Northwest Healthcare Properties is a leading owner and operator of healthcare real estate in major markets in Canada, Brazil, Germany, Australia and New Zealand. It is the largest non-governmental owner and administrator of medical office buildings and healthcare facilities in Canada.

Australia and Asia account for 55% of the total NOI in the Northwest, followed by the Americas (28%) and Europe (19%). The REIT operates in seven countries around the world and has a tenant base of over 2,000 high-quality healthcare companies. Northwest offers holistic services ranging from selling a medical office building to renting new space to meeting individual professional needs or meeting other evolving health needs.

Northwest’s portfolio consists of high quality healthcare properties with 189 properties and gross lettable space of over 15.5 million square feet. The portfolio is valued at $ 7.8 billion. The portfolio usually consists of medical office buildings, hospitals and health facilities, which are characterized by long-term leases and stable occupancy. By asset value, hospitals and health care facilities make up 58% of Northwest’s total net worth.

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Investment data

Sales growth and market exposure

Over the years, Northwest Healthcare REIT has built leading tenant relationships, strategic partnerships with leading healthcare operators, and operational expertise. The REIT has built strong partnerships with leading healthcare providers in international markets and established leading management platforms in major global cities.

Healthscope Ltd, Median, Rede D’Or, Healthe Care and Alberta Health Services are some of Northwest Healthcare REIT’s leading tenants based on gross rent. Healthcare tenants are generally reluctant to relocate and therefore sign long-term leases, resulting in predictable and stable rental income.

Northwest Healthcare REIT has grown steadily through acquisitions. The merger of Northwest with NorthWest International in 2015 created a globally leading, diversified investment fund for healthcare real estate and cemented its position as a strong global player. Northwest Healthcare REIT enters into strategic transactions from time to time, which has expanded its global reach and extensive partnerships. It focuses on the Cure segment of Healthcare Real Estate.

Northwest is well positioned to benefit from its geographically diversified portfolio of healthcare real estate in stable and growing international markets. The portfolio is characterized by long-term indexed rental contracts and a stable occupancy rate of more than 97%. Northwest REIT’s AUM has increased from just $ 3 billion in the past five years to $ 7.8 billion, up 20% year over year.

The REIT’s business qualified as a major service provider and 100% of its properties remained open during the pandemic, with over 80% of its tenants receiving government support. Northwest is well positioned to leverage its leading international platform and existing assets for significant fee growth. It focuses on European expansion and simplifying Australasia for future expansion. Northwest REIT had a robust acquisition and development pipeline of $ 414 million at the end of fiscal 2020.

Distributions

Northwest Healthcare REIT is a Canadian dividend aristocrat and has successfully increased its dividend payouts by 5.5% CAGR over the past five years. The REIT pays monthly cash distributions. The payout ratio is 38% and the dividend yield is 3.6%. Northwest has a proven track record of more than 10 years in shareholder return of 10% CAGR. Funds from Operations have also grown by 31% CAGR over the past five years.

Healthcare real estate is an attractive long-term investment because of its extremely defensive nature. Aging populations and rising healthcare spending are favorable industry trends that support future growth. Northwest’s leadership position in the healthcare REIT position is better for significant consolidation opportunity and an opportunity to scale capital relationships. Global healthcare real estate is valued at over $ 3 trillion. The REIT will also benefit from favorable global health forecasts such as $ 8 trillion in annual global health spending growing 4 to 7% annually.

Northwest’s highly scalable management platform should continue to increase operational leverage. The REIT is shifting towards investment grade metrics with management fees growth of 7.5% and AFFOPU growth of 1% + in 2020. The properties of the Northwest REIT are characterized by strong and stable occupancy (~ 97 %) and a long-weighted average expiry of the rental period of around 15 years, which make the cash flow generation very stable.

Northwest has expanded the length and breadth of its global presence and strategic partnerships with key international players around the world to further consolidate its position in leading global markets. Exciting growth opportunities include closing the Healthscope acquisition, completing a new $ 3 billion European joint venture, expanding geographically into the UK and simplifying the Australasian platform. Supportive health trends, strong relationships, and an established local operating platform position the REIT well to capitalize on these growth opportunities at scale.

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Note that REITs pay a distribution, not a dividend. Be aware of the tax differences.

competition

Healthcare is a recession-proof industry with high demand despite economic conditions. Northwest Healthcare Properties competes directly with Chartwell Retirement Residences, an owner and operator of a number of senior residential communities providing long-term care, assisted living, independent living and memory care in Canada.

Bottom line

Healthcare tenants have specific real estate needs and healthcare REITs are well positioned to benefit from growing trends such as population aging, consolidation and the introduction of new treatments. Northwest Healthcare Properties REIT is well positioned to provide bespoke real estate solutions to the healthcare industry worldwide.

The geographically diversified portfolio of real estate properties in the healthcare sector in stable and growing international markets, a high-quality tenant base and strategic relationships with leading healthcare operators are strong factors for future growth. A robust acquisition and development pipeline should continue to support future growth.

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