- Northwest Healthcare Properties Real Estate Investment Trust (TSX:NWH.UN) has finalized its strategic review process with the C$885 million sale of its United Kingdom-based portfolio to Assura (LSE:AGR), a REIT listed on the London Stock Exchange
- Management anticipates the sale to be accretive to adjusted funds from operations by about C$0.06 per unit on an annualized basis
- Northwest Healthcare Properties REIT provides exposure to a portfolio of high-quality international healthcare real estate infrastructure including medical office buildings, clinics and hospitals
- Northwest Healthcare Properties REIT has given back 30 per cent year-over-year and more than 57 per cent since 2019
Northwest Healthcare Properties Real Estate Investment Trust (REIT) (TSX:NWH.UN) has finalized its strategic review process with the £500 million (C$885 million) sale of its United Kingdom-based portfolio to Assura (LSE:AGR), a REIT listed on the London Stock Exchange.
The transaction, representing a 5.9 per cent cap rate, was paid in cash (C$708 million) and Assura shares (C$177 million), granting Northwest an 8 per cent stake in the London-listed REIT.
Northwest will use proceeds from the transaction to pay down C$690 million in debt at a weighted average interest rate of 7.9 per cent. It anticipates this to be accretive to adjusted funds from operations by about C$0.06 per unit on an annualized basis.
The REIT’s divestiture from the U.K. finalizes its strategic review announced in August 2023. Here are the key results form that process:
- Property divestitures in excess of C$1.4 billion at a blended cap rate of 6.5 per cent and unlisted security sales of C$200 million.
- Active management of debt maturities leading up to asset sales.
- Debt reduction from C$4.2 billion to C$3 billion, decreasing consolidated-debt-to-gross-book-value to 47.6 per cent.
- A strengthened management team and corporate governance process.
- Improved liquidity through a revised distribution policy.
- Enhanced disclosure and investor engagement.
Northwest remains focused on further asset sales to strengthen its balance sheet and attract more institutional capital to complement its retail investor base. The REIT will hold its Q2 2024 conference call at 10 am ET Aug. 14, 2024.
Leadership insights
“The management team, in collaboration with the board, remains committed to maximizing value for unitholders by continuing to execute on identified initiatives,” Dale Klein, Northwest’s non-executive chair, said in a statement. “This includes a commitment to further asset sales in order to continue to simplify the business and strengthen the balance sheet. These strategic actions will help us to continue deleveraging as we work towards our goal of becoming an institutional-quality REIT.”
“We are pleased with the progress on the accretive dispositions completed over the last year and the positive impact they have had on our balance sheet,” said Craig Mitchell, Northwest’s chief executive officer. “We remain committed to achieving favourable leverage levels and continuing to strengthen our financial position.”
“Our focus on core assets and social infrastructure, along with investments in care and life sciences, will continue to drive our future growth. Additionally, we are committed to streamlining operations and reducing costs to ensure efficient and effective operations. We believe these efforts will support our strategic initiatives and yield greater cost savings in the coming quarters,” Mitchell added. “We are in the right asset class, meeting the growing demand for quality healthcare facilities. We are excited about the future and are building a solid foundation for growth in healthcare real estate.”
About Northwest Healthcare Properties REIT
Northwest Healthcare Properties REIT provides exposure to a portfolio of high-quality international healthcare real estate infrastructure including medical office buildings, clinics and hospitals. As of March 31, 2024, the REIT holds interests in 210 income-producing properties and 17.4 million square feet of gross leasable area throughout major markets in North America, Brazil, Europe and Australasia.
Northwest Healthcare Properties REIT (TSX:NWH.UN) is up by 3.49 per cent, trading at C$5.04 per share as of 11:10 am ET. The stock has given back 30 per cent year-over-year and more than 57 per cent since 2019.
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(Top photo of Northwest Healthcare Properties REIT’s Ascot Hospital in New Zealand: Northwest Healthcare Properties REIT)