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Press release from CNW Group

NorthWest Healthcare Properties Real Estate Investment Trust Releases Second Quarter Results

Tuesday, August 14, 2012

NorthWest Healthcare Properties Real Estate Investment Trust Releases Second Quarter Results17:03 EDT Tuesday, August 14, 2012TORONTO, Aug. 14, 2012 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (the "REIT") (TSX: NWH.UN), the largest non-government owner and operator of Canadian healthcare real estate, today announced its results for the second quarter, 2012.Highlights of the Quarter:AFFO per unit increased to $0.21 from $0.20 the previous quarter.Occupancy and committed occupancy increased slightly to 91.1% from 90.9% the previous quarter, with committed occupancy increasing to 91.7%, reflecting recent leasing initiatives, including the successful conversion of former theatre space at our Sunridge Professional Centre complex into a large multi-practitioner medical clinic and training centre of approximately 18,000 square feet for the University of Calgary.On April 10, 2012, a two year, $13.0 million floating rate mortgage loan secured against the Springbank Medical Centre funded. The mortgage bears interest equal to the bank's prime rate plus 1.25% or Bankers' Acceptances plus 2.25%.On April 10, 2012 the REIT completed the acquisition of Willow Brook Medical Centre, a 34,800 square foot medical office and retail property in Airdrie, Alberta. The purchase price was $14.5 million and the property was acquired free and clear of mortgage financing.  Subsequent to the acquisition, the REIT entered into a six year, $9.55 million mortgage at a fixed interest rate of 3.62% which funded on April 16, 2012.On May 7, 2012 a 10 year $11.7 million mortgage on the Malvern Medical Arts property funded, at a fixed rate (achieved with an interest rate swap contract) of 4.31% .On June 25, 2012, the REIT increased the mortgage on Glenmore Professional Centre in Calgary, Alberta to $40.0 million from $34.0 million.  The interest rate and maturity remain the same at 3.40% and May 2013 respectively.On April 20, 2012, the REIT entered into an agreement with NorthWest Value Partners Inc. ("NWVP"), a private company controlled by Paul Dalla Lana, the REIT's chairman and a substantial investor in theREIT,whereby the REIT, subject to regulatory approvals, would acquire, by way of a share and unit transaction, an eleven property medical office building portfolio (the "Initial GT Portfolio") located in Ontario from GT Canada Medical Properties REIT ("GT REIT") in the event NWVP was successful in a take-over bid for GT REIT.On May 31, 2012, NWVP announced it was successful in its take-over bid for GT REIT.On May 31, 2012, the REIT entered into an acquisition agreement with GT REIT to acquire, subject to regulatory approvals, all shares and limited partnership units of the applicable GT REIT subsidiaries controlling the Initial GT Portfolio for a purchase price together with reimbursement of certain transaction costs of $37.4 million, plus assumption of mortgage debt of approximately $42.0 million, subject to usual adjustments. The purchase price and transaction costs, at GT REIT's option and subject to regulatory approvals, will be satisfied by the issuance of REIT units at a price of $12.31 per unit ($12.50 per unit closing price on the day the transaction was approved by the REIT less a 1.5% discount) and/or for cash.On June 1, 2012, to facilitate the GT REIT take-over by NWVP and in accordance with the April 20, 2012 agreement with NWVP, the REIT advanced $41.3 million to NWVP by way of a loan bearing 7% interest. The loan is fully guaranteed by NWVP and is due upon the conveyance of the Initial GT Portfolio, with an outside date of October 31, 2012.On June 1, 2012, the REIT issued by way of private placement 1,323,858 REIT units to NWVP at the previously agreed upon price of $12.31 per unit, for aggregate consideration of $16.3 million.On June 19, 2012, a subsidiary of the REIT entered into an agreement with a subsidiary of GT REIT to acquire, subject to regulatory approvals, all shares and limited partnership units of the applicable entities which had recently acquired a property municipally known as 249 Ontario Street, Port Hope Ontario (the "Port Hope Property") for a purchase price of approximately $2.9 million, plus the assumption of mortgage debt of approximately $5.0 million, subject to usual adjustments. The purchase price, at the vendor's option and subject to regulatory approvals will be satisfied by the issuance of REIT units at a price of $12.31 per unit and/or for cash.The transactions relating to the Initial GT Portfolio and the Port Hope Property are expected to close no later than October 31, 2012 and to be immediately accretive.The REIT paid distributions of $0.06667 per unit on April 13, 2012, May 15, 2012 and June 15, 2012 consistent with its annualized target of $0.80 cents per unit.Selected Financial Information:   (unaudited)Three Months EndedThree Months Ended($000's, except unit and per unit amounts)June 30, 2012June 30, 2011   Revenue      $32,567           $28,884Net Operating Income      $18,155           $16,175Funds from Operations ("FFO")      $10,769           $9,961Adjusted Funds from Operations ("AFFO")           $9,115      $8,236Debt to Gross Book Value           50.9%           48.8%   Per unit data            FFO           $0.25           $0.23AFFO      $0.21           $0.19Distributions      $0.20           $0.20AFFO Payout ratio      96%        104%             Subsequent Events:Subsequent to the quarter, the REIT entered into a commitment letter for a new ten year $33 million mortgage against its Sunridge Professional Centre asset in Calgary.  The mortgage will replace an existing mortgage at Sunridge Professional Centre, resulting in net proceeds to the REIT, after costs, of approximately $21.0 million.  The mortgage loan is expected to fund in the third quarter, at which time the interest rate will be determined and fixed by way of an interest rate swap arrangement.The REIT has entered into agreements to acquire a controlling interest in Smyth Medical Centre, a 35,000 square foot medical office condominium property in Ottawa. The purchases are expected to close in the third quarter of 2012, subject to customary closing conditions and are expected to be immediately accretive. The condo units are being acquired for approximately $3.5 million free and clear of mortgages. Located just east of downtown, Smyth Medical Centre (1929 Russell Road) is a premier building in the Ottawa medical office market due to its favourable location, diversified healthcare tenant mix and appealing design. It is well-leased to primarily healthcare related uses that include pharmacy, laboratory, physiotherapy, dental and specialist physicians who benefit from the building's close proximity to the Ottawa Hospital General Campus.  The investment will be the REIT's first acquisition in Ottawa.The REIT has entered into an agreement to acquire 84% of 807 Broadview Avenue, a 54,720 square foot medical office condominium building in Toronto. The purchase is expected to close in the third quarter of 2012, subject to customary closing conditions and is expected to be immediately accretive. The property is being acquired for $16.44 million, with the REIT assuming the vendor's existing mortgage, having a principal amount of approximately $9.34 million, an interest rate of 4.40% and a 2015 maturity. Located in a well-established Riverdale neighbourhood northeast of the downtown core, 807 Broadview Avenue is a recently constructed medical office condominium building that benefits from a central location and a modern design. The 45,770 square feet being acquired is 100% leased on a long term basis to the Albany Medical Clinic, a large full service Family Health Group that represents one of Canada's oldest, and one of Toronto's largest, healthcare clinics. The clinic is anchored by a large number of both general practitioners and medical specialists who are complemented by ancillary healthcare services that include laboratory, diagnostic imaging, dental, psychology and physiotherapy. The investment will be the REIT's thirteenth acquisition in Toronto.The REIT declared distributions of $0.06667 per unit to unitholders of record as at July 31, 2012 and August 31, 2012.Peter Riggin, CEO, said "We are pleased with our results for the first half of the year, resulting in year over year and quarterly FFO and AFFO increases.  We expect improving occupancy and further accretive acquisitions during the remainder of the year, furthering the stability of our portfolio of primarily necessity-based healthcare providers."Some financial measures used in this press release, such as FFO and AFFO, 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. As such, they are unlikely to be comparable to similar measures presented by other real estate companies.  These non-IFRS measures are more fully defined and discussed in the REIT's management discussion and analysis (the "MD&A") for the second quarter of 2012, which is available on the SEDAR website at www.sedar.com.  Also on SEDAR are the interim 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 Annual Information Form and 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 second quarter 2012 results on Wednesday, August 15, 2012 at 11:00 a.m. (Eastern).The conference call can be accessed by dialing 416-640-3404 or 1-866-322-1159. The conference ID is 4834547.Audio replay is available until August 22, 2012 by dialing 647-436-0148 or 1-888-203-1112.  The conference ID is 4834547.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.SOURCE: NorthWest Healthcare Properties Real Estate Investment TrustFor further information: Ernie Spraggs, CFO (416) 601-3221, or www.nwhp.ca