NorthWest Healthcare Properties Real Estate Investment Trust Releases Second Quarter 2016 Results

TORONTO, Aug. 11, 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 and six months ended June 30, 2016.

2016 Second Quarter Financial and Operational Highlights:

For the three and six months ended June 30, 2016, the REIT delivered strong financial and operating results with key highlights as follows:

  • Revenues from investment properties of $64.2 million ($129.1 million year-to-date), an increase of 43% over the same period last year (80% year-to-date);
  • Net operating income ("NOI") of $46.1 million ($90.8 million year-to-date), an increase of 35% over the same period last year (56% year-to-date);
  • AFFO per unit for the second quarter of $0.22 or $0.88 on an annualized basis, ($0.92 per unit on a normalized second quarter 2016 annualized basis – "Normalized AFFO");
  • AFFO payout ratio of approximately 91% (87% relative to Normalized AFFO) for the second quarter based on the REIT's annual distribution policy of $0.80/unit;
  • Normalized portfolio occupancy of 96.2%, led by the international portfolio occupancy of 98.7%;
  • Normalized weighted average lease expiry of 11.1 years, underpinned by the international portfolio with a weighted average lease expiry of 15.9 years;
  • Strong same property NOI growth, relative to the same quarter last year, in source currency, of 3.9% driven largely by inflation indexation adjustments on leases at the REIT's international assets;
  • Recognition of a $38.4 million valuation gain in the REIT's total investment property portfolio for the second quarter ($54.7 million year-to-date), driven primarily by valuation gains in the REIT's international regions of Australasia, Brazil and Germany partially offset by valuation losses realized in Canada primarily in the Alberta region;
  • Net asset value per unit of $10.70/unit ($10.73/unit on a normalized basis); and
  • Lower leverage of 48.1% (54.2% including convertible debentures), from 49.2% (55.6%) at the end of March 31, 2016.

During both the second quarter and subsequent to the quarter, the REIT executed on a number of strategic and accretive investments, and financing initiatives, expanding the REIT's high-growth, high-yielding international portfolio and improving its financial position.  Key initiatives include: 

$350 Million of Accretive Investments:

  • Completed the acquisition of Generation Healthcare Management Pty Limited ("GHM"), the external manager for Generation Healthcare REIT (ASX: GHC.AX) ("GHC"), for $56.2 million (A$58.5 million);
  • Executed a 19.9% investment of GHC for $92.1 million (A$95.5 million);
  • Participated in Vital Trust's NZ $160M Rights Offering maintaining its 24.4% interest through an incremental $35.9 million (NZ$39.0 million) investment;
  • Completed and committed to approximately $165 million of property acquisitions:
    • $145.2 million (R$372.4 million) for two Brazil Hospitals located in the major urban markets of Sao Paulo and Brasilia and leased to key tenant Rede D'or for 25 years, on a triple-net basis; and,
    • $19.7 million (€13.5 million) for a two-property medical office complex in Berlin, Germany ("Mehrower Allee").

$410 Million of Net New Financing (including Vital Trust):

  • Completed $225.5 million of new corporate financing through two successful public offerings and concurrent private placements:
    • In April 2016, the issuance of 8,619,456 trust units at a price of $9.20 per unit for gross proceeds of $79.3 million, including $10.0 million issued on a private placement basis with NorthWest Value Partners Inc. ("NWVP"), the REIT's largest unitholder;
    • In July 2016, the issuance of 7,295,204 trust units at a price of $9.80 per unit for gross proceeds of $71.5 million, including $5.0 million issued on a private placement basis with NWVP and certain members of management;
    • In July 2016, the issuance of $74.75 million principal amount of 5.25% convertible unsecured subordinated debentures
  • Completed long term financing of the REIT's Hospital e Maternidade Brasil ("HMB") asset for gross proceeds of $70.9 million (R$191.3 million), representing the securitization of 85% of the future rents for a 10 year period at an 8.28% interest rate plus IPCA inflation adjustments to the principal balance;
  • Repaid the balance of the holdback payable for its Hospital Caxias D'Or asset of $30.6 million (R$83.2 million);
  • Completed the refinancing of four Canadian mortgages, replacing the existing mortgages of $42.9 million, with a weighted average interest rate of 5.49%, with new mortgages of $43.8 million at a weighted average interest rate of 3.25% and weighted average term of five years;
  • Entered into a new combined Australian and New Zealand Dollar credit facility with an available amount equal to the equivalent of $115.8 million (A$120.2 million) and an initial effective interest of 6.35%;
  • Repaid the REIT's two Vital margin facilities totaling $47.4 million (NZ$51.4 million) with a portion of the proceeds of the Australasian Secured Financing;
  • Following the July public offering, repaid $16.0 million of the outstanding balance of the Acquisition Facility and repaid a net $56.9 million of the REIT's revolving credit facility; and,
  • Vital Healthcare Property Trust ("Vital Trust") completed a $147.1 million (NZ$159.9 million) rights offer, with the REIT participating and retaining its strategic 24.4% interest in Vital Trust.

