Q1 2021 NorthWest Healthcare Properties REIT Earnings Call
Good morning, ladies and gentlemen, and welcome to the northwest healthcare properties Real estate investment Trust first quarter 2021 results conference call.
At this time all lines are in listen only mode. 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. This call is being recorded on Friday may 14th 2021, I would now like to turn the conference over to Paul Delaware.
Please go ahead.
Thank you operator, and good morning, everyone. I appreciate you joining us today.
I'm joined by channel agenda.
Financial Officer, and Peter Ragan, Chief administrative officer together, we are pleased to share with you our results for the first 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 well set.
Forward looking statements reflect management's expectations regarding our business plans for future results.
It's early based on assumptions that are subject to certain.
Uncertainties and risks, which could cause actual results to differ materially.
Direct to all of you to the risk factors that line.
Filings.
Before getting into the details of the quarter, though I thought I would offer a few comments on the continued impact from COVID-19 on our business.
The REIT portfolio healthcare infrastructure assets continues to perform well with all properties open and operational.
For the three months ended March 31, 2021 for Rick.
We collected 99% of rent and improvement from the 98% collected in Q4 2020.
Strong rent collections throughout the pandemic is illustrative of the defensive attributes of the REIT portfolio. The essential nature of its tenant base and commitment from governments to ensure access to critical healthcare services around the world.
Beyond this we see a significant build up of demand for health services in the post COVID-19 era.
The growing backlog of non essential treatments and surgeries in each of the global markets is expected to increase demand levels for us.
Healthcare services and support private hospital system volumes going forward.
With national vaccination programs at most of our core markets in full swing and continued containment of cases in Australia as yet we believe that a strong recovery for the healthcare industry and by extension healthcare real estate is on the horizon.
Specifically as it relates to our hospital operators, we believe they are well positioned to participate in increasing volumes to alleviate these backlogs backlogs. Similarly, many of the tenancies in our medical office building portfolio are expected to see increased volumes in the months ahead, given the nature of the essential services with a.
Inelastic demand that many of them experience.
Operationally the regions performing defensively and well as expected.
With a well positioned portfolio that is 97% occupied by a diversified tenant roster and hospital healthcare service and life Sciences research tenants. The majority of which are directly or indirectly funded publicly by their respective governments. This defensiveness continued close quarter with our growth April gross rent collections.
Again above 99% across our diversified tenant base.
In terms of liquidity <unk> is well positioned with $239 million of cash and available borrowing capacity to deploy toward key strategic and financial priorities.
With approximately 35% of the 2021 debt maturity is already complete and the remaining maturities comprising normal course for renewals and debt repayment.
<unk> remains on track to continue to strengthen its balance sheet.
Looking ahead to the balance of 2020, one threep has several key priorities.
The success in 2020.
Key strategic priorities in 2021.
Scaling the REIT and global asset management platform with a two pronged approach predicated on deploying available capacity and its existing JV platforms and launching new fee bearing capital tools, such as the previously mentioned UK joint venture, which remains a top priority. Despite.
Despite a relatively benign quarter for new acquisitions and developments. The read is well advanced on all of its existing and a number of new strategic initiatives that will likely lead to deployment of this more than $6 billion of debt and equity commitments.
Sooner than previously forecast.
As well the REIT continues to consider expanding its geographic footprint with both the United States in select Western European markets. Currently in focus through this multifaceted approach will position itself as a leading global healthcare real estate asset growth.
Another key priority for the region for continued optimization of its balance sheet with the goal of achieving an investment grade credit metrics for this and the REIT has completed an equity issuance of $220 million, including its private placement that closed in April.
Proceeds from which we deployed to repay higher cost debt.
In may $61 million of the $75 million series E convertible debentures were converted into equity with the balance for dealing with existing liquidity through.
Through the.
Execution of the recent UK joint venture initiative as well as the simplification of its capital structure. The REIT intends to continue to optimize its balance sheet.
It's difficult.
ESG initiatives also remain a key strategic priority with the REIT being committed to issuing its first ESG reported in 2021.
<unk> believes that ESG issues have played an important role in defining its past and will continue to do so future.
