NorthWest Healthcare Properties Real Estate Investment Trust (OTC: NWHUF) is an unincorporated, open-ended real estate investment trust established under the laws of Ontario Province. NWHUF is one of those rare healthcare REITs, where almost three-fourths of ownership belongs to the general public. Only 13 percent is owned by institutions, whereas in all its peers it ranges between 65 to 99 percent. NWHUF invests in the global Medical Office Building Segment (MBO). Its portfolio consists of 190 healthcare facilities which are spread over 15.4 million square feet of gross leasable area. Its properties are located in Canada, Brazil, Europe, Australia and New Zealand.
NWHUF aims to serve as a long-term real estate partner to leading healthcare operators. NWHUF’s main interest is in the medical office building segment, which is leased to physicians, clinics, and hospitals. This segment of healthcare REITs is amongst the fastest growing segments. Moreover, most of its properties are leased over longer periods and have stable occupancies. NWHUF’s efficient management team includes over 200 professionals across nine offices in five countries.
NWHUF is also a rare healthcare REIT to pay monthly dividends, and has a solid track record of paying steady dividends since May 2010. It has recorded an average yield of 6.78 percent over the past 4 years, and 6 percent yield over the past 12 months . Its yields are among the highest when compared with its peers. However, there has not been any visible growth in dividend over the past five years. Since July 2015, the dividend has been close to $ 0.05 per share. Overall this kind of dividend payment is good enough to attract income seeking investors.
Source: NorthWest Healthcare Properties Real Estate Investment Trust (OTC: NWHUF) Dividend History
NorthWest Healthcare Properties Real Estate Investment Trust also recorded a healthy and steady price growth. Till the pandemic hit the market, its return was almost similar to that of S & P500. Afterwards, it failed to match the growth of S & P500 since March 2020. However, it has grown at a similar or faster rate than before. Overall the price growth of NWHUF has been very steady, which makes it more lucrative for conservative investors expecting a steady return on their investments.
Source: NorthWest Healthcare Properties Real Estate Investment Trust (OTC: NWHUF) Momentum Performance
Over the past 5 years, NWHUF’s price performance is also the most steady and strong among its peer healthcare REITs (market capitalization of less than $ 5 billion). This REIT has recorded a price growth of 38 percent over the past 5 years. Except for the pandemic related market slump during March & April 2020, NWHUF’s price has been quite steady. Only Community Healthcare Trust Incorporated (CHCT) and Global Medical REIT Inc. (GMRE) have recorded higher growth than NWHUF over the same period. However, those two REITs were not very steady and also have very low market capitalization (1 billion) compared to others.
Source: NorthWest Healthcare Properties Real Estate Investment Trust (OTC: NWHUF) Stock Price Today, Quote & News
Compared with its peers, both its price growth and revenue growth seem to be on the higher side. A revenue growth of 13 percent and price growth of 38 percent over the past 5 years, places NWHUF very strongly among its peers. Again only those two smaller healthcare REITs (CHCT and GMRE) have recorded significantly higher growth in revenue and price over the same period. A 60-month Beta of 0.8 also suggests that this fund is less risky.
The P / E of NorthWest Healthcare Properties Real Estate Investment Trust is extremely low at around 7. However, For REITs, the P / E ratio does not hold much significance, because the value of real estate investments is more meaningful in terms of assets rather than earnings. Price to book value of 1.31 is a bit on the lower side. However, Price to Cash flow, and EV / EBITDA are close to 20. This means that investors are optimistic that NWHUF will be able to generate significant operating income and cash flow in the long run. That means, investors have faith in the management of NWHUF, that they will be able to utilize its assets to generate sufficient cash flow and earnings. However, only 13 percent of institutional investments is a cause of some small concern. NWHUF being unincorporated might be a reason for such low level of institutional investment.
Source: Compiled from several pages of seekingalpha website
NWHUF’s focus segment, Medical office building, is expected to benefit from various macro factors such as increase in geriatric population and preference towards outpatient services. “Throughout most of the world, survival beyond age 65 is improving. Globally, a person aged 65 years in 2015-2020 could expect to live, on average, an additional 17 years. By 2045-2050, that figure will have increased to 19 years. Between 2015-2020 and 2045-2050, life expectancy at age 65 is projected to increase in all countries ”. Baring Brazil, NWHUF’s four other markets (Canada, Europe, Australia and New Zealand), are considered to be the topmost destinations for a comfortable retirement. This suggests that there are ample healthcare facilities and policies for senior citizens, resulting in increased demand for medical office buildings.
However, NWHUFs focus on a single segment may make its investments a little riskier, due to increased attention of all four major healthcare REITs – Medical Properties Trust (MPW), HealthPeak Properties (PEAK), Ventas (VTS), and Welltower (WELL) . The unforeseen pandemic related issues such as shorter stays by patients due to cost constraints, lower reimbursements and increased awareness about managed care, etc. have somewhat compelled these four larger healthcare REITs to abandon skilled nursing facilities and focus on more lucrative segments, such as senior living, MBO, life science offices, etc. MBO as a segment is no doubt lucrative, but is hindered by oversupply. Presence of more and more players surely will increase the competition and make it more difficult for smaller players.
However, this may also act as a positive indicator for NorthWest Healthcare Properties Real Estate Investment Trust. These developments are expected to fuel intense competition, and in order to dominate the Medical office building segment, these major healthcare REITs may go for mergers and acquisitions. Average market capitalization of those four REITs is 10X that of NWHUF. Due to its excessively high concentration in the MOB segment, and assets spreading over five regions outside the US, NWHUF could possibly become a perfect acquisition target, which may again lead to its price growth. Otherwise investors may expect minimal price growth with a steady dividend payment. In such a case, this REIT will continue to offer a reasonably good dividend yield of more than 6 percent, and a more or less equal percentage of price growth. Overall, NorthWest Healthcare Properties Real Estate Investment Trust offers an attractive investment opportunity for income-oriented investors who are interested in average steady returns.