TORONTO, July 23, 2019 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust ("NorthWest" or the "REIT") (TSX: NWH.UN) announced today high quality German acquisitions, accretive financing activity, and provided an update on corporate initiatives including a $1.6 billion (A$1.7 billion) expansion of its Australian healthcare joint venture (the "JV").
"We are pleased to have the opportunity to expand our Australian JV as we continue to see attractive opportunities to participate in the consolidation of the Australian healthcare real estate space and expand this important relationship" commented Paul Dalla Lana, Chief Executive Officer of NorthWest. "Additionally, we are pleased with our team's ability to source high quality accretive acquisition opportunities in Germany as well as with the outcome of recent financing initiatives, which will generate meaningful interest savings and are accretive to AFFO per unit on a leverage neutral basis and provide increased balance sheet stability."
The REIT has either closed or entered into definitive agreements to expand its European platform with the acquisition of a German medical office building and a rehabilitation hospital for a combined purchase price of approximately $61.5 million (€41.0 million) at a weighted average stabilized capitalization rate of 5.8%. The acquisitions will be funded with new property mortgages totaling $37.8 million (€25.2 million) at a weighted average interest rate of 1.8%, and the REIT's existing resources. The acquisition of the medical office building closed on July 5, 2019 and the rehabilitation hospital acquisition is expected to close in August 2019, subject only to normal closing conditions.
On July 3, 2019, the REIT entered into a new 3 year New Zealand Dollar denominated bank loan facility of $109.5 million (NZ$125.0 million), secured by 108.8 million units of Vital Trust owned by the REIT at a current interest rate of 4.40%. Proceeds from the new loan facility were used to repay the existing Australasian secured facility in the amount of $96.1 million (NZ $109.7million) bearing interest at 5.84%, generating $1.4 million of annualized interest savings on a leverage neutral basis while also extending the REIT's weighted average term to maturity on its corporate facilities.
On July 22, 2019 the REIT closed a new 12 year, Brazilian Real denominated $190 million (BRL$548 million) financing at a 3.88% interest rate, subject to annual inflation adjustments. The financing is secured by a portfolio of three Brazilian hospitals including Hospital Sao Luiz Morumbi, Santa Luzia Hospital and Coracao Hospital. The new Brazilian financing provides a very attractive source of long-term permanent capital in Brazil, noting that the REIT's comparable existing Brazilian financings carry a weighted average interest rate of 7.80%, with the ~400bps reduction in spreads attributable to the respective hospital's improving EBITDAR coverage, increasing levels of investor demand for core, major market hospital as well as the more general stabilization of the Brazilian macro environment. Proceeds from the financing will be used to repay existing higher cost corporate debt facilities.
Australian JV Expansion
On July 23, 2019 the REIT reached an agreement in principle to increase the size of its existing Australian healthcare joint venture (the "JV") by $1.6 billion (A$1.7 billion) of debt and equity bringing the total JV commitment to $3.4 billion (A$3.7 billion). This follows the successful closing of the $1.1 billion (A$1.2 billion) Healthscope acquisition in June which together with the initial seed portfolio, anticipated brownfield development opportunities, and near-term acquisition pipeline deployed the initial capacity of the JV. The terms of the upsized JV are unchanged in all material respects.
On July 10, 2019 Vital Healthcare Property Trust ("Vital"), a subsidiary of the REIT, announced a portfolio revaluation gain for the twelve months ended June 30, 2019 of $90.1 million (NZ$102.4 million). Vital's weighted average portfolio capitalization rate compressed by 15 bps year over year to 5.61% with the Australian assets carried at a 5.57% capitalization rate and the New Zealand assets carried at a 5.72% capitalization rate.
About NorthWest Healthcare Properties Real Estate Investment Trust
NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (NorthWest) 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 169 income-producing properties and 13 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 180 professionals across nine offices in five countries to serve as a long term real estate partner to leading healthcare operators.
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, and the targeted leverage levels post completion of the Offering. 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. 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 risk that the Offering will not be completed on the terms proposed, or at all 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 15, 2019, a copy of which may be obtained on the SEDAR website at www.sedar.com.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust
For further information: Paul Dalla Lana, CEO at (416) 366-8300 x 1001.