Mr. Craig Mitchell reports

NORTHWEST HEALTHCARE PROPERTIES REAL ESTATE INVESTMENT TRUST ANNOUNCES Q2 2023 FINANCIAL RESULTS AND DECLARES DISTRIBUTIONS

Northwest Healthcare Properties Real Estate Investment Trust has released results for the period ending June 30, 2023. The REIT also provided updates and declared August, 2023, distributions.

Q2 2023 financial and operational highlights

For the three and six months ended June 30, 2023, revenue increased by 13 per cent and 16.6 per cent, respectively. Adjusted funds from operations (AFFO) per unit decreased from 20 cents in Q2 2022 to 13 cents in Q2 2023 as result of lower management fees and an increase in interest expense related to floating rate debt. Adjusting for the non-recurring component of management fees, AFFO would increase to 15 cents per unit for the quarter.

Operationally, the REIT's high-quality and defensive portfolio delivered strong results including 5.1-per-cent same-property net operating income (SPNOI) growth on a year-over-year basis. The REIT's portfolio occupancy of 96 per cent is underpinned by a weighted average lease expiry of 13.5 years and 83 per cent of leases are subject to rent indexation. With a portfolio comprising more than 2,000 tenants, the REIT's cash flow is highly diversified across its 231 properties.

Overall highlights:

• Q2 2023 revenue of $126.5-million, up 12.5 per cent year over year;
• Q2 2023 AFFO of 13 cents per unit.

Real estate:

• Q2 2023 same-property NOI increased by 5.1 per cent on a year-over-year basis, driven primarily by annual rent indexation;
• Strong portfolio occupancy of 96 per cent consistent with last quarter;
• Weighted average lease expiry of 13.5 years is underpinned by health care infrastructure.

Asset management:

• Total assets under management (AUM) was up 1 per cent on a year-over-year basis to $10.3-billion;
• Net asset value (NAV) per unit decreased by 4.6 per cent to $12.55, compared with March 31, 2023; the decrease is predominantly due to cap rate expansion of 14 basis points to 5.6 per cent.

Investments:

• Total capital deployed in fee-bearing vehicles is $5.8-billion, up 3.6 per cent year over year;
• Consolidated debt to gross book value including convertible debentures of 50.8 per cent has increased by 80 basis points on a quarter-over-quarter basis.

Commenting on the quarter, Craig Mitchell, Northwest's interim chief executive officer, said: "These operational results demonstrate Northwest's stability and resilience in a challenging environment with rising interest rates and inflation. Our strong fundamentals as a global asset manager with specialized expertise in health care real estate underscore this position."

Other updates:

• Settlement agreement with Australian Unity Funds Management (AUFM): As announced on July 10, 2023, the REIT has entered into a settlement agreement to end litigation against AUFM. As part of the settlement, AUFM and other Australian Unity entities have agreed to work in good faith to assist the REIT and its affiliates to divest their units in AUHPT (Australian Unity Healthcare Property Trust) by the end of 2023. To date, the REIT has sold $67.2-million (Australian).
• United Kingdom portfolio: The United Kingdom portfolio continues to perform well with year-over-year source-currency SPNOI up 4.6 per cent and occupancy was steady at 100 per cent. Moreover, operator performance at the REIT's hospitals continues to be strong. Northwest believes in the attractiveness of the United Kingdom health care real estate market and its diversified portfolio of hospitals. The REIT will continue to actively consider strategic opportunities in respect of the United Kingdom real estate market and its existing United Kingdom properties portfolio.
• Capital recycling: The health care real estate market continues to adapt to changes in global interest rates while bid-ask spreads are beginning to converge and transaction volumes are normalizing. The REIT remains highly disciplined with respect to capital deployment -- acquisition volume was nil in the quarter. The REIT's approximately $340-million non-core asset sale program continues to advance. To date, the REIT completed sales totalling $74.2-million. An additional approximately $93-million of assets are under conditional letters of intent for sale.
• Balance sheet initiatives: As at June 30, 2023, the REIT reported debt to gross book value (including convertible debentures) of 50.8 per cent and 58.0 per cent on a consolidated and proportionate basis, respectively. Strengthening the balance sheet is a high priority for the REIT:
  • On April 27, 2023, the REIT issued $86.3-million of convertible debentures with a 7.75-per-cent coupon that matures on April 30, 2028. Net proceeds of the transaction were used to repay short-term, variable-rate debt with a weighted average interest rate of 9.3 per cent.
  • After quarter-end, the REIT enhanced liquidity by $175-million by completing the following:
    • Finalization of a $50-million, non-revolving credit facility from its Canadian banking syndicate;
    • Extension of the maturity date of its $125-million revolving unsecured credit facility by one year to November, 2024.

As of Aug. 11, 2023, the REIT has refinanced 91 per cent of its 2023 debt maturities, increased its exposure to fixed-rate debt (including in-place hedges) to 66 per cent and has a weighted average interest rate of 5.1 per cent.

Declaration of August, 2023, distribution

The trustees of the REIT declared a distribution of 6.667 cents per unit for the month of August, 2023, representing 80 cents per unit on an annualized basis. The distribution will be payable on or about Sept. 15, 2023, to unitholders of record as at Aug. 31, 2023.

Q2 2023 conference call

A conference call will be held on Aug. 11, 2023, at 10 a.m. EST. Participating on the call will be members of the REIT's senior management team.

An audio replay will be available from Aug. 11, 2023, through Aug. 18, 2023, and can be accessed by dialling 416-764-8677 or 1-888-390-0541. The reservation number is 641739 followed by the number sign.

Vital Healthcare Property Trust

On Aug. 10, 2023, Vital Trust also released its financial results for the fiscal year ended June 30, 2023. Details on Vital Trust's financial results are available on Vital Trust's website.

About Northwest Healthcare Properties Real Estate Investment Trust

Northwest is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. As at June 30, 2023, the REIT provides investors with access to a portfolio of high-quality international health care real estate infrastructure comprising interests in a diversified portfolio of 231 income-producing properties and 18.5 million square feet of gross leasable area located throughout major markets in the Americas, Europe and Australasia. 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 300 professionals in 11 offices in eight countries to serve as a long-term real estate partner to leading health care operators.

We seek Safe Harbor.