TORONTO, Feb. 16, 2021 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) ("NorthWest" or the "REIT") announces progress on recent operational, transactional and balance sheet initiatives, and provides timing of Q4 2020 results and conference call details.
The REIT's portfolio of healthcare infrastructure assets continues to perform well through the COVID-19 pandemic with all properties open and operational. For the three months ended December 31, 2020 the REIT collected 98.3% of rent (including those subject to formal deferral arrangements), which is a 76 basis points improvement from the 97.6% collected in Q3 2020. The strong rent collection throughout the pandemic is illustrative of the defensive attributes of the REIT's portfolio, the essential nature of its tenant base and commitment from governments to ensure access to critical healthcare services. The REIT believes that a growing back log of non-essential treatments and surgeries in each of its global markets is expected to increase demand levels for acute healthcare services and support private hospital system volumes going forward.
As previously disclosed, during 2020 the REIT acquired a $620 million (£358 million) portfolio of ten high quality private hospitals in the UK leased to leading private hospital operators on a long-term, triple net, inflation indexed basis, at a weighted average acquisition capitalization rate of 6.5%. Since acquisition and during the COVID-19 pandemic, the REIT's UK portfolio has performed as expected with 100% rent collection underpinned by strong funding support from the National Heath Service. The REIT continues to see an approximate $85 million value creation opportunity as the UK portfolio acquisition cap rate stabilizes to market, generating an estimated 150 basis points of compression realized through: (i) tenant diversification and focus on top 5 UK private hospital operators; (ii) major market concentration; and, (iii) lease optimization. The REIT expects to complete these asset management initiatives in 2021 and continues to progress its discussions with potential partners in respect of its planned UK joint venture (the "UK JV") in parallel with a view to generating approximately $260 million in net proceeds from the sell down of its 100% interest in the portfolio in 2021.
In Europe, the REIT sold four wholly owned Dutch Clinics in Q1 2021 to its recently established $3.1 billion (€2.0 billion) joint venture (the "European JV") with GIC for $44.8 million (€29.1 million). Also in the Netherlands, the REIT has agreed to acquire a 59,000 square foot life sciences building, 100% leased to a leading clinical research firm with a 19 year weighted average lease expiry ("WALE") for $24.3 million (€15.8 million), representing a 5.9% initial capitalization rate. The property is located in Assen, NL.
In Australia, the REIT together with a capital partner, has entered into option agreements to acquire a strategic interest of approximately 16% of the units in Australian Unity Healthcare Property Trust ("AUHPT"), a $2.3 billion (A$2.4 billion) unlisted healthcare property trust comprising 62 high quality hospital, medical centres and other healthcare assets leased to leading Australian healthcare operators with a WALE of 15.9 years and 98% occupancy. The agreements are subject to customary Australian foreign investment approvals.
Balance Sheet Initiatives
The REIT has accelerated its 2021 refinancing plans and, to date, has either renewed, refinanced, or extended over 45% of its 2021 maturities with a path to repay and/or refinance the remaining normal course debt maturities. Additionally, the REIT has identified the following organic deleveraging opportunities:
- Conversion of $155 million of convertible debentures: At the REIT's current unit price of $12.98, holders of NWH.DB.E 5.25% debentures maturing July 31, 2021 and NWH.DB.F 5.25% debentures maturing December 31, 2021 with conversion prices of $12.75 and $12.80 per Unit, respectively, have an economically advantageous opportunity to convert their debentures to REIT units. Assuming full conversion to equity, the REIT's pro-forma proportionate leverage would decline by approximately 350 basis points.
- Anticipated Q4 2020 valuation increase: The relative outperformance of healthcare infrastructure assets since the onset of COVID-19 combined with decreasing interest rates globally have driven increased demand for the REIT's assets which is expected to result in positive revaluation gains to investment properties of between $125 million and $175 million. This anticipated valuation increase is underpinned by third-party, independent property valuations consistent with the REIT's valuation policy and remains subject to internal review, finalization of the REIT's December 31, 2020 financial statements and completion of its year-end audit. Based on the anticipated valuation range the REIT's proportionate leverage would decrease by approximately 160 to 220 basis points and its net asset value would increase by approximately $0.70 to $1.00 per Unit.
The cumulative impact of the transaction activity (including the completion of the REIT's planned UK JV) and the deleveraging initiatives outlined above is expected to reduce the REIT's proportionate leverage from 57.6% as at Q3 2020 to less than 50% and position the REIT's balance sheet for continued strategic growth.
Q4 2020 Earnings Release Date and Conference Call Details
The REIT will issue its fourth quarter 2020 financial results for the three and twelve months ending December 31, 2020 on Thursday, March 11, 2021, after markets close.
A conference call will be held on Friday, March 12, 2021 at 10:00 am (ET). Participating on the call will be members of the REIT's senior management team.
Investors are invited to access the call by dialing 416-764-8609 or toll-free 1 (888) 390-0605, conference ID# 24599469. A recording of this call will be made available Friday, March 12, 2021 beginning at 12:30 pm (ET) through to Friday, March 19, 2021. To access the recording, please call 1 (888) 390-0541 or (416) 764-8677 and use the reservation number 599469#.
Vital Healthcare Property Trust will report first half results for its fiscal year 2021 on February 25, 2021.
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 190 income-producing properties and over 15.4 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, without limitation, statements regarding: the REIT's revenues for the quarter ended December 31 2020; increased demand levels for the REIT's assets; value creation opportunities for the UK portfolio; the anticipated UK JV; capitalization rates; the REIT's strategic interest in AUHPT; anticipated conversion of the REIT's debentures; anticipated revaluation gains to investment properties for the year ended December 31, 2020; the repayment of debt and other deleveraging strategies; pro forma or anticipated leverage levels; and the REIT's continued growth. The forward-looking statements in this news release are based on certain assumptions and are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including, without limitation, risks related to: the REIT's business and financial position; changes and adjustments to these preliminary or anticipated financial estimates resulting from the REIT's reviews and/or regular financial closing and review procedures and audit procedures; the REIT's ability to realize on its UK value creation opportunities or complete the UK JV; the ability to access equity and debt markets; 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 April 7, 2020, a copy of which may be obtained on the SEDAR website at www.sedar.com.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust