Mr. Andrew Greig reports

NORTHWEST HEALTHCARE PROPERTIES REAL ESTATE INVESTMENT TRUST ANNOUNCES INITIATIVES TO STRENGTHEN FINANCIAL POSITION AND PROVIDES UPDATE ON ITS STRATEGIC REVIEW PROCESS

Northwest Healthcare Properties Real Estate Investment Trust has taken steps to strengthen its financial position, including financing and disposition initiatives, and a reduction to its monthly distribution. Northwest has also provided an update on its previously announced strategic review process. These initiatives are expected to provide the REIT with greater financial strength and flexibility.

Steps taken to strengthen balance sheet and financial position

Extension of credit facility

The REIT has extended the maturity date of its $127.5-million (U.S.) (approximately $172-million) non-revolving tranche of its secured credit facility pursuant to a credit agreement with a syndicate of Canadian financial institutions by one year, from January, 2024, to January, 2025.

Australian Unity Healthcare Property Trust (AUHPT) unit sales

Further to the REIT's news release on July 10, 2023, announcing the settlement agreement between, inter alia, Northwest and Australian Unity Funds Management Ltd., Northwest has received gross proceeds from AUHPT unit sales and redemptions of approximately $82-million, which have been used to repay debt. Northwest anticipates it will complete the sale or redemption of the balance of its holdings in AUHPT, expected to generate net proceeds of approximately $110-million to $120-million, in Q4 2023 and Q1 2024, to be used to repay debt and for general trust purposes.

Near-term non-core asset sales

At the outset of 2023, the REIT identified dispositions of certain non-core assets as a key priority for the year. Sales of assets to date have generated gross sale proceeds of approximately $74-million, with additional gross proceeds in excess of $50-million expected to be received in Q4 2023 pursuant to executed and unconditional contracts. Additional assets expected to generate gross proceeds in excess of $100-million are currently under conditional agreement or are being marketed for sale.

The REIT intends to use the proceeds from non-core asset sales, net of transaction costs, to repay debt and for general trust purposes, and will continue to review its portfolio for other non-core asset sale candidates with the intention to apply net proceeds to pay down additional high cost debt.

Changes to monthly distribution and declaration of September distribution

Management has undertaken an analysis of the REIT's distribution payments, with a specific focus on expected 2024 operating results and cash flows, including the maturity of the in-place interest rate caps in Q1 2024 (which is expected to decrease the REIT's AFFO (adjusted funds from operations) per unit by approximately 16 cents to 20 cents per annum).

The board of trustees has carefully considered the results of management's analysis and advice from the financial advisors regarding the REIT's distribution payments. The board today announces an immediate reduction of the REIT's monthly distribution to unitholders from 6.667 cents per unit to three cents per unit, or from 80 cents per unit to 36 cents per unit on an annualized basis.

The distribution will be paid on Oct. 16, 2023, to unitholders of record as at Sept. 29, 2023.

The board and management believe this decision is prudent and in the best interests of the REIT and its unitholders. The distribution reduction is expected to provide the REIT with financial flexibility to continue advancing its short-term and long-term objectives while exploring strategic alternatives, with maximizing unitholder value being the principal objective.

Update on strategic review process

As announced on Aug. 8, 2023, Northwest has formed a strategic review committee of the board to undertake a broad-based strategic review.

The committee has engaged Canadian banks Bank of Nova Scotia and RBC Capital Markets, and international bank Deutsche Bank Securities, each as co-advisers, to provide financial advisory services, and DLA Piper (Canada) LLP as legal counsel to the committee.

The committee and its advisers have received a broad range of enquiries from third parties, including expressions of interest and non-binding proposals regarding certain potential asset dispositions. The committee, following consultation with its financial and legal advisers, has determined to explore, among other strategic initiatives, transactions involving the potential sale of all or part of Northwest's United States and/or Brazil property portfolios.

There is no certainty regarding the results of the committee's strategic review or that any particular transaction will be agreed upon or consummated. The REIT does not intend to comment further on the strategic review until it determines that additional disclosure is appropriate or required.

Continuing strong portfolio and platforms

The REIT's portfolio continues to perform well. Operationally, the REIT's high-quality and defensive portfolio continues to deliver strong results, including 5.1-per-cent same-property net operating income growth through Q2 of 2023 on a year-over-year basis, portfolio occupancy of approximately 96 per cent and a weighted average lease expiry of approximately 13.5 years, and approximately 83 per cent of leases are subject to rent indexation, as of Q2 2023. With a portfolio comprising more than 2,000 tenants in eight countries, the REIT's cash flow is highly diversified across its 231 properties. The REIT currently believes that global partnerships will remain a strategic backbone of the REIT and are likely to be significant to the REIT's future success, one notable example being Northwest's interest in New Zealand Exchange-listed Vital Healthcare Property Trust.

Summary

Craig Mitchell, Northwest's interim chief executive officer, commented: "Since the release of the REIT's Q2 2023 financial results, management has been actively working to review the REIT's distribution policy with the objective of positioning the REIT for future success. The decision to reduce the REIT's monthly distribution based on management's analysis as well as advice from the strategic review committee's financial advisers, coupled with today's announcements pertaining to the extension of certain near-term debt maturities and proceeds generated from non-core asset and unit sales, are each anticipated to significantly improve the REIT's near-term financial flexibility."

"The board supports the management team as they focus on fortifying the REIT's balance sheet," said Dale Klein, non-executive chair of the board.

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. The REIT provides investors with access to a portfolio of high-quality international health care real estate infrastructure consisting as at June 30, 2023, of 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 Canada, the United States, Brazil, Europe, 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 300 professionals in 10 offices in eight countries to serve as a long-term real estate partner to leading health care operators.

We seek Safe Harbor.