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TORONTO, Oct. 9, 2015 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) ("NorthWest" or the "REIT") is pleased to provide an update on recent events at the REIT including the closing of its previously announced $50.0 million public offering of convertible debentures and ongoing portfolio refinancing and non-core asset disposition initiatives.
Closing of $50.0 Million Convertible Debentures
Earlier today, the REIT completed its previously announced offering (the "Offering") of $50.0 million aggregate principal amount of 5.50% convertible unsecured subordinated debentures (the "Debentures"), on a bought deal basis, to a syndicate of underwriters (the "Underwriters") led by BMO Capital Markets and RBC Capital Markets.
The REIT has granted the Underwriters an over-allotment option exercisable at any time up to the date that is 30 days from the date of closing of the Offering to offer for sale up to an additional $7.5 million aggregate principal amount of Debentures on the same terms and conditions.
The net proceeds from the Offering will be used to repay a portion of the REIT's Brazilian term loans, which is expected to result in annual interest savings of approximately $1.5 million ($0.02/unit).
The REIT has identified balance sheet optimization in respect of reducing its weighted average interest rate and extending its weighted average term to maturity as key priorities for 2015. To date, the REIT has made significant progress in achieving both of its objectives without increasing overall debt levels:
- In August 2015 the REIT completed its previously announced $48.5 million portfolio refinancing for five of its assets in Germany with a weighted average 6.7 year term at a 1.65% weighted average interest rate, resulting in annual interest savings of approximately $0.3M ($0.004/unit);
- The REIT has received a conditional commitment from a Brazilian financial institution and expects to complete a long term financing in respect of its Hospital e Maternedade Brasil asset ("HMB"). The financing is for an amount ranging from R$180.0 million to R$205.0 million with a term of 10 years and an expected interest rate broadly in line with the current rate on the REIT's Brazilian term loans. The financing is subject to due diligence and regulatory approvals. The REIT expects to complete the long term financing before the end of the year and the net proceeds will be used to repay the existing term loan relating to the HMB property maturing in January 2016 and remaining balances on other Brazil term loans maturing December 2015;
- During Q4 2015 the REIT is focused on completing the early refinancing of many, if not all, of its Canadian property mortgages maturing in 2016 totalling C$128.4 million with a weighted average interest rate of 5.32%. The REIT is currently in negotiations with lenders in respect of the early refinancings and anticipates entering into 5 to 10 year mortgage terms at current market rates ranging between 2.75% and 3.50% before the end of the year.
Update on Non-Core Canadian Asset Dispositions
Consistent with its previously announced Canadian asset disposition strategy, on September 22, 2015 the REIT completed the sale of the Alexander Medical Building in Peterborough for a sale price of approximately $5.3 million. This represents the REIT's second Canadian asset disposition in 2015 and is consistent with the REIT's strategy to focus on core healthcare infrastructure in major markets across each of its five geographic regions.
The REIT continues to make progress on additional non-core asset dispositions with nine under conditional contract and the balance listed for sale. The REIT expects to substantially complete its identified non-core Canadian dispositions over the next 12 months.
Update on Normal Course Issuer Bid
As previously announced in July 2015 and approved by the TSX, the REIT implemented a normal course issuer bid ("NCIB"), intending to acquire up to a maximum of 4,762,579 of its Units, or approximately 10% of its public float, for cancellation over the next 12 months. Currently, the REIT has purchased 695,200 Units at an average price of $8.0112 per Unit under the NCIB. The REIT began to purchase Units on July 16, 2015 and the bid will terminate 12 months from such date, or such earlier time as the REIT completes its purchases pursuant to the NCIB or provides notice of termination. The REIT believes that the repurchase by the REIT of a portion of outstanding Units is an appropriate use of resources and is in the best interests of the REIT.
Commenting on the recent events at the REIT, Chairman & CEO of NorthWest, Paul Dalla Lana said:
"The REIT continues to make significant progress on its identified priorities of lowering its interest costs, reducing debt levels and improving its portfolio quality. When complete, the REIT will have an improved long-term financial profile providing for long-term earnings and value growth."
Timing of Third Quarter 2015 Financial Results
NorthWest will issue its financial results for the three months ending September 30, 2015 on Thursday, November 12, 2015. A conference call will be held on Friday, November 13, 2015 at 10:00 am (ET). Participating on the call will be members of the REIT's senior management team.
Investors are invited to access the call by dialing 647-427-7450 or toll-free 1-888-231-8191, conference ID# 492 187 08. A recording of this call will be made available on November 13, 2015 beginning at 12:45 pm (ET) through to November 20, 2015 at 11:59 pm (ET). To access the recording, please call 1-855-859-2056 or 416-849-0833 and use the reservation number 492 187 08.
About NorthWest Healthcare Properties Real Estate Investment Trust
NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT provides investors with access to a portfolio of high quality international healthcare real estate infrastructure comprised of interests in a diversified portfolio of 122 income-producing properties and 7.8 million square feet of gross leasable area located throughout major markets in Canada, Brazil, Germany, Australia and New Zealand. The REIT's portfolio of medical office buildings, clinics, and hospitals is characterized by long term indexed leases and stable occupancies. With a fully integrated and aligned senior management team, the REIT leverages over 180 professionals across 9 offices in 5 countries to serve as a long term real estate partner to leading healthcare operators.
Forward Looking Information
Certain statements contained in this news release may contain projections and "forward looking statements" within the meaning of that phrase under Canadian securities laws, including but not limited to the expected use of proceeds of the Offering, interest savings, expected interest rates, the refinancing of HMB and certain Canadian assets and the proposed dispositions and a financial profile providing for long-term earnings and value growth. When used in this new release, the words "may", "would", "should", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions may be used to identify forward looking statements. Those statements reflect the REIT's current views with respect to future events or conditions. By their nature, forward looking statements reflect management's current views, beliefs and assumptions and are subject to certain risks and uncertainties, known and unknown, including, without limitation, risks disclosed in the REIT's annual information form dated March 10, 2015, joint management information circular dated April 7, 2015, (final) short form prospectus dated October 2, 2015 and the REIT's other public filings, copies of which each may be obtained on the SEDAR website at www.sedar.com. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by these forward looking statements. The REIT does not intend to nor assume any obligation to update these forward looking statements whether as a result of new information, plans, events or otherwise, unless required by law.
These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold in the United States or to U.S. persons except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities laws or pursuant to an exemption therefrom. Accordingly, this news release does not constitute an offer for sale of securities in the United States.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust