Good morning, ladies and gentlemen, and welcome to the Northwest Healthcare Properties Real Estate Investment Trust third quarter 2021 results conference call. At this time, all lines are in a listen-only mode, and following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would like to remind everybody this call is being recorded today, Friday, November 12, 2021. I would now like to turn the conference over to Mr. Paul Dalla Lana, Chief Executive Officer. Please go ahead, sir. Thank you, operator, and good morning, everyone. Appreciate you joining us today. I'm joined by Shailen Chande, the REIT's Chief Financial Officer, and Peter Riggin, the REIT's Chief Administrative Officer. Together, we are pleased to share with you our results for the third quarter of 2021. First, I'd like to point out that during today's call we may make forward-looking statements as defined under Canadian securities law. While such forward-looking statements reflect management's expectations regarding our business plans and future results, they are necessarily based on assumptions that are subject to uncertainties and risks, which could cause actual results to differ materially. We direct you to all of the risk factors outlined in our public filings. Operationally, during the quarter, the REIT is performing well, with its portfolio 97% occupied by a diversified tenant roster of healthcare, service, hospital, and life science research tenants, the majority of which are directly or indirectly funded publicly by their respective governments. In the current environment, with concerns surrounding rising inflation rates in much of the world, it is worth highlighting that over 75% of NorthWest rent is directly indexed to inflation. If inflation proves to be not transitory, then we would expect same-property net operating income growth rates to correspondingly increase. In Q3, the REIT advanced a number of its strategic priorities, including substantial completion of its value creation initiatives in the U.K., advancing its ambulatory care and hospital precinct development strategies through its partnership with leading healthcare operators such as Epworth in Australia, and achieving credit metrics consistent with an investment-grade issuer. As previously disclosed, the REIT completed the acquisition of Aspen Healthcare on August sixth for approximately CAD 39 million. The Aspen Group is an independent healthcare provider situated in the U.K. and was the REIT's tenant at four of its U.K. properties immediately prior to the acquisition. As a result of the transaction, the REIT assumed Aspen's interest in two hospital properties located in Sheffield and Edinburgh with a value of CAD 41.3 million and obtained control over the operations of eight hospitals located throughout the U.K. with the intention to sell these operations. During the quarter, the REIT successfully completed the sale of six of the eight Aspen OpCos for gross proceeds of CAD 37.2 million and agreed to sell the Claremont OpCo for approximately CAD 33 million in a transaction expected to close in Q4. The sale of the final OpCo is progressing and expected also to close in 2021. The Aspen on-sale transactions have substantially improved the tenant roster and credit quality, lease coverage, and lease terms of our U.K. portfolio and resulted in a regional fair value uplift of CAD 126 million, 100% underpinned by external valuations. Combined with realized gains on the purchase and completed on sales of CAD 32.5 million, the REIT has recorded an overall gain to date from the Aspen transactions of CAD 158.5 million. The overall gain is expected to increase by a further CAD 27.5 million to CAD 186 million in total when the final 2 OpCo sales previously mentioned close in Q4. Since entering the market in January 2020, the REIT has built a high-quality portfolio of 13 hospitals valued at approximately $800 million. This portfolio is 100% occupied, geographically diversified with a Greater London concentration, and is fully indexed to inflation with a weighted average lease term of 22 years. The properties are occupied by three of the top 5 U.K. hospital operators, including Circle Health, Nuffield Health, and Spire Healthcare. With direct operator relationships and a growing local platform, the REIT has originated an attractive pipeline of follow-on investment opportunities. In the quarter, the REIT leveraged these relationships to acquire Woking Hospital, operated by Nuffield, and its pipeline of opportunities expanded to nearly GBP 100 million of additional actionable opportunities. As the REIT executes on the final stages of its U.K. portfolio repositioning, it is now shifting focus to deliver on its U.K. JV initiative and leveraging its U.K. portfolio as the basis for a $1.7 billion regional joint venture targeted for the first quarter of 2022. During and subsequent to quarter end, the REIT also advanced its ambulatory care and hospital precinct strategies through its partnership with Epworth, one of Australia's largest not-for-profit hospital groups. The REIT, building on its 20-year relationship with Epworth that includes the Epworth Eastern Precinct and Epworth Freemasons Precinct already, in addition to Epworth Camberwell, which was acquired in Q2, valued collectively at more than AUD 800 million, added to the precinct through its long-term Australian joint venture that is set to deliver a state-of-the-art AUD 550 million innovation, education, and healthcare hub in Geelong and expanded facilities at the site where Epworth Richmond is located in inner-city Melbourne. As part of the transaction, the REIT and its Australian institutional partner have entered into an agreement with Epworth to acquire 50% of Epworth Geelong Hospital and 50% of 4.2 hectares of adjacent development land, as well as a site at Epworth Richmond for approximate purchase price of AUD 117.4 million. The properties are both located within the Greater Melbourne area and are 100% occupied by Epworth on new 20-year triple net leases, fully indexed to inflation. Both properties are located in areas with a steadily growing population and increased need for critical healthcare infrastructure. With a developmental envelope of approximately 1 million additional sq ft across multiple stages over a 10-year period, the estimated total development costs could be more than AUD 600 million. When fully developed, the REIT expects this to be an irreplaceable healthcare precinct akin to existing ones with Epworth in the eastern suburb of Melbourne. This acquisition adds to the REIT's high-quality global development pipeline, which now exceeds more than AUD 1 billion, and expected to be a significant driver of growth for both earnings and net asset value over the coming decade. During this moment of intense focus on the global healthcare industry, healthcare precincts have emerged as a key global healthcare trend, and NorthWest is in the pole position to capitalize by working hand-in-hand with key operating partners to deliver on these opportunities, of which Geelong and the Eltham Richmond site are prime examples. In Australia, the REIT is currently looking at several opportunities to partner with leading operators, universities, and research institutions of a similar scale. Closer to home, in Canada, we see emerging opportunities to deliver similar solutions to meet evolving demands of our educational, healthcare, and research industries. In this context, NorthWest is particularly focused on the trend of decanting services out of hospitals, and along with its capital partners, is executing actively on an ambulatory care and healthcare precinct strategies to drive value-added development opportunities. Another key priority advanced during the quarter was our continued balance sheet optimization with the pay down and goal of achieving investment-grade metrics. During the quarter, the REIT closed a CAD 25 million private placement to NorthWest Value Partners following on the Q2 capital-raising initiatives. Net proceeds of the issuance were deployed towards the previously announced acquisition of Dutch medical office buildings and the repayment of higher-cost debt. The REIT's leverage remains stable quarter-over-quarter at 49.8%, primarily driven by the presence of previously disclosed intra-quarter transactions. Subsequent to quarter end, the REIT announced its intention to redeem all of the outstanding Series F debentures maturing on December 31, 2021, which have a conversion price of CAD 12.80 per unit and are currently in the money. The redemptions are expected to occur in November 25, 2021. Assuming full conversion of the Series F debentures to equity, completion of the remaining U.K. initiatives, and ceding of the planned U.K. JV, the REIT's pro forma consolidated and proportionate leverage would further decline by approximately 810 basis points and 780 basis points respectively. For the quarter, our results are in line with expectations, with annualized quarterly adjusted funds from operations of $0.92 per unit on a normalized basis, implying a payout ratio of 87%. Earnings accretion from recent investment activity and financing activity was as expected, although the appreciation of the Canadian dollar over the past year relative to the REIT's average foreign currency exposure was a slight drag on earnings. On a constant currency basis, AFFO per unit was up 1% year-over-year, which is particularly notable in the context of the REIT's deleveraging activity, which resulted in proportionate leverage decreasing by 780 basis points. While the Canadian dollar has shown some recent strength. We expect them to unwind at some point and provide a tailwind to our future earnings. While AFFO per unit growth was flat, AFFO was up actually 18% per year, driven by net investment activity, expansion of the REIT's global asset management platform, and built-in lease indexation. Management fees grew 44% to CAD 15.8 million in the quarter, underpinned by higher base and acquisition fees as a result of both increased assets under management and investment activity. Overall, the global asset management platform continues to provide significant and steady earnings growth and highlight that annual base fees have grown by almost 30% annually since 2019. Additionally, net asset value per unit was up 11% to NZD 13.60 per unit, driven primarily by strong revaluation gains in both Australasia and Europe due to the recently completed UK initiatives. With significant demand for long leased inflation indexed assets and increased interest in healthcare real estate, we see near-term potential for continued cap rate compression across our markets, leading to meaningful valuation increases in the near term. Combined with the expansion of the global asset management platform through our planned UK JV and a growing global development pipeline, we see potential for a further NZD 1-NZD 2 of NAV per unit growth over the next 12 months. Sustainability initiatives also remain a key priority within the REIT, and committing to issue its first sustainability report later in 2021. The REIT believes that sustainability has played an important role in defining its past and will continue to do so in the future, particularly as the REIT grows its asset management platform with global institutional investors. Operationally, our results, which are derived from a 192-property, NZD 8.5 billion healthcare infrastructure portfolio tenanted by leading operators on long-term inflation-indexed leases, was on plan. The inherent strength of this portfolio is reflected in the REIT's operating results, with year-over-year constant currency cash recurring SPNOI growth of 2.4%, again, largely driven by contractual rent indexation and underpinned by 97% occupancy and a weighted average lease term of more than 14 years. For the three months ended September 30, 2021, the REIT collected 99% of rent, which is a 10 basis points improvement quarter-over-quarter, and is fully recovered from the minimal impact of COVID in earlier quarters. In all regards, a highly defensive portfolio. Canada remained stable during the quarter with adjusted year-over-year cash SPNOI reduction of approximately 1%. Portfolio occupancy was stable at 91%, and leasing activity during the quarter was also strong, with 24,000 sq ft of new leasing and 53,000 sq ft of renewal leasing completed. The spread on renewal rents during the quarter was broadly flat, with rent collection remaining strong at approximately 98%. Segmentally, I note the following. In Brazil, we are on plan with steady 100% occupancy and continued strong year-over-year cash SPNOI growth of 4.3%. Operationally, the REIT's major tenant, Rede D'Or, continues to deliver exceptionally strong results and expand its business, thereby creating potential opportunities for future partnerships with the REIT. The REIT is also focused on gaining traction with additional high-quality operators. With COVID momentum recurring, returning to normal and normalcy picking up steam, we see a very significant constructive environment end result. In Europe, we are on plan and performing as expected, with year-over-year source currency SPNOI growth of 2.7% and occupancy at 97%. In Europe, the REIT continues to exhibit its growth agenda by developing strategic relationships in both the medical office and hospital segments, and continues to translate it into accelerated deal flow. Last, in Australia, the occupancy remained stable there above 99% and delivered consistent year-over-year constant currency SPNOI growth of 2.9%, with a weighted average lease term of almost 17 years. At Vital, the business there performed similarly with year-over-year constant currency SPNOI growth of 4% and occupancy approaching 99% at a weighted average lease term of almost 19 years. I am pleased with the progress made during the quarter, which advanced a number of the REIT's key long-term strategic initiatives, as well as producing solid operating results. With these deep relationships, best-in-class regional operating platforms, and strong access to public and increasingly attractively priced private capital, the REIT is well positioned to continue executing on its strategic priorities with a focus on growth and balance sheet optimization. I will now ask the operator to open up the call for questions. Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press the star followed by the one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. Please stand by for your first question. Your first question comes from Jonathan Chen of BMO. Please go ahead. Hi, good morning. Hi, Jonathan. Just maybe a couple of quick ones from me, but with the sale of some of your units in Australian Unity Healthcare subsequent to quarter end, I just kind of want to gauge what your strategic thinking is with respect to kind of your remaining interest. Yeah. Maybe just a point of clarity. The sale of those units was into our joint venture relationship. Right. Again, collectively, we retain 17.3% interest in Australian Unity. Mm-hmm. We're actively considering our next strategic steps there. I can't report beyond that, but Okay The business is continuing to look at what to do next. Okay, got it. I guess maybe just on your development pipeline, kind of what geographic focus would be over the near to medium term? I guess, has the recent inflation environment changed your thinking on that front? Yeah. Thanks. Good question. So the focus, for sure, builds in Australia and New Zealand, to a slightly lesser extent, where we've had, you know, quite an active pipeline for a long time. We currently, you know, have what we call brownfield expansions underway there, totaling approximately AUD 350 million today. That's been a number that's been pretty stable in the business for the last little while. Mm-hmm. We see that as sort of a foundational starting point to the development pipeline and likely to continue, again, that 5%-10% of our portfolio in some form of brownfield expansion. Adding to that are both our ambulatory and precinct developments, which will take that number up in the region closer to NZD 1 billion and likely to be on a steady-state basis over the next little while. All of those developments are capitalized within our joint venture arrangements or through Vital, so pre-capitalized. You know, the vast majority of those projects, you know, will be pre-let and likely to have, you know, similar arrangements to the ones that we've talked about earlier in the call around Epworth. We do see an expansion in Australia moving towards, you know, that AUD 1 billion mark on a more steady-state basis and, you know, an evolution from brownfield perhaps to more greenfield developments. Again, you know, we focus on, you know, all of