Northwest Healthcare Properties Real Estate Investment Trust Reports First Quarter 2025 Results

Toronto, Ontario--(Newsfile Corp. - May 14, 2025) - Northwest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) (the "REIT" or "Northwest"), a leading owner and operator of healthcare real estate infrastructure in North America, Brazil, Europe, and Australasia, announces results for the three months ended March 31, 2025.

"We entered 2025 with a clear plan – and our first quarter results reflect meaningful execution across all fronts," said Craig Mitchell, CEO of Northwest. "We improved key financial and operating metrics, including AFFO per unit, reduced our payout ratio, and materially advanced our capital recycling strategy with over $260 million in non-core asset sales completed year to date. At the same time, we strengthened our balance sheet through proactive debt repayment and refinancing initiatives, lowering our leverage and extending our debt maturity profile. With enhanced liquidity and greater financial flexibility, we remain well-positioned to deliver on our objectives and create long term value for our unitholders."

Q1 2025 Highlights
Highlights for Q1 2025 and events subsequent to the quarter are set out below:

• Revenue from investment properties was $111.6 million for Q1 2025, a decrease of 16.4% from Q1 2024 driven by the disposition of non-core assets during 2024 and 2025 to date, partially offset by strong same property revenue growth;

• Same Property Net Operating Income ("SPNOI") increased by 4.5% to $73.8 million for Q1 2025, over Q1 2024, reflecting steady growth across all regions (see Exhibit 1);

• General and administrative expenses, excluding unit-based compensation and employee termination benefits and associated costs, were $11.9 million for Q1 2025, a decrease of $1.1 million from Q1 2024, primarily due to headcount reduction and simplification of the REIT's business;

• Net loss for Q1 2025 was $15.5 million compared to net loss of $38.6 million in Q1 2024, primarily due to a decrease in mortgage and loan interest expense, lower fair value losses on investment properties, and higher fair value gains on revaluation of financial instruments, partially offset by lower net operating income as a result of disposition activity;

• Adjusted funds from operations ("AFFO") was $0.10 per unit in Q1 2025 as compared to $0.10 per unit in Q4 2024 and $0.09 per unit in Q1 2024 ($0.11 per unit including the impact of interest rate caps, which expired in the first quarter of 2024), resulting in an AFFO payout ratio of 92% in Q1 2025 compared to 92% in Q4 2024 and 105% in Q1 2024 (80% in Q1 2024 including impact of interest rate caps) (see Exhibit 2);

• During Q1 2025, the REIT recorded fair value losses on investment properties of $46.3 million, compared to $71.7 million in Q1 2024. The fair value losses were mainly attributable to changes in valuation parameters, incorporating market evidence when available and rent reviews. The REIT's portfolio cap rate as at March 31, 2025 is 6.3%;

• The REIT's leverage was 50.4% at the end of Q1 2025, as compared to 50.0% as at December 31, 2024. Including the impact of subsequent events, including the sale of the REIT's interest in Assura PLC (see Disposition Activity and Assets Held for Sale), post-quarter end leverage decreases to 48.6%; and

• Strong operating performance in Q1 2025 was supported by a stable, long-term lease maturity profile with a weighted-average lease expiry ("WALE") of 13.6 years and a global portfolio occupancy rate of 96.5%.

Operations and Leasing

The REIT's consolidated SPNOI increased by 4.5% in Q1 2025 compared to the prior year period, driven mainly by inflationary rent adjustments, rentalised capital spend, and improved recoveries reflecting steady growth in the REIT's underlying lease income. Performance was further supported by a long-term weighted-average lease expiry ("WALE") of 13.6 years. Regionally, SPNOI increased by 4.1% in North America, 4.8% in Brazil, 2.1% in Europe, and 5.3% in Australasia (see Exhibit 1).

In Q1 2025, the REIT completed 280,000 square feet of new, renewal and early leasing, achieving a strong renewal rate of 89%.

During the quarter, the REIT and Healthscope Limited ("HSO") reached a partial rent deferral arrangement for the period from March 1, 2025 to May 11, 2025 and since quarter end the REIT has agreed to provide HSO with a further partial rent deferral until July 18, 2025, totaling $2.3 million (at the REIT's proportionate share). HSO is the second largest private hospital operator in Australia and is the REIT's second largest tenant, occupying 12 properties and accounting for 5.4% of the REIT's proportionate revenues, which takes into account the REIT's ownership level of 30%. HSO also advised the REIT that it has reached an agreement with its lender syndicate to provide time and enhanced liquidity to explore a sale or recapitalization of the business. Upon expiry of the initial lender forbearance period, on May 11, 2025, HSO has committed to an orderly transition of control to lenders, who will continue the sale process while HSO hospitals continue to operate. The deferred rent is subject to interest at 8% per annum and further conditions to protect collectability. As of today, all rent owing to the REIT from HSO (other than the rent subject to the agreed upon deferral arrangements) has been paid and HSO continues to meet all other lease obligations.

Disposition Activity and Assets Held for Sale

The REIT's capital recycling during the quarter, including subsequent events, has generated over $260 million of proceeds as detailed below.

In Q1 2025, the REIT completed the sale of three income producing properties and one development property in North America for total proceeds of $46.9 million. The proceeds were used to repay directly attributable debt and outstanding balances on credit facilities.

During the quarter, the REIT also fully exited its investment in Australian unlisted securities, generating $4.1 million in proceeds through the sale or redemption of all remaining units.

As at March 31, 2025, the REIT held three income producing properties and two development properties totaling $58.8 million classified as assets held for sale.

Subsequent to March 31, 2025, the REIT sold its shares in Assura through two on-market transactions for total proceeds of $209.3 million (£114.6 million) resulting in a full divestment of the shares. The REIT's investment in Assura was acquired as consideration for the REIT's disposition of its UK portfolio in August 2024 at a value of $177 million (£100 million), resulting in a gain on disposition of approximately $32.3 million (£14.6 million). Proceeds were used to repay related debt and corporate facilities.

Financing Activity

On February 5, 2025, the REIT received an investment-grade issuer credit rating of BBB(low) with a Stable Trend from Morningstar DBRS. On February 18, 2025, the REIT successfully completed its inaugural senior unsecured debenture offering totaling $500.0 million. The offering included (i) $200.0 million of 5.02% Series A senior unsecured debentures due on February 18, 2028; and (ii) $300.0 million of 5.51% Series B senior unsecured debentures due on February 18, 2030. The REIT used the proceeds from the offering to repay outstanding debt including the REIT's US term debt, the Series G Convertible Debentures, and corporate facilities with a weighted average interest rate of 7.55%.

During and subsequent to quarter end, the REIT also amended, extended or refinanced several debt facilities including its revolving credit facility and Australasian term loans, further addressing 2025 and 2026 maturities.

These financing activities meaningfully enhanced, the REIT's capital structure, reducing its economic weighted average interest rate to 5.00% from 5.52% at December 31, 2024, and increased its weighted average term to maturity of outstanding debt to 3.3 years from 2.6 years at December 31, 2024.

As of today, the REIT has $95.7 million of 2025 maturities remaining, which consists of mortgages expected to be repaid or renewed in the ordinary course. The REIT currently has approximately $268 million of available liquidity, consisting of cash and the unused portion of its credit facilities.

Selected Operating and Financial Information:

(1) FFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. See Performance Measurement in the REIT's MD&A. The adjustments to determine FFO and AFFO have been presented on a proportionate basis. See "Non-IFRS Financial Measures", Exhibit 1 and Exhibit 2.

(2) Included in FFO and AFFO for the three months ended March 31, 2024, is $6.7 million related to interest rate cap derivative arrangements, which matured during the three months ended March 31, 2024, the impact of which is $0.02 per unit.

(3) For the three months ended March 31, 2025, FFO and FFO per unit excludes $1.9 million of accelerated amortization of deferred financing charges due to the early repayment of debt using proceeds from the issuance of the $500 million senior unsecured debentures in February 2025. FFO and FFO per unit including accelerated amortization of deferred financing charges is $24.2 million or $0.10 per unit, respectively.

2024 Sustainability Report

Today, the REIT has released its 2024 Sustainability Report, highlighting significant progress of sustainability activities and advancing the REIT's ESG leadership in global healthcare real estate. The report emphasizes Northwest's commitment to long-term ESG goals through achievements in energy efficiency, climate action, tenant engagement, and community impact. Key initiatives include energy audits across all regions, award-winning green building certifications, expanded air quality and health measures, and enhanced tenant and employee programs.

The REIT continues to embed sustainability at the core of its strategy, creating resilient healthcare infrastructure and long-term value for stakeholders. For more information and to read the report, please visit the Sustainability Page on our website.

