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

TORONTO, Nov. 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 and nine months ended September 30, 2016.

2016 Third Quarter Financial and Operational Highlights:

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

  • Revenues from investment properties of $66.4 million ($195.6 million year-to-date), an increase of 5% over the same period last year (45% year-to-date);
  • Net operating income ("NOI") of $48.3 million ($139.0 million year-to-date), an increase of 11% over the same period last year (37% year-to-date);
  • FFO per unit for the third quarter of $0.25 or $1.00 on an annualized basis, ($1.09 per unit on a normalized third quarter 2016 annualized basis – "Normalized FFO");
  • AFFO per unit for the third quarter of $0.21 or $0.84 on an annualized basis, ($0.92 per unit on a normalized third quarter 2016 annualized basis – "Normalized AFFO");
  • AFFO payout ratio of approximately 98% (87% relative to Normalized AFFO) for the third 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 98.8%;
  • Normalized weighted average lease expiry of 11.3 years, underpinned by the international portfolio with a weighted average lease expiry of 13.6 years;
  • Strong same property NOI growth, relative to the same quarter last year, in constant currency terms, of 4.4% driven largely by inflation indexation adjustments on leases at the REIT's international assets;
  • Recognition of a $15.0 million valuation gain in the REIT's total investment property portfolio for the third quarter ($62.9 million year-to-date), driven primarily by valuation gains in the REIT's international regions of Australasia, Brazil and Germany;
  • Net asset value per unit of $10.94/unit ($10.94/unit on a normalized basis); and
  • Lower leverage of 43.1% (51.2% including convertible debentures), from 48.1% (54.2%) at the end of June 30, 2016.

During both the third 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 completion of: 

  • $146.3 million new corporate financing through a successful public offering and concurrent private placement in July 2016 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, and the issuance of $74.8 million principal amount of 5.25% convertible unsecured subordinated debentures;
  • A 19.8% investment in Generation Healthcare REIT ("GHC") for $93.8million (A$93.6 million);
  • The acquisition of two Brazil Hospitals for $145.6 million (R$372 million) 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. On October, 28, 2016 Fitch affirmed its National Scale long-term rating of Rede D'Or S.A. at 'AA+(bra)' and revised its outlook to positive.
  • $97.9 million of new investments in Australia highlighted by the Sydney, Australia located Mons Road Medical Centre acquired by Vital and the Melbourne, Australia located Epping Medical Centre acquired by Generation;
  • Completed incremental long term financing of the REIT's Hospital e Maternidade Brasil ("HMB") asset for gross proceeds of $12.0 million (R$32.8 million), representing the securitization of an additional 15% of the future rents for a 10 year period at a 9.09% interest rate plus IPCA inflation adjustments to the principal balance and Caxias Financing for $64.5 million ($R151.4 million) for a term of 10 years at a 7.0% interest rate plus IPCA inflation adjustments to the principal balance.
  • 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 rate of 6.35%;
  • Repaid the REIT's two Vital margin facilities totaling $47.4 million (NZ$51.6 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 for 18,745,354 Vital Trust units for $35 million, which retained its strategic 24.4% interest in Vital Trust.

"The third quarter of 2016 was particularly active for the REIT with the successful completion of its previously announced $350 million strategic investment and financing initiatives" said Paul Dalla Lana, the REIT's Chairman and CEO. "I was especially pleased with the REIT's strong underlying operating and financial performance post the accretive redeployment of its successful $146 million July financing.  Looking forward, with its defensive healthcare real estate portfolio, the REIT is well positioned to weather any near-term economic or political uncertainties as well deliver continued growth in earnings and unit values over the longer term through both ongoing value-add initiatives and attractive investment opportunities."  

Selected Financial Information:  




(unaudited)

Three Months Ended

Three Months Ended

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

September 30, 2016

June 30, 2016




Number of properties(1)

135

120

Gross leasable area (sf) (1)

9,023,392

7,815,316

Occupancy(1)

95.9%

94.9%

Weighted Average Lease Expiry (Years) (1)

10.8

10.0

Net Operating Income

$48,277

$46,056

Net (Loss) Income attributable to unitholders

($5,285)

($7,160)

Funds from Operations ("FFO")

$21,432

$17,710

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

$17,708

$17,325

Debt to Gross Book Value – Declaration of Trust

43.1%

48.1%

Debt to Gross Book Value – Including Convertible Debentures

51.2%

54.2%




Per unit data



FFO

$0.25

$0.22

AFFO

$0.21

$0.22

Distributions

$0.20

$0.20

AFFO Payout ratio

98%

91%




(1)

Stated at 100% of Vital Trust and GHC, excludes acquisitions completed subsequent to September 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 third quarter 2016 results on Friday, November 11, 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 third 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 November 10, 2016, Vital Trust also announced its financial results for the 3 months ended September 30, 2016. Details on Vital Trust's financial results are available on Vital Trust's website at www.vitalhealthcareproperty.co.nz.

Generation Healthcare REIT

On November 10, 2016, Generation also announced its financial results for the 3 months ended September 30, 2016. Details on Generation's financial results are available on Generation's website at www.generationreit.com.au.

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 135 income-producing properties and 9.0 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 third quarter ending September 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 nine months ended September 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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