NorthWest Healthcare Properties Real Estate Investment Trust releases strong fourth quarter 2017 and year-end results underpinned by high quality international portfolio growth

TORONTO, March 8, 2018 /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 and 12 months ended December 31, 2017.

Commenting on the activity in 2017, Paul Dalla Lana CEO of the REIT, said:

“2017 was another transformative year for the REIT, with our asset base growing by over 40%, completion of $330 million of equity financing, inclusion in the Solactive REIT Index, completion of $975 million of acquisitions and developments and $200M of dispositions, all while delivering improved operational metrics and per unit AFFO and NAV growth. Among a series of achievements, the acquisition of Generation REIT stands out as significant for the REIT which together with the integration and rebranding of our two Australasian management platforms, as NWH Healthcare Properties Management, has solidified our leadership position in the region and positions the REIT to capitalize on future growth opportunities in this exciting region.”

2017 Full Year Financial and Operational Highlights:

During 2017, the REIT executed its international growth strategy to build regional scale, enhance portfolio quality, and solidify leading market positions in key geographic markets all while delivering growth on an absolute and per unit basis to unitholders. Key highlights are as follows:

• Net Income increased from $129.1M to $225.2M (+74.4%);
• Total operating income¹ has increased by 33.2% to $288M;
• AFFO per unit has increased by 5.8% from $0.86 in 2016 to $0.91 in 2017 ($0.93 on a normalized basis);
• AFFO payout ratio of 88.2% (85.8% normalized) for the full year 2017 based on the REIT’s $0.80 per unit annual distribution;
• Strong organic growth with Canadian dollar and source currency weighted cash recurring SPNOI growth of 3.6% and 2.8%, respectively, in 2017, driven largely by inflation indexation on leases at the REIT’s international assets;
• Gross book value has increased by 40.7% from $3.3 billion to $4.7 billion;
• Net asset value per unit has increased by 2.9% to $12.00 primarily driven by portfolio valuation gains;
• Strong portfolio occupancy of 95.9% rising 30 bps from Q4 2016 and the international portfolio holding stable above 99% occupancy;
• Weighted average lease expiry of 12.1 years increased by 1.0 year, underpinned by the international portfolio with a weighted average lease expiry of 16.3 years; and
• The percentage of leases subject to annual indexation² is 67.7% and serves as a strong base to deliver organic growth and a natural hedge in a rising interest rate environment.

Fourth Quarter 2017 Financial and Operational Highlights:

For the three months ended December 31, 2017, the REIT delivered another quarter of strong financial and operating results with key highlights as follows:

• Revenue increased 3% in Q4 2017 to $84.4M from $81.7M in Q4 2016 primarily driven by the acquisition of the Australia REIT;
• AFFO per unit for the fourth quarter 2017 of $0.20 as compared to $0.22 in the fourth quarter 2016 which was partially driven by a lease termination fee earned in Q4 2016 at Vital Trust;
• Recognition of a $53.1M fair value gain in the REIT’s total investment property portfolio, driven by gains in Brazil, Australasia, and Germany;
• Leverage of 46.8% (53.1% including convertible debentures) at the end of Q4 2017. The REIT continues to target a 40% leverage ratio and expects leverage to decline towards that target; and,
• Canadian dollar and source currency weighted cash recurring SPNOI growth of 1.2% and 4.4%, respectively, in Q4-2017, as compared to Q4-2016.

During 2017 and subsequent to year-end, the REIT has continued to execute on committed, low-risk development and expansion projects, completing accretive debt and equity financings, capital recycling, and pursuing select accretive acquisitions. Significant achievements included:

• During 2017, the REIT completed two equity offerings raising combined proceeds of $327.4M, including $143.8M raised in Q4 2017. Proceeds of the fourth quarter offering were used to repay two series of convertible debentures totaling $40M with a weighted average interest rate of 7.0% and repay acquisition financing related to the acquisition of Generation REIT;
• On December 22, 2017, the REIT completed a new 5 year, $475.5M (A$485M) term loan facility to refinance existing Generation REIT (“NWH Australia”) portfolio lending facilities and acquisition facilities which is expected to generate $3.3M in annual interest savings on a leverage neutral basis;
• In October the REIT completed a new 10 year, 6.35% Brazilian long term financing. The REIT’s borrowing cost in Brazil continues to decline with this financing 69 bps lower than its previous financing;
• Completion of 5 development projects in 2017 with a combined cost of $102.7M ($80.9M at the REIT’s share), including Melbourne acute care hospitals at Casey and Frankston that were acquired as part of the Generation REIT transaction;
• Active development pipeline; the REIT has committed or agreed in principle to develop eleven properties with a combined value of approximately $290M over the next 36 months at accretive project yields; and,
• Executed on its capital recycling program with $32.3M of property sales during Q4-17 and a further $167.0M of dispositions completed subsequent to quarter end;
• In Q1-2018, the REIT completed the integration of its two Australasian management platforms and rebranded the combined entity NWH Healthcare Properties Management with management responsibilities for the REITs directly held Australian assets and all of Vital Trust’s Australian and New Zealand assets. NWH Healthcare Properties Management is the leading healthcare real estate asset manager in the region;
• Enhanced capital market profile; during 2017 the REIT was added to the Solactive Equal Weight REIT Index. Subsequent to year end the FTSE EPRA NAREIT Index will add the REIT to its Global Developed Index at the close of markets on March 16, 2018; and
• 100% of the distributions paid by the REIT in 2017 were classified as return of capital for income tax purposes.

Looking ahead and building on strong and consistent quarterly and full year 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 capital recycling. The REIT continues 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:

 

The REIT invites you to participate in its conference call with senior management to discuss our fourth quarter 2017 results on Friday, March 9, 2018 at 10:00 AM (Eastern).

The conference call can be accessed by dialing (647) 427-7450 or 1 (888) 231-8192. The conference ID is 1363869.

Audio replay will be available until March 16, 2018 by dialing 416-849-0833 or 1-855-859-2056. The passcode is 1363869.

In conjunction with the release of the REIT’s fourth 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 February 26, 2018, Vital Trust also announced its financial results for the period ended December 31, 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. As at December 31, 2017 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 146 income-producing properties and 10.2 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 Operating Income, same-property NOI, 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 fourth quarter ending December 31, 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 December 31, 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.

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1} Defined as NOI plus (i) share of profit (loss) from associates; (ii) management fees; and (iii) interest income.
² Percentage of NOI subject to annual inflationary or market based adjustments.

 

SOURCE NorthWest Healthcare Properties Real Estate Investment Trust

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