TORONTO, Nov. 15,
2022 /CNW/ - NorthWest Healthcare Properties Real
Estate Investment Trust (the "REIT") (TSX: NWH.UN), today announced
its results for the three and nine months ended September 30, 2022 and the formation of a new
joint venture targeting UK healthcare real estate.
NorthWest has entered into agreements with a UK institutional
investor (the "UK Investor") in respect of a new joint venture
targeting healthcare real estate in the UK (the "UK JV") with an
aggregate equity commitment of $765
million (£500 million) to be funded 85% by the UK Investor
and 15% by the REIT as well as a $75
million (£50 million) investment in the REIT's existing seed
portfolio. The agreements are expected to be finalized by
year-end.
Operationally, NorthWest's inflation indexed $10.6 billion, 233 property portfolio performed
well in the third quarter with a stable net asset value increasing
by 2.7% to $13.97 per unit, occupancy
at 97% and a market leading 14.0 year WALE delivering 2.5% year
over year ("YOY") same property NOI growth on a constant currency
basis.
During the quarter, revenue and NOI grew 21.2% and 19.9%,
respectively on a YOY basis. However, as a result of several
non-recurring items and lower transactional volumes, management
fees decreased during the quarter while increasing interest expense
coupled with the REIT's temporarily elevated leverage level
resulted in AFFO per unit decreasing to $0.151. With high visibility into
near-term transactional activity which is expected to result in
quarterly management fee income reverting to historic levels and
adding ~$0.02/unit on a run-rate
basis, the REIT expects earnings to be in-line with previous
quarters when combined with the $0.04/unit annualized impact of balance sheet
initiatives completed post quarter, including:
- Refinancing two floating rate facilities with a combined
outstanding balance of approximately $475
million which extended the term to maturity by approximately
2 years and are expected to result in annual interest rate savings
of approximately $0.02/un.
- Proceeds from the UK portfolio recapitalization will be used to
repay higher cost floating rate debt. The transaction is expected
to close in December and upon completion are expected to generate
annualized interest savings of approximately $0.01/un.
- Commitments to extend the maturity of its US secured loan
facility to 2025, which is expected to generate annual interest
rate savings of approximately $0.01/un.
________________________________
|
1
|
These are not measures
recognized under IFRS and do not have standardized meanings
prescribed by IFRS. Further, the REIT's definitions of FFO and AFFO
differ from those used by other similar real estate investment
trusts, as well from the definitions recommended by REALpac. See
"Non-IFRS Financial Measures", Exhibit 1 and Exhibit 2.
|
Proforma the completion of the UK refinancing and
recapitalization, associated debt repayment, and the US
refinancing, exposure to long-term fixed rate debt is expected to
increase to 65% of outstanding debt while also generating the
aforementioned interest savings and extending the REIT's weighted
average term to maturity.
Commenting on NorthWest's results and progress on key strategic
initiatives Paul Dalla Lana,
Chairman and CEO said:
"With the recent market volatility, we are
pleased to announce the formation of a new UK JV with a £500
million equity commitment and the recapitalization of our existing
UK platform in line with our current IFRS valuation. This was the
REIT's top priority in 2022 and it is highly strategic for the
business as it expands the asset management franchise, introduces a
new institutional partner, and positions the REIT to execute on
attractive opportunities that we expect to emerge in the UK in the
near-term."
Mr. Dalla Lana went on to
say:
"While Q3 financial results were impacted by an
interim flexible capital structure, the REIT has taken concrete
actions to reduce its interest expense by refinancing more than
$1.0 billion of higher cost debt at
lower rates post quarter-end."
Capital Formation:
The REIT entered into agreements with the UK Investor to
recapitalize the REIT's existing UK portfolio (the "Seed
Portfolio") with a $75 million (£50
million) investment and the formation of a joint venture to pursue
investment opportunities in the UK with a $765 million (£500 million) equity commitment
(the "UK JV"). The capital commitment will be split 85% to the UK
Investor and 15% to NorthWest. The UK JV has a target to grow,
independent of the Seed Portfolio, to approximately $1.5 billion (£1.0 billion). NorthWest will
manage the UK JV and will charge market-based fees.
Separately, the REIT's US joint venture initiative continues to
progress despite macroeconomic uncertainty and the REIT remains
actively engaged with a short list of qualified partners and is
working to agree commercial terms in Q1 2023.
Funds Management:
In-place capital commitments increased by $1.5 billion to $12.5
billion as a result of the new UK JV, agreed post quarter
end and deployed fee bearing capital increased to $5.9 billion (+1.7% QOQ). The REIT's funds
management business continues to scale and proforma the completion
of the US joint venture, deployed and committed capital would
increase to $6.7 billion and
$13.3 billion, respectively.
At a target ownership level of between 20% - 30% across its
capital platforms the REIT anticipates generating an increased
level of growth in both AFFO and NAV on a per unit basis as a
result of leveraging its capital light model and internally
generated capital to fund growth.
Growth:
In Q3, the REIT completed acquisitions totaling approximately
$125 million all within either Vital
or its Australian JV and continues to advance its global precinct
strategy and post quarter end added an additional ~$150 million development project to its pipeline
in one of its Australian capital platforms.
While macro-economic uncertainty resulted in lower near-term
volume in the quarter, the REIT remains constructive on the
long-term demand factors that drive value creation in healthcare
real estate. With a growing investment pipeline, the REIT continues
to evaluate new investment opportunities within its fee bearing
capital vehicles on an opportunistic basis while remaining
disciplined in its capital allocation strategies.
Defensive Real Estate Portfolio:
The REIT's high-quality and defensive portfolio delivered strong
operational results including 2.5% same property NOI growth which
is up 10 bp YOY. The REIT continues to have market leading cash
flow stability with portfolio occupancy at 97%, a weighted average
lease expiry of 14.0 years and 81.7% of the consolidated portfolio
subject to rent indexation.
Balance Sheet Initiatives:
A significant focus in Q3 and post-quarter end was the
refinancing of $1.0B of the REITs
2022 and 2023 debt maturities to extend term and fix rates:
- On August 25, 2022 the REIT
completed a public offering of $155
million of unsecured convertible debentures with a
$16.00 per unit conversion price,
bearing fixed rate interest at 6.25% and maturing August 31, 2027.
- On October 28, 2022 the REIT
completed an 18 month extension of its $110.9 million (A$125
million).
- On October 28, 2022 the REIT
closed a new three year, $406.8
million (£266 million) term loan facility secured by its UK
portfolio. Proceeds of the transaction were used to repay existing
UK debt with a November, 2022 maturity date.
- On November 1, 2022 the REIT
closed a new one-year, $125 million
unsecured revolving credit facility. A portion of the of the
proceeds will be used to repay the REIT's existing $79 million unsecured facility with a
January 1, 2023 maturity date.
- On November 2, 2022, the REIT
extended the term to maturity of its Australian term debt
facilities maturing in November and December
2022 to April and June 2024,
respectively.
- The REIT has also received commitments to extend the maturity
of its US secured loan facility to 2025.
Proforma completion of the post quarter end financing
activities, the UK recapitalization and associated debt repayment,
and the US JV the REIT's consolidated leverage is expected to
decrease to 43.5%.
2022 Third Quarter Financial and Operational
Highlights:
For the three and nine months ended September 30, 2022, the REIT delivered strong
operational performance with an increasingly conservative balance
sheet across an expanded 233 property, 18.6 million square foot
defensive acute healthcare real estate portfolio underpinned by
long-term inflation indexed leases. Key highlights are as
follows:
- Q3 2022 revenue of $115.8M up
21.2% YOY;
- Q3 2022 AFFO of $0.15 per unit
(see Exhibit 2);
- Same Property NOI growth of 2.5% in Q3 2022 as compared to Q3
2021, driven primarily by annual rent indexation (see Exhibit
3);
- Strong portfolio occupancy of 97% consistent with last quarter
with the international portfolio holding stable at 98.4%;
- Weighted average lease expiry of 14.0 years is underpinned by
the international portfolio's Hospital and Health Care Facility
Assets' weighted average lease expiry of 18.6 years;
- Total assets under management ("AUM") increased 24.9% year over
year to $10.6 billion;
- Total capital deployed in fee bearing vehicles is $5.9 billion up 16.0% year over year. Undeployed
capital in existing fee bearing vehicles totals $4.3 billion;
- Net asset value ("NAV") per unit increased by 2.7% year over
year to $13.97 driven primarily by
fair value gains resulting from the execution of the REIT's UK
asset management initiatives (see Exhibit 4);
- Debt to Gross Book Value - Including Convertible Debentures of
47.7% has decreased 390 bps, year over year, and is expected to
decrease by a further 416 bp through the seeding of the new US
JV.
Selected Financial Information:
(unaudited)
($000's, except unit
and per unit amounts)
|
Three months
ended
September 30, 2022
|
Three months
ended
September 30, 2021
|
Number of
properties
|
233
|
192
|
Gross leasable area
(sf)
|
18,582,638
|
16,153,200
|
Occupancy
|
97 %
|
97 %
|
Weighted Average Lease
Expiry (Years)
|
14.0
|
14.1
|
Net Operating
Income
|
$89,547
|
$74,694
|
Net Income (Loss)
attributable to unitholders
|
$6,611
|
$161,380
|
Funds from Operations
("FFO") (1)
|
$37,176
|
$47,645
|
Adjusted Funds from
Operations ("AFFO") (1)
|
$36,960
|
$47,264
|
Debt to Gross Book
Value - Declaration of Trust (1)
|
44.4 %
|
40.6 %
|
Debt to Gross Book
Value - Including Convertible
Debentures (1)
|
47.7 %
|
43.8 %
|
(1)
|
FFO and AFFO are not
measures recognized under IFRS and do not have standardized
meanings prescribed by IFRS. The REIT's definitions of FFO and AFFO
differ from those used by other similar real estate investment
trusts, as well from the definitions recommended by REALpac. See
"Non-IFRS Financial Measures", Exhibit 1 and Exhibit 2 and
"Performance Measurement" in the REIT's MD&A.
|
Q3 2022 Conference Call:
The REIT invites you to participate in its conference call with
senior management to discuss our third quarter 2022 results on
Tuesday, November 15, 2022 at 10:00
AM (Eastern).
The conference call can be accessed by dialing 416-764-8609 or 1
(888) 390-0605. The conference ID is 73323698#.
Audio replay will be available from November 15, 2022 through November 22, 2022 by dialing 416-764-8677 or 1
(888) 390-0541. The reservation number is 323698#.
In conjunction with the release of the REIT's third quarter 2022
financial results, the REIT will post a current investor update
presentation to its website where additional information on the
REIT's investments and operating performance may be found. Please
visit the REIT's website at
www.nwhreit.com/Investors/Presentations
Vital Healthcare Property Trust
On November 10, 2022 Vital Trust
also announced its financial results for the first quarter ended
September 30, 2022. Details on Vital
Trust's financial results are available on Vital Trust's website at
www.vitalhealthcareproperty.co.nz
About NorthWest Healthcare Properties Real Estate Investment
Trust
NorthWest Healthcare Properties Real Estate Investment Trust
(TSX: NWH.UN) (NorthWest) is an unincorporated, open-ended real
estate investment trust established under the laws of the Province
of Ontario. As at September 30, 2022, the REIT provides investors
with access to a portfolio of high quality international healthcare
real estate infrastructure comprised of interests in a diversified
portfolio of 233 income-producing properties and 18.6 million
square feet of gross leasable area located throughout major markets
in Canada, 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 250 professionals in nine
offices in five countries to serve as a long term real estate
partner to leading healthcare operators.
Non-IFRS Financial Measures
Some financial measures used in this press release, such as
SPNOI, Constant Currency SPNOI, FFO, FFO per Unit, AFFO, AFFO per
Unit, AFFO Payout Ratio, NAV, NAV per Unit, portfolio occupancy and
weighted average lease expiry, 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 and nine months
ended September 30, 2022, in the
"Performance Measurement" and "Results from Operations" sections.
The MD&A is available on the SEDAR website at
www.sedar.com.
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, geographic
expansion, ESG initiatives, expanding AUM, balance sheet
optimization arrangements, and potential acquisitions, dispositions
and other transactions, including the proposed UK joint venture, a
potential US joint venture and the program intended to reduce the
REIT's exposure to floating rate debt. 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 acquisitions,
dispositions, development, joint venture, deleveraging and other
transactions (some of which remain subject to completing
documentation) on terms disclosed; (ii) the REIT's properties
continuing to perform as they have recently, (iii) the REIT
successfully integrating past and future acquisitions, including
the realization of synergies in connection therewith; (iv) various
general economic and market factors, including exchange rates
remaining constant, local real estate conditions remaining strong,
interest rates remaining at current levels, the impacts of COVID-19
on the REIT's business ameliorating or remaining stable; and (vii)
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
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.
NORTHWEST HEALTHCARE
PROPERTIES REAL ESTATE INVESTMENT TRUST
|
Condensed
Consolidated Interim Statements of Income (Loss) and Comprehensive
Income (Loss)
|
(in thousands of
Canadian dollars)
|
|
|
|
|
Unaudited
|
|
|
|
|
|
For the three months
ended September
30,
|
For the nine months
ended
September 30,
|
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Net Property
Operating Income
|
|
|
|
|
Revenue from
investment properties
|
$
115,780
|
$
95,554
|
$
330,283
|
$
278,245
|
Property operating
costs
|
26,233
|
20,860
|
74,786
|
63,161
|
|
89,547
|
74,694
|
255,497
|
215,084
|
|
|
|
|
|
Other
Income
|
|
|
|
|
Interest and
other
|
2,691
|
1,773
|
6,729
|
3,529
|
Development
revenue
|
—
|
2,577
|
3,746
|
5,742
|
Management
fees
|
(4,199)
|
4,097
|
12,252
|
13,149
|
Share of profit (loss)
of equity accounted investments
|
5,154
|
8,066
|
28,884
|
55,553
|
|
3,646
|
16,513
|
51,611
|
77,973
|
|
|
|
|
|
Expenses and
other
|
|
|
|
|
Mortgage and loan
interest expense
|
40,864
|
22,404
|
98,775
|
68,162
|
General and
administrative expenses
|
12,421
|
8,381
|
35,560
|
29,777
|
Transaction
costs
|
3,740
|
16,899
|
15,858
|
30,332
|
Development
costs
|
—
|
2,775
|
3,430
|
5,004
|
Foreign exchange
(gain) loss
|
3,822
|
4,628
|
(777)
|
(9,019)
|
|
60,847
|
55,087
|
152,846
|
124,256
|
|
|
|
|
|
Income before
finance costs, fair value
adjustments, and net gain (loss) on financial
instruments
|
32,346
|
36,120
|
154,262
|
168,801
|
Finance
costs
|
|
|
|
|
Amortization of
financing costs
|
(2,857)
|
(1,314)
|
(7,824)
|
(10,054)
|
Amortization of
mark-to-market adjustment
|
300
|
105
|
719
|
314
|
Class B exchangeable
unit distributions
|
(342)
|
(342)
|
(1,026)
|
(1,026)
|
Fair value adjustment
of Class B exchangeable units
|
2,497
|
(308)
|
5,455
|
(530)
|
Accretion of financial
liabilities
|
(2,003)
|
(2,445)
|
(12,049)
|
(7,431)
|
Fair value adjustment
of convertible debentures
|
5,167
|
(516)
|
14,892
|
949
|
Net gain (loss) on
financial instruments
|
10,468
|
(1,577)
|
59,901
|
12,973
|
Fair value adjustment
of investment properties
|
(14,743)
|
152,672
|
118,424
|
323,321
|
Fair value adjustment
of deferred unit plan liability
|
3,239
|
(62)
|
6,855
|
(612)
|
|
|
|
|
|
Income before taxes
from continuing operations
|
27,024
|
182,333
|
332,561
|
486,705
|
|
|
|
|
|
Current tax
expense
|
2,813
|
4,378
|
17,240
|
10,570
|
Deferred tax expense
(recovery)
|
3,129
|
30,320
|
54,175
|
71,658
|
Income tax expense
(recovery)
|
5,942
|
34,698
|
71,415
|
82,228
|
Net income from
continuing operations
|
$
21,082
|
$
147,635
|
$
261,146
|
$
404,477
|
|
|
|
|
|
Net income (loss) from
discontinued operations
|
—
|
25,658
|
—
|
25,658
|
|
|
|
|
|
Total net
income
|
$
21,082
|
$
173,293
|
$
261,146
|
$
430,135
|
|
|
|
|
|
Net income
attributable to:
|
|
|
|
|
Unitholders
|
$
6,611
|
$
161,380
|
$
164,490
|
$
295,427
|
Non-controlling
interests
|
14,471
|
11,913
|
96,656
|
134,708
|
|
$
21,082
|
$
173,293
|
$
261,146
|
$
430,135
|
Financial Exhibits
Exhibit 1 – Funds From Operations Reconciliation
The REIT calculates FFO based on certain adjustments to net
income (computed in accordance with IFRS) as detailed below. The
REIT makes adjustments for cost incur with respect to exploring new
growth opportunities, establishing joint arrangements, building
relationships with healthcare operators and institutional
investors, which in management view are not reflective of earnings
from core operations or impact the REIT's ability in the long-run
to make distributions to Unitholders given their discretionary and
strategic nature. In addition, beginning in the quarter ended
September 30, 2022, FFO is being
adjusted for net losses incurred with respect to an investment in
unlisted securities and certain G&A expenses that, in each
case, management views as not reflective of recurring earnings from
core operations (collectively, the "Other FFO Adjustments").
REALpac has established a standardized definition of FFO in a White
Paper dated January 2022 ("REALpac
Guidance"). The REIT's FFO definition differs from the REALpac
Guidance in that, when calculating FFO, the REIT (a) excludes the
revaluation of financial liabilities, convertible debenture
issuance costs and all transaction costs, and (b) makes the Other
FFO Adjustments. The REIT's method of calculating FFO also differs
from other issuers' methods and may not be comparable to similar
measures used by other issuers.
FUNDS FROM
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Expressed in thousands
of Canadian dollars,
except per unit amounts
|
Three months ended
September 30,
|
|
Six months ended
September 30,
|
2022
|
|
2021
|
|
Variance
|
|
2022
|
|
2021
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to
unitholders
|
$
6,611
|
|
$
161,380
|
|
$ (154,769)
|
|
$
164,490
|
|
$
295,427
|
|
$ (130,937)
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
|
|
|
|
(i) Fair market value
losses (gains)
|
(6,628)
|
|
(150,209)
|
|
143,581
|
|
(205,527)
|
|
(336,101)
|
|
130,574
|
Less: Non-controlling
interests' share
of fair market value losses (gains)
|
8,814
|
|
8,060
|
|
754
|
|
95,515
|
|
138,192
|
|
(42,677)
|
(ii) Finance cost -
Exchangeable Unit
distributions
|
342
|
|
342
|
|
—
|
|
1,026
|
|
1,026
|
|
—
|
(iii) Revaluation of
financial liabilities
|
2,003
|
|
2,445
|
|
(442)
|
|
12,049
|
|
7,431
|
|
4,618
|
(iv) Unrealized
foreign exchange loss
(gain)
|
3,653
|
|
4,430
|
|
(777)
|
|
1,268
|
|
(12,013)
|
|
13,281
|
Less: Non-controlling
interests' share
of unrealized foreign exchange loss
(gain)
|
(8)
|
|
(4)
|
|
(4)
|
|
(180)
|
|
1,398
|
|
(1,578)
|
(v) Deferred
taxes
|
3,129
|
|
30,320
|
|
(27,191)
|
|
54,175
|
|
71,658
|
|
(17,483)
|
Less: Non-controlling
interests' share
of deferred taxes
|
(2,009)
|
|
(1,226)
|
|
(783)
|
|
(18,881)
|
|
(19,733)
|
|
852
|
(vi) Transaction
costs
|
3,740
|
|
17,678
|
|
(13,938)
|
|
16,061
|
|
36,926
|
|
(20,865)
|
Less: Non-controlling
interests' share
of transaction costs
|
719
|
|
—
|
|
719
|
|
981
|
|
(167)
|
|
1,148
|
(vii) Net adjustments
for equity
accounted investments
|
1,054
|
|
(1,193)
|
|
2,247
|
|
(7,447)
|
|
(34,039)
|
|
26,592
|
(viii) Internal
leasing costs
|
538
|
|
646
|
|
(108)
|
|
1,988
|
|
2,149
|
|
(161)
|
(ix) Net adjustment
for discontinued
operations
|
—
|
|
(24,912)
|
|
24,912
|
|
—
|
|
(24,912)
|
|
24,912
|
* Net adjustment for
lease amortization
|
97
|
|
(112)
|
|
209
|
|
(45)
|
|
(198)
|
|
153
|
(xi) Other FFO
adjustments(1)
|
8,073
|
|
—
|
|
8,073
|
|
8,073
|
|
1,224
|
|
6,849
|
Funds From
Operations ("FFO") (2)
|
$
37,176
|
|
$
47,645
|
|
$
(10,469)
|
|
$
130,594
|
|
$
128,268
|
|
$
2,326
|
FFO per Unit –
Basic
|
$
0.15
|
|
$
0.22
|
|
$
(0.07)
|
|
$
0.55
|
|
$
0.67
|
|
$
(0.12)
|
FFO per Unit - fully
diluted (3)
|
$
0.15
|
|
$
0.21
|
|
$
(0.06)
|
|
$
0.55
|
|
$
0.65
|
|
$
(0.10)
|
Adjusted weighted
average units
outstanding (4)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
241,119,245
|
|
218,843,204
|
|
22,276,041
|
|
235,769,760
|
|
192,347,998
|
|
43,421,762
|
Diluted
(3)
|
244,488,605
|
|
237,163,092
|
|
7,325,513
|
|
238,645,590
|
|
210,346,094
|
|
28,299,496
|
Notes
|
1.
|
Other FFO adjustments
include items that, in management's view, are not reflective of
recurring earnings from core operations. For the three and nine
months ended September 30, 2022, other FFO adjustments included (a)
net losses of $5.6 million ($5.2 million in distribution income
less $10.8 million in financing costs) incurred with respect to an
investment in unlisted securities, (b) $1.6 million of technology
related G&A expenses incurred by the REIT's European joint
venture, and (c) $0.9 million of corporate G&A expenses related
to the establishment of a philanthropic platform.
|
2.
|
FFO is not a measure
recognized under IFRS and does not have standardized meanings
prescribed by IFRS. The REIT's definition of FFO differs from that
used by other similar real estate investment trusts, as well from
the definitions recommended by REALpac. See Performance
Measurements section in the REIT's MD&A.
|
3.
|
Diluted units includes
vested but unissued deferred trust units and the conversion of the
REIT's Convertible Debentures that would have a dilutive effect
upon conversion at the holders' contractual conversion price.
Convertible Debentures are dilutive if the interest (net of tax and
other changes in income or expense) per unit obtainable on
conversion is less than the basic per unit measure.
|
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 B LP Units in
basic and diluted units outstanding/weighted average units
outstanding. There were 1,710,000 Class B LP Units
outstanding as at September 30, 2022 and 1,710,000 outstanding as
at September 30, 2021.
|
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 makes certain adjustments as
detailed below in calculating its FFO and AFFO, which in management
view are not reflective of earnings from core operations or impact
the REIT's ability in the long-run to make distributions to
Unitholders given their discretionary and strategic nature. The
REIT's AFFO definition differs from the REALpac Guidance in that,
when calculating AFFO, the REIT does not make an adjustment to AFFO
for amortization financing charges. The REIT's method of
calculating AFFO also differs from other issuers' methods and may
not be comparable to similar measures used by other issuers.
ADJUSTED FUNDS FROM
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Expressed in thousands
of Canadian dollars,
except per unit amounts
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
2022
|
|
2021
|
|
Variance
|
|
2022
|
|
2021
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
(1)
|
$
37,176
|
|
$
47,645
|
|
$ (10,469)
|
|
$
130,594
|
|
$
128,268
|
|
$
2,326
|
|
|
|
|
|
|
|
|
|
|
|
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
|
|
|
|
(i) Amortization of
marked to market
adjustment
|
(300)
|
|
(105)
|
|
(195)
|
|
(719)
|
|
(314)
|
|
(405)
|
(ii) Amortization of
transactional deferred
financing charges
|
1,868
|
|
217
|
|
1,651
|
|
4,842
|
|
1,193
|
|
3,649
|
(iii) Straight-line
revenue
|
(401)
|
|
384
|
|
(785)
|
|
(165)
|
|
1,340
|
|
(1,505)
|
Less:
non-controlling interests' share of
straight-line revenue
|
(483)
|
|
(317)
|
|
(166)
|
|
(1,423)
|
|
(1,191)
|
|
(232)
|
(iv) Leasing costs and
non-recoverable
maintenance capital expenditures
|
(2,923)
|
|
(2,800)
|
|
(123)
|
|
(8,997)
|
|
(8,290)
|
|
(707)
|
Less:
non-controlling interests' share of
actual capex and leasing costs
|
29
|
|
193
|
|
(164)
|
|
313
|
|
704
|
|
(391)
|
(v) DUP Compensation
Expense
|
2,023
|
|
2,168
|
|
(145)
|
|
7,228
|
|
7,209
|
|
19
|
(vi) Debt repayment
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
30
|
|
(30)
|
(vii) Net adjustments
for equity accounted
investments
|
(29)
|
|
(121)
|
|
92
|
|
(449)
|
|
(425)
|
|
(24)
|
Adjusted Funds From
Operations ("AFFO") (1)
|
$
36,960
|
|
$
47,264
|
|
$ (10,304)
|
|
$
131,224
|
|
$
128,524
|
|
$
2,700
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO per Unit -
Basic
|
$
0.15
|
|
$
0.22
|
|
$
(0.07)
|
|
$
0.56
|
|
$
0.67
|
|
$
(0.11)
|
AFFO per Unit - fully
diluted (3)
|
$
0.15
|
|
$
0.21
|
|
$
(0.06)
|
|
$
0.55
|
|
$
0.65
|
|
$
(0.10)
|
Distributions per Unit
- Basic
|
$
0.20
|
|
$
0.20
|
|
$
—
|
|
$
0.60
|
|
$
0.60
|
|
$
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted
average units
outstanding: (2)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
241,119,245
|
|
218,843,204
|
|
22,276,041
|
|
235,769,760
|
|
192,347,998
|
|
43,421,762
|
Diluted
(3)
|
244,488,605
|
|
237,163,092
|
|
7,325,513
|
|
238,645,590
|
|
210,346,094
|
|
28,299,496
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
1.
|
FFO and AFFO are not
measures recognized under IFRS and do not have standardized
meanings prescribed by IFRS. The REIT's definition of FFO differs
from that used by other similar real estate investment trusts, as
well from the definitions recommended by REALpac. See
Performance Measurement section in the REIT's
MD&A.
|
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 and
diluted per unit measure that includes the Class B LP Units in
basic and diluted units outstanding/weighted average units
outstanding. There were 1,710,000 Class B LP Units
outstanding as at September 30, 2022 and 1,710,000 outstanding as
at September 30, 2021.
|
3.
|
Distributions per units
is a non-IFRS ratio calculated as sum of the distributions on the
REIT's units and finance costs on Class B LP Units. Management does
not consider finance costs on Class B LP units to be an financing
cost of the REIT but rather component of the REIT's total
distributions. Distributions is not defined by IFRS and does not
have a standard meaning and may not be comparable with similar
measures presented by other issuers.
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of
CAD
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
Var %
|
|
2022
|
|
2021
|
|
Var %
|
|
|
|
|
|
|
|
|
|
|
|
|
Same property
NOI (1)
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$ 28,351
|
|
$ 27,541
|
|
2.9 %
|
|
$ 84,655
|
|
$ 81,352
|
|
4.1 %
|
Europe
|
15,594
|
|
16,031
|
|
(2.7) %
|
|
41,664
|
|
42,853
|
|
(2.8) %
|
Australasia
|
23,250
|
|
21,971
|
|
5.8 %
|
|
71,156
|
|
67,992
|
|
4.7 %
|
Same property
NOI (1)
|
$
67,195
|
|
$
65,543
|
|
2.5 %
|
|
$
197,475
|
|
$
192,197
|
|
2.7 %
|
Impact of foreign
currency
translation on Same Property NOI
|
—
|
|
3,835
|
|
|
|
—
|
|
6,293
|
|
|
Straight-line rental
revenue
recognition
|
(263)
|
|
4
|
|
|
|
(575)
|
|
362
|
|
|
Amortization of
operating leases
|
(46)
|
|
(76)
|
|
|
|
(150)
|
|
(243)
|
|
|
Lease termination
fees
|
21
|
|
575
|
|
|
|
21
|
|
605
|
|
|
Other
transactions
|
626
|
|
91
|
|
|
|
1,112
|
|
91
|
|
|
Developments
|
3,662
|
|
2,569
|
|
|
|
11,360
|
|
8,640
|
|
|
Acquisitions
|
17,787
|
|
1,503
|
|
|
|
45,228
|
|
4,977
|
|
|
Dispositions
|
62
|
|
245
|
|
|
|
(306)
|
|
881
|
|
|
Intercompany/Elimination
|
503
|
|
405
|
|
|
|
1,332
|
|
1,281
|
|
|
NOI
|
$
89,547
|
|
$
74,694
|
|
19.9 %
|
|
$
255,497
|
|
$
215,084
|
|
18.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
1.
|
Same property NOI is a
non-IFRS measure, defined and discussed in the REIT's
MD&A.
|
2.
|
NOI is an additional
IFRS measure presented on the consolidated statement of income
(loss) and comprehensive income (loss). NOI is defined and
discussed in the REIT's MD&A.
|
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").
Expressed in thousands
of Canadian dollars, except per unit amounts
|
|
|
Q3
2022
|
|
|
Q4
2021
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
8,282,049
|
|
|
$
7,064,401
|
less: Total
liabilities
|
|
(4,549,431)
|
|
|
(3,540,827)
|
less: Non-controlling
interests
|
|
(1,245,800)
|
|
|
(1,131,443)
|
Unitholders'
equity
|
|
2,486,818
|
|
|
2,392,131
|
|
|
|
|
|
|
|
Add/(deduct):
|
|
|
|
|
|
|
Goodwill
|
|
(35,907)
|
|
|
(41,671)
|
|
Deferred unit plan
liability
|
|
24,720
|
|
|
26,223
|
|
Deferred tax
liability
|
429,641
|
|
|
374,845
|
|
|
less NCI
|
(104,424)
|
325,217
|
|
(91,052)
|
283,793
|
|
|
|
|
|
|
|
|
Financial instruments -
net
|
(36,698)
|
|
|
22,602
|
|
|
less NCI
|
13,774
|
(22,924)
|
|
(15,363)
|
7,239
|
|
|
|
|
|
|
|
|
Exchangeable
Units
|
|
18,126
|
|
|
23,581
|
|
Global Manager
valuation adjustment
|
|
576,318
|
|
|
576,318
|
|
Other
|
|
—
|
|
|
—
|
Net Asset Value
("NAV")
|
|
$
3,372,368
|
|
|
$
3,267,614
|
|
|
|
|
|
|
|
Adjusted Units
Outstanding (000s)- period end (1)
|
|
241,458
|
|
|
225,837
|
NAV per
Unit
|
|
$
13.97
|
|
|
$
14.47
|
Notes
|
1.
|
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.
|
Exhibit 5 – Proportionate Management Fees
"Proportionate Management Fees" is a non-IFRS financial measure
defined as the REIT's total management fees earned from third
parties adjusted to be reflected on a proportionately consolidated
basis at the REIT's ownership percentage (see "Performance
Measurement" "PART III – RESULTS FROM OPERATIONS – NET
INCOME").
GLOBAL MANAGER
FEES
|
|
Expressed in thousands
of Canadian dollars
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
Variance
|
|
2022
|
|
2021
|
|
Variance
|
|
|
|
|
|
|
|
|
|
|
|
|
Base fee
|
$
7,787
|
|
$ 7,103
|
|
$ 684
|
|
$ 24,074
|
|
$
20,052
|
|
$
3,572
|
Incentive and
performance fee
|
4,067
|
|
3,520
|
|
547
|
|
8,460
|
|
10,819
|
|
(2,359)
|
Trustee fees
|
277
|
|
242
|
|
35
|
|
821
|
|
691
|
|
130
|
Project and Acquisition
fees
|
715
|
|
3,548
|
|
(2,833)
|
|
8,659
|
|
10,144
|
|
(1,485)
|
Other fees and cost
reimbursements
|
(6,823)
|
|
1,395
|
|
(8,218)
|
|
3,271
|
|
4,221
|
|
(950)
|
Total Management
Fees
|
$
6,023
|
|
$
15,808
|
|
$
(9,785)
(9,785)
|
|
$
45,285
|
|
$ 46,377
|
|
$
(1,092)
|
less: inter-company
elimination (1)
|
(10,222)
|
|
(11,711)
|
|
1,489
|
|
(33,033)
|
|
(33,228)
|
|
195
|
Consolidated
Management Fees (2)
|
$
(4,199)
(4,199)
|
|
$
4,097
|
|
$
(8,296)
(8,296)
|
|
$
12,252
|
|
$ 13,149
|
|
$
(897)
|
|
|
|
|
|
|
|
|
|
|
|
|
add: fees charged to
non-controlling interests
|
6,528
|
|
7,827
|
|
(1,299)
|
|
21,288
|
|
22,202
|
|
(914)
|
Proportionate
Management Fees (3)
|
$
2,329
|
|
$
11,924
|
|
$
(9,595)
(9,595)
|
|
$
33,540
|
|
$ 35,351
|
|
$
(1,811)
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
1.
|
Management fees charged
to Vital Trust and to the JVs are eliminated on consolidation as an
inter-company transaction.
|
2.
|
Represents the reported
consolidated management fees.
|
3.
|
See Performance
Measurements in the REIT's MD&A.
|
SOURCE NorthWest Healthcare Properties Real Estate Investment
Trust