NorthWest Healthcare Properties REIT (NWH-UN-T) has completed its acquisition of a 5.1 per cent interest in Australian Unity Healthcare Property Trust (AUHPT) and confirmed the details of its latest offer to take over the  trust in a transaction that values it at about $2.43 billion Cdn.

In a release Monday morning, NorthWest updates its offers for Australian Unity, a process which has been ongoing for several months. Thus far, Australian Unity has rejected previous, lower bids according to multiple published reports in Australia.

AUHPT owns a portfolio of 62 hospitals, medical office buildings and other healthcare facilities. The portfolio is 98 per cent occupied by a diverse tenant roster with a weighted average lease expiry of 16 years, according to figures provided by NorthWest. Forecast annual rent growth is approximately 2.5 per cent and the trust has a development pipeline of at least $467 million.

Northwest is already a major owner and operator of healthcare-related real estate in Australia, with a portfolio valued at about $4 billion. This includes 11 hospital assets which it acquired in a $1.2-billion transaction from Australian Healthscope Ltd., about two years ago.

NorthWest says its latest bid for Australian Unity includes a capital partner and is an all-cash offer for all shares it does not currently own. NorthWest made its previous unit acquisitions as part of an arrangement with Hume Partners Pty. Ltd. The current offer quotes prices of $2.38 per wholesale unit, $2.44 per retail unit and $1.51 per class-A unit.

The offer for Australian Unity

The offer, which requires AUHPT unitholder approval, implies a total equity value of $1.96 billion and an enterprise value of $2.43 billion, including debt of $577 million. The offer represents an approximate 30 per cent premium and 16 per cent premium to AUHPT’s unaffected unit price as of Feb. 17 and its current unit price, respectively.

NorthWest already has approval from the Australian Foreign Investment Review Board, should unitholders vote in favour of the offer. That vote will take place on July 1 and NorthWest requires approval of 75 per cent of the value of AUHPT units on that date.

In addition to the 5.1 per cent of AUHPT which it already owns, NorthWest also has options for an additional 11.1 per cent of outstanding units, for a total of 16.2. This makes it AUHPT’s largest unitholder, “and reduces the prospect of a superior proposal emerging” according to the release.

NorthWest said it has a combination of equity and debt funding in place for the transaction. The REIT completed in February an equity raise of about $215 million through the issuance of almost 19.4 million units.

If the transaction is approved, NorthWest expects it to close in July.

Goldman Sachs is acting as the bidding consortium’s financial advisor with Ashurst providing legal counsel while RBC Capital Markets and Scotiabank are acting as financial advisors to the REIT.

About NorthWest Healthcare Properties REIT

NorthWest Healthcare Properties REIT is an unincorporated, open-ended real estate investment trust based in Toronto.

As of March 31. 2021, the REIT held a portfolio of international healthcare real estate infrastructure comprised of interests in 186 income-producing properties and 15.5 million square feet of gross leasable area. It is located in major markets in Canada, Brazil, Europe, Australia and New Zealand.

The REIT’s portfolio includes medical office buildings, clinics and hospitals.

With a fully integrated 230-person management team, NorthWest has nine offices across five countries.