Northwest Healthcare Properties Real Estate Investment Trust Announces Closing Of $765 Million U.S. Portfolio Acquisition

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NorthWest Healthcare Properties Real Estate Investment Trust (the (TSX: NWH.UN) (“NorthWest” or the “REIT”), Canada’s leading global diversified healthcare real estate investment trust, announced today the closing of its previously announced $765 million (US$601.9 million) acquisition of 27 cure-focused healthcare properties located in the United States is now closed (the “U.S. Portfolio”).

The acquisition is the REIT’s first in the United States. The U.S. Portfolio comprises 27 properties including 7 hospitals, 5 micro-hospitals, and 15 MOBs totaling 1.2 million square feet. The portfolio is 97% occupied, with a weighted average lease expiry of 10.7 years and is geographically diversified across 10 states with approximately 60% of NOI coming from top 20 US MSAs with a focus in the Greater Chicago Area and Sunbelt States. The portfolio includes an attractive mix of single-tenant (78% of NOI) and multi-tenant (22%) properties and 91% of NOI is either triple or quadruple net.

As funded, the transaction is expected to be immediately accretive to the REIT’s AFFO per unit. As the REIT integrates the US Portfolio and expands on its market entry strategy over the course of 2022 it intends to recapitalize the acquisition with a new co-investment partner.

About NorthWest Healthcare Properties Real Estate Investment Trust

NorthWest is a global real estate investor and asset manager focused on properties and partnerships at the intersection of healthcare, knowledge and research. Founded in 2004 and publicly traded since 2010, NorthWest (TSX: NWH.UN) is a real estate investment trust that owns and operates a $10 billion portfolio of 224 high quality healthcare properties across Canada, the United States, Brazil, the UK, Germany, the Netherlands, Australia, and New Zealand. With more than 300 professionals globally, operating in 7 countries, NorthWest brings a global view, local execution capabilities, and a long-term ownership strategy which allows it to serve as a real estate partner of choice to leading healthcare operators around the world.

 

Source: HREI

Investors Plan To Put More Money Into Healthcare

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The I-word, inflation, is bad enough. But then there’s the R-word: recession. And some forecasters see the potential coming forward, according to the latest CNBC Fed Survey.

Not that it’s a given, but the trifecta of inflation, more hawkish Fed monetary policy, and issues coming out of Russia’s invasion of Ukraine have increased the bet to a 33% chance of one in the next 12 months.

That may be what a new CBRE survey picked up on. Distributed to “approximately 500 of healthcare real estate’s most influential healthcare real estate trusts (REITs), institutional healthcare investors, private capital investors, and developers throughout the United States” and responses coming from about a fifth of them, 85% believed that the healthcare real estate industry is “recession resistant.”

“Survey results suggest a very significant increase in capital allocated to healthcare real estate for 2022,” the report said. “In 2021, the total capital allocation provided by respondents in our survey was $10.9 billion, while actual transaction volume for 2021 ended at nearly $16 billion. This year, the total capital allocation from those unique firms who provided a figure (65 out of 86 firms) totaled $17.1 billion, which represents a 57% increase compared to 2021.”

This year, the firms that gave a capital allocation reported $17.1 billion going into 2022, a 57% increase. Given that, CBRE expects investors to allocate at least $25 billion in capital to the sector. Market caps are likely to drop with the capitol going in, and 96% of respondents expected cap rates on Class A on-campus to be below 6% this year, while 79% anticipate the average cap rate will drop below 5.5%.

“This can be ascribed to the ongoing increase in demand for high-quality healthcare real estate, the resiliency of healthcare real estate during the pandemic, and new funding sources actively exploring alternatives to traditional real estate products, such as office, industrial, multifamily and retail,” the report reads.

Similarly, the life science sector is also tremendously strong, with record level venture funding of $32.5 billion in 2021 and in 2022 40% of respondents thinking that life sciences properties, especially those housing biotech or pharma, should see a cap rate below 5%.

As might be expected from these numbers, a big majority—84%—plan to be net buyers of healthcare real estate, including all healthcare REITs and institutional investors that responded. Only 26% of current owners will be net sellers. With that much demand and low interest in dropping net ownership, that describes a coming challenge to obtain additional properties, meaning likely higher prices.

 

Source: GlobeSt.

Dallas-Based Big Sky Forms $1 Billion Joint Venture With Off-Shore Institutional Investor

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Big Sky Medical Real Estate, a Dallas-based healthcare real estate investment management firm led by well-known industry veteran Jason L. Signor, announced this morning that it has formed a $1 billion joint venture with “an off-shore, new-entrant, institutional investor.”

The new venture, which seeks to acquire medical office buildings and surgery centers, was seeded by a $400 million-plus MOB portfolio that was aggregated by the Big Sky Medical platform during the past year.

The formation of the JV was facilitated by Big Sky and the Healthcare Capital Markets and International Capital Markets teams of Newmark Group Inc.

 

Source: HREI