TORONTO, June 21, 2016 /CNW/ – NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (the “REIT” or “NorthWest”) is pleased to provide an update on activities from NSX-listed Vital Healthcare Property Trust (“Vital Trust”). The REIT owns a 24.4% interest in Vital Trust. Vital Trust is also managed by a wholly owned subsidiary of the REIT (the “Vital Manager”).
A$85 Million Pipeline of Value-Enhancing Initiatives Announced
Vital Trust recently announced an approximate A$64 million (C$61.1 million) pipeline of new development projects across its Australian private hospital portfolio, and a suite of strategic acquisitions of approximately A$20 million (C$19.1 million) which are expected to occur over coming months. These initiatives are expected to further support various scale and diversification objectives at key assets or with market leading operating partners. When completed, all projects will further enhance the quality of Vital Trust’s portfolio and sustainability and growth of Vital Trust’s earnings.
The A$64 million of development projects relate to five private hospitals, four of which are operated by Healthe Care Australia Pty Ltd., Australia’s third largest private hospital operator, with the fifth hospital leased to Epworth Healthcare. The development projects support the expansion of the existing hospitals including increasing the number of beds, operating theatres and parking capacity, as well as contributing to the general modernization of facilities which will ultimately deliver exceptional clinical care to patients. The five development projects are expected to be completed over a period of approximately twelve months.
In addition, Vital Trust is working on a number of organic growth initiatives to further protect and enhance value at a number of Vital Trust’s existing strategic assets. Vital Trust is working to establish new high quality long-term partnerships with market leading operators. Collectively Vital Trust expects to acquire approximately A$20 million (C$19.1 million) of strategically located properties in support of these initiatives over the coming months.
Preliminary NZ$100 Million Portfolio Revaluation Increase for Fiscal Year 2016
Vital Trust recently announced a preliminary unaudited portfolio revaluation increase of NZ$55.6 million (C$50.8 million) for the six months ending 30 June 2016 (an increase of NZ$49.8 million (C$45.5 million) since March 31, 2016). For the twelve months to June 30, 2016 (Vital Trust’s 2016 fiscal year-end) Vital Trust has delivered a total revaluation gain over book value of NZ$100.7 million (C$92.0 million), a 12.1% increase over June 2015. The overall carrying value of Vital Trust’s investment property portfolio is forecast to be approximately NZ$962 million (C$880.0 million) as at June 30, 2016.
For the twelve months to 30 June 2016, Vital Trust’s total portfolio weighted average capitalization rate (“WACR”) decreased 80 basis points to 7.2% (a decrease of 40 basis points from 7.6% since December 31, 2015). Vital Trust’s Australian portfolio WACR firmed 90 basis points to 7.2% and the New Zealand portfolio WACR firmed 60 basis points to 6.9% during fiscal year 2016. Bolstered by the successful development program, the Australian portfolio was the key driver of the strong overall revaluation increase, accounting for approximately 90% of the total NZ$100.7 million (C$92.0 million) total revaluation gain.
The valuations were undertaken by seven independent valuers. The valuations remain subject to Vital Trust’s June 30, 2016 year-end audit and final exchange rates. These will be confirmed in Vital Trust’s fiscal year 2016 financial results, expected to be announced in New Zealand on August 11, 2016.
Announcement of NZ$160 Million Rights Offering and Pro Rata Participation by NorthWest
Vital Trust announced yesterday it intends to raise approximately NZ$160 million (C$146.2 million) of new equity capital through a pro rata renounceable rights offer of new units to existing unitholders (the “Offer”), with NorthWest committing to subscribe for its full 24.4% share for approximately NZ$39 million (C$35.6 million). NorthWest’s participation in the Offer will be funded through internal resources. The remaining approximate NZ$121 million will be underwritten by Forsyth Barr Group Limited on a bought deal basis.
The Offer will be executed through a 2-for-9 pro rata renounceable rights offer at an issue price of NZ$2.08 per unit (C$1.90 per unit). The issue price reflects a 5.2% discount to the ex rights price of NZ$2.195 per unit (C$2.01 per unit).
The funds raised through the Offer will initially be used to reduce Vital Trust’s bank debt. This will better position Vital Trust to continue to pursue development, acquisition and growth opportunities that will deliver value and increased returns to investors. On a pro-forma basis relative to March 31, 2016, Vital Trust expects to reduce its leverage ratio from 37.1% to approximately 20.3%, following the repayment of bank debt.
“The REIT is fully supportive of Vital Trust and overall Australasian healthcare real estate opportunities,” said Paul Dalla Lana, Chief Executive Officer of NorthWest. “Vital Trust has experienced an extremely successful period of growth and has built a track record of being market-leading long-term managers and investors in healthcare real estate. Vital Trust has established and strengthened key operator partnerships across the sector, and, supported by strong industry fundamentals, it will continue with its growth and diversification strategy, delivering long-term sustainable returns to investors, including NorthWest”.
Further details on Vital Trust’s rights offer and a copy of Vital Trust’s current investor presentation relating to investment activities and the rights offer can be found on Vital Trust’s website at www.vitalhealthcareproperty.co.nz under the section “Latest news & announcements”.
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 120 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.
This press release contains forward-looking statements which reflect the REIT’s current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual results could differ materially from those projected herein. The REIT disclaims any obligation to update these forward-looking statements.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust
