Earnings Call: Q3 2019

Nov 15, 2019

Earnings release

Ladies and gentlemen, and welcome to the Northwest Healthcare Properties Real Estate Investment Trust Third Quarter 2019 Results and Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. Note that the call is being recorded on Friday, November 15, 2019. And I would like to turn the conference over to Paul Della Lana, CEO of Northwest Healthcare Properties REIT. Please go ahead, sir. Thank you, operator, and good morning, everyone. I appreciate you joining us today. I'm joined by Bernard Crotty, the REIT's President Peter Riggin, The REIT's Chief Operating Officer and Shailen Janday, The REIT's Chief Financial Officer. Together, we are pleased to share with you our results for the 3rd quarter of 2019. But first, I'd like to point out that during today's call, we may make forward looking statements as defined under Canadian Securities Law. While such forward looking statements reflect management's expectations regarding our business plans and future results, they are necessarily based on assumptions that are subject to uncertainties and risks, which could cause actual results to differ materially. We direct you all to the risk factors outlined in our public filings. For the quarter, our results were in line with our expectations, including annualized quarterly adjusted funds from operations of $0.92 per unit on a normalized basis, implying a payout ratio of 87%. Earnings accretion from recent acquisitions and financing activity, including the $1,200,000,000 Healthscope Portfolio acquisition, which closed late in the second quarter was as expected, but was offset by foreign exchange movements, which saw the Canadian dollar appreciate by approximately 4% over the last quarter relative to the REIT's average foreign currency exposure. In fact, over the past 12 months, we estimate that the relative strength of the Canadian dollar has reduced annualized AFFO by approximately $0.04 per unit. In the context of a lower for longer Canadian and interest rate environment, we expect that these trends will reverse over the balance of 2019 and into 2020, providing further tailwinds to the REIT's earnings going forward. Similarly, net asset value, which was broadly flat over the quarter and saw an impacted slightly by negative foreign exchange movement, offset by an increase in the value of the REIT's asset management platform, in particular driven by an incremental $1,600,000,000 commitment in respect of the Australian Healthcare Joint Venture. We see increasing momentum in our asset management platform built around the REIT's strong regional operating businesses, increasing institutional interest in alternative assets such as healthcare real estate and ultimately a very constructive acquisition environment. Ultimately, over the next 12 months, the REIT sees the ability to add significant additional third party capital, potentially approaching up to $10,000,000,000 up from $3,600,000,000 today in support of a variety of regional investment strategies. It is well advanced on existing announced commitments to build on these numbers. Operationally, our results derived from an expanded 171 property, $6,200,000,000 defensive healthcare infrastructure portfolio, all having long term inflation index leases with leading healthcare operators. This strategy is reflected in the REIT's Q3 year over year source currency and Canadian dollar cash recurring SDA NOI growth of 3.6% and 2.6% respectively, largely driven by contractual rent indexation and underpinned by a 97% occupancy rate and weighted average lease term of almost 14 years. In addition to our focus on operations, the REIT advanced several key strategic initiatives, making substantial progress towards the previously mentioned $3,000,000,000 of institutional capital commitments targeted for 2019 and identifying a significant pipeline of attractive investment opportunities. Taken together, these initiatives provide the REIT with a significant runway and resources to continue to scale its business in both the near and long term. In Europe, we continue to execute on our growth programs by developing new strategic relationships in both the medical office and hospital segments, which have seen accelerated deal flow that our team is converting into accretive acquisitions, including approximately $90,000,000 of transactions closed in Q3 and subsequent to quarter end. By way of example, The REIT has added 2 additional Dutch ambulatory care outpatient clinics in Amsterdam and Rotterdam, which were acquired from a local developer and as part of the transaction secured a right to a development pipeline from which 3 additional clinics totaling $33,000,000 are under commitment. Similarly, in Canada, the REIT leverages exceptionally strong footprint in Alberta to acquire the Cambrian Centre in Calgary, a significant medical office building in close proximity to 2 major hospitals in the city's Northwest. And as well an adjacent building to its Queensway Professional Center providing expansion possibilities across from the Trillium Health Partners Mississauga Hospital. The REIT continues to build scale in Canadian Capital Markets, successfully executing its largest equity offering of $172,000,000 during the quarter. Proceeds from the financing were deployed to repay existing debt and reduce leverage on an earnings accretive basis. The REIT also completed significant refinancing initiatives, repaying approximately $435,000,000 of debt with a weighted average interest rate of 5.61 percent and a weighted average term to maturity of 2 years and entered into new facilities totaling $543,000,000 with a weighted average interest rate of 3.84% and a weighted average term of 6 years, reducing both overall leverage and weighted average interest rates by 90 and 54 basis points, respectively. The REIT remains committed to reducing leverage below 50% over the medium term and has targeted a suite of higher cost debt for repayment in the remainder of 2019 and during 2020 with similar accretive features using resources from its targeted non core and Australian JV asset sales, which are also progressing well. Regionally, Brazil is on plan with occupancy steady at 100% and continued strong and predictable income. Year over year, it sourced currency cash recurring SPNOI growth of 4.5%. Operationally, L'Orealit's major tenant, Regador, continues to deliver strong results and expand its business, thereby opening up the possibility of further partnerships with the REIT. Of note, 2 existing developments totaling approximately $10,000,000 at its HMB property in Sao Paulo, Brazil reached substantial completion and will be funded by the REIT at a 7.5% yield in Q4 2019. Market interest rates in Brazil driven by a stabilizing economy and progress on domestic fiscal reforms have stabilized at substantially lower rates as noted in the REIT's accretive refinancing in the 2nd quarter. The REIT is also gaining traction with other high quality operators in Brazil and is actively working on transactions to diversify its investments in the region. In Canada, we were also on plan continuing solid performance with positive year over year cash recurring SBI and NOI growth of 1.7% and portfolio occupancy remaining healthy at 92.2%. During the quarter, the REIT completed 76,000 square feet of renewal leasing at an average annual or average renewal rate of 4.1% above the expiring rent. The REIT also acquired 145,000 square feet through the acquisitions that I previously mentioned. We continue to focus on our ambulatory care initiatives, building on commitments to Lakeridge Health that we announced in the Q2 of 2019 with additional projects under consideration in Ontario and Alberta. And in Europe, we were on plan performing as expected with year over year source currency SPNOI being flat and occupancy increasing to 97.1%. As mentioned earlier, we continue to find good investment opportunities in Europe, allowing us to not only build scale and critical mass in both Germany and the Netherlands, but also to pursue opportunities in adjacent markets. Lastly, in Australia, occupancy remained steady quarter over quarter at 99% and delivered consistent year over year source currency SPNOI with a weighted average lease term of 16 years. At Vital, the business reported strong and on plan results, again with SPNOI growth of 2.5% stable occupancy over 99% with a weighted average lease term of more than 18 years. Post quarter end, Vital Trust held its annual meeting where 99.9% of the voting unitholders approved amendments to the trustee, including changes to the manager's fees. The REIT does not expect any material impact to the trust operating results or to the management fees earned by the ANZ manager as a result of this amendment and use this as an opportunity to further stabilize and expand the platform. We note that Vital is currently trading near an all time high, reflecting the strong fundamentals of this market leading business. Continuing in Australia, in addition to the $1,600,000,000 capital increase of its institutional JV, the REIT committed to 2 additional investments totaling approximately $200,000,000 including the Burnett Institute, a life sciences research facility in the Alfred Health Precinct in Melbourne and Wortop Private Health Hospital. For the balance of 2019 and building on these stable results, ongoing portfolio improvements and continued support of trends in the healthcare industry, the REIT will continue to drive internal growth through the completion of its value added development and expansion projects, totaling approximately $402,000,000 on a consolidated basis or $165,000,000 at our share. As well, the REIT expects a further $400,000,000 of new investment activity to progress as 2019 comes to a close, broadly amongst its regions. And furthermore, we are targeting approximately $350,000,000 of JV asset sales in Australia for early 2020. I am pleased with the progress made during the quarter, which advanced a number of the REIT's key long term strategic objectives, while also producing solid operating results. With deep relationships, best in class regional operating platforms and strong access to public and increasingly attractively priced private capital, the REIT is well positioned to continue executing on its accretive growth while prudently managing its balance sheet and delivering long term value for the unitholders. I'll now ask the operator to open up the call for questions. Thank And your first question will be from Fred Blondeau at Echelon Wealth Partners. Please go ahead. Thank you and good morning. Shannon, I was just looking at your NOI margin and it was a bit below our expectations at 76.6%. I was wondering if you could give us a bit more color on that and maybe tell us about your expectations for next year. Yes. Thanks, Fred. I might do a bit of a deeper dive there and come back to you more specifically. I'd say there was no material non recurrings this quarter. So I think $76,600,000 I'll just need to do a bit of a deeper dive into and come back to you on. Perfect. And same for G and A, was a bit higher than our expectations. I was wondering if you could give us a good run rate here. Yes. I think I'd note that the G and A number includes because we consolidate 100 percent of Vital Trust, the G and A number includes fees that are effectively paid by Vital Trust to Northwest. I can get into a little bit more detail around how that elimination works with you offline. But I'd say the G and A number, given that management fees are highly stable, but do include some level of activity based fees on a quarterly basis And Vital's fees paid to Northwest do fluctuate quarterly, you might see some quarterly volatility there. Got you. And then lastly for me, what should we expect in terms of same property NOI growth for next year but in local currencies? Yes. I'd say what you saw this quarter was fairly representative, averaging around that 3.5% at a run rate. This quarter specifically, Europe, it was probably a little bit lower than where you'd see it on a run rate basis. We see that number tracking to about 1% to 1.5%, where it came in broadly flat year over year this quarter. But I'd say when you look at Australia and Brazil, given the inflation index nature of the leases and the highly contracted nature of those leases and then related SPNOI, the numbers are relatively stable. That's great. Thank you. Thank you. Next question will be from Chris Couprie at CIBC. Please go ahead. Good morning, guys. I just wanted to go back to your comments, Paul, if you could just kind of maybe reiterate some of those the numbers that you were rhyming off. So just in terms of 2019, your acquisition, I think you mentioned you had some acquisition commitments. And then into 2020, I think you said $400,000,000 is a kind of number that you're I don't know if that's something that you've got kind of on the table, that's the pipeline or that's your hope for next year. And then I think you also mentioned something about JV asset sales. Is that, Northwest selling properties into a JV or is it sales out of the JV? Thanks. Okay. A few points there. So to the first point, consistent with last quarter where we messaged about $500,000,000 of acquisition activity for the remaining 2019 and we completed approximately just under $100,000,000 of that in Q3. So $400,000,000 to go. We do expect that to happen, broadly speaking, by the end of the year, with maybe some small carryover into January just around closings. So that number is a 2019 number. I guess high visibility on that number. So I would think that that's looking fairly likely at this point. To JV asset sales, we have a combination of a couple of non core assets in Australia and a small amount of non core assets in Canada that we have identified for outright sale. That would comprise again approximately a couple of $100,000,000 of assets. And then the balance is really, Arnott Westside Australia, 100% owned assets which are being targeted for one of either of our regional capital platforms. And all of those activities are reasonably well at hand, again with likely late in the year or early next year closings in mind. So I think that was the first two. And then there was again a little bit of a question around some of our JV capital activities. So obviously, the highlight of the quarter was increasing our existing Australian JV up to again approximately $3,700,000,000 of which again including the acquisitions that I've just mentioned, around $2,200,000,000 has been committed. So again, dollars 1,500,000,000 or so of capacity in that JV. We are actively and very close to signing off on an additional set of regional JVs. And again, we'd be targeting again approximately $3,000,000,000 of additional debt and equity capital commitments in those JVs. That's up from $1,500,000,000 to $2,000,000,000 that we would have announced last quarter. Those are substantially progressed, and we do expect to be in place by the end of 2019. So I think that was the 3. Did I get all of that? Yes, that's great. So just going back to make sure I've got this and I understand this correctly. So within the kind of Australian third party capital, I think $3,200,000,000 $3,700,000,000 you said $2,200,000,000 of that has been basically deployed including the Healthscope. Was that right? Correct. Okay. And then maybe for both the remaining $1,500,000,000 in Australasia as well as the new relationships that you expect to enter. How should we think about the pace of deployment of the call it 4,500,000,000 dollars Yes. I think I'd give 2 answers to that. I mean, the commitments provide us with 4 years to deploy that capital. So I think it's very safe to say that there's 100% likelihood that it would happen in 4 years. But I think in general, I would tease out that we are seeing an increasing opportunity set in the moment. Again, the overarching particularly in the markets that we're in are leading us to believe that that could be substantially quicker. Calling out our experience in Australia as an example, we've signed the initial JV there just over 12 months ago and deployed $2,200,000,000 inside of 12 months. So I think we see a real opportunity to accelerate that. Again, we don't have any specific timelines in mind other than I think it's going to be substantially faster than the 4 years that we have to deploy it. Again, a reminder on everyone that these JV capital commitments are also in the same format as the original Australian JV, which are evergreen and long term and have that combination of base and incentive fees that Northwest, again, largely targeting. In the case of Australia, seventy-thirty and in the case of other markets, somewhere around 70 five-twenty 5 type investment program. So just calling out some of those features. But I would say that the moment for our business is very constructive and we see high visibility into the opportunities to deploy this capital accretively and quickly. Okay. And then just two quick ones. With the new potential capital partners, would there be an intent to similar to the inception of the Australasian JV where Northwest kind of ceded the venture with some of its on balance sheet assets. Would that be would it be a similar kind of setup for the new relationships? And then secondly, there was an article where NorthWest was highlighted kind of looking at mental health facilities in Australasia. Just wondering if you can kind of give any color on that market and that opportunity? And then I'll turn it back. Thanks. Sure. Yes. I think the answer is yes, Chris, that the additional JVs, which are a pretty direct structure, follow very closely the Australian JV that we have in place and are likely to include some seed assets, whether those are pending acquisitions or existing portfolio properties of Northwest as part of the initial startup. And I think so that is a yes. Specifically to the mental health opportunity article that you referred to, I might just call it a couple of things. We have a pretty active portfolio in Australia with that type of modality in it and includes large assets like the Melbourne Clinic that was acquired as part of the Healthscope transaction, probably the largest psychiatric hospital in Australia as well as a number of regional facilities. And certainly, mental health as a modality, as I said, is experiencing very significant growth. So a lot of our operating partners are focusing on that. In Australia as well, of course, we have an existing and growing relationship with MEDIAN in Germany, and they are very much in the post acute care world focusing in that area. So we would see that as an area of pre secular growth in most of our regions and in healthcare in general. So I think that's something that we're seeing from our operating partners, an increasing focus on. And so we're certainly open to supporting them as they target those types of operations. Thank you. Thank you. Next question will be from Tal Woolley at National Bank Financial. Please go ahead. Hi, good morning. Hi. Just wanted to start, for the balance of the refinancing activity that you would like to complete, do you have an idea of what we should be penciling in just for the what some of the like the cash cost attached to that refinancing activity? Just a sec, if I could. Tal, sorry. So I'd just give a couple of answers to that. As we look down the line, we're probably seeing an opportunity to take our weighted average interest rate inside around 50 to 60 basis points over the next 12 months. I would see relatively limited cash cost to that given that we have a pretty near term maturity profile that expires naturally over that timeline and gives us pretty direct access to it. So the experience that we had more recently in Brazil, there was a reasonable repayment cost that came through off of what was long term financing just replaced with substantially cheaper, newer, longer term financing being sort of more the exception than the rule. Okay. And then just coming back to the fee income, I just I'd like to maybe understand a little bit better conceptually what's been going on this year. Like when you look at the presentation on Page 29, like year to date, your fees look roughly flat, which makes a bit of sense. You've made an adjustment to the Vital fee structure. You brought on newer fees with the Healthscope opportunity. And so I can sort of understand that. By the time we get down to your proportion exposure though, you're down pretty significantly. And so I'm just trying to understand what's the shift in the mix of fees that's creating that gap? Maybe I could take that just at a high level. So pick up a couple of points, but I might suggest that there's a more detailed response from Shailen to walk through that. But just at the highest level, what I would say is, we've had last 12 months fees of about $40,000,000 through the business. That's up pretty significantly over 12 months. Clearly, the construct of those fees is broadly split between Vital and our new Australian JV. So clearly over that period, our fees from Vital would be approximately flat or a little bit, but in that there or thereabouts level and all of the new JV fees are new. The JV has only been in existence for 12 months. So those would be all new fees and pretty significant ones given big transactions like Healthscope and obviously now $2,200,000,000 of run rate To the Vital comment, I To the Vital comment, I think I'd just be very direct to say that although we did renegotiate our Vital fee agreements and those were concluded in October at the AGM. That fee arrangements now very meaningful activity based fees. And so based on how we see the business going forward and its business prospects, which are also very going forward and also continue to be meaningful in the context of the overall business. So I think I might just call out those 2 overarching points. If I look down the line and without being too prescriptive about it, I think the great business opportunity that we have is to build out this asset management business. And I sort of highlighted that based on the $3,600,000,000 in committed capital we have at the JV and the almost $2,000,000,000 that we have at Vital today, we see an opportunity to double that over the coming years and certainly more likely sooner than later. And so I would think that, you know, roughly speaking, you know, we see an equal opportunity to double our asset management fees over that period. So I would just highlight that over time, I think the business is going to generate again approximately $40,000,000 of last 12 month fees growing substantially and potentially doubling as we deploy what we see as these increasing capital commitments and that those fees are highly recurring in nature given the permanency of those JV and vital capital commitments as well as the construct of the fees. So I'd just say that that's probably a part of the business that has very significant growth attached to it and very significant accretion attached to it given that our business has substantially invested in its platforms today and has the people and relationships in place to deploy that capital with fairly limited additional G and A. So I think that's probably something from the business that has changed a lot over the last 12 months as we've accessed more and varied institutional and public capital through Vital. So I think it's a very important point, but the starting point is quite positive right now. Okay. And then just my last question, just on the Canadian business. Sorry, earlier you had mentioned you're maybe looking at trimming your portfolio by how much in Canada? Yes, we've identified approximately $100,000,000 of non core assets again in the continuation of our major markets focus and major assets focus. I think that's been a long standing program here in Canada. So I would think that over the next little while, we'll see an opportunity to take that capital and recycle it into gain more core type assets that we believe have higher growth and better returns. And we started to do that obviously with things like Cambrian and the Lakeridge Ambulatory Care Center. So we see more of that opportunity in Canada. So a little bit more recycling than anything else. And long term because like when you look at the structure of the various regions now, like Canada does stick out a little bit versus the others, just in terms of like shorter weighted average lease term, that kind of thing. Do you need to be in Canada longer term? Or is this a business that I guess, yes, is Canada core to the long term because it certainly seems like your marginal investment dollar is outside? Yes, I mean, I think I would answer that in a few ways, right. Again, the overall answer is yes, Ken, it's core to the business and we like the business here. Given that we've been at it for 15 years and it's a more mature business, we have a very specific focus as we've mentioned historically to major markets and larger assets and increasingly are seeing the opportunity to find assets with that longer duration, more index type features. And again, that really is coming out of some of the overall healthcare trends that we see and the opportunity to do things with our regional health authorities like the ambulatory care center program. We've clearly had an active investment strategy in Quebec that follows the Quebec CSLC clinics as an example, which are very similar and we're starting to see trends in Ontario and Alberta as an example that offer us those opportunities going forward. So I think increasingly we see opportunities to deploy into slightly more infrastructure like assets in Canada and we're very focused in doing that. Clearly, the moment for health policy and as a result sort of healthcare opportunities is still stylized relative to some of our other markets. But we do see these trends starting to change. And so certainly, we're optimistic that we'll be able to use our essentially front row seat here with prime relationships with all of these health authorities and governments and related parties to drive some more differentiated investments. So I think that would be our feeling about Canada. We're also very focused on looking for expansion opportunities within our existing portfolio and have identified good opportunities at places like 30 Martin and 1849 Young in downtown Toronto. We've called out 149 College and 5 Fairview Mall or Fairview Drive to see real expansion opportunities in Alberta, our portfolio and the addition of Cambrian opens up a number of interesting adjacencies to large hospitals and really more infrastructure like assets and we just continue to chip away at it. So I think, again, we're probably as constructive as we've ever been on Canada in the moment, noting that clearly it still lacks some of the broader private opportunities that we see in other regions. Okay. Thanks, Paul. That's great. Thank And your next question will be from Mario Saric at Scotiabank. Please go ahead. Hi, good morning. Just on the near term acquisition activity, I wanted to clarify the $400,000,000 expected by January. Is that NWH share or gross? Yes, that's gross, Mario. And again, hard to break down its share, but again, probably at least 50% of that going into our JVs and fifty percent direct if I had to start as a starting point. Got it. Okay. And then when we look at the potential regional funds, the $3,000,000,000 target, I think Paul you mentioned a 75%, 25% kind of 25% co invest general structure. And this backs on to Chris's earlier question. When we think about NWH's kind of how you think about NWH's net equity requirement to that $3,000,000,000 over time between like fresh new