NORTHWEST HEALTHCARE PROPERTIES REAL ESTATE INVESTMENT TRUST ANNOUNCES FIRST QUARTER 2024 RESULTS
For Q1 2024, the REIT delivered another quarter of strong operating results with key highlights as follows:
- Strong operating performance is underpinned by a long-term lease maturity profile with a weighted-average lease expiry ("WALE") of 13.2 years, a global portfolio occupancy rate of 96.5%, and a global rent collection rate of 98%;
- Revenue from investment properties for Q1 2024 of
$133.5 million was 1.3% lower compared to Q1 2023 due to asset sales partially offset by contractual and inflationary rental increases; - Same property NOI ("SPNOI") of
$88.9 million for the quarter increased by 6.0% in Q1 2024 compared to Q1 2023 (see Exhibit 3); - For Q1 2024, the reported Net Loss decreased to
$38.6 million from$89.2 million in Q1 2023 primarily driven by fair value adjustments; - Adjusted funds from operations ("AFFO") per unit for Q1 2024 was
$0.11 (1) (Q1 2023 -$0.17 per unit), resulting in a payout ratio for Q1 2024 of 80% (Q1 2023 – 121%) (see Exhibit 2); - The REIT's leverage at 47.7% (52.2% including convertible debentures) at the end of Q1 2024 remains consistent with Q4 2023; and
- Dispositions of
$201 million in YTD fiscal 2024, including a portion of the REIT's investment in unlisted securities.
(1) |
AFFO per unit of |
"Our Q1 2024 results are in line with our expectations and are supported by strong leasing, occupancy and Same Property NOI metrics," said
Craig added, "Our goal is to become an institutional-quality healthcare REIT with a sustainable financial profile, and a balance sheet capable of withstanding interest rate changes and other uncertainties. We are making good progress on this. Northwest's healthcare real estate portfolio is performing well in a sector that is positioned for resilience and growth, and we believe we are well placed to capitalize on the heightened demand for healthcare real estate."
(unaudited)
( |
Three months ended |
Three months ended |
Number of properties |
210 |
233 |
Gross leasable area (sf) |
17,399,185 |
18,637,159 |
Occupancy |
96.5 % |
97.0 % |
Weighted Average Lease Expiry (Years) |
13.2 |
13.6 |
Rent collection rate |
98 % |
98 % |
Net Operating Income |
|
|
Net Income (Loss) attributable to unitholders |
|
|
Funds from Operations ("FFO") |
|
|
Adjusted Funds from Operations ("AFFO") |
|
|
Debt to Gross Book Value - Declaration of Trust |
47.7 % |
46.7 % |
Debt to Gross Book Value - Including Convertible Debentures |
52.2 % |
50.0 % |
The REIT's SPNOI for Q1 2024 increased by 6.0% over the comparable prior year period mainly due to inflationary adjustments on rents, rentalised capital spend and improved recoveries reflecting a steady growth in our underlying lease rentals additionally supported by a long-term WALE of 13.2 years. These strong operating results came from all regions in the quarter with SPNOI growth coming from
During Q1 2024, the REIT recorded a fair value loss on investment properties of
As at
In Q1 2024, the REIT divested 12 properties for total proceeds of
During Q1 2024, the REIT redeemed an additional
Total proceeds from dispositions in Q1 2024 and subsequent to the quarter totaled
During the last twelve months, the REIT has divested 27 properties and investments in unlisted securities for total proceeds of
As at
Further to the financing update provided in mid-March, the REIT refinanced the terms of its
In 2024 to-date, the REIT has refinanced and amended mortgages in
The weighted average interest rate on debt as of
Ms.
Ms.
The REIT invites you to participate in its conference call with senior management to discuss the Q1 results on
Investors are invited to join the conference call by phone by using the following URL to register and be connected into the conference call automatically: https://emportal.ink/4aER8Ys. Investors may also access the call by dialing 416-764-8609 or 1 (888) 390-0605. The conference ID is 30046836.
A recording of this call will be made available from
For additional information please visit: www.nwhreit.com.
Some financial measures used in this press release, such as SPNOI, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, NAV and NAV per Unit are used by the real estate industry to measure and compare the operating performance of real estate companies, but they do not have any standardized meaning prescribed by IFRS.
These non-IFRS financial measures and non–IFRS ratios should not be construed as alternatives to financial measures calculated in accordance with IFRS. The REIT's method of calculating these measures and ratios may differ from the methods of other real estate investment trusts or other issuers, and accordingly may not be comparable. Further, the REIT's definitions of FFO and AFFO differ from the definitions recommended by REALpac. These non-IFRS measures are more fully defined and discussed in the exhibits to this news release and in the REIT's Management's Discussion and Analysis ("MD&A") for the three months ended
Forward-Looking Statements
This press release may contain forward-looking statements with respect to the REIT, its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe", "normalized", "contracted", or "continue" or the negative thereof or similar variations. Examples of such statements in this press release may include statements concerning the REIT's position as a leading healthcare real estate asset manager globally, balance sheet optimization arrangements, and the REIT's pursuit of becoming an institutional quality REIT with a sustainable financial profile. The REIT's actual results and performance discussed herein could differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on numerous assumptions which may prove incorrect and which could cause actual results or events to differ materially from the forward-looking statements. Such assumptions include, but are not limited to (i) assumptions relating to completion of anticipated dispositions and deleveraging transactions; (ii) the REIT's properties continuing to perform as they have recently, (iii) various general economic and market factors, including exchange rates remaining constant, local real estate conditions remaining strong, and interest rates remaining at current levels or decreasing; and (iv) the availability of equity and debt financing to the REIT. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulations and the factors described under "Risks and Uncertainties" in the REIT's Annual Information Form and the risks and uncertainties set out in the MD&A which are available on SEDAR+ at www.sedarplus.ca.
These cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release, and, except as expressly required by applicable law, the REIT assumes no obligation to update such statements.
|
|||
Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) |
|||
(in thousands of Canadian dollars) |
|
|
|
Unaudited |
|
|
|
For the three months ended |
|
2024 |
2023 |
|
|
|
|
Net Property Operating Income |
|
|
|
Revenue from investment properties |
|
$ 133,545 |
$ 135,324 |
Property operating costs |
|
38,093 |
39,903 |
|
|
$ 95,452 |
$ 95,421 |
Other Income (loss) |
|
|
|
Interest and other |
|
3,403 |
4,116 |
Management fees |
|
3,850 |
10,725 |
Share of profit (loss) of equity accounted investments |
|
3,315 |
3,988 |
|
|
$ 10,568 |
$ 18,829 |
Expenses and other |
|
|
|
Mortgage and loan interest expense |
|
55,433 |
51,648 |
General and administrative expenses |
|
15,537 |
13,036 |
Transaction costs |
|
2,367 |
5,020 |
Foreign exchange (gain) loss |
|
(13,730) |
(7,216) |
|
|
$ 59,607 |
$ 62,488 |
Income before finance costs, net gain (loss) on financial |
|
$ 46,413 |
$ 51,762 |
Finance income (expense) |
|
|
|
Amortization of financing costs |
|
(5,180) |
(2,970) |
Class B exchangeable unit distributions |
|
63 |
(342) |
Fair value adjustment of Class B exchangeable units |
|
(205) |
1,761 |
Accretion of financial liabilities |
|
(4,008) |
(5,043) |
Fair value adjustment of convertible debentures |
|
(5,975) |
3,198 |
Convertible debenture issuance costs |
|
(27) |
(21) |
Net gain (loss) on financial instruments |
|
5,612 |
(17,192) |
Fair value adjustment of investment properties |
|
(71,703) |
(151,561) |
Loss on disposition of investment properties, net |
|
(5,192) |
— |
Fair value adjustment of unit based compensation liabilities |
|
355 |
3,303 |
|
|
|
|
Income (loss) before taxes |
|
$ (39,847) |
$ (117,105) |
|
|
|
|
Current tax expense |
|
2,766 |
6,996 |
Deferred tax expense (recovery) |
|
(3,996) |
(34,946) |
Income tax expense (recovery) |
|
$ (1,230) |
$ (27,950) |
|
|
|
|
Net income (loss) |
|
$ (38,617) |
$ (89,155) |
|
|
|
|
Net income (loss) attributable to: |
|
|
|
Unitholders |
|
$ (47,607) |
$ (97,486) |
Non-controlling interests |
|
8,990 |
8,331 |
|
|
$ (38,617) |
$ (89,155) |
Financial Exhibits
Exhibit 1 – Funds From Operations Reconciliation
FFO is a supplemental non-IFRS industry wide financial measure of a REIT's operating performance. The REIT calculates FFO based on certain adjustments to net income (computed in accordance with IFRS) as detailed below. FFO is more fully defined and discussed in the REIT's MD&A (see "Performance Measurement" and "Funds From Operations").
