Q3 2025 Northwest Healthcare Properties REIT Earnings Call

November 12, 2025

Following the presentation, we will conduct a question and answer session.

Operator: 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 0 to reach an operator. This call is being recorded today, Wednesday, 12 November 2025. I would now like to turn the conference over to Alyssa Barry, Investor Relations for Northwest. Please go ahead.

Operator: 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 to reach an operator. This call is being recorded today, Wednesday, 12 November 2025. I would now like to turn the conference over to Alyssa Barry, Investor Relations for Northwest. Please go ahead.

If at any time during this call you require immediate assistance. Please press Star then zero to reach an operator.

This call is being recorded today Wednesday November 12 2025.

I would now let's turn the conference over to Melissa <unk> Investor Relations for Northwest. Please go ahead.

Thank you operator, and good morning, everyone and welcome to Northwest Q3 Conference call. This call is being recorded and the replay will be made available on our website at triple W. Dot N W. H reaves dot com.

Alyssa Barry: Thank you, Operator. Good morning, everyone, and welcome to Northwest's Q3 conference call. This call is being recorded, and the replay will be made 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 CDAR Plus, 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 Q3 investor presentation, which is available on the Investor Relations section of our website, provides more detail on Q3 portfolio performance, financial metrics, and our accomplishments.

Alyssa Barry: Thank you, operator. Good morning, everyone, and welcome to Northwest's Q3 Conference Call. This call is being recorded and the replay will be made 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 Q3 investor presentation, which is available on the investor relations section of our website, provides more detail on Q3 portfolio performance, financial metrics, and our accomplishments.

As discussion includes forward looking statements as always we want to caution you that such statements are based on management's assumptions and beliefs.

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, plus 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 Q3 Investor presentation, which is available on the Investor Relations section of our website provides more detail on Q3 portfolio performance financial metrics and our accomplishments presenting on today's call are Zach Vaughan, our CEO, Stephanie care market niche, our CFO and we have Mike Brady our president.

Alyssa Barry: Presenting on today's call are Zach Vaughan, our CEO, Stephanie Karamarkovic, our CFO, and we have Mike Brady, our President, and Tracy Whittal, our COO, here present as well and available for the question-and-answer session. I will now turn it over to Zach for his opening remarks.

Alyssa Barry: Presenting on today's call are Zach Vaughan, our CEO, Stephanie Karamarkovic, our CFO, Mike Brady, our President, and Tracey Whittall, our COO, here to present as well and available for the question and answer session. I will now turn it over to Zach for his opening remarks.

And Tracy with all our CFO are here to presence as well and available for the question and answer session I will now turn it over to Zac for his opening remarks.

Yeah.

Well. Thank you Melissa good morning, everyone and thanks to you all for joining us on the call today.

Zach Vaughan: Well, thank you, Alyssa. Good morning, everyone. Thanks to you all for joining us on the call today. Our results in Q3 were strong. Operationally, our portfolio performed well. Same-property NOI grew. It's up about 4.4% year-over-year, and we completed about 200,000 sq ft of leasing during the quarter, where importantly, we realized the 90% retention ratio on the expiring leases. This really shows how sticky our tenants are and that our properties are critical to the operations of the clinics, the surgery centers, the hospitals, and other doctors and specialists that take space in our portfolio. Our financial metrics continue to trend in a positive direction, with leverage and payout ratios both coming down. The recent activities we've announced are gonna further strengthen our balance sheet. Overall, we're very pleased.

Zachary Vaughan: Well, thank you, Alyssa. Good morning, everyone. Thanks to you all for joining us on the call today. Our results in the third quarter were strong. Operationally, our portfolio performed well. Same property NOI grew. It's up about 4.4% year over year. We completed about 200,000sq ft of leasing during the quarter, where, importantly, we realized a 90% retention ratio on the expiring leases. This really shows how sticky our tenants are, and that our properties are critical to the operations of the clinics, the surgery centers, the hospitals, and other doctors and specialists that take space in our portfolio. Our financial metrics continue to trend in a positive direction, with leverage and payout ratios both coming down. The recent activities we've announced are going to further strengthen our balance sheet. Overall, we're very pleased.

Our results in the third quarter was strong operationally our portfolio performed well same property NOI grew its up about four 4% year over year, and we completed about 200000 square feet of leasing during the quarter were importantly, we realized 90% retention ratio on the expiring.

Leases, it's really shows how sticky our tenants are.

And that our properties are critical to the operations of the clinics the surgery centers, the hospitals and other doctors and specialists that takes space in our portfolio our financial metrics continue to trend in a positive direction with leverage and payout ratios, both coming down and.

And the recent activities, we've announced theyre going to further strengthen our balance sheet. So overall, we're very pleased Stephanie is going to share some more specifics on our financial results in a second.

Zach Vaughan: Stephanie's going to share some more specifics on our financial results in a second, just switching to strategic alternatives. You know, we've been clear that we want to simplify our business, repatriate capital, and focus on accretive growth, which encouragingly in the future can now include unit buybacks through our recently approved NCIB. I'm pleased to report that on the strategic front, since our last call, we've made a lot of progress. First, in Europe, we're actively evaluating strategic alternatives to unlock capital and have engaged third-party advisors to run a process involving a substantial portion of our portfolio there. The current transaction perimeter includes the majority of our wholly owned properties in Germany and in the Netherlands. From a timing perspective, it makes sense to explore this now. There's a lot of capital flowing into Europe and having personally had a lot of experience there.

Zachary Vaughan: Stephanie's going to share some more specifics on our financial results in a second. Just switching to strategic alternatives, we've been clear that we want to simplify our business, repatriate capital, and focus on accretive growth, which, encouragingly in the future, can now include unit buybacks through our recently approved NCIB. I'm pleased to report that on the strategic front, since our last call, we've made a lot of progress. First, in Europe, we're actively evaluating strategic alternatives to unlock capital and have engaged third-party advisors to run a process involving a substantial portion of our portfolio there. The current transaction perimeter includes the majority of our wholly owned properties in Germany and in the Netherlands. From a timing perspective, it makes sense to explore this now. There's a lot of capital flowing into Europe.

But just switching to strategic alternatives.

Been clear that we want to simplify our business repatriate capital and focus on accretive growth, which encouragingly in the future can now include unit buybacks through our recently approved in CIB.

And I'm pleased to report that on the strategic front since our last call. We've made a lot of progress first in Europe. We are actively evaluating strategic alternatives to unlock capital and have engaged third party advisors to run a process involving a substantial portion of our portfolio there.

The current transaction perimeter includes the majority of our wholly owned properties in Germany and in the Netherlands from a timing perspective, it makes sense to explore this now.

There's a lot of capital flowing into Europe, and having personally had a lot of experience there. Although Europe is a massive economy from a financial perspective and in a real estate perspective. It is highly fragmented and the health care infrastructure space is no different and our portfolio is a very compelling opportunity for investor that wants to participate.

Zachary Vaughan: Having personally had a lot of experience there, although Europe is a massive economy, from a financial perspective and a real estate perspective, it is highly fragmented, and the healthcare infrastructure space is no different. Our portfolio is a very compelling opportunity for an investor that wants to participate in an aggregation opportunity in what is still a more nascent institutional property sector in Europe. Our portfolio there, or in Europe, is performing very well. Our decision to explore these options is not because we have any negative views or any negative sentiment towards our assets currently or their prospect. It is simply a capital allocation consideration. There is no guarantee that a transaction is going to happen, but so far, we have been very encouraged by the levels of interest we are seeing from some highly credible investors. We will have more to come on Europe on upcoming calls.

Zach Vaughan: Although Europe's a massive economy from a financial perspective and a real estate perspective, it's highly fragmented and the healthcare infrastructure space is no different. Our portfolio is a very compelling opportunity for an investor that wants to participate in an aggregation opportunity in what is still a more nascent institutional property sector in Europe. Our portfolio there or in Europe is performing very well. Our decision to explore these options isn't because we have any negative views or any negative sentiment towards our assets currently or their prospect. It's simply a capital allocation consideration. Now, there's no guarantee that a transaction's gonna happen, but so far we've been very encouraged by the levels of interest we're seeing from some highly credible investors. We'll have more to come on Europe on upcoming calls.

And an aggregation opportunity in what is still a more nascent institutional property sector in Europe.

Our portfolio there or in Europe is performing very well so our decision to.

To explore these options isn't because we have any negative views or any negative sentiment towards our assets are currently or their prospect, it's simply a capital allocation consideration.

Now there is no guarantee that a transaction is going to happen, but so far we've been very encouraged by the levels of interest we're seeing from some highly credible investors so well have more to come on Europe in on.

On upcoming calls.

Moving from Europe to ANZ.

Zachary Vaughan: Moving from Europe to ANZ, following the close of the quarter, we entered into an agreement to internalize the management of Vital Healthcare Property Trust. When this closes, Northwest will receive a payment of NZD 214 million. At the same time, about three-quarters of our team members in the region will become full-time employees of Vital. Just in terms of the numbers, we generate about NZD 10 million of EBIT from our asset management activities related to Vital. This payment reflects slightly more than a 21x multiple, which, in our view, is a pretty attractive number. While we are going to forgo these earnings, the proceeds we're going to receive are going to be used to pay down debt and for other activities.

Zach Vaughan: Moving from Europe to ANZ. Following the close of the quarter, we entered into an agreement to internalize the management of Vital Healthcare Property Trust. When this closes, Northwest will receive a payment of NZD 214 million. At the same time, about three quarters of our team members in the region will become full-time employees of Vital. Just in terms of the numbers, we generate about NZD 10 million of EBIT from our asset management activities related to Vital. This payment reflects slightly more than the 21 times multiple, which in our view is a pretty attractive number. While we are going to forgo these earnings, the proceeds we're going to receive can be used to pay down debt and for other activities.

Following the close of the quarter, we entered into an agreement to internalize the management of vital health care property Trust. When this closes northwest will receive a payment of 214 million New Zealand dollars.

And at the same time about three quarters of our team members in the region will become fulltime employees of vital.

Just in terms of the numbers, we generate about 10 million in New Zealand dollars of EBIT.

From our asset management activities related to vital. So this payment reflects slightly more than the 21 times multiple which in our view is a pretty attractive number.

So while we aren't going to forego these earnings.

The proceeds were going to receive can be used to pay down or are going to be used to pay down debt and for other activities. But the end result is that we're going to be able to execute this internalization and deleveraging on an earnings neutral basis today with the incremental benefits in the future.

Zachary Vaughan: The end result is that we're going to be able to execute this internalization and deleveraging on an earnings-neutral basis today, with the incremental benefits in the future still to come as our G&A in the region drops significantly, as we increase our margins for our ongoing activities in Australia, and, most importantly, as we benefit from improved performance in Vital's units. Once this closes, we're still going to be Vital's largest shareholders. We're going to own about a quarter of the company. Mike and I are still going to be both on the board of directors of Vital. As part of Vital's equity raise, there were 13 institutions that participated, several of whom, even though they always liked Vital, they liked the story, they liked that they were a leader in healthcare infrastructure, hadn't participated as shareholders because of the external management structure.

Zach Vaughan: The end result is that we're gonna be able to execute this internalization and deleveraging on an earnings neutral basis today with the incremental benefits in the future, still to come in the future as our G&A in the region drops significantly as we increase our margins for our ongoing activities in Australia, and most importantly, as we benefit from improved performance in Vital's units. Once this closes, we're still gonna be Vital's larger shareholders. We're gonna own about a quarter of the company. Mike and I are still gonna be both on the board of directors of Vital.

Still still to come in the future as our G&A in the region dropped significantly.

As we increase our margins for our ongoing activities in Australia, and most importantly, as we benefit from improved performance in vitals units.

Once this closes we're still going to be vital larger shareholders, we're going to own about a quarter of the company, Mike and I are still going to be both are on the board of directors of vital but as part of items equity raise there were 13 institutions that participated.

Zach Vaughan: As part of Vital's equity raise, there were 13 institutions that participated, several of who, even though they always liked Vital, they liked the story, they liked that they were a leader in healthcare infrastructure, hadn't participated as shareholders because of the external management structure. Now that Vital is gonna be fully internalized, the liquidity and demand for the units is only gonna increase. Which will benefit us directly as the largest shareholder. In terms of ongoing operations in Australia, we have retained the asset management, leasing, and property operating capabilities that we need to drive value in our portfolio. As it relates to development, substantially all of our activities in the region occur at Vital, which is also where our strategic land bank is held. We have a few properties in Australia, however, that may be candidates for future redevelopment.

Several of whom even though they always like vital they like the story. They liked it they were a leader in health care infrastructure hadn't hadn't participated as shareholders because of the external management structure and now that vital is gonna be fully internalized.

Zachary Vaughan: Now that Vital is going to be fully internalized, the liquidity and demand for the units is only going to increase, which will benefit us directly as the largest shareholder. In terms of ongoing operations in Australia, we have retained the asset management, leasing, and property operating capabilities that we need to drive value in our portfolio. As it relates to development, substantially all of our activities in the region occur at Vital, which is also where our strategic land bank is held. We have a few properties in Australia, however, that may be candidates for future redevelopment. As part of the transaction, we retained Vital to perform certain development services as we evaluate our options for those properties. Although our footprint in terms of direct people and team members is going to shrink in Australia, we still remain very well positioned there for the future.

The liquidity and demand for the units is only going to increase which will benefit us directly as the largest shareholder.

In terms of ongoing operations in Australia, we have retained the asset management leasing and property operating capabilities that we need to drive value in our portfolio.

As it relates to development substantially all of our activities in the region of current vital which is also where our strategic land bank as health. We have a few properties in Australia. However that that may be candidates for future redevelopment. So as part of the transaction, we retained vital to perform certain development services as we evaluate our options for.

Zach Vaughan: As part of the transaction, we retained Vital to perform certain development services as we evaluate our options for those properties. Although our footprint in terms of direct, people and team members is going to shrink in Australia, we still remain very well-positioned there, for the future. Before handing it over to Stephanie, just a quick word on Healthscope. Since May, the receiver's been running a process to find a new owner and new operators for the hospitals. Initially, the bid dates were scheduled for late October. It then got pushed to late November. We've been in active discussions with numerous operators in the last several months. These discussions are ongoing.

Those properties.

So although our footprint in terms of direct people and team members is going to shrink in Australia, we still remain very well positioned there for.

For the future.

Before handing it over to Stephanie just a quick word on health scope.

Zachary Vaughan: Before handing it over to Stephanie, just a quick word on Healthscope. Since May, the receiver has been running a process to find a new owner and new operators for the hospitals. Initially, the bid dates were scheduled for late October. It then got pushed to late November. We've been in active discussions with numerous operators in the last several months. These discussions are ongoing. Our goal is to end up with a financially strong and proven operator to make sure that our properties are not only well-run, but are also profitable, which is going to preserve and grow long-term value for our shareholders. Assuming one of these parties is selected and we can come to an agreement, we would hope to have a new counterparty solidified by the end of the year and fully in place by mid-2026.

Since may the receiver has been running a process to find a new owner and new operators for the hospitals.

Initially the bid dates are scheduled for late October.

It doesn't got pushed to late November.

We've been in active discussions with numerous operators in the last several months. These discussions are ongoing.

Our goal is to end up with a financially strong and proven operator to make sure that our properties are not only well run but are also profitable which is going to preserve and grow long term value for four four for our shareholders.

Zach Vaughan: Our goal is to end up with a financially strong and proven operator to make sure that our properties are not only well-run but are also profitable, which is gonna preserve and grow long-term value for our shareholders. Assuming one of these parties is selected and we can come to an an agreement, we would hope to have a new counterparty solidified by the end of the year and fully in place by mid-2026. Stephanie's gonna give an update on where Healthscope is as it relates to their rent obligations. I would say on the plus side, in Australia, we are still seeing profitability improve across the 10 large operators that we have exposure to in the region.

To me one of these parties are selected and we can come to an agreement we would hope to have a new counterparty solidified by the end of the year and fully in place by mid 'twenty six Stephanie is going to give an update on warehouse scope.

Zachary Vaughan: Stephanie's going to give an update on where Healthscope is as it relates to their rent obligations. I would say on the plus side, in Australia, we are still seeing profitability improve across the 10 large operators that we have exposure to in the region. One thing I would say, however, and I would just caution everyone, is that there are frequently stories that come out in the Australian press that are not accurate. I would only expect this to continue and likely to accelerate as the Healthscope resolution gets closer. Just please keep that in mind when thinking about Healthscope. Just to sort of summarize with two things before handing it over to Stephanie, I'd say first, our results for the quarter were strong. AFFO is up, leverage is down, our payout ratio is down, and we're seeing very strong tenant retention.

He is as it relates to their rent obligations, but I would say on the plus side.

Australia, we are still seeing profitability improve across the 10 large operators that we have exposure to in the region.

One thing I would say, however, and I would just caution everyone.

Zach Vaughan: One thing I would say, however, and I would just caution everyone, is that there are frequently stories that come out in the Australian press that are not accurate. I would only expect this to continue and likely to accelerate as the Healthscope resolution gets closer. Just please keep that in mind when thinking about Healthscope. Just to sort of summarize on with two things before handing it over to Stephanie. I'd say first, our results for the quarter were strong. AFFO is up, leverage is down, our payout ratio is down, and we're seeing very strong tenant retention.

Is that there are frequently stories that come out in the Australian press that are not accurate and I would only expect this to.

And and then likely to accelerate as the health scope resolution gets closer. So just please keep that in mind when thinking about health scope.

But just to sort of summarize with two things before.

Handing it over to Stephanie I'd say first our results for the quarter was strong <unk> was up leverages down our payout ratios down and we're seeing very strong tenant retention and second our strategy is clear and simplify our business strengthen the balance sheet.

Zach Vaughan: Second, our strategy is clear: simplify our business, strengthen the balance sheet, and focus on growth in North America, where we see great fundamentals, a huge investable universe, and it's a very efficient place for our capital. With that, I'll turn it over to Stephanie.

Zachary Vaughan: Our strategy is clear: simplify our business, strengthen the balance sheet, and focus on growth in North America, where we see great fundamentals, a huge investable universe, and it's a very efficient place for our capital. With that, I'll turn it over to Stephanie.

And focus on growth in North America, where we see great fundamentals.

A huge investable universe, and it's a very efficient place for our capital with that I'll turn it over to Stephanie.

Thanks, Zach and good morning, everyone.

Q3 delivered continued resilience and strong operational results for north West.

Alyssa Barry: Thanks, Zach, and good morning, everyone. Q3 delivered continued resilience and strong operational results for Northwest. The REIT's global portfolio continues to perform. Our high-quality healthcare assets deliver stable, inflation-protected cash flows, supported by strong tenants and long-term leases. First, I'll start by reviewing the REIT's key operating and financial results. Our solid Q3 performance reaffirms the resilience of our platform and the enduring quality of our assets. Revenue from investment properties was CAD 104.3 million in the third quarter, reflecting the impact of asset dispositions in 2024 and 2025 to date, partially offset by same-property growth. Consolidated same-property net operating income increased 4.4% year over year to CAD 76.9 million, supported by contractual indexation, rentalized capital spend, and improved recoveries across all geographies. Notably, same-property NOI increased 5.1% in Australasia, 4.8% in Europe, 4.6% in Brazil, and 2.9% in North America.

Stephanie Karamarkovic: Thanks, Zach, and good morning, everyone. Q3 delivered continued resilience and strong operational results for Northwest. The REIT's global portfolio continues to perform. Our high-quality healthcare assets deliver stable, inflation-protected cash flows supported by strong tenants and long-term leases. First, I'll start by reviewing the REIT's key operating and financial results. Our solid Q3 performance reaffirms the resilience of our platform and the enduring quality of our assets. Revenue from investment properties was CAD 104.3 million in the Q3, reflecting the impact of asset dispositions in 2024 and 2025 to date, partially offset by same-property growth. Consolidated same-property net operating income increased 4.4% year-over-year to CAD 76.9 million, supported by contractual indexation, rentalized capital spend, and improved recoveries across all geographies.

To reach global portfolio continues to perform our high quality healthcare assets deliver stable inflation protected cash flows supported by strong tenants and long term leases.

First I'll start by reviewing our key operating and financial results.

Our solid Q3 performance reaffirms the resilience of our platform in the enduring quality of our asset.

Revenue from investment properties with $104 3 million in the third quarter, reflecting the impact of asset dispositions in 2024, and 2025 to date, partially offset by same property growth.

Consolidated same property net operating income increased four 4% year over year to $76 9 million supported by contractual indexation rental is capital spend and improve recoveries across all geographies.

Notably same property NOI increased five 1% in Australia Asia, four 8% in Europe, four 6% in Brazil, and two 9% in North America.

Stephanie Karamarkovic: Notably, same-property NOI increased 5.1% in Australasia, 4.8% in Europe, 4.6% in Brazil, and 2.9% in North America. Q3 leasing activity highlights our strong tenant retention and consistent cash flows, key advantages that distinguish us amongst our REIT peers. We renewed or secured 200,000 sq ft of leases at a 90% renewal rate, underscoring the essential nature of our assets. We ended Q3 with strong portfolio occupancy at 96.9% and a weighted average lease expiry of over 13 years, which is among the longest of the global listed sector and our 27th consecutive quarter above 13 years. This highlights the durability of our cash flows and the strength of our operator relationships. We remain focused on managing our G&A costs and demonstrated progress in Q3.

Third quarter leasing activity highlights our strong tenant retention and consistent cash flows he advantages that distinguish us amongst our REIT peers.

Alyssa Barry: Third-quarter leasing activity highlights our strong tenant retention and consistent cash flows, key advantages that distinguish us amongst our REIT peers. We renewed or secured 200,000sq ft of leases at a 90% renewal rate, underscoring the essential nature of our assets. We ended Q3 with strong portfolio occupancy at 96.9% and a weighted average lease expiry of over 13 years, which is among the longest of the global listed sector, and our 27th consecutive quarter above 13 years. This highlights the durability of our cash flows and the strength of our operator relationship. We remained focused on managing our G&A costs and demonstrated progress in Q3. G&A, excluding unit-based compensation and severance, was CAD 12 million, down CAD 0.6 million or 5% year over year, as we continue to realize savings from organizational streamlining and cost discipline.

We renewed or secured 200000 square feet of leases at a 90% renewal rate underscoring the essential nature of our asset.

We ended Q3 with strong portfolio occupancy at 96, 9% and a weighted average lease expiry of over 13 years, which is among the longest of the global listed sector and our 27th consecutive quarter above 13 years. This.

This highlights the durability of our cash flows and the strength of our operator relationships.

We remain focused on managing our G&A cost and demonstrated progress in Q3.

G&A, excluding unit based compensation and severance was $12 million down $6 million or 5% year over year as we continue to realize savings from organizational streamlining and cost discipline.

Stephanie Karamarkovic: G&A, excluding unit-based compensation and severance, was CAD 12 million, down CAD 0.6 million or 5% year-over-year, as we continue to realize savings from organizational streamlining and cost discipline. Upon completion of the internalization of Vital, we anticipate incremental cost reductions and will provide better estimates of this in Q4 once the transaction impacts are finalized. AFFO per unit increased to CAD 0.11, 3% ahead of Q2 and 16% over prior year. The AFFO payout ratio improved to 85%, underscoring our distribution sustainability. The improvement in AFFO per unit was mainly driven by lower interest costs, partially offset by lower NOI due to asset sales. Next, I will touch on transactional activity both during and post-quarter end, which demonstrates our commitment to further strengthening the balance sheet and improving capital allocation.

Upon completion of the internalization of <unk>, we anticipate incremental cost reduction and we will provide better.

Alyssa Barry: Upon completion of the internalization of Vital, we anticipate incremental cost reductions and will provide better estimates of this in Q4 once the transaction impacts are finalized. AFFO per unit increased to $0.11, 3% ahead of Q2, and 16% over prior year. The AFFO payout ratio improved to 85%, underscoring our distribution sustainability. The improvement in AFFO per unit was mainly driven by lower interest costs, partially offset by lower NOI due to asset sales. Next, I will touch on transactional activity, both during and post-quarter end, which demonstrates our commitment to further strengthening the balance sheet and improving capital allocation. In addition to operating the portfolio, we have been focused on the execution of opportunistic and strategic dispositions.

Estimates of this in Q4 once the transaction impacts are finalized.

<unk> per unit increased to 11, three center had a 3% ahead of Q2 and 16% over prior year.

And the <unk> payout ratio improved to 85% underscoring our distribution sustainability.

The improvement in <unk> per unit was mainly driven by lower interest costs, partially offset by lower NOI due to asset sales.

Next I will touch on transactional activity, both during and post quarter end, which demonstrates our commitment to further strengthening the balance sheet and improving capital allocation.

In addition to the port for operating a portfolio, we've been focused on the execution of opportunistic and strategic disposition.

Stephanie Karamarkovic: In addition to operating the portfolio, we have been focused on the execution of opportunistic and strategic dispositions. With respect to the Vital internalization, we currently estimate to be able to repatriate net proceeds of approximately CAD 150 million, inclusive of transaction costs and a conservative estimate of withholding taxes. We continue to work through final allocations and tax positions, we'll provide an update once figures are finalized upon closing. Proceeds are expected to be used to repay the REIT's credit facilities, which carry a blended interest rate of approximately 6%. Vital currently generates fees of about CAD 20 million per year on a 100% basis, translating to a net AFFO contribution of roughly CAD 8 million annually. As a result, the internalization is expected to be neutral to the REIT's AFFO.

With respect to the vital internalization.

Currently estimate to be able to repatriate net proceeds of approximately $150 million Canadian inclusive of transaction costs and a conservative estimate of withholding taxes. We continue to work through final allocations and tax position and will provide an update once figures are finalized upon closing.

Alyssa Barry: With respect to the Vital internalization, we currently estimate to be able to repatriate net proceeds of approximately CAD 150 million, inclusive of transaction costs and a conservative estimate of withholding taxes. We continue to work through final allocations and tax positions, and will provide an update once figures are finalized upon closing. Proceeds are expected to be used to repay the REIT's credit facilities, which carry a blended interest rate of approximately 6%. Vital currently generates fees of about CAD 20 million per year on a 100% basis, translating to a net AFFO contribution of roughly CAD 8 million annually. As a result, the internalization is expected to be neutral to the REIT's AFFO. As Zach mentioned, we're evaluating options for a portion of our European portfolio, with the goal of reallocating capital back to North America.

Proceeds are expected to be used to repay the credit for the Reed's credit facilities, which carry a blended interest rate of approximately 6%.

But I don't currently generates fees of about $20 million Canadian per year on 100% basis translating to a net <unk> contribution of roughly $8 million annually.

As a result, the internalization is expected to be neutral to the REIT <unk>.

As Doc mentioned for evaluating options for a portion of our European portfolio with the goal of reallocating capital back to North America. While this process is ongoing we're not yet in a position to provide further details on expected profit proceeds there timing, but we'll share updates as they become available.

Stephanie Karamarkovic: As Zach Vaughan mentioned, we're evaluating options for a portion of our European portfolio with the goal of reallocating capital back to North America. While this process is ongoing, we're not yet in a position to provide further details on expected proceeds or timing, but we'll share updates as they become available. We had dispositions during the quarter totaling $35 million and have a further $80 million of properties held for sale, which are expected to close in Q4 2025 or early 2026, facilitating further leverage reduction and improved liquidity. We've just launched a normal course issuer bid permitting the repurchase of convertible debentures and trust units. As we repatriate capital from our active initiatives in Australasia and Europe, the NCIB provides the REIT with flexibility for capital allocation, balancing against our goal of reduction in our leverage ratios.

Alyssa Barry: While this process is ongoing, we're not yet in a position to provide further details on expected proceeds or timing, but we'll share updates as they become available. We had dispositions during the quarter totaling CAD 35 million and have a further CAD 80 million of properties held for sale, which are expected to close in the fourth quarter of 2025 or early 2026, facilitating further leverage reduction and improved liquidity. We've just launched a normal course issuer bid permitting the repurchase of convertible debentures and trust units. As we repatriate capital from our active initiatives in Australasia and Europe, the NCIB provides the REIT with flexibility for capital allocation, balancing against our goal of reduction in our leverage ratios. Lastly, I want to highlight the continued work we're doing to improve the balance sheet by continuing to deleverage prudently without negatively impacting earnings.

We had dispositions during the quarter totaling $35 million and have a further $80 million of properties held for sale.

Which are expected to close in the fourth quarter of 2025 or early 2026, facilitating further leverage reduction and improve liquidity.

We've just launched a normal course issuer bid permitting the repurchase of convertible debentures in trust unit as we repatriate capital from our active initiatives in Australasia in Europe. The NCI provides the REIT with flexibility for capital allocation.

Wincing against our goal of reduction in our leverage ratios.

Lastly, I want to highlight the continued work we're doing to improve the balance sheet.

Stephanie Karamarkovic: Lastly, I want to highlight the continued work we're doing to improve the balance sheet, by continuing to delever and prudently without negatively impacting earnings. Management believes it's important to balance two critical goals: to reallocate capital to generate return, but also continue our progress in deleveraging. While leverage remains unchanged this quarter, the announced internalization transaction, once complete, will reduce our proportionate leverage by about 300 basis points. We took steps this quarter to advance our strategy, transition to unsecured financing, improve our cost of debt. Our refinancing program includes the amendment of our revolving credit facility this July, which further reduced our economic weighted average interest rate to 4.8%. Post-quarter end, available liquidity is CAD 250 million, positioning the REIT well for future obligations and opportunities. Now let me turn to one-time updates.

And by continuing to Delever and prudently without negatively impacting earnings.

Management believes it's important to balance two critical goals to reallocate capital to generate return, but also continue our progress in deleveraging will.

Alyssa Barry: Management believes it's important to balance two critical goals: to reallocate capital to generate return, but also continue our progress in deleveraging. While leverage remains unchanged this quarter, the announced internalization transaction, once complete, will reduce our proportionate leverage by about 300 basis points. We took steps this quarter to advance our strategy to transition to unsecured financing and improve our cost of debt. Our refinancing program includes the amendment of our revolving credit facility this July, which further reduced our economic weighted average interest rate to 4.8%. Post-quarter end, available liquidity is CAD 250 million, positioning the REIT well for future obligations and opportunities. Now, let me turn to one-time updates. Subsequent to the quarter, Healthscope voluntarily ended its rent deferral arrangement as of 31 October 2025 with both us and its other landlord, repaying all deferred rent owing with accrued interest.

Well leverage remained unchanged this quarter the announcement the announced internalization transaction once complete will reduce our proportionate leverage by about 300 basis points.

We took steps this quarter to advance our strategy to transition to unsecured financing improve our cost of debt or refinancing program includes the amendment of our revolving credit facility. This July which further reduced our economic weighted average interest rate to four 8% post quarter and available liquidity of 250 million <unk>.

Listening to REIT, well for future obligations and opportunities now.

Now, let me turn to onetime updates.

Subsequent to the quarter, how scope voluntarily ended its rent deferral arrangement as of October 31, 2025, with both us and its other landlord repaying all deferred rent owing with accrued interest all rent is fully current and how scope continues to meet their lease obligations.

Stephanie Karamarkovic: Subsequent to the quarter, Healthscope voluntarily ended its rent deferral arrangement as of 31 October 2025, with both us and its other landlord repaying all deferred rent owing with accrued interest. All rent is fully current, and Healthscope continues to meet their lease obligations. overall, our Q3 results show the strength and stability of our platform, the discipline in how we manage capital, and the continued progress we're making to strengthen our balance sheet. With resilient healthcare assets driving growth and a proactive approach to capital management, Northwest is well-positioned to unlock further opportunities and deliver sustained results in the quarters ahead. With that, I'll now turn it back to the operator to open it up for Q&A.

Alyssa Barry: All rent is fully current, and Healthscope continues to meet their lease obligations. Overall, our third-quarter results show the strength and stability of our platform, the discipline in how we manage capital, and the continued progress we're making to strengthen our balance sheet. With resilient healthcare assets driving growth, and a proactive approach to capital management, Northwest is well positioned to unlock further opportunities and deliver sustained results in the quarters ahead. With that, I'll now turn it back to the operator to open it up for Q&A.

So overall, our third quarter results show, the strength and stability of our platform the discipline on how we manage capital and the continued progress, we're making to strengthen our balance sheet with resilient healthcare assets driving.

Both in our proactive approach to capital management, North West is well positioned to unlock further opportunities and deliver sustained results in the quarters ahead.

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

We will now begin the question and answer session.

Zachary Vaughan: 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. Our first question today is from Himanshu Gupta with Scotiabank. Please go ahead.

Operator: We will now begin the question-and-answer session. To join the question queue, you may press star 1 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 2. We will pause for a moment as callers join the queue. Our first question today is from Himanshu Gupta with Scotiabank. Please go ahead.

To join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging and request.

If you were 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 call. It has joined the queue.

Our first question today is from Himanshu Gupta with Scotiabank. Please go ahead.

Thank you and good morning.

Good morning.

Himanshu Gupta: Thank you, good morning.

Himanshu Gupta: Thank you, and good morning.

So first on health schools.

Zachary Vaughan: Good morning.

Zach Vaughan: Morning.

And hence no longer requiring then definitely now just wondering what has changed and how has the I mean has the profitability or cash flow improved.

Himanshu Gupta: First on Healthscope. I mean, Healthscope no longer requiring rent deferral now. Just wondering what has changed? I mean, has their profitability or cash flow improved?

Himanshu Gupta: First on Healthscope, I mean, Healthscope no longer requiring rent deferral now. Just wondering what has changed? I mean, how has their profitability or cash flow improved?

Himanshu Gupta: First on Healthscope. I mean, Healthscope no longer requiring rent deferral now. Just wondering what has changed? I mean, has their profitability or cash flow improved?

Hi.

I think generally we've seen improvements across all the operators we have exposure to in.

Zach Vaughan: I think, look, generally, we've seen improvements across all the operators we have exposure to in the region. That's a factor. I think Healthscope did have some liquidity available to them, heading into this. Look, I mean, this is a good, this is a good thing in our view, obviously, them paying off. Obviously the real significant impact for us is going to be the future and who we end up with as an eventual operator and what the structure of that looks like.

Zachary Vaughan: I think, look, generally, we've seen improvements across all the operators we have exposure to in the region. That's a factor. I think Healthscope did have some liquidity available to them heading into this. I mean, this is a good thing in our view, obviously, them paying off. Obviously, the real significant impact for us is going to be the future and who we end up with as an eventual operator, and what the structure of that looks like.

In the region. So that's a factor I think <unk> did have some liquidity.

Available to them heading into this.

So look at I mean this is a good.

This is a good thing in our view, obviously them them.

Are paying off but obviously the the real significant impact for us is going to be the future.

And who we end up with us as an eventual operator and what the structure of that looks like.

Yeah.

Okay fair enough, so and that you will get to know in the next few months as I think you mentioned.

Himanshu Gupta: Okay, fair enough. That you will get to know in the next few months as I think you mentioned the sale process is on. Yeah.

Himanshu Gupta: Fair enough. You will get to know in the next few months, as I think you mentioned, the sale process is on.

Oh, Yeah, Yeah, we hope so again, we thought we have a more fulsome update by now as of the last call, but things did get pushed.

Zachary Vaughan: Yeah, we hope so. Again, we thought we'd have a more fulsome update by now as of the last call, but things did get pushed. We still believe, despite some noise out there, that it may get pushed again. They are holding to end of November. Hopefully, by then, we'll have a more fulsome summary of kind of where we are. I would caution that this is a bit fluid, so the dates could slip.

Zach Vaughan: Yeah, we hope so. We thought we'd have a more fulsome update by now as of the last call, but things did get pushed. We still believe, despite some noise out there, that it may get pushed again, that they are holding to end of November. Hopefully by then we'll have a more fulsome summary of kind of where we are. I again would caution that this is a bit fluid, so the dates could slip.

We still believe despite some noise out there that it may get pushed again that they are holding to end of November.

So hopefully by then we'll have a.

A more fulsome summary of kind of where are we.

Where we are but again I would caution that this is a bit fluid so that they could slip.

Okay, Okay fair enough. Thanks.

Himanshu Gupta: Okay. Okay. Fair enough. Thanks. Just switching gears to your European portfolio. Zach, I think you mentioned a lot of capital flowing into Europe. In that context, you know, what kind of pricing expectations do you have for this? I mean, should we expect something closer to IFRS value if anything gets done there?

And then just switching gears to your European portfolio, and Doug I think you mentioned a lot of capital flowing into Europe.

Himanshu Gupta: Okay. Fair enough. Thanks. Just switching gears to your European portfolio. Zach, I think you mentioned a lot of capital flowing into Europe. In that context, what kind of pricing expectations do you have for this? I mean, should we expect something closer to IFRS value if anything gets done there?

So in that context, you know what kind of pricing expectations do you have for this.

I mean should we expect something closer to widespread value if anything gets done there.

I guess look it's a good question we're still in the early phases of this I mean, we have advisors engaged.

Zach Vaughan: I guess, look, it's a good question. We're still in the early phases of this. I mean, we have advisors engaged. They've gone out, spoken to several investors. I don't think we're quite at the point where we can give any guidance because we haven't received a lot. There's a few moving parts in that we're selling assets in Germany and in the Netherlands. It's possible someone could look at one or the other. Again, I think we'll have an update, hopefully in the next, at least by the end of the year.

Zachary Vaughan: I guess, look, it's a good question. We're still in the early phases of this. I mean, we have advisors engaged. They've gone out, spoken to several investors. I don't think we're quite at the point where we can give any guidance because we haven't received a lot. There's a few moving parts in that we're selling assets in Germany and in the Netherlands. It's possible someone could look at one or the other. Again, I think we'll have an update there, hopefully, at least by the end of the year.

They've gone out.

<unk> spoken to several investors. So so I don't think were quite at the point, where we can give any guidance because we haven't received a lot theres a few moving parts in that we're selling assets in Germany and in the Netherlands, it's possible someone could.

Look at one or the other but.

I think we'll have an update.

There hopefully in the next.

Hopefully at least by the end of the year.

Fair enough and just one follow up there.

Sairam Srinivas: Fair enough. Just one follow-up there. I mean, in terms of your desired goal, is the ultimate goal to exit Europe at the right price and reallocate capital back to North America?

Himanshu Gupta: Fair enough. Just one follow-up there. I mean, in terms of your desired goal, is the ultimate goal to exit Europe at the right price and reallocate capital back to North America?

I mean in terms of your desired goal.

Is the ultimate goal to exit at the right price and allocate capital back to North America.

I think our goal is where we see the most.

Zachary Vaughan: I think our goal is where we see the most probably compelling opportunities for us once we get through some incremental deleveraging and some other initiatives. It just feels like the best place for us to focus on growth is in North America going forward. I would anticipate that over time, we will have a lot less capital exposed to Europe. It's unlikely that this sort of happens in one transaction, but I would assume that that's the case.

Zach Vaughan: I think our goal is it's where we see the most, probably compelling opportunities for us once we get through some incremental de-leveraging and some other initiatives. It just feels like the best place for us to focus on growth is in North America going forward. I would anticipate that over time, we will have a lot less capital exposed to Europe. It's unlikely that this sort of happens in one transaction, but I would assume that that's the case.

Probably compelling opportunities for us once we get through some incremental deleveraging and some other initiatives. It just feels like the best place for us to focus on growth is as it is in North America.

Going forward and so I would anticipate that over time, we will have a lot less capital.

<unk> two to Europe.

Unlikely that this sort of happens.

In one transaction, but I would I would assume that that's the case.

Got it okay. Thank you I'm not a weekend the queue. Thank you goodbye.

Sairam Srinivas: Got it. Okay. Thank you, and I will leave you on the queue. Thank you. Bye.

Himanshu Gupta: Got it. Okay. Thank you, and I will leave you on the queue. Thank you. Bye.

Himanshu Gupta: Got it. Okay. Thank you, I'll rejoin the queue. Thank you. Bye.

The next question is from serum in front of US with core Mark Securities. Please go ahead.

Operator: The next question is from Sairam Srinivas with Cormark Securities. Please go ahead.

Zachary Vaughan: The next question is from Sirum Srinivas with Kormark Securities. Please go ahead.

Thank you Alberto good morning, guys.

Uh huh.

Sairam Srinivas: Hi, everybody. Good morning, guys.

Sirum Srinivas: Thank you, Arvinda. Good morning, guys.

Just looking at the announcements from the weekend and from last night Mcallen team over here that seems to be a boost to liquidity.

Stephanie Karamarkovic: Good morning.

Sairam Srinivas: Just looking at the announcements from the weekend and from last night, the common theme over here seems to be a boost to liquidity and going through to the asset-light model outside of North America, which is again in line with what you guys have said. What does this mean for the other JV structures and also for the European JV right now?

Juliano Thornhill: Morning.

Sirum Srinivas: Just looking at the announcements from the weekend and from last night, the common key note here seems to be a boost to liquidity and going through to the asset light model outside of North America, which is, again, in line with what you guys have said. What does this mean for the other JV structures, and also for the European JV right now?

When it comes to the asset light model outside of talking about it coming through again in line with what you guys have said.

What does this mean for the other JV structures and also for the European Jamie right, though.

Yeah.

So sorry, what does this mean for the joint ventures.

Zach Vaughan: sorry, what does this mean for the joint ventures, the sort of partnership?

Zachary Vaughan: Sorry. What does this mean for the joint ventures sort of partnership?

Yeah Baden Baden.

Northern Europe and the one in Austin.

Sairam Srinivas: Yeah, both in Europe and the one in Australasia, I guess now, considering the trend seems to be more that you're kind of looking at an asset-light model. Can we expect probably an exit from the other structures as well?

Sirum Srinivas: Yeah. Both in Europe and the one in Australasia, I guess, now, considering the trend seems to be more that kind of looking at an asset light model, can we expect probably an exit from the other structures as well?

Most major I guess now considering the trend seems to be more of that kind of looking at an asset like model and we expect probably.

Is it from the other structures as well.

I think right now we're not.

That's not actively being considered I think obviously, we felt like.

Zach Vaughan: I think right now that's not actively being considered. I think obviously we felt like the transaction with Vital made a lot of sense financially, obviously for us, but it makes a lot of sense for Vital, which we're gonna benefit from over time as its largest shareholder. The assets in Europe we're looking at that are in the perimeter today are predominantly wholly owned. They're not in any sort of joint venture. Again, those are assets that we own 100% of and control directly. The goal is to try and get, you know, to try and repatriate capital from those.

Zachary Vaughan: I think right now, that's not actively being considered. I think, obviously, we felt like the transaction with Vital made a lot of sense financially, obviously, for us, but it makes a lot of sense for Vital, which we're going to benefit from over time as its largest shareholder. The assets in Europe we're looking at that are in the perimeter today are predominantly wholly owned. They're not in any sort of joint venture. Those are assets that we own 100% of and control directly. The goal is to try and repatriate capital from those.

The transaction with vital made a lot of sense financially obviously for us, but it makes a lot of sense for vital which we're going to benefit from overtime.

Its largest shareholder.

The assets in Europe, we're looking at that are in the perimeter today are predominantly wholly owned.

So they are not in any sort of.

Joining venture.

So again those are assets that we own 100% of it and control directly so the goal is to try and get.

Okay.

To try and.

Patriot capital from those.

Okay.

Clarification, thanks for that and maybe just to kind of a European sale are you looking at maybe more of a onesie twosies it essentially bigger transactions and while most of the portfolio. Yeah I think at the moment, we're contemplating and what we think makes most sense and likely what.

Himanshu Gupta: Okay. That's actually a good clarification, Zach. Thanks for that. Maybe just looking at the European sale, are you looking at maybe more 1D, 2D, or essentially bigger transactions involving most of the portfolio?

Sairam Srinivas: Okay. That's actually a good clarification, Zach. Thanks for that. Maybe just looking at the European sale, are you looking at maybe more one deal, these are essentially bigger transactions involving most of the portfolio?

Zach Vaughan: Yeah, I think at the moment we're contemplating, and what we think makes most sense and likely what will draw a lot of investors is the opportunity to participate in a larger transaction. Because again, it's a highly fragmented market. For someone who's looking to get exposure specifically to healthcare infrastructure type of assets, this is a pretty unique opportunity, compared with some other markets where it's more accessible. This is a very tough sector to access. We think that keeping things together is actually more appealing than breaking them apart in this market.

Zachary Vaughan: Yeah. I think at the moment, we're contemplating, and what we think makes most sense, and likely what will draw a lot of investors, is the opportunity to participate in a larger transaction because, again, it's a highly fragmented market. For someone who's looking to get exposure specifically to healthcare or healthcare infrastructure type of assets, this is a pretty unique opportunity compared with some other markets where it's more accessible. This is a very tough sector to access. We think that keeping things together is actually more appealing than breaking them apart in this market.

It will draw us.

A lot of investors is is the opportunity to participate in a larger transaction.

Because again, it's a highly fragmented market.

So for someone who is looking to get exposure, specifically to health care health care infrastructure type of assets. This is this is a pretty unique opportunity compared with.

Some other markets, where it's more accessible. This is this is a this is a very tough sector to access so we think that.

Keeping things together is actually more appealing than breaking them apart.

In this market.

That's good to know is that unfortunately, this one's probably for you. When you look at the guidance for the fee income on a quarterly basis.

Sairam Srinivas: That's good to know, Zach. Stephanie, this one's probably for you. When we look at the guidance for the fee income on a quarterly basis, how does that change post the Vital transaction?

Himanshu Gupta: That's good to know, Zach. Stephanie, this one's probably for you. When we look at the guidance for the fee income on a quarterly basis, how does that change post-Vital transaction?

That changed post the <unk> transaction.

Yeah, So as I mentioned by and the vital management fees are running at approximately 5 million a quarter on a on a 100% basis until those will of course.

Stephanie Karamarkovic: As I mentioned, Sai, the Vital management fees are running at approximately CAD 5 million a quarter on a 100% basis. Those will, of course, come out 1 January once we close. Other than that, the management fees will continue from our other existing arrangements with both the Australasia JV and the European JV.

Zachary Vaughan: Yeah. As I mentioned, the Vital management fees are running at approximately $5 million a quarter on a 100% basis. Those will, of course, come out come 1 January 2025 once we close. Other than that, the management fees will continue from our other existing arrangements with both the Australasia JV and the European JV.

Come January 1st once we close.

But other than that the management fees will continue from our other existing arrangements.

The Australia Asia JV in the European JV.

Alright, Thank you guys I'll turn it back.

Thanks, Ed.

Himanshu Gupta: All right, thank you, guys. I'll turn it back.

Sairam Srinivas: All right. Thanks you guys. I'll turn back.

The next question is from Tom Callaghan with BMO capital markets. Please go ahead.

Zach Vaughan: Thanks, Sai.

Zachary Vaughan: Thanks, Zach.

Operator: The next question is from Tom Callaghan with BMO Capital Markets. Please go ahead.

Zachary Vaughan: Thanks. The next question is from Tom Callahan with BMO Capital Markets. Please go ahead.

Good morning, guys, maybe just sticking on that on the capital allocation theme, obviously lots of progress there between the two initiatives and just wondering more broadly are there any other types of opportunities you're looking at here near term in terms of repatriating capital and I guess, specifically with respect to the vital I couldn't help but notice.

Tom Callaghan: Thanks. Morning, guys. Maybe just sticking on the capital allocation theme, obviously lots of progress there between the two initiatives. Just wondering more broadly, are there any other types of opportunities you're looking at here near-term in terms of repatriating capital? I guess specifically with respect to Vital, I couldn't help but notice in the release there, you know, you've committed to keeping the unit to February, which is not that far after or close. Zach, I think in your prepared remarks, though, you mentioned participating in the upside with those units in Vital. How should we think about those kind of near, medium, and long-term?

Sirum Srinivas: Thanks. Morning, guys. Maybe just sticking on the capital allocation theme, obviously, lots of progress there between the two initiatives. Just wondering more broadly, are there any other types of opportunities you're looking at here near term in terms of repatriating capital? I guess specifically with respect to Vital, I couldn't help but notice in the release there, you've committed to keeping the units to February, which is not that far after close. Zach, I think in your prepared marks there, though, you did mention you mentioned participating in the upside with those units in Vital. How should we think about those kind of near, medium, and long-term?

In the release there.

You know you've committed to keeping the units to February which is not that are out there or close.

I think in your prepared remarks, there, though you did mention you mentioned participating in any upside with those units and vital so how should we think about those kind of near medium and long term.

Sure.

Thanks, Tom.

I would say at the moment.

Zach Vaughan: Sure. Thanks, Tom. I would say at the moment those are probably the main focus for our capital allocation activities and what's gonna be probably most impactful in the near term. In terms of Vital and the internalization, there are certain agreements that we have as a condition of that. Maybe Mike, you can just walk Tom through a bit of that.

Zachary Vaughan: Sure. Thanks, Tom. I would say at the moment, those are probably the main focus for our capital allocation activities, and what's going to be probably most impactful in the near term. In terms of Vital and the internalization, there are certain agreements that we have as a condition of that. Maybe, Mike, you can just walk Tom through a bit of that.

Those are probably the main focus for us for our capital allocation activities and what's going to be probably most impactful in in the in the near term in terms of vital.

And the internalization there are certain agreements that we have as a condition of that maybe Mike you can just walk us through a bit of both.

Yes, I mean, we.

We are looking forward to continuing our relationship with vital we think it's important for US together, we're stronger as far as.

Mike Brady: Yeah, Tom. I mean, we are looking forward to continuing our relationship with Vital. We think it's important for us, together we're stronger. As far as, you know, what that means, Zach and I will continue on the board. We have arrangements for them to support us on pre-development work and potentially development if it comes to that. As far as the transaction, we have made some commitments, as we've disclosed, about maintaining our ownership stake. At this time, that is our intent.

Alyssa Barry: Yeah, I mean, we are looking forward to continuing our relationship with Vital. We think it's important for us; together, we're stronger. As far as what that means, Zach and I will continue on the board. We have arrangements for them to support us on pre-development work and potentially development if it comes to that. As far as the transaction, we have made some commitments, as we've disclosed, about maintaining our ownership stakes. At this time, that is our intent.

What that means I can I will continue on the board we have arrangements for them to support us.

On pre development work and potentially development if it comes to that.

And you know and as far as the transaction we have made some commitments as we've disclosed maintain our ownership stakes. So at this time.

As our intent.

Yes, that's helpful.

Arrangements, we we won't be.

Zach Vaughan: Yeah. Tom, you'll not say arrangements. We won't be. There's a period of time till February where we won't dispose of any of our interest. We've also committed until August 2026 that we will retain at least a 10% interest. We're not looking to exit Vital. I don't think you'll see anything by next quarter.

Zachary Vaughan: Yeah. Tom, you'll not see arrangements. We won't be, there's a period of time until February where we won't dispose of any of our interest. We've also committed until 26 August that we will retain at least a 10% interest. We're not looking to exit Vital. I don't think you'll see anything by next quarter.

Yeah.

There is a period of time.

But until February where we won't.

Dispose of any of our interest and we are also committed until August 26 that we will retain at least a 10% interest so.

We're not looking to exit.

<unk> I don't think you'll see anything by next quarter.

Got it got it that's helpful. And then maybe as we think about capital coming back to North America, obviously leverage reduction has been a focus you've mentioned kind of select growth opportunities in and then did announced the CIB just how should we think about allocation across those three buckets here is it kind of leverage and growth and then maybe mean.

Tom Callaghan: Got it. Got it. That's helpful. Then maybe as we think about capital coming back to North America, obviously leverage reduction has been a focus. You've mentioned kind of select growth opportunities and then did announce the NCIB. Just how should we think about allocation across those three buckets here? Is it kind of leverage and select growth and then maybe medium-term as the balance sheet improves towards the NCIB, or could we see some of that right off the bat here?

Sirum Srinivas: Got it. That's helpful. Maybe as we think about capital coming back to North America, obviously, leverage reduction has been a focus. You've mentioned kind of select growth opportunities and then did announce the NCIB. Just how should we think about allocation across those three buckets here? Is it kind of leverage and select growth and then maybe medium term as the balance sheet improves towards the NCIB, or could we see some of that right off the bat here?

<unk> Chairman says the balance sheet improves towards the NCI would be or could we see some of that right off the bat here.

Hey, Tom and I. Thank you you've now that.

Stephanie Karamarkovic: Hey, Tom. Yeah, I think you've nailed it. We are still very much focused on leverage reduction. The proceeds from the Vital internalization are going to be allocated to reducing debt, and potentially any further proceeds. We'll make a big dent in with the internalization transaction being... We're seeing our leverage reduced to 53% proportionately, which we still believe should be a bit lower. We're focused on that. The NCIB is really a tool for a little bit further down the road, but we wanted to have it in place so that it's ready to go if and when we see opportunity.

Zachary Vaughan: Hey, Tom. Yeah, I think you've nailed it. We are still very much focused on leverage reduction. The proceeds from the Vital internalization are going to be allocated to reducing debt, and potentially any further proceeds will make a big dent. With the internalization transaction, we're seeing our leverage reduced to 53% proportionately, which we still believe should be a bit lower. We are focused on that. The NCIB is really a tool for a little bit further down the road, but we wanted to have it in place so that it's ready to go if and when we see opportunity.

We are still very much focused on leverage reduction and the proceeds from from the vital internalization are are going to be allocated to reducing debt and.

And potentially any further proceeds we'll make a big dent in with the internalization transaction being.

We're seeing our leverage reduced to 53% proportionately, which.

We still believe should be a bit lower and so we're focused on that and so the NCI is really a tool for a little bit further down the road, but we wanted to have it in place so that it's ready to go if and when we see.

Unity.

Perfect appreciate the color I'll hop back thank you.

Tom Callaghan: Perfect. Appreciate the color. I'll hop back. Thank you.

Sirum Srinivas: Perfect. Appreciate the color. I'll hop back. Thank you.

Thanks, Tom.

Your next question is from Giuliano Thornhill with National Bank Capital markets. Please go ahead.

Zach Vaughan: Thanks, Tom.

Zachary Vaughan: Thanks, Tom.

Operator: The next question is from Giuliano Thornhill with National Bank Financial. Please go ahead.

Zachary Vaughan: Thanks. The next question is from Juliano Thornhill with National Bank Capital Markets. Please go ahead.

Hey, guys good morning, everyone.

Just wanted to start off on cause V. H P N. The internalization there what does the internalization due for the scalability of the Australian portfolio I know in the past you've kind of.

Giuliano Thornhill: Hey, guys. Good morning, everyone.

Juliano Thornhill: Hey, guys. Good morning, everyone.

Stephanie Karamarkovic: Thanks.

Giuliano Thornhill: Just wanted to start off on, I guess VHP and the internalization there. What does the internalization do for the saleability of the Australian portfolio? I know in the past you've kind of indicated you want to repatriate all that capital and get more North American focus. I'm just kind of wondering, you know, what strategic options would open up. Does it make it more difficult, less difficult to kind of sell that portfolio going forward?

Zachary Vaughan: Thanks.

Juliano Thornhill: Just wanted to start off on, I guess, VHP and the internalization there. What does the internalization do for the saleability of the Australian portfolio? I know in the past you've kind of indicated you want to repatriate all that capital and get more North American focus. I'm just kind of wondering what strategic options would open up. Does it make it more difficult, less difficult to kind of sell that portfolio going forward?

Indicated you want to repatriate all that capital and get more North American focused so I'm just kind of wondering what strategic options that are open up just to make it more difficult less difficult to kind of sell that portfolio going forward, but and sorry, giuliana youre talking about the portfolio, we own and Australia outside of vital yeah like.

Zach Vaughan: Sorry, Giuliano, you're talking about the portfolio we own in Australia outside of Vital?

Zachary Vaughan: Sorry, Juliano, you're talking about the portfolio we own in Australia outside of Vital?

Zach Vaughan: Sorry, Giuliano, you're talking about the portfolio we own in Australia outside of Vital?

The whole Australasia kind of region.

Giuliano Thornhill: Yeah, like the whole Australasia kind of region.

Juliano Thornhill: Yeah, the whole Australasia kind of region.

In some ways.

Zach Vaughan: Yeah. I mean, I think in some ways, like we have no intention of, at the moment of creating liquidity in our Australian-owned assets that we own outside of Vital. I think what this does is look to, you know, it does give us some degree down the road of flexibility, depending on how Vital performs, that we could create more liquidity in that with effectively our equity interest in Vital. I sort of look at this as a way to enhance our liquidity options down the road. Although we have no plans, obviously, we're restricted in our Vital units, and we have no plan to do anything on our joint venture properties.

We have no intention of at the moment of of.

Zachary Vaughan: Yeah, I mean, I think in some ways, we have no intention at the moment of creating liquidity in our Australian-owned assets that we own outside of Vital. I think what this does is, look, it does give us some degree down the road of flexibility depending on how Vital performs, that we could create more liquidity in that with effectively our equity interest in Vital. I sort of look at this as a way to enhance our liquidity options down the road, although we have no plans, obviously. We're restricted in our Vital units, and we have no plan to do anything on our joint venture properties.

Creating liquidity in our Australian owned.

That's the debt we own outside of vital.

I think what this does is look to it.

It does give us.

Some degree down the road of flexibility depending on how vital for forms that we could create more liquidity in that with with with effectively our equity interest in vital I sort of look at this as a way to enhance our liquidity options down the road. Although we're docket. We have no plans. Obviously, we are restricted in our vital units and we have no <unk>.

Lan.

To do anything on the on our on our joint venture properties.

And then so with the kind of a more I guess third party now.

Juliano Thornhill: Right. With kind of a more, I guess, third party now, is there the possibility to drop other assets from your GIC into them, or does that increase the liquidity of your existing portfolio there just because they are a pretty large buyer in the region?

Giuliano Thornhill: Right. With kind of a more, I guess, third party now, is there the possibility to drop other assets from your GIC into them? Does that increase the liquidity of your existing portfolio there just because they are, you know, a pretty large buyer in the region?

Is there the possibility to drop other assets from your GIC into them or does that increase the liquidity of your existing portfolio or theyre just because they are.

Pretty large pretty large buyer in the region.

I don't think so I think I don't think it changes.

Zach Vaughan: I don't think so. I think, I don't think it changes any dynamics. I mean, at the moment, we have no intention. The assets we have been selling in Australia have come out of the Vital portfolio, which wouldn't change. We have no intentions selling any out of our other portfolios. I don't... In fact, we may look at new opportunities. I don't think it changes anything, the fact that we're not the manager anymore. If we did ever want to do something between either of those vehicles, we'd have to effectively step back and get third parties to independently.

Zachary Vaughan: I don't think so. I don't think it changes any dynamics. I mean, at the moment, we have no intention. The assets we have been selling in Australia have come out of the Vital portfolio, which wouldn't change. We have no intention of selling any out of our other portfolio. I don't, in fact, we may look at new opportunities. I don't think it changes anything, the fact that we're not the manager anymore. If we did ever want to do something between either those vehicles, we'd have to effectively step back and get third parties to opine on the values.

Any dynamics I mean at the moment, we have no intention on the assets we have been selling in Australia have come out of the vital portfolio, which wouldn't change we have no intention of selling any out of our other portfolio.

I don't in fact, we make.

Look at new opportunities so I.

I don't think it changes anything the fact that we're not the manager anymore. If we did ever want to do something between here.

Through those vehicles, we would have to effectively step back in and get third parties too.

Upon on the values and.

Then I guess, just sticking with Australia on the Hs those situations.

Giuliano Thornhill: Right

Zach Vaughan: ... opine on the values.

Giuliano Thornhill: I guess just sticking with Australia on the HSO situation, is there kind of a final date that we think that can be resolved that you're willing to kind of communicate? Because I know it's been, you know?

Juliano Thornhill: I guess just sticking with Australia on the HSO situation, is there kind of a final date that we think that that can be resolved that you're willing to kind of communicate? Because I know it's been down the road for a couple of months.

Is there a kind of a final date, but we think that that can be resolved, but you're willing to kind of communicate because I know it's been you know down the road for a couple of months.

Yes.

Zach Vaughan: Yeah

Giuliano Thornhill: ... a bit down the road for a couple of months.

Yeah Julian.

I wish I could.

Zach Vaughan: I-

Giuliano Thornhill: I guess-

Zach Vaughan: Yeah, Giuliano, I wish I could is the answer. I think if you were to ask our team, they wish they could and everyone. I think it's. I think what's happened is it's a very complex situation given these are hospitals. There's a lot of regulation. It's a complex business. I think it's probably taken a bit more time than the receivers initially thought is probably what is driving this. Again, So far as of yesterday, we believe that they are sticking to the end of November.

Zachary Vaughan: Yeah. Juliano, I wish I could is the answer. I think if you were to ask our team, they wish they could, and everyone, I think it's a, I think what's happened is it's a very complex situation given these are hospitals. There's a lot of regulation. It's a complex business. I think it's probably taken a bit more time than the receivers initially thought is probably what is driving this. Again, so far as of yesterday, we believe that they are sticking to the end of November, and that's what we're working hard to get in a position that we will have a transaction that, should it be acceptable, then we can start planning to move forward so that it's in place by, say, early to mid-2026.

Yeah, sure and I think if you were to ask our team they wish they could and everyone I think it's a.

I think what's happened is it's a very complex situation given.

These are hospitals.

Inflation, it's a.

Complex business and so I think it's probably taken a bit more time.

Giuliano Thornhill: Mm-hmm.

Zach Vaughan: There's a lot of regulation. It's a complex business. I think it's probably taken a bit more time than the receivers initially thought is probably what is driving this. Again, So far as of yesterday, we believe that they are sticking to the end of November.

Then.

The receivers initially thought is probably what the what is driving this.

So again.

So far as of yesterday, we believe that they are sticking to the end of November.

And that's what we're working hard to get in a position.

Giuliano Thornhill: Mm-hmm.

Zach Vaughan: That's what we're working hard to get in a position, that we will have a transaction that should it be acceptable, then, we can start planning to move forward so that it's in place by, say, early to mid-2026. I wouldn't say I could not say with certainty that we're not sitting here at some point, in a few weeks saying this got pushed again because it looks like.

That we will have a transaction that should it be acceptable then.

We can start planning to move forward so that its in place by <unk>.

Hey.

Early to mid 'twenty, six, but I wouldnt say I could not say with certainty that that we're not sitting here.

Zachary Vaughan: I would not say with certainty that we're not sitting here at some point in a few weeks saying, this got pushed again, because it's happening.

At some point.

Few weeks, saying this got pushed again because.

Mostly the complexity of the transaction or is it like the most.

Giuliano Thornhill: Is it mostly the complexity of the transaction? Or is it like the, you know, Is it the complexity of the transaction or just the multiple parties kind of being involved that's causing all this delay?

Juliano Thornhill: Is it mostly the complexity of the transaction, or is it the complexity of the transaction or just the multiple parties kind of being involved that's causing all this?

Is that the complexity of the transaction or just the multiple parties kind of being involved.

Oh, yes, absolutely.

I would put that all under the complexity umbrella you have a pool of editors who have a receiver.

Zachary Vaughan: Yes. I would put that all under the complexity umbrella. You have a pool of creditors, a receiver, and an existing business. This is obviously of interest to the regulators and the government. You have 20,000 workers. I think it's not quite as simple as, well, a lender took over, and now they're just going to sell the asset. I think that's playing into this in a big way. The good thing for everybody is that the conditions continue to improve. We see that not only in the Healthscope hospitals but also in the others that we have exposure to, where we get the regular performance data. Again, I don't want to give any assurance that by the end of the year, we'll have anything done because so far, it has been pushed.

Zach Vaughan: Yes. I would put that all under the complexity umbrella. You have a pool of creditors, you have a receiver, you have an existing business, you have, in, you know, this is obviously of interest to the regulators and...the government. You have 20,000 workers. I think it's not quite as simple as, well, you know, say, a lender took over and now they're just gonna sell the asset. I think that's playing into this, in a big way. The good thing for everybody is that the conditions continue to improve. We see that not only in the Healthscope hospitals, but also in the others that we have exposure to and where we get the regular performance data.

In existing business you have.

This is obviously of interest to the regulators and the government you.

You have 20000 workers. So I think it's not quite as simple as.

Giuliano Thornhill: Mm-hmm.

Zach Vaughan: the government. You have 20,000 workers. I think it's not quite as simple as, well, you know, say, a lender took over and now they're just gonna sell the asset. I think that's playing into this, in a big way. The good thing for everybody is that the conditions continue to improve. We see that not only in the Healthscope hospitals, but also in the others that we have exposure to and where we get the regular performance data. Again, I can't, I don't wanna give any assurance that by the end of the year, we'll have anything done because so far we've, it just has been pushed.

Well.

Uh huh.

Our lender took over and now Theyre just going to sell the asset I think thats playing into this.

In a big way the good thing for everybody.

Is that the conditions continue to improve and we see that not only in the health scope hospitals, but also in the others that we have exposure to and where we get the regular performance data.

But again.

Can't I don't want to give any assurance that by the at the end of the year, we'll have anything done because so far we.

Zach Vaughan: Again, I can't, I don't wanna give any assurance that by the end of the year, we'll have anything done because so far we've, it just has been pushed.

It has been pushed.

Okay.

Okay, and just lastly on Europe.

Giuliano Thornhill: Okay. Just lastly on Europe, what kind of percentage of fair value does the on-balance sheet European assets make up within your portfolio? With like, within Europe, I mean.

What kind of percentage of fair value does the on balance sheet.

Giuliano Thornhill: Okay. Just lastly on Europe, what kind of percentage of fair value does the on-balance sheet European assets make up within your portfolio? With like, within Europe, I mean.

Juliano Thornhill: Okay. Just lastly on Europe, what kind of percentage of fair value does the on-balance sheet European assets make up within your portfolio, within Europe, I mean.

European assets make up yeah within your portfolio.

With like within Europe, I mean.

Yeah.

Sorry.

Yes.

The percentage of our gross assets or yeah within Europe, how much.

Zach Vaughan: So, so-

Zachary Vaughan: You mean the percentage of our gross assets, or?

Giuliano Thornhill: Would you be willing to-

Zach Vaughan: The percentage of our gross assets, or?

How much of the on balance sheet kind of.

Giuliano Thornhill: Yeah, within Europe. How much of the on-balance sheet kind of, properties in Europe does that represent? Is it like half of the kind of European exposure, or is it...

Juliano Thornhill: Yeah. Within Europe, how much of the on-balance sheet kind of properties in Europe does that represent? Is it like half of the kind of European exposure, or is it?

Properties in Europe does that represent is it like.

Half of the kind of European exposure or is it.

That's more than a favorite it yeah.

Stephanie Karamarkovic: A bit more than that. Sorry to-

Zachary Vaughan: A bit more than that. Sorry, we're just.

It's more than half.

Zach Vaughan: Yeah. Hang on. It's more than half, because again, the assets that are in the current transaction perimeter are the ones that we wholly own.

Zachary Vaughan: Yeah. Hang on. It's more than half because, again, the assets that are in the current transaction perimeter are the ones that we wholly own, so it makes up.

Because again the assets that were there.

That are in the current transaction perimeter are the ones that we wholly own.

So it makes up.

Giuliano Thornhill: Yeah.

Zach Vaughan: It makes up.

No.

Zach Vaughan: It makes up.

Yeah, so our on balance sheet assets are $620 million Canadian.

Zachary Vaughan: CAD 620 million. Yeah, our on-balance sheet assets are CAD 620 million, approximately.

Stephanie Karamarkovic: CAD 620 million. Yeah. Our on balance sheet assets are CAD 620 million, approximately.

Okay.

Thank you.

And then just my last question before I jump back is just what are the taxes to selling Europe and repatriate that capital.

Giuliano Thornhill: Thank you. Just my last question, before I jump back is just what are the tax risks to selling Europe and repatriating that capital back to Canada?

Juliano Thornhill: Thank you. My last question before I jump back is just what are the tax risks to selling Europe and repatriating that capital back to Canada?

Back to Canada.

So consistent with how we sold our U K portfolio.

Stephanie Karamarkovic: Consistent with, you know, how we sold our UK portfolio, you know, we hold those assets in a fairly effective or efficient structure in Europe, and, therefore, don't have material tax leakage as we bring proceeds back. You know, depending on how these transactions are structured, there's of course things like capital gains tax that are in the portfolios that we'll have to manage. Again, it really depends on how the transactions occur. We, at this point, can't provide any.

Zachary Vaughan: Consistent with how we sold our UK portfolio, we hold those assets in a fairly efficient structure in Europe and therefore do not have material tax leakage as we bring proceeds back. Depending on how these transactions are structured, there are, of course, things like capital gains tax that are in the portfolios that we will have to manage. Again, it really depends on how the transactions occur. At this point, we cannot provide any, or if there is anything more coming. Yeah.

We hold those assets in a fairly effective efficient structure in Europe and.

Therefore don't have material tax.

Tax leakage as we bring proceeds back.

Tell me like hobbies transactions are structured because of course things like capital gains tax that are that are in the portfolio that we will have to manage but again it really depends on how how the transactions occur. So we at this point can't provide any.

Alright.

Okay. Thanks, guys.

Giuliano Thornhill: Mm-hmm.

Stephanie Karamarkovic: Anything more concrete. Yeah.

Once again, if you have a question. Please press Star then one.

Giuliano Thornhill: Yep. Thanks, guys.

Juliano Thornhill: Yep, thanks, guys.

Operator: Once again, if you have a question, please press star then 1. The next question is from Pammi Bir with RBC Capital Markets. Please go ahead.

Zachary Vaughan: Thanks.

Operator: Once again, if you have a question, please press star, then one. The next question is from Pommy Beer with RBC Capital Markets. Please go ahead.

The next question is from Paul Me beer with RBC capital markets. Please go ahead.

Thanks, Good morning.

Zach was there perhaps any unsolicited interest in the European assets that perhaps drove the move to explore options now I guess I'm just curious because you know the company. Just obviously went through a fairly significant strategic review and you manage to sell the U K asset so just.

Zachary Vaughan: Thanks. Good morning. Zach, was there perhaps any unsolicited interest in the European assets that perhaps drove the move to explore options now? I guess I'm just curious because the company just obviously went through a fairly significant strategic review, and you managed to sell the UK assets. I'm just trying to get a sense of what sort of led to this, I guess, initiative at this point.

Pammi Bir: Thanks. Good morning. Zach, was there perhaps any unsolicited interest in the European assets that perhaps drove the move to explore options now? I guess I'm just curious because, you know, the company just obviously went through a fairly significant strategic review and, you know, you managed to sell the UK assets. I'm just trying to get a sense of, you know, what sort of led to this, I guess, initiative at this point.

Trying to get a sense of what sort of.

Led to this.

Guess initiative at this point.

Hey, Paul it's Mike here.

I think.

Giuliano Thornhill: Hey, Pami, it's Mike here. I think, you know, the market in Europe has really improved over the last while. We just think that, you know, it's opportunistic to explore this path. You know, as we've emphasized, unlike during the strategic review, we don't need to do anything. This is really about whether the market is there for us to take advantage of than to repatriate capital.

Mike Brady: Hey, Pami, it's Mike here. I think, you know, the market in Europe has really improved over the last while. We just think that, you know, it's opportunistic to explore this path. You know, as we've emphasized, unlike during the strategic review, we don't need to do anything. This is really about whether the market is there for us to take advantage of than to repatriate capital.

Alyssa Barry: Hi, Pommy. It's Mike here. I think the market in Europe has really improved over the last while. We just think that it's opportunistic to explore this path. As we've emphasized, unlike during the strategic review, we don't need to do anything. This is really about whether the market is there for us to take advantage of and to repatriate capital.

The market in Europe has really improved over the last well and so we just think that you know.

Opportunistic to explore this past and.

And you know as we've emphasized unlike during the strategic review, we don't need to do anything. So this is really about whether the market is there for us to.

To take advantage of them to repatriate capital.

Yeah.

Echo that I mean I.

Again wasn't here during the strategic review, but I would say even in my past role.

Zach Vaughan: Yeah. I'd sort of echo that. I mean, I again, wasn't here during the strategic review, but I would say even in my past role, you know, we noticed a dramatic 180-degree shift in terms of the desire for institutional capital, which is what we were working with to get exposure to Europe. Whereas if I were to rewind another six months, they would have said, I'm quite happy I'm focusing my efforts on, at the time, the US. I don't think that's limited to real estate. I think it's everything. I mean, if you look at some of the alternative asset managers are talking about big private credit opportunities in Europe, it just increased activity everywhere. I do think that's obviously a factor.

Zachary Vaughan: Yeah. I'd sort of echo that. I mean, I, again, wasn't here during the strategic review, but I would say even in my past role, we noticed a dramatic 180-degree shift in terms of the desire for institutional capital, which is what we were working with, to get exposure to Europe. Whereas if I were to rewind another six months, they would have said, I'm quite happy. I'm focusing my efforts on, at the time, the US. I don't think that's limited to real estate. I think it's everything. I mean, if you look at some of the alternative asset managers, they're talking about big private credit opportunities in Europe. It just increased activity everywhere. I do think that's obviously a factor. We do have regularly people approaching us about assets all over our portfolio.

You know, what we noticed a dramatic 180 degrees shift.

In terms of the desire for.

Institutional capital, which is what we were working with.

To get exposure to Europe, whereas if I were to rewind. Another six months, they would've said I'm quite happy I'm focusing my efforts on.

At the time in the U S. I don't think that's limited to real estate I think.

It's everything that I mean, if you look at some of the alternative asset managers are talking about big private credit opportunities in Europe.

In.

It just increased activity at a ratio I do think Thats, obviously a factor.

We do have <unk>.

Regulatory people approaching us about that's all all over our portfolio I think that the combination of kind of sometimes the flows of capital can can make a.

Zach Vaughan: We do have regularly people approaching us about assets all over our portfolio. I think that the combination of kind of sometimes the flows of capital can accelerate a decision, and I think that's what we're seeing. I think in addition, it, you know, our assets there lend themselves well. What works really well are aggregation type of scale-up strategy, roll-up strategies in Europe just 'cause it's so fragmented. The opportunity with us is to come into something that's large, but not too large for a lot of investors, and then scale that up over time and really benefit from that in the long run.

Zachary Vaughan: I think that the combination of sometimes the flows of capital can accelerate a decision. I think that's what we're seeing. I think, in addition, our assets there lend themselves well. What works really well are aggregation type of scale-up strategies, roll-up strategies in Europe, just because it's so fragmented. The opportunity with us is to come into something that's large but not too large for a lot of investors, and then scale that up over time and really benefit from that in the long run. I think it was us trying to be opportunistic and think about what makes more sense. Sometimes that's driven by executing just a business plan, at least. In this case, I'd say the capital flows are playing a big part.

Can accelerate a decision and I think that's what we're seeing I think in addition.

Okay.

Our assets there lend themselves well.

What what works really well our aggregation type of scale up strategy roll up strategies in Europe, just because it's so fragmented and so the opportunity with us is to come into something that's large but not too large for a lot of investors and then scale that up over time and really benefit from that.

In the long run so I think it was.

I was trying to be opportunistic and think about.

Zach Vaughan: I think it was, you know, us trying to be opportunistic and think about, you know, what makes more sense, and sometimes that's driven by, executing a business plan, a lease. In this case, it, you know, I'd say the capital flows are playing a big part.

You know, what what what makes more sense and sometimes that's driven by.

Executing at just a business plan of leases, but in this case I.

I'd say the capital flows are playing out.

Part.

Got it okay. So that's no that's that's great color.

Pammi Bir: Got it. Okay. That's, no, that's great color. Okay. Then just maybe on the CAD 300 million of or potentially over CAD 300 million of net proceeds that you cited, just to clarify, the Vital buyout would be, let's say, half of that. I think, Stephanie, you mentioned CAD 150 million after some of the withholding taxes and deal costs, etc., which would then effectively imply that, you know, we're basically talking roughly CAD 150 million from monetizing the European portfolio.

Operator: Got it. Okay, that's great color. Just maybe on the 300 million or potentially over 300 million of net proceeds that you cited, just to clarify, the Vital buyout would be, let's say, half of that. I think, Stephanie, you mentioned 150 after some of the withholding taxes and deal costs, etc., which would then effectively imply that we're basically talking roughly 150 million from monetizing the European portfolio.

Okay, and then just maybe on the 300 million of oral potentially over 300 million of net proceeds that you cited.

Just to clarify the vital buyout would be let's say half of that I think Stephanie you mentioned 150. After some of the withholding taxes and deal costs et cetera, which would then effectively imply that basically talking roughly.

Roughly $150 million from monetizing the European portfolio.

Yeah, that's the right math, Tony I mean, I think again that fairly conservative and also kind of reflects the existing transaction perimeter and but again, it's all dependent on kind of final outcome. So at this time, we think it's at least that that 300 number. So yes, I think we're pretty comfortable there.

Stephanie Karamarkovic: Yeah, that's the right math, Tommy. I mean, I think again that's fairly, you know, conservative, and also kind of reflects the existing transaction perimeter. Again, it's all dependent on kind of final outcome. At this time, we think at least that 300 number so.

Zachary Vaughan: Yeah, that's the right math, Pommy. I mean, I think, again, that's fairly conservative, and also kind of reflects the existing transaction perimeter. Again, it's all dependent on kind of final outcome. At this time, we think it's at least that 300 number.

That's a reasonable number of arena.

Zach Vaughan: Yeah. I think we're pretty comfortable that that's a reasonable number. We would, you know, hope it would be higher. Will it be double for these? No. I think that reflects reasonable assumptions around what's out there today and also reflects reasonable assumptions around either withholding taxes or-

Zachary Vaughan: Yeah, I think we're pretty comfortable that that's a reasonable number. We would hope it would be higher. Will it be double for these? No, I think that reflects reasonable assumptions around what's out there today, and also reflects reasonable assumptions around either withholding taxes or transaction costs.

You know I hope it would be higher will it be.

Dr Double for these no, but but but but I think that reflects reasonable assumptions around.

What's what's out there today and it also reflects reasonable assumptions around around either either with holding taxes or transaction costs, though.

Yeah.

Stephanie Karamarkovic: Mm-hmm.

Zach Vaughan: Transaction costs, so.

It just seems a little low relative to the $600 million of assets you cited on balance sheet in Europe, if we apply.

Pammi Bir: Yeah. Just, it just seems a little low relative to the CAD 600 million of assets you cited on balance sheet in Europe. You know, if we apply, let's roughly 50% leverage on a gross basis, the CAD 150 would translate to CAD 300 versus CAD 300 gross of European on like European assets you could sell versus the CAD 620 that you said is on the balance sheet at 100%. Would that imply that there's just a lot more debt on these European assets or?

Operator: Yeah. It just seems a little low relative to the 600 million of assets you cited on balance sheet in Europe. If we apply roughly 50% leverage on a gross basis, 150 would translate to 300 versus 300 gross of European assets you could sell versus the 620 that you said is on the balance sheet at 100%. Would that imply that there's just a lot more debt on these European assets, or?

Awfully, 50% leverage on a gross basis. The 150 would translate to 300 versus 300 gross of European on European assets, you could sell versus the six 'twenty that you said it on the balance sheet at 100%.

So would that imply that there's just a lot more debt on these European assets or.

No, it's a little bit higher than 50, but not much.

Stephanie Karamarkovic: No, it's a little bit higher than 50, but not much. I think as Zach mentioned, it's not, it's not everything.

Zachary Vaughan: No. It's a little bit higher than 50, but not much. I think, as Zach mentioned, it's not everything. This, again, is, again, a conservative.

I think as Zach mentioned, it's not it's not everything so there again it is again evident.

Sorry, I may have missed spoke at my I'm not Stephanie.

Pammi Bir: Okay.

Stephanie Karamarkovic: This again is again conservative.

Zach Vaughan: Yeah. Sorry, I may have misspoken. Stephanie probably could do much better. These are assets that we just own 100% of versus stuff we have in partnerships. That's not really part of the perimeter.

Zachary Vaughan: Yeah, sorry. I may have misspoken. I'm not. Stephanie probably could do much better. These are assets that we just own 100% of, versus stuff we have in partnerships. That's not really part of the perimeter.

Do much better these are assets that we just don't 100% of.

Versus stuff, we we haven't partnerships that that's not really part of the perimeter and it's not everything you read hold on.

And there is and there are a couple of things that we've excluded.

Stephanie Karamarkovic: Yeah. It's not everything that we hold on balance sheet either.

Zachary Vaughan: Yeah. It's not everything that we hold on balance sheet either.

Zach Vaughan: There is. There are a couple things that we've excluded that could get included.

Zachary Vaughan: There are a couple of things that we've excluded that could get included, but that we've excluded. That's why we said, Pommy, just like the 300 million amongst these two initiatives is not crazy. Just to be clear, it's not everything. We tried to create the portfolio we thought made the most sense. It could grow. It could shrink a bit. I think that number's reasonably conservative.

That could get.

But we've excluded so that's why we said pardon me just like the 300 million amongst these two initiatives is not.

Pammi Bir: Right.

Zach Vaughan: That we've excluded. That's why we said, Tommy, just like the CAD 300 million amongst these two initiatives, it is not crazy. It's not, just to be clear, it's not everything. We tried to create the portfolio we thought made the most sense. It could grow, it could shrink a bit, but I think that number's reasonably conservative.

Is not crazy, but it's not just to be clear it's not everything.

We tried to create the portfolio, we thought made the most sense.

It could grow it could shrink a bit but I think that numbers reasonably conservative. Okay. So if I think about what could come out of Europe based on what Youre looking at today not the full 600 million that's on balance sheet.

Pammi Bir: Okay. If I think about what could come out of Europe, based on what you're looking at today, not the full CAD 600 million that's on balance sheet.

Operator: Okay. If I think about what could come out of Europe based on what you're looking at today, not the full CAD 600 million that's on balance sheet, but somewhere north of CAD 300 million-ish.

But somewhere north of $300 million ish.

Zach Vaughan: Yes.

Pammi Bir: somewhere north of CAD 300 million-ish.

Yes, yes.

Right.

Stephanie Karamarkovic: Yes.

Zachary Vaughan: Yes.

Right.

Zach Vaughan: Yes.

Zachary Vaughan: Yes.

Pammi Bir: Yeah. Right. Okay. Right. Okay. Just lastly on Healthscope, you mentioned that the cash flows, you know, have improved more recently. Can you just comment on maybe what that rent coverage looks like now versus, you know, I think earlier in the year it was sub 2 times. I'm just curious where that is today. Is it at a level that you see as sustainable?

And then just lastly, unhealth scope.

Operator: Right. Okay. Right. Okay. Lastly, on Healthscope, you mentioned that the cash flows have improved more recently. Can you just comment on maybe what that rent coverage looks like now versus, I think, earlier in the year it was sub 2x? I am just curious where that is today, and is it at a level that you see as sustainable?

You mentioned that the cash flows have improved more recently so could you just comment on maybe what that rent coverage. It looks like now versus you know I think earlier in there. It was sub two times. So I'm just curious where that is today and is it at a level that you see as sustainable.

Yeah, I don't think there's been significant increases beyond that that what we saw but we are seeing and you know.

Stephanie Karamarkovic: Yeah. I don't think there's been, you know, significant increases beyond that what we saw. We are seeing, you know, improved pass-through revenues to the operators. There's been deals negotiated with the insurers across all of Australia, they're getting a higher percentage of the insurance proceeds. We are seeing improvements. They're coming through across the board, it's not significantly moving those numbers. At this time, I don't have any, you know, update on the coverage ratios.

Zachary Vaughan: Yeah, I don't think there's been significant increases beyond what we saw. We are seeing improved pass-through revenues to the operators. There's been deals negotiated with the insurers across all of Australia, and they're getting a higher percentage of the insurance proceeds. We are seeing improvements. They're coming through across the board, but it's not significantly moving those numbers. At this time, I don't have any update on the coverage ratios.

Improved.

Pass through revenues to the to the operator, and there's been deals negotiated and and with the insurers across all.

Australia, and they're getting a higher percentage of the insurance proceeds, though and we are seeing improvement there theyre coming through across the board, but it's not significantly moving those number. So at this time I don't have any.

Update on.

Is that the coverage ratios.

Okay, Alright, and then just just this last one.

Operator: All right. Just this last one. I guess on the European portfolio side again, these things are always difficult to sort of have a sense of it from a timing perspective. Is there something in your mind that you'd like to have something in place by? Is it mid-year next year, or is it something that could take longer?

Pammi Bir: Okay. All right. Just this last one. I guess on the European portfolio side, again. These things are always difficult to sort of have a sense of it from a timing perspective, you know, is there something in your mind that you'd like to have something in place by? You know, is it, you know, mid-year next year, or is it something that could take longer?

I guess on the European portfolio start again is there.

These things are always difficult to sort of have a sense of it from a timing perspective, but is there something in your mind that you'd like to have something in place by.

Is it mid year next year or is it something that could take longer.

Yeah look I.

I think Mike.

Zachary Vaughan: Yeah. Look, I think in Q1, we certainly anticipate having a transaction concluded.

Q1, we.

Zach Vaughan: Yeah. Look, I think by in Q1 we certainly anticipate having a transaction concluded.

We certainly anticipate having a transact having a transaction concluded.

Okay. Thanks.

Thanks, very much I'll turn it back.

Operator: Okay, thanks very much. I'll turn it back.

Pammi Bir: Okay. Thanks very much. I'll turn it back.

Yes.

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

Zach Vaughan: Bye.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Alyssa Barry for any closing remarks.

Zachary Vaughan: Bye.

Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Alyssa Barry for any closing remarks.

Thank you on behalf of the team at northwest we thank you all for your participation and interest in the REIT should you have any questions. Please feel free to reach out to us at any time have a great rest of your day every one.

Stephanie Karamarkovic: Thank you. On behalf of the team at Northwest, we thank you all for your participation and interest in the REIT. Should you have any questions, please feel free to reach out to us at any time. Have a great rest of your day, everyone.

Alyssa Barry: Thank you. On behalf of the team at Northwest, we thank you all for your participation and interest in the REIT. Should you have any questions, please feel free to reach out to us at any time. Have a great rest of your day, everyone.

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

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

Q3 2025 Northwest Healthcare Properties REIT Earnings Call

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