NWH-UN.TO NorthWest Healthcare Properties REIT

Discussion in 'Canadian Stocks Message Boards' started by TomB16, Jul 7, 2019.

  1. TomB16

    TomB16 Well-Known Member

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  2. TomB16

    TomB16 Well-Known Member

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    I expect this will only be of interest to Marvan but I've been following this stock for many years and have owned it for several. It's been a solid company and a great distributor.

    The books currently look a bit unattractive, after large scale purchases in New Zealand and Australia. The write-downs and good will have been a tough ride for investors but they have continued the dividend. The distribution has not increased in years.

    Before this latest flurry of acquisitions, the EPS was pretty solid in the 1.60~1.80 with a dividend of 0.80. It peaked at something like 2.40 before they made it rain in the South Pacific with a capital raise and a ton of debt.

    My hope is they return to more efficient governance I've come to know them for.
     
  3. TomB16

    TomB16 Well-Known Member

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    Good news. The finances are starting to heal after several rounds of major acquisitions. We know this because the earnings call is in just over two weeks and the price is starting to spike.

    Now, I'm not saying there is inside trading going on.... it could just be a coincidence that happens 100% accurate in predicting quarterly results.

    We've held this stock for several years, most of which have been entirely unexciting. It has always been a strong distributor so we have built up a lot of shares through with DRIP.

    I believe we are in a transitory period.

    The company has been diligent and very well run until 17 months ago. With the acquisition of Acurity hospitals in New Zealand in February of 2018, the books went from being amazing to crap. There have been multiple major acquisitions since then, also. They have taken countless write downs and good will charges. NWH is making it rain down under.

    During this time, there haven't been a lot of investors getting out. This is a cozy little REIT.

    I believe the buying frenzy is over, for now. The books should heal up and start looking good again.

    In 2020, they intend to start buying back stock. That will help the stock price and hurt the yield.

    For those of us who have been squirrelling away shares over the past several years, the trajectory (as envisioned) is quite appealing.
     
    Marvan likes this.
  4. TomB16

    TomB16 Well-Known Member

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    NWH would seem to have caught the attention of a lot of folks. Volume is up over the last year and the market cap is up over 30% in 12 months.

    For those fortunate enough to buy the dip at the end of 2019, congratulations. I raise my glass to you. Cheers.

    I speculate this REIT must be in consideration for inclusion in the TSX/S&P 300. If this becomes reality, this REIT will do something very nice for those of us who believed in it all these years when it was nothing but a terrific company and a distribution monster.
     
  5. TomB16

    TomB16 Well-Known Member

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    For those who care about fundamentals, NWH is buying lots of stuff and diluting their issue at a ratio of 35% of new acquisitions.

    Paul Della Lana has said they have a medium term path to $10B in enterprise value. I suspect the strategy is to expand, even at low or neutral value, in hope of gaining a position in the Canadian index.

    To that end, they have new holdings in the UK and the Netherlands, plus a significant joint venture they are setting up for the European space.

    Meanwhile, even at the currently elevated valuations, NWH is distributing over 6%.
     
    #5 TomB16, Feb 25, 2020
    Last edited: Feb 25, 2020
  6. TomB16

    TomB16 Well-Known Member

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    ER on March 4.
     
    #6 TomB16, Mar 4, 2020
    Last edited: Mar 9, 2020
  7. TomB16

    TomB16 Well-Known Member

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    At just over 6 bucks, this seemed like a a terrific bargain on Wednesday. I didn't get in quite that cheap but picked up more under 7 bucks.

    At 6.65, it yields out at 12%. The dividend is fully funded and I don't think it's in question.

    These are early days in this apocalypse so I'm not anxious to blow all of our cash, just yet.

    I don't see us buying any more NWH, though. It's been a good company, has been well run, and I fully expect it to survive this apocalypse just fine.

    It won't really take off until it can struggle it's credit rating up to BBB (lowest investment grade rating). This has been a goal since 2019. If they can achieve it, they will attract the attention of the Canadian S&P 300 and it should be a rocket ride from there. I believe they can do it.
     
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  8. Syynik

    Syynik Well-Known Member

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  9. Syynik

    Syynik Well-Known Member

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    Thanks for this, Tom. I'm currently building an all-REIT Roth IRA, will check this one out.
     
  10. TomB16

    TomB16 Well-Known Member

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    NWH has a few issues of junk bonds. I picked up a bunch of the G issue debentures on Monday for 80 cents on the dollar. Currently trading at 95 cents on the dollar.

    They have set a corporate goal of achieving BBB credit rating, which would elevate them from junk status. I believe they are likely to achieve this.

    For now, they are junk status but they own medical facilities. They aren't going bankrupt any time soon. I trust this debt more than I would trust much of the debt the market considers blue chip.
     
  11. TomB16

    TomB16 Well-Known Member

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    I'm surprised how many hospital leases are in arrears. NWH released the Q1 numbers yesterday and earnings are way down.

    This seems like a buy opportunity but I'm also concerned about the stability of the dividend and concerned that most of this delayed income will drag on for years. I don't see municipalities being financially healthy for some time.

    For my part, I have no plans to acquire more in the near future. Our DRIP has been off for some time with no intention of turning it back on, either.

    For now, cash is king.
     
  12. Marvan

    Marvan Well-Known Member

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    Hey Tom,

    Earnings are way down for most companies, it will take time to recover.

    I keep most Canadians not too long because i trade most off them, just now i have only two in port.

    Regards.
     
  13. TomB16

    TomB16 Well-Known Member

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    I haven't updated this in a while but Q2 earnings show the debt ratio below 50%. That, and GAAP accounting, is their homage to the S&P 300. If they get included in this index, and I expect they will at some point, things will move upward quickly.
     
  14. TomB16

    TomB16 Well-Known Member

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    Q3 EC on November 13. NWH-UN is in the S&P TSX 300, along with NWH.

    I believe there is opportunity for NWH valuation growth but it can't happen until they significantly clean up their receivables and that could be quite a while.

    Two years ago, they purchased a property in Phoenix and announced plans to expand into the US. I'm glad that effort has stopped. Part of what I have liked about NWH is their spectrum of holdings in multiple countries that are more susceptible to inflation. On the other hand, the US might be ripe for inflation so maybe it wouldn't have been such a bad idea. They timed the Brazilian inflation spiral to a T.
     
    #14 TomB16, Nov 1, 2020
    Last edited: Nov 1, 2020
  15. TomB16

    TomB16 Well-Known Member

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    Two years after acquiring new assets in Australia and New Zealand, it appears NWH is finally ready to swallow what they bit off.

    I haven't been all that impressed with NWH, for a few reasons. In early march 2020, I backed the truck up to load a ton of NWH. That's the last time I purchased it.

    The next few quarters will determine whether I hold and enjoy the dividend or sell and redeploy the capital.

    NWH has a great opportunity. They have high bank leverage and very strong earnings. I don't have high confidence in them returning current business advantages to the owners but I am cautiously optimistic.
     

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