FUNDS FROM OPERATIONS ("FFO") |
||
|
Three months ended March |
|
2024 |
2023 |
|
Net income (loss) attributable to unitholders |
$ (47,607) |
$ (97,486) |
Add / (Deduct): (1) |
|
|
Fair market value losses (gains) (2) |
79,124 |
163,525 |
Finance cost - Exchangeable Unit distributions |
(63) |
342 |
Revaluation of financial liabilities |
4,008 |
5,043 |
Unrealized foreign exchange loss (gain) |
(14,043) |
(6,600) |
Deferred taxes |
(4,590) |
(34,530) |
Transaction costs |
3,077 |
5,020 |
Net loss on disposal of investment properties |
4,404 |
— |
Convertible Debenture issuance costs |
27 |
21 |
Internal leasing costs |
358 |
494 |
Property taxes accounted for under IFRIC 21 |
135 |
401 |
Net adjustment for lease amortization |
(125) |
(82) |
Other FFO adjustments |
2,252 |
3,390 |
FFO (2) |
$ 26,957 |
$ 39,538 |
FFO per Unit - Basic |
$ 0.11 |
$ 0.16 |
FFO per Unit - Diluted (3) |
$ 0.11 |
$ 0.16 |
Adjusted weighted average units outstanding (4) |
|
|
Basic |
245,381,166 |
242,870,623 |
Diluted (3) |
246,703,287 |
246,584,256 |
(1) |
FFO is not a measure recognized under IFRS and does not have standardized meanings prescribed by IFRS. See Performance Measurement. The adjustments to determine FFO have been presented on a proportionate basis. |
(2) |
Included in FFO is |
(3) |
Diluted units include the impact of vested deferred trust units and the convertible debentures, that would have a dilutive effect upon conversion. |
(4) |
Under IFRS the REIT's Class B LP Units are treated as a financial liability rather than equity. The REIT has chosen to present an adjusted basic and diluted per unit measure that includes the Class |
Exhibit 2 – Adjusted Funds From Operations Reconciliation
AFFO is a supplemental non-IFRS financial measure of a REIT's operating performance and is intended to reflect a stabilized business environment. The REIT calculates AFFO as FFO, plus/minus certain adjustments as detailed below. AFFO is more fully defined and discussed in the REIT's MD&A (see "Performance Measurement" and "Adjusted Funds From Operations").
ADJUSTED FUNDS FROM OPERATIONS |
||
|
Three months ended |
|
2024 |
2023 |
|
|
|
|
FFO |
$ 26,957 |
$ 39,538 |
|
|
|
Add / (Deduct): |
|
|
Amortization of transactional deferred financing charges |
2,785 |
2,079 |
Unit-based compensation expense |
2,549 |
2,346 |
Straight-line revenue |
(1,186) |
(647) |
Leasing costs and non-recoverable maintenance capital expenditures |
(3,426) |
(3,187) |
AFFO |
$ 27,679 |
$ 40,129 |
|
|
|
AFFO per Unit - Basic |
$ 0.11 |
$ 0.17 |
AFFO per Unit - diluted |
$ 0.11 |
$ 0.16 |
Distributions per Unit - Basic |
$ 0.09 |
$ 0.20 |
|
|
|
Adjusted weighted average units outstanding: |
|
|
Basic |
245,381,166 |
242,870,623 |
Diluted |
246,703,287 |
246,584,256 |
(1) |
FFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. See Performance Measurement. The adjustments to determine FFO and AFFO have been presented on a proportionate basis. |
(2) |
Diluted units include the impact of vested deferred trust units and the convertible debentures, that would have a dilutive effect upon conversion. |
(3) |
Under IFRS the REIT's Class B LP Units are treated as a financial liability rather than equity. The REIT has chosen to present an adjusted basic and diluted per unit measure that includes the Class |
Exhibit 3 – Constant Currency Same Property NOI
Constant Currency Same Property NOI, sometimes also presented as "Same Property NOI" or "SPNOI", is a non-IFRS financial measure, defined as NOI for investment properties that were owned for a full reporting period in both the current and comparative year, subject to certain adjustments including: (i) straight-line rental revenue recognition; (ii) amortization of operating leases; (iii) lease termination fees; and (iv) non-recurring transactions that are not expected to recur (v) excluding properties held for redevelopment and (vi) excluding impact of foreign currency translation by converting the foreign currency denominated SPNOI from comparative period at current period average exchange rates. Management considers. SPNOI is more fully defined and discussed in the REIT's MD&A (see "Performance Measurement").
