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NorthWest International Healthcare Properties REIT Releases Second Quarter 2014 Results

TSX-V: MOB.UN

TORONTO, Aug. 14, 2014 /CNW/ - NorthWest International Healthcare Properties REIT ("NWI" or the "REIT") announced today that it has released its results for the three and six month period ended June 30, 2014.

The REIT's second quarter of 2014 delivered solid financial results posting a 4.6% increase in Net Operating Income ("NOI") versus the first quarter of 2014, and more than doubling NOI relative to the same quarter last year. Further, Adjusted Funds From Operations ("AFFO") grew approximately 7.1% relative to the first quarter of 2014 and approximately 77.4% relative to the same quarter of last year, largely due to the strength of our growing NOI and strong year-end results from our strategic investment in Vital Healthcare Property Trust ("Vital Trust").

Also in the second quarter, the REIT continued to execute on its business plan to build a diversified, growing global portfolio of healthcare properties. In June 2014, the REIT completed the acquisition of 13 medical office buildings in Germany, as previously announced in the first quarter this year.

Key highlights from the REIT's financial and operating results for the three and six month period ended June 30, 2014 include:

  • Growth in assets to $821.5 million, up $65.2 million from the beginning of 2014 and $304.4 million from one year ago;
  • NOI of $9,659,644 in Q2'14, representing a 112.5% increase over the same quarter last year (YTD NOI of $18,890,455);
  • AFFO/unit of $0.06 for Q2'14, or $0.22 per unit on an annualized basis consistent with the first quarter of 2014 (AFFO/unit of $0.11 per unit for the six months ended June 30, 2014);
  • AFFO to distribution payout ratio of 99.0% (AFFO payout ratio of 100% for the six months ended June 30, 2014);
  • Same property NOI growth of 6.1% driven by indexation of approximately 99% of the company's international property revenues;
  • Leading portfolio occupancy at 96.1% (Canada = 92.1%; International = 98.5%), consistent with the first quarter of 2014;
  • Weighted average lease term expiry of 11.6 years (Canada = 4.7 years; International = 15.6 years), slightly below the first quarter of 2014 as a result of the addition of the German medical office building acquisition with traditionally shorter-term leases;
  • In May 2014, the REIT closed a successful $23 million bought deal equity offering which saw an expanded syndicate and new institutional support; and
  • In June 2014, the REIT completed the acquisition 13 medical office buildings in Germany located in the cities of Berlin, Ingolstadt and Leipzig. This approximate $54 million portfolio comprises approximately 350,000 square feet of gross leasable area and has a weighted average occupancy rate of 95% and weighted average lease expiry of approximately 4.4 years.

Also in the second quarter of 2014, in April the REIT announced plans to establish a long-term fully-integrated internal management structure. The REIT announced that it had entered into an agreement with NorthWest Value Partners Inc. ("NWVP") with respect to the internalization of its external management arrangements. This internalization will also result in the REIT acquiring from NWVP all of the rights and obligations relating to the management of Vital Trust of which the REIT currently indirectly holds an approximate 24% interest. Additionally, the REIT announced plans to seek a listing on the Toronto Stock Exchange (the "TSX") and concurrently expand the size of its board of directors. The REIT continues to work towards the completion of these items by December 31st, 2014.

"The second quarter of 2014 demonstrated the REIT's commitment to deliver stable distributions to our unitholders while establishing a long-term platform for growth", said Paul Dalla Lana, Chief Executive Officer of the REIT. "The German medical office building portfolio acquisition adds significant scale to the REIT's German operations and will solidify the REIT as a leading healthcare landlord in that country, complementing its existing leadership positions in Australia, New Zealand, Brazil and Canada. Further we remain committed to executing the internalization of management by the end of the year."  


FINANCIAL HIGHLIGHTS




As at
Jun. 30, 2014


As at
Dec. 31, 2013

Operational Information (1)





Number of Properties - 100% of associates



122



113

Gross Leasable Area (sf) - 100% of associates



7,844,564



7,664,605

Occupancy % - 100% of associates



94.9%



94.4%








Summary of Financial Information







Gross Book Value (2)


$

821,503,979


$

756,258,230

Debt - Declaration of Trust (3)


$

492,630,516


$

437,642,389

Debt to Gross Book Value - Declaration of Trust



60.0%



57.9%

Debt - Including convertible debentures (3)


$

529,884,026


$

473,065,389

Debt to Gross Book Value - Including convertible debentures



64.5%



62.6%








Percentage of Mortgages and Loans Payable at Fixed Rates



64.9%



59.1%

Weighted-Average Interest Rate on Fixed Rate Mortgages and Loans Payable



5.77%



6.11%

Adjusted Units Outstanding - period end (4)








Basic



160,928,997



146,046,705


Diluted (7)



161,276,423



146,347,916








For the three
months ended
Jun. 30, 2014


For the six
months ended
Jun. 30, 2014






Operating Results





Net Income / (Loss) 


$

(8,899,911)


$

(35,919,591)

NOI  (5)


$

9,659,644


$

18,890,455

Funds From Operations ("FFO") (5)


$

4,069,349


$

7,652,498

Adjusted Funds From Operations ("AFFO") (5)


$

8,552,032


$

16,535,194

Distributions (6)


$

8,635,814


$

16,730,529








Per Unit Amounts (4)







FFO per unit - Basic 


$

0.03


$

0.05

FFO per unit - Adjusted fully diluted  (7)


$

0.03


$

0.05

AFFO per unit - Basic


$

0.06


$

0.11

AFFO per unit - Adjusted fully diluted  (7)


$

0.06


$

0.11

Distributions per unit 


$

0.06


$

0.11

AFFO Payout Ratio 



99%



100%

AFFO Payout Ratio - Adjusted fully diluted  (7)



99%



100%







Adjusted Weighted Average Units Outstanding (4)






Basic 



154,012,230



150,547,331

Diluted (7)



154,218,763



150,742,380

Full financial statements and MD&A will be available on SEDAR (www.sedar.com) as well as the Investors section of the REIT's website (www.nwireit.com).  

Notes

  1. Operational information includes 100% of Vital Trust and Northwest Healthcare Properties REIT ("NWHP REIT"). The REIT has an exposure to an approximate 24% interest in Vital Trust and approximate 26% interest in NWHP REIT.
  2. Gross Book Value is defined as total assets.
  3. Indebtedness as defined in the Declaration of Trust includes the principal balance of mortgages, securities lending agreement, margin facilities, term loan, line of credit, and deferred consideration. The REIT's total debt also includes convertible debentures (at fair value).
  4. Under IFRS the REIT's Class B LP and Class D GP exchangeable units are treated as a financial liability rather than equity. The REIT has chosen to present an adjusted basic and diluted per unit measure that includes the Class B LP and Class D GP exchangeable units in basic and diluted units outstanding/weighted average units outstanding. There were 91,068,320 Class B LP and 1,110,580 Class D GP exchangeable units outstanding as at June 30, 2014 and 91,068,320 Class B LP exchangeable units outstanding at December 31, 2013.
  5. NOI, FFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. NOI, FFO and AFFO as computed by the REIT may differ from similar computations as reported by other real estate investment trusts and, accordingly, may not be comparable to NOI, FFO and AFFO as reported by other such issuers. These terms are defined in this MD&A and reconciled to IFRS-based amounts reported in the consolidated financial statements of the REIT.
  6. Represents distributions to Unitholders and Class B LP and Class D GP exchangeable unitholders on an accrual basis. Distributions are payable as at the end of the period in which they are declared by the Board of Trustees, and are paid on or around the 15th day of the following month.
  7. Diluted units include the conversion of the REIT's convertible debentures and warrants if the closing price of the Trust Unit is greater than the conversion price or exercise price as at the end of the reporting period. Otherwise the convertible debentures and warrants are considered anti-dilutive.

The REIT invites you to participate in a conference call with senior management to discuss second quarter 2014 results on Friday, August 15, 2014 at 10:00 am (ET). Investors are invited to access the call by dialing 647-427-7450 or toll-free 1-888-231-8191, conference ID# 71593372. Audio replay of this call will be made available Friday, August 15, 2014 beginning at 1:00 pm (ET) through to Friday, August 29, 2014. To access the recording, please call 416-849-0833 or 1-855-859-2056 and use the reservation number 71593372.

In conjunction with the release of the REIT's second quarter 2014 financial results, the REIT has posted a current investor update presentation to its website where additional information on the REIT's investments and operating performance may be found. Please visit the REIT's website at www.nwireit.com/Investors/Presentations.

Vital Healthcare Property Trust Releases Results for Fiscal Year-End June 30, 2014

The REIT is also pleased to announce financial results from NSX-listed Vital Trust for the year ended June 30, 2014, released on August 14, 2014. The REIT has an exposure to an approximate 24% interest in Vital Trust. Vital Trust is also managed by an affiliate of the REIT's external manager – NorthWest International Asset Management Inc. 

For the year ended June 30, 2014, Vital Trust increased its net distributable income by 23.1% to NZ$34.7 million which was underpinned by a portfolio occupancy of 99.3% that realized 94 rent reviews with an average increase of 2.6%. Further, Vital completed four development projects in the year totaling A$20 million now yielding approximately 10% per annum. Vital Trust posted a market-leading weighted average lease term expiry of 15.1 years as at year-end, up substantially from 11.8 years the year prior. In line with Vital Trust's solid year on year operational results, for fiscal year 2015, Vital Trust announced an increase of 1.3% in its cash distribution guidance to NZ$0.08 per unit. Also this week, Vital Trust announced the acquisition of a 31-bed stand-alone private psychiatric hospital, The Marian Centre, in Perth, Western Australia for A$13.5 million and an initial yield of approximately 8.5%. The Marian Centre is operated by Healthe Care, Australia's third largest for-profit private hospital operator. Details on Vital Trust's fiscal year-end results ending June 30, 2014 are available on the SEDAR website at www.sedar.com under the REIT's profile, as well as on Vital Trust's website at www.vitalhealthcareproperty.co.nz.  

NorthWest Healthcare Properties REIT Releases Second Quarter 2014 Results

The REIT further announces financial results for TSX-listed NorthWest Healthcare Properties REIT ("NWHP REIT") for the three and six months ended June 30, 2014, released on August 12th, 2014. The REIT has an exposure to an approximate 26% interest in NWHP REIT.

NWHP REIT's second quarter operating results were generally in line with expectations, with FFO and AFFO per unit for the quarter at $0.25 and $0.21, respectively, consistent with the three months ended March 31, 2014 and consistent with the same quarter prior year. The payout ratio for the second quarter was 93% of AFFO. For the three months ended June 30, 2014, NWHP reported $20.1 million of net operating income, which represents a 2% increase over the prior year. The increase was primarily attributable to an increase in same property NOI of 1% and the impact of completed accretive acquisitions during the period, offset partially by dispositions of two properties during the six months ended June 30, 2014. NWHP REIT's portfolio occupancy increased from 91.3% to 92.1% from December 31, 2013 to June 30, 2014. Details on NWHP REIT's second quarter 2014 results are available on the SEDAR website at www.sedar.com as well as on NWHP REIT's website at www.nwhp.ca.

About NorthWest International Healthcare Properties Real Estate Investment Trust

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT's objectives are to: (i) provide its unitholders with stable and growing cash distributions from investments focused on international healthcare properties, on a tax efficient basis; (ii) enhance the value of the REIT's assets and maximize long-term unit value; and (iii) expand the asset base of the REIT. For more information on the REIT, visit www.nwireit.com.

Reader Advisory

This news release contains "forward-looking statements" within the meaning of applicable securities laws. 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 ability of the REIT to pay or grow distributions, and the risk that the management internalization, will not be completed on the terms proposed, or at all. 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 April 23, 2014, audited consolidated financial statements and management's discussion and analysis for the year ended December 31, 2013, and the REIT's short form prospectus dated May 13, 2014, copies of which each may be obtained on the SEDAR website at www.sedar.com.

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

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