December 10, 2018

NorthWest Healthcare Properties Real Estate Investment Trust (NWH)

The NorthWest Healthcare Properties Real Estate Investment Trust (NWH) first went public on March 25, 2010.  It fills an interesting niche within the Canadian REIT market.  The trust is made up properties in the medical office building and healthcare real estate sector.  Its holdings number over 55 properties, which make it the largest non-government Canadian owner in this sector.  The leasable space owned by the REIT totals 3.9 million square feet.  The board behind the NorthWest Healthcare Properties Real Estate Investment Trust (NWH) has an extensive background in healthcare properties, and their goal is to apply this expertise in dominating a sector that has typically been owned by smaller, private investors.  Their interests are well aligned with those of the unit holders since they own approximately 30% of the REIT.  NWH REIT is pretty well diversified, serving over 1,300 tenants across six provinces.  The main focus of the trust is in Calgary, Edmonton, Toronto, Montreal, Quebec City, and Halifax.  The total assets of the NorthWest Healthcare Properties REIT (NWH) total around $900 million.

 

The most recent acquisition by the REIT was the purchase of Canamera Medical Centre located in Cambridge, Ontario.  The Centre is a large, 82,500 square foot medical office complex and was recently constructed.  It is already fully leased to several different healthcare related business including Family Health team, a large dentist group, several doctors, an orthodontics clinic, a pharmacy, a diagnostic imaging clinic, and a laboratory.  The price of the acquisition came in at around $15 million.  Strategically, this purchase helps cement the NorthWest Healthcare REIT (NWH) as a force within the sector and province of Ontario where the REIT now owns 23 properties.  The trust also finished up the paperwork on its main summer acquisitions of the Hys Centre and Tawa Centre in Edmonton (taking advantage of great interest rates within the province).

 

The core long-term strategy of the NorthWest Healthcare REIT is a solid one.  It is built on the premise that an aging population, that will live longer than any before it, will be in greater need of medical services than ever before.  There is no-doubting that the key demographics support the strategy that this REIT (NWH) is pursuing.  By grouping their properties near major service centres, there is a strong possibility that the trust could come to control a large market share within the niche, and profitability could grow exponentially.  Given the expertise and experience in evidence concerning the makeup of the board, I think that lease rates will stay extremely high among all of their conservatively managed holdings.  Right now NWT is trading at about $11.36-per unit, with a 52-week high of $12.51, and a 52-week low of $10.80.  It has a fairly small market capitalization of around $400 million (not surprising given how new the REIT is).  The current annual dividend of $.80 gives the REIT a respectable dividend ratio of 7.10%.  The NorthWest Healthcare REIT (NWH) is also proud to announce their new Distribution Reinvestment Plan (DRIP which allows unit holders to automatically reinvest their dividends into the REIT at a 3% discount.  This is an effective way of growing a large position, and eliminates costly brokerage fees.