SAME PROPERTY NOI |
|
|
|
|
|
|
|
|
Three months ended |
||
|
2024 |
2023 |
Var % |
Same property NOI (1) |
|
|
|
|
$ 21,252 |
$ 20,069 |
5.9 % |
|
14,763 |
14,090 |
4.8 % |
|
21,433 |
20,548 |
4.3 % |
|
31,451 |
29,186 |
7.8 % |
Same property NOI (1) |
$ 88,899 |
$ 83,893 |
6.0 % |
Impact of foreign currency translation |
— |
(255) |
|
Straight-line rental revenue recognition |
724 |
945 |
|
Amortization of operating leases |
(40) |
(42) |
|
Lease termination fees |
69 |
31 |
|
Other transactions |
(548) |
(534) |
|
Developments |
3,225 |
1,731 |
|
Acquisitions |
— |
— |
|
Dispositions |
2,632 |
9,063 |
|
Intercompany/Elimination |
491 |
590 |
|
NOI |
$ 95,452 |
$ 95,422 |
— % |
|
|
|
|
Exhibit 4 – Net Asset Value ('NAV') per Unit
"NAV per Unit" or sometimes presented as "NAV/unit" is an extension of NAV and defined as NAV divided by the number of units outstanding at the end of the period. NAV and NAV/unit is more fully defined and discussed in the REIT's MD&A (see "Performance Measurement" and "Part IX – Net Asset Value").
|
|||||
|
|
Q1 2024 |
|
Q4 2023 |
|
Total Assets |
|
$ 7,383,601 |
|
$ 7,628,615 |
|
less Total Liabilities |
|
(4,412,857) |
|
(4,543,347) |
|
less Non-controlling interests |
|
(1,062,992) |
|
(1,090,956) |
|
Unitholders' equity |
|
1,907,752 |
|
1,994,312 |
|
|
|
|
|
|
|
Add/(deduct): |
|
|
|
|
|
|
|
|
(37,298) |
|
(38,566) |
|
Unit-based compensation liabilities |
|
16,731 |
|
15,161 |
|
Deferred tax liability |
399,850 |
|
409,269 |
|
|
less NCI |
(90,184) |
309,666 |
(91,490) |
317,779 |
|
|
|
|
|
|
|
Financial instruments - net |
(28,950) |
|
(19,483) |
|
|
less NCI |
5,481 |
(23,469) |
5,524 |
(13,959) |
|
|
|
|
|
|
|
Exchangeable Units |
|
— |
|
8,721 |
|
Global manager valuation adjustment (1) |
|
373,826 |
|
378,220 |
Net Asset Value ("NAV") |
|
|
|
$ 2,661,668 |
|
Adjusted units outstanding ('000s) - period end (2) |
|
245,759 |
|
245,002 |
|
NAV per Unit |
|
$ 10.36 |
|
$ 10.86 |
(1) |
Global manager includes the European and Australasian asset management operations. |
(2) |
Under IFRS the REIT's Class B LP Units are treated as a financial liability rather than equity. The REIT has chosen to present an adjusted basic per unit measure that includes the Class B LP Units in basic units outstanding/weighted average units outstanding. |
SOURCE