TORONTO, Dec. 10, 2019 (GLOBE NEWSWIRE) -- NorthWest Healthcare Properties Real Estate Investment Trust ("NorthWest" or the "REIT") (TSX: NWH.UN) announced today a public offering, on a "bought deal" basis, of 16,400,000 trust units (the "Units") at a price of $12.20 per Unit (the "Offering Price") representing gross proceeds of approximately $200.1 million (the "Public Offering"). The Public Offering is being made through a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets, and Scotiabank.
The REIT has also granted the underwriters the option to purchase up to an additional 2,460,000 Units to cover over-allotments, if any, exercisable in whole or in part anytime up to 30 days following closing of the Public Offering.
Concurrently with the Public Offering, the REIT has also entered into an agreement to sell 2,049,180 trust units to NorthWest Value Partners Inc. ("NWVP"), NorthWest's largest unitholder, on a non-brokered private placement basis at the Offering Price for gross proceeds of approximately $25.0 million (the "Private Placement", and together with the Public Offering, the "Offering"). NWVP currently holds an approximate 16.8% interest in NorthWest and is wholly-owned by Paul Dalla Lana, CEO of the REIT. Upon closing of the Private Placement, which is expected to occur in January 2020, NWVP will hold an approximate 16.2% effective interest in the REIT through ownership of trust units and Class B LP units (or approximately 15.9% assuming the exercise in full of the over-allotment option).
The REIT intends to use the net proceeds of the Offering to repay $191 million of corporate debt with a weighted average interest rate of approximately 6.4% and a weighted average term to maturity of approximately 2 years, as well as to expand its European platform through the acquisition of three properties (two clinics in Germany and one medical office building in the Netherlands) (the "Acquisition Properties") for a combined purchase price of approximately $68.5 million at a weighted average stabilized capitalization rate of approximately 5.8%.
Included in the corporate debt that will be repaid are the REIT's 5.25% convertible debentures maturing on September 30, 2020 with an outstanding balance of approximately $40.3 million and a conversion price of $14.20 per unit and the REIT's 5.50% Series D convertible debentures maturing on October 31, 2020 with an outstanding balance of approximately $52.8 million and a conversion price of $11.25 per unit.
The Acquisition Properties are 100% occupied with a weighted average lease term of approximately 23 years. The Acquisition Properties will be funded with proceeds from the Offering and new property specific mortgages totaling $44.0 million at a weighted average interest rate of 1.51% (10 year weighted average term to maturity). The acquisitions are expected to close by Q1 2020 and are subject to normal closing conditions.
Pro forma the Offering, the intended use of proceeds (including full redemption of both series of convertible debentures) and previously disclosed acquisition activity subsequent to Q3 2019, NorthWest's consolidated leverage is expected to be reduced by 300bps from approximately 53% as at Q3 2019 to approximately 50%. To the extent that any of the 5.50% Series D convertible debentures (which are currently in-the-money) are converted into trust units, the REIT's intention is to use proceeds from the Offering that were allocated to repay these convertible debentures to repay other corporate debt. Assuming that all of the Series D convertible debentures are converted into equity and an additional approximately $52.8 million of debt is repaid, the REIT's consolidated leverage would be reduced by a further 100bps to approximately 49% pro forma the Offering. The pro forma leverage level is consistent with the REIT's previously stated medium-term consolidated leverage target of 50%. Given the accretive nature of the Acquisition Properties and the cost of debt that will be repaid, the REIT does not expect any material dilution to its AFFO per unit.
As the REIT continues to execute on its capital recycling initiatives with its new and existing JV relationships, the REIT expects to continue to optimize its balance sheet and reduce its consolidated debt to GBV to approximately 45% and lower its net debt / EBITDA by approximately two times in the medium term (9 ? 12 months) organically.
The Public Offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange, and is expected to close on or about December 19, 2019. The Private Placement is expected to close shortly after closing of the Public Offering.
The Units issued under the Public Offering will be offered pursuant to the REIT's base shelf prospectus dated October 19, 2018. The terms of the Offering will be described in a prospectus supplement to be filed with securities regulators in all provinces and territories of Canada and may also be offered by way of private placement in the United States.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About NorthWest Healthcare Properties Real Estate Investment Trust
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 of interests in a diversified portfolio of 171 income-producing properties and 14 million square feet of gross leasable area located throughout major markets in Canada, 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 180 professionals across nine offices in five countries to serve as a long term real estate partner to leading healthcare operators.
This press release contains "forward-looking statements" within the meaning of applicable securities laws, including statements about the Offering and the proposed use of proceeds thereof, the expected closing of the Private Placement, the completion of the European acquisitions, stabilized capitalization rates, NWVP's expected ownership levels, the repayment of debt, and the pro forma and expected leverage levels following completion of the Offering and in the medium term. The forward-looking statements in this news release are based on certain assumptions, including without limitation that all conditions to completion of the Offering and the European acquisitions will be satisfied or waived, the European properties will perform as expected and additional equity capital will be obtained in the future. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the risk that the Offering and the European acquisitions will not be completed on the terms proposed, or at all or that other developments may arise that result in the REIT having to further increase its leverage. The statements in this news release are made as of the date of this release. Although the REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. A discussion of the risk factors applicable to the REIT is contained under the heading "Risk Factors" in the REIT's annual information form dated March 15, 2019, a copy of which may be obtained on the SEDAR website at www.sedar.com.
For further information, please contact Paul Dalla Lana, CEO at (416) 366-8300 x 1001.
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