- NorthWest Healthcare Properties REIT (TSX:NWH.UN) is assuring its shareholders that the ongoing COVID-19 pandemic is not substantially impacting its leasing operations around the world
- Despite the pandemic impacting non-essential medical care, the company pointed out that 85 per cent of its revenue is guaranteed through publicly-funded healthcare systems
- As a result, around 93 per cent of the company’s tenants are expected to meet their rental obligations this month
- To improve its liquidity position during the crisis, the company is selling or financing assets in the UK and Australia to generate approximately C$250 million in further cash reserves
- NorthWest Healthcare Properties REIT (NWH.UN) is up 0.87 per cent, with shares trading for $9.15 and a market cap of $1.61 billion
NorthWest Healthcare Properties REIT (TSX:NWH.UN) is assuring its shareholders that the ongoing COVID-19 pandemic is not impacting its operations significantly.
The company owns and leases healthcare facilities in Australia, Germany, the Netherlands and the UK.
The COVID-19 pandemic is having a dual effect on the company’s operations. On the one hand, the increased need for essential health care services has safeguarded a number of its assets from government-mandated shutdowns.
However, while essential services are seeing an unprecedented spike, non-essential medical procedures are being suspended and postponed across the world to free up resources.
This could have a substantial impact on the company’s expected rental payment in the coming months, but Northwest believes it is largely protected from the potential shortfall.
Firstly, the company pointed out that much of its revenue is supplied through publicly-funded healthcare systems. As a result, the company currently receives 85 per cent of its revenue from government funding.
Furthermore, while the company is expecting some short-term downturn in peripheral healthcare industries, these sectors are likely to make quick comeback once the pandemic abates.
Thus far, around 93 per cent of the company’s tenants are expected to meet their rental obligations this month. Of those who can’t, Northwest is currently in payment renegotiations and believes its liquidity position is more than enough to outlast any payment deferrals.
Currently, the company has C$135 million in liquidity and expects to substantially improve that number in the coming quarters. A previously arranged sale of some of its Australian and European assets is scheduled to close in 2020’s second quarter. This deal should increase the company’s cash reserves by $180 million.
Coupled with a further $65 million of financing from the company’s six UK hospitals, Northwest expects to enter the second half of the year with $380 million in liquid assets.
NorthWest Healthcare Properties REIT (NWH.UN) is up 0.87 per cent, with shares trading for $9.15 at 11:22am EST.
