NorthWest Healthcare Properties REIT Q4 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Maybe just sticking to the U.S. portfolio expansion, what's kind of -- I think it was noted about what 90% of the income is indexed. What's been the kind of rent growth in the portfolio over the past couple of years in terms of underwriting? What type of rent growth are you looking for going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 15, 2022 / 2:00PM, NWH_u.TO - Q4 2021 NorthWest Healthcare Properties REIT Earnings Call

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Got it. Perfect. Okay. And then within the portfolio, is there any value attributable to kind of development or redevelopment upside? Or is the valuation essentially stabilized valuation?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Right. Okay. And then what would the average debt cost to be on the property level debt?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : And the term for that?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Right. Perfect. Okay. That's what I was looking for. So call it a 250-ish kind of spread to acquisition cap rate?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. Paul, your comment on kind of bringing a JV partner in it, it sounded like the partner that you're thinking of bringing any specific to the transaction as opposed to kind of a springboard partner for a much bigger kind of U.S. JV fund, if I can call it that. Is that a fair assessment?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Got it. And just also, what would make this transaction kind of discrete in your terms?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then I guess in terms of deciding upon this portfolio given the market liquidity which you highlighted presumably, there is other opportunities kind of as the starter portfolio. Like what was it in particular, if you have to point to one thing more that in particular, that really attracted this portfolio over others in terms of deciding that this was the first one to go in?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Perfect. Okay. That makes sense. And then I guess my last question or area of focus part. I just want to clarify your comments on inflation, which, as you pointed out, has been very topical recently globally. You mentioned in terms of like what expectations. I just want to clarify that you kind of highlighted CPI at 5%, historically at 2%, and you think that rents could increase [about] 70% of the excess. So are you saying that like the expected rent growth in '22 should be something closer to 4%, am I understanding that correctly?

Question: Mario Saric - Scotiabank Global Banking and Markets, Research Division - Analyst : Perfect. And you probably mentioned this in prior calls, however, in terms of timing, like, let's say, the CPI is 4% in Q4 '21. Generally, is there a time lag between when you start to see that in your leases across your geographies? Or is it fairly instantaneous?

Question: Pammi Bir - RBC Capital Markets, Research Division - Analyst : Just really one question for me. It sounds like you're keeping your options open [to increase] the U.S. co-investment partners. But I'm just curious, are you down the path in terms of possibly having one in place? And then just given the -- I guess, the work that we saw with respect to the U.K. joint venture that obviously took more time. But I guess really the question and the second part of that question is, is there a good degree of confidence that you will have a partner in for 2022?

Question: Pammi Bir - RBC Capital Markets, Research Division - Analyst : That's good color. Just maybe as an add-on to that, the partner that you're speaking to, it sounds like it's pretty broad, would that include possible U.S. partners?