TORONTO, June 7, 2023
/CNW/ - Northwest Healthcare Properties Real Estate Investment
Trust (the "REIT") (TSX: NWH.UN), announces that its UK healthcare
real estate joint venture will close in June
2023, the completion of the sale of its Bakersfield Hospital
on May 31st, approval from
the Toronto Stock Exchange (the "TSX") to acquire up to 10% of its
public float under a normal course issuer bid and the suspension of
its distribution reinvestment plan beginning with the upcoming
June 2023 distribution.
UK Joint Venture ("UK
JV")
On June 7, 2023, the REIT and an
institutional investor (the "Investor") waived conditions and
finalized terms on the previously disclosed UK JV including an
investment into the REIT's existing UK structure which holds a
portfolio of 14 UK hospitals. The transaction, which is in line
with the REIT's Q1-2023 IFRS value, includes the assumption of
associated debt and other customary adjustments resulting in net
consideration of approximately $276
million (£165.8 million). The UK JV will be owned 70% by the
Investor and 30% by the REIT and will be externally managed by the
REIT for market-based management fees.
Update on Non-Core Asset
Sales
On May 31, 2023 the REIT closed
the sale of Bakersfield Hospital located in California, USA for $76
million (US$56 million) at a
6.5% capitalization rate. Bakersfield hospital is a high-quality
property but was considered non-core owing to it being the only
acute care hospital in the REIT's US portfolio. This sale
represents the first sale from the REIT's previously disclosed
$340 million non-core asset sale
program that is expected to be substantially completed in
Q3-2023.
Collectively, the sale of 70% of the REIT's UK assets and the
sale of Bakersfield Hospital will generate net equity for the REIT
of approximately $300 million.
Proceeds will be used to repay debt with a weighted average
interest rate of 8.2% and result in proportionate leverage
decreasing from 57.6% to 53.1%.
Normal Course Issuer Bid
("NCIB")
The TSX has approved the REIT's intention to acquire up to a
maximum of 22,224,257 trust units ("Units"), or approximately 10%
of its public float of Units as of May 31,
2023, for cancellation over the next 12 months. As of
May 31, 2023, the REIT had
242,494,222 issued and outstanding Units.
The REIT is committed to its accretive deleveraging strategy but
expects net proceeds from the sale of the UK assets and its
$340 million non-core sale process to
generate excess liquidity beyond the amounts that can be used to
accretively de-lever in the near term. In the REIT's view, the
current unit price does not reflect the fundamental value of the
REIT's high quality, defensive healthcare real estate portfolio or
the value of its global asset management platform. As a result, the
REIT believes deploying excess capital towards acquiring Units
under the NCIB is the most accretive use of capital at the current
unit price.
Purchases under the NCIB will be made through the facilities of
the TSX or through Canadian alternative trading systems and in
accordance with applicable regulatory requirements at a price per
Unit representative of the market price at the time of acquisition.
The number of Units that can be purchased pursuant to the NCIB will
be subject to a daily maximum of 187,046 Units (which is equal to
25% of 748,186 Units, being the average daily trading volume of the
Units from December 1, 2022 through
to May 31, 2023), subject to the
REIT's ability to make one block purchase of Units per calendar
week that exceeds such limits. All Units purchased under the NCIB
will be cancelled upon their purchase. The REIT intends to fund the
purchases out of its available resources.
The REIT may begin to purchase Units on June 12, 2023 and the NCIB will terminate on
June 7, 2024, or such earlier time as
the REIT completes its purchases pursuant to the NCIB or provides
notice of termination. The REIT believes that the repurchase by the
REIT of a portion of outstanding Units is an appropriate use of
resources and is in the best interests of the REIT.
The REIT intends to adopt an automatic securities purchase plan
("ASPP") in connection with its NCIB that contains strict
parameters regarding how its Units may be repurchased during times
when it would ordinarily not be permitted to purchase Units due to
regulatory restrictions or self-imposed blackout periods. The ASPP
is expected to be effective in July
2023.
Distribution Reinvestment Plan
("DRIP")
The REIT also announced today that it has suspended its DRIP
until further notice. Commencing with the June 2023 distribution (payable on or about
July 15, 2023), unitholders enrolled
in the DRIP will receive distribution payments in cash. If
the REIT elects to reinstate the DRIP in the future, unitholders
that were enrolled in the DRIP at the time of its suspension and
remain enrolled at the time of its reinstatement will automatically
resume participation in the DRIP.
Commenting on these developments Paul
Dalla Lana, Chairman and CEO of the REIT said:
"The completion of the UK JV and
related portfolio sale is important as it brings added resources to
the important UK market, expands our third-party capital management
platform and represents a strong vote of confidence for the
attractiveness of healthcare real estate from one of the world's
largest institutional investors. Today Northwest has committed
third party capital of $12.0 billion
and undrawn capacity of $4.0 billion,
providing the REIT with strong financial flexibility. Together with
the non-core asset sales which are progressing, the REIT will have
more than $150 million of excess
liquidity to be redeployed to further reduce leverage and acquire
units under the NCIB."
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. As at March 31, 2023, 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 233 income-producing properties and 18.6 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. Some of the specific forward-looking statements in this news
release include, but are not limited to, statements with respect to
the closing of the UK JV, completion of the REIT's non-core asset
sale program, accretive use of liquidity, the number of Units to be
acquired under the NCIB and other related matters.
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.
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 risks that the transactions
referenced in this news release may not be completed on the terms
proposed, and other risks identified in materials filed under the
REIT's profile at www.sedar.com from time to time. The
forward-looking statements made 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