Q2 2025 NorthWest Healthcare Properties Real Estate Investment Trust Earnings Call

Operator: Welcome to the NorthWest Healthcare Properties REIT second quarter earnings 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, then zero for an operator. This call is being recorded today, Wednesday, August 13th, 2025. I would now like to turn the conference over to Alyssa Barry, Investor Relations for NorthWest. Please go ahead.

Welcome to the NorthWest Healthcare Properties Real Estate Investment Trust Q2 2025 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session.

Alyssa Barry: Thank you, operator. Good morning, everyone, and welcome to NorthWest's Q2 2025 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. 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 such statements. Please see our public filings on SEDAR+, including our MD&A and annual information form for a discussion of these risk factors. Please note all currencies referenced today are in Canadian dollars unless otherwise stated. Our Q2 investor presentation, which is available on the investor relations section of our website, provides more details on Q2 portfolio performance, financial metrics, and our accomplishments.

If at any time during this call, you require immediate assistance, please press star, then zero for an operator. This call is being recorded today, Wednesday, August 13th. 2025 I would now like to turn the conference over to Alisa Barry investor relations for Northwest. Please go ahead. Thank you, operator. Good morning, everyone, and welcome to North West Q2 2025 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.

Nwhat do 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. We have forward-looking statements are subject to uncertainties, and other factors that could cause actual results to differ materially from such statements.

Please see a public filings on C, do plus including our mdna and annual information form for a discussion of these risk factors.

Please note all currencies referenced today are in Canadian dollars, unless otherwise stated.

Alyssa Barry: Presenting on today's call are Zach Vaughn, our CEO, and Stephanie Karamarkovic, our CFO. Mike Brady, our President, and Tracy Whittle, our Chief Operating Officer, are also present and available for the question-and-answer session. With that, I will now turn it over to Zach for his opening remarks.

I’ll turn it over to Zach for his opening remarks.

Zach Vaughn: Thanks, Alyssa, and thank you all for joining the call and for your interest in and support of NorthWest. I look forward to meeting all of you over the coming few months. I am thrilled to be on board and working with such a strong senior leadership team and also to have the support of the board of directors, who have been a great and tremendous sounding board and resource for me so far. I have been lucky in my career. I have worked across several property sectors and had opportunities to scale up property businesses. Although healthcare real estate is somewhat new to me, given that it has such strong structural tailwinds and it is going to continue to draw in new capital, it is very exciting for me to be at NorthWest.

Well, thanks, Alissa. And thank you all for joining the call and for your interest in and support of Northwest. I I look forward to meeting uh, all of you, over the coming few months. I'm thrilled to be on board and working with such a strong senior leadership team. And also to have the support of the board of directors, who've been a great and tremendous sounding board and resource for me so far.

I've been lucky in my career. I've worked across several property sectors.

Zach Vaughn: Since joining about five weeks ago, I have been visiting our assets and meeting with our team members around the world. So far, I have been able to see the assets in Europe, Australasia, and the Greater Toronto area, and I plan to see the balance of the portfolio in the next few months. I have been very impressed by the caliber not only of our portfolio, but also our team, who have in-depth knowledge of the needs of the healthcare systems and operators across our various markets, and our teams have the skill sets to operate and deliver those assets effectively. I do want to thank Craig Mitchell, our former CEO. Craig was extraordinarily helpful to me during the transition, even taking time out of his schedule to show me around Australasia during my first week here.

And had opportunities to scale up property businesses. So although Healthcare real estate is somewhat new to me given that it has such strong. Such strong, structural Tailwinds and it's going to continue to draw in New Capital. It's very exciting for me to be at Northwest.

Since joining about 5 weeks ago, I've been visiting our assets and meeting with our team members around the world. And so far, I've been able to see the assets in Europe, Australia, New Zealand and the greater Toronto area and I plan to see the balance of the portfolio in the next few months.

And I've been very impressed by the caliber, not only of our portfolio, but also our team who have in-depth knowledge of the needs of the Healthcare systems, and operators across our various markets, and our teams have the skill sets to operate and deliver those assets effectively.

I do want to thank Craig Mitchell, our former CEO.

Zach Vaughn: Most importantly, I want to thank Craig for all his efforts that put this business back on a stable foundation. I also want to thank the entire NorthWest team for being so welcoming and helpful in my first few weeks. When I was first approached about this opportunity, to be honest, I was not familiar with NorthWest, but the more I dug in, the more excited I got. This is a business that owns essential healthcare infrastructure assets. There are several unique characteristics our assets have, but three really stand out to me. The first is the quality of our cash flows. The cash flows we generate are supported by extraordinarily highly rated credit, often AAA, that would be very tough to replicate in other property sectors. Second, our assets have very low obsolescence risk.

Uh Craig was extraordinarily helpful to me during the transition even taking time out of his schedule to show me around Australia during my first week here. Uh, but most importantly, I want to thank Craig for all his efforts that put this business back on a stable Foundation.

And I also want to thank the entire Northwest team for being so welcoming and helpful in my first few weeks. When I was first approached about this opportunity, to be honest, I was not familiar with Northwest. But the more I dug in, the more excited I got. This is a business that owns essential healthcare infrastructure assets, and there are several unique characteristics or assets it has, but three really stand out to me.

Uh the first is the quality of our cash flows, the cash flows we generate are supported by extraordinarily. Highly rated credit often Triple A that would be very tough to replicate in other property sectors.

Zach Vaughn: While advances in technology do and have made certain types of properties less valuable, in our case, technology advances actually improve the profitability for our operators, our doctors, and specialists who take space in our portfolio. Third, our assets are very hard to replicate, whether they are our hospitals or our outpatient facilities. These are highly specialized and are often located in very dense urban environments and global cities where there is significant long-term residual value. In addition to the quality of our assets, the sector itself is undergoing a transition. What do I mean by that? Healthcare real estate has been considered somewhat of a niche or alternative property sector that always attracted a subset of institutional real estate investors. But now it is attracting capital not only from real estate, but also from infrastructure investors. We have been the beneficiaries of this recently.

Second, our assets have very low obsolescence risk. So while advances in technology, do and have made certain types of properties less valuable. In our case technology advances actually improve the profitability for our operators. Our doctors and Specialists who take space in our portfolio.

And third, our assets are very hard to replicate whether there are hospitals or outpatient facilities. These are highly specialized and are often located in very dense, Urban environments and Global cities where there's significant long-term residual value.

in addition to the quality, in addition to the quality of our assets, the sector itself is undergoing a transition

What do I mean by that? Well, healthcare real estate has been considered somewhat of a niche or alternative property sector that has always attracted a subset of institutional real estate investors. However, it is now attracting capital not only from real estate but also from infrastructure investors.

Zach Vaughn: Stephanie Karamarkovic is going to speak in more detail about the results, but last quarter we did fully exit our investment in Assura PLC, realizing about a 30% total return on our investment. In Assura PLC's case, for those of you that followed it, there were two large global infrastructure investors looking to acquire the company for core and very long-dated infrastructure funds that they managed. Having infrastructure and real estate capital overlap as it relates to healthcare is a trend that will continue, as the growth in allocated capital towards infrastructure forces those investors to widen their nets as they search for stable, recession-resistant, high-credit index cash flow. At the same time that new capital is entering the healthcare space, we are also in a transition period where existing institutional real estate investors are diversifying their portfolios and broadening into new sectors.

We've been the beneficiaries of this recently Stephanie's going to speak in more detail about the results. But last quarter, we did fully exit our investment in.

In in assura, realizing about a 30% Total return on our investment.

In assurance case, for those of you that followed it, there were 2, large Global infrastructure investors, looking to acquire the company for core and very long dated infrastructure funds that they managed.

Having infrastructure and real estate Capital overlap as it relates to healthcare, as a trend, that will continue as the growth in allocated Capital towards infrastructure forces. Those investors to widen their Nets as they search for stable, uh, recession resistance, High credit index cash flow at the same time as new at. At the same time that new capital is entering the healthcare space. We're also in a transition period where existing institutional Real Estate Investors are diversifying.

Zach Vaughn: While institutional real estate allocations may not be rising as quickly as they were historically, sectors like data centers or student housing, hospitality ledger, and yes, healthcare will continue to have unmet demand in their portfolio. As this rotation takes place, certain property sectors are going to have lower liquidity, but fortunately for us, we are among a small group specializing in healthcare assets that large-scale capital is going to be looking for. We have a lot of wind at our backs. The market, however, does not recognize this. Our assets facilitate the delivery of healthcare, are critical to people's everyday lives, and are supported by some of the highest-rated credit in the world. In an environment where government bonds yield around or less than 3.5%, the spread one is getting by owning NorthWest Healthcare Properties Real Estate Investment Trust compared to alternatives looks very wide.

Their portfolios and broadening into new sectors.

So, while institutional real estate, allocations may not be rising as quickly as they were historically, sectors, like data centers or student housing. Hospitality Ledger. And yes Healthcare will continue to have unmet demand in the in their portfolio.

As this rotation takes place certain property, sectors are going to have lower liquidity. But fortunately for us we're among a small group specializing in healthcare assets, that large scale. Capital is going to be looking for

So, we have a lot of wind at our backs. The market, however, does not recognize these assets. Facilities that deliver healthcare are critical to people's everyday lives and are supported by some of the highest-rated credit in the world.

Zach Vaughn: Given the characteristics of our portfolio, NorthWest Healthcare Properties Real Estate Investment Trust is a very attractive investment, not just in terms of the wide discount to its intrinsic value, but also on a risk-adjusted basis given the underlying credit that supports our income. I am confident that as more investors learn about and understand the nature of our portfolio and our cash flows, we are going to be rewarded with more appropriately priced capital. This is going to unlock opportunities for us to drive unitholder value through our creative growth initiatives. In terms of external growth, the investable universe for us is enormous. We can be a partner of choice for healthcare systems, health authorities, and governments as they move clinical and surgical procedures out of acute hospitals, as we saw with Lakeridge, leading to the development of our Jerry Kaufman asset in Pickering.

Alternatives looks very wide.

Given the characteristics of our portfolio Northwest is a very attractive investment, not just in terms of the wide discount to its intrinsic value, but also on a risk-adjusted basis given the underlying credit that supports our income.

And I'm confident that it's more investors learning about and understanding the nature of our portfolio and our cash flows, which will reward us with more appropriately priced capital.

Zach Vaughn: At the same time, rising investor demand for healthcare assets means we can attract more institutional capital to work with us as we scale up our business. Although we sit on a strong foundation today, as you are going to hear from Stephanie Karamarkovic in a minute, we will continue to unlock liquidity through selective dispositions and recycle that capital to reduce debt and pursue creative growth initiatives. So far this year, we have generated over $280 million through capital recycling. Encouragingly, the inbounds we are getting from investors that want to acquire assets from us keep growing. We are in early-stage discussions on a few assets. Before I turn it over to Stephanie Karamarkovic to run through our results, I would just say a few words on Healthscope. Healthscope operates 12 of our hospitals in Australasia and accounts for about 6% of our gross revenue.

This is going to unlock opportunities for us to drive unit holder value through a creative growth initiative. In terms of external growth, the investable universe for us is enormous. We can be a partner of choice for Healthcare Systems. Health authorities and governments as they move clinical, and surgical procedures out of acute hospitals, as we saw with Lori leading to the development of our Jerry Coffman asset in in, uh, Pickering

At the same time, rising investor demand for healthcare assets means we can attract more institutional capital to work with us as we scale up our business.

Although we sit on a strong Foundation today, as you're going to hear from, uh, Stephanie in a minute, we will continue to unlock liquidity through selective dispositions and recycle that Capital to reduce debt and pursue a creative growth initiatives. So far this year, we've generated over 280 million, uh, over 2 million dollars, uh, through Capital Recycling and encouragingly. The inbounds, we're getting from investors that want to acquire assets from us to keep growing. And we're an early stage discussions, uh, on, on, on a few assets.

Before I turn it over to Stephanie to runs for our results. I just say a few words on health scope.

Zach Vaughn: Craig Mitchell would have previously walked through the challenges Healthscope was facing, which ultimately led the company into receivership in May. Just in terms of some basic facts on Healthscope, they are the second largest hospital operator in Australasia, with 37 hospitals in every state and every territory in the country. They employ about 20,000 people, and another 4,000 healthcare professionals work in their hospitals. In Australia, over 70% of elective surgeries happen in private hospitals, of which 15% are performed in Healthscope facilities. Healthscope is a critical part of the Australian healthcare system, and it would not be desirable from the government's, the insurer's, or the patient's perspectives to not have these facilities operating.

Uh, Health scope operates, 12 of our hospitals in Australia and accounts for about 6% of our gross revenue. Uh, Craig would have previously walked through the challenges. Hell scope was facing which ultimately led the company into receivership in may just in terms of some basic facts on health scope,

They are the second largest hospital. Operator in Australia with 37 hospitals. In every state and every territory in the country. They employ about 20,000 people. And another 4,000 people, uh, 4,000 Healthcare professionals work in their hospitals.

In in Australia, over 70% of electric of elective surgeries happen in private hospitals, of which 15% are performed in health scope facilities.

Zach Vaughn: Although Healthscope has created some noise in Australia, given the critical nature of their business and the importance of NorthWest Healthcare Properties Real Estate Investment Trust's assets to Healthscope, we believe material risks to NorthWest Healthcare Properties Real Estate Investment Trust long-term are limited. Depending on how the process evolves, we might even be able to improve our position as they emerge from receivership. Today, all the hospitals are operating as usual. The company has access to over $200 million in liquidity, including over $100 million of cash. Rent owing to NorthWest Healthcare Properties Real Estate Investment Trust, other than a nominal amount of deferred, not forgiven, but deferred rent have been paid, and Healthscope is meeting all of their lease obligations.

so Health scope is a critical part of the Australian healthcare system and it would not be desirable from the governments, the insurers or the patients perspectives to not have these facilities operating

So, although HealthScope has created some noise in Australia, given the critical nature of their business and the importance of Northwest's assets to HealthScope, we believe material risks to Northwest's long term are limited. Depending on how the process evolves, we might even be able to improve our position.

As they emerge from a severe shift today, all the hospitals are operating. As usual, the company has access to over 200 million in liquidity, including over 100 million of cash.

Zach Vaughn: The Healthscope sale process is underway with the goal of having a new owner identified by the end of the year and operating in place by the end of the first quarter of 2026. We will continue to provide updates on Healthscope as the process unfolds over the next few quarters. Just to wrap up, I would leave you with three thoughts. One, our portfolio is a very high-quality collection of healthcare infrastructure properties that continue to demonstrate their stability. Two, we are determined to unlock more appropriately priced capital, in part by educating the market on the attributes of what we own and the strength of our cash flows and credit. Three, we will be laser-focused on capital allocation to generate accretive growth for our unitholders as we continue to simplify our business. With that, I will turn it over to Stephanie Karamarkovic to walk you through results.

Rents owing to Northwest other than a nominal amount of deferred not forgiven but deferred rent have been paid and health scope is meeting all of their lease obligations.

The health scope sale processes underway with the goal of having a new owner identified by the end of the year and operating in place by the end of the first quarter of 2026, we'll continue to provide updates on health scope as the process unfolds over the next few quarters.

Just to wrap up, you know I'd like to leave you with three thoughts. 1.

Our portfolio is a very high quality collection of healthcare infrastructure properties. That continue to demonstrate their stability 2. We are determined to unlock more appropriately priced capital in part by educating the market on the attributes of what we own and the strength of our cash flows and credit.

Alyssa Barry: Thanks, Zach, and good morning, everyone. Q2 marked another strong quarter of operational and financial performance. We ended Q2 with occupancy of over 96% and a weighted average lease expiry of 13.5 years. We delivered consolidated same-property net operating income of $73.2 million, up 2.8% year over year, with every region contributing positively. North America up 2%, Australasia 2.6%, Brazil 4.6%, and Europe 2.3%. AFFO growth was driven by contractual and inflationary adjustments on rents, rentalized capital spend, and improved operating cost recoveries. Leasing performance remains strong. We completed 298,000 square feet of leasing in the quarter, with an 89% renewal rate, which continues to reflect the stickiness of our tenants and the operational stability of our portfolio. Q2 AFFO per unit was $0.11, excluding the impact of accelerated amortization of financing costs. This compares to $0.09 per unit in Q2 of 2024.

And 3, we will be laser focused on Capital allocation to generate a creative growth for our unit holders as we continue to simplify our business with that. I will turn it over to Stephanie to walk you through results.

Thank you, and good morning everyone.

Q2 marked another strong quarter of operational and financial performance. We ended Q2 with occupancy of over 96% and a weighted average lease expiry of 13.5 years.

We delivered consolidated, same-property net operating income of $73.2 million, up 2% year-over-year, with every region contributing positively. North America was up 2%, Australasia up 2.6%, Brazil up 4.6%, and Europe up 2.3%. Same property operating income growth was driven by contractual and inflationary adjustments on rents, rental spend, and improved operating cost recoveries.

Leasing performance remains strong. We completed 298,000 Square ft of leasing in the quarter with 89% renewal rate which continues to reflect the stickiness of our tenants and the operational stability of our portfolio.

Fq2 ffo per unit was 11 cents. Excluding the impact of accelerated amortization of financing costs.

Alyssa Barry: Q2 AFFO was $0.10 per unit, up 19% from last year and consistent with Q1. Our payout ratio continues to trend lower, landing at 88% this quarter, down from 105% a year ago and 92% last quarter. The increase in AFFO per unit was largely driven by improvements in interest expense, partially offset by lower NOI from disposition activity and a decrease in management fees. General and administrative expenses, excluding amounts associated with employee termination benefits and unit-based comp, decreased by $0.5 million compared to Q2 2024. This was a result of simplification of operations and cost control initiatives, partially offset by a stronger euro relative to the Canadian dollar. Our Q2 G&A cost ratio came in at 7.8%, reflecting the seasonality of certain corporate costs, including the annual meeting costs and ESG reporting initiatives during the second quarter.

Q2 AFO was up, at $0.10 per unit, which is up 19% from last year and consistent with Q1. Our payout ratio continues to trend lower, landing at 88%. This quarter is down from 105% a year ago and 92% last quarter.

The increase in afo per unit, was largely driven by improvements in interest expense, partially offset, by lower noi, from disposition activity, and a decrease, in management fees.

General and administrative expenses, excluding amounts of associated with employee termination, benefits and unit, based comp decreased by 0.5 million, compared to Q2 24, as a result of simplification of operations and cost control initiatives, partially offset by a stronger Euro relative to the Canadian dollar.

Alyssa Barry: Looking ahead, we still expect this ratio to normalize to approximately 5.5% by year-end as our efficiency initiatives continue to take hold. Gross management fees for Q2 2025 were $8.8 million, slightly higher than Q1 2025 but lower than Q2 2024, where management fees were $11 million. The decrease in management fees as compared to prior year reflects lower levels of activity-based fees being earned in the current environment. Interest expense decreased to $30.8 million this quarter, down from $53.8 million in Q2 2024. The $23 million decrease year over year is due to the concerted debt reduction and repayments following asset sales and an overall decrease in our weighted average interest rate as a result of refinancing activities. Turning now to the balance sheet, our gross book value at June 30th was $5.4 billion, using a blended cap rate of 6.3%.

Our Q2 GNA cost ratio came in at 7.8%, reflecting the seasonality of certain corporate costs, including the annual meeting costs and ESG reporting initiatives during the second quarter.

Looking ahead. We still expect this ratio to normalize to approximately 5.5% by year end as our efficient efficiency initiatives continue to take hold.

Growth management fees for Q2, 255 were 8.8 million slightly higher than q125 but lower than Q2 2024, where management fees were 11 million.

The decrease in management fees as compared to Prior year. Reflects lower levels of activity, based fees being earned in the current environment.

Interest expense decreased to $30.8 million this quarter, down from $53.8 million in Q2 2024.

The $23 million decrease year-over-year is due to the concerted debt reduction and repayments following asset sales, as well as an overall decrease in our weighted average interest rate as a result of financing refinancing activities.

turning now, to the balance sheet,

Alyssa Barry: During the quarter, we recorded net fair value gains of approximately $14 million, driven by improvements in NOI and valuation metrics in both Europe and Australasia. During the quarter, NorthWest Healthcare Properties REIT refinanced over $1.1 billion of debt, primarily in Australasia, where term debts were extended and interest rates were reduced by approximately 12 basis points. NorthWest Healthcare Properties REIT also refinanced approximately $25 million of mortgages in North America. Subsequent to the quarter end, we amended the terms of our revolving credit facility. The amendment extends the maturity date of the facility to July 2027 and moves us to grid pricing based on our credit rating, reducing our cost of borrowing by 65 basis points. The amendment also provides an additional $100 million accordion commitment subject to incremental security and lender approval that provides flexibility with mortgage maturities as we transition away from amortizing debt.

our gross Book value at June 30th was 5.4 billion. Using a blended cap rate of 6.3%.

During the quarter, we recorded net fair value gains of approximately $14 million, driven by improvements in NOI and valuation metrics in both Europe and Australasia.

During the quarter, the re refinanced, over, 1.1 billion of debt. Primarily in Australia, were termed, debts were extended and interest rates were reduced by approximately 12 basis points.

The Reed also refinanced approximately 25 million of mortgages in North America.

Subsequent to the quarter end, we amended the terms of our revolving credit facility.

The amendment extends the maturity date of the facility to July 2027 and moved us to grid pricing based on our credit rating, reducing our cost of borrowing by 65 basis points.

Alyssa Barry: As previously announced during Q2, NorthWest Healthcare Properties REIT fully divested of its shares in Assura PLC, a UK-based REIT, for total proceeds of $209 million. Our gain on sale was approximately $32 million, with the proceeds used to repay debt and related debt in corporate facilities. Following the refinancing activities and asset disposition, NorthWest Healthcare Properties REIT has reduced proportionate leverage to 56% and consolidated leverage to 48.5%. Our weighted average cost of debt currently sits at 4.8% and weighted average term to maturity of just over three years. Importantly, NorthWest Healthcare Properties REIT only has $87 million of 2025 maturities remaining, comprised of mortgages in Canada and Europe. Of NorthWest Healthcare Properties REIT's 2026 proportionate debt maturities, approximately $424 million, or over 50%, are maturing in the fourth quarter of 2026. As of today, NorthWest Healthcare Properties REIT's available liquidity is approximately $230 million.

The amendment also provides an additional $100 million accordion, commitment subject to incremental security and lender approval. That provides flexibility with mortgage maturities as we transition away from advertising debt.

As previously announced during Q2 The Reef fully divested of its shares, and insurer at UK based reach for total proceeds of 209 million. Our gain on sale was approximately 32 million with the proceeds used to repay debt and related debt in corporate facilities.

Following the refinancing activities in asset dispositions. The Reed has reduced proportionate leverage to 56% and Consolidated, leverage to 48.5%. And our weighted average cost of debt currently sets up 4.8% and weighted average turned to maturity of just over 3 years.

Importantly, the rate only has 807 million of 2025 for maturities remaining comprised of mortgages in Canada and Europe and of the reach 2026 proportionate debt maturities, approximately 424 million or over 50% are maturing in the fourth quarter of 2026.

Alyssa Barry: As a result of our improved capital position and liquidity, yesterday we announced we are suspending our distribution reinvestment plan, or DRIP, commencing with the September 2025 distribution, which will be paid in cash on October 15th. The REIT's unit price continues to trade at a meaningful discount to NAV per unit, and the issuance of units under the DRIP runs counter to the REIT's focus of optimizing capital structure and driving superior growth in NAV per unit and returns over time. Finally, I'd like to congratulate Zach Vaughn on his appointment as our CEO and being named as a Director. Management and the board value his strong real estate experience and look forward to his contributions. With that, I'll turn it back to the operator to open up the call for Q&A.

As of today, the REITs available liquidity is approximately 230 million.

As a result of our improved Capital position and liquidity. Yesterday we announced, we are suspending our distribution reinvestment plan or drip commencing with the September 2025 distribution, which will be, which will be paid on in cash on October 15th.

The Rees unit price continues to trade at a meaningful discount to nav per unit and the issuance of units under the drip runs counter to the reit's focus of optimizing capital structure and driving Superior growth in nav per unit and returns over time.

Finally, I'd like to congratulate Zach on his appointment of as our CEO and being named as a director Management in the board values, his strong real estate experience and looks forward to his contributions.

With that, I'll turn it back to the operator, to open up the call for Q&A.

Operator: We will now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. Your first question comes from Frank Liu with BMO Capital Markets. Please go ahead.

We will now begin the question and answer session.

Please pick up your handset before pressing any keys to withdraw your question. Please press star. Then 2. We will pause for a moment as callers join the queue.

And your first question comes from Frank Lou with BMO Capital Markets. Please go ahead.

Frank Liu: Good morning, everyone. First of all, Zach, congrats on your appointment to CEO and to the board. Thanks. I know you are only about a month and a half in, but just want to get your thoughts on the long-term vision for the REIT. Which geography will be the primary focus over others? More near-term speaking, what is the top priority in your mind to be addressed?

Uh, good morning, everyone. First of all that, congrats on your appointment to see you and to the board. Thanks, uh, I know you are only about like a month and a half, but just want to get your thoughts on the long-term vision for the week, uh, which geography will be the primary focus over others and more near-term. Speaking, what's the top priorities in your mind to be addressed?

Zach Vaughn: Yeah, that is a good question. Again, I have only been here five weeks, so I think in the near term, the priority is really to see all the assets, meet in person, all the team. I would say, I guess how I see it is we have no intention of doing some sort of U-turn into other sectors or other areas. We are sticking where we have real advantage, which is healthcare infrastructure, real estate, and the markets we are in. I think there is a lot of growth opportunity in North America in particular. We are starting to see some interesting things in Canada, so we will obviously be focused there. But one of my near-term priorities, to be frank, is really to work with the board on that strategy going forward.

Uh,

again, only been here 5 weeks so I think in in the near term the priority is really to see all the assets meet

Uh, in person, all the team I would say.

Um, I I I guess I how I see it is. We we have no intention of

Of doing some sort of U-turn into other sectors or other areas, we're sticking where we have real advantage, which is, you know, healthcare infrastructure and real estate. And in the markets we're in, I think there's a lot of growth opportunity.

Zach Vaughn: So I think it is probably still early days, but we do have, we will certainly have more to report in the next quarter or two.

Frank Liu: Got it. I totally understand. You are only here at five weeks in. There is still a lot of stuff to ramp up. Just more touching on the Healthscope, could you remind us, maybe it is a question for Stephanie Karamarkovic as well, could you remind us the annualized rent at NorthWest Healthcare Properties Real Estate Investment Trust Assura PLC? For the repayment that we received, covering the 50% of the four-month deferrals, was that reflected in the current quarter NOI?

Uh, in in North America, in particular, we're starting to see some interesting things in Canada, so we'll obviously be focused there but 1 of my near-term priorities. If Frank is really to work with the board, uh, on that strategy going forward. So I I think it's, it's, it's probably still early days, but but we do have, uh, you know, we'll we'll certainly have more to report in in the next quarter or 2.

Got it and I totally understand. Uh, you're only at 5 weeks and uh there's still a lot of stuff to ramp up. Um, there's more touching on the health scope, uh, just could you remind us maybe this question for Stephanie as well. So could you remind us the annualized brand at Northwest? Uh, sure, and for the repayment that received

for covering the 50% of the 4 months deferrals, with that reflected in the current quarter and why

Alyssa Barry: I can answer first, Frank. Our annualized revenue at our share is about $22.2 million. The rent deferrals, and any impact of them, because they are just deferrals, are not impacting NOI.

Frank Liu: Got it. But like the repayment, if you receive, is that baked into your NOI figures or is it any other?

Uh, so yeah, I can answer first Frank, so our annualized Revenue at our share is about 22.2 million. Um, and the rent deferrals, um, any impact of them because they're just deferrals are not impacting noi.

Got it. But like the repayments you received is that baking to your

and why fingers or or it's it's in other,

Alyssa Barry: are just recording the full rent, and any deferral just gets booked to the balance sheet as a receivable and then is reduced as it is paid. So it has no, the deferral arrangements have no impact on NOI.

Frank Liu: Got it. Makes sense. Lastly, on the same property net operating income figure, I think this quarter is rapidly weaker compared to the prior quarters. Is there any lumpy items driving this? I mean, I just want to touch on the 3% to 4% growth for the year. Is that still intact?

How does that? No, we're just recording. We're recording the full rent. Um, and any deferral just gets booked to the balance sheet as a receivable and then is reduced as it's paid. So it has no the the deferral Arrangements have no impact on noi.

Alyssa Barry: There is nothing lumpy that I would call out. I think what you are seeing in North America, Australasia, Brazil, and Europe are kind of all reflective of their run rate growth that we are targeting. Brazil being higher just given where inflation sits there, but otherwise, the other regions are kind of in that 2% to 3% range, which is what we anticipate and target.

Got, it makes sense and uh lastly on the same property and I figure I think this quarter uh it's rated weaker compared to the prior quarters. Is there any lumpy items driving this? And uh, I mean just want to touch on the 3 to 4% uh girls for the year. Is that still in tax?

Frank Liu: Got it. Okay. Thank you very much. I appreciate the call. I will turn it back.

Yeah. Um, there's nothing lumpy that I would call out. I think what you're seeing in North America and australasia and Brazil and Europe are kind of all reflective of their run rate growth that we're targeting Brazil being higher, just given where inflation sits there. But otherwise the other regions are kind of in that 2 to 3% range, which is what we anticipate in Target.

Got it. Okay. Thank you very much. I appreciate the call. I'll turn it back.

Operator: Your next question comes from Sai Ram Srinivas with CoreMark Securities. Please go ahead.

In your next question comes from syrians of us with core Mark Securities. Please go ahead.

Sai Ram Srinivas: Good morning, Zach and Stephanie. Zach, congratulations on the new role. Going back to your comments on capital allocation, I know it is early days, but maybe putting your hat across all the experience you have had in the private markets, can you comment on private market activity and the transaction dynamics you are seeing out there in different markets?

Zach Vaughn: Yeah, I think I'd say broadly, liquidity is certainly coming back to, I'd say, the commercial real estate markets. Let me put it that way. It certainly stalled out for a period of time. I think investors are more comfortable with what's going on. Supply has ground to a virtual halt in most sectors. So I think what we're seeing is people more confident now to put capital to work in the sector generally. I think what you're seeing in particular, and I highlighted it, is certain sectors are just more active than others. Historically, investors had fairly simple portfolios that you spread across a few sectors. They're starting to really expand that for their core holdings and looking for things not only that are different that fall out, but that are more operational in some cases. So we're seeing that trend play itself out.

Congratulations on the new role. Uh, she's probably going back to your comments on, you know, Capital location. I know it's early days, but maybe putting putting your hat across all the experiences you've had in the private markets. Can you comment on private Market activity and the transaction Dynamics you seeing out there in different markets?

Yeah, I think I I'd say, broadly, um, liquidity is, is certainly coming back to I'd say the commercial real estate markets. Let me, let me put it that way. It it, it certainly stalled out uh, for for a period of time. I think investors are more comfortable with what's what's what's what's going on supply has ground to a virtual halt in most sectors. So I I think what we're seeing is is people more confident now, uh, to put Capital to work in the sector generally. I think what, um, you're seeing in particular and I I I highlighted it as certain sectors are, are, are just more active than others and historically.

Zach Vaughn: You've certainly seen it in the data center space. Before that, you saw it in the warehouse space. And certainly, healthcare, as we speak to large institutions, is something they're trying to understand and importantly trying to find the right partners to work with as they grow in this space. Every market has a bit of a different dynamic to it. Obviously, I think Australasia, in particular, just given some of the noise around Healthscope, has slowed transaction volume. But I'd say encouragingly, we're starting to see inbound interest on our assets there at values that are in line with our values. Not to say we'll sell them necessarily, but it's encouraging because we haven't seen that until recently. In Europe, I would say transaction activity there is certainly picking up.

Had fairly simple portfolios, you spread across a few sectors. They're starting to really expand that for their core Holdings and looking for things, not only, um, that are different that fall out, but that are more operational, uh, in, in some cases. And so, we're, we're, we're, we're seeing that Trend play itself out. You've certainly seen it in the data center space before that, you saw it in, in the warehouse space and certainly Healthcare as, as we,

Speak to large institutions, is, is something they're trying to understand and importantly, trying to find the right Partners to work with, uh, as as they grow in, in, in this space every Market has a bit of a different Dynamic to it. Obviously, I think Australia in particular, are just given some of the noise around Health scope, uh, has slowed transaction volume. But I'd say, encouragingly, we're starting to see, you know, in inbound interest on our assets. There at values that are in line with our values, not to say we'll sell them necessarily, but it it's, it's encouraging because we haven't seen that uh, until recently um, in Europe, I I would say

Zach Vaughn: I think there's a, you know, speaking to someone at a major investor who said, you know, capital is looking to come back to Europe in force as they kind of rebalance their holdings. And then in North America, we're starting to see some more activity, particularly in the U.S. Obviously, Canada is a smaller market, but I'd say overall it feels pretty encouraging as I think about growth, but as I think about some potential capital recycling.

Um, transaction activity there is is certainly picking up. I think there's a, you know, I was speaking to someone at a at a major investor who said, you know, capital is looking to come back to Europe and force, um, as they kind of rebalance, uh, their, their, their Holdings. And then, in North America, we're starting to see some more activity in, uh, particularly in the US obviously, Canada is a smaller Market, but I'd say, overall it, it it, it feels pretty encouraging. Um,

that as I think about growth, but as I think about some some potential, um uh recycling

Frank Liu: That's good color, Zach. Maybe just, you know, in terms of markets, how are you guys thinking about Brazil? Has the market dynamic improved over there?

Uh, that's good color Zack and maybe just, you know, in terms of markets, I believe that's income in Brazil, uh, you know, has a market Dynamic, including over there.

Zach Vaughn: Brazil, so that's a market I haven't been down to yet. I've been, I guess, involved in Brazil from more of a committee perspective in the past. I think it's still pretty quiet from a capital point of view, given where rates are. There's obviously more noise around trading things. I think inevitably, what we own there, again, if you want to talk about critical infrastructure, these are some incredible hospitals in the center of major cities in Brazil. If we look at the financial performance of our tenants, their revenue is up meaningfully. They're doing extraordinarily well. Their rent covers, I don't know, 5 plus 5.5 times. We're not even remotely concerned about the underlying fundamentals there. As liquidity comes back, we'll think about whether it makes sense to do something more strategic there.

Brazil. I see that's a market I haven't been down to yet. Um, I've been, I guess, involved in Brazil sort of from a more of a committee perspective in the past. Um,

I, I think it's still pretty quiet from, from a, a capital point of view, um, given where rates are and, you know, there's obviously more noise around, you know, trading things. But but I think inevitably, um, what we own there again, if if, if you want to talk about critical infrastructure, these are um, some incredible hospitals.

In really the center of major cities in, in, uh,

In Brazil. And, and if we look at the financial performance,

Of of our tenants. So you know, rezidor their revenue is up meaningfully.

I mean they're doing extraordinarily well, um, their rent covers. I don't know, 5, plus 5 and a half times. Um, so we're, we're, we're not even remotely concerned about the, the underlying fundamentals there. And as liquidity comes back, we'll, we'll think about whether it makes sense to, uh, to, to do something more strategic there.

Sai Ram Srinivas: That makes total sense. As I mentioned, critical to assets. I really appreciate your comment, Zach, especially considering it has just been five weeks for you. Stephanie, it is probably more of a groundbreaking question for you. In context of transaction activity and how we see the asset management business kind of running, do you see the asset management fee benefit kind of resume more towards the end of this year, or is it more of a 2026 timeline there?

That makes total sense. And as I mentioned, critical assets, I really appreciate your comments back, especially considering it's just been five weeks for you. Um, Stephanie, this is probably more of an Android question for you. You know, in the context of transaction activity and how you see the asset management business kind of running?

Alyssa Barry: is a good question. Sai, from what we are seeing today, given we are already in August, I think it is probably a 2026, you know, something that is going to kind of start to increase in 2026. At this point, we are just not seeing quite yet the development or, you know, acquisition activity pick up in our markets that we do asset manage in.

Uh, do you see the asset management fee benefit of It, kind of resume more of towards the end of this year, or is it more of a 26 uh timeline there?

it's a good question, so I

What we're seeing today?

Given we're already.

In August, I think it's probably a 2026. Um,

You know, is it something that's going to kind of start to increase in 2026 at this point? Um, we're just not seeing quite yet, the the development or or, you know, acquisition activity, pick up in in that, in our markets that we do asset management,

Sai Ram Srinivas: Fair enough. Maybe taking a look at the debt strategy over there, congratulations on the revolver financing on that side. How are you guys thinking about matching debt maturities ahead with your lease terms? I appreciate that you guys have about three years on a weighted average, on an average of about 13 years of leases. Are you guys thinking of essentially maybe going longer on your debt side, or how are you guys thinking about it?

Fair enough and maybe just looking at the debt uh strategy over there. Congratulations on on the revolver. Uh financing on that side. Uh how do how are you guys thinking about matching that patcharees ahead with your lease terms? Because appreciate that, you guys are about 3 years on a very average and you know, on an average about 13 years of leases. So are you guys thinking of essentially, maybe going longer on a debt side? Or how are you guys thinking about?

Alyssa Barry: I think we're still fairly comfortable in that, you know, three to five-year window, Sai. It is something we're evaluating as we look at our portfolio. I think the tricky part is that in Australasia, where our leases are the longest, it's really challenging to get any longer-term debt there than kind of three-ish years. That's really the driver of a lot of our weighted average lease, I mean, debt term. So, it's something we will think about, but at this point, I think we're fairly comfortable in the zone we're at.

I think we're still fairly comfortable in that, you know.

3 to 5 years.

Um, and so that's really the driver of a lot of our weighted average lease, uh, I mean, debt term. Um, so yeah, I mean, it's something we will think about, but, um, at this point, I think we're fairly comfortable in the zone we're at.

Sai Ram Srinivas: Perfect. Thanks for your comment, Stephanie. Zach, I'll turn it back.

Frank Liu: Thanks. Thanks, Sai.

Perfect. Thanks for the comment, Stephanie Zach. I'll do it back.

Thanks.

Thanks.

Operator: Your next question comes from Juliano Thornhill with National Bank Financial. Please go ahead.

And your next question comes from Giuliano Thornhill with National Bank Financial, please go ahead.

Juliano Thornhill: Hey guys, good morning, and congrats, Zach. I guess I just want to start on Healthscope. What sort of rent concessions or lease structurings are kind of under consideration for HSO? I know you did mention there might be a chance to actually improve NorthWest's position there, so I am just wondering if you could expand on that.

Zach Vaughn: Yeah, look, I think it is a bit early in the process, Juliano, to sort of figure out what we might do. I think in terms of opportunities that we could see, we know there are specific assets where specific capital programs were earmarked, identified, and then sort of pulled as the business went into receivership. So we are thinking about, you know, how can we potentially help with, you know, effectively tenant improvements in exchange for some betterment on our leases. It could be term. It could be better indexation in some ways, because if you look at what is happening now, we have even seen it in the past few months, even in the Healthscope assets, which are a bit lagging the market, obviously, because the business is still in a receivership process.

Hey guys, good morning, and congrats Zach. Um, so I guess there's just more to start on health scope. Um, what sort of rent concessions or lease structures are kind of UNC under consideration for HSO? I know you did mention there might be a chance to actually improve Northwest's position there, so I'm just wondering if you could expand on that.

Yeah. Look, I think it's

it's a bit early in the process Giuliano to, to, uh, to sort of figure out what we might do. I, I think in, in, in, in, in terms of opportunities that we could see, we know there's specific assets where

Specific Capital programs where earmarked identified and then sort of pulled as as the business went into receivership. Um, so we're we're we're thinking about, you know, how can we

yeah, potentially help with

Zach Vaughn: But, you know, as these insurers increase the amount that the operators can, effectively, their reimbursement rates, it does not take much to really move the needle. And so, you know, our view is, you know, we do not, at this point, there is really nothing on the table. There is nothing there. The deferral that is there is a bit of a combination of legacy and us continuing that with the receiver in order to try and effectively get better access to what is going on, which I think was very smart strategically. You know, Juliano, when I first started and saw this, I said, why do they need this? Like, why is it so small relative to the business? And it really was a more strategic decision to kind of have a seat at the table. So I guess the answer is we do not know yet.

Uh, you know, effectively tenant, improvements in exchange for some, uh, betterment on our leases, it could be term. Um, it could be better, indexation, uh, in some ways because if you look at what's happening now, we've even seen it in the past few months even in the health scope assets, which are a bit lagging, the market, obviously because the business is still in in a receivership process. But, you know, as these insurers, increase the amount that that the operators can, um, they effectively they're reimbursement rates. It doesn't take much to really move the needle. And so you know, our view is um

You know, we don't at this point, there's really nothing on the table. There's nothing there. The deferral that's there is a bit of a, a combination of of legacy and US continuing that with the receiver in order to try and effectively get better access to what's going on. Which I think was very smart strategically, but, you know, Julian? I want to. When I first started and saw this, I said, why do they need this? Like why is it so small relative to the business and it and it really was a more strategic decision.

Zach Vaughn: I do not think we will know much until the end of the year, because the process involves kind of end of this month. You know, they are going to sort of start to round down the bidders and see where they are. And I think through that process, likely they will want to talk to us. We will want to talk to them. And so we will have more to disclose. But at this point, there is nothing on the table apart from the current arrangement we have.

Um, to kind of have a seat at the table. So, I guess the answer is we don't know yet. I don't think we'll know much until the end of the year because.

The process is, is involves kind of end of this month, you know, they're going to sort of start to round down the bidders and see where they are. And I think through that process likely they'll want to talk to us, we'll want to talk to them. And so,

Juliano Thornhill: Right, yeah. So, announcement or finalization of the sale come October, then maybe announcement by yourselves after that in November or December is kind of the timeline that I am gathering?

We'll have more to disclose. But at this point, there's nothing on the table apart from the current ratio we have.

All right. Yeah. So and so announcement or finalization of the sale come October and then maybe Announcement by yourself after that. And November or December is kind of the time that I'm gathering.

Zach Vaughn: I think so. The way things are headed now. Look, it is hard to know where this evolves. There has been a lot of new, look, there have been news reports that, you know, landlords should all cut their rent. There has also been news reports that they are thinking about turning the company into a nonprofit, which is like a material benefit to the profitability of the hospital. So we will have to see how this unfolds. It is complicated. There is a government aspect to it. They do not want the hospitals closed, so they are going to kind of be around the edges to make sure we are going to try and do what is best for our capital, but we just have not had that opportunity yet.

I, I

Had it now. And look, it's hard to know where this evolves. There's been a lot of new... look, there's been news reports that...

Juliano Thornhill: Going to your prior comment, just regarding the feds and potentially insurers paying out more industry profits to operators, have you noticed an increase in that willingness by the insurers or potential for the feds to actually, you know, force that to happen, or is it the same as always?

You know, oh, landlords should all cut the rent. There's also been news reports that they're thinking about turning the company into a nonprofit, which is like a material benefit, uh, to the profitability of the hospital. So, we'll have to see how this unfolds it. It's, it's complicated. Uh, there's a government aspect to it. Um, they don't want the hospitals closed, so they're going to kind of be around the edges to make sure we're going to try and do what's best for for, for our, our, our Capital. But, but we just haven't had that opportunity yet.

Zach Vaughn: Again, I am a bit new to Australasia, so Mike is here and can comment. I think what we are seeing in our Healthscope portfolio, including the other operators through our vital business, is an improvement in performance. That is not necessarily driven by an increase in procedures and activities. Therefore, it is being driven by a slow creep-up of reimbursement rates. Mike, maybe you want to comment on that.

And and I guess going to your uh prior comment. Um, just just regarding the feds and potentially insurers, paying out more uh, more industry profits to operators. Have you noticed, uh, an increase in that willingness by the insurers or potential for the feds to actually, you know, force that to happen? Or is it the same as always? Yeah, again I'm I'm a bit new to Australia. So Mike is, is here in can comment. I, I think what we're seeing in our

Health scope for portfolio, including the other operators through our Vital business is is an improvement in performance.

That's not necessarily driven by an increase in procedures and activities. Therefore, it...

Mike Brady: Yeah, I can confirm that we are seeing individual operators cutting revised deals with the private insurers. The funding is increasing, which is improving the life of the operators and improving our rent coverage.

Zach Vaughn: I think the way I understand it is the government said, "Figure this out, or we are going to have to get involved." They are figuring it out, but it will probably take time. Once it does, things will be, we are already seeing people be very interested in the asset class and kind of looking through this, which is very encouraging.

Improving the life of the Operators and enhancing our coverage.

I think the way the way AI understand it is the government said,

Figure this out or we're going to have to get involved and and so so the they're figuring it out um but it it'll probably take time but once it does things will be. Um we're already seeing people be very interested.

Juliano Thornhill: All right. Then, just sticking with Australasia, I have also noticed more calls for the government to increase the number of kind of smaller ambulatory care centers. Are those like a risk to your hospital that you own there, or are those operations that they administer not really comparable to your assets that you own there?

In the asset class, it's kind of looking through this, which is very encouraging.

All right, and and then just sticking with Australia. Um,

I've also noticed more, uh, calls for the government to increase the number of kind of smaller Ambulatory Care Centers is, are those like a risk to your hospital that you own there? Or that is, are those operations, uh, that they administer not really comparable to your, to, to the assets that you own their

Mike Brady: We don't see it as a risk. I think every government around the world is trying to motivate additional healthcare supply. That's an example that, you know, we're seeing not only in Australasia, but in Canada and the U.S. The demographics are such that healthcare demand is increasing and will continue to do so. So we're not worried about any new supply. Actually, we see opportunities there for us to participate.

We don't see it as a risk as I think, I think every government uh around the world is trying to motivate additional health care supplies. And that's an example that you know, we're seeing not only in Australia, but in Canada in the US. It's uh the you know, the demographics are such that Healthcare demand is

Zach Vaughn: Yeah, look, I'd say the same. I mean, I think Australia is further ahead in terms of moving the lower acuity surgeries out of the high acuity hospitals. We are benefiting from that. We are negotiating, again, early stages on some opportunities to actually build some of those small facilities on land we have there. I think the big opportunity in that regard could actually be here in Canada. I mean, we have seen it in our portfolio, and I have to imagine it could be a major theme for us going forward.

Increasing and will continue to do so. So we're not uh we're not worried about uh any new Supply and actually we see opportunities there for us to purchase. Yeah look I I'd say the same, I mean, I think Australia's further ahead in terms of moving um the lower Acuity surgeries out of the high Acuity hospitals,

Uh, we are benefiting from that; we're negotiating.

That, you know, again early stages on some opportunities to actually build some of those small facilities on, on, on land. We have their, you know, I think the big opportunity in that regard could could actually be here, uh, in, in, in, in Canada. I mean, we've seen it in our portfolio, and, and I have to imagine

um, it it it

Juliano Thornhill: Is the retirement and nursing supply demand as imbalanced as it is here in Canada within Australasia?

could be a major theme for us going forward.

And and the retirement and nursing Supply demand is that as imbalanced as it is here in Canada, within Australia.

Zach Vaughn: I think it is. It's not an area that we are investing in or necessarily have.

I, I think it is, um, it's it's not, it's not an area that we um,

Juliano Thornhill: I'm just trying to gather a sense of the strain on the operations for the hospitals.

They are investing in or necessarily have, yeah.

Zach Vaughn: I guess they're probably less strained than here in a sense, but the dynamics in terms of the demographics, et cetera, are quite similar.

But yeah, I'm just trying to gather a sense of of the of the strain on the uh, on the operations for the hospitals. Um,

Juliano Thornhill: Okay. Then just lastly, for Stephanie Karamarkovic, on the balance sheet, I noticed the European kind of economic where it declined. I am pretty sure that is just from the expiration of the floor. Are there any other derivatives over the next 12 months which are going to be beneficial on the expiry or that you can call out?

I guess I guess they're probably less strained than than here in a sense, but but the Dynamics in terms of the demographics Etc are are quite similar.

Okay. And then just lastly for Stephanie, on the balance sheet, I noticed that the European kind of economic growth decline. I'm pretty sure that's just from the expiration of the floor. Is there any other derivatives over the next 12 months which are going to be beneficial on the expiry, or that you can call out on?

Alyssa Barry: No, I think in Australasia, there are some derivatives that we will rule off that are kind of at the market today. As those rates continue, I think they are still coming down in that part of the world. So we will see probably some benefit there. But largely speaking, we try to rule them, and there is not anything material coming off.

um,

some derivatives that will roll off that are kind of at the market today. So as those rates continue, I think they're still coming down in that part of the world. So we'll, we'll see, probably some benefit there but largely speaking, we try to roll them, um, and there's not anything material coming off.

Juliano Thornhill: Okay. Thank you guys.

Okay, thank you guys.

Zach Vaughn: Thanks, Juliana.

Thanks Julian.

Operator: Again, if you have a question, please press star and one. Your next question comes from Pami Burr with RBC Capital Markets. Please go ahead.

Again, if you have a question, please press star and 1.

Your next question comes from pommy Burr with RBC Capital markets. Please go ahead.

Zach Vaughn: Thanks. Good morning, everyone. Zach, maybe just expanding on your comments on the inbound interest. Can you just comment on what's in the disposition pipeline at this stage and maybe potential volume or how you see that unfolding over the next year or so?

Thanks, good. Uh, good morning, everyone. Um, Zach, maybe just expanding on your comments on the inbound interest. Uh, can you just comment on what's in the disposition pipeline at the stage and maybe potential volume or how you see that unfolding over the next year or so.

Mike Brady: Hi, Pami. It's Mike. We are seeing inbound inquiries in every region. Not every region, I do not want to overstate that. But in Europe, in Australasia, in North America, we are in a position where we do not need to sell anything. So we will be strategic and opportunistic. It will be about where we see opportunities to recycle capital to grow the business.

Uh, hi Pammy. It's Mike. I mean we're seeing inbound inquiries of in every region. Uh, well, not every region that Dylan overstate that. But uh, in Europe in Australia in North America. Um, you know, we are, we are in a position where we're, you know, we don't need to sell anything, so we will be strategic and opportunistic and

Zach Vaughn: Yeah, I sort of echo that, Palmi, in that it is, you know, these are early days inbounds. But, you know, sometimes what you see is inbounds, depending on the sector, people kind of bottom fishing and trying to, you know, buy at distressed prices. These are not that necessarily, but it is very asset selective. So it is someone in some region has capital. They want to own a hospital. They want to own one of our outpatient facilities. Would I anticipate more divestment activity by the end of the year? Possibly. I do not think it will be as material as what we have seen year to date.

that it's, you know, these are early days in bounds, but

you know, sometimes what you see is inbounds and depending on the sector, people kind of bottom fishing and trying to

You know, buy it to stress prices. These are not that um, necessarily but it is very uh, asset selective. So it's, it's, it's someone in some region has Capital, they want to own a hospital. They want to own 1 of our, our outpatient facilities. Would I anticipate more divestment activity by the end of the year. Um, possibly. I don't think it will be as material.

As what we've seen.

Zach Vaughn: But I would not be surprised if there is, you know, a couple of non-strategic, I guess I should not even call them non-strategic. It is a combination of things that we would say, you know, at a decent price, we will sell. Then there is some stuff where we would probably not sell. So we are sort of looking at it all. But I would anticipate some amount, but I do not think it is going to be in the same order as what has been kind of accomplished for the first half. Okay. That is helpful.

Year-to-date, but I wouldn't be surprised if there are, you know, a couple of non-strategic. I guess I shouldn't even call them non-strategic. It's a combination of things that we would say.

You know, add a decent price, we'll sell. And then there's some stuff where we would probably not sell. Um, so we're sort of looking at it all, but I anticipate some amount. I don't think it's going to be in the same order as what's been kind of accomplished for the first half.

Zach Vaughn: Just, you know, is some of the inbound interest that you have spoken about, is that some of the infrastructure type players that, you know, you referred to earlier? We have certainly in Australasia, there has been some of that type of capital hunting around and looking. It is probably, again, a bit early for that, for us to do it. Our structures there are a little more complex than the Assura PLC was. Most of what we are seeing is really, you know, I would call it smaller institutional capital sources, but still institutional, still very credible. But again, it is a bit early days. I think what has been encouraging is that the values we are seeing, it is just not people throwing, you know, offensive offers seeing if we are desperate at all.

Okay, that's helpful. And and just you know is some of the inbound interest that you you've spoken about is is that some of the infrastructure type players that, you know, you referred to earlier

um we we've certainly in Australia, there there's been some of that type of capital um,

Hunting around and looking. Um, it's, it's probably, again, a a bit early for that for us to do it. Our our structures, there are a little more complex than the, um, then, uh, Ashura was, um, most of what we're seeing is really, um,

You know, I call it smaller institutional capital.

Sources, um, but still institutional, um, still very credible, um, but again it's a bit early days. I think what's been encouraging is that the values we're seeing.

Zach Vaughn: These are serious people at decent prices that are willing to spend their own money to do a lot of work and engage. So still early days, but it is, again, I would not anticipate anything major being done in the next few months, but we are certainly looking. But it is very encouraging just in terms of general activity. Okay. To clarify, I mean, deleveraging is still in the cards from where you sit. I mean, you clearly made some progress over the past year, but just wanted to confirm that that is still on the agenda.

It's just not people throwing you know offensive off or seeing if we're desperate at all. These are these are serious people at at decent prices that are willing to spend their own money.

To do a lot of work and change. So,

Still early days, but it's again, I wouldn't anticipate anything major being done, uh, in the next few months. But we're, we're certainly looking, but it's, it's very encouraging. Just in terms of General activity,

Alyssa Barry: Yes, absolutely, Palmi. We're trying to get kind of sub 50% over time. So that's still in the cards to bring that down.

Okay. And, but to clarify, I mean, is leveraging still in the cards from where you sit? I mean, you clearly made some progress over the past year, but I just wanted to confirm that that's still on the agenda.

Yes, absolutely pommy. Um, you know, we're we're trying to get kind of, you know, sub 50% um, over time so um,

That's still still in the cards. So,

Zach Vaughn: Yeah. Okay. Last one for me. Just with respect to the sequential drop in the management fees from Q1, can you maybe just provide some more color there and how we should think about sort of a run rate at this point? I realize it can be lumpy, but just wanted to get your thoughts on that. Thank you.

Just bring that down.

Alyssa Barry: Yeah. And Palmi, we might need to take it offline because I think what you're maybe referring to is we did make a slight presentation adjustment in management fees, which I can walk you through essentially just from a proportionate basis. If you look at our gross management fees in the table in the MD&A, you'll see that they're actually pretty flat quarter over quarter. The level that's flowing through to our AFFO is consistent with the last two quarters. So I can take you through that offline if needed.

Yeah. Okay. Uh, last 1 for me just uh, with respect to the uh the sequential drop in the management fees from q1. Um, can you maybe just provide some some more color there and how we should think about, uh, sort of a run rate at this point. I realize it can be lumpy, but just wanted to get your thoughts on that. Thank you.

Yeah, and Pammy.

May be referring to is, we did make a, a slight presentation adjustment in management fees, um, which I can walk you through, essentially on just from a proportionate basis. If you look at our gross management fees from uh, on in the table in the mdna, you'll see that they're actually pretty flat quarter over quarter and so um the level that's flowing through to our afo is consistent with the last 2 quarters. So we can I can take you through that offline if

Zach Vaughn: Okay. We will circle back. Thanks very much. Thank you.

If needed.

Okay, we will Circle back. Thanks very much. Thank you.

Operator: Your next question comes from Himanshu Gupta with Scotiabank. Please go ahead.

Himanshu Gupta: Thank you and good morning. First of all, congrats, Zach.

And your next question comes from Him Gupta with Scotiabank. Please go ahead.

Zach Vaughn: Thank you.

Himanshu Gupta: Then, just on asset dispositions, is Brazil portfolio still on the table? I mean, would you consider selling this here? What do you think is the investor appetite for that Brazil portfolio?

Thank you and good morning. Uh, first of all, congrats, uh, Zach.

Thank you. Uh then uh just from asset dispositions, uh, is Brazil portfolio, still on the table. Uh, I mean, would you consider selling this here? And what do you think is the investor appetite? Uh, you know, for that budget portfolio?

Zach Vaughn: You know, I think at the moment, it is not something we are actively pursuing. You know, I think it is one of those where the underlying performance of the assets just keeps getting better and better in terms of the rent. I mean, the rent coverage is through the roof. The financial performance of our major tenant is exceptional. That being said, we just, from a capital market, like we are in a position where we are not forced to do anything. I would say, look, we are going to be opportunistic about it. There is.

You know, I I think at the moment it's it's not something we're actively.

uh, pursuing, um I you know I think it's it's 1 of those where the the underlying

Performance of the of the assets just keeps getting better and better in terms of the I mean these are. I mean the rent coverage is through the roof. The financial performance of of our major tenant. Is it just is is is exceptional.

um, that being said, we just from a

Operator: no intent of doing anything. We have had inbounds on that portfolio, as we always do, given the caliber of the assets. We sort of said, look, let's wait until we think there's a lot more liquidity in that market. Then, it is obviously a currency question. Then, see where it goes. So there is no active plan. Mike, I do not know if that is a good summary on the history.

Anything. And so I would say, look, we're going to be opportunistic about it, so there's no intent of doing anything. We have had inbounds.

On that portfolio. Um, as we always do given the the caliber of the assets but we, we sort of said, look, let's let's wait till we think there's a lot more liquidity in that market and then and then, uh, you know, it's obviously a currency question and and then and then see where it goes.

So, there's no active plan, Mike. I don't know if you know that's not a good summary of the history.

Speaker 2: Okay, that is very helpful. Maybe, Zach, as you look at the NorthWest Healthcare Properties Real Estate Investment Trust portfolio and geographies around the world, are there areas you think NorthWest Healthcare Properties Real Estate Investment Trust should be overweight or underweight going forward? I know it is early days, by the way.

Okay. Uh, that's that's very helpful. Uh and maybe you know Zach, you know, as you look at the Northwest portfolio and geographies uh, you know, around the world kind of are they areas you think North should be overweight or underweight going forward?

Operator: is, look, I would love to be a much larger weight everywhere. I guess I think we have the opportunity here to really scale this business up, which we are going to do. But I would say certainly, I think in North America in particular, we are, I would say on a relative basis, it is we are the largest, most dominant owner of healthcare infrastructure in Australasia by a factor of probably three. So for us to really scale that business, it is going to be very selective. We are looking at a few things, but we are kind of already dominant.

And I know it's early days, but it's looking good.

Yeah, I'd love to be much larger in weight everywhere. Um, I guess I think we have the opportunity here to really scale this business up, which we're going to do, but I would say certainly.

Um, I think in North America, in particular.

we we, we are

Um, I would say on a relative basis. It's it's we are the largest most dominant owner of healthcare infrastructure in Australia by a factor of probably 3.

Operator: When I look across North America, whether it is Canada and some of the more strategic things we are looking at, or south of the border, given that there are a lot of assets held by, in some cases, non-natural owners of those assets, I think there is a huge opportunity for us. At the same time, there is a lot of capital out there that wants to get into this space, that wants to diversify their portfolios. They know that this is not something where you are buying necessarily assets that are just simple and you can kind of close your eyes and put to bed. You need people that know what they are doing. You need people that understand how hospitals work, how outpatient facilities work, how ambulatory surgical facilities work.

Operator: I guess I would say that the simple analysis would be, I do think, as I look at it, North America is probably the glaring opportunity. Australasia is just what we have there. It is unmatched. Europe is a bit more complicated because every country has a very different. People think of Europe as one region, but you know, you have got 20 languages and all these kinds of countries and tax systems and health systems and how health gets delivered. So it is a bit more complex there. Certainly Germany is an opportunity for scale. But look, we are looking at them all. I guess to summarize, I do think North America is a sort of big land of opportunity for us.

So for us to really scale that business, it's going to be very selective. We're looking at a few things, but we are kind of already dominant when I look at North America, um, whether it's Canada and some of the more strategic things we're looking at or South of the Border. Um, given that there are a lot of assets, held by, in some cases, non-natural owners of those assets. I think there's a huge opportunity for us. Um, and at the same time there's a lot of capital out there that is that wants to get into this space that wants to diversify their portfolios. And they know that this is not something where you're buying necessarily assets that, um, are just simple and you can kind of close your eyes and put to bed, you need people that know what they're doing. You need people that understand how hospitals work. How outpatient facilities work, how ambulatory surgical facilities work? So I guess I would say to this simple analysis would be. I do think um as I look at it North America

Is probably the glaring opportunity. Australia is just what we have. There is is it is is is unmatched. Um,

And Europe's a bit more complicated because every country has a very different people think of Europe as 1 region. But you know, you've got 20 languages and all these kind and uh, you know, countries and tax systems and and health systems, and how health gets delivered. So it is a bit more complex.

Speaker 2: Awesome. This is a great cover, by the way. Thank you. I will take it back.

There, uh, certainly Germany is a, is a, is an opportunity, uh, for scale. Um, but look, we're, we're looking at them all, but I, I guess to summarize. I I do think North America is is, is a sort of big land of opportunity for us.

Awesome. This is a great color by the way. And thank you and I'll get back.

Operator: Thanks.

Thanks.

Speaker 3: This concludes the question and answer session. I would like to turn the conference back over to Zach Vaughn for any closing remarks.

Operator: Yeah. So look, thank you all for joining on my first call here. Again, I am thrilled to be on board. As I mentioned, I did not know much about this, which I think is actually one of the big opportunities here. I think it is just something that is here that is not well understood and not well known. We are going to change that. But certainly, in terms of the sector, in terms of the assets we own and the capabilities, this is something that is a real growth opportunity for us. So thank you again. Please reach out to myself, Mike Brady, Tracy Whittle, Stephanie Karamarkovic with any questions. I look forward to meeting you all.

This concludes the question and answer session. I would like to turn the conference back over to Zack Fawn for any closing remarks.

Yeah, so look, thank you all for joining uh, on my first call here. Again, I'm thrilled to be on board. I, um, as I mentioned, I, I didn't know much about this, um, which I think is actually 1 of the big opportunities here. I, I, I think it's just something that's here. That's not well, understood and not well known and we're going to change that. Um, but certainly in in, in terms of the sector, in terms of, you know, the assets we own and the capabilities. This is this is something that that's a real. That's a real growth opportunity for us. So thank you again, and look, look please

Reach out, uh, to myself, Mike Tracy, uh, staff with any questions? I look forward to meeting you all.

Speaker 3: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.