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NorthWest Healthcare Properties Real Estate Investment Trust Releases Fourth Quarter and Year-End Results
Highlights of the Quarter:
-- AFFO for the quarter of $0.17 was, against the forecasted AFFO
of $0.21, unfavourable by $0.04, primarily as a result of the
issuance of additional units associated with the October 2010
follow-on equity offering noted below.
-- Occupancy improved to 91.5% at December 31, 2010 from 90.4% at
September 30, 2010.
-- During the quarter the REIT raised net proceeds of $82.3
million from the October 2010 follow-on equity offering
(including over-allotment option) of 7,469,250 trust units at a
price of $11.55 per unit.
-- The REIT acquired Alexander Medical Building, located in
Peterborough, Ontario on December 1, 2010 for $8.6 million.
Alexander Medical Building is a 30,500 square foot (95%
occupied), multitenant medical building prominent in its market
with a location near the recently-built Peterborough Regional
Hospital. The property was acquired free and clear of mortgages
using cash on hand from the October 2010 follow-on equity
-- On December 24, 2010 the REIT closed the acquisition of
Glenmore Professional Centre located in Calgary, Alberta.
Glenmore Professional Centre is a modern 137,800 square foot
(100% occupied) class A suburban office building completed in
2007. The REIT acquired 100% of the shares/units of the
registered and beneficial owners of Glenmore Professional
Centre for a purchase price of approximately $29.45 million,
subject to the usual adjustments, which values the building at
approximately $65.5 million and an adjacent development parcel
at $2.95 million, net of an existing mortgage of approximately
$39 million. The purchase price was settled 50% in cash and 50%
in REIT units.
-- The REIT paid distributions of $0.06667 per unit on October 15,
2010, November 15, 2010 and December 15, 2010 consistent with
its annualized target of $0.80 cents per unit.
-- Quarter end debt ratio of 50%, all comprised of fixed-rate
mortgages with a weighted average interest rate of 5.54%. The
REIT's credit facility was undrawn at quarter-end.
-- Subsequent to the quarter, on January 25, 2011, the REIT
completed the acquisition of the prominent medical and
professional office complex known as The Dundas-Edward Centre,
in Toronto, Ontario for $103 million. Located in the Discovery
District of downtown Toronto, one block from University Avenue,
The Dundas-Edward Centre is a 410,000 square foot two-tower
office complex (97% occupied) with an eight-level parking
facility. The complex is located in close proximity to several
hospitals (SickKids, Princess Margaret, Toronto General, and
Mount Sinai), the Provincial Legislature (Queen's Park), the
Provincial Courts, Toronto City Hall and the City's financial
core. The acquisition was funded by a combination of cash on
hand and $60 million drawn on an interim bridge facility. The
REIT is arranging permanent long term fixed rate financing,
which is expected to fund in the second quarter of 2011.
-- Subsequent to the quarter, on February 1, 2011, the REIT
completed the acquisition of Hys Centre, the premiere medical
office complex in Edmonton, Alberta for $53 million. Hys Centre
is strategically located on and connected by pedway access to
the Royal Alexandra Hospital campus. Hys Centre is a Class "A"
medical office complex composed of a 147,000 square foot (99%
occupied) multi-tenant medical office building, 50 residential
apartments and a 384-stall pay parking facility. The
acquisition was funded by a combination of cash on hand and
debt, including a $25 million draw on the interim bridge
facility, and a draw of $23 million on the revolving credit
facility. The REIT in due course will be arranging permanent
long term fixed rate financing.
-- On March 1, 2011 the REIT entered into an agreement to acquire
the Malvern Medical Arts Building, Toronto, a prominent medical
office building anchored by the Malvern Medical Clinic, one of
the busiest medical clinics in the Greater Toronto Area. The
purchase is expected to close in the first half of 2011,
subject to customary closing conditions. The Malvern Medical
Arts Building is a Class "A" complex consisting of a 40,974
square foot medical office building (99% occupied). The
purchase price will be approximately $16.75 million, subject to
adjustments, and will be acquired free and clear of mortgages.
-- Subsequent to the quarter, on March 9, 2011, the REIT issued
6,400,000 trust units at a price of $11.75, for gross proceeds
of $75.2 million. The REIT also granted an over-allotment
option for an additional 960,000 units at the same offering
price, exercisable by April 8, 2011. A portion of the net
proceeds of the equity offering were utilized to pay down the
bridge facility by $70 million.
Selected Financial Information:
(unaudited) Three Months Ended Three Months Ended
($000's, except unit and per December 31, 2010 September 30, 2010
Revenue 22,371 21,234
Net Operating Income 12,432 11,978
Funds from Operations ("FFO") 7,077 7,234
Adjusted Funds from Operations
("AFFO")((1)) 5,405 5,566
Debt to Gross Book Value 49.8% 56.0%
Per unit data (Annualized,
FFO $0.89 $1.09
AFFO $0.68 $0.84
Distributions $0.80 $0.80
AFFO Payout ratio 117.6% 95.2%
(1) AFFO amounts are calculated utilizing leasing and capital reserves of the 6% of revenue as reflected in the IPO Prospectus.
"With our strong acquisition track record, a strong acquisition pipeline which we are confident will allow us to deploy the proceeds of our recent follow-on equity offering in a timely and accretive manner, continued progress against our leasing targets and the positive market reaction to the REIT's recent follow-on equity issuance, the REIT continues to be well positioned to achieve its objectives of creating unitholder value through growth by way of acquisitions and by maximizing net income from the existing portfolio," said Peter Riggin, CEO.
"We are proud to have increased the value of our Portfolio by more than 50% by way of nearly $293 million worth of completed or soon-to-be-completed acquisitions since our IPO, less than one year ago. This acquisition activity not only resulted in the growth of the company, it also resulted in the improvement of the Portfolio. Two of the acquisitions were strategic assets representing the largest such properties in their respective markets and so furthered our dominance in each of Toronto (Dundas-Edward Centre) and Edmonton (Hys Centre), both core markets for the REIT. Four of the acquired properties were constructed within the last four years, and each is fully occupied, resulting in improved portfolio quality in terms of building age and occupancy. In total another 995,000 square feet and 164 tenants were added to the Portfolio, further increasing our healthcare relationships while also enhancing revenue stability through increased diversification. The combination of acquisitions, equity raises and unit price appreciation has increased the REIT's market capitalization by approximately 80% since the IPO, to approximately $475 million. This has also enhanced the liquidity of the units, resulting in increased trading volumes", Mr. Riggin commented.
The non-GAAP measures used in this press release, such as FFO and AFFO, are key financial measures 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 Canadian generally accepted accounting principles ("GAAP"). As such, they are unlikely to be comparable to similar measures presented by other real estate companies. These non-GAAP measures are more fully defined and discussed in the REIT's management discussion and analysis (the "MD&A") for the fourth quarter of 2010, which is available on the SEDAR website at www.sedar.com. Also on SEDAR are the audited 2010 year end financial statements of the REIT.
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", or "continue" or the negative thereof or similar variations. The REIT's actual results and performance discussed herein could differ materially from those expressed or implied by such statements. Such 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 "Risk Factors" in REIT's Prospectus and the risks and uncertainties set out in the MD&A which are available on www.sedar.com. 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.
The REIT invites you to participate in its conference call with senior management to discuss our fourth quarter 2010 results on Friday, March 11, 2011 at 1:00 p.m. (Eastern).
The conference call can be accessed by dialing (416) 800-1066 or 1-866-212-4491.
Audio replay is available until March 18, 2011 by dialing 1-866-583-1035 and entering access code 2518630, followed by the number sign.
The webcast of the conference call can be accessed from the "Investor Relations" page of the REIT's web site at www.nwhp.ca, and will be archived for 30 days.
To view this news release in HTML formatting, please use the following URL:
SOURCE: NorthWest Healthcare Properties Real Estate Investment Trust
Ernie Spraggs, CFO
(416) 366-2000 ext. 262, or www.nwhp.ca