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NorthWest International Healthcare Properties Reit completes CAD120m sale leaseback of Brazilian hospital

Wed, 02/01/2013 - 14:15

NorthWest International Healthcare Properties Real Estate Investment Trust has acquired Hospital e Maternedade Brasil (HMB) located in suburban Sao Paulo, Brazil from Rede D'Or São Luiz for approximately CAD120m.  

Concurrent with the sale, Rede D'Or entered into a fully net 25 year leaseback of the property with an initial annual rent of approximately CAD12.3m, representing a 10.25 per cent initial cap rate, plus annual inflation adjustments.

The acquisition represents the Reit's second investment in Brazil. Adjusting for the acquisition, the Reit's weighted average occupancy and lease term have increased to 99.4 per cent and 13.6 years, respectively, reinforcing the defensive nature of its portfolio. In addition, post acquisition, approximately 99 per cent of the Reit's rental revenue will be indexed to inflation, adding to its organic growth prospects.

At approximately 342,000 square feet and with 305 beds, HMB is the largest full-service hospital in Santo Andre, a suburb of Sao Paulo, located approximately 30 km south of the city centre. HMB is operated by Rede D'Or, a privately owned Brazilian hospital operator with 26 hospitals across the country and a dominant presence in Rio de Janeiro under the "D'Or" hospitals brand, São Paulo under the "São Luiz" brand and Brasilia under the "Santa Lucia" brand.

The gross purchase price of CAD120m includes CAD24m of deferred consideration, which is due in one year. The Reit's investment was funded from existing resources and new mortgage financing from BTG Pactual Bank for CAD60m at an interest rate of 6.80 per cent plus annual inflation for a two year term.


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