Northwest Healthcare Properties Real Estate Investment Trust Releases Fourth Quarter 2015 Results

TORONTO, March 10, 2016 /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 months and year ended December 31, 2015.

2015 Financial and Operational Highlights:

For the three months and year ended December 31, 2015, the REIT delivered strong financial and operating results with key highlights as follows:

  • AFFO per unit for the fourth quarter and fiscal year 2015 of $0.20 and $0.82, respectively, ($0.87 per unit on a  normalized fourth quarter annualized basis);
  • AFFO payout ratio of approximately 100% (92% normalized) for the fourth quarter and 98% for the year based on the REIT's annual distribution policy of $0.80/unit;
  • Recognition of a $72.9 million and $169.5 million valuation gains in the REIT's total investment property portfolio, in the fourth quarter and the year 2015, respectively, driven by valuation gains in the REIT's international regions of Australasia, Brazil and Germany;
  • Adjusted net asset value of $10.71/unit, an increase of approximately 12.8% from Q3 2015 as a result of positive revaluations on the REIT's assets and  currency appreciation;
  • Reduced leverage to 49.2% (55.5% including convertible debentures), down from 52.4% (57.1%) at the end of the third quarter and 51.6% (60.1%) at the end of 2014, respectively;
  • Strong core portfolio occupancy of 95.9%, led by the international portfolio occupancy of 98.8%;
  • Core weighted average lease expiry of 10.0 years, underpinned by the international portfolio with a weighted average lease expiry of 15.9 years; and
  • Strong operational results, resulting in same property NOI growth, relative to the same quarter last year, in source currency, of 3.2% driven largely by inflation indexation adjustments on leases at the REIT's international assets and outperformance in Australia and New Zealand.

Since the date of the combination transaction between the REIT and NorthWest International Healthcare Properties REIT ("NWI REIT"), the REIT has focused on executing near-term integration priorities with a goal of improving both its portfolio quality and financial profile.  Key initiatives completed include:

  • Completing the sale of 12 of 17 identified non-core Canadian properties totaling $75.6M which generated approximately $24.2M of net proceeds. We expect to complete the dispositions of the remaining 5 properties before the end of Q2 2016 for additional estimated net proceeds of approximately $3.6M;
  • Completed corporate financing initiatives including issuing $53M of 5.50% unsecured convertible debentures and expanding the REIT's revolving credit facility by another $30 million to $80 million;
  • Repaying or refinancing $185.5M of property level debt with an estimated annual interest rate savings of $4.7M ($0.07/unit) and extended maturity profile;
  • Completing $106.7M of acquisitions and $177.2M of developments previously announced as follows:
    • In Australia/New Zealand - 7 acquisitions totaling $85.3M and 5 developments totaling $127.2M;
    • In Canada - 2 developments totaling $50M; and,
  • Completing $21.4M of new accretive acquisitions comprising the 2 building medical office complex in the REIT's core Berlin, Germany market.

"The fourth quarter of 2015 concludes a transformational year for NorthWest Healthcare Properties REIT and its unitholders following its May 15, 2015 merger with NWI REIT", said Paul Dalla Lana, Chief Executive Officer.  The transaction has brought NWH scale as well as internal and external growth potential; more than doubling the size of its portfolio, delivering significant earnings and NAV accretion now and for the future as well as opening up new opportunities arising from compelling global healthcare industry trends. Our focus in 2015 has been around integrating the businesses and unlocking the full potential of the combined platform.  With these efforts now substantially complete and a strong foundation firmly in place, the REIT looks forward to 2016 and beyond to execute on its long-term plans of delivering accretive growth and driving unitholder value as Canada's only global healthcare REIT."

2016 Outlook:

For 2016, the REIT will continue executing on committed, low-risk development and expansion projects as well as making select accretive acquisitions. The REIT will also seek further capital-recycling opportunities to improve its portfolio quality, reduce debt, and fund its growth initiatives.  Finally, the REIT will explore new institutional partnerships in each of its international markets as a means to leverage its platform in the on-going consolidation of the healthcare real estate globally.

