Good morning, ladies and gentlemen, and welcome to the NorthWest Healthcare Properties Real Estate Investment Trust Fourth Quarter 2021 Results Conference Call. At this time, note that all lines are in a listen-only mode. Following the presentation we will conduct the question and answer session. . Also note that the call is being recorded on March 15, 2022. And I would now like to turn the conference over to Paul Dalla Lana, CEO. Please go-ahead sir.

Thank you, operator. And good morning, everyone. I appreciate you joining us today. I'm joined by Shailen Chande, the REIT’s Chief Financial Officer; and together we are pleased to share with you our results for the fourth quarter of 2021. 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 to all of the risk factors outlined in our public filings. The REIT's high quality and defensive $9.2 billion portfolio delivered record financial results, highlighted by 2.2% and 9% AFFO and net asset value per unit year-over-year growth respectively, while also reducing proportionate leverage by 840 basis points. Underpinning these results was a 16.3% increase in fee bearing capital, resulting in a 60% increase in proportionate asset management fees and 3.6% constant currency same property NOI growth. While the social and economic disruption caused by COVID-19 fades from memory, demographic trends and a backlog built during global lock downs are expected to drive elevated demand for healthcare services and healthcare real estate over the medium and long term. Demand for healthcare real estate has continued to intensify, as demonstrated by the $594 million of investment property revaluation gains in our portfolio in 2021 as the REIT's weighted average capitalization rate compressed by 43 basis points to 5.2%. The increase is being driven by capital flows into the sector as a result of the relative outperformance. These are the typical commercial asset classes, and an acknowledgement of the stability and infrastructure like characteristics offered by long weighted average lease term cure focused healthcare real estate. Despite the fair value gain recorded in the year, healthcare real estate continues to trade at a discount to core commercial asset classes, which we believe will support continued cap rate compression as healthcare real estate continues its migration into the mainstream. The REIT also notes the increased Geelong & ELIM progress driven by the Russia/Ukraine conflict and despite the organization's exposure to European markets, the impact of this point has been limited with credit and equity markets open and accessible and no evidence of disruption in acquisition markets. Nonetheless, the REIT is moving to derisk its operations by accelerating 2022 debt maturities, and is already either refinanced or is in advanced discussions to refinance approximately 70% of its 2022 maturities. Moreover, the changing macroeconomic environment including rising inflation, and interest rates, as highlighted the importance of annual rent indexation, factoring in fixed contractual increases in inflation linked caps and collars, the REIT would expect rent growth above inflation at global CPI of 2%. In the context of the current inflationary environment, with CPI hovering around 5%, the REIT's contractual rents would be expected to increase by almost 70% of this increased inflation. In the event of a wider conflict, the REIT has mitigant in place to ensure execution of key 2022 strategic priorities that will minimize the impact on its global operations. The instability caused by this conflict across multiple facets of the global economy further highlights the stability of cure based healthcare real estate as a haven for investors due to strong returns driven by high occupancy and long credit with supportive thesis. Before discussing the results of the year, I thought I would provide some perspective on our business boom in this moment. Today, Northwest is in the best position in history with vital trust trading your all time size, and asset management platform just reaching its stride and the strongest balance sheet that it's ever had. Post quarter end, the REIT made substantial progress on key initiatives, including full completion of our UK value creation initiatives, generating approximately $200 million of incremental value and entering into agreements to refinance a portfolio with a new £265 million facility, all of which positions the REIT to execute on its plan, UK JV in the second quarter of this year. A new $2.2 billion Australian JV expansion that builds upon our successful Australian core hospital JV with GIC and increases the total commitment in that fund to more than $5.6 billion. And after a year of extensive diligence, the REIT has agreed to acquire a $765 million portfolio of cure focused healthcare assets located in the United States. This high quality portfolio with 27 assets located in 10 states with a mix of hospitals, ambulatory outpatient clinics and medical office buildings akin to our current portfolio. The portfolio also has low management intensity with a long way out and is an ideal starting point for our future growth in the U.S. And building on our previously announced precinct development focus, the REIT has launched a healthcare precinct development fund to focus on a growing pipeline that includes opportunities at the intersection of healthcare, research and education. An example of this type of development is the recent acquisition in Q4 of the Epworth Geelong and ELIM project. In particular, these types of development offer significant long term growth and multi phases with leading partners in this case, Epworth and a potential project of almost 1.2 million square feet, which will create a world-class innovation, education and healthcare precinct in suburban Melbourne. Additional to this, we see opportunities across Australia and Canada and the total precinct pipeline development pipeline approaching $2 billion. Also in 2021, we saw significant deleveraging driven by $580 million of equity issuance, which includes both Series E and F convertible debenture conversions, and $447 million of equity, new equity consolidated leverage decreasing by 610 basis points to 41.9% in line with investment grade metrics. Upon completion of the U.S. acquisition, we will temporarily increase this leverage, noting that on formation of both the UK JVs and U.S. co-investment funds with existing portfolio seeding those platforms, leverage will decrease again by further 600 basis points to approximately 36%. Pro forma proportionate leverage is expected to decrease by almost 400 basis points from Q4, 2021 starting point of 48.5%. For the year, our results were in line with our expectations, noting the above deleveraging, including annualized quarterly adjusted funds from operations of $0.95 per unit on a constant currency and leveraged neutral basis, implying a payout ratio of 84%. Earnings accretion from recent investment and financing activities it was as expected, although foreign exchange movements on the Canadian dollar appreciate by approximately 4.6% over the last year rather to the REITs average foreign currency exposure, which continues to slow earnings growth. Net asset value also increased by 17% year-over-year to 15.47 per unit, a gain on a constant currency basis driven by an increased value in the REIT's asset management platform and strong property valuation gains on a constant currency basis. Over the past 12 months, we estimate the increased strength of Canadian dollar has reduced annualized FFO by approximately $0.04 per unit and net asset value by $1. In terms of the liquidity the REIT is well positioned with $100 million in existing liquidity. This is expected to exceed $300 million if the REIT sees its current UK portfolio and future U.S. portfolio into new funds this year. Operationally, our results reflected those expected from an expanded 197 property, $9.2 billion defensive healthcare infrastructure portfolio, mostly having a long term inflation index leases with leading health care operators. The strategy is reflected in the REIT's 2020 constant currency cash record, sorry 2021 constant currency cash recurring SPNOI growth at 3.6%, again largely delivered by a 97% occupied substantially rate index portfolio with a native weighted average lease term of almost 15 years. In all regards, a highly defensive portfolio. Segmentally, I note the following. In Brazil we're on plan with steady 100% occupancy and continued strong constant currency cash SBNOI growth up the 4.8%. Operationally, we know that the REIT's major tenant, Rede D'Or, continues to deliver exceptionally strong results, and is among Brazil's Top 10 companies by market capitalization. In Canada, we were also are fine, continuing solid performance with constant cash recurring SPNOI growth of 1.2% and portfolio occupancy remaining stable at 91%. During the year, the REIT completed 257,000 square feet of renewal leasing at rates relatively in line with expiring rents. We continue to focus on regional sustainability initiatives and our ambulatory care and life sciences, precinct development initiatives are gaining momentum and expected to be highly accretive. In Europe, we are on plan and performing as expected, with constant currency SPNOI growth of 1.1% and a stable 97.4% occupancy. We continue to find good investment opportunities in Europe, allowing us not only to build scale and critical mass in our existing regions, but also to pursue new opportunities in adjacent markets. And in Australia, our largest market occupancy remained steady over the year at 99% and delivered constant currency SPNOI growth of 2.8% with a weighted average lease term of almost 17 years. At Vital business reported similar results, with SPNOI growth of 5.5% driven by record inflation again in the year and occupancy stable at 98% with a weighted average lease term of more than 18 years. Vital's weighted average cap rate also compressed by 66 basis points driving significant fair value gains, resulting in an incentive fee exceeding $17 million for the REIT's asset manager, a 222% increase from the prior period. I'm pleased with the progress made during the year, which advanced the REIT's long term strategic objectives and produce solid operating results with deep relationships, best-in-class regional operating platforms, and strong access to both public and private capital. The REIT is just beginning to hit its stride in terms of unlocking the full potential of its asset management business and becoming a global leader in healthcare real estate. I will now ask the operator to open up the call for questions.

Thank you, sir. And your first question will be from Joanne Chen at BMO Capital Markets. Please go ahead.

Hey, good morning. Congrats on the solid end for the year. Also, just also on your entry in the U.S. I guess just on that front first. What's the pipeline looking like for further opportunities in the U.S. I guess kind of in the near term?

Yes. That's a fantastic question. I think in the near term we're very focused on bringing capital partner into the existing investment. So that's probably our highest priority. But clearly, the U.S. is the largest healthcare and healthcare real estate market in the world. So there's a very significant opportunities that happening. And we've been working hard over the last year to identify that. So certainly, we have a decent pipeline of opportunities. But nothing eminently planned in terms of a major transactions.

Got it. Would it be in the market that you're already in or looking at additional ones as well?

Yes. I think I would always refer back to sort of our core strategies. So this is -- the one thing we like about this portfolio, obviously, it's highly diversified, both by market and operator and in fact asset type. So, it kind of makes a pretty pod wide imprint across possibilities. But I think we see that as a good starting point, and certainly broadly in that cure healthcare space, which we remain focused, but I'd call it sort of our of global priorities that healthcare precincts or campuses or academic medical centers in U.S. terminology, as well as ambulatory outpatient as being key themes for us and recalling that the MOB space in the U.S. has a heavy degree of ambulatory and outpatient sort of characteristics to it. So, I think as we think about MOBs, and up in the ambulatory, we look a little bit more to geographic concentration opportunities over time, and we have got some key markets, and when we get into healthcare precincts and academic medical centers, such that a pretty well known map of the Top 20 of those places in the U.S. and those would all be on our list to be looking at overtime.

Got it. Okay. And I guess just on the organic growth front it was encouraging to see the big bounce back in Australia, but could you maybe provide some color on the European portfolio? What are some of the factors that perhaps growth that are a little bit lower relative to other markets?

Yes. I think maybe I might refer to Shailen, because I think there's some nuance in the numbers, sort of our UK business and the final stabilization of things. And then, we could speak even more regionally about CPI and the structure of our leases in different places.

Okay, great. Thanks, Paul. So over the course of 2021, you would have seen about 1% or 1.1% of year-over-year SPNOI growth. That's probably muted by the tune of about 120 basis points or so by some of the value creation activities we undertook in the UK, where we ended up re-gearing some of the leases, and specifically in respect of the Aspen portfolio that we acquired. As we restructured and replaced some of those tenancies with higher quality tenancies, and ultimately embarked on our $200 million of value creation, we ended up regearing some of the leases, which impacted SPNOI growth. So excluding that kind of call it non-recurring asset level value creation initiative, you would have seen about 2% -- 2.3% of year-over-year SPNOI growth in Europe, including the UK, which is in line with our longer term expectations. And maybe I'll defer to Paul on some of the more broader macro in Europe where we see significant growth in the pipe.

Great.

Yes. So I think, the majority of our -- we really have to two types of asset classes in Europe, that's long term acute and outpatient type facilities with long term leases and full indexation that ranges from sort of 70% of CPI to RPI in the UK, which is probably somewhere between 75 and 100 basis points above UK CPI. So a bit of a mix in that part of long term index leases. And then, we have our MOB portfolio, which is broadly centered and concentrated around Berlin, which is a market that's enjoying pretty strong rental growth just given some of its own characteristics. So, I think that 2.3 to up to 3 range given that combination of activities is sort of a continuing European targeted, and really that the results this quarter had that one time adjustment that shows perfect .

Got it. That's really helpful. I guess, maybe switching gears more so back to Canada. You've seen a lot of headlines where there's a very strong demand for life science, with life sciences in Canada, and the short supply. Would you have any interest to further invest in this area kind of in 2022? And I guess, within Canada, would there be any particular markets that you would be focused on?

