NorthWest Health Prop Real Est Inv Trust (TSE:NWH.UN) used its fourth-quarter and full-year 2025 earnings call to highlight what executives described as a “transformative” year marked by portfolio stability, significant balance sheet work, and an accelerating push to simplify the platform and refocus growth in North America.
2025 performance: stable operations, higher AFFO, improved payout ratio
CEO Zach Vaughan said the REIT’s existing portfolio “did what it should,” delivering stable and growing cash flows. For 2025, management reported property NOI growth of more than 3%, with contributions from all regions, while ending the year with occupancy above 96% and a weighted average lease term of more than 12 years.
Adjusted funds from operations (AFFO) per unit were reported at $0.12 in Q4 and $0.42 for the full year, representing increases of 20% and 8%, respectively. The full-year payout ratio improved to 86% from 92% in 2024, which management said is within its target range. Karamarkovic attributed AFFO growth primarily to lower interest expense and current taxes, partially offset by reduced NOI from non-core asset sales and lower management fees.
Reporting changes following Vital internalization
Karamarkovic emphasized that 2025 results are not directly comparable to prior periods due to reporting changes tied to the internalization of Vital Healthcare Property Trust’s management structure, which closed on Dec. 30, 2025. The REIT no longer controls Vital Healthcare Property Trust, and its results were deconsolidated as of that date. The retained interest is now accounted for as an equity investment under IFRS and presented as a standalone investment on a proportionate basis.
Because the transaction closed on Dec. 30, Karamarkovic said there was no impact on proportionate earnings for 2025. Beginning in the first quarter of 2026, the REIT’s proportionate results will reflect distribution income received from Vital Healthcare Property Trust. She also noted that Vital’s operating results were removed from leasing metrics and the portfolio profile at year-end.
Balance sheet transformation: deleveraging, lower interest costs, higher liquidity
Management framed 2025 as a year of major balance sheet and liquidity progress. Vaughan said the REIT executed more than half a billion Canadian dollars of asset sales across three regions, including fully exiting the U.K. and completing the Vital internalization in New Zealand. Proceeds were used primarily to deleverage.
Karamarkovic reported that proportionate leverage declined about 600 basis points to 52.4% in 2025, while the weighted average interest rate declined 78 basis points to 4.71%. More than 90% of debt was fixed as of year-end, with a weighted average term to maturity of 2.5 years. Debt to adjusted EBITDA was 8.7x (adjusted to reflect the Vital internalization), down from 8.9x at Dec. 31, 2024.
Liquidity was a central theme. Vaughan said available liquidity exceeded CAD 450 million at year-end, while Karamarkovic cited proportionate liquidity of CAD 465.5 million, up CAD 324 million from the prior year. Vaughan also noted the REIT suspended its DRIP and implemented a normal course issuer bid (NCIB).
In response to analyst questions, management said it expects to move leverage below 50% as the European sale closes and the Ottawa acquisition is completed, and reiterated its commitment to staying below 50%, even if results are “lumpy” depending on acquisition opportunities.
Portfolio simplification: Europe sale agreement and ongoing exit plans
Vaughan said simplifying the business is “critical” to future success, arguing that complexity “rarely pays off” in real estate. In addition to the U.K. exit and steps to streamline Australia and New Zealand, the REIT announced a major European transaction shortly after year-end.
Karamarkovic said the REIT finalized an agreement to sell 33 European properties for gross pre-proceeds of EUR 400 million (approximately CAD 650 million) to TPG Real Estate, following a “broad marketing process” with multiple bidders. Closing is expected by the end of Q2. The REIT expects estimated net proceeds of approximately CAD 145 million at its proportionate share, with proceeds intended for further deleveraging and to support capital redeployment.
Management described the sale as earnings neutral after debt repayment and platform cost reductions. Karamarkovic pointed to expected European G&A reductions over the course of the year and said proceeds are targeted toward repaying the Series H debentures, which carry a 6.25% rate. On the call, management also noted that the transaction materially reduces operational intensity in the region, including a sharp reduction in the number of tenants managed.
Vaughan told analysts the REIT’s goal remains to eventually exit Europe entirely. He said the remaining European exposure after the sale is largely a long-leased clinics portfolio in a joint venture (with more than 20 years of remaining lease term) plus a single wholly owned asset that may take longer due to operational considerations.
Growth: Canadian development, Ottawa acquisition, and U.S. strategic exploration
With deleveraging largely complete, management said it is increasingly focused on growth. Vaughan highlighted that it had been roughly eight years since the REIT completed an acquisition in Canada, which he said changed in Q4 with a commitment to acquire a transitional care facility in Ottawa adjacent to The Ottawa Hospital’s main campus.
Karamarkovic provided transaction details: in February, the REIT agreed to acquire a 73,000-square-foot transitional care facility in Ottawa for $49 million, leased to The Ottawa Hospital with more than 14 years remaining and annual rent escalations. The REIT expects the acquisition to close in early March and said it will be funded from existing liquidity.
On development, Karamarkovic said the REIT signed a CAD 112 million build-to-suit agreement with a Canadian hospital system, with construction expected to begin in late 2026. Vaughan described the project as a 120,000-square-foot health services building for a large Canadian hospital, slated for completion in 2029 and intended to move non-critical procedures out of the main facility. In response to analyst questions, Vaughan said the project is in Ontario and indicated a “7%-ish” going-in yield plus annual escalators, while emphasizing the long-term nature of the commitment.
Vaughan also discussed longer-term ambitions in the U.S., telling analysts the REIT is exploring options ranging from strategic transactions, including potential M&A, to strategic alignment or acquiring a U.S.-based healthcare infrastructure asset manager to establish a deeper operating position and relationships with health systems. He said the focus would be on outpatient surgery and, to a smaller extent, inpatient rehab, and that the REIT is not looking to branch into non-healthcare infrastructure such as midstream assets or toll roads “for the foreseeable future.”
Separately, the REIT said its board has approved a name change that is expected to take effect in the coming weeks, with the entity becoming Vital Infrastructure Property Trust along with new tickers and a new website.
Healthscope update: Management also addressed Healthscope, noting the tenant remains current on rent and continues to meet lease obligations during its receivership process. Vaughan said the REIT had entered into a transaction in November with Calvary Health Care, but was surprised to learn from receivers that the proposal was not yet accepted and that receivers were considering converting Healthscope to a not-for-profit entity. Executives said they had not received sufficient information to assess implications for the REIT, and cautioned that there is no assurance the Calvary bid will proceed.
About NorthWest Health Prop Real Est Inv Trust (TSE:NWH.UN)
Northwest Healthcare Properties Real Estate Investment Trust provides investors with access to a portfolio of high-quality healthcare real estate. The company provides investors exposure to a well-diversified portfolio of healthcare real estate located in the greater areas of cities such as Australasia, Brazil, Germany, and Canada of which Australasia derives a majority of revenue to the company.
