NorthWest Healthcare Properties REIT Successfully Completes Brazil Hospital Acquisition and Long Term Financing as well as Canadian Portfolio Respositioning Initiatives
TORONTO, Oct. 24, 2016 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (the "REIT" or "NorthWest") (TSX: NWH.UN) announced that it has completed the previously disclosed acquisition of Hospital Santa Helena for $127.1 million (R$300.0 million) (the "Acquisition") and a new 10 year financing secured by the REIT's existing Caxias Hospital for $64.5 million (R$151.4 million) (the "Financing"). Additionally, the REIT announced the completion of its $100M Canadian portfolio repositioning program.
Brazil Acquisition and Financing
Hospital Santa Helena is a general hospital comprising 234 beds and 16 surgical units located in the north hospital sector of Brasilia, the federal capital of Brazil. The property is entirely occupied by Rede D'Or, who has entered into a new, fully net 25-year lease (with three 25-year renewal options) with an initial annual rent of $12.1 million (R$28.5 million), representing a 9.50% initial cap rate, plus annual inflation adjustments. The Acquisition brings the REIT's Brazil portfolio to seven hospitals located in the major gateway cities of Sao Paulo, Brasilia and Rio De Janeiro and marks the continuing consolidation by the REIT of private hospitals in the region.
The Acquisition further strengthens the REIT's relationship with Rede D'Or the largest private hospital operator in Brazil with approximately 4,500 beds across 31 owned and two managed hospitals, in addition to 35 oncology clinics in Rio de Janeiro, Sao Paulo, Pernambuco and Brasilia. Rede D'Or maintains a credit rating of 'brAA-' on a National scale with Standard & Poor's Rating Services.
The REIT also announced the completion of a $64.5 million (R$151.4 million) new long-term financing secured by the REIT's existing Caxias Hospital leased to Rede D'Or with a term of 10 years and an interest rate of 7.0%, approximately 125bps lower than its recent HMB secured financing completed in Q2 2016. The Financing represents the REIT's third asset level securitization in Brazil and evidences the strong appetite for both high quality credit tenant financings as well exposure to the maturing private hospital operator sector in Brazil.
Combined, the Acquisition and Financing are expected to be immediately accretive and will further strengthen the REIT's balance sheet with long-term fixed rate financing.
Completion of Canadian Portfolio Repositioning
On September 30th 2016, the REIT completed its final dispositions under its previously announced Canadian non-core asset disposition program. Collectively, the non-core asset dispositions generated gross proceeds of $100M and net proceeds of $25M after mortgage discharges. The disposition assets were located in secondary and tertiary Canadian markets and will allow the REIT to focus on its core portfolio of healthcare tenancies located in major urban areas. The completion of the Canadian non-core asset disposition program also marks the end of the REIT's broader portfolio repositioning initiative which has seen its international portfolio grow from 39% to 45% of proportionate net operating income.
Separately, the REIT also completed the sale and leaseback of a mid-town Toronto parking garage located on 30 Merton Street. The sale, to an institutional third-party developer, generated net proceeds of approximately $19.5 million. The purchaser is seeking the necessary approvals for a large mixed-use development which will include, in addition to a large residential component, a segregated underground commercial parking garage which the REIT will repurchase at construction cost following completion. The REIT has leased and will continue to operate the existing parking garage until the redevelopment commences.
Commenting on the Acquisition, Financing and portfolio repositioning, NorthWest Chairman and CEO Paul Dalla Lana said:
"The transactions enhance the REIT's high quality portfolio of healthcare real estate as well as being accretive to earnings and improving its financial profile. In particular, we were pleased to see the 125 basis point lower interest rate on our second secured financing this year in Brazil, highlighting the improving domestic credit markets there as well as continued strength of our lead tenant Rede D'Or."
Additional details on the Acquisition are available in a presentation on the REIT's website at www.nwhreit.com.
About NorthWest Healthcare Properties Real Estate Investment Trust
NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. 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 139 income-producing properties and 9.3 million square feet of gross leasable area located throughout major markets in Canada, Brazil, Germany, 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 180 professionals across 9 offices in 5 countries to serve as a long term real estate partner to leading healthcare operators.
This news release contains "forward-looking statements" within the meaning of applicable securities laws, including, without limitation, statements regarding the benefits of the Acquisition, Financing and portfolio repositioning (including the extent to which they will be accretive), the REIT's financial profile, the state of Brazil's domestic credit markets and financial profile of Rede D'Or. The forward-looking statements in this news release are based on certain assumptions, including that revenue and costs associated with the assets acquired and refinanced will meet the REIT's expectations, significant additional costs will not have to be incurred by the REIT, exchange rates remain consistent and the other assumptions referenced under the heading "Forward-Looking Information Advisory" in the REIT's most recently filed management's discussion and analysis. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risk Factors" in the REIT's annual information form available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust