Earnings Call: Q3 2018

Nov 12, 2018

Good morning, ladies and gentlemen, and welcome to the Northwest Healthcare Properties REIT 3rd Quarter Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Monday, November 12, 2018. I would now like to turn the conference over to Paul Dalla Lana, CEO of Northwest Healthcare Properties REIT. Please go ahead, sir. Thank you, operator, and good morning, everyone. Thank you again for joining us. I'm joined today by Bernard Clougherty, the REIT's President Shailen Chenaday, the REIT's Chief Financial Officer and Peter Riggin, the REIT's Chief Operating Officer. Together, we are pleased to share with you our results for the Q3 of 2018. 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. Well 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 to all of the risk factors outlined in our public plans. Before getting into the details of the quarter, I thought I would provide some perspective on our business in this moment. Today, Northwest is in the best position in its history, building expressly on its strategy put in place in 2015. In a nutshell, we are focused exclusively in healthcare real estate, bringing our real estate acumen, knowledge and relationship to the world's largest and fastest growing healthcare, differentiated with a high quality infrastructure like portfolio. Decision. Please hold for the next available operator. Currency appreciation, closed quarter end September 30, 2018 NAV per unit would increase to $11.45 approximately 49% LTV, excluding convertible debentures. The source currency adjusted SPNOI growth of 4% as compared to the Q3 of 2017, driven largely by inflation indexation on leases of the REIT's international assets, and all of this underpinned by a 96% plus portfolio occupancy and a weighted average lease term of approximately 13 years across an expanded 153 properties, 10,800,000 Square Foot Portfolio. Q3 of 2018 marked another active period for the REIT, highlighted by the completion of key strategic initiatives, including in Australia, the REIT finalizing the sale of the C portfolio as part of its new to 2,000,000,000 Debt and Equity JV with a large sovereign loss fund. The focus of the fund is to acquire and develop core Australian healthcare real estate. The JV will have an indefinite buy and will be 7% to 8% owned by the institutional investor and 30% owned and managed by the REIT. The seed portfolio has complete value of A400 $412,000,000 During the quarter, Craig Mitchell joined the REIT in his capacity as CEO of Australia and New Zealand. Prior to joining the REIT, Craig was the CEO of GrowCon, a large Australian development company and prior to that, Chief Financial Officer of DEXIS, one of Australia's largest funds groups. Craig brings a wealth of knowledge to the organization and has been a welcome addition to The REIT's global leadership team. In Brazil, the REIT completed the acquisition of Hospital Room Marumbi from Rijador for Brazilian reais $1,000,000 at an initial 7.5% capitalization rate. The acquisition is at 7th with Brazil's leading hospital operator, Ritador, and was funded from net proceeds from the sale of the initial assets into the institutional joint venture. Lastly, in Canada, the REIT is happy to report that Glenmore Professional Center has been stabilized following Batrails contraction in late 2017. The property has been reworked as a multi tenant building and is now over 90% occupied. With significant growth opportunities in both Australia and Europe, the REIT will continue to leverage its differentiated healthcare real estate platform and anticipates attracting additional fee bearing institutional capital to support a target growth pipeline in excess of $2,000,000,000 Taken together, these initiatives provide The REIT with significant runway and resources to continue to scale its business in both the near and long term. In addition to our increasing scale has significantly improved our capital markets profile and will enable us to leverage new opportunities to also further improve the business over time. Segmentally, I note the following. In terms of finance and liquidity, the reentenditures in the 4th quarter with a significant opportunity to continue to optimize its balance sheet, carrying approximately $200,000,000 of historic corporate and property level financing with a weighted average interest rate of over 7.5%, which presents a natural opportunity to generate meaningful interest savings through refinancing at lower rates. Consolidated leverage at 49.4 percent and 55.7 percent excluding and including convertible debentures, respectively. The REIT will continue to focus on accretive deleveraging opportunities through capital recycling and leveraging its global platforms with new institutional JV partners to reach its target of an LTV below 50%. In terms of net asset value, the relative strength of the Canadian dollar was a gain of headwind for the REIT's NAV, with the C dollar up about 3% relative to the REIT's weighted basket of foreign currency exposure, which shaved approximately $0.40 per unit from the REIT's NAV, more than percent Adjusting for currency appreciation post quarter, the per unit increase would be at $11.45 per unit. With regional perspectives, Brazil was on plan with 100 percent occupancy and continued strong predictable income with constant currency adjusted SPNOI year over year of 7.7%. Operationally, the REIT's major tenant, Rejador, continues to deliver strong results and continues to grow, thereby opening up the possibility for future partnerships with with positive constant currency adjusted SBI ROI of 0.7% year over year and portfolio occupancy at 91.7%. Factoring in leasing at Glenmore that occurred in the 4th quarter, occupancy increases to 92.7%. In Germany, we were on plan and performing as expected with constant currency adjusted SPNOI of 4.2% year over year and occupancy at 95.6%. During the quarter, the focus was on integrating the recently acquired Netherlands properties. With a strong acquisition pipeline in the region, we see many near high quality term opportunities. In terms of Northwest Australia, there was also strong operational performance, portfolio occupancy stable above 98% and weighted average lease term above 13 years. With the recent closing of the C portfolio sale to the REIT with the REIT focused on deploying significant low cost committed capital into strategic growth opportunities. During the quarter, the REIT completed development at its $80,000,000 EPYC Medical Center and subsequent quarter end in accordance with its terms converted its participating loan interest into a direct 50 percent ownership interest. Also of note, recent developments at Healthscope over the weekend include a renewed and increased conditional offer from Brookfield Capital Partners and affiliates at AUD 2.55 per unit. Healthscope has been granted exclusive access to due diligence materials and North West will continue to look to engage Brookfield with respect to any potential property transaction. At Vital Trust, for its Q1 'nineteen results release on Friday, November 9, It also reported strong and on plan results with constant currency adjusted SPNOI up 4.6% year over year, occupancy over 99% and a weighted average lease term of 7 years and NTA of $2.22 per unit New Zealand, while making progress on its $120,000,000 portfolio of accretive developments. Post quarter end, Fyto declared an increased distribution of $2.18 per unit, excuse me, that's as well as announced the addition of Graham Stewart, previously CEO of Cibler Group and CFO of Monterra Co Operatives to its board. For the balance of 2018, building on these strong results and ongoing portfolio improvements, the continued supportive trends in the healthcare industry, the REIT will continue to focus on internal growth through the completion of its 9 committed value add development projects, primarily in Australia and New Zealand. I'm pleased that the Nordwest Global team has been able to advance a number of key long term strategic initiatives during and post quarter. Our bigger and better portfolio is supported by long term indexed leases and assets. And as a result, the REIT is even better positioned to deliver stable and growing returns to its senior holders. Further, to be the real estate partner of choice to the healthcare industry in our markets, which provides exceptional opportunities to grow accretively and enhance unitholder value. I'll now ask the operator to open up the call for questions. Thank you. Your first question comes from Fred Blondeau from Echelon Wealth Partners. In terms of the goodwill impairment Sure. Thanks, Fred. It's Shailen. Perhaps I'll let you speak to that. Yes. Thanks, Fred. Good morning. The goodwill impairment loss that we took over the quarter related primarily to the sale of the North West or part of the North West Australia portfolio as part of our long term joint venture. You might recall that last quarter, excluded goodwill from its net asset value calculation in anticipation of this. So ultimately no impact on net asset value. And as a result of selling part of the portfolio, we've eliminated part of goodwill that was generated upon the portfolio acquisition almost a year ago. I might also add that the goodwill number has been more than offset by fair market value revaluation gains over the last year. Yes, I saw that. Okay, perfect. And it looks like deck and previous comments we've made on the issue, we've been continuing comfortable with a diversified currency approach. It sort of has a bunch of natural hedges built into it. I think the relative strengths of the Canadian dollar this year because it's not exclusively a quarterly event has sort of led us to start looking to the potential to add some currency hedging tools to that and possibly bringing that to mix. So I think that's a focus for us in the Q4. But I think again coming back to the basics, we continue to have 4 global currencies that sort of behave differently with the C dollar and use a combination of local debt where available as well as having strong indexation or at least just to balance off against currency movement. So again, the principal factors or elements of our currency strategy are still in place, and we're looking to possibly add to that to reduce a little bit of near term volatility, more likely on the income statement side as opposed to the balance sheet side. Okay. And when you did your presentation in October, I remember you mentioned currently having a significant acquisition pipeline in Europe. I was wondering if you could give us a bit more details on that. And I guess, what changed since the last 2, 3 years? Or how does it compare since the last 2, 3 years? Right. Well, I think we had mentioned that there's potentially a $2,000,000,000 pipeline in front of us. And without being too prescriptive, we see, obviously, Australia and Europe is offering some relatively attractive growth opportunities. So I think that's number 1. We're substantially funded for a lot of that acquisition through our JV as well as other internal resources. So I think we feel good about that. I'd say what's changing is probably maybe threefold, but certainly 2 big trends. 1, in terms of all the parameters that supported our Australian institutional JV, we are starting to see increased interest and focus in the asset class and certainly at the largest scale of global institutional investors looking for high quality partners to help them deploy capital into the space. So perhaps an asset class that was once really alternative becoming less alternative, if not more core, more core plus to use terms in the industry. Secondly, I think we're starting to see the fruits of our labors pay off, which is building relationship and platforms in our regions and the ability to execute and deploy on not just capital investment, but also value add investment for our partners or tenants. And so we're bringing real estate solutions to them. And Epping is a great example as we just announced this quarter, coming off of still buying through a structured position alone on a development that was once done by a group of doctors that couldn't get it over the line in terms of bringing a core hospital tenancy. We brought that tenancy to the building in healthy care. We've expanded it fully now to 100% occupancy and been able to deliver a fully operational day surgery center, again across from a large regional hospital. And now we're on to focusing on the full private hospital parallel investment. And so that sort of value add through the chain of being able to find an opportunity, structure it, deploy the capital, bring in the right hospital partners and both complete initial phase of growth, but also plummet for future phases of growth, I think is what differentiates us. So I think a lot of relationship and hard work paying off and that's seeds that have been planted many years ago and again coming to bear and we're seeing that not just in Australia and New Zealand, but certainly in Europe as we've been working very hard with relationship players. Having done now a number of deals with MedianClinic and certainly working on others, we see that the relationship and sort of value add part of our platform is really starting to pay off. So in addition to capital, you've got that and those are the big trends happening in our industry. So that's what sort of brings things to the opportunity pace. I guess stepping back even one step further, I'd add that again in our markets, most of our operators, most of our partners continue to be relatively asset heavy and need the capital sources that we provide, whether it's part of natural growth or in the extreme situations like Healthscope, where we're seeing corporate activity and the high need for capital into that type of a structure. So I think all those trends are playing in our direction and that's a good feeling after lots of years of hard work. Next question is from Troy MacLean from BMO Capital Markets. The REIT recorded a large fair value gain at a property in Toronto on density rights. Is that a property you'd look at selling? It looked like the fair value gain was about $30,000,000 Yes. I mean, Craig sorry, yes, Drorie, I think we're very focused on our core business. And so I think that's a constant state of being for us in terms of looking at things that perhaps become non core and always looking to optimize the portfolio. So I guess in this one specifically, I think the challenge is it has proximity to regional hospitals and certainly is in a fantastic node itself. So I think we if we were to look to do something, it would probably include an opportunity for us to bring future medical tenancy into any development in an ideal world. But I think it's early days. We haven't made a specific decision there. But again, I think this is a theme that we know has been our portfolio and I expect in the our portfolio and I expect in the industry as intensification opportunities do evolve and change things. And certainly, we've been actively looking through our portfolio over the last little while to find ones that might be there. We certainly looked at that and development partnership on our Davisville property, 1849 Young and more recently, I guess, Dundas Edwards Center, where we ended up selling the property where we thought that was the highest and best use. And so I think there's never one exact answer and it's early days on the specific opportunity, but we do have a number of opportunities within our portfolio for significant intensification and we're certainly continually looking through that. And this just happens to be another case of it. And then in the MD and A, you mentioned increasingly looking at Brazil for acquisitions given the exchange rate. What volume of acquisitions are you looking at? And do you have a target position of how big you want Brazil to be in the portfolio? Yes. I think that's to echo back to earlier comments around Brazil. Within the context of our portfolio, we certainly see it at a maximum in the current range that it is right now. I think with everything going on in the business, that's likely to come down naturally over time, just given what we're likely to outpace our growth in Australia and Europe. But as we've mentioned, we have a very interesting moment in Brazil, both with our main tenant, but also with a number of emerging counterparties there that look like good high quality tenants and it's a big market. So I think we balance all those things. And so my prediction is that the Brazil additions will be selective to the portfolio at the highest quality end of things like the recent Burumbi Hospital are likely to stay under the current level of the portfolio today. But I think that level is likely to come down naturally as we see waiting in other areas coming a little bit faster and again, already structurally built into our plan. So I hope that answers your question. But again, we do see high quality tuck in acquisition opportunities in Brazil. And whenever we're able to do a major market, major regional hospital like Morumbi with a high quality tenant like Regidor, we would certainly look to find a way to get that done within our portfolio. And then I guess just finally on kind of curious how you look at development in a rising rate world, like does that change your hurdle rate or your development spread you want on development? I'm just curious about your overall thoughts on that. Yes. Well, certainly, it would in the general sense. But again, remind everyone that our development is quite specific and that it's cost plus, 100% let sort of structure. And in that cost plus, we typically have the return benchmarked or with a floor spread over the then current bond rates, if you will, for each respective market. So we're pretty low risk in terms of that type of development. And I'd say that so to be specific, where we have our current development pipeline, getting around 100 basis points spread to what we see as underlying value, almost all of that has deal protection around interest rates. And so that 100 basis point spread is likely to substantially remain intact. So obviously, if we're able to continue that with relatively low interest rate risk and some structure around it, we're comfortable to proceed within the context of the overall business. I've mentioned historically that just given the brownfield expansion regime that goes with private hospitals in our main markets, in particular Australia, New Zealand and now also Brazil, perhaps in the future Germany, we see this as sort of a constant state of being. And so we do see the opportunity to play, again, between 5% and 10% of the overall balance sheet into some form of expansion in this very low risk basis. And so we're comfortable to do that within the context of our business and within the structures of these cost plus yield return investments. So I think that's where we get comfortable. It's not a general comment on at risk development, which I think would be a very different answer in which we have a very limited amount of in the portfolio might be more akin to our St. Albert medical office building development, which is an $18,000,000 project, again, substantially pre lit with a fairly short construction time line. But there would be an example where we would be much more focused underlying costs and look to bring in long term financing earlier and structure around that. So yes, I think pretty prototypical answer for at risk development in the case of our brownfield, fully committed, low risk development, if you will. We have a little more tolerance for these things just given the built in protection that we have. Your next question is from Neil Downey from RBC. Just a couple of quick ones. You mentioned there was some leasing in Calgary and Glenmore post quarter end. How much net operating income does that add on an annualized basis? Peter or Shailen, could you respond to that? So Neil, the tenancy is about 32,000 square feet. Once we work through some pre rent in 2019. I would think that the addition is meaningful for the Calgary portfolio, but not overall for the REIT portfolio. I don't have that number specifically. Okay. Thank you. In Brazil, it would appear that the debt balance mortgage balance is effectively unchanged at the end of the Q3 versus the Q2, setting aside the change in the currency. So does that imply just remind me that you bought Marumbay with cash? Correct. Will there be some term financing placed on this asset at some point in the future or near future? Yes, it's a good question, Neil. I think maybe I'd come back to just Brazil financing in general and highlight that of our existing financing there, we have 2 series of our they're bond like finances that we put in place for each of the existing assets that we chose to finance, that are open for prepayment right now and those are at relatively high rates, 1 in the early 9s and 1 in the early 8s, and that we see markets today probably in the 6s in terms of that financing. So might just make that observation first. And then secondly, to Morumbia, given that it has a very significant expansion and we're working with the REACH door to commit that expansion. I think we wouldn't be in a natural moment to put long term finance on the asset. We think that would come more naturally as that expansion and the program gets delineated. So I think where we think about Brazil, we're likely to look to refi our existing assets again given relative cost in the 6s indexation, we have a lower leverage approach to Brazil in general, but we haven't set that in stone. But I think we have constructive opportunities in the existing portfolio, both to top up and to lower costs and will is likely to come a little bit later as that development visibility comes remembering that that development again could be potentially double the size of the existing assets or doubling the size of the existing assets. So it's a meaningful one and one that would need to be considered in light of long term finance. Okay. And just on the particulars of that acquisition, I believe it was CAD88 point $4,000,000 and this is a bit of detail in minutiae I recognize. I think your property roll forward shows the acquisition of CAD90 $2,300,000 So there's been a $4,000,000 difference or 4.5%. Is that in effect all just transaction costs? I might take that offline, Neil, and try to come to that, if that's okay. Understood. I'll probably have a little detail beyond me in this moment. Understood. And lastly, there was some discussion about the $30 odd 1,000,000 fair value mark in Canada. What property does that relate to? And what was the trigger point under IFRS that allow you to recognize that embedded density value? I mean, has there been a rezoning application? Or has there been an award of additional density? Or has there been an offer for the property? Or what was the trigger point? And what property was it? Yes. That's a great question. The property specifically, Neil, is our Fairview Drive property, which is just North Toronto. It was the latter of your three things that led us to look at it in more detail. And certainly, it has kicked off all of our sort of thinking around the former two initiatives. So those are underway right now, but early days. So it's a big suburban style property with lots of land and lots of density. And so, you know, in a fantastic node with transit and a large regional mall. So it's sort of that perfect combination of everything happening at once. So I think we've been a little bit Your next question comes from Mario Saric from Scotiabank. Coming back to the fair value gain and specifically on that asset, you give us a sense in terms of what the kind of the price per billable square foot would have been on that fair value gain? A lot of detail here, but since we're focusing, it's again around $100 per square foot on a fairly conservative estimate of what buildable. Got it. And Paul, I know you just you mentioned in response to the previous question that you're in the early stages of kind of identifying additional opportunities throughout the portfolio. Do you have any sense in terms of when you may be able to provide a bit more color in terms of what the overall kind of intensification upside could be in the portfolio in terms of converting some of the space to residential use over the long term? I don't think we're quite as focused in doing it on a portfolio per se, but I think we do see 2 or 3 other high quality, high density opportunities within the portfolio. And so I think that's our near term focus. Again, no specific timing, but would expect Q4, Q1 2019 as being a pretty logical timeline for sort of delineating that gain. Most of our focus is continuing to look for both that combination of health care and expansion opportunities since the states we have in mind are quite core to our healthcare needs. So I think that's a rough direction, but nothing more specific than that stuff. Okay. And then my other question just comes back to Brazil, which is about a quarter of your NOI today. Obviously, there's been a recent election there that the market has cheered. With the currency moving higher, some may think that it may enable additional foreign capital coming into the country. So how, if at all, does the election result impact your ability to potentially export your asset management model that you've kind of created in Australia to Brazil going forward? Yes. Again, lots of dots to connect there, but I'd just say that the main thing that the election result has done, I think, is bring some stability to what could have otherwise been a relatively unstable moment. Certainly a more positive direction in terms of, let's say, an emerging market currency moment, which is sort of playing out around the world. I think fundamentals in Brazil, though, and independent of the election, are actually pretty strong. And I'd just highlight that Brazil is coming out of a couple of year deep recession. It has been coming out of it for the past 12 or 15 months or so. You've got, for them, historically low interest rates, reasonably stable growth trajectory. And certainly, I think now a fairly clear political environment and one where hopefully some of the structural reforms that they need in their system can happen. And so I think it's a very constructive moment there. And certainly, we are seeing a number of bellwether international and global investors starting to have comfort to look to the space. So combined with a moment in the private hospital space, which certainly through Ricador we see as performing very, very well, I mean, we're seeing meaningful improvements in operating performance coming through our portfolio. Certainly, Rigidor has had record levels of corporate performance. And as I mentioned, we're starting to see the emergence of some new counterparty. So I think all of that leads to an opportunity for us to both partner and find the quality opportunities. So I think it's a constructive moment there. And as you rightly pointed out, it's a part of our business. And so we're looking forward to taking advantage of that. Okay. And my last question maybe on the pipeline in Europe, the acquisition is roughly €100,000,000 that you're looking at over the next 3 to 6 months. Would you classify those as primarily kind of tuck in acquisitions, so similar markets, similar type of assets to what you have today or are you exploring additional opportunities in new geographies? No, very much, Tuck in. Again, to remind, we've got 2 main strategies underway in the space. We've got an MOB strategy, again, reasonably ambulating our Canadian one with a core focus of Berlin and other major markets in Germany. So again, we continually see small tuck in opportunities within that business and portfolio expect to add to those things periodically over time. New to that, that was our addition of the Netherlands last quarter. And so we'll be adding to that in the same way around core locations within Holland and certainly see that those as coming naturally. The other side of the portfolio also new to last quarter or a quarter earlier, was the addition of the rehab hospital space through an initial partnership with Median Clinic, the largest owner of rehab hospitals in Germany, but still very much in a consolidation mode. So we think naturally there's going to come more opportunities in that space in the 25 30 year leases with built in indexation, relatively low management intensity. So we're quite focused on growing that. That's a German opportunity. And we do see more coming as media and perhaps others in the space continue to consolidate what is a highly fragmented industry as well. So I think those are our 2 areas of focus and we're at least in the near term unlikely to change that given they're both scaling and we have lots on. Okay. Thank you. Thank you. Your next question is from Chris Couprie from CIBC. Chris, please go ahead. Hi. Good morning, guys. Question for you about the Healthscope transaction. Do you guys have a preference as to which party wins the bid or if it goes the private route? Our only preference is that somebody that deals with us to sell the real estate, Chris, to be super direct. I think all of the known counterparties, whether it's the company or either of the potential bidders in Brookfield or BGH would be good counterparties for us. And certainly, we're focused on the real estate and being a good long term real estate partner to the business. So no particular focus at this point. And obviously, the situation is relatively fresh and live. So we're still assessing, obviously, the overnight news and in particular, what's going to happen going forward. Although, I think directionally, it brings more certainty to the situation. And I think we see the value both in our public company investments and certainly natural counterparties for the real estate transaction in all directions. So I think that's the initial reaction from NorthWest. So just in terms of the Australian JV, any sense of timeline for deployment there? And then in this quarter, were there any fees recognized by the REIT from the JV? Yes. I'll take the first half of that question and perhaps, Shannon, you can think to the second half. In terms of the first half, I think we've guided that the JV has 4 years to deploy the initial capital commitments And in fact, those capital commitments are scalable, in particular, around the Healthscope opportunity. And so clearly, 2 very different trends happening there. But I think we see in the natural course, independent of Healthscope, 2 to 3 years being a likely deployment window for the capital. And we're quite comfortable with that planning and timing. And as we've just noted, separate to that Healthscope situation, it looks like it's got a 6 month fuse to it now. And obviously, noting Australian M and A change and evolve in a moment's notice. It does seem to bring some certainty to that part of the transaction and certainly we're very focused there as a real estate partner. So directionally, those would be my comments. Sean? Yes, great. Thanks, Chris. In respect to fees from the joint venture during the last quarter, we did earn an acquisition and development fee related to the initial seed portfolio that was bended into the JV portfolio, and that was market based. And then in respect to base fees, given that the transaction closed only 10 days prior to quarter, base fees were relatively material over the quarter. So as we look into next quarter, we'd really expect those base fees to replace, call it, the activity based fees that came in during the trailing quarter. Got it. So then if we think about your $30,000,000 to $35,000,000 run rate in fees, is it fair to say it's roughly half, half base versus other or any kind of guidance there? Yes. I like the $30,000,000 to $35,000,000 has a couple of components, both fees generated off of Vital Trust as well as fees generated off of our Obviously, subject to in respect of the JV, obviously, the timing of those fees will be subject to how quickly that capital is deployed. But in the near term, we'd expect it to, I think, broadly be a bit more activity based driven and then ultimately replace with base fees. Okay, great. And then I've got a couple of questions on some of the developments. What happened to the Lingard Private Development? It looks like the cost to complete jumped up and the time to delivery has moved out a few years. It was slated to be delivered this quarter, I believe. Yes. So Chris, we can come back to you in a bit more detail. But I think at a high level, Phase 1 of that I mean Phase 1 of that development completed, hence the cost to complete and the previous guidance or the cost to complete increase, I'm sorry, the cost incurred increase. And the extension ultimately on the delivery date is really the addition of a new phase. I see. Okay, got it. And then with respect to the recent Brazil acquisition, you mentioned that there's also an administrative building that will be acquired. Can you give us some color on that? Sure. I can speak to that, Chris. So sorry, separate from Murumbi, we signed an agreement to acquire, again, a small administration building at HMB, our Hospital de Brazil, the first