NorthWest Healthcare Properties Real Estate Investment Trust Releases Second Quarter 2015 Results

TORONTO, Aug. 12, 2015 /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 six months ended June 30, 2015.

The second quarter of 2015 marks a new era for NorthWest Healthcare Properties REIT (the “REIT“) and its unitholders. During the quarter, on May 15, 2015, the REIT completed its previously announced combination transaction with NorthWest International Healthcare Properties REIT (“NWI“) (the “Combination Transaction“). The REIT has emerged as the leading global healthcare real estate investment trust with interests in over $2.5 billion of assets representing 123 properties and comprising 8.0 million square feet of leasable space, located in Australia, Brazil, Canada, Germany and New Zealand.

“Having now completed our significant merger transaction, I am excited to be moving forward in this new era for our combined business” said Paul Dalla Lana, CEO of the REIT.  NorthWest Healthcare Properties REIT is better positioned than ever to offer unitholders stable, growing returns through a high quality portfolio of defensive international healthcare real estate, and we look forward to continuing to execute on our differentiated business plan and long-term strategy.”

Financial and Operational Highlights

Financial Highlights of the Quarter

• AFFO per unit for the quarter of $0.21, or $0.85 on an annualized basis;
• AFFO payout ratio of 95% for the quarter;
• Strong portfolio occupancy of 94.0%, led by the international portfolio’s occupancy of 98.5%;
• Weighted average lease expiry of 9.4 years, underpinned by the international portfolio with a weighted average lease expiry of 15.9 years; 
• Same property NOI growth relative to the same quarter last year, in source currency, of 2.5% driven largely by inflation indexation adjustments on leases at the REIT’s international assets; 
• Recognition of a portfolio valuation gain of $84.1 million representing an increase of 3.6% from March 31, 2015, comprised of $8.3 million in Brazil and $76.3 million in Australia/New Zealand.  These results are being driven by increased rents that are indexed to inflation in both regions, and in Australia, the successful completion of value-add expansion and hospital repositioning activity along with sector wide compression of capitalization rates as investors increasingly recognize the strong characteristics of the private healthcare real estate asset class in the region;
• The REIT earned a $3.4 million incentive fee from Vital Healthcare Property Trust through its wholly-owned asset management subsidiary.  The incentive fee was driven by a $76.3 million fair value gain recognized on the Vital Trust investment property portfolio for the fiscal year ended June 30, 2015. 
• The REIT repaid approximately $60 million of short-term corporate financing with an interest rate of 9.4%, using proceeds from internal resources and $70 million of new mortgage facilities with terms of 24 months and interest rates averaging 5.7%.

Subsequent to the quarter end, the REIT completed the following operational activities:

• The REIT received commitments for $45 million of portfolio refinancing for five of its assets in Germany with a weighted average 6.7 year term at a 1.77% weighted average interest rate, representing a savings of 0.5% per annum. The REIT also received commitments for $39 million of mortgage financing with an average 2 year term at a weighted average interest rate of 4.1% for its two Canadian development properties.  When combined with finalizing its committed Brazilian portfolio refinancing expected in the third quarter of 2015, the REIT has established a more cost-effective,  long-term financial profile;
• The REIT approved and implemented a Normal Course Issuer Bid to acquire up to 4,762,579 of its Trust Units, or approximately 10% of its public float, for cancellation over the next 12 months, of which 304,000 were acquired through August 11, 2015. The REIT continues to believe that at current market prices versus underlying value these acquisitions offer an attractive investment opportunity; and,
• The REIT entered into conditional sales agreements for three Canadian medical office buildings located in non-core markets.  The sales of the three properties, with a combined carrying value of $16.3 million, are expected to close in the third quarter and generate net proceeds of approximately $2.5 million, before transaction costs. 

Going forward, the REIT is focused on its key 2015 priorities of:

• Balance sheet optimization, through refinancing or repaying higher cost debt financing;
• Portfolio repositioning, through recycling capital out of non-core Canadian assets into committed expansion opportunities and select acquisitions; and,
• Integrating the acquired international assets and operations in the REIT.

Selected Financial Information:  

 

Vital Healthcare Property Trust

On August 12, 2015, Vital Trust also announced financial results for the 12 months ended June 30, 2015. Details on Vital Trust’s fiscal year 2015 financial results are available on Vital Trust’s website at www.vitalhealthcareproperty.co.nz.

Combination Transaction

On May 15, 2015, the REIT acquired, among other things, all the assets of NWI and NWI’s subsidiaries became direct or indirect subsidiaries of the REIT, in accordance with the plan of arrangement. The REIT is the legal acquirer, however NWI has been identified as the accounting acquirer of the REIT. Accordingly the financial results for the second quarter of 2015 reflect the following:

• Financial results of NWI for the three and six months ended June 30, 2015 which includes the consolidation of Vital Trust on an 100% basis and applicable recognition of the approximate 76% non-controlling interest;
• Financial results of the business formerly known as NorthWest Healthcare Properties REIT, and now defined as the REIT’s Canada segment, on an equity accounted basis for the period January 1, 2015 to May 14, 2015 (representing NWI’s former approximate 26% in the REIT);
• Financial results for the REIT’s Canada segment from the period May 15 to June 30, 2015; and
• Any consolidation and adjustments necessary to effect the business combination, all as more fully described in the REIT’s condensed consolidated interim unaudited financial statements for the three and six months ended June 30, 2015 and management discussion and analysis for the second quarter 2015 (“MD&A“).

Some financial measures used in this press release, such as FFO, AFFO, and Normalized AFFO 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 discussion and analysis (the “MD&A”) for the second quarter of 2015, which is available on the SEDAR website at www.sedar.com.  Also on SEDAR are the condensed consolidated interim financial statements of the REIT for the three and six months ended June 30, 2015.

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”, “run rate”, “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.

The REIT invites you to participate in its conference call with senior management to discuss our second quarter 2015 results on Thursday, August 13, 2015 at 10:00 AM (Eastern).

The conference call can be accessed by dialing 647-427-7450 or 1-888-231-8191. The conference ID is 762 873 44.

Audio replay will be available until August 20, 2015 by dialing 416-849-0833 or 1-855-859-2056. The passcode is 762 873 44.

Following the call, the webcast can be accessed from the “Investor Relations” page, under “Webcasts & Presentations”, of the REIT’s web site at www.nwhreit.com, and will be archived for 30 days.

In conjunction with the release of the REIT’s second quarter 2015 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.

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 123 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.

 

SOURCE NorthWest Healthcare Properties Real Estate Investment Trust