TORONTO, Sept. 22,
2023 /CNW/ - Northwest Healthcare Properties Real
Estate Investment Trust (the "REIT" or "Northwest")
(TSX: NWH.UN) today announces steps to strengthen
its financial position, including financing and disposition
initiatives, and a reduction to its monthly distribution. Northwest
also announces an update on its previously announced strategic
review process. These initiatives are expected to provide the REIT
with greater financial strength and flexibility.
Steps Taken to Strengthen Balance Sheet and Financial
Position
The REIT today announces:
Extension of Credit Facility
An extension to the maturity date of its US$127.5 million (~$172
million) non-revolving tranche of its secured credit
facility pursuant to a credit agreement with a syndicate of
Canadian financial institutions by one year, from January 2024 to January
2025.
Australian Unity Healthcare Property Trust ("AUHPT")
Unit Sales
Further to the REIT's press release on July 10, 2023 announcing the settlement agreement
between, inter alia, Northwest and
Australian Unity Funds Management Limited, Northwest has received
gross proceeds from AUHPT unit sales and redemptions of
approximately $82 million, which have
been used to repay debt. Northwest anticipates it will complete the
sale or redemption of the balance of its holdings in AUHPT,
expected to generate net proceeds of approximately $110-$120 million,
in Q4 2023 and Q1 2024, to be used to repay debt and for general
trust purposes.
Near-Term Non-Core Asset Sales
At the outset of 2023, the REIT identified dispositions of
certain non-core assets as a key priority for the year. Sales of
assets to date have generated gross sale proceeds of approximately
$74 million, with additional gross
proceeds in excess of $50 million
expected to be received in Q4 2023 pursuant to executed and
unconditional contracts. Additional assets expected to generate
gross proceeds in excess of $100
million are currently under conditional agreement or are
being marketed for sale.
The REIT intends to use the proceeds from non-core asset sales,
net of transaction costs, to repay debt and for general trust
purposes, and will continue to review its portfolio for other
non-core asset sale candidates with the intention to apply net
proceeds to pay down additional high cost debt.
Changes to Monthly Distribution & Declaration of
September Distribution
Management has undertaken an analysis of the REIT's distribution
payments, with a specific focus on expected 2024 operating results
and cash flows, including the maturity of the in-place interest
rate caps in Q1 2024 (which is expected to decrease the REIT's AFFO
per unit by approximately $0.16-$0.20 per
annum).
The Board of Trustees (the "Board") has carefully
considered the results of management's analysis and advice from the
financial advisors regarding the REIT's distribution payments. The
Board today announces an immediate reduction of the REIT's monthly
distribution to unitholders from $0.06667 per unit to $0.03 per unit, or from $0.80 per unit to $0.36 per unit on an annualized basis.
The distribution will be paid on October
16, 2023, to unitholders of record as at September 29, 2023.
The Board and management believe this decision is prudent and in
the best interests of the REIT and its unitholders. The
distribution reduction is expected to provide the REIT with
financial flexibility to continue advancing its short and long-term
objectives while exploring strategic alternatives, with maximizing
unitholder value being the principal objective.
Update on Strategic Review Process
As announced on August 8, 2023,
Northwest has formed a Strategic Review Committee (the
"Committee") of the Board to undertake a broad-based
strategic review.
The Committee has engaged Canadian banks, Scotiabank and RBC
Capital Markets, and international bank Deutsche Bank Securities,
each as co-advisors to provide financial advisory
services, and DLA Piper (Canada)
LLP as legal counsel to the Committee.
The Committee and its advisors have received a broad range of
enquiries from third parties, including expressions of interest and
non-binding proposals regarding certain potential asset
dispositions. The Committee, following consultation with its
financial and legal advisors, has determined to explore, among
other strategic initiatives, transactions involving the potential
sale of all or part of Northwest's U.S. and/or Brazil property portfolios.
There is no certainty regarding the results of the Committee's
strategic review or that any particular transaction will be agreed
upon or consummated. The REIT does not intend to comment further on
the strategic review until it determines that additional disclosure
is appropriate or required.