the issues, including cost and leasing and cost management issues that you mentioned. You know, a more challenging environment to build things. You know, most of our projects when we start have fixed price contracts and third-party performance-driven contractors in place. Pretty prototypical, I would think, for development. You know, we have a long experience in that region of- For sure. those types of projects, more than 25 years when I look at the team there. That's moving apace, and those opportunities at the precinct level, you know, look to be ones, you know, that can come on a pretty recurring basis for the next, you know, 5 or 10 years. We're quite excited about that set of initiatives. I think closer to home, the other focus is in Canada. We have Mm-hmm At least two and possibly three significant projects that we're in the you know sort of planning phase on. Those will be more conventional development, so will obviously require you know the both you know both the leasing and I guess cost side of the business to line up. We do see a market in the areas that we're focused in for very significant research, life science, and education and healthcare opportunities. Certainly we're hoping to progress those to you know both announcement and you know commencement phase you know over the next 12 months, and we can see some really attractive opportunities. I guess around that, we've been active in the ambulatory strategy here. You know, we have projects like Lakeridge Health under construction today. We are looking and expecting to see, you know, most of the provinces enact, you know, ambulatory strategies, which is really, you know, driving decanting out of some of the acute care facilities into more purpose-built and purpose-suitable facilities. We start to expect that could be a nice trend for us in Canada. Those would be the main markets that we're focused in. I think we can see on the horizon in Europe and particularly in the U.K., some attractive opportunities as we grow our capabilities in those markets as well. For the near term, those are kind of our focal areas. Right. No, that's great color. Thanks. Maybe just a little bit more on the specifics. Could you elaborate a bit more on the fair value gain in the U.K. and, you know, just exactly what changes were on the valuation parameters that you mentioned? Yeah. I'll try, and I've got Shailen looking at me to correct me if I get it wrong. Let me just walk through the journey. You know, as you recall, we acquired two, broadly speaking, portfolios there, you know, somewhat opportunistically, the first from BMI back in early 2020. You know, that was acquired at approximately a 7% cap rate. And more recently in the summer, last year's 2020 summer, we acquired our four Welltower assets, came broadly in the mid-5s. Both of those portfolios now with the new leasing and portfolio activities that we've done, you know, transitioning BMI in the case was bought by Centene and merged with Circle. Quite a journey, and we had Brexit happen and all sorts of stuff in between. That seven has come into the mid-fours. Broadly speaking, similar destination for the Welltower portfolio, which we added to with the two on-balance-sheet assets and the third asset that we acquired from Nuffield. Collectively, you know, the journey involved, I think a lot of corporate activity in the case of BMI, Circle and Centene, which has ended up with us, you know, a large investment-grade tenant as the ultimate owner of that business. Then the transition of our Aspen leases to the combination of Nuffield and Spire, which are established existing, you know, leading operators in the U.K. You know, and new leases on new long term. You know, all in all, a pretty wholesale reset of those portfolios. you know, we entered opportunistically at good times, and we were able to convert, you know, into good and new long-term partners, you know, on these long-term inflation index leases, you know, triple net the way we like them. That's sort of the journey and the destination is, broadly speaking, you know, 4.5, I think, on where we've ended up. Got it. Okay. it. Okay. Jonathan, maybe the only thing I'd add to that is that really the catalyst for us was around replacing the tenants in the, I mean, in those assets, which ultimately triggered the requirement for an external valuation. Then as we- Got it. ... had those external valuations completed, triggered those fair value gains. Got it. Okay. I guess just one last one from me. I guess, I think I asked this last quarter, but are you getting any closer in with respect to possibly accessing the unsecured market now that, you know, criteria given your investment-grade credit metrics? Yeah. Jonathan, I'll chime in there. Yeah, thanks for that question. You are spot on that our credit grade or our credit metrics are very much circling investment-grade metrics. You would note that we have kept a relatively flexible balance sheet. Yeah with a fair amount of debt maturity in 2022 that's really primed for permanent asset level finance on either an unsecured basis, through the investment-grade markets or put into our prospective U.K. and regional JVs. We've very much been working the balance sheet to position for an investment-grade rating and related accessing of those markets. Got it. Okay. That's it from me. Thank you very much, guys. I'll turn it back. Your next question comes from Mario Saric of Scotiabank. Please go ahead. Hi, good morning. Hello. Just coming back to the AUHPT sale. What was kind of the overriding rationale for the disposition from a Northwest perspective? Sorry. The overriding rationale for us maintaining our 17.3% stake, or what we do next? No, sorry. Just the overriding rationale for selling some of the units to your partner. Well, yeah, thanks. Sorry. The wait between the put and call arrangements that we had entered into with Hume and just the finalization of the JV terms. You know, the initial investments were made on balance sheet, so it's really just, you know, just moving them into their long-term home. That's all just a natural cycle of things that happened in the third quarter, which is when, you know, all of the bid-related things transpired. You know, it happened in the normal time, in the normal course and was expected. Nothing unexpected there. It was always contemplated to be, you know, with our joint venture partner and just worked out that August was the time that it happened. Got it. Okay, that's good. Maybe Paul, to your comment on, you know, further $1-$2 of NAV per unit upside over the next 12 months. You took some pretty solid fair value gains this quarter in the U.K. Yet the potential upside remains pretty attractive and pretty significant. Has anything changed for you quarter over quarter in terms of the magnitude of that upside, whether it's, you know, cap rates, expected cap rates, the compression could be more than you expected last quarter? It just seems like you're surfacing the value, but the potential value creation remains intact. It's a curious combination. Just wanted to hear some thoughts in terms of what's changed quarter to quarter, if anything. Yeah. I think there's maybe two of us. You're right about the trend for sure that cap rate movement has continued to compress. We're expecting sort of 10 basis points across the portfolio. We generally take a lot of those marks in the fourth quarter, so it's pretty natural time. I'd say that's at the you know conservative end of things. Just to be fair to everyone, it is a very prime moment, and we are seeing very meaningful cap rates movement in all of our markets. Just call that out. We still have a chunk to go in the U.K., which is the balance of the non-Aspen portfolio that will get marked as well. There's some pretty discrete elements to that. Broadly speaking, you know, a further 10 basis points and maybe a little bit more depending on where things end up at year-end. Second one is development. Again, with both developments completing and the pipeline getting restocked and with some of the new things like Epworth, we see a meaningful momentum happening through the development book. Again, those are materially wider than stabilized values. Those transactions somewhere 75 to 100 basis points wider on average, broadly committed. That book is getting quite chunky. Then the last area is in through the asset manager. I think we're on the cusp of completing a number of big initiatives. You know, the business there is growing meaningfully over the year and is forecast to grow very meaningfully in the next year. I think taken together, all of those things give us some confidence that certainly 1-2 and perhaps even more are gonna be possible in the near term. That's great color. Thanks, Paul. My last question just comes to AFFO per unit growth. I think you mentioned on the call the normalized AFFO per unit, NZD 0.92. That's been pretty consistent. If we go back to Q2 of 2019, it's kind of been at that level. You highlighted some factors in that intervening time period with the pressure on that number. So for example, the delevering that you've done. The balance sheet's in really good shape, post the UK healthcare fund. And the currency's been a bit tough as well, which clearly you can't predict going forward. With the amount of repositioning of the portfolio that you've accomplished, like where then with the delevering likely done now, like where in the priority scale does kind of inching up that NZD 0.92 disclosed normalized AFFO per unit rank, when you look out in 2022? Yeah, it's an excellent question. I may go back and look at that. Sort of on a constant leverage basis, that 92 might have been over NZD 1, if I'm recalling, Shailen. Yeah. You know, there's NZD 0.08 of delevering in that number, if we wanna say it like that, plus some of the other effects that you mentioned around a little bit of a negative FX environment on average. It's not huge, but it's around the edges. I think looking ahead, we would see similar levels of growth in the next couple of years comfortably. Again, the business is moving to a more asset-light model. Certainly the heavy equitization of the business for growth and delevering that has happened in the last little bit is likely to come off as we move, you know, assets into our JVs, which obviously, you know, offer a significant accretion on top of the asset level returns. You know, that's the theme for us over the next couple of years, and we really do hope to be able to unlock, you know, pretty meaningful AFFO growth, but certainly heading up above 92. You know, I would expect over a couple of years, heading up over a dollar would be a pretty reasonable target. Okay. Thanks, Paul. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one now. Mr. Dalla Lana, there are no further questions from the phone line, sir. I'll turn the conference back over to you. Okay. Well, thank you everyone, and on behalf of Northwest Healthcare Properties, we appreciate your time listening in to our third quarter 2021 earnings call. Have a great day. Thank you. Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and ask that you please disconnect your lines.