In support of the REITs strategy, global healthcare trends remain buoyant. We participate in the world's largest and fastest growing industry that is about to experience its peak demand over the next 30 years as populations grow and age, while at the same time demanding better and differentiated health services. To address this, we see consistent responses from policy makers, hospital operators and insurers alike - namely increasing consolidation among participants to achieve scale, efficiency and best practices as well as a shift to focusing on outcomes versus traditional fee for service reimbursement.

Together these trends translate into significant opportunity for the REIT as our tenants or potential tenants are getting bigger, more efficient and requiring improved or differentiated facilities.  To achieve this, they are also requiring capital to fund growth or are increasingly likely to sell surplus assets, such as their real estate, to become more efficient. In both cases, this creates opportunities for our REIT as a real estate capital partner to provide them long-term, cost-effective solutions that grow our portfolio. The features of these investments are particularly compelling with 20+ year inflation-indexed, triple-net leases providing stable growing cash flows.

In fact, these opportunities are already coming from within the REITs existing portfolio and tenant base, as many of our tenants, including Rede D'Or in Brazil, Healthecare and Ramsay in Australia, and Mercy Ascot in New Zealand, are industry leaders at the forefront of this growth and consolidation wave.  In 2015, each of these tenants enjoyed strong growth and record earnings, and are looking aggressively to further intensification and expansion opportunities within their markets.

With supportive healthcare trends and exposure to growing international markets, management believes the REIT is uniquely positioned to offer unitholders stable, growing returns through an improved, high quality portfolio of defensive international healthcare real estate. This was the rationale for its merger with NWI REIT which has delivered above expectations.  Our team looks forward to executing on this differentiated strategy as it seeks to build a leading global healthcare real estate company.

Selected Financial Information:

     
(unaudited) Three Months Ended Year Ended
($000's, except unit and per unit amounts) December 31, 2015 December 31, 2015
     
Number of properties - 100% of Vital Trust 122 122
Gross leasable area (sf) - 100% of Vital Trust 8,034,098 8,034,098
Occupancy - 100% of Vital Trust (1) 94.3% 94.3%
Weighted Average Lease Expiry (Years) - 100% Vital Trust 9.6 9.6
Net Operating Income $44,250 $44,250
Net Income attributable to unitholders $4,185 $116,854
Funds from Operations ("FFO") $13,199 $39,948
Adjusted Funds from Operations ("AFFO")(1) $14,016 $48,705
Debt to Gross Book Value - Declaration of Trust 49.2% 49.2%
Debt to Gross Book Value - Including Convertible Debentures 55.5% 55.5%
     
Per unit data              
FFO $0.18 $0.68
AFFO $0.20 $0.82
Distributions(2) $0.20 $0.80
AFFO Payout ratio 100% 98%
 

(1)   AFFO amounts are calculated utilizing leasing and capital reserves of 6% of revenue in Canada and Germany
(2) Distributions per unit for the year ended December 31, 2015 reflect the annual distribution policy of the REIT which differs from the reported annual distribution per unit rate of $0.69, based on NWI REIT being deemed the accounting acquirer.
   

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's Discussion and Analysis ("MD&A") for the fourth quarter ending December 31, 2015, which is available on the SEDAR website at www.sedar.com.  Also on SEDAR are the annual audited consolidated financial statements of the REIT for the year ended December 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", "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 fourth quarter 2015 results on Friday, March 10, 2016 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 414 706 20.

Audio replay will be available until March 18, 2016 by dialing 416-849-0833 or 1-855-859-2056. The passcode is 414 706 20.

In conjunction with the release of the REIT's fourth 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 120 income-producing properties and 7.7 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

For further information:

please contact Paul Dalla Lana, CEO at (416) 366-8300 x 1001.


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