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TORONTO, June 10, 2021 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) ("NorthWest" or the "REIT") announced today a public offering, on a "bought deal" basis, of 13,900,000 trust units (the "Units") at a price of $12.60 per Unit (the "Offering Price") representing gross proceeds of approximately $175,140,000 (the "Public Offering"). The Public Offering is being made through a syndicate of underwriters co-led by RBC Capital Markets and Scotiabank.
The REIT has also granted the underwriters the option to purchase up to an additional 2,085,000 Units to cover over-allotments, if any, exercisable in whole or in part anytime up to 30 days following closing of the Public Offering.
Concurrently with the Public Offering, the REIT has also entered into an agreement to sell 1,985,000 trust units to NorthWest Value Partners Inc. ("NWVP"), NorthWest's largest unitholder, on a non-brokered private placement basis at the Offering Price for gross proceeds of approximately $25 million (the "Private Placement", and together with the Public Offering, the "Offering"). NWVP currently holds an approximate 13.8% interest in NorthWest and is wholly-owned by Paul Dalla Lana, CEO of the REIT. Upon closing of the Private Placement, which is expected to occur in July 2021, NWVP will hold an approximate 13.7% effective interest in the REIT through ownership of trust units and Class B LP units (or approximately 13.6% assuming the exercise in full of the over-allotment option).
The REIT intends to use the net proceeds of the Offering to: (i) fund its equity requirement for the purchase of a campus of four medical office buildings in the Netherlands (the "Netherlands MOBs"); and (ii) provide financial flexibility in respect of its previously announced proposed transaction to acquire Australian Unity Healthcare Property Trust ("AUHPT") as described in its May 31, 2021 press release (the "Proposed Transaction"). The remaining proceeds, if any, will be used to fund future acquisitions, to repay amounts outstanding on its credit facilities and for general trust purposes.
As previously disclosed, through a combination of existing liquidity and committed debt facilities, the REIT's equity requirement for the Proposed Transaction is fully funded. Pro forma the Offering, the intended use of proceeds, transaction activity completed subsequent to Q1 2021 including the conversion of outstanding Series E convertible debentures the REIT's proportionate leverage will decline to approximately 50%.
As the REIT executes on its strategic priorities and acquisition pipeline including the Proposed Transaction, as well as its capital recycling initiatives, including the planned H2 2021 United Kingdom Joint Venture ("UK JV") which is expected to generate approximately $260 million in net proceeds, proportionate leverage is expected to stabilize at approximately 50%, in line with the REIT's previously stated targets.
Acquisition of the Netherlands MOBs
The Netherlands MOBs represent a unique opportunity to acquire four on-campus buildings totalling approximately 410,000 square feet that are immediately adjacent to a leading Dutch hospital operator that also occupies more than 50% of leaseable area in the MOBs.
The purchase price for the Netherlands MOBs is approximately $172 million (€117 million) based on a capitalization rate of approximately 5.1%. The REIT has secured debt financing based on 58% loan-to-value with an attractive interest rate of approximately 2.4% to partially fund the purchase price. The acquisition of the Netherlands MOBs is expected to close in June 2021.
Proposed Transaction to Acquire AUHPT
As previously announced on May 31, 2021, the REIT and a capital partner (collectively the "Bidding Consortium") have made a fully funded, all-cash offer to acquire 100% of the outstanding units of AUHPT that the REIT does not already own at a price of A$2.55 per Wholesale Unit, A$2.61 per Retail Unit and A$1.62 per Class A unit (collectively, the "AUHPT Units") under a trust scheme (the "Proposed Transaction"). The Proposed Transaction, which remains subject to AUHPT unitholder approval, implies a total equity value for AUHPT of $2.0 billion (A$2.1 billion) and an enterprise value of $2.6 billion (A$2.7 billion). For further details of the Proposed Transaction please refer to the REIT's press release dated May 31, 2021.
About the Offering
The Offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange. The Public Offering is expected to close on or about June 18, 2021 and the Private Placement is expected to close in July 2021.
The Units issued under the Public Offering will be offered pursuant to the REIT's base shelf prospectus dated November 27, 2020. The terms of the Offering will be described in a prospectus supplement to be filed with securities regulators in all provinces and territories of Canada and may also be offered by way of private placement in the United States.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
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 186 income-producing properties and over 15.5 million square feet of gross leasable area located throughout major markets in Canada, Brazil, Europe, 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 230 professionals across ten offices in seven countries to serve as a long term real estate partner to leading healthcare operators.
Forward Looking Information
This press release contains "forward-looking statements" within the meaning of applicable securities laws, including statements about the Offering and the proposed use of proceeds thereof, the expected closing of the Private Placement and the acquisition of the Netherlands MOBs, NWVP's expected ownership levels, the repayment of debt, and the pro forma and expected stabilized leverage levels. The forward-looking statements in this news release are based on certain assumptions, including without limitation that all conditions to completion of the Offering will be satisfied or waived, and that the REIT will be able to complete the Proposed Transaction (which is not currently supported by AUHPT) on the terms previously proposed and disclosed. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations including the REIT's ability to complete the UK JV; the risk that the Offering, the acquisition of the Netherlands MOBs and the Proposed Transaction will not be completed on the terms proposed or at all; the risk that holders of the REIT's convertible debentures will not convert their debentures; or that other developments may arise that result in the REIT having to further increase its leverage. The statements in this news release are made as of the date of this release. Although the REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. A discussion of the risk factors applicable to the REIT is contained under the heading "Risk Factors" in the REIT's annual information form dated March 29, 2021, a copy of which may be obtained on the SEDAR website at www.sedar.com.
These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold in the United States or to U.S. persons except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities laws or pursuant to an exemption therefrom. Accordingly, this news release does not constitute an offer for sale of securities in the United States.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust