Press Release

Northwest Healthcare Properties Real Estate Investment Trust Releases Third Quarter 2017 Results

TORONTO, Nov. 9, 2017 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (the "REIT") (TSX: NWH.UN), Canada's leading global diversified healthcare real estate investment trust, today announced its results for the three months ended September 30, 2017.

Commenting on the activity in the quarter, Paul Dalla Lana CEO of the REIT, said:

"Q3 2017 was another very active quarter, highlighted by the REIT's acquisition of Generation Healthcare REIT. Integration of this strategic acquisition is well under way and we are pleased that the initial earnings accretion from development completions and portfolio refinancing will be in place by year end. Additionally, to further reduce leverage and simplify its balance sheet, we successfully completed our largest equity offering to repay higher cost debt and announced the repayment of $40 million of convertible debentures. Complementing the REIT's balance sheet strength and current liquidity position, its capital recycling initiatives are progressing well and it is positioned to capitalize on a significant pipeline of accretive growth opportunities".

2017 Third Quarter Financial and Operational Highlights:

  • For the three months ended September 30, 2017, the REIT delivered another quarter of strong financial and operating results with key highlights as follows:
  • IFRS revenue increased 26% in Q3 2017 to $83,932 from $66,488 in Q3 2016 primarily driven by the acquisition of GHC;
  • For Q3 2017, IFRS net income/(loss) declined to $(71,213) from $3,633 in Q3 2016 driven by loss on business combination;
  • AFFO per unit for the third quarter 2017 of $0.23 and $0.90 on an annualized basis ($0.96 per unit on a normalized basis);
  • AFFO payout ratio of 88.6% (83.3% normalized) for the third quarter based on the REIT's annual distribution of $0.80 per unit;
  • Recognition of a $14M fair value gain in the REIT's total investment property portfolio, primarily driven by gains in Australasia;
  • Net asset value of $12.00 per unit, a slight decrease from Q2 2017 primarily driven by appreciation of the Canadian dollar relative to the REIT's other currencies which was partially offset by continued portfolio valuation gains;
  • Temporary increase in leverage to 46.7% (54.4% including convertible debentures) at the end of Q3 2017 which has been more than offset by the REIT's financing initiatives post the end of the quarter which have reduced current in-place leverage to 43.7% (50.6% including convertible debentures);
  • Strong portfolio occupancy of 95.4%, led by the international portfolio occupancy of 99%;
  • Weighted average lease expiry of 11.3 years, underpinned by the international portfolio with a weighted average lease expiry of 15.6 years; and,
  • Canadian dollar and source currency weighted normalized cash SPNOI growth of 3.3% and 4.7%, respectively, in Q3 2017 as compared to the same quarter in 2016, driven largely by inflation indexation on leases at the REIT's international assets.

During both the third quarter and subsequent to quarter end, the REIT has continued to execute on committed, low-risk development and expansion projects, completing accretive debt and equity financings and pursuing select accretive acquisitions. Significant achievements included:  

  • Completed the acquisition of 100% of Generation Healthcare REIT, with total assets of $865M and a high quality portfolio of 16 hospitals and MOBs located primarily in major Australian cities;
  • $143.8M equity offering, which allowed the REIT to reduce its overall leverage levels and repay higher cost revolving debt and reduce leverage by approximately 300bps;
  • $84.7M, 10 year, 6.35% Brazilian long term financing, further enhancing the REIT's liquidity position and simplifying its balance sheet by repaying two series of convertible debentures totaling $40M with a  weighted average interest rate of 7.0%;
  • Receipt of a committed term sheet in respect of a new 5 year, $473.5M term loan facility to refinance existing Generation portfolio lending facilities which is expected to generate $3.3M in annual interest savings on a leverage neutral basis;
  • Completion of 3 development projects with a combined cost of $130M ($63M at NorthWest's share) at a 7.8% weighted average yield on cost;
  • Committed or agreed in principal to develop six properties with a combined value of approximately $400 million at accretive project yields; and,
  • Executed on its $225M capital recycling program which is progressing well with expected proceeds being deployed into a combination of accretive growth and deleveraging.

Looking ahead and building on strong and consistent quarterly and YTD operational results, the REIT is focused on further deleveraging consistent with its 40% LTV target as well as continuing to execute on its accretive acquisition and development pipeline and previously announced capital recycling initiatives. To round out 2017, the REIT will continue to advance ongoing discussions with new institutional capital partners in each of its international markets as a means to leverage its platform in the continuing consolidation of healthcare real estate globally.

Selected Financial Information:  

(unaudited)

Three Months

Three Months


Ended

Ended

($000's, except unit and per unit amounts)

September 30, 2017

June 30, 2017




Number of properties

144

143

Gross leasable area (sf) 

9,714,877

9,673,467

Occupancy(1)

95.4%

95.7%

Weighted Average Lease Expiry (Years)  

11.3

11.4

Net Operating Income

$61,805

$54,131

Net Income(Loss) attributable to unitholders

($80,713)

$63,917

Funds from Operations ("FFO")

$24,123

$25,912

Adjusted Funds from Operations ("AFFO")

$24,080

$25,983

Debt to Gross Book Value – Declaration of Trust

46.7%

43.5%

Debt to Gross Book Value – Including Convertible Debentures

54.4%

51.7%




Per unit data



FFO

$0.23

$0.24

AFFO

$0.23

$0.25

Distributions

$0.20

$0.20

AFFO Payout ratio

89%

82%

The REIT invites you to participate in its conference call with senior management to discuss our third quarter 2017 results on Friday, November 10, 2017 at 10:00 AM (Eastern).

The conference call can be accessed by dialing (647) 427-7451 or 1 (888) 231-8192. The conference ID is 5399819.

Audio replay will be available until November 17, 2017 by dialing 416-849-0833 or 1-855-859-2056. The passcode is 5399819.

In conjunction with the release of the REIT's third quarter 2017 financial results, the REIT will post a current investor update presentation to its website where additional information on the REIT's investments and operating performance may be found. Please visit the REIT's website at www.nwhreit.com/Investors/Presentations

Vital Healthcare Property Trust

On November 8, 2017, Vital Trust also announced its financial results for the 3 months ended September 30, 2017. Details on Vital Trust's financial results are available on Vital Trust's website at www.vitalhealthcareproperty.co.nz 

About NorthWest Healthcare Properties Real Estate Investment Trust

NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (NorthWest) 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 144 income-producing properties and 9.7 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 nine offices in five countries to serve as a long term real estate partner to leading healthcare operators.

Non-IFRS Measures

Some financial measures used in this press release, such as FFO, AFFO, Normalized AFFO, Net Asset Value per Unit, portfolio occupancy and weighted average lease expiry, are used by the real estate industry to measure and compare the operating performance of real estate companies, but they do not have any standardized meaning prescribed by IFRS. As such, they are unlikely to be comparable to similar measures presented by other real estate companies.  These non-IFRS measures are more fully defined and discussed in the REIT's Management's Discussion and Analysis ("MD&A") for the third quarter ending September 30, 2017, which is available on the SEDAR website at www.sedar.com.  Also on SEDAR are the condensed consolidated unaudited interim financial statements of the REIT for the three months ended September 30, 2017.

Forward-Looking Statements

This press release may contain forward-looking statements with respect to the REIT, its operations, strategy, financial performance and condition.  These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe", "normalized", "contracted", "stabilized" or "continue" or the negative thereof or similar variations.  The REIT's actual results and performance discussed herein could differ materially from those expressed or implied by such statements.  Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed.  Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulations and the factors described under "Risks and Uncertainties" in the REIT's Annual Information Form and the risks and uncertainties set out in the MD&A which are available on www.sedar.com. These cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf.  Unless otherwise stated, all forward-looking statements speak only as of the date of this press release, and, except as expressly required by applicable law, the REIT assumes no obligation to update such statements.

SOURCE NorthWest Healthcare Properties Real Estate Investment Trust