Corporate Presentation

Download the Company's Updated Corporate Presentation:
https://www.nwhreit.com/investors/unitholders/presentations

Q1 2025 Results Conference Call

The REIT will be hosting its Q1 2025 conference call on Thursday, May 15, 2025, at 10:00 a.m. ET. The dial-in numbers for the conference call are as follows:

North America (toll free): 1-833-752-3625

Overseas or local (Toronto): 1-647-846-8435

Link to audio webcast: https://www.gowebcasting.com/13996

A replay will be available until May 22, 2025, by accessing:

US/Canada (toll free): 1-855-669-9658

International: 1-412-317-0088

Replay Access Code: 7425512

Annual Meeting of Unitholders

Northwest will hold its 2025 Annual Meeting of Unitholders virtually on May 27, 2025, at 2 p.m. ET. To attend the virtual meeting, register at www.viewproxy.com/northwest/2025.

About Northwest

Northwest provides investors with access to a portfolio of high-quality international healthcare real estate infrastructure comprised as at May 14, 2025, of interests in a diversified portfolio of 169 income-producing properties and 15.8 million square feet of gross leasable area located throughout major markets in North America, Brazil, Europe, and Australasia. The REIT's portfolio of medical outpatient buildings, clinics, and hospitals is characterized by long-term indexed leases and stable occupancies. Northwest leverages its global workforce in eight countries to serve as a long-term real estate partner to leading healthcare operators. For additional information please visit: www.nwhreit.com.

Non-IFRS Measures

Some financial measures used in this press release, such as SPNOI, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, and Proportionate Investment Properties 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 March 31, 2025, in the "Performance Measurement" and "Results from Operations" sections. The MD&A is available on SEDAR+ at www.sedarplus.ca.

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 words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe", "normalized", "contracted", or "continue" or the negative thereof or similar variations. Forward-looking statements in this press release may include statements concerning HSO's rent deferral arrangements. the ongoing operation of HSO's hospitals, the impact of its sustainability efforts, future debt repayment and renewal, and the REIT being well positioned to deliver on its objectives and create long term value for unitholders. 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 MD&A 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 the continued operation of HSO's hospitals and HSO's ability and willingness to pay its deferred rent in accordance with its agreements; (ii) the REIT's properties continuing to perform as they have recently, (iii) various general economic and market factors, including exchange rates remaining constant, local real estate conditions remaining strong, and interest rates remaining at current levels or decreasing, (iv) the availability of equity and debt financing to the REIT and the REIT's ability to refinance, or extend the maturity of, its existing debt, (v) the REIT's commitment to sustainability objectives and the impact thereof, and (vi) savings resulting from the REIT's workforce reduction initiatives not being reallocated to other matters. 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 SEDAR+ at www.sedarplus.ca.

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.

Exhibit 1 - 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. SPNOI is more fully defined and discussed in the REIT's MD&A (see "Performance Measurement").

(1) Same property NOI is a non-IFRS measure, defined and discussed in the REIT's MD&A.

Exhibit 2 - Funds From Operations and Adjusted 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 (loss) (computed in accordance with IFRS) as detailed below. FFO is more fully defined and discussed in the MD&A (see "Performance Measurement" and "Funds From Operations").

For the three months ended March 31, 2025, FFO was $24.2 million including accelerated amortization of deferred financing costs as a result of early repayment of the underlying debt, using proceeds from the senior unsecured debentures. Excluding the impact of $1.9 million of accelerated amortization of deferred financing costs, FFO for the three months ended March 31, 2025 is $26.1 million or $0.11 per unit.

(1) FFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. See Performance Measurement in the REIT's MD&A. The adjustments to determine FFO and AFFO have been presented on a proportionate basis.

(2) Included in FFO for the three months ended March 31, 2024 is $6.7 million related to premiums paid in connection with interest rate cap derivatives, the impact of which is $0.02 per unit.

(3) Diluted units include the impact of vested deferred trust units and the convertible debentures, that would have a dilutive effect upon conversion.

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 MD&A (see "Performance Measurement" and "Adjusted Funds From Operations").

(1) FFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. See Performance Measurement in the REIT's MD&A. The adjustments to determine FFO and AFFO have been presented on a proportionate basis.

(2) Included in FFO and AFFO for the three months ended March 31, 2024 is $6.7 million related to premiums paid in connection with interest rate cap derivatives, the impact of which is $0.02 per unit.

(3) Diluted units include the impact of vested deferred trust units and the convertible debentures, that would have a dilutive effect upon conversion.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/252128

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