October 25, 2016
BRAZIL ACQUISITION UPDATE
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DISCLAIMER
No Reliance
This investor presentation does not purport to be comprehensive or to contain all the information that a recipient may need in order to evaluate the proposed transaction or an investment in
securities of NorthWest Healthcare Properties Real Estate Investment Trust (“NorthWest” or the “REIT”). No representation or warranty, express or implied, is given and, so far as is permitted
by law and no responsibility or liability is accepted by any person, with respect to the accuracy or completeness of the investor presentation or its contents. In particular, but without
limitation, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts contained
in this investor presentation. In giving this investor presentation, the REIT does not undertake any obligation to provide any additional information or to update this investor presentation or
any additional information or to correct any inaccuracies which may become apparent. This investor presentation has been prepared without reference to your particular investment
objectives, financial situation, taxation position and particular needs. If you are in any doubt in relation to these matters, you should consult your financial or other advisers. No securities
regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.
Forward-Looking Statements
This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including, without limitation, statements regarding the completion of the proposed
acquisitions, the offering, the financing of the acquisitions, the benefits of the proposed acquisitions (including the extent to which they will be accretive), initial cap rates, yield and pro forma
operating metrics regarding NOI, Adjusted NOI, occupancy, WALE, and tenant composition. The forward-looking statements in this news release are based on certain assumptions, including
that all conditions to completion of the proposed acquisitions and the offering will be satisfied or waived, the REIT will complete the proposed acquisitions and offering on the terms
anticipated, revenue and costs associated with the assets acquired in connection with the proposed acquisitions will meet the REIT’s expectations, significant additional costs will not have to
be incurred by the REIT, exchange rates remain consistent and the other assumptions referenced under the heading “Forward-Looking Information Advisory” in the REIT’s most recently filed
management’s discussion and analysis. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could
cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the risk that the proposed acquisitions and the offering will
not be completed on the terms proposed and the factors discussed under the heading "Risk Factors" in the REIT's annual information form available at www.sedar.com. There can be no
assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers,
therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as
expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or
otherwise.
Non-IFRS Financial Measures
Adjusted NOI and cap rate are not measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. Such measures are presented in this news release because
management of the REIT believes that such measures are relevant in interpreting the performance of the REIT’s assets. Such measures, as computed by the REIT, may differ from similar
computations as reported by other similar organizations and, accordingly, may not be comparable to measures reported by such other organizations.
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BRAZIL INVESTMENT: Rede D’Or Hospitals
REDE D’OR INVESTMENT OVERVIEW
The REIT continues to expand its relationship with the
leading private hospital operator in Brazil, Rede D’Or through
completing the acquisition of Hospital Ifor for C$27.9M
(R$65.9M) and the acquisition of Hospital Santa Helena for
C$127.1M ($R300.0M) in its existing markets of São Paulo and
Brasilia
25 year NNNN leases indexed to inflation
Total Year 1 Annual Rent of C$15.1M (R$35.6M)
Hospital Ifor: C$3.0M ($7.1M)
Hospital Santa Helena: C$12.1M (R$28.5M)
Healthcare Fundamentals continue to support growth and
consolidation in the world’s third largest private healthcare
market
On Strategy consistent with REIT’s focus on major markets,
core assets, and leading operators in Brazil
Enhances portfolio metrics with WALE rising 5.9% to 22
years, average building age decreasing ~3% to 20.5 years,
and improving overall portfolio quality
Funding with proceeds from existing resources and new long
term financing in respect of the Caxias Hospital for C$64.5M
(R$151.4M) with a term of 10 years and 7.0% interest rate
1. Gross value in C$ is based on the Q2-2016 Brazil Portfolio value (before securitization) of R$1,051M and is converted at the October 24, 2016 exchange rate of 0.42 CAD/BRL.
BRAZILIAN PORTFOLIO PROFILE
Q2/16 Current
Assets 5 7
GLA (millions of sq. ft.) 1.0 1.5
Beds 932 1,226
Gross Value (C$)1
445.6 600.6
Occupancy 100% 100%
WALE (years) 21 22
Gross rent (C$'s)140.8 55.9
W.A. cap rate 9.2% 9.3%
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BRAZIL INVESTMENT – COMPLETED: Hospital Ifor, São Paulo
Asset Profile:
Purchase Price C$27.9M (R$65.9M)
Location São Paulo City
Asset Type Orthopedic Hospital
Beds 60 Beds / 6 Surgical Suites
Rentable Area 150,000 sf
Occupancy 100%
Building Age ~1970
Lease Terms:
Cap Rate ~10.75%
CovenantInvestment Grade
> 2.0x rental coverage
Lease Term 25.0 years
Lease TypeNNNN
(Quadruple net)
Rental Growth 100% Inflation-indexed
Expansion Potential Yes
Timing July 2016
Hospital Ifor
IFOR ORTHOPEDIC HOSPITALSão Bernardo do Campo (São Paulo City)
Hospital Ifor is a Specialist Orthopedic Hospital located in the
City of São Paulo with 60 beds and 6 surgical suites, built in
the 1970’s.
Operated by Rede D’Or – long-term lease structure similar to
other NorthWest owned assets, with rent annually indexed to
100% of inflation
3rd Asset in São Paulo – continued scale and concentration in
the REIT’s existing Brazilian markets.
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BRAZIL INVESTMENT – COMPLETED: Hospital Santa Helena, Brasilia
Asset Profile:
Purchase Price C$127.1M (R$300.0M)
Location Brasília
Asset Type General Hospital
Beds 234 Beds / 16 Surgical Units
Rentable Area 360,000 sf
Occupancy 100%
Building Age ~2003
Lease Terms:
Cap Rate ~9.5%
CovenantInvestment Grade
> 2.0x rental coverage
Lease Term 25.0 years
Lease TypeNNNN
(Quadruple net)
Rental Growth 100% Inflation-indexed
Expansion Potential Yes
Timing October 2016
SANTA HELENA GENERAL HOSPITALBrasilia – North Federal District
Hospital Santa Helena
Hospital Santa Helena is a General Hospital located in the
Federal capital of Brazil in the north hospital sector district
with 234 beds and 16 surgical suites, built in 2003.
Operated by Rede D’Or – long-term lease structure similar to
other NorthWest owned assets with rent annually indexed to
100% of inflation
3rd Asset in Brasilia – continued scale and concentration in
the REIT’s existing Brazilian markets.
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52 Beds Cardiovascular Hospital Expiry: Dec-2038
Hospital Coração
345 Beds Leading Maternity
Hospital Expiry: Dec-2037
227 Beds General Hospital Expiry: Dec-2038
108 Beds Leading Children’s
Hospital Expiry: Sep-2024 Hospital Santa Luzia
Hospital Brasil
200 Beds General Hospital Expiry: Dec-2038
Hospital Caxias
Hospital Sabará
234 Beds General Hospital Expiry: Sep-2041
Hospital Santa Helena
60 Beds Orthopedic Hospital Expiry: Jul-2041
Hospital Ifor
Hospital Ifor
Hospital Santa Helena
BRAZIL: Portfolio Overview
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BRAZIL FINANCING: Update
Completed $159 million (R$376 million) term
financing on a 10-year fully amortizing basis at
an average interest rate of 7.8%+IPCA
Brazilian credit conditions improving as a result
of economic and political progress. Caxias
financing -125bp compared to HMB-1 with
significant institutional and retail demand.
Caxias and HMB 10-year financings have
significantly extended the weighted average
debt term to maturity from ~1.5 years to ~7
years
Remaining 2016 loan maturities to be repaid
resulting in interest cost savings, lower LTV
(~28%), and extended debt term to maturity of
~10 years* Includes HMB-1, HMB-2 and Caxias financings
10.3%
9.3%
7.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
+
W.A.Interest Rate
C$ million
Brazil Debt Maturity Schedule*
Recent Brazil Financing Activity Sub-total/ Brazil
HMB - 1 HMB - 2 Caxias average overall
Issue date 13-May-16 31-Aug-16 21-Oct-16 n.m. n.m.
Size ($R millions) 191.3 33.1 151.5 376.0 568.8
Size ($C millions) 81.1 14.0 64.2 159.3 237.6
Interest rate 8.3% + IPCA 9.1% + IPCA 7.0% + IPCA 7.8% + IPCA 8.6% + IPCA
LTV 65% 63% 40%
Remaining term (yrs) 9.5 9.5 10.2 9.8 6.9
62%
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Increasing Income and Margins
Industry Leading Operating Metrics
MARKET LEADERSHIP STRONG FUNDAMENTALS
# Company Beds Revenue (BRL)
Rede D‘Or 4,922 6.1B
2 IMPAR 1,500 1.5B
3 Albert Einstein 899 1.9B
4 Sírio Libanes 439 1.4B
5 A.C. Camargo 471 0.8B
11st
Investment Grade Covenant
Top 5 Private Hospital Operators
REDE D’OR PROFILE: Leading Private Hospital Operator in Brazil
Rede D’Or Fitch Rating – “AA” on a National Scale
Outlook: Positive
Key Highlights:
Rede D’Or announced a ~C$2.0B (R$5.0B) equity investment from the world’s leading institutional investors, The Carlyle Group (NASDAQ:CG) and GIC,
Singapore’s sovereign wealth fund, valuing the business at more than C$7.5BN on April 30, 2015.
Expects to invest ~C$600M (R$1.5B) to finance consolidation plans through acquisitions, new developments and expansions at existing facilities
Source: Rede D’Or Q4 2015 Institutional Presentation
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Canada52%
Brazil22%
Germany7%
Australasia19%
Hospitals37%
MOBs / Other63%
PORTFOLIO IMPACT: Increased Diversification
NOI BY REGION ASSET COMPOSITION
PORTFOLIO METRICS
Proforma Adjusted NOI by Region (including management fees)
increases to ~56% international / ~44% Canada
Proforma Portfolio is comprised of 139 healthcare properties (Q2-16: 120; GHC: 17; RDSL: 2)
Proforma Metrics on a fully consolidated basis are expected to improve to ~96.5% occupancy and ~11.0 year WALE
Recent acquisitions raise WALE in Brazil from ~21 years to ~22 years with NNNN leases
Proforma entity will increase by ~9% in Hospitals to 46%
Hospitals and to 54% MOB’s/Clinic’s on a proportionate basis.
Adj. NOI (Q2-16) Proforma NOI Proforma NOI
Note: Proforma for the Brazil transactions.
Adj. NOI (Q2-16)
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NWH REIT: Proforma Tenant Diversification
TOP 10 TENANTS BY GROSS RENT Q2-2016 (1) PROFORMA (2)
1. Gross rent has been adjusted to reflect the REIT’s 24.3% proportionate interest in Vital Trust, estimated gross rent from GHC at its 19.9% ownership interest as well as recording Hospital Sabara at its gross rent
(before financing).
2. Includes Brazil acquisitions of Hospital Ifor and Hospital Santa Helena.
1
2
3
6
7
8
9
10
4
5
Tenant Region% of Gross
Rent
Rede D'Or SL 15.6%
Healthe Care 3.9%
Bantrel Corporation 3.1%
CLSC/CSSS 2.9%
Hospital Sabara 1.9%
Shoppers Drug Mart 1.6%
Epworth Foundation 1.6%
Lawton’s Drug Mart 1.5%
Winnipeg Regional Health 1.4%
Healthscope 1.4%
Top 10 Tenants 39.2%
1
2
3
6
7
8
9
10
4
5
1010
A P P E N D I X –
BRAZIL
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Inflation is declining at a rapid pace
MARCO ECONOMIC INDICATORS
Brazil Currency has rebounded and stabilized
BRAZIL MACRO ENVIRONMENT: Path to Stabilization
Source: XE.COM for Currency charts and Trading Economics / IBGE for Brazil IPCA statistics
Key Highlights:
Political: New acting President Michel Temer to cut spending and rein in entitlements
Economy: Forecasts are for a return to GDP growth of 1.0% in 2017
Inflation: Forecasts are for 7.25% in 2016 and 5.40% for 2017
Currency: Currency has rebounded to 0.42 BRL/CAD, an increase of over 30% from the low of 0.32 BRL/CAD
Demographic: Total population is estimated at 205 million in 2015, an increase from 203 million the prior year
+30% appreciation
Stabilized Level at 0.40
Inflation Index:
- Trailing twelve months has
declined from 10.9% to 7.6%
- Past three months yielded 1.04%
of inflation, implying a 4.2%
annualized rate
Declining month by month
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Increasing Income
Aging Populations
During the 10 year period
between 2003-2014, the
middle class has grown from
37% to 56%.
Represents an addition of 47
million individuals to the
Brazilian middle class
In the working population
age group of 25 to 64,
there has been an
increase of 35 million
individuals
The group has increased
from 45% of the
population to 54%
STRONG FUNDAMENTALS
GLOBAL HEALTHCARE SPENDING
BRAZIL HEALTHCARE MARKET: Open to Foreign Investment
MARKET OVERVIEW
Key Highlights:
The world’s third largest private healthcare market has opened up to foreign investment since changes were enacted by the government in March 2015.
Since the opening of the legislation, global private equity players / sovereign wealth funds such as the Carlyle Group, GIC, TPG, and others have been
investing significantly in healthcare operators and even buying individual hospitals (operations + real estate).
Source: National Association of Private Hospitals (ANAHP) in Brazil and the Rede D’Or Q4 2015 Institutional Presentation.
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• Brasília is the federal capital of Brazil and is located in
the Federal District which is in the Central-West.
• Fourth largest city in Brazil and sixth largest
metropolitan area.
• Brasília is the largest city in the world that did not exist
at the beginning of the 20th century.
• As a master planned city, hospital zoning is limited and
there is a north and south hospital sector.
• Population
• 2.8 million (City)
• 4.1 million (Metro)
• GDP
• R$ 61,915 per capita
• Land Area
• 5,802 square kilometers
Brasília is the Federal Capital and has the highest GDP per capita in Brazil
CITY PROFILE: Brasilia
LOCATION
REGIONAL FACTS
Source: Wikipedia – Economy of Brasilia.
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São Paulo is the largest city in the Southern Hempishere of the Americas
CITY PROFILE: São Paulo
• São Paulo is the largest city in Brazil, the largest city in
the southern hemisphere of the Americas, and ranks
amongst the world's top 10 largest cities by population.
• Main financial, corporate and commercial center in Latin
America.
• Represents 12% of the total Brazilian GDP and 36% of
the total output of goods and services of the State of
São Paulo.
• Population
• 11.9 million (City)
• 20.9 million (Metro)
• GDP
• R$ 39,799 per capita
• Land Area
• 1,523 square kilometers
LOCATION
REGIONAL FACTS
Source: Wikipedia – Economy of São Paulo.
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