"During the second quarter of 2016 the REIT marked the one year anniversary of its combination with NorthWest International Healthcare Properties REIT and concluded a transformational repositioning which saw it grow into a $3.5 billion global healthcare REIT" said Paul Dalla Lana, the REIT's Chairman and CEO. "Over the past 12 months, we have achieved or exceeded all of our key merger objectives, including financial, portfolio and integration goals while delivering a total shareholder return of 42% - significantly outperforming the TSX REIT index. These efforts have also created a differentiated business with strong defensive and growth characteristics, well positioned to lead in the ongoing global healthcare real estate consolidation, the first steps of which the REIT commenced in Q2 with its $350 million of strategic international acquisitions."  

Selected Financial Information:




(unaudited)

Three Months Ended

Three Months Ended




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

June 30, 2016

March 31, 2016




Number of properties(1)

120

120

Gross leasable area (sf) (1)

7,815,316

7,834,655

Occupancy(1)

94.9%

94.8%

Weighted Average Lease Expiry (Years) (1)

10.0

9.8

Net Operating Income

$46,056

$44,707

Net (Loss) Income attributable to unitholders

($7,160)

($8,049)

Funds from Operations ("FFO")

$17,710

$16,103

Adjusted Funds from Operations ("AFFO")(2)

$17,325

$15,674

Debt to Gross Book Value – Declaration of Trust

48.1%

49.2%

Debt to Gross Book Value – Including Convertible Debentures

54.2%

55.6%




Per unit data



FFO

$0.22

$0.22

AFFO

$0.22

$0.22

Distributions

$0.20

$0.20

AFFO Payout ratio

91%

92%




(1)

Stated at 100% of Vital Trust and excludes acquisitions completed subsequent to June 30, 2016 and contracted acquisitions/dispositions

(2)

AFFO amounts are calculated utilizing leasing and capital reserves of 6% of revenue in Canada and Germany

 

The REIT invites you to participate in its conference call with senior management to discuss our second quarter 2016 results on Friday, August 12, 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 435 923 48.

Audio replay will be available until August 19, 2016 by dialing 416-849-0833 or 1-855-859-2056. The passcode is 435 923 48.

In conjunction with the release of the REIT's second quarter 2016 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.

Vital Healthcare Property Trust

On August 10, 2016, Vital Trust also announced financial results for the 12 months ended June 30, 2016. Details on Vital Trust's fiscal year 2016 financial results are available on Vital Trust's website at www.vitalhealthcareproperty.co.nz and a webcast of its 2016 Annual Results presentation is available at: http://www.media-server.com/m/go/Vital-2016-Annual-Results.

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 139 income-producing properties and 9.3 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.

Non-IFRS Measures

Some financial measures used in this press release, such as FFO, AFFO, Normalized AFFO, Net Asset Value per Unit, portfolio occupancy and weighted average lease expiry, 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 second quarter ending June 30, 2016, which is available on the SEDAR website at www.sedar.com.  Also on SEDAR are the condensed consolidated unaudited interim financial statements of the REIT for the three and six months ended June 30, 2016.

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", "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.

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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