NorthWest International Healthcare Properties REIT Announces $205m Sale Leaseback of a Portfolio of leading Brazilian Hospitals

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TSX-V: MOB.UN

TORONTO, Sept. 30, 2013 /CNW/ - NorthWest International Healthcare Properties Real Estate Investment Trust (TSXV: MOB.UN) (the "REIT") announced today that it has agreed to acquire a portfolio of three private hospitals from Rede D'Or Sao Luiz S.A. ("Rede D'Or") for $205 million (the "Rede D'Or Hospital Portfolio Acquisition"). Concurrent with the sale, Rede D'Or will enter into a fully net 25 year leaseback for each of the three properties with an initial annual rent of $19.5 million in the aggregate, representing an average 9.5% initial cap rate, plus annual inflation adjustments.

Comprising 570,000 square feet and 446 beds in the aggregate, the three hospitals are located in the major markets of Brasilia and suburban Rio de Janiero and are regarded as core healthcare infrastructure in their respective markets. The hospitals are operated by Rede D'Or - the largest independent operator of hospitals in Brazil with 26 hospitals and 4,000 beds across the country. Rede D'Or is S&P rated "A-" on a national scale ("BB-" on an international scale). This is the second transaction the REIT has undertaken with Rede D'Or, following the December 2012 acquisition of Hospital e Maternedade Brasil ("HMB") in Sao Paulo. 

The Rede D'Or Hospital Portfolio Acquisition is expected to close in the fourth quarter of 2013. The gross purchase price of $205 million includes  $37 million of deferred consideration, which is due one year after closing. The REIT expects to fund the Rede D'Or Hospital Portfolio Acquisition through a combination of new domestic property-level financing, a new $40 million acquisition facility and existing internal resources.

As part of the transaction the REIT has also committed to fund $9 million for the expansion of a parking garage at one of the Brasilia hospitals at a 9.5% yield. In addition, the REIT has agreed to double a similar commitment at HMB to $28 million for the expansion of the hospital at a 12.0% yield.  Both projects are expected to commence in 2014 and complete in 2016.

Upon closing of the Rede D'Or Hospital Portfolio Acquisition the REIT expects that its previously reported Q2-2013 year-to-date annualized AFFO of approximately $19 million ($0.19/unit) will increase to approximately $27 million ($0.26/unit) on a pro forma basis.

In connection with the Rede D'Or Hospital Portfolio Acquisition, Paul Dalla Lana - Chairman and CEO of the REIT commented:

"We are pleased to announce this significantly accretive, strategic transaction with our key Brazilian operating partner - Rede D'Or.  The transaction highlights the REIT's approach to providing leading healthcare operators in its target markets with long-term real estate solutions, including acquisition, expansion and development capital.  It also serves to establish the REIT as one of the largest landlords of healthcare real estate in Brazil with a portfolio of 5 hospitals comprising 1.0 million square feet and 823 beds located in the major markets of Brasilia, Rio de Janiero and Sao Paulo.

With over $400 million of announced and completed transactions year to date, the REIT continues to accretively augment and differentiate its existing $2.5 billion international healthcare real estate platform with characteristics such as inflation indexed rents, built in growth opportunities and highly stable infrastructure-like assets with long-term tenancies.

We believe that the REIT is uniquely positioned to deliver unitholders with stable and growing distributions over an increasingly diverse and sizeable portfolio."

Additional details on the REIT, the Rede D'Or Hospital Portfolio Acquisition and other recent developments are available on the REIT's website at www.nwireit.com.

Reader Advisory

This news release contains "forward-looking statements" within the meaning of applicable securities laws, including statements regarding: the initial cap rate of the acquisition; the impact of the acquisition on the REIT's AFFO and AFFO per Unit; the intentions of the REIT with respect to the financing of the acquisition; and the expected pricing of such financing. 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 acquisition does not close as expected; financing for the acquisition is not available on the terms contemplated or at all; and foreign exchange rates remain constant. A discussion of other risk factors applicable to the REIT is contained under the heading "Risk Factors" in the short-form prospectus of the REIT dated August 23, 2013, the REIT's annual information form dated March 11, 2013 and audited consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2012, copies of which may be obtained on the SEDAR website at www.sedar.com. The statements in this news release are made as of the date of this release. The REIT does not intend to, and the REIT disclaims any obligation to, update any forward looking information, whether written or oral, or whether as a result of new information, future events or otherwise, except as required by law. 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.

Certain terms used in this press release, such as AFFO and cap rate, are not measures defined under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. AFFO and cap rate, as presented, may not be comparable to similar measures presented by other issuers. AFFO should not be construed as an alternative to net earnings or cash flow from operating activities as determined by IFRS The REIT believes that AFFO is useful in the assessment of its operating performance and that this measure is also useful for valuation purposes and is a relevant and meaningful measure of its ability to earn and distribute cash to unitholders. Examples of reconciliations of AFFO to the most directly comparable measure calculated in accordance with IFRS are provided in the MD&A of the REIT for the three months ended June 30, 2013 and year ending December 31, 2012.

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) has approved or disapproved the contents of this press release.

SOURCE: NorthWest International Healthcare Properties REIT

For further information:

Paul Dalla Lana
CEO, NorthWest International Healthcare Properties REIT
[phone] ext. 1001