Q1 2024 NorthWest Healthcare Properties Real Estate Investment Trust Earnings Call

Good morning, ladies and gentlemen, and welcome to the Northwest Health care properties Real estate investment Trust first quarter 2024 results conference call.

At this time all lines are in listen only mode. Following the presentation, we will conduct a question and answer session.

Operator: Good morning, ladies and gentlemen, and welcome to the Northwest Healthcare Properties Real Estate Investment Trust first quarter 2024 results conference call. At this time, all lines are in listen-only mode.

Operator: 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 Wednesday, May 15, 2024. I would now like to turn the conference over to Alyssa Berry, Investor Relations for NorthWest. Please go ahead. Thank you all.

At any time during this call you required immediate assistance. Please press star zero for the operator.

This call is being recorded on Wednesday May 15, 2024, I would now like to turn the conference over to Lisa Barry Investor Relations for Northwest. Please go ahead.

Alyssa Berry: Thank you, operator. Good morning, everyone, and welcome to the Northwest Q1 2024 conference call. Thank you for joining us today. This call is being recorded, and a replay will be available on our website at www.nwhreit.com.

Lisa Barry: Thank you operator, good morning, everyone and welcome to Northwest Q1, 2024 conference call. Thank you for joining US today. This call is being recorded and a replay will be available on our website at triple W. Dot N W. H Reaves Dot com today's discussion includes forward looking statements.

Alyssa Berry: Today's discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed.

Lisa Barry: As always we want to caution you that such statements are based on management's assumptions and beliefs. These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings on SEDAR plots, including our MD&A and financial statements and Aif for a discussion of these risks.

Speaker Change: Factors presenting on today's call are Craig Mitchell, our CEO, Mike <unk>, our president and Stephanie care Markovic, our CFO Tracy Whittle, our Chief operating Officer is also present and available for the question and answer session I will now turn it over to Craig for his opening remarks.

Alyssa Berry: Please see our public filings on CDAR Plus, including our MD&A and financial statements and AIF for discussion of these risk factors. Presenting on today's call are Craig Mitchell, our CEO; Mike Brady, our President; and Stephanie Karamarkovic, our CFO. Tracy Whittall, our Chief Operating Officer, is also present and available for the question and answer session. I will now turn it over to Craig for his opening remarks.

Craig: Thank you Lisa.

Craig Douglas Mitchell: Thank you, Lisa. So good. Good morning, everyone.

Speaker Change: Good morning, everyone I'm pleased to share that our Q1 results are consistent with Q4 2023.

Craig Douglas Mitchell: I'm pleased to share that our Q1 results are consistent with Q4 2023 and are in line with management's expectations. We reported revenue of $134 million, net operating income of $95 million, and maintained a strong occupancy rate of 96.5%. Our performance this quarter reflects strong leasing activities and robust same property NOI, which is up 6% from Q1 last year. In the first quarter alone, we successfully completed $200 million in property dispositions and the sale of a portion of our investment in unlisted securities, and we've used these proceeds to reduce debt and strengthen our balance. During the last 12 months, we've divested 27 properties and a portion of our AUHPT units for a total of nearly $700 million.

Speaker Change: They are in line with management's expectations.

Speaker Change: We reported revenue of 134 million net.

Speaker Change: Net operating income of 95 million and maintained a strong occupancy rate of 96, 5%.

Speaker Change: Our performance this quarter reflects strong leasing activity and robust.

Speaker Change: Same property NOI, which is up 6% from Q1 last year.

Speaker Change: In the first quarter alone, we successfully completed $200 million in property dispositions and the <unk>.

Speaker Change: Although a portion O'brien investment securities.

Speaker Change: Securities.

We've used these proceeds to reduce debt and strengthen our balance sheet.

Speaker Change: During the last 12 months with da Vinci 27 properties and a portion of our <unk> units for a total proceeds of nearly $700 million.

Speaker Change: As we look ahead into the year, we continue to pursue the sale of additional assets globally and will provide further updates on this as you die level.