Global Cross functional team led by the newly appointed Chief administrative officer will advance this important aspect of its business.
For the quarter our results were in line with our expectations with annualized quarterly adjusted funds from operations from 92 per unit on a normalized basis.
Buying a payout ratio of 87 per cent.
Earnings accretion from recent investment activity and financing activity was as expected, although the approximately 1% appreciation of the Canadian dollar in the quarter relative to the average foreign currency exposure was a slight drag on earnings on a constant currency basis for you.
<unk> was up approximately 1% year over year, which is particularly notable in the context of the reach deleveraging activity.
In the context of a lower Canadian interest rate environment, we expect that FX headwinds may begin to ease and unwind over the balance of 'twenty for.
Riding a tailwind.
Charities.
Additionally, net asset value decreased slightly by three 8% to $12 77 per unit driven primarily again by the higher Canadian dollar relative to Hillary for an assets property up values largely stable.
However, with significant demand for long leased inflation index assets and increasing interest in healthcare real estate in particular, we see the near term potential for significant cap rate compression across our markets leading to meaningful valuation increases in the near term combined.
Combined with advanced asset manager activities across the portfolio, particularly in the UK, we see the potential for up to 1% to $2.
Over the coming months.
Operationally our results, which are derived from 186 properties seven $7 billion of healthcare infrastructure portfolio tenanted by leading operators on long term inflation index leases was on plan and the strength of this portfolio is reflected in <unk> results with year over year constant currency cash recurring.
The NOI growth for 3% again, largely driven by contractual rent to the patient.
Again, underpinned by 97% occupancy and our weighted average lease term of more than 14 years in all regards highly defensive portfolio.
Mentally followed in Brazil or on plan with a steady 100% occupancy and continued strong year over year cash SPP NOI growth of four 2%.
Operationally the major tenant reached Dor continues to deliver exceptionally strong results and expand its business, thereby creating potential opportunities for future partnerships.
Reed is also focused on gaining traction with additional high quality operators in Brazil.
For a very constructive in that line.
Market from that flow stream.
Canada performed satisfactorily during the quarter with adjusted year over year cash SPP NOI growth of 2% portfolio occupancy was on plan at 92% leasing activity. During the quarter was also in line.
21000 square feet of new leasing at 95000 square feet of group leasing completed the spread on renewal rents was down two 2%.
Rent collections remained strong in Q1 at approximately 98%.
On the investment from the REIT completed its inaugural life Sciences transaction with a $15 million acquisition from 40000 square foot property at approximately $6 one per cent capitalization rate in close proximity to Montreal second part one of the leading life science clusters of Canada.
<unk> also completed the sale of two noncore mlps for $19 4 million.
In Europe, we are on plan and performing as expected with year over year currency SPP NOI growth of one 5% and occupancy at $97 one per cent.
In Europe <unk> continues to execute its growth agenda by developing strategic relationships in both the medical office and hospital segments, which continues to translate into accelerated deal flow.
Q1, close to $25 million of life science property in the Netherlands.
First venture into life Sciences in Europe.
<unk> also sold for clinics to its European joint venture for <unk>.
$3 5 million.
And last.
Australia.
Occupancy remained stable above 99% and delivered consistent year over year constant currency SPP NOI growth of 2% with a weighted average lease term of over 17 years.
And vital business reported similar results with year over year constant currency cash standalone growth of seven 2%.
You can see at 99% and a weighted average lease term of more than 19 years.
Together with a capital partner continue to hold an option to acquire a strategic interest of approximately 16%.
Units of Australian Unity healthcare property Trust.
Australia immunity owns a high quality portfolio of hospitals medical centers and other healthcare assets leased to leading Australia and operators and the REIT continues to evaluate its options with respect to the strategic stake.
I am pleased with the progress made during the quarter, which advanced a number of its key long term strategic initiatives as well as produced solid operating results. Despite the COVID-19 environment.
With deep relationships best in class regional operating platforms, and strong access to public and increasingly attractively price private capital. The REIT is well positioned to continue executing growth strategy.
I'll now ask the operator to open up the call for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone, you'll hear a three total pump acknowledging your request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press star followed by two.
If you're using a speaker phone please lift the handset before pressing any keys. Your first question comes from <unk> <unk> from Scotiabank Mario. Please go ahead.
Hi, good morning.
I joined the call a little bit late so I apologize if I'm repeating anything but.
But I wanted to focus a bit more on the potential U S entry and then you talked about last quarter.
Closer to that entry into the market, presumably you are refining your strategy.
Can you just maybe quickly remind us of the asset profile being targeted.
For those assets are trading today in terms of cap rates and then whether you have more conviction.
The entry will be through a JV format as opposed to a 100% subsequent indication like you've done in your other regions.
<unk>.
Yeah lots isn't that.
Thanks.
I think I'm going to take the high ground on this one which is.
We continue to be focused in the carrier side of the business obviously so.
Really between hospitals and medical office.
Including sort of outpatient and ambulatory type clinic.
Clinics, so that's our sweet spot.
And those would be the areas that we're focused on the U S. I think we are in the middle innings of defining and articulated strategy again, I think transaction imminent, but certainly looking to to move to.
Sort of a specific decision over the next little bit and to make our first investment seemed later in 2021.
I do expect debt.
Anything substantial would involve a partner although at this point you know getting started maybe direct.
As we have in the past so, but we're not committed on anything, particularly large at the moment. So I think that's a building part of the portfolio for that.
Any any color in terms of so Paulo.
Central acquisition cap rates may compare to some recent transactions you've done there kind of a geographies.
Yeah, No I mean, as we know the U S is an incredibly vibrant market, but I think what we can say is that we see.
Maybe a spectrum of.
Returns between sort of low to mid fives for a high quality.
The existing <unk>.
And we're in good markets with characteristics that we like in any event up into the high <unk> low sevens for for hospital opportunities, particularly for <unk>.
For profit space, which is which is a little bit where we're focused so is that sort of range of cap rates that we see.
Obviously, it's an incredibly vibrant market. So as I said, there is a lot around that and any change but that would.
The market that we're looking at.
No I was going to color. Thank you for that.
Maybe just shifting.
Our focus I think Paul to your comment on potential $1 to $2.
Not per unit upside on on cap rate compression in the value creation, presumably were from the UK healthcare fund.
The yields are coming up for treasury yields are coming up.
But.
Overall demand.
For the alcohol is quite strong so how do you like.
We are the once the door is coming from what type of cap rate.
So do you see from the portfolio.
Yes.
Super Good question, so breaking it down if we just looked at the.
<unk>.
The current portfolio, if you will and said no.
Where do we see.
Demand for fuel for long term index assets sort of moving.
Could see again up to 25 basis points in our portfolio over the certainly over 2021 and maybe a good chunk of that sooner.
In Europe part of that so if you if.
If you do that math, but by our estimates about 10 basis points translates into approximately $120 million of NAV or so.
Big chunks of that obviously you might be in Australasia as you know we have a pretty particular approach to approaching of our valuations there.
It's their year end in June so clearly.
Pretty high visibility in that part of the world that Mike.
Reference some recent.
Comments in the release that came out at around similar issues. So just given valuation policies, we take those marks sort of semi annually and the big ones come at the end of the year, which is in June.
So pretty good visibility there, but I'd just say incredibly.
Incredibly positive at least from a valuation standpoint environment, certainly starting to see pretty meaningful marks so there'd be some ideas, but it's coming through the rest of the portfolio as well.
In bits and pieces, so that might make up sort of a more cap rate driven stuff in terms of value creation I think what I can sales were substantially advanced our UK initiatives.
And you'll recall that we've acquired.
350 odd million pounds of assets, they're north of a six cap on average in the market as well inside of that we've brought certainty through our asset manner, bringing certainty through our asset management initiatives too.
For those portfolios and so we see pretty meaningful steps coming broadly a long time line certainly over the next 90 days before we report again so good progress in that also acts as a.
A key unlocking element to some of our JV initiatives. So perhaps to reported progress there is pretty substantial it's partly market driven partly our asset management activity driven and we continue to carry those.
Cost for the book today.
Got it and what would be some of the major remaining milestones with respect to launching that.
For them.
Hum.
Yeah.
Okay.
Still a bit of work to go it's going to follow the asset management work, but by a little bit, but we're certainly making progress.
I believe we're in good shape for the second half of 'twenty wanted to put that in place.
Got it and then maybe just last question on the evolution of the asset management franchise.
Any any incremental progress our thoughts on.
Diversifying.
For the LP Investor base over time.
Are you spending more time talking from European investors relative to.
History, just maybe some thoughts on the evolution of the LP Investor base for the next year for five years.
Yeah. So every hour every day.
It's a strategic priority for us.
As we previously said and yes, I do think again in the balance of 2021, we expect to introduce new partners to the business.
One of our existing <unk>.
Strategic priorities or perhaps a new line.
We're focused on it I do think the market for.
Institutional partners.
Healthcare real estate is as positive and constructive as we've ever seen so again.
Came to the historical.
So we've made finding the right partner and the right structure is of high priority for us so.
It's all of those key.
Things that sort of drives that.
The decision and I think we're making good progress there. So yes, I expect to have some positive news over the course of the year.
Uh huh.
Similar to qualitative elements that we have.
Relationships.
Got it and then just.
Following when you when you look at that.
One LP capital, let's say, that's targeting healthcare is typically more of a <unk>.
One on one relationship where you have MLP investor with.
Sponsor or our commingled funds.
Something about.
Hum.
But you are seeing in the industry today.
We're coming at it from both directions to be fair and each has its advantages.
Lines up with particular strategies, but I can't say, we have certain.
I would like to add some commingled more diversified funds to search.
The strategies that we have on them.
We will call out that some of the strategies and things that we're seeing.
For.
For example, our precinct development opportunity program in.
In Australia.
Ambulatory care outpatient strategy also in Australia, and again, we've initiated some life sciences.
Investments, both in Europe, and Canada, which may be naturally suited. So we do have a number of new strategies under consideration.
And scaling and certainly a number of opportunities.
It might be a little bit differentiated than some of your long term core ones that we have in place today.
All being a little bit more development and a little bit more.
And.
And leading to a slightly different structure. If you will so those are some thoughts around how we're approaching it.
But I think these are meaningful core programs two assets slightly.
Slightly different.
Characteristics to the individual strategies.
Thank you for the color.
Your next question comes from.
Your next question comes from Frank <unk> from BMO capital markets. Frank. Please go ahead.
Hi, good morning, everyone.
Yeah.
So my first question.
So my first question in terms of same property NOI on a constant currency basis I felt vital achieved 10, 2% growth in Q1 from four three per site back in Q4, I Wonder whats the main driver behind the growth and what level should we expect the growth rate to be for the rest of 'twenty one.
Your line.
Yes, Thank you Sheila.
Take that just because of having been on the vital.
Vital cold overnight trust.
In my mind.
So thank you for for that question, otherwise normally I'd I'd, let you handle this one but.
We've had a couple sort of meaningful mark to market.
<unk> come through the vital portfolio over over the recent past I think.
In general that's a little bit higher than what we would expect to see.
From our typical estate alive in the game, but 99% occupied 99% index. So Brian large that portfolio should track a little more closely to.
Two inflation than what it has but we did have some mark to market activities in that line.
Let those higher numbers, so hopefully that answers your question.
Okay, Alright, that's great.
My next question moving pretty much to the leasing side. So I saw that excluding Canada presented revenue that subject to the BC action and taxation I increased to 98 three percentage this quarter.
And I saw like vital line, Australia are moving towards 100% I Wonder if Germany would also pick up this year.
They're a percentage it's kind of like maintaining.
We maintain a stable around at 94%.
Quarter over quarter, and what Germany also.
Getting closer to 100% this year.
Children can I, perhaps.
Sure.
Hi, Frank.
Yes, thanks for the question.
I have difficulty hearing you, but I think you were referring to occupancy primarily in Germany recently, our Australian portfolio in Brazil.
Just calling out the asset class in Australia, as well as Brazil.
We'll be focused on hospitals and long term.
Assets that are 100% occupied.
In Europe, and specifically in Germany, which you referenced occupancy we do have a medical office building platform, which tends to structurally operated lower occupancy levels at hospitals at a 100%.