Continuing Strong Portfolio and Platforms
The REIT's portfolio continues to perform well. Operationally,
the REIT's high quality and defensive portfolio continues to
deliver strong results, including 5.1% same property net operating
income growth through Q2 of 2023 on a year-over-year basis,
portfolio occupancy of approximately 96%, a weighted average lease
expiry of approximately 13.5 years and approximately 83% of leases
are subject to rent indexation, as of Q2 2023. With a portfolio
comprising more than 2,000 tenants in 8 countries, the REIT's cash
flow is highly diversified across its 231 properties. The
REIT currently believes that global partnerships will remain a
strategic backbone of the REIT and are likely to be significant to
the REIT's future success, one notable example being Northwest's
interest in NZX-listed Vital Healthcare Property Trust.
Summary
Craig Mitchell, Northwest's
Interim CEO commented: "Since the release of the REIT's Q2 2023
financial results, management has been actively working to review
the REIT's distribution policy with the objective of positioning
the REIT for future success. The decision to reduce the REIT's
monthly distribution based on management's analysis, as well as
advice from the Strategic Review Committee's financial advisors,
coupled with today's announcements pertaining to the extension of
certain near term debt maturities and proceeds generated from
non-core asset and unit sales, are each anticipated to
significantly improve the REIT's near term financial
flexibility."
"The Board supports the management team as they focus on
fortifying the REIT's balance sheet" said Dale Klein, Non-Executive Chair of the
Board.
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 as at June 30, 2023 of interests in a diversified
portfolio of 231 income-producing properties and 18.5 million
square feet of gross leasable area located throughout major markets
in Canada, the United States, 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 300 professionals in ten
offices in eight countries to serve as a long-term real estate
partner to leading healthcare operators.
Forward Looking Information
Certain statements contained in this news release constitute
forward-looking information within the meaning of applicable
securities laws. In some cases, forward-looking information can be
identified by such terms such as "may," "might," "will," "could,"
"should," "would," "occur," "expect," "plan," "anticipate,"
"believe," "intend," "estimate," "predict," "potential,"
"continue," "likely," "schedule," or the negative thereof or other
similar expressions concerning matters that are not historical
facts. The forward-looking information in this news release
includes statements regarding the REIT's distribution policy, the
Committee's strategic review process, including the potential for
any transaction involving the REIT or its assets, including the
Brazilian or U.S. portfolios, the sustainability of the REIT's
distributions, the REIT's operating results and cash flows, the
annualized impact of interest rate caps, fund formation
initiatives, the strategic review process being undertaken by the
REIT, the REIT's commitment to global partnerships, the potential
sale of assets, including non-core assets and the proceeds
therefrom, the AUHPT settlement and the expected use of proceeds
thereof.
The REIT has based these forward-looking statements on factors
and assumptions about future events and financial trends that it
believes may affect its financial condition, financial performance,
business strategy and financial needs. These assumptions include,
but are not limited to, those relating to the REIT being able to
achieve its operating results and cash flows, interest rates
remaining stable or decreasing, the REIT's properties continuing to
perform, and the completion of various transactions (including
related to the Brazil and U.S.
portfolio sales, the AUHPT settlement, and non-core asset sales) on
the terms currently contemplated.
Although the forward-looking statements contained in this news
release are based upon assumptions that management of the REIT
believe are reasonable based on information currently available to
management, there can be no assurance that actual results will be
consistent with these forward-looking statements. Forward-looking
statements necessarily involve known and unknown risks and
uncertainties, many of which are beyond the REIT's control,
including, among other things, the risk that the REIT's business
will be unable to generate the income needed to sustain the new
distribution, the transactions described above not being completed
on the terms proposed and generating the expected net proceeds, no
transaction or other changes will result from the strategic review
process and other risks identified in materials filed under the
REIT's profile at www.sedar.com from time to time. The
forward-looking statements in this news release relate only to
events or information as of the date hereof. Except as required by
applicable Canadian securities laws, the REIT undertakes no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, after the date on which the statements are made or to
reflect the occurrence of unanticipated events.
SOURCE NorthWest Healthcare Properties Real Estate Investment
Trust