capital versus ceding assets and how do you go about determining the optimal composition of that? Yes. Again, just following our Australian experience as an example, I think we would see a gain approximately 10% to 15% of that initial investment coming through a seed portfolio. Obviously, our substantial amount of our initial and near term equity would be provided by that seed portfolio. And again, on a $3,000,000,000 debt and equity number looking at 75%, 25%. And again, probably 65% 60% to 65% levered, you start to get some equity figures there that sort of back into it. So I'd highlight we're feeling reasonably confident that between non core asset sales and JV asset sales that we have seen with the capital to take the next steps in all of our JVs. So I think that's probably the way that we would see it in that sort of a 12 to 18 month view to look at it that way. Got it. Okay. That makes sense. And the 60% to 65% LTV for an asset class that is stable as the assets you're buying. What's the governor there in terms of kind of optimal LTV? Could it be higher than 60 to 65 like the line? Yes, that's if you think of our regions scenario, I think, again, and just highlighting that we have 65 ish and Australia has a starting point. If we looked into the European direction, obviously, it could be higher, highly constructive financing markets there. So it really comes back more to the SIROS looking for an aggregate level of equity commitment as we look at the JVs there. And a little bit the opposite, let's say, in Brazil, if we look in that direction and thinking that in general, we've run more leverage there, although the moment today is highly constructive. So I think that's a bit of a blended number between 2 quite different regions. But ultimately, again, we see debt being an accretion tool to the original investments, particularly so in Europe, where we would see financing in our JVs in the certainly sub-two, it may be close to 1% level for long term financing. And we would see financing in Brazil very much similar to what we've just done, which was sub 4% for, again, approximately a 12 year duration financing in the Rigidor financings that we just completed in the Q2. So I think those would be data points. They're obviously very regional, but I think in all cases, certainly allowing us to drive both near term and long term accretion through those investments. Okay. And then as you approach realization or finalization of these funds, presumably the fee structures become more visible. Are there any notable differences in the fee structures anticipated with these funds versus your existing funds in Australia? No, I would say that our experience in Australia is highly representative. And if you recall, we spent a lot of time thinking about not just socializing partners, but also thinking about structure and the types of things that we wanted in our agreement. So I would say that we're quite focused on maintaining those types of things in the new things that we're doing. So I'd highlight that, again, that type of construct is what we're looking to. Okay. And just my last question on the asset management side of the business. When you look at your experience in Australia, is there anything that you can take from that in relation to kind of future fundraising and future funds that increase the efficiency of deployment? So are there any kind of lessons learned that may be surprising for you that you think will benefit the organization going forward? That's a great question. And I try to answer that a couple of ways. And I think there's lots to learn all the time. So we're growing and maturing as we go through this. But I think what we've learned is that a couple of things. From an operator perspective and maybe a healthcare trend perspective, it's a highly conducive moment in the industry right now to our business. Again, we have just an incredible amount of need and opportunity for real estate capital. So we see that trend accelerating very quickly. And obviously, that drives our thinking to make sure that we have the types of commitments and capacity to pursue large things like Healthscope and varied things. So I think the general feeling is that there will be an increasing number of larger opportunities. We're getting that feeling from both our existing and potential operating partners, as an example, and really seeing an opportunity at the deployment phase to be able to do that. Certainly at the capital phase, I think the experience we've had in Australia is quite validating. Obviously, we've been able to find a very significant partner that is, I think, considered to be one of the more thoughtful and capable investors globally and that's allowed us to piggyback on that relationship and experience. Certainly, we have behind the scenes built the infrastructure and really that's been 5 years journey or more that we've been on around putting platforms in place with people and structures and resources to be able to leg these things out. So I feel that sort of it's just a real sweet spot moment for our business and all three of those elements. And so the answer would be to strike while the iron is hot and to move definitively and aggressively as we did in things like Tuscope last year and to be able to opportunities in front of us. So I do think that's our experience. But ultimately, it does come down to local investing and being able to find good opportunities and deploy that capital on a case by case basis. And certainly, we're set up for that and know better than ever how