Craig Douglas Mitchell: As we look ahead into the year, we continue to pursue the sale of additional assets globally and will provide further updates on this as available. Efficiency and cost savings remain at the core of our operational focus. We're challenging how we do things to drive efficiency across our entire organization. On top of this, we're working hard to improve our capital management, achieving more favourable leverage levels, and strengthening our financial position. Concurrent with the strategic review process underway, we've also enhanced our governance and management team.

Speaker Change: Attrition fee and cost savings remain at the core of our operational focus.

Speaker Change: Challenging how we're doing things to drive efficiency across our entire organization.

Speaker Change: On top of this we are working hard to improve our capital management, achieving more favorable leverage levels and strengthening our financial position.

Speaker Change: Concurrent with the strategic review process is underway, we've also enhanced governance and management team.

Craig Douglas Mitchell: During the quarter, Tracey Whittle joined as our Chief Operating Officer and Stephanie Karamarcovich as our Chief Financial Officer. Both have been very impressive in a short period of time and strengthened our leadership bench in a very meaningful way. We're extremely pleased to have both on board. And I'd like to introduce our president, Mike Brady, to provide an update on our strategic initiatives during the quarter.

Speaker Change: During the quarter Tracy widow joined as our Chief operating officer.

Speaker Change: And Stephanie Caremark's, Rich <unk> Chief Financial Officer.

Speaker Change: Both had impressive.

Speaker Change: Have been very impressive in a short period of time and strengthen our leadership bench in a very meaningful way, we're extremely pleased to add back on board.

Michael Brady: And now I'd like to introduce our president Mike <unk> to provide an update on our strategic initiatives during the quarter.

Mike: Over to you Mike.

Thanks, Craig and good morning, everyone in terms of our strategic asset dispositions. During Q1 2024, we successfully divested 12 noncore properties generating total proceeds of $165 2 million.

Michael Brady: Thanks, Craig. And good morning, everyone.

Mike: Following the quarter, we further divested an additional property valued at $25 million.

Michael Brady: In terms of our strategic asset dispositions, during Q1 2024, we successfully divested 12 non-core properties, generating total proceeds of $165.2 million. Following the quarter, we further divested an additional property value of $20.5 million. Proceeds from these sales have gone towards repaying property-level debt and corporate credit facilities, aligning with our broader objectives to streamline the organization and strengthen our financial position. Since mid-2023, we have reduced our proportionate debt by $383 million, reducing it to $3.5 billion.

Mike: Proceeds from these sales have gone towards repaying property level debt and corporate credit facilities.

Mike: Aligning with our broader objectives to streamline the organization and strengthen our financial position.

Craig Douglas Mitchell: Since mid 2023, we have reduced our proportionate debt by $383 million, reducing it to $3 5 billion.

Craig Douglas Mitchell: Additionally, during this first quarter, we redeemed an additional $15 3 million from our investments in unlisted securities, bringing our total proceeds from these sales to $150 million. We've now sold approximately 71% of this investment.

Michael Brady: Additionally, during this first quarter, we redeemed an additional $15.3 million from our investment in unlisted securities, bringing our total proceeds from these sales to $150 million. We've now sold approximately 71% of this investment. This has enabled us to fully repay the term debt secured by these unlisted securities in Australasia. This strategic financial management reflects our commitment to maintaining a robust and adaptable financial framework and continuing Northwest's progress towards becoming an institutional quality region. I'll now turn it over to our Chief Financial Officer, Stephanie Karamarkovich, to share our financial highlights for the quarter.

Craig Douglas Mitchell: This has enabled us to fully repaid the term debt secured by these unlisted securities in Australasia.

This strategic financial management reflects our commitment to maintaining a robust and adaptable financial framework and continuing northwest progress towards becoming an institutional quality right.

Speaker Change: I'll now turn it over to our Chief Financial Officer, Stefanie Keira Markovich to share our financial highlights for the quarter.

Craig Douglas Mitchell: Yeah.

Hi, everyone. Thank you for the warm welcome over the last nine I really appreciate it.

Stephanie Karamarkovic: Thank you for the warm welcome over the last month. I really appreciate it.

Speaker Change: The northwest Chief Financial Officer for about 30 days and there is nothing like diving in during a reporting period.

Stephanie Karamarkovic: I've been NorthWest's Chief Financial Officer for about 30 days, and there's nothing like diving in during a reporting period. This is a bit of a homecoming for me as I previously worked at Northwest for eight years. I'm very pleased to be back, and I look forward to getting to know many of you.

This is a bit of a homecoming for me as I previously worked at northwest for eight years.

Speaker Change: I'm very pleased to be back and I look forward to getting to know many of you.

Stephanie Karamarkovic: Turning over to our financials in more detail, our Q1 revenue from investment properties slightly decreased by 1.3% as compared to Q1 2023 due to strategic asset sales, but was partially offset by rental increases across all of our markets. Our NOI of $95 million was essentially flat as compared to the first quarter of last year, however, it was 2.7% lower than Q4 2023 as a result of the asset disposition. Same property NOI of $88.9 million was 6% higher than in Q1 2024, and 6.1% higher than in Q1 2024, driven primarily by contractual rent increases and indexation.

Speaker Change: Over to our financials in more detail our Q1 revenue from investment properly property has slightly decreased by one 3% as compared to Q1 2023 strategic asset sales, but was partially offset by rental increases across all of our markets. Our NOI of $95 million was essentially flat as compared to the.

Speaker Change: First quarter of last year, however, with two 7% lower than Q4 2023, as a result of the asset dispositions.

Speaker Change: Same property NOI of $88 9 million was 6% higher than in Q4, Q1 2024 with six point were higher than in Q1, 2024, driven primarily by contractual rent increases and indexation.

Stephanie Karamarkovic: Our portfolio occupancy of 96.5% is underpinned by a weighted average lease expiry of 13.2 years and 84% of leases subject to rent indexation. With our portfolio comprising more than 1800 tenants, the REIT's cash flow is highly diversified. It's also worth noting that our global rent collection is 98%.

Our portfolio occupancy of 96, 5% is underpinned by a weighted average lease expiry of $13 two years and 84% of leases subject to rent indexation.

Speaker Change: With portfolio, our people our portfolio comprising of more than 1800 tenants. The right cash flow is highly diversified. It's also worth noting that our global rent collection is 98%.

Stephanie Karamarkovic: Q1 AFFO per unit was $0.11 after adjusting for interest rate caps that expired during the period. AFFO per unit remains consistent with the past two quarters at $0.09 per unit. reported GNA for the quarter was $15.5 million, which is $2.5 million higher than the first quarter of 2023 and $3.2 million higher than Q4. Included in GNA is non-cash compensation expense for Q1 2024 of $2.5 million as compared to $2.3 million in Q1 2023 and a $0.7 million non-cash compensation recovery in Q4.

Speaker Change: Q1, <unk> per unit was 11.

Speaker Change: After adjusting for interest rate caps that expired during the period.

Speaker Change: <unk> per unit remained consistent with the past two quarters at nine cents per unit.

Speaker Change: Reported G&A for the quarter was $15 5 million, which is $2 5 million higher than the first quarter of 2023, and $3 2 million higher than Q4 <unk>.

Speaker Change: Included in G&A is noncash compensation expense during Q1, 2024 of $2 5 million as compared to $2 3 million in Q1, 2023, and a point 7 million noncash compensation recovery in Q4, excluding these impacts of noncash compensation.

Speaker Change: G&A in the first quarter was $13 million, which is $2 3 million higher than Q1, 'twenty, three but flat as compared to Q4.

Stephanie Karamarkovic: Excluding these impacts of non-cash compensation, G&A in the first quarter was $13 million, which is $2.3 million higher than Q1 2023 but flat as compared to Q4. Debt to GBV remained stable at 47.7%, with a decrease in debt related to asset sales being offset by investment property fair value losses and FX depreciation. We've also taken significant steps in capital management, having refinanced and amended mortgages to achieve more favorable terms, contributing to a more resilient financial structure.

Speaker Change: Debt to GBP <unk> remained stable at 47, 7% with a decrease in debt related to asset sales being offset by investment property fair value losses, and FX depreciation.

Speaker Change: We've also taken significant steps in capital management, having refinanced an amended mortgages to achieve more favorable terms contributing to a more resilient financial structure.

Stephanie Karamarkovic: The REIT continues to be impacted by higher central bank interest rates globally. Interest expense for the quarter was $55.4 million, which is $3.7 million higher than in Q1'23, but is $1.7 million lower than in Q4. The decrease in interest expenses compared to Q4 is due to debt repayments of high-cost debt as a result of proceeds from asset sales, partially offset by the full quarter impact of the extension of the REITs Series G convertible debentures.

Speaker Change: The REIT continues to be impacted by higher central bank interest rates globally interest expense for the quarter was $55 4 million, which is $3 7 million higher than in Q1, 'twenty three but it is $1 7 million lower than in Q4.

Speaker Change: This decrease in interest expense as compared to Q4 is due to debt repayments of high cost debt as a result of proceeds from asset sales, partially offset by the full quarter impact of the extension of the REIT series G convertible debentures.

Stephanie Karamarkovic: The REIT's effective interest rate is 6.1% as compared to 5.15% at March 31, 2023, and 6.37% at December 31, 2023. As of March 31, 2024, on a proportionate basis, the REIT had mortgages and loans payable of $3.5 billion, down from $3.6 billion in the prior period and $3.7 million in Q4. During the first three months of 2024, the REIT extended approximately $300 million of its non-mortgage debt maturing in 2024. This included the extension of $125 million of its revolving credit facility from November 24 to March 25, and the extension of the $172 million Australasian Secured Loan for an additional two years to March 2027. Looking ahead, we're encouraged by the significant progress made to date and the overall performance of our real estate portfolio. And with that, I'll now ask the operator to open up the call to questions.

Speaker Change: The rates effective interest rate is six 1% as compared to $5 one 5% at March 31, 2023, and $6 three 7% at December 31 2023.

Speaker Change: As at March 31, 2024 on a proportionate basis, the REIT had mortgages and loans payable of $3 5 billion down from $3 6 billion in the prior period and $3 7 million in Q4.

During the first three months of 2020 for the REIT extended approximately $300 million of its non mortgage debt maturing in 2024. This includes the extension of $125 million of its revolving credit facility from November 24 to March 25, and the extension of the $172 million, Australia is unsecured loan for.

Speaker Change: An additional two years to March 2027.

Speaker Change: Looking ahead, we're encouraged by the significant progress made to date and the overall performance of our real estate portfolio.

Speaker Change: And with that I'll now ask the operator to open up the call for questions.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you will hear three Tom prop acknowledging your request any of 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 the two.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be answered in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. Your first question comes from Sairam Srinivas with Kornack. Please go ahead.

Speaker Change: If you are using a speaker phone please lift the handset before pressing any keys one moment. Please.

Speaker Change: For your first question.

Speaker Change: Your first question comes from ceramic scrutiny, thus with core Mark. Please go ahead.

Sairam Srinivas: Thank you, operator. Good morning, everybody.

Speaker Change: Thank you all Dana good morning, everybody.

Craig Douglas Mitchell: Just looking at the transaction market right now. And you know, just trying that with the fair value loss you guys saw this quarter on assets. Can you talk about a bit of a transaction outlook? And is this something we should be reading from the Fair Value Laws in terms of market appetite for that?

Speaker Change: Just looking at the transaction market right now.

Speaker Change: At this time that was a fair value loss of bank saw this quarter on assets.

Speaker Change: Can you talk a little bit of a transaction outlook and is this something we should be reading from the fair value loss in terms of market appetite for the assets.

Speaker Change: Yes, so maybe I'll go back in history.

Craig Douglas Mitchell: Yeah, so maybe I'll go back into history just to provide a bit of color. The markets are dropping, as you would appreciate, but we've been very successful with our dispositions. Now, the $700 million that we've sold in the last 12 months, we've sold it just at a cap rate of under 7%. In the last quarter, the $200 million of sales in the AHPT unit at the real estate level are selling at a cap rate of just under seven and a half percent.