asset we acquired with Ritador. And in addition to that, a second building, which is a clinic building, again, an outpatient clinic building, which is under construction. So expect that the initial acquisition is just a $4,000,000 acquisition for the HMB admin building, which is built and to come on in the Q4 and then to gain the completion of the ongoing outpatient clinic at second development there, likely to come on either late Q4 or early Q1 of next year and can go in from memory. That's again approximately a $10,000,000 or $12,000,000 development, so about $16,000,000 or so in total, Canadian committed, 4 of it coming relatively quickly in the 4th quarter and the balance late Q4 or early Q1. And again, the nice thing about that is that with those two additions, we true up our existing lease as well to a new 25 year lease. So again, all of the good things that we like, in this case, with Bridge Door, which is a great situation in one of our main assets in Suburban Sao Paulo. Thank you. Your next question is a follow-up from Fred Blondeau. Please go ahead. Thanks guys. Maybe one last question for Shane. You have a sizable amount of corporate debt coming to maturity next year. I was wondering what's the strategy there and what are your views on the environment at this point? Yes. Thanks, Fred. In respect of some of our corporate facilities coming up for maturity, I think we very much see an opportunity that Paul perhaps referenced earlier around very high cost facilities and an opportunity to bring a mean, around those around those refinancings and most of them in fairness are fully committed at this stage. So I think again, just given the nature of the debt that we do have coming for maturity, we really see it as an opportunity to accretively refinance. That's great. Thank you, guys. Thank you. Your next question is from Tal Woolley from National Bank. Please go ahead, Tal. Hi, good morning. Good morning. I just wanted to talk quickly about the 3rd party capital business. Obviously, you signed up this new JV this quarter and potentially an option to add a lot more capital with the Healthscope business. And now you're sort of reiterating today, you're kind of interested in looking for more. Pretty soon, it's going to become very sizable. And so I'm just wondering when you're making these payments, do you have like a target in mind for yourself? Like is it a $5,000,000,000 committed capital business in 24 months? Or how do you how are you sort of thinking about how to scale that business over time? Yes. I think that's a great question. I'm not sure that we've quite set the destination mind. I think maybe just the Q1 that we're off the treadmill on talking about this and an existing partner that's looking for a lot of business, what we're going to do with $2,000,000,000 But practically speaking, I think we do see in our main regions the opportunity to bring in parallel capital. And so again, I think that as we look to that 24 to 30 6 month kind of timeline, we do see an opportunity again to more than double if that gets it to $5,000,000,000 from $2,000,000,000 and that's a nice round number. Maybe that's a good illustrative mark, but certainly more than double the current commitments. And with some of the things we have on, obviously, that could come a lot sooner than later. So again, I think directionally that's as far as I go at this point other than to say, the platform is in a position to have these relationships now, which is nice after many years of hard work and scaling and the ability. And I think we have strategies in each of our international regions and perhaps even Canada for that matter that offer the opportunity to partner with institutions. And I think that are increasingly looking at markets that are very mature in terms of traditional asset classes and in terms of our asset class, a market that's becoming a little better understood and has some differentiating characteristics, in particular, long term index cash flow that is quite appealing. So those are the trends, and trying to balance that out as an organization that still got a lot on, but I think we see the ability to add in a manageable and constructive way in the near term. Okay. And this is probably more suitable for Shailen, but I would have thought this quarter given everything that was going on, G and A spend would have been fairly high and yet it was actually down over last year when you exclude the compensation or your DUP charges and I think it was down significantly over the last quarter. So I was wondering if you can give us some color on that line is trended and where you sort of see it going ahead? Yes. So thanks, Tal. Good observation on G and A and specific year over year and quarter over quarter decrease. This quarter was specifically impacted by a, call it, a catch up recovery on some G and A recoveries that we could make against some of our third party capital providers. So it's probably lower than the quarterly run rate. Our run rate is appropriately reflected in the normalized AFFO, and we do have an adjustment there to account for the G and A year to date catch up recovery, and I'd happy to dive into a little bit more detail offline. Okay, perfect. Thanks very much, gentlemen. Thank you. At this time, we have no further questions. You may proceed. Thank you, operator. That's all from NorthWest. I appreciate everyone's involvement. Have a good day. Ladies and gentlemen, this concludes today's conference call. We thank you for participating, and we ask that you please disconnect your