Northwest Healthcare Properties Real Estate Investment Trust Reports Third Quarter 2024 Results
Northwest Healthcare Properties Real Estate Investment Trust Reports Third Quarter 2024 Results . (MENAFN - Newsfile Corp) 
Toronto, Ontario--(Newsfile Corp. - November 14, 2024) - Northwest Healthcare Properties Real Estate Investment Trust (TSX: NWH) (the "REIT" or "Northwest"), a leading ...
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(MENAFN- Newsfile Corp) Toronto, Ontario--(Newsfile Corp. - November 14, 2024) - Northwest Healthcare Properties Trust (TSX: NWH) (the "REIT" or "Northwest"), a leading owner and operator of healthcare real estate infrastructure in North America, Brazil, Europe and Australasia, announces results for the three and nine months ended September 30, 2024. "As we continue to streamline our portfolio through our asset disposition strategy and simplify operations, we are laying a solid foundation for stability, sustainable growth, and long-term value creation for our unitholders," said Craig Mitchell, CEO of Northwest. "Our progress to-date-monetizing assets, significantly reducing debt, addressing debt maturities, and improving operating performance-demonstrates our commitment to creating a more resilient, focused, and institutional-quality healthcare REIT. With steady growth in Same Property NOI metrics and disciplined expense management, we are well-positioned to complete our strategic initiatives during 2025, turning around the business and allowing for a seamless transition to new leadership." Q3 2024 Highlights Highlights for Q3 2024 and events subsequent to the quarter are set out below:

Revenue from investment properties was $107.0 million for Q3 2024, a decrease of 12% from Q3 2023 due to the disposition of non-core assets during 2023 and 2024, partially offset by rent indexation and development rentalization;

Same Property Net Operating Income ("SPNOI") was $70.7 million for Q3 2024, an increase of 5.0% from Q3 2023, reflecting a steady growth across all regions (see Exhibit 1);

Net loss for Q3 2024 was $157.3 million, an increase of $62.0 million compared to Q3 2023, primarily due to lower net operating income due to disposition activities previously mentioned, the fair value loss on disposal of investment properties associated with the disposition of the UK Portfolio, and fair value losses on revaluation of the REIT's convertible debentures;

General and administrative expenses, excluding the impact of employee termination benefits and unit-based compensation in Q3 2024 was $12.7 million, a decrease of 14% compared to Q3 2023. In a strategic effort to enhance operational efficiency, the REIT made the decision to reduce its workforce by approximately 16% resulting in a stabilized headcount of 260. The REIT recognized termination benefits costs totaling $3.8 million for the three and nine months ended September 30, 2024, which have been included in general and administrative expenses. This workforce reduction measure is expected to result in annualized savings of approximately $3.7 million in general and administrative expenses and property operating costs, net of capitalization;

Adjusted funds from operations ("AFFO") was $0.09 per unit in Q3 2024 as compared to $0.13 per unit in Q3 2023 ($0.06 per unit excluding impact of interest rate caps, which expired in the first quarter of 2024), resulting in an AFFO payout ratio in Q3 2024 of 99% compared to 122% in Q3 2023 (183% in Q3 2023 excluding impact of interest rate caps) (see Exhibit 2);

The REIT's leverage at the end of Q3 2024 was 43.6% (49.2% including convertible debentures) as compared to 47.7% (51.9% including convertible debentures) at December 31, 2023; and Continued strong operating performance in Q3 2024 was underpinned by a long-term lease maturity profile with a weighted-average lease expiry ("WALE") of 13.4 years, a global portfolio occupancy rate of 96.1%, and a global rent collection rate of 99%. Selected Financial Information:



(unaudited)

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

Three months ended September 30, 2024



Three months ended September 30, 2023

Number of properties

186



231

Gross leasable area (sf)

16,064,306



18,530,160

Occupancy

96 %



96 %

Weighted Average Lease Expiry (Years)

13.4



13.5

Rent collection rate

99 %



99 %

Net Operating Income $ 82,216

$ 95,097

Net Income (Loss) attributable to unitholders $ (157,266 ) $ (95,270 ) Funds from Operations ("FFO"), excluding accelerated amortization of deferred financing charges 1 $ 26,093

$ 33,559

Adjusted Funds from Operations ("AFFO") $ 22,352

$ 32,879

Debt to Gross Book Value - Declaration of Trust

44 %



47 %

Debt to Gross Book Value - Including Convertible Debentures

49 %



51 %



(1) For the three months ended September 30, 2024, FFO and FFO per unit excludes $10.3 million of amortization of transactional deferred financing charges which includes accelerated amortization of deferred financing costs due to early repayment of debt upon sale of the UK portfolio in August 2024. FFO and FFO per unit including amortization of transactional deferred financing charges is $15.8 million or $0.06 per unit, respectively for the three months ended September 30, 2024.

Included in FFO and AFFO for the three months ended September 30, 2023, is $11.0 million related to interest rate caps which matured during the three months ended March 31, 2024, the impact of which is $0.05 per unit.

Operations and Leasing

The REIT's consolidated SPNOI for Q3 2024 increased by 5.0% over the comparable prior year period mainly due to inflationary adjustments on rents, rentalised capital spend and improved recoveries reflecting a steady growth in our underlying lease rentals and additionally supported by a long-term weighted-average lease expiry ("WALE") of 13.4 years.

SPNOI within the REIT's geographic regions increased 7.1% in North America, 4.9% in Brazil, 4.0% in Europe and 4.0% in Australasia.

In Brazil, the Sabara hospital lease for approximately 157,000 square feet which was expiring on September 30, 2024, was renewed for a 10-year term, with a 10-year renewal option, at expiring rental rates, and is subject to future inflationary increases.