Speaker Change: Rather than a column.

Speaker Change: The markets are choppy as you would appreciate.

Speaker Change: That will be very successful.

Speaker Change: With the dispositions.

Speaker Change: 100 million that will solve the last 12 months consolidated adjusted cap line of sub 7%.

Speaker Change: And the last last quarter, the 200 million sounds in green.

Speaker Change: <unk> units.

Speaker Change: The Rus debt level, you sell at a cap rate of just under 7%.

Speaker Change: So we are we are seeing transactions names.

Craig Douglas Mitchell: So we are we are seeing transactions move. It varies by market. It is choppy, but we are transacting, selling 27 properties. It feels like we're at the top of the interest rate cycle, which is giving everyone a little bit of confidence about how to apply discount rates.

Speaker Change: Yes.

Speaker Change: Varies by market. It is choppy, but we are transacting sending.

Speaker Change: Selling 27 properties it feels like we're at the top of the interest rate cycle, which would give me everyone a little bit of confidence.

Speaker Change: About Hatton I don't apply discount rates.

Speaker Change: That's good color, Greg and maybe just maybe I missed this in the disclosure, but other motive dispositions out in the pipeline for you guys and congrats and welcome Robert.

Craig Douglas Mitchell: That's a good color, Craig. And maybe, just maybe, I missed this in the disclosure, but are there more dispositions out in the pipeline for you guys that you guys are working on right now?

Speaker Change: I think we'll be very very clear I mean, we're trying to restore.

Craig Douglas Mitchell: I think we've been very clear. I mean, we're trying to restore our unit price as close to NAV as possible and increase our earnings. We have some high-cost debt. You know, we've got nearly 400 million dollars in nearly double-digit interest rates. So, you know, we would like to be able to... reduce that. We're looking to strengthen our balance sheet, as we have done, you know, in the last 12 months.

Speaker Change: Our unit prices close to NAV as Barstool and increase our earnings we have some high cost debt, we've got nearly $400 million of.

Speaker Change: Nearly double digit interest rates.

Speaker Change: Okay.

Speaker Change: To reduce that.

Speaker Change: We're looking to strengthen our balance sheet as we've done in the last 12 months.

Craig Douglas Mitchell: So we're always looking at ways of improving the robustness of this business, whether that be distributions of units, real estate, individual real estate transactions, or efficiencies in the G&A line. So all three things, all three parts.

Speaker Change: So we're always looking at ways.

All improving.

Speaker Change: Robustness of this business would that be distributions of units.

Speaker Change: Real estate individual real estate transactions or efficiencies in the G&A line.

Speaker Change: So all three things all three pass through item for us.

Speaker Change: Alright, and then maybe just kind of reminding me most of Europe now I guess within that process of dispositions is it also kind of key.

Craig Douglas Mitchell: All right, and maybe just kind of rewinding almost a year ago now, I guess the entire process of dispositions was also kind of getting started because of leverage and the urgency to kind of pay down debt. But having now actually refinanced extended them beyond 24, at least most of them. Does that maybe change your outlook on this position? Maybe it gives you more of a breather in terms of the timeline you can execute this position?

Speaker Change: Leverage under urgency to kind of pay down debt.

Speaker Change: Having now actually refinanced.

Speaker Change: You extended them beyond 'twenty for at least most of them does that change maybe outlook on dispositions and maybe that will give you more of a breather in terms of what timeline you can exit your disposition.

Speaker Change: No I think.

Craig Douglas Mitchell: No, I think, as I said, we're very focused on increasing our earnings. You know, we're probably in the third quarter at nine cents. We're very pleased that we feel like we've got a good baseline. We need to grow that number; www.norwest.com.au There's always an urgency, you know, in all transactions, and particularly in this market. Yeah, it's important to us.

Speaker Change: Okay great.

Speaker Change: Very focused on increasing our earnings we're now probably the third quarter at <unk>. We were very pleased that we feel like we've got a good baseline.

Speaker Change: We need to grow grow that number.

Speaker Change: Part of growing that as AGA and ultimately three why Aegean good like for like growth you saw that come through our portfolio.

Speaker Change: Reducing G&A it is a big focus on that and efficiency and then the third one is repaying high cost debt through dispositions.

Speaker Change: There's always an urgency.

In all transactions and particularly in this market it is important to us.

Speaker Change: Hi, Brian I'm. Following my last question is you spoke of.

Craig Douglas Mitchell: Hi Varun, probably my last question is, you know, you spoke about various markets that you are looking to kind of lighten up on, and obviously, Brazil is one of them. Like, is that still a candidate you guys are looking to offload? And would you say that the current fair value where it is today on the balance sheet kind of represents where those assets should be sold at? of what you would be looking for them from a seller's point of view?

Danny: Thank you Danny.

Lighten up on and then obviously, Brazil is one of them.

Speaker Change: Is that still a candidate you guys are looking to offload and what do you see that the current fair value added yesterday on the balance sheet kind of represented by those assets should be sold off.

Speaker Change: What's your what you'd be looking for them.

Speaker Change: Okay.

Craig Douglas Mitchell: Yeah, so the real estate we sold in the first quarter that we just announced, and they held our books at their value at $2.4. I think we're at a point in the cycle where cap rates have started to stabilize. You might see a little bit of softening in cap rates, but nothing material. So I think you're at a point in the cycle where capital values are starting to stabilize.

Speaker Change: Yeah.

Speaker Change: So the rudest time, we sold in the first quarter.

Speaker Change: We just announced they were held in our books at zero value.

Speaker Change: Q4.

Speaker Change: I think we're at the cycle now where cap rates and start to stabilize you might see a little bit of softening in cap rate, but nothing material. So I think you're right.

Speaker Change: At a point in the cycle.

Speaker Change: Capital values are starting to stabilize.

Speaker Change: Alright, so what I'm basically anything is that fair value reduction of the division that he saw was mainly a function models interest rates being hobbled on gasoline Douglas I'll ask you. The NOI number on the assets that they can generate would that'd be fair to say.

Craig Douglas Mitchell: All right, so what I'm basically reading is that the fair value reduction or the revision that you saw was mainly a function mode of interest rates being a Hamilton cap rate rather than actually the NOI number on the assets that they can generate. Would that be fair to say?

Craig Douglas Mitchell: That's fair to say. NOI is strong with good indexation, that rent collection of 98%, that's four years in a row of 98%. So the cash flows are strong really. The valuation assumptions are either a discount rate or on the terminal cap rate or the initial cap rates, what's driving it, not the underlying cash flows.

Speaker Change: That said, it's fair to say NOI.

Speaker Change: Is strong with good indexation that rent collections of 98% for use in around 98%. So the cash flows are strong lately.

Speaker Change: The valuation assumptions is on the discount rate.

Speaker Change: Oh on the terminal cap rate or the initial cap rates, what's driving it not the underlying cash flows.

Sairam Srinivas: That's brilliant, Craig. I'll turn it back on. Thank you.

Speaker Change: Absolutely. Thanks, guys I'll turn it back thank you.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, as a reminder, should do you have a question. Please press star followed by the one.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Your next question comes from Frank Liu with BMO Capital Markets. Your line is now.

Speaker Change: Your next question comes from Frank Lee with BMO capital markets. Your line is now.

Speaker Change: Yeah.

Frank Liu: Good morning, everyone, and congrats on your appointments, Stephanie and Tracy.

Speaker Change: Good morning, everyone and congrats on your appointment Stephanie Tracy.

Speaker Change: Yeah.

Speaker Change: Good morning.

Stephanie Karamarkovic: Good morning, how are you? Good.

Frank Liu: Good, good. Thank you. It's good to see the new disclosures within the supplemental schedules. With the new segments laid out, could you just briefly comment on the organic growth you're expecting over, let's say, a year and two years across North America, Brazil, Europe, and Australia-Asia?

Speaker Change: Got it got it thank.

Stephanie Tracy: Thank you it's good to see the new Dick's cultures.

Speaker Change: Supplemental schedules.

Speaker Change: With the new segments laid out could you just briefly comment on the organic growth you are expecting over let's say a year and two years across North America, Brazil Europe.

Speaker Change: And Australasia.

Speaker Change: Yeah.

Speaker Change: I'll talk.

Craig Douglas Mitchell: Yeah. I'll talk to Frank and Craig at a higher level.

Speaker Change: As Craig has a high level.

Craig Douglas Mitchell: On a proportionate basis, we saw 5.4% like-for-like growth, or a consolidated basis of 6%. I think that is elevated. I think if you look forward to where we are in the inflationary environment globally, I think you can assume, particularly in the next 12 months or so, 4% like-for-like growth on a blended basis. But that is a reasonable assumption across most of the markets. If I forward out two years, that's a little bit harder, depending on where you are, you know, because 84% is indexed to inflation.

Craig Douglas Mitchell: On a proportionate basis, we saw five 4% like for like growth on a consolidated basis of 6% I think that is elevated I think if you look forward, where we are in an inflationary environment globally. I think you can assume particularly in the next 12 months or so 4% like for like growth on a blend.

Speaker Change: Dices.

Speaker Change: Pretty hard to give you.

Speaker Change: But that's a reasonable assumption.

Speaker Change: Of course, most of the markets fivefold.

Speaker Change: That's a little bit harder, depending where 94%.

Speaker Change: Index to inflation, yeah, you're still in that 3% to 4%. If you want to sort of two years. If we think the interest rate globally are going to come down.

Craig Douglas Mitchell: You know, you're still in that 3% to 4% if you want to go out for sort of two years, if we think the interest rates globally are going to come down. But so think about 4% for the next 12 months, you know, 3% to 4% the year after that. I appreciate your comments on the disclosure. I think, you know, we really tried to listen hard to the investment community late last year. And we're also open to comments to try and get the best disclosure and make our business as easy to value as possible.

Speaker Change: So think.

Speaker Change: Thinking about 4% next 12 months, and then 3% to 4% the year often.

Speaker Change: Appreciate your comments on the disclosure.

Speaker Change: Really try to listen hard to the investment community late last year.

Speaker Change: I will also open to comments to try and get the best disclosure and Mega businesses easy to value as possible.

Frank Liu: Of course, yeah, it's always good to see some improvements, and that may help with our modeling perspective and better understanding your business. Um, since we're a caller on the last PNY, I guess, so there's no liar, right? I mean, 3-4%. I mean 4% next 12 months, 3-4% in two years. Is there any other wires you want to go on? Maybe I can switch my question to this way.

Speaker Change: Of course, it's always good to see some improvements and that'd be helpful.

Speaker Change: Our modeling perspective.

Speaker Change: And in your business.

Speaker Change: Is that sort of color on the ASP I guess, so there is no all right.

Speaker Change: I mean three 4%.

I mean, 4% next 12 months' before two years is there any outliers warnaco, maybe I can switch my question does this way.

Craig Douglas Mitchell: No, no, we've got a reason. If you look at our management presentation, we have our expiry profile. You know, it's very, very benign. So I don't expect any, any major outliers, you know, whether it be downtime, termination income, or the like. So don't expect any outliers.

Speaker Change: No. We've got a reason if you look at on a management presentation, we've got a.

Speaker Change: <unk> profile.

Speaker Change: You know, it's very very benign so I don't expect any any major out lies.

Speaker Change: The downtime termination income.

Speaker Change: And the likes.

Speaker Change: Can you explain to you that lives.

Frank Liu: Got it. Perfect. Thanks for the call.

Speaker Change: Got it perfect. Thanks for the color.

Speaker Change: Just wanted to briefly follow up on a news came out in March related.

Frank Liu: I just want to briefly follow up on some news that came out in March related to HealthScope. I guess they were planning to ask landlords for rent relief for some of the assets, some of their underperforming hospitals. I'm just curious if you have had any conversation with management at HealthScope and should we expect any impact on Northwest?

Speaker Change: Related to household.

Speaker Change: I guess, there were planning to ask landlords for rent relief for some of the assets.

Speaker Change: Some of their underperforming hospitals.

Speaker Change: I'm just curious if you have had any conversation with Bash My household.

Should we expect any impact to the northwest.

Speaker Change: Sure Okay.

Craig Douglas Mitchell: Sure. Okay, no, that's a good question. Just maybe, just for the broader audience, maybe a bit of background for everyone.

Speaker Change: Good question.

Scott: Just maybe just the broad a broad audience, maybe a bit of background for everyone else Scott, yes, they're critical provider of healthcare services in Australia. They are the second largest private or.

Craig Douglas Mitchell: You know, HealthScope, you know, they're a critical provider of healthcare services in Australia. They're the second largest private hospital operator in Australia behind Ramsey. They're working with the government at the moment trying to increase their revenue rates they're getting from insurers. But at the moment, they're facing negative jaws. In effect, what I mean by that is their cost base, you know, whether it be PP&E or nursing, is going up at a higher rate than they're getting from revenue from insurers.

Scott: Private hospital, operator in Australia behind Ramsey.

Scott: They're working with the government at the moment trying to increase their revenue rights of getting from reinsurance.

Scott: Women.

Scott: They're facing negative jaws.

Speaker Change: What I mean by that.

Speaker Change: The cost base.

Speaker Change: P P M a C.

Speaker Change: Is going up at a higher rate than they are getting from revenues from insurance, so that negative jaws, it kind of working with the industry and government.

Craig Douglas Mitchell: So those negative jaws, they're kind of working with the industry and government to close that down. The owners of Healthcare Businesses, Brookfield Partners, yes, they have come with a proposal to the banks and landlords to restructure their debt and their corporate structure. But very clearly, we and the banks have rejected that initial proposal.

Speaker Change: To close that down.

Speaker Change: The irony of healthcare business Brookfield partners, yes.

Speaker Change: Yes, I have them.

Speaker Change: With our proposal to the banks and landlords to restructure their debt and then corporate structure.

Speaker Change: Very candidly, we and the banks have rejected any initial proposal.

Craig Douglas Mitchell: We always consider supporting them in return for any lease enhancements. I think it's important to note that we've got very strong leases; we've got cross defaults on all their leases. But it is also very important to note as well that Healthcare has met all its lease obligations, and they have a zero amount of rent outstanding. And again, just give it the quantum of the proportional rent; they're 3.5% of our rent roll on a proportionate basis. So I think it's, you know, bringing it all together, the conversations will continue, and I think this will sort of play out over time. Okay.

Speaker Change: We will always consider them to support them in return for any lease enhancements.

Speaker Change: I think it's important denied that we've got.

Speaker Change: Very strong leases without cost defaults and all their leases, but it is also very important to note as well that helps covers met all their lease obligations and then zero amount of brand outstanding.

Speaker Change: Again, just to keep it.

Speaker Change: The quantum of the propulsion rain, there three 5% of our rent roll on a proportional basis.

Speaker Change: So I think it's yeah, bringing it all together the conversations will continue and I think this is sort of play out.

Speaker Change: John.

Frank Liu: Okay, that's great. I mean, I don't have any first questions. I'll turn it back.

Speaker Change: Okay, that's great.

Speaker Change: I mean, I don't have any further questions I will turn it back.

Speaker Change: Thanks, guys.

Speaker Change: There are no further questions at this time I will now turn the call over to Lisa for closing remarks.

Operator: There are no further questions at this time. I will now turn the call over to Alyssa for her closing remarks. Thank you.

Alyssa Berry: Thank you very much. On behalf of the NorthWest team, thank you for participating in today's call, and we're looking forward to speaking with you again in August for our Q2 results. Should you have any questions, please feel free to reach out to us directly. Have a wonderful rest of your week.

Lisa Barry: Thank you very much on behalf of the northwest team. Thank you for participating in today's call and we're looking forward to speaking with you again in August for our Q2 result should you have any questions. Please feel free to reach out to us directly have a wonderful rest of your week.

Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating in assay. Please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.

Speaker Change: Yeah.