Yes. I mean, as you know, one of our most core strategies is the precinct strategy. So intersection of healthcare and research and education. So for sure, we're focused on the good places that those things happen right now, and we have assets in those precincts like our 149 college asset here in Toronto in the MaRS Discovery District and others. So we're very focused on looking to appropriately to grow and evolve that. You're right there, probably the dollar demand for Life Sciences is very strong, I'm not sure that the tenant demand is so strong. So, we're quite focused on making sure our projects are sustainable and have the long term characteristics that we like and need. But we did enter the Life Sciences market here with an acquisition in Quebec in 2021, and spending a good amount of time thinking about it and expect it, we'll have a number of things to do in 2022 in our current pipe here in Canada, and we like the space. Of course, in Australia, where we're very active. We have a significant pipeline there. Part of the reason for our leaning into focus on a new precinct oriented development fund for JV as it were. And we think there's a huge opportunity set there in front of us. We already are heavily invested in healthcare precincts in Australia with our existing Vital and GIC, JVs and we look to redouble that sort of investment over the next little while, we think we have a fantastic opportunity set there. So I think that will continue to be a theme for us, as we sort of fully leg out this precinct strategy in these markets, and with the possibility of looking in Europe, although noting that the concentrations of healthcare precincts are slightly different in Europe and have a slightly different construct than the ones that we're focused on for the moment in the Americas and the Australia.

Got it. Okay. That's helpful. Just maybe one last one for me. Would there be any updates that you can provide on Australian Unity healthcare Property Trust or none at this time?

No, I think we are now on just under 18% of Australian Unity. And so, in our partnership with JC. And clearly, we're considering actively all of our next steps there.

Okay. Got it. That's helpful. Okay. Thank you so much. I will turn it back.

Thank you. Next question will be from Sairam Srinivas at Cormark. Please go ahead.

Thanks, Shailen and Paul, and congratulations on both the quarter as well as the initiatives of both quarter. Just heading into Australia, I just had a question on the Australian JV expansion. Have you already identified the assets for that investment? And if you can just comment on the timeline there?

Yes. The answer is we do have a significant pipe in Australia for the core JV. And so, that was the rationale behind it. And I would just point to the current JV, which was a $3.7 billion Australian and invested between just under four years. So certainly we expect to meet or exceed that pacing and the current moment there. So yes, quite an active pipeline, and really good visibility into deployment there. But, again, we have already lived through $3.7 billion over the last four years of GIC successfully. And so that's a pretty good track record I think

Definitely. Thanks for that color, Paul. Just probably going back to the U.S., congratulations on that acquisition. In terms of when you guys set up in Australia, you ended up establishing an entire platform there. Can you talk about the importance of having the local platform as well as your plans for the U.S. in that context?

Yes. That's a great question. So I think, two answers. I think we have a long history as a firm in going into new markets and building strong local platforms. And so, I would expect that over time we'll see that in our U.S. expansion initiatives. And so, expect some announcements coming up around people and platform and related things there. That said, we have a very strong operational business here based in Toronto with all of our regional offices that offer a lot of corporate and relative support. So I think we're quite comfortable to get started, and again, calling out that this portfolio and particularly, is not overly management intensive. Again, it's got relatively long term leases and a relatively small number of tenants. So, from the top ratio ownership perspective it's manageable even within the context of our current business. And I think we're focusing on the team is at the asset management, and more growth oriented level, so that we can leg out that part of our exercise. So a comfortable starting point today and long history here in owning and operating these types of buildings in similar markets. So capable to leverage that and then from there, obviously, we'll look to have the more dedicated U.S. teams to grow the business in time.

That makes a lot of sense Paul. And probably my final question is regarding the global healthcare precinct fund. Can you give some color on your thought process there and the kind of investments you're looking on to that fund related to kind of the other geography specific investment funds you already have?

Yes. I think that the thought process is really that it's more development, and longer term than what we have. And we already have a perpetual life one. So to make it longer term, then forever, it seems interesting, but it's really that nexus of development, and then converting into long term ownership that we're focused on. And so, and