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Northwest Healthcare Properties Real Estate Investment Trust Releases First Quarter Results
May 12, 2015 at 6:08 PM EDT

TORONTO, May 12, 2015 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (the "REIT") (TSX: NWH.UN), Canada's largest non-government owner and operator of medical office buildings and healthcare real estate, today announced its results for the three months ended March 31, 2015.

Highlights of the Quarter:

  • AFFO per unit for the quarter was $0.21, consistent with the previous quarter and up $0.01 from comparable prior year quarter.
  • FFO per unit for the quarter was $0.25, up $0.01 from previous quarter and consistent with the comparable prior year quarter.
  • Occupancy was 91.4%, a decrease from the previous quarter at 91.9% primarily due to the expiry on March 24, 2015 of the IPO head leases at certain of the REIT's properties. The current contracted occupancy rate is 91.9%.
  • On March 10, 2015, the REIT entered into an agreement with NorthWest International Healthcare Properties Real Estate Investment Trust ("NWI") to combine and create a leading global diversified healthcare real estate investment trust with over $2 billion of assets (the "Combination Transaction").  The Combination Transaction will be effected by a plan of arrangement pursuant to which NWH will acquire all of the assets of NWI. The unitholders of NWI will receive 0.208 of a NWH unit for each NWI trust unit held, on a tax-deferred basis.  The Combination Transaction was unanimously approved by NWH's Board of Trustees (excluding interested trustees) based on a unanimous recommendation by an independent committee of NWH's Board of Trustees, after consultation with the independent committee's financial and legal advisors.  Subsequent to the quarter, on May 5, 2015, the Combination Transaction was approved at the special meeting of NWH voting unitholders by 96.64% of the total votes cast and 93.6% of the votes cast excluding NWI and other interested parties. The Combination Transaction was also approved by 99.19% of the votes cast at the special meeting of NWI unitholders. The Combination Transaction is expected to close in the second quarter of 2015.
  • During the quarter the REIT completed a series of transactions, as part of its on-going portfolio optimization strategy, that improve portfolio quality and position the REIT for growth:
    • The REIT acquired the Owen Sound Medical Building for $23 million pursuant to a right of first offer it held over the property.  Consideration included the assumption of a $13.9 million mortgage secured by the property and settlement of an $8 million loan with the property's developers. The property located at 1415 1st Avenue West, Owen Sound, Ontario is a new generation medical office building which has been the home, under a long-term lease, of the Owen Sound Family Health Team since 2012.
    • The REIT acquired a two-building complex located at 81-85 The East Mall in Toronto, containing an aggregate rentable area of approximately 82,000 square feet. One building is substantially occupied by a variety of tenants, including a significant health care user, and the second building is vacant, as it undergoes renovation in order to become the future home of the Etobicoke Family Health Team, together with ancillary healthcare uses. It is expected to be substantially occupied in late 2016, after completion of the renovations.  The REIT also acquired two land parcels slated for medical office building development, one in Barrie, Ontario and one in St. Albert, Alberta. The first land parcel is located on Bayview Drive in Barrie, Ontario, and will be the future home of the Barrie Family Health Team. This long-term tenancy is scheduled, along with other identified healthcare users, to take occupancy following the construction of a 3-storey, 79,000 square foot, new generation multi-tenant medical office building. Pre-leasing is advanced and construction has commenced, with the opening of the building scheduled for late 2016. The second land parcel is located across the street from the Sturgeon Community Hospital in St. Albert, Alberta, which is a 25-minute drive northwest of downtown Edmonton. The 1.4-acre site has been designed for a new generation, "on-campus" medical office building of between 30,000 and 50,000 square feet, and pre-leasing is underway.  Consideration for the 8185 The East Mall acquisition right and the two land parcels was $10 million, subject to adjustments.  81-85 The East Mall, Toronto, Ontario was acquired from a third party for $10.5 million
    • Concurrent with the foregoing acquisitions, the REIT ended its development relationship with NorthWest Value Partners Inc. ("NWVP"), at no cost, resulting in the internalization of the development platform and the hiring of NWVP's development team.
  • On January 15, 2015, the REIT, in its on-going efforts to recycle capital into higher-quality assets, sold Polyclinique de la Capitale in Quebec City, Quebec, an older non-core medical office building.  The sale generated gross proceeds of $4.6 million and net proceeds of $0.9 million after settlement of the existing mortgage of $3.4 million and payment of transaction costs of $0.3 million.
  • During the quarter the REIT took advantage of a favourable lending market and low interest rate environment. The REIT received gross mortgage proceeds of approximately $70.3 million from nine new mortgage financings, and net proceeds of approximately $18.5 million after repayment of maturing mortgages and the refinancing of the Owen Sound Medical Building mortgage. The new mortgages have a weighted average term to maturity of 6.5 years and weighted average interest rate of approximately 2.95%.  With the completion of these mortgage financings the REIT has refinanced all of its 2015 mortgage maturities.
  • The REIT paid distributions of $0.06667 per Unit during the quarter on January 15, 2015, February 13, 2015 and March 13, 2015 consistent with its annualized target of $0.80 cents per Unit. Subsequent to the quarter, the REIT declared distributions of $0.06667 per unit to Unitholders of record as at April 30, 2015.

Peter Riggin, CEO, commented that "We are pleased with the REIT's positive operational start to 2015, which will be augmented in the future by the contributions of the completed internalization of development and the pending business combination with NorthWest International Healthcare Properties REIT."

Selected Financial Information:




(unaudited)

Three Months Ended

Three Months Ended

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

March 31, 2015

March 31, 2014(2)




Number of properties

74

76

Revenue

$38,316

$39,190

Net Operating Income

$20,217

$20,138

Net Income

$6,142

$14,326

Funds from Operations ("FFO")

$11,733

$11,509

Adjusted Funds from Operations ("AFFO")(1)

$9,608

$9,336

Debt to Gross Book Value

56.2%

53.1%




Per unit data



FFO

$0.25

$0.25

AFFO

$0.21

$0.20

Distributions

$0.20

$0.20

AFFO Payout ratio

97%

99%




(1)

AFFO amounts are calculated utilizing leasing and capital reserves of 6% of revenue.

(2)

FFO and AFFO for the three months ended March 31, 2014 have been restated to conform

with the current year presentation.

Some financial measures used in this press release, such as FFO and 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 first 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 months ended March 31, 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", 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 first quarter 2015 results on Wednesday, May 13, 2015 at 8:00 AM (Eastern).

The conference call can be accessed by dialing 647-427-7450 or 1-888-231-8191. The conference ID is 44660760.

Audio replay is available until May 20, 2015 by dialing 416-849-0833 or 1-855-859-2056. The passcode is 44660760.

Following the call, the webcast can be accessed from the "Investor Information" page, under "Webcasts & Presentations", of the REIT's web site at www.nwhp.ca, and will be archived for 30 days.

About NorthWest Healthcare Properties Real Estate Investment Trust
NorthWest Healthcare Properties Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT holds a portfolio of 74 income-producing properties, with a focus on medical office buildings and healthcare real estate, comprising approximately 4.6 million square feet of gross leasable area located in British Columbia, Alberta, Manitoba, Ontario, Québec, Nova Scotia and New Brunswick.

SOURCE NorthWest Healthcare Properties Real Estate Investment Trust

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