Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Northwest Healthcare Properties Real Estate Investment Trust (NWHUF, Financial) reported a 5% increase in same property net operating income compared to the same period last year.
- The portfolio occupancy rate is high at 96%, with a weighted average lease expiry of 13.4 years, and over 86% of leases are subject to rent indexation.
- The REIT successfully completed the sale of its UK portfolio, generating $885 million in gross proceeds, which were used to repay debts.
- The company has addressed more than 80% of its 2025 debt maturities through asset sales and refinancing initiatives, reducing overall debt exposure.
- The REIT achieved a global rent collection rate of nearly 99% and executed 369,000 square feet of leasing deals at a retention rate of 88%.
Negative Points
- Q3 2024 revenue from investment properties decreased by 12% over the prior year due to the disposition of non-core properties.
- Q3 2024 FFO per unit was $0.11, down from $0.14 per unit in Q3 2023, although it was an improvement from $0.09 per unit when excluding interest rate cap impacts.
- The REIT's general and administrative expenses included $3.8 million in termination benefits due to a 16% workforce reduction.
- The proportionate value of the REIT's investment properties decreased from $5.2 billion to $4.3 billion due to asset disposals and fair value adjustments.
- The REIT's payout ratio remains high at 99%, indicating limited room for dividend growth or reinvestment.
Q & A Highlights
Q: Can you explain the G&A expense ratio calculation and whether it's done on a proportionate or consolidated basis?
A: The G&A expense ratio is calculated by taking G&A expenses as reported, excluding non-cash compensation and severance, subtracting base management fees, and dividing by rental revenue. This is done on a consolidated basis.
Q: What is the current corporate liquidity, and how does it compare to the $125 million convertible debenture?
A: The current corporate liquidity is $104 million, which includes existing credit facilities and cash. Additionally, there are over $200 million of assets in various stages of disposition expected to close in the next couple of quarters. This liquidity does not include Vital and is a corporate metric.
Q: What is the leverage attached to the assets held for sale, and what options are available if liquidity is not generated?
A: The leverage attached to the assets held for sale is less than 50%. There are multiple options available, including refinancing in the debt markets, utilizing investments in securities, and leveraging existing credit facilities. The company is confident in its ability to manage liquidity needs.
Q: Has there been any progress in the Brazilian portfolio disposition, and what is the current focus?
A: The company has extended the lease for Sabara hospital and listed it for sale with CBRE to test the market. The focus is on understanding local market depth and breadth while being prepared for all options.
Q: What is the expected organic growth rate for North America, excluding tenant introductions?
A: The normalized organic growth rate for North America is estimated to be between 3.5% and 4%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