our partners and potential partners are thinking about those opportunities. But clearly, they're looking to us to originate and to underwrite and to operate these types of investments and we have the capacity to do that now. Got it. And when you think about this sweet spot or conducive moment that you're seeing today and tomorrow, like what are the risks that you think about in terms of the longevity of that sweet spot moment going forward? Yes, that's a great question. And I think I'd answer that in a few ways. I mean, again, I think the movement into alternatives is a pretty again, it's an established trend, but certainly one that has lots of runways and comes off the back of a long cycle in conventional assets and certainly reasonable market maturity in most core markets. So certainly in general, we see a very mid term opportunity in the alternative space, not just healthcare, but certainly in healthcare. I think all the big trends in our industry are even longer than that. As we've mentioned, healthcare really is coming into a moment of peak demand and that demand looks like it's coming over the next 30 plus years, just to highlight sort of that bulge that's coming through our system. Obviously, that is driving at the margin a whole bunch of change. And I think that change, we're very focused on. So when we think about risks, it's the risk of what's being done in buildings and what how the building took place over time. And so we're quite focused on that. Again, we've called out a couple of key trends that we do see a huge movement to outpatient and ambulatory care and just more things happening outside of hospitals. So I think we're super well positioned there in terms of having those operating experiences starting with the hard learnings in our Canadian portfolio, but being a real estate company first, being able to build and develop and round out the offerings of a campus, if you will, from any of those buildings and being inclined to do that, not just purely capital provision. And then what's happening in hospitals is higher acuity and change, right? So everything that comes out of a hospital, what comes back in is even higher acuity. So we really see a great opportunity through the capital expansion plans at our hospitals to continue to provide incremental capital there and to have facilities modernized and approved. So it's a very nice moment where you have things happening in both directions. Obviously, there are lots of disruptors and all that and there's technology, there's clearly a lot of desire to seek care even in food being into the care side of the equation, but those are big trends. We still see huge fundamental demand coming through the hospitals and pure infrastructure that we have. So I think that's where we focus on risk. Clearly behind that, we look very closely at our operating partners and that's both top down as a affordability and real estate usability sort of thinking. So we're thinking about that in a few different ways. But so far, at least in our portfolio, we have high rent coverage. And I'd just highlight that the vast majority of our investment are in regions that are both public and private. And I guess just in general have lower business risk than perhaps a market like the U. S. Where it's truly a private market and you have much more business risk throughout the system. Again, all of our markets are public and private and have just a lower level of more defensiveness akin to what we've seen in Canada. So those are some thoughts. It's a bit of a general discussion, but I think I just combine all of it to say, we see a very dynamic moment in the industry and good operating partners are pursuing it aggressively and really creating opportunities for us to provide from acquisition capital to big things like Healthscope to expansion capital and everything in between. And we're looking to round that out with related facilities, if you want to think of it that way, and we just see that opportunity gaining pace in all of our markets. So it does feel like a good moment. And I think in terms of relationships and platform sophistication, the ability to execute. We've got a deep team here. We've invested heavily in those resources over the last since inception, but certainly internationally since we've been focused on it and we really do have the leading platforms in all of our international markets. So we're ready to go and being quite discerning about what we do, but just seeing lots of good opportunities. Okay. Thanks for the color. Thank you. Next question will be from David Rothschild, Private Investor. Please go ahead. Thank you for taking my call. Mine are 2 simple questions. Your FFO was $0.23 and your AFFO was $0.22 What was it last year in the same quarter? David, just bear with us. We'll come back to that as we go. Maybe I can start with your second question, if it's and we'll come back to you as we go through that. No. Those are both on the same question to what it was last year. Yes. Sorry, David. I might ask that you give me a call offline. I'm not seeing the numbers that you're seeing. So perhaps we can just go on that offline. Okay. Did you have any further questions, sir? No. Thank you. And at this time, Mr. Dalla Lana, we have no other questions registered. Please proceed. Okay. Well, thank you, operator. I think that was the end of the call. I'd like to appreciate everyone for joining and following Northwest Healthcare Healthcare Properties' 3rd quarter release. Thank you. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at