NorthWest's high quality and defensive
Portfolio quality: The REIT's high-quality and defensive portfolio delivered strong operational results including 2.2% constant currency same property NOI growth, supported by high 97% occupancy and more than 80% of revenue contractually indexed to inflation. The REIT's recent US acquisition enhanced these characteristics while also improving geographic diversification and the credit quality of its tenants thereby enhancing its overall cash flow profile. Additionally, the REIT's active development program delivered three new fully-leased projects in Q1 with a combined value of
Capital formation: In furtherance of its capital formation objectives, the REIT completed a series of important initiatives including supporting Vital's recent
Funds Management: With in-place capital commitments and deployed fee bearing capital totaling
Growth: The REIT's
1 | Proforma the US acquisition which closed on |
Commenting on NorthWest's strong results and progress on key strategic initiatives
"The REIT's key priorities in 2022 included entering
Mr.
"Despite the evolving macro-economic environment and rising inflation and interest rates the REIT is well positioned with more than 80% of global revenue subject to annual indexation. Moreover, the REIT's balance sheet is conservatively constructed and post completion of the US acquisition and both the
Summary of YTD 2022 Investment Activity
2022 is off to a strong start with the REIT completing YTD acquisitions of
The REIT continues to have an active investment pipeline totaling approximately
On May 2, 2022, Vital completed an institutional entitlement offering raising
Balance Sheet Initiatives
On March 31, 2022 the REIT completed a $172.5 million equity offering of 12.5 million units (including full exercise of the overallotment option) at
At Q1-2022, total proportionate debt outstanding was
2022 First Quarter Financial and Operational Highlights:
For the three months and year ended
- Q1 2022 revenue increased by 10.9% year over year to
$102.7M ; - Q1 2022 AFFO of
$0.21 per unit is comparable year over year (see Exhibit 2); - AFFO payout ratio of 95% based on the REIT's
$0.80 per unit annual distribution; - Year to date Same Property NOI growth of 2.2%, driven primarily by annual rent indexation (see Exhibit 4);
- Strong portfolio occupancy of 97.0% is in line with the previous quarter;
- Weighted average lease expiry of 14.6 years is underpinned by the international portfolio's Hospital and Health Care Facility Assets' weighted average lease expiry of 17.0 years;
- Total assets under management ("AUM") increased 23.7% year over year to
$9 .5 billion; - Total capital deployed in fee bearing vehicles is
$5.6 billion up 19.1% year over year. Undeployed capital in existing fee bearing vehicles totals$4 .8 billion; - Net asset value ("NAV") per unit increased by 15.4% year over year to
$14.73 (see Exhibit 4); - Debt to Gross Book Value - Including Convertible Debentures of 42.5% has decreased 180 bp, year over year
Selected Financial Information:
(unaudited) ( | Three months ended | Three months ended |
Number of properties | 202 | 186 |
Gross leasable area (sf) | 16,919,499 | 15,535,503 |
Occupancy | 97% | 97% |
Weighted Average Lease Expiry (Years) | 14.6 | 14.3 |
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 | 40.7% | 39.2% |
Debt to Gross Book Value - Including Convertible Debentures | 42.5% | 44.3% |
Q1 2022 Conference Call:
The REIT invites you to participate in its conference call with senior management to discuss our first quarter 2022 results on
The conference call can be accessed by dialing 416-764-8609 or 1 (888) 390-0605. The conference ID is 68858023#.
Audio replay will be available from
In conjunction with the release of the REIT's first 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
About
NorthWest is a global real estate investor, asset manager and developer focused on properties and partnerships at the intersection of healthcare, knowledge and research. Founded in 2004, NorthWest (TSX: NWH.UN) owns and operates a
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. 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 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, geographic expansion, ESG initiatives, expanding AUM, balance sheet optimization arrangements, the proposed
Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) | ||
(in thousands of Canadian dollars) | ||
Unaudited | ||
For the three months ended | ||
For the three months ended | 2022 | 2021 |
Net Property Operating Income | ||
Revenue from investment properties | $ 102,677 | $ 92,599 |
Property operating costs | 25,610 | 22,035 |
77,067 | 70,564 | |
Other Income | ||
Interest and other | 1,566 | 354 |
Development revenue | 2,564 | 1,853 |
Management fees | 6,047 | 3,556 |
Share of profit (loss) of equity accounted investments | 7,160 | 6,145 |
17,337 | 11,908 | |
Expenses and other | ||
Mortgage and loan interest expense | 23,387 | 23,111 |
General and administrative expenses | 10,309 | 10,157 |
Transaction costs | 5,599 | 1,793 |
Development costs | 2,348 | 1,305 |
Foreign exchange (gain) loss | (594) | (12,460) |
41,049 | 23,906 | |
Income before finance costs, fair value adjustments, and net gain (loss) on financial instruments | 53,355 | 58,566 |
Finance costs | ||
Amortization of financing costs | (2,221) | (4,057) |
Amortization of mark-to-market adjustment | 90 | 97 |
Class B exchangeable unit distributions | (342) | (342) |
Fair value adjustment of Class B exchangeable units | 34 | (564) |
Accretion of financial liabilities | (8,573) | (4,082) |
Fair value adjustment of convertible debentures | 2,850 | 2,650 |
Net gain (loss) on financial instruments | 28,970 | 15,489 |
Fair value adjustment of investment properties | 82,341 | 22,320 |
Fair value adjustment of deferred unit plan liability | 211 | (599) |
Income before taxes from continuing operations | 156,715 | 89,478 |
Current tax expense | 7,193 | 2,801 |
Deferred tax expense (recovery) | 26,187 | 13,088 |
Income tax expense (recovery) | 33,380 | 15,889 |
Total net income | $ 123,335 | $ 73,589 |
Net income attributable to: | ||
Unitholders | $ 88,254 | $ 52,957 |
Non-controlling interests | 35,081 | 20,632 |
$ 123,335 | $ 73,589 |
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 | |||||
Expressed in thousands of Canadian dollars, except per unit amounts | Three months ended | ||||
2022 | 2021 | Variance | |||
Net income (loss) attributable to unitholders | $ 88,254 | $ 52,957 | $ 35,297 | ||
Add / (Deduct): | |||||
(i) Fair market value losses (gains) | (114,406) | (39,296) | (75,110) | ||
Less: Non-controlling interests' share of fair market value losses (gains) | 37,559 | 19,662 | 17,897 | ||
(ii) Finance cost - Exchangeable Unit distributions | 342 | 342 | — | ||
(iii) Revaluation of financial liabilities | 8,573 | 4,082 | 4,491 | ||
(iv) Unrealized foreign exchange loss (gain) | 1,817 | (15,276) | 17,093 | ||
Less: Non-controlling interests' share of unrealized foreign exchange loss (gain) | (171) | 1,404 | (1,575) | ||
(v) Deferred taxes | 26,187 | 13,088 | 13,099 | ||
Less: Non-controlling interests' share of deferred taxes | (7,901) | (5,487) | (2,414) | ||
(vi) Transaction costs | 5,697 | 4,245 | 1,452 | ||
Less: Non-controlling interests' share of transaction costs | 303 | (167) | 470 | ||
(vii) Net adjustments for equity accounted investments | 240 | 1,244 | (1,004) | ||
(viii) Internal leasing costs | 906 | 845 | 61 | ||
(ix) Net adjustment for discontinued operations | — | — | — | ||
* Net adjustment for lease amortization | (72) | (84) | 12 | ||
(xi) Other FFO adjustments | — | 771 | (771) | ||
Funds From Operations ("FFO") (1) | $ 47,328 | $ 38,330 | $ 8,998 | ||
FFO per Unit – Basic | $ 0.21 | $ 0.21 | $ — | ||
FFO per Unit - fully diluted (3) | $ 0.21 | $ 0.20 | $ 0.01 | ||
Adjusted weighted average units outstanding (2) | |||||
Basic | 226,324,317 | 184,349,757 | 41,974,560 | ||
Diluted (3) | 237,987,041 | 208,067,475 | 29,919,566 | ||
Notes | |||||
(1) FFO is not a measure recognized under IFRS and does not have standardized meanings prescribed by IFRS. See Performance Measurements 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 | |||||
(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. |
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 | |||||
Expressed in thousands of Canadian dollars, except per unit amounts | Three months ended | ||||
2022 | 2021 | Variance | |||
FFO (1) | $ 47,328 | $ 38,330 | $ 8,998 | ||
Add / (Deduct): | |||||
(i) Amortization of marked to market adjustment | (90) | (97) | 7 | ||
(ii) Amortization of transactional deferred financing charges | 1,332 | 759 | 573 | ||
(iii) Straight-line revenue | 533 | 437 | 96 | ||
Less: non-controlling interests' share of straight-line revenue | (427) | (408) | (19) | ||
(iv) Leasing costs and non-recoverable maintenance capital expenditures | (2,737) | (2,615) | (122) | ||
Less: non-controlling interests' share of actual capex and leasing costs | 106 | 130 | (24) | ||
(v) DUP Compensation Expense | 1,648 | 1,658 | (10) | ||
(vi) Debt repayment costs | — | 30 | (30) | ||
(vii) Net adjustments for equity accounted investments | (243) | (200) | (43) | ||
Adjusted Funds From Operations ("AFFO") (1) | $ 47,450 | $ 38,024 | $ 9,426 | ||
AFFO per Unit - Basic | $ 0.21 | $ 0.21 | $ — | ||
AFFO per Unit - fully diluted (3) | $ 0.21 | $ 0.20 | $ 0.01 | ||
Distributions per Unit - Basic | $ 0.20 | $ 0.20 | $ — | ||
Adjusted weighted average units outstanding: (2) | |||||
Basic | 226,324,317 | 184,349,757 | 41,974,560 | ||
Diluted (3) | 237,987,041 | 208,067,475 | 29,919,566 | ||
Notes | |||||
(1) FFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. 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 | |||||
(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 |
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 | |||||
Expressed in thousands of Canadian dollars | Three months ended | ||||
2022 | 2021 | Var % | |||
Same property NOI (1) | |||||
Canada | $ 15,796 | $ 15,933 | (0.9) % | ||
Brazil | 11,770 | 10,709 | 9.9 % | ||
Europe | 14,712 | 15,018 | (2.0) % | ||
Vital Trust - | 21,945 | 21,216 | 3.4 % | ||
Australia | 2,118 | 2,026 | 4.5 % | ||
Same property NOI (1) | $ 66,341 | $ 64,902 | 2.2 % | ||
Impact of foreign currency translation on Same Property NOI | — | 1,646 | |||
Straight-line rental revenue recognition | (105) | 87 | |||
Amortization of operating leases | 359 | 610 | |||
Lease termination fees | — | 31 | |||
Other transactions | (641) | (589) | |||
Developments | 3,274 | 2,803 | |||
Acquisitions | 7,431 | 356 | |||
Dispositions | (3) | 310 | |||
Intercompany/Elimination | 411 | 408 | |||
NOI | $ 77,067 | $ 70,564 | 9.2 % | ||
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 | ||||||
Q1 2022 | Q4 2021 | |||||
Total Assets | $ 7,591,115 | $ 7,064,401 | ||||
less: Total liabilities | (3,799,727) | (3,540,827) | ||||
less: Non-controlling interests | (1,170,612) | (1,131,443) | ||||
Unitholders' equity | 2,620,776 | 2,392,131 | ||||
Add/(deduct): | ||||||
(40,012) | (41,671) | |||||
Deferred unit plan liability | 25,821 | 26,223 | ||||
Deferred tax liability | 420,777 | 374,845 | ||||
less NCI | (100,360) | 320,417 | (91,052) | 283,793 | ||
Financial instruments - net | (6,466) | 22,602 | ||||
less NCI | 601 | (5,865) | (15,363) | 7,239 | ||
Exchangeable Units | 23,547 | 23,581 | ||||
Global Manager valuation adjustment | 576,318 | 576,318 | ||||
Other | — | — | ||||
Net Asset Value ("NAV") | $ 3,521,002 | $ 3,267,614 | ||||
Adjusted Units Outstanding (000s)- period end (1) | 239,001 | 225,837 | ||||
NAV per Unit | $ 14.73 | $ 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 |
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 | ||||
2022 | 2021 | Variance | |||
Base fee | $ 7,893 | $ 6,715 | $ 1,178 | ||
Incentive and performance fee | 4,799 | 6,917 | (2,118) | ||
Trustee fees | 269 | 226 | 43 | ||
Project and Acquisition fees | 3,293 | 1,920 | 1,373 | ||
Other fees | 3,118 | — | 3,118 | ||
Total Management Fees | $ 19,372 | $ 15,778 | $ 3,594 | ||
less: inter-company elimination (1) | (13,325) | (12,222) | (1,103) | ||
Consolidated Management Fees (2) | $ 6,047 | $ 3,556 | $ 2,491 | ||
add: fees charged to non-controlling interests | 8,852 | 8,246 | 606 | ||
Proportionate Management Fees (3) | $ 14,899 | $ 11,802 | $ 3,097 | ||
Notes | |||||
(1) Management fees charged to | |||||
(2) Represents the reported consolidated management fees. | |||||
(3) See Performance Measurements in the REIT's MD&A. |
SOURCE
© Canada Newswire, source