Valuations

During Q3 2024, the REIT recorded a fair value loss on investment properties of $94.7 million, compared to $122.2 million in Q3 2023. The fair value loss was mainly attributable to changes in valuation parameters, incorporating market evidence when available and rent reviews.

As of September 30, 2024, the weighted average capitalization rate was 6.2% for the consolidated portfolio, compared to 5.9% as at December 31, 2023.

Disposition Activity and Assets Held for Sale

To date in 2024, the REIT has disposed of investment properties for total proceeds of $1.3 billion. The property dispositions represented 16 properties in North America, 5 properties in Australasia, and 15 properties in Europe, 14 of which were related to the UK sale, with the proceeds used to pay directly attributable debt as well as balances outstanding on credit facilities.

As previously announced on August 8, 2024, the REIT's UK portfolio was sold to Assura PLC ("Assura"), a publicly-listed REIT on the London Stock Exchange (LSE: AGR) for total consideration of $885 million, consisting of $708 million of cash and the remaining $177 million in shares of Assura, calculated on a 30-day VWAP basis. The REIT's stake in Assura equates to approximately 8% of Assura's public float and is subject to certain disposal restrictions for a period of six months following August 8, 2024. The net cash proceeds from the sale of the UK portfolio were used to repay debts with a weighted average interest rate of 7.9%.

During the three and nine months ended September 30, 2024, the REIT sold or redeemed units of its investment in unlisted securities totaling $19.2 million and $50.0 million, respectively. Subsequent to September 30, 2024, the REIT completed approximately $12.6 million of incremental sales of its investment in the unlisted securities. The proceeds were used towards repaying balances outstanding on credit facilities. As of today, the balance of the REIT's investment in unlisted securities is approximately $9.5 million.

As at September 30, 2024, the REIT has 19 income producing properties and one development property totaling $122.8 million classified as assets held for sale. The REIT expects to complete the dispositions within the next 12 months and will use the proceeds to repay debt and reduce leverage.

Capital Management Update

The net cash proceeds from the sale of the UK portfolio were used to repay debt secured by Brazilian properties of $140.0 million, and total credit facilities of $143.5 million. The $470.7 million term debt secured by the underlying UK properties were settled by the purchaser and the underlying European (GBP) interest derivative swaps were settled in full.

During Q3 2024, the REIT's credit facility, with an outstanding balance of $65.0 million, previously maturing in March 2025, was amended to extend maturity to March 2026.

Further, during the quarter, the REIT's North American term debt with a balance outstanding of $185.7 million was amended to extend the maturity date by 2 years to January 2027. Subsequent to September 30, 2024, the interest rate derivative swaps relating to the North American term debt were also extended by 2 years.

Mortgages in North America totaling $14.1 million were amended, bearing a weighted average interest rate of 3.13% with new mortgages of $15.0 million bearing a weighted average interest rate of 5.07%. The weighted average term to maturity was extended by approximately 5 years. Subsequent to quarter end, the REIT received lender commitments or executed refinancing of all remaining 2024 debt maturities totaling $48.8 million increasing the weighted average interest rates from 3.30% to 4.80% and extended the weighted average term on these debts by 4 years.

Post completion of the Q3 2024 asset sales and refinancing activities completed during the quarter (including subsequent events), consolidated leverage has decreased to 43.6% and the REIT has reduced 2024 and 2025 debt maturities by approximately $1.1 billion to approximately $281 million as at the date of this press release. The remaining 2025 maturities are represented by $156 million of mortgages and property level borrowings across multiple facilities in the REIT's portfolio which the REIT expects to be refinanced in the normal course, and $125 million Series G Convertible Debentures maturing on March 31, 2025, not available for prepayment, which are a continued focus for the REIT. The REIT's objective is to repay the Series G Convertible Debentures on maturity through existing credit facility capacity and proceeds from further asset sales.

As at the date of this press release, the REIT has approximately $104 million of available liquidity between cash and unused portion of its credit facilities.

The weighted average interest rate on debt as of September 30, 2024, was 5.60%, as compared to 6.27% at December 31, 2023.

Corporate Presentation

Download the Company's Updated Corporate Presentation:

Upcoming Q3 2024 Results Conference Call

The REIT will be hosting its Q3 2024 conference call on Friday, November 15, 2024, at 10:00 a.m. ET. The dial-in numbers for the conference call are as follows:

North America (toll free): 1-844-763-8274

Overseas or local (Toronto): 1-647-484-8814

Link to audio webcast:

A replay will be available until November 22, 2024, by accessing:

US Toll Free: 1-877-344-7529

International Toll Free: 1-412-317-0088

Canada Toll Free: 1-855-669-9658

Replay Access Code: 9659034

About Northwest

Northwest provides investors with access to a portfolio of high-quality international healthcare real estate infrastructure comprised as at November 14, 2024, of interests in a diversified portfolio of 185 income-producing properties and 16.1 million square feet of gross leasable area located throughout major markets in North America, Brazil, Europe and Australasia. The REIT's portfolio of medical office buildings, clinics, and hospitals is characterized by long-term indexed leases and stable occupancies. Northwest leverages its global workforce in eight countries to serve as a long-term real estate partner to leading healthcare operators. For additional information please visit: .
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2024-11-14
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(MENAFN - Newsfile Corp) 
Toronto, Ontario--(Newsfile Corp. - November 14, 2024) - Northwest Healthcare Properties Real Estate Investment Trust (TSX: NWH) (the "REIT" or "Northwest"), a leading ...
Northwest Healthcare Properties Real Estate Investment Trust Reports Third Quarter 2024 Results