NorthWest Healthcare Properties REIT Q4 2024 Earnings Call Transcript

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

Question: Frank Liu - BMO Capital Markets - Analyst : First of all, congrats on achieving the investment-grade rating and the successful issuance. Kudos to you guys and my old colleague at DBRS Morningstar. Just with respect to the debt repay with the $500 million unsecured debentures, I wonder how much of those debt are related to 2026 maturities? I mean, you've got a good handle on 2025 maturities. I'm just wondering what's your plan with respect to the $800 million maturing in 2026?

Question: Frank Liu - BMO Capital Markets - Analyst : Thank you, Stephanie. I appreciate the color. I mean a lot of heavy lifting has been done and just focusing more on the operational side of things. I mean, there's a new disclosure introduced last quarter, I believe, on the renewals, you guys down on a year-to-date basis. Just looking at the 1 million square foot renewals during 2024. How does the renewal spread and renewal rate achieved compared to the historical norm? 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 10, 2025 / 6:00PM, NWH_u.TO - Q4 2024 NorthWest Healthcare Properties REIT Earnings Call

Question: Frank Liu - BMO Capital Markets - Analyst : Got it. For sure. Yeah, you guys have a lot of indexation, which is good to see. Yes. Just touching on your outlook, if you're -- if you can provide some color, SPNOI growth next year will be a similar range as 2024?

Question: Himanshu Gupta - Scotiabank - Analyst : So on asset dispositions, I think you mentioned around $200 million of pipeline. So is it mostly Assura? Or are you including any other noncore properties as well?

Question: Himanshu Gupta - Scotiabank - Analyst : That was my follow-up question, by the way, on Brazil. So thanks for answering that. Okay. So that's good. And then on the debt maturities, I think 2025 pretty much in the bag, except that mortgages left. On 2026, I think you did mention that some debt can be converted into unsecured debentures. So what debt maturities can you kind of tackle, which could be resolved through unsecured? 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 10, 2025 / 6:00PM, NWH_u.TO - Q4 2024 NorthWest Healthcare Properties REIT Earnings Call

Question: Himanshu Gupta - Scotiabank - Analyst : Got it. Okay. And then on Healthscope, thanks for providing the color on the call and the filings as well. So some deferred payment for, I think, 8 weeks or 10 weeks rather, I think you mentioned. There are also news articles around that the portfolio could be sold. Brookfield could put this in the market. The question is like what happens in that case? Are there provisions to restructure the leases to roll down rents on this asset?

Question: Himanshu Gupta - Scotiabank - Analyst : Got it, that's helpful. Okay, and maybe my last question is on the AFFO payout ratio. And I think you've done a remarkable job in the last few quarters, tackling the balance sheet. Now on the AFFO side, do you have any, I mean, thoughts on the AFFO payout ratio for this year as you realize some of the interest rate savings as well?

Question: Giuliano Thornhill - National Bank Financial, Inc. - Analyst : I just want to turn to kind of acquisition markets. With where rates are in cap rates, which one are you preferring the US geography or Canada? Because eventually, you are going to be in a position to allocate some of this capital that you release?

Question: Giuliano Thornhill - National Bank Financial, Inc. - Analyst : And so you envision or anticipate that closing in H2, the Assura deal?

Question: Giuliano Thornhill - National Bank Financial, Inc. - Analyst : And then the last question I had just on Brazil. I understand there's probably limited interest now, but do you still kind of view that as noncore and eventually that will be supposed of within your portfolio?

Question: Pammi Bir - RBC Capital Markets - Analyst : I just wanted to come back to Healthscope for a minute. I just want to clarify, is that $2 million -- on the $2 million of rent that was deferred, is that the only amount that will be deferred or can that figure grow?

Question: Pammi Bir - RBC Capital Markets - Analyst : Okay, and then can the -- I think the 10-week deferral period, can that be extended at all or?

Question: Pammi Bir - RBC Capital Markets - Analyst : Okay. And then you mentioned some protections in the leases like in the event of an HSO recapitalization of restructuring. So can you maybe just elaborate on what that implies or what you were referring to?

Question: Pammi Bir - RBC Capital Markets - Analyst : I see. So in the event that any other operator steps in to fill their shoes, there's no -- I mean, you can continue to collect the rent as it said?

Question: Pammi Bir - RBC Capital Markets - Analyst : So what is the coverage ratio? Or what can you sort of -- if you can provide a range, what is the coverage ratio on the leases with Healthscope as it stands at the moment? 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 10, 2025 / 6:00PM, NWH_u.TO - Q4 2024 NorthWest Healthcare Properties REIT Earnings Call

Question: Pammi Bir - RBC Capital Markets - Analyst : Sorry, you said it's 60%. It's current coverage is at 60%.

Question: Pammi Bir - RBC Capital Markets - Analyst : And is that where you are with some of the other operators across the portfolio?

Question: Pammi Bir - RBC Capital Markets - Analyst : Yes. And sorry, you said some of them are in the mid-30s, not the Healthscope ones but some of your other operators, yes. Okay.

Question: Pammi Bir - RBC Capital Markets - Analyst : Yeah, okay. Last one for me, just in terms of -- as you think about 2025, you mentioned a couple of hundred million of dispositions, including Assura, maybe that's a minimum number. Where would you ideally like to see leverage get to by the end of this year? And Craig, I know you may not be here to see it through, but in terms of your budgeting process, what are you thinking about?

Question: Dean Wilkinson - CIBC Capital Markets - Analyst : Two quick ones for me, Craig. Just on the Assura, I just wanted to confirm that your shares there are free for many lockups and in the event that KKR successful, that's a transaction you can support?

Question: Dean Wilkinson - CIBC Capital Markets - Analyst : Perfect. Nice and easy. And on the Healthscope, in the event that something changes in the ownership structure there, is there anything in the JV that would have some sort of either a drag along or shotgun or any other clauses that might get triggered that would give you either rights or hopefully not back you into a position?

Question: Charles Lazure - Mackenzie Investments - Analyst : Thanks for the update, that was super helpful and congrats on the strong quarter. I just wanted to talk a little bit more about the -- or get some more color on the insurers in Australia for other operators, and I kind of think we got it briefly, but just wanted to get more color the second operator is having these tough negotiations with the insurers, clearly, it's fair to assume that some of the other operators would also be in tough negotiation position. So I just want to see about -- get your view on kind of how the other operators are facing potential negotiations with those insurers?

Question: Charles Lazure - Mackenzie Investments - Analyst : Yes. That's super helpful. Appreciate it. And then just one more on my side. Just on -- going back to Brazil, again, obviously, you mentioned that you didn't get kind of values where you thought they should be priced at. But I just want to compare to book value for Brazil. Are these incredible bids were they all cash, cash and shares mix? Just want to get a sense of kind of where book values? How do you think they're fair?

Question: Charles Lazure - Mackenzie Investments - Analyst : Okay. And just for my benefit, have they sold -- have you sold assets in Brazil successfully thus far, in general?

Question: Charles Lazure - Mackenzie Investments - Analyst : Congratulations again on the strong quarter. 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 10, 2025 / 6:00PM, NWH_u.TO - Q4 2024 NorthWest Healthcare Properties REIT Earnings Call