Another acquisition and new issue at $12.60 TORONTO, June 10, 2021 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) ("NorthWest" or the "REIT") announced today a public offering, on a "bought deal" basis, of 13,900,000 trust units (the "Units") at a price of $12.60 per Unit (the "Offering Price") representing gross proceeds of approximately $175,140,000 (the "Public Offering"). The Public Offering is being made through a syndicate of underwriters co-led by RBC Capital Markets and Scotiabank.
The REIT has also granted the underwriters the option to purchase up to an additional 2,085,000 Units to cover over-allotments, if any, exercisable in whole or in part anytime up to 30 days following closing of the Public Offering.
Concurrently with the Public Offering, the REIT has also entered into an agreement to sell 1,985,000 trust units to NorthWest Value Partners Inc. ("NWVP"), NorthWest's largest unitholder, on a non-brokered private placement basis at the Offering Price for gross proceeds of approximately $25 million (the "Private Placement", and together with the Public Offering, the "Offering"). NWVP currently holds an approximate 13.8% interest in NorthWest and is wholly-owned by Paul Dalla Lana, CEO of the REIT. Upon closing of the Private Placement, which is expected to occur in July 2021, NWVP will hold an approximate 13.7% effective interest in the REIT through ownership of trust units and Class B LP units (or approximately 13.6% assuming the exercise in full of the over-allotment option).
The REIT intends to use the net proceeds of the Offering to: (i) fund its equity requirement for the purchase of a campus of four medical office buildings in the Netherlands (the "Netherlands MOBs"); and (ii) provide financial flexibility in respect of its previously announced proposed transaction to acquire Australian Unity Healthcare Property Trust ("AUHPT") as described in its May 31, 2021 press release (the "Proposed Transaction"). The remaining proceeds, if any, will be used to fund future acquisitions, to repay amounts outstanding on its credit facilities and for general trust purposes.
As previously disclosed, through a combination of existing liquidity and committed debt facilities, the REIT's equity requirement for the Proposed Transaction is fully funded. Pro forma the Offering, the intended use of proceeds, transaction activity completed subsequent to Q1 2021 including the conversion of outstanding Series E convertible debentures the REIT's proportionate leverage will decline to approximately 50%.
As the REIT executes on its strategic priorities and acquisition pipeline including the Proposed Transaction, as well as its capital recycling initiatives, including the planned H2 2021 United Kingdom Joint Venture ("UK JV") which is expected to generate approximately $260 million in net proceeds, proportionate leverage is expected to stabilize at approximately 50%, in line with the REIT's previously stated targets.
Acquisition of the Netherlands MOBs
The Netherlands MOBs represent a unique opportunity to acquire four on-campus buildings totalling approximately 410,000 square feet that are immediately adjacent to a leading Dutch hospital operator that also occupies more than 50% of leaseable area in the MOBs.
The purchase price for the Netherlands MOBs is approximately $172 million (€117 million) based on a capitalization rate of approximately 5.1%. The REIT has secured debt financing based on 58% loan-to-value with an attractive interest rate of approximately 2.4% to partially fund the purchase price. The acquisition of the Netherlands MOBs is expected to close in June 2021.
Proposed Transaction to Acquire AUHPT
As previously announced on May 31, 2021, the REIT and a capital partner (collectively the "Bidding Consortium") have made a fully funded, all-cash offer to acquire 100% of the outstanding units of AUHPT that the REIT does not already own at a price of A$2.55 per Wholesale Unit, A$2.61 per Retail Unit and A$1.62 per Class A unit (collectively, the "AUHPT Units") under a trust scheme (the "Proposed Transaction"). The Proposed Transaction, which remains subject to AUHPT unitholder approval, implies a total equity value for AUHPT of $2.0 billion (A$2.1 billion) and an enterprise value of $2.6 billion (A$2.7 billion). For further details of the Proposed Transaction please refer to the REIT's press release dated May 31, 2021.
About the Offering
The Offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange. The Public Offering is expected to close on or about June 18, 2021 and the Private Placement is expected to close in July 2021.
The Units issued under the Public Offering will be offered pursuant to the REIT's base shelf prospectus dated November 27, 2020. The terms of the Offering will be described in a prospectus supplement to be filed with securities regulators in all provinces and territories of Canada and may also be offered by way of private placement in the United States.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.