Northwest Healthcare Properties is a leading owner and operator of healthcare real estate properties located throughout major markets in Canada, Brazil, Germany, Australia, and New Zealand. It is the largest non-government owner and manager of medical office buildings and healthcare facilities in Canada.
Australia and Asia comprise 59% of Northwest’s total NOI, followed by Canada (17%), Brazil (14%) and Europe (10%). The REIT operates nine offices in five countries worldwide. It serves healthcare tenants and provides them holistic services ranging from the sale of a medical office building to leasing new space to individual professional requirements or addressing other evolving healthcare needs.
Northwest’s portfolio consists of high-quality healthcare real estate comprising of 149 properties and over 10 million square feet of gross leasable area. Its international portfolio is worth $6.2 billion. Its portfolio typically consists of medical office buildings, clinics, and hospitals characterized by long term leases and stable occupancy rates. By assets, hospitals and healthcare facilities constitute 65% of Northwest’s total assets.Investment Data
- Opportunity Score: 39
- Ticker: TSE:NWH.UN
- Sector: Real Estate
- Industry: REIT - Healthcare Facilities
- Market Cap: 2.54B
- P/E: 8.41
- Dividend Yield: 6.08%
- Payout Ratio (Earnings): 50.96%
- Canadian Dividend Aristocrat: NO
- Chowder Score: Members Only
- Dividend Growth: Members Only
- Dividend Growth Fit: 1/10
- Dividend Income Fit: 6/10
Revenue Growth & Market Exposure
Over the years, Northwest Healthcare REIT has developed leading tenant relationships, strategic partnerships with leading healthcare operators and operational expertise. The REIT has developed strong partnerships with leading healthcare operators in international markets as well and has built leading management platforms in large global cities. Healthscope Ltd., Rede D’Or, Healthe Care, Epworth Foundation are a few of Northwest Healthcare REIT’s leading tenants by gross rent. Healthcare tenants are generally reluctant to move their locations and hence sign long-term leases which leads to predictable and steady rental income.
Northwest Healthcare REIT has been growing through acquisitions and recently completed the acquisition of a portfolio of 11 high-quality hospitals. Northwest’s merger with NorthWest International back in 2015, created a leading global diversified healthcare real estate investment trust and consolidated its position as a strong global player. Northwest Healthcare REIT keeps on entering into strategic transactions from time to time which has expanded its global reach and extensive partnerships. Its recently completed Healthscope acquisition will deepen its relationship with Australia’s second largest private operator. The acquisition is expected to be immediately accretive to AFFO per unit. To date, the REIT has closed or committed to $1.4 billion of accretive acquisitions at a weighted average cap rate of 5.1%.
Northwest is well positioned to benefit from its geographically diversified portfolio of core healthcare real estate assets in stable and growing international markets. A quality portfolio of healthcare real estate infrastructure assets provides avenues for future growth. Its portfolio is characterized by long term indexed leases and stable occupancies of more than 97%. Northwest REIT has $413 million in development pipeline.
Northwest is favorably placed to leverage its leading international platform and existing assets to drive meaningful fee growth. Significant global pipeline and deep operator relationships should also support future revenue growth.
Northwest Healthcare REIT has successfully maintain its dividend payouts ratio at 33% over the last three years. The REIT pays monthly cash distributions. Its FFO payout ratio stands near 43% and it sports an attractive dividend yield of almost 7%. Its funds from operations have grown by 13% CAGR in the past five years.
Healthcare real estate is an attractive long-term investment, given its highly defensive nature. Aging populations and rising healthcare expenditures are favorable industry trends supporting future growth. Northwest’s leading position in the healthcare REIT positions it better for significant consolidation opportunity and an opportunity to scale capital relationships. Its highly scalable management platform should continue to drive operating leverage. Northwest REIT’s properties are marked by strong and stable occupancies (~97%) and long weighted average lease term expiry of about 12 years making its cash flow generation very stable.
Northwest has been expanding the length and breadth of its global footprint and strategic partnerships with key international players worldwide which will further help to consolidate its position in leading global markets. Few of the exciting growth opportunities include the recently completed Healthscope acquisition and new relationships in medical office and hospital segments in Europe. Supportive healthcare trends, strong relationships, and established local operating platform positions the REIT well to execute on these growth opportunities at scale.
Healthcare is a recession proof industry with high demand despite the economic conditions. Northwest Healthcare Properties competes directly with Chartwell Retirement Residences which is an owner and operator of a complete range of seniors housing communities, providing long term care, assisted living, independent living, and memory care in Canada.
Healthcare tenants have specialized real estate needs and Northwest Healthcare Properties REIT is well positioned to provide customized real estate solutions to the healthcare industry on a global scale. Its geographically diversified portfolio of core healthcare real estate assets in stable and growing international markets, high quality tenant base and strategic relationships with leading healthcare operators are strong enablers of future growth.
The international focus and acquisition approach allows for growth while maintaining income from specialized tenants in the medical industry.