NWH.UN Northwest Healthcare Properties Real Estate Investment Trust

• Positive revenue growth and same property NOI growth in Q3 2023 and YTD 2023
• Secured a new C$140 million term loan to extend maturities
• In process for extending of the maturity date of series G Convertible debt
• Northwest recognized as a leader in 2023 GRESB ESG Real Estate Assessment

TORONTO, Nov. 8, 2023 /CNW/ - Northwest Healthcare Properties Real Estate Investment Trust (the "REIT" or "Northwest") (TSX: NWH.UN), an owner, asset manager and developer of healthcare real estate, today announced results for the period ending September 30, 2023 ("Q3 2023"). The REIT also provided updates on recent capital management initiatives, and shared results of the 2023 GRESB ESG Real Estate Assessment.

Craig Mitchell, Northwest's CEO comments: "While a Strategic Review is underway, management and the Board have taken key actions in the near term to strengthen the balance sheet and the business."

"The REIT will eliminate all 2023 debt maturities, and over 60% of its 2024 debt maturities. We are also seeking approval from our debentureholders to amend and extend the Series G debentures. We are working to divest our remaining investment units in Australian Unity Healthcare Fund ("AUHPT"). To date we have completed investment and non-core asset sales that have generated gross proceeds of $235.1 million, with additional non-core assets being under contract. We remain committed to building on our position as a healthcare real estate leader, focused on creating value for our many stakeholders." 

Since August 2023, Northwest has pursued a strategy to strengthen the balance sheet by reducing its monthly distributions and extending its maturity profile to create stability through 2024. To date the REIT has been successful in refinancing and extending corporate debt obligations. With the completion of the convertible debt maturity date extension anticipated for later this month, the REIT will have eliminated corporate debt facilities maturing before November of 2024. As previously communicated to the market, the REIT is also undertaking non-core assets sales to de-lever the balance sheet.

• Secured a new term loan of C$140 million, with an April 2025 maturity.
• Launched the process of amending and extending its C$125 million ("Series G") convertible debentures due on December 31, 2023, to March 31, 2025. See announcement of October 16, 2023 for details.
• Refinanced its largest debt facility maturing in 2024, which comprises the A$269 million (C$235 million) JV portfolio debt facilities, extending the maturity date from June 2024 to December 2025.
• To-date completed sales or have under contract $181 million gross non-core property asset.
• To-date completed $110 million in sales of its investment in AUHPT.

For the three and nine months ended September 30, 2023, revenue increased by 5.1% and 15.3%, respectively. Net income (loss) for the three and nine months ended September 30, 2023, decreased by $116.4 million and $553.0 million, respectively, primarily as result of fair value losses on investment properties from changes in valuation parameters.

Operationally, the REIT's high-quality and defensive healthcare real estate portfolio delivered strong results including 3.7% same property net operating income ("SPNOI") growth (see Exhibit 3) on a year over year basis.

The REIT's portfolio occupancy of 96% is supported by a weighted average lease expiry of 13.2 years and 82.9% of leases are subject to inflation indexation. With a portfolio comprising more than 2,000 tenants, the REIT's cash flow is highly diversified across its 229 properties.

Adjusted Funds From Operations (AFFO) ⁽¹⁾ per unit decreased from $0.15 in Q3 2022 to $0.13 in Q3 2023 as result of increased interest expense.

• Q3 2023 revenue of $122.2 million up 5.1% year-over-year;
• Q3 2023 net loss attributable to unitholders of $81.3 million as result of fair value loss on investment properties.
• Q3 2023 SPNOI increased by 3.7% on a year-over-year basis, driven primarily by annual rent indexation (see Exhibit 3);
• Strong portfolio occupancy of 96% consistent with last quarter;
• Q3 2023 AFFO of $0.13 per unit, down from $0.15 per unit on a year-over-year basis (see Exhibit 2);
• Weighted average lease expiry of 13.2 years is underpinned by healthcare infrastructure;
• Total assets under management ("AUM") decreased by 5.3% on a year–over-year basis to $10.0 billion due to combination of non-core asset sales and property valuations.
• Net asset value ("NAV") per unit decreased by 4.7% to $11.96 in Q3 2023 (see Exhibit 4) compared to June 30, 2023. The decrease is predominantly due to cap rate expansion to 5.75%.
• Total capital deployed in fee bearing vehicles is $5.7 billion, a decrease of 1.7% year-over-year as result of fluctuation in foreign exchange rates and;
• Consolidated Debt to Gross Book Value Including Convertible Debentures of 51.6%, an increased of 80 bps on a quarter-over-quarter basis.

On September 22, 2023, the REIT announced a reduction in the REIT's monthly distribution to unitholders from $0.06667 per unit to $0.03 per unit. The distribution reduction is expected to provide the REIT with financial flexibility to continue advancing its short and long-term objectives while exploring strategic alternatives, with maximizing unitholder value being the principal objective.

The REIT announced a distribution of $0.03 per REIT unit to unitholders of record on September 29, 2023, and paid on October 16, 2023.

In 2023, the REIT and Vital Healthcare Property Trust ("Vital") (which is managed by Northwest) participated in the GRESB Real Estate Assessment for the third year running. GRESB, the global Environmental, Social and Governance (ESG) benchmark for assessing real estate and infrastructure investments, collectively representing USD 8.8 trillion in gross asset value ("GAV").

Northwest and Vital were GRESB Sector Leaders in the following categories:

• Global Listed Sector Leader, Healthcare Standing Investments
• • (Vital and Northwest came in 1st and 2nd place respectively)
• Global Listed Sector Leader, Healthcare Development
• • (Vital and Northwest came in 1st and 2nd place respectively)
• Global Sector Leader, Healthcare Development
• • (Vital and Northwest came in 1st and 3rd place respectively)

These results for the REIT and Vital demonstrate Northwest's commitment to ESG best practices. Not only is this the "right and responsible" thing to do, but this in time will also represent a key component of Northwest's value and its associated cost of capital.

A conference call will be held on November 8, 2023, at 10:00 AM (ET). Participating on the call will be members of the REIT's senior management team.

Investors are invited to instantly join the conference call by phone by using the following URL to register and be connected into the conference call automatically: https://emportal.ink/3FlUUZa.

• Investors may also access the call by dialing 416-764-8609 or 1 (888) 390-0605. The conference ID is 16291139#.
  
  
• An audio replay of this call will be made available from November 8, 2023, through November 15, 2023, by dialing 416-764-8677 or 1 (888) 390-0541.
  
  
• The conference replay entry code is 291139#.

Some financial measures used in this press release, such as SPNOI, Constant Currency SPNOI, FFO, FFO per Unit, AFFO, AFFO per Unit, 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 months ended September 30, 2023, in the "Performance Measurement" and "Results from Operations" sections. The MD&A is available on the SEDAR+ website at www.sedarplus.ca.

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 and strengthening plans, the REIT's non-core asset sale program and potential acquisitions, dispositions and other transactions, including plans to amend and extend the Series G debentures and sell the REIT's remaining investment units in AUHPT. 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, financings, refinancings, 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.

Please find the follow financial tables including a reconciliation of Non-GAAP Financial Measures to our IFRS measures.

1. Table: Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)
2. Exhibit 1: Funds from Operations
3. Exhibit 2: Adjusted Funds from Operations
4. Exhibit 3: Constant Currency Same Property NOI
5. Exhibit 4: Net Asset Value ('NAV') per Unit
6. Exhibit 5: Property Management Fees

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").

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").

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").

"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 are more fully defined and discussed in the REIT's MD&A (see "Performance Measurement" and "Part IX – Net Asset Value").

"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").

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. The REIT provides investors with access to a portfolio of high-quality international healthcare real estate infrastructure comprised as at September 30, 2023, of interests in a diversified portfolio of 229 income-producing properties and 18.2 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 ten offices in eight countries to serve as a long-term real estate partner to leading healthcare operators. For more information please visit: www.nwhreit.com.

SOURCE NorthWest Healthcare Properties Real Estate Investment Trust