Still very high in that context.
90% to 95%. So I think we view our German occupancy is broadly stabilized.
And continue to see same property NOI growth opportunities there.
The institutionalization of our leases.
Really bringing all of our leases and medical office buildings up to the northwest standard.
And then continued indexation in that portfolio. So.
I think hopefully that answered your question that has been a difficulty hearing you, but feel free to read yet online and we cannot get into it.
Okay sure Yes sure. So my last question is kind of moving to the development front.
I just wanted to have a tracking for you guys can you hear me okay now.
Yes.
Okay, great. So.
With respect for the current environment in which we see on the cost side.
Inflation across the board are starting anything that in Europe, as well and I wonder if not well move around your bottom line Youll for your current development project.
Yeah.
Thanks So.
Again, noting that the REIT collectively not share but in terms of whole dollars is just over $400 million of development underway.
The number and in almost all of that development is on sort of a fixed price.
Some contracts with very little cost exposure, okay, and broadly speaking, 100% leased with a small exception of the Canadian development, which is pretty close.
And really our contracts are.
Sort of.
Ah cost cost plus if you want to say in terms of our returns so very structured and very very specific.
So I think we're feeling quite confident about.
The ability to deliver broadly speaking on budget and on schedule. The vast majority of those projects, which are substantially advanced as well. So the answer is probably not a huge impact coming through our portfolio around.
Construction price increases.
Certainly beyond that though we do have a very active development pipe and very active focus on adding.
On adding.
New and expansion assets to the portfolio I think we've called out debt and over time, we'd like to see that in the 10% to 15% part of our overall business. So certainly costs play a big part of kicking off those projects.
Although we are likely to pursue them very closely to the historical types of contracts, where we take the vast majority of the risks on the way in and have the buildings broadly Latin and most of the most of the contracts sort of set sort of cost.
Cost cap.
Getting things off in this environment will will be increasingly difficult for for the time being but I think things will normalize in the beta over time, and we will be able to manage through over time, so kind of a bit of a dual answer where in the existing projects were not too concerned at all given that they are all very structured and broadly speaking.
Hitting their milestones on the stuff that we're working on it to a high degree of focus and making sure that we can make the numbers work theres certainly some inflation in those numbers, but we're still finding attractive opportunities to deliver.
Strong in place yields and I would say our objective as we've historically mentioned on relatively low risk development is to look for 50 to 100 basis points, maybe 125, if we get a get lucky on on against in place and market cap rates. So we're looking for a relatively structure.
<unk>.
Type of return on a project so I hope that answers your question.
Yes. Thank you that's great. My last question kind of moving to the financing side. So I see you guys have made a great achievement like lower.
And also you know getting a stronger credit profile.
And also I know like you guys touch on Oscar financing backing like.
Our 2020.
I'm wondering would you consider getting into the unsecured market this year.
2021.
If you can provide any color.
Yeah.
Yes, Paul.
Yes.
Yes. Thanks for thanks for that question and thanks for the acknowledgement around our leverage.
Year over year, we brought leverage down around 500 basis points on a proportionate loan to value basis and around the turn and a half in terms of a net debt to EBITDA on a proportionate basis.
See a very clear path at the moment to leverage that would be in line with our long term objectives hovering just north of seven times.
Net debt to EBITDA and <unk>.
Over 40% on a proportionate loan to value basis, that's probably a bit lower than where we see long term debt, but very much squarely within what.
What we consider to be investment grade metrics. So we think we're closer than we've ever been in terms of being able to access unsecured.
Debt markets.
In terms of timing and when we see that as a potential.
I think there is a bit of nuance there around pets be where the unsecured debt with CIT.
Whether it be at our at our capital or managed capital platforms are.
Versus at the REIT level, and we're working through that I think we very much do you see 2021.
Achievable in terms of achieving investment grade metrics.
And then thereafter, considering where unsecured debt fits best in our structure.
Okay, Alright, that's great. Thanks, Shannon, that's all my questions and I'll turn it back.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by one. Your next question comes from Tal Woolley from National Bank Financial. Please go ahead.
Hey, good morning.
Hi, Tom.
Just wanted to talk first about the unity.
Austin deal.
I understand that you've got like a 13 month contract in there like is there expectation that like this is.
That's something strategic will happen there within the next year or is that just the starter and you guys are ready to sort of.
Roll this position until you know.
If something happens on the on.
On their side.
Yeah, I prefer not to really comment on line.
Sort of what we might do here, but.
Just maybe referred to.
Our kind of historical approach to these things in and say that.
We are.
We tend to have a pretty consistent approach when it comes to what we're looking to do so I'd leave it there, but we do look at the business as a high quality business. It's certainly something that if it became an investment we'd be happy with that.
But clearly.
That's probably not all in all we're thinking.
Okay and shale and maybe you can answer this just.
I remember with the.
Brookfield are.
The Australian Hospital deal.
When you had taken a derivative position.
There was a bit of.
There's a bit of a wild ride there towards the close of that acquisition and.
The value of that derivative sort of went all over the place I'm assuming here on the private side.
Given us as a private REIT, we're not we don't have to worry about that kind of volatility in this going forward.
Yes, Tom I think that's.
That's fair on our financial statements, we record the fair market value of the derivative.
The option, we have in respect of Australian unity and given that there is no public mark to market, we wouldn't expect to see the same type of volatility we highlight that the assets as Paul alluded to are exceptionally high quality.
Our long term in nature, so don't see that type of valuation fluctuation.
Yes.
And then looking at the U S. U S entry I understand sort of like you are continuing to look on a cure for.
Care side of the business.
What is your comfort with exposure to serve like.
Public insurance.
In terms of like the proportion that b assets.
<unk>.
Generate this revenues for them.
As opposed to private insurance.
I'll try and answer that.
I think quite a nuance question. So if we have to take it offline.
Lots of thinking here, but I would call out debt I mean, the U S market as you know.
Certainly.
Yeah.
Predominantly a for profit market, so again, where would I expect us to be us.
That part of the space, which would have no debt.
More.
Would have the traditional insurance.
Elements to it where we've got both.
Payers providers and integrated players like Hmos as an example, so we're very focused on understanding that and being able to to to to.
Consider and risk adjusted.
For the for profit market, obviously, there is a smaller number of we'll.
We will call it public or Medicaid and Medicare driven you know institutions as well but.
Again, that's part of the focus to look at that and understand it well, but I think what makes us different and big is for sure is for profit space. So.
There's a big focus and that's been part of our ongoing education, obviously, we've invested in and one on the ground resources as well to be sure that we you know we have all of that understanding.
In existing for profit spaces, I mean, both Brazil, and Australia, although they have for public systems in each function a little bit differently. The private industries around them. They both are substantial parts of our business and of course, we've recently entered the U K.
In a mixed environment, although that market is more nuanced with with the large NHS kind of driver to healthcare, but still we're invested in the private space, where some of our operators provide exclusively private and some some of our mix of NHS from private and so I think and I think we're comfortable and looking at.
The U S to say it separately for what it is and what the opportunities and we're really looking to have our own clear view on where risk is and relative risk and return and so I think that's part of the exercise, we're well down the path that we're spending a lot of time thinking about it and as you've heard me previously say at least in the for profit space I mean.
We do see it as a slightly higher risk higher return business to other markets that we're in and some of the earlier cap rates that I called out her or transaction prices.
We believe represent the market today so.
That's kind of our current take on it and we're being very thoughtful in that.
I'm looking to do things that for probably at the higher quality end of the spectrum in all directions to go through.
Okay, and I think you had made reference to like not just maybe hospitals, but things like ambulatory care facilities.
I mean that when we when you sort of say something like that you mean like these are like day surgeries and things like that as opposed to say like.
Skilled nursing or things along those spectrum.
Yeah, that's right I mean again very much on the on the <unk> side right. So, yes, I mean ambulatory.
Or again urgent care, maybe there's a continuum of services right. So outpatient facilities can be quite infrastructure like and they can be more you know more simple like an urgent care center and there's a real continuum. So in general you know you know our big themes in my for are a bit more campus oriented in a bit more infrastructure.
Oriented and then those are the things, we really like of course.
The challenge or an opportunity in the U S is it's a big menu and theres lots of possibilities right.
So we're really looking at it all and trying to find.
A good entry point that lines up with our sort of highest conviction things but.
Again, we're very much on the carrier side not not in the in the care side, where you see skilled nursing and see some of the other stuff not not that those are bad places to be fundamentally it's just not our focus.
Okay, and a little bit closer to home care in Canada.
We have the long term care Commission here in Ontario talk about.
Potentially looking for a new development model going forward, where they split for the responsibility for the provision of capital for the real estate and physical plan of the operations versus the delivery of care.
If the province moved in that kind of direction would you guys be interested in participating on the capital provision five of our of our opportunity like that.
Yeah. So I think the answer I think in terms of the care space here would be possibly again, very covenant, driven and thinking about that but certainly having prudential backing.
And that type of program exists in Quebec, as Youre, probably aware already.
And most of the other provinces are considering it.
We are looking at that very selectively and again, it's that backing in the longer term nature of those contracts that make the real estate commitments work.
What I would call out, though is and where we are absolutely laser beam focused as an interest.
Similar initiatives that we see coming through ambulatory and outpatient so I'd call out for example, our acreage development, which is again a joint venture with Lake Charles Toronto.
That really speaks to the fact that we're starting to see.
The health Ministry in Ontario, and I expect in other provinces look for ways to expand out of their traditional hospital hospital footprints and that type of commitment in providing either being driven by hospitals like it was in the case of the acreage we're providing the smaller number of of.
Service providers that exist in the marketplace today or whoever it is going to be that sort of service provider with <unk>.
Commitments that facilitate the ability to to get this infrastructure in places.
Important for us and so we're super constructive on that I would say debt coming in addition to long term care that snow across the country and areas of focus for us and we believe that we're going to see.
A whole lot of opportunities coming.
With more direct government involvement Michael acreage or even with some private sector players, providing and building on existing types of things. So yes, it's a super relevant trend and we're all over it in our core business of course to the extent, we can find a small number of care things that might fit.
We're looking at it very closely too.
Okay.
I guess my last question.
You guys have been in serious asset aggregation mode over the last several years.
Has there been any any thought.
Looking back at the portfolio and maybe trying to optimize a little bit more I have to think.
Given the growth you guys have experienced you might look back into them for like okay. Like we own these book.
Do we need to own them forever.
Yeah, I mean, it's.
Right.
It's a great cash.
Sort of come back and answer it.
Maybe cloud classically around sort of capital allocation and really thinking about where.
Where do we want to have.
Dollars and so I think thats, a continuous exercise now, but we've gotten a lot better at that over time, and we're looking very closely at that through the portfolio now.
But certainly it leads us to some broader for mathematics and so.
I will say sort of yes to that and I think we will have.
Some answers.
The.
As the year comes on line with things that we do.
You know with J vs or otherwise.
And just to remind that we've kind of been through a continuous <unk> program in Canada over the years as an example, and again we have historically been.
Sellers are things that as you recall, we were quite broad and wide as we built the platform up and book to get scale and then we started to refine that back to larger assets and more major markets and I think there is another.
If that's coming probably over time for us as we look at look at our portfolios across the world around thinking about.
Things like ambulatory and outpatient so we're very focused on buildings for example that have the capacity to take on these higher acuity initiatives.
Within catchments or places that are likely to benefit by that so that's a pretty logical one to the point of building new ones, where we don't have something or where we don't like what we have so I think that's a theme that is already resonating through the portfolio and more focus on it but we do believe that that debt integration of <unk>.
Or let's say continuum of investment in the carrier space.
That focus on major markets and assets that are on a precinct or higher acuity based as sort of.
Consistent with our core strategies right now so we really.
Probably to continue the I don't know if it's not in those directions, it's probably very much up for consideration and that's how we're thinking about it today.
Okay. That's great. Thanks for the restaurant.
Okay.
There are no further questions at this time I'll turn it back to Paul for closing remarks.
Yes. Thank you. So I think I appreciate everyone's attendance today and wish you well and thank you for listening into our Q1 'twenty one.
West healthcare properties.
Thanks.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Yeah.