 2014 is 4.00 cpu

➤ Re-affirm full year guidance to 30 June 2014 is for a distribution of 8.00 cpu

➤ 9% increase on FY13

➤ Forecast normalised UOI payout ratio of 90% (after adjusting for Placement and UPP units issued part way through the period that received full distribution entitlements)

For

per

sona

l use

onl

y

31

BUSINESS OBJECTIVES

Over the next 6 months, the management team is focussed on six key objectives:

1. Continue to grow operational earnings and distributions;

2. Continue to proactively manage the assets within the portfolio to drive value growth;

3. Construction of Stage 1 development at Casey being an integrated specialist and cancer centre;

4. Advance the planning of Stage 2 at Casey, being a scale private hospital;

5. Progress the Frankston Private redevelopment options; and

6. Secure additional growth opportunities that add value to the Fund.

For

per

sona

l use

onl

y

32

SUMMARY AND OUTLOOK

Operational

Financial

Strategy

Summary of first half

➤ Strong first half operating result and a material total return outperformance

➤ UOI up 47% and distribution up 9% on pcp

➤ Strong rent growth achieved via CPI / fixed rent reviews and market reversions

➤ Renegotiated lower debt pricing, lengthened term and increased limit

➤ Equity and debt raised to fund the $19.2 million Casey Stage 1 development and position the balance sheet for value adding growth

Outlook

➤ FY14 full year UOI per unit guidance of 8.90 cpu

➤ FY14 full year distribution guidance of 8.00 cpu, a 9% increase on FY13

➤ Upside potential from organic growth within the portfolio

➤ A number of attractive growth opportunities are being actively investigated For

per

sona

l use

onl

y

33

APPENDICES

For

per

sona

l use

onl

y

34

APPENDIX 1

Profit & Loss Statement

6 months to

31 December 2013

($m)

6 months to

31 December 2012

($m)

Revenue Net property income 9.2 7.7

Expenses Finance costs

Responsible Entity’s fees

Other

(3.7)

(0.7)

(0.1)

(3.8)

(0.6)

(0.1)

Underlying Operating Income 4.7 3.2

Other P&L items Property revaluations

Performance fees

Other

2.0

(4.2)

0.7

(1.3)

(0.9)

0.3

Statutory profit 3.2 1.3

For

per

sona

l use

onl

y

35

31 December 2013

($m)

30 June 2013

($m)

Current assets Current assets 3.3 3.5

3.3 3.5

Non-current assets Trade and other receivables Loans receivable

Investment properties Equity accounted investments Derivatives

19.2 7.1

197.0 19.8 0.1

18.9 0.0

195.6 18.3 0.0

243.2 232.8

Total assets 246.5 236.3

Current liabilities Payables Borrowings Derivatives

Provision for distribution

7.1 0.4 2.2 4.6

3.8 0.4 2.3 3.6

14.3 10.1

Non-current liabilities Payables Borrowings Derivatives

7.3 106.3

3.7

7.0 118.0 4.2

117.3 129.2

Total liabilities 131.6 139.3

Net assets 114.9 97.0

Unitholders’ interest Issued units Retained earnings

107.5 7.4

88.2 8.8

Total unitholders’ interest 114.9 97.0

Net tangible assets (NTA) per unit $0.98 $0.98

Property net tangible assets (NTA) per unit1 $1.03 $1.05

APPENDIX 2

Balance Sheet

1 Excluding the fair value of derivatives

For

per

sona

l use

onl

y

36

APPENDIX 3

Cashflow Statement

6 months to

31 December 2013

($m)

6 months to

31 December 2012

($m)

Operating

Rental income

Property and other expenses

Distributions from equity accounted investments

Borrowing costs

11.5

(4.2)

0.6

(4.4)

9.6

(4.0)

0.7

(3.9)

3.5 2.4

Investing

Additions to investment properties & properties under construction

Loans advanced

(0.9)

(6.9)

(2.4)

0.0

(7.8) (2.4)

Financing

Net proceeds/(repayment) of borrowings

Proceeds from issue of equity (net of costs)

Distributions

(11.6)

17.6

(2.3)

1.8

0.0

(2.0)

3.7 (0.2)

Net decrease in cash (0.6) (0.2)

Cash at the beginning of the half-year 1.9 2.1

Cash at the end of the half-year 1.3 1.9

For

per

sona

l use

onl

y

37

APPENDIX 4

Additional disclosure on Responsible Entity base and performance fees

Base fee 0.60% on gross assets Calculated and paid monthly in arrears

Performance fee Manager only entitled to a fee if the Fund outperforms against the S&P/ASX300 Property

Accumulation Index

Fee = First tier plus second tier performance fee First tier performance fee = (% outperformance x opening market cap) x 5% Second tier performance fee = (% outperformance over 1% x opening market cap) x 15%

High tide mark – if underperform need to outperform by same amount to be eligible for a fee

Calculated 6 monthly and satisfied by way of an issue of units at the higher of NTA or the market price

For

per

sona

l use

onl

y

38

Epworth

Freemasons Private

Hospital and

Medical Centre

Epworth Freemasons

Private Hospital

(Clarendon Street)

Frankston Private

Harvester Centre

Australian Red Cross

Blood Service Facility

(ARCBS)

Location Melbourne, Victoria Melbourne, Victoria Frankston, Victoria Melbourne, Victoria Brisbane, Queensland

Description Maternity hospital, day surgery, consulting &

ancillary services

Hospital with ancillary diagnostic and cancer services

Day surgery, cancer services, diagnostic and

medical office

Medical office building Blood testing, processing and distribution centre, part of University Medical School

Built 1980s 1935, with extensions 1950s, 60s, 70s, 90s and 2007

2006 Complete building refurbishment and

extension 2007

2008

Book value $43.8 million (50% interest) $19.3 million (50% interest) $17.6 million $12.7 million $71.7 million

Major tenant (s) Epworth Foundation Epworth Foundation Frankston Private Day

Surgery, GenesisCare, MIA Radiology

Melbourne Health (State Government)

ARCBS

WALTE 9.0 years 12.3 years 5.6 years 2.3 years 17.5 years

Site area 4,490m2 9,173m2 3,916m2 5,021m2 6,897m2

NLA 8,584m2 13,990m2 4,528m2 4,413m2 20,250m2

Occupancy 100% 100% 100% 100% 100%

Rental reviews Combination of CPI,

fixed and market reviews Annual reviews to be the

higher of CPI and 3% Combination of CPI, fixed

and market reviews Combination of CPI, fixed

and market reviews

Higher of CPI or 3-4% and mid term market review for

ARCBS

APPENDIX 5 – GHC PORTFOLIO

For

per

sona

l use

onl

y

39

Pacific Private

Clinic

Leading

Healthcare

Bendigo

Westmead

Rehabilitation

Casey

development

Frankston

development

Waratah Private

Hospital (debt)

Location Gold Coast, Qld. Bendigo, Victoria Westmead, NSW Berwick, Victoria Frankston, Victoria Hurstville, NSW

Description Surgical and medical

office building

Primary Care Medical

Centre

Rehabilitation Hospital Specialist centre with

cancer focus

Development Site Hospital with ancillary

diagnostic and cancer services

Built 2000 2012 2005 Stage 1 under construction

NA 2010

Book value $28.0 million $8.6 million $20.4 million $3.4 million (capex to

Dec. ‘13) (50% interest) $2.1

million $7.1 million

Major tenant (s) Healthscope Limited

IPN, Pacific Smiles, Melbourne Pathology

Pulse Health Ltd

St. John of God, GenesisCare, MIA

Radiology

Zaly Pty Ltd (note – redevelopment

provision subject to notice period)

NA

WALTE 4.0 years 7.0 years 24.4 years NA 2.4 years NA

Site area 3,723m2 2,034m² 5,305m² Stage 1 – 4,700m² with

circa 7,500m² for stages 2 & 3

2,775m² 2,696m²

NLA 7,955m2 2,378m² 2,611m² Stage 1 - 3,500m² 885m² 13,497m²

Occupancy 91.6%

100% (76% plus 24% subject to 2 year rental

guarantee from July 2012)

100% NA 100% NA

Rental reviews Combination of CPI, fixed and market

reviews 4% pa

Yr 1 is 1.5%, then > of CPI and 2.5%

NA NA NA

APPENDIX 5 – GHC PORTFOLIO

For

per

sona

l use

onl

y

40

As at

30 Dec 2013

Epworth

Freemasons

Victoria

Parade

Epworth

Freemasons

Clarendon

Street1 Frankston

Private1 Harvester

Centre

ARCBS

Head-

quarters

Pacific

Private

Leading

Health-

care

Bendigo

Westmead

Rehab.

Casey dev.

land

Frankston

dev. land

Total

Portfolio

Book

Value($m) 3 43.8 19.3 17.6 12.7 71.7 28.0 8.6 20.4 3.4 2.1 227.6

Last external

valuation 30 Jun

2013 31 Dec

2013 31 Dec

2013 30 Jun

2012 31 Dec

2012 31 Dec

2013 31 Dec

2012 22 Feb

2013 18 Jan

2013 9 May

2013

Cap Rate 3 8.50% 7.75% 8.25% 9.75% 8.00% 9.75% 8.25% 9.00% - - 8.52%

Discount

rate 9.50% 9.25% 9.50% 10.50% 9.50% 9.75% 9.00% 9.50% - - 9.55%

Major Tenant Epworth

Foundation Epworth

Foundation

Frankston Private Day

Surgery, Genesis,

MIA, Peninsula Oncology

Melbourne Health

ARCBS Healthscope

Ltd

IPN, Pacific Smiles,

Melbourne Pathology

Pulse Health Ltd

- Zaly Pty Ltd

WALTE (yrs) 9.0 12.3 5.6 2.3 17.5 4.0 7.0 24.4 - 2.4 11.7

Lettable

area 8,584 13,990 4,528 4,413 20,2502 7,955 2,378 2,611 - 885 65,594

Occupancy 100.0% 100.0% 100.0% 100.0% 100.0% 91.6% 100%4 100% - 100% 98.7%

1 GHC has a 50% interest in Epworth Freemasons Clarendon St, Frankston Private & Frankston development land while lettable area represents 100% 2 Includes 8,231sqm of net exclusive area occupied by QUT under an 80 year lease where rent has been paid in advance 3 Based on market rent not passing rent 4 24% is subject to a 2 year rental guarantee from July 2012

APPENDIX 6 – GHC VALUATION METRICS

For

per

sona

l use

onl

y

41

As at 31 December 2013 Facility 1 Facility 2 Facility 3 Total

Provider NAB NAB Bank of Melbourne

Limit ($m) 77.8 8.51 41.2 127.5

Amount drawn ($m) 48.5 8.5 41.2 98.2

Loan to value ratio (LVR) actual 36.1% 45.8% 59.3% -

LVR bank covenant 60.0% 60.0% 65.0%2 -

Interest cover ratio (ICR) actual 2.65x 2.94x 1.81x -

ICR bank covenant 1.5x 1.5x 1.5x -

% Hedged 103% 52% 50% 76%

Facility expiry Sept 2017&18 3 Sept 2015 July 2016

1 GHC’s 50% share 2 Facility 3 also has a second LVR covenant being drawn debt plus the mark to market of the contracted interest rate swap, divided

by the property valuation. As at 31st December 2013 the actual LVR was 63.6% versus a covenant of 70% 3 Facility 1 has $38.9m expiring in September 2017 and $38.9 million expiring in September 2018

APPENDIX 7 – DEBT

For

per

sona

l use

onl

y

42

With over 20 years experience in financial services, property funds management and health property, Miles

has the overall responsibility for the day to day management and performance of Generation Healthcare

REIT™. His responsibilities include formulating and implementing the overall strategy for the Fund, capital

management and investor relations. Miles holds a Bachelor of Commerce (Accounting) from Otago

University, is a Chartered Accountant and a member of the New Zealand Institute of Chartered

Accountants.

Chris has over 20 years experience in the property industry in Australia, New Zealand and the United

Kingdom, including over 18 years experience in the areas of health sector property acquisitions, transaction

structuring, large scale hospital developments and portfolio management. Chris’s responsibilities include

overseeing the property portfolio along with acquisitions and developments undertaken by the Fund. Chris

holds a Bachelor of Property from Auckland University.

Miles Wentworth Chief Executive Officer

Chris Adams Director

APPENDIX 8 – MANAGEMENT BIOGRAPHIES

For

per

sona

l use

onl

y

43

Miles Wentworth

Chief Executive Officer

T (03) 8656 1000

E mwentworth@generationreit.com.au

Generation Healthcare REIT

Level 30, 101 Collins Street

Melbourne Victoria 3000 Australia

www.generationreit.com.au

CONTACT

For

per

sona

l use

onl

y

44

This presentation was prepared by APN Funds Management Limited (ABN 60080674479) (the "Responsible Entity") of Generation

Healthcare REIT (ARSN 118 712 584) (“GHC"). Information contained in this presentation is current as at 20 February 2014. This presentation is

provided for information purposes only and has been prepared without taking account of any particular reader’s financial situation,

objectives or needs. Nothing contained in this presentation constitutes investment, legal, tax or other advice. Accordingly, readers should,

before acting on any information in this presentation, consider its appropriateness, having regard to their objectives, financial situation

and needs, and seek the assistance of their financial or other licensed professional adviser before making any investment decision. This

presentation does not constitute an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale

of any security, nor does it form the basis of any contract or commitment.

Except as required by law, no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the

information, opinions and conclusions, or as to the reasonableness of any assumption, contained in this presentation. By reading this

presentation and to the extent permitted by law, the reader releases the Responsible Entity and its affiliates, and any of their respective

directors, officers, employees, representatives or advisers from any liability (including, without limitation, in respect of direct, indirect or

consequential loss or damage or loss or damage arising by negligence) arising in relation to any reader relying on anything contained in

or omitted from this presentation.

The forward looking statements included in this presentation involve subjective judgment and analysis and are subject to significant

uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, the Responsible Entity. In particular,

they speak only as of the date of these materials, they assume the success of GHC's business strategies, and they are subject to significant

regulatory, business, competitive and economic uncertainties and risks. Actual future events may vary materially from forward looking

statements and the assumptions on which those statements are based. Given these uncertainties, readers are cautioned not to place

reliance on such forward looking statements.

The Responsible Entity, or persons associated with it, may have an interest in the securities mentioned in this presentation, and may earn

fees as a result of transactions described in this presentation or transactions in securities in GHC.

DISCLAIMER

A copy of this presentation is available on generationreit.com.au

For

per

sona

l use

onl

y