TSX:NWH.DB.G - Post by User
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incomedreamer11on Nov 09, 2023 10:08am
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Scotia comments on result
Scotia comments on result
Q3 Glance: In-Line Q; No New Bad News = Good News
OUR TAKE: Neutral is the new Positive.
In line Q (so no surprises): Reported FFOPU of $0.14 versus Scotia estimate of $0.137 and consensus estimate of $0.140 (wide range $0.10-$0.18). Reported FFOPU fell ~7% on y/y basis in Q3 (looks like Q3/22 was re-classified). Based on the soft guidance from management, we expect ~20% y/y decline in 2024. So, FFOPU has still not bottomed out.
Strategic review update: as expected, no incremental information. So much has happened in the last few months (distribution cut, management change, potential bids, no UK or US JV formation etc. – see our previous note titled “Laying out cards on the table” for full details. In this note, we provided scenario analysis and mentioned $4.50 as the expected floor price.)
Operational portfolio performing well – and making progress on Balance sheet: SP NOI grew +3.7% y/y in Q3 (+3.3% YTD). WALT remains one fo the longest in our coverage at 13.2 years. With completion of convertible debt maturity date extension expected later this month, NWH will have addressed all corporate debt facilities maturing until November 2024. So, addressing near-term debt maturity concerns.
IFRS NAVPU decreased 4.7% q/q to $11.93: Despite big FV loss, this should be a non-event as current NWH unit price is in mid-$4. FV loss was due to cap rate expansion to 5.75% (up 20bp q/q).
Variable rate exposure is unchanged, stands at 34.2% (34.1% in Q2/23). In the light of expected interest rate cuts in 2024, this could become a tailwind (vs headwind in the last 12 months). Proportionate D/GBV remains elevated at 59% (58% in Q2/23). No update provided on potential US or UK JV formation (probably will come with strategic review update).
Update on non-core assets sale: During the quarter, assets held for sale in Australasia were sold at fair value for total proceeds of $74.9M, proceeds were used to repay variable debt. NWH classified additional assets with fair value of $154.5M located in the Americas and Australasia into assets held for sale. Post quarter, two Canadian properties were sold at their fair value of $52.2M. Proceeds were used to repay $12.4M property level debt and variable rate debt.
Making progress on financing: Most of them already preannounced. Only new was the term loan of $140M with April 2025 maturity. As previously announced, NWH has extended maturity of US$127.5M (C$172M) Credit Facility to January 2025 from January 2024. NWH has also proposed to extend maturity of $125M Convertible Debentures to March 31, 2025 from December 31, 2023 (the debenture holders meeting is on November 27, 2023).
More AUHPT proceeds coming in: NWH received $95.9M from its investment in AUHPT in Q3/23 and $14.5M more post quarter adding up to $110.4M. Proceeds were used to repay Australasian term debt which was secured by the investments in AUHPT.
Debt maturity: Much more manageable after recent credit extensions: Remainder of 2023: $61.5M (5% of total) and 2024: $383M (8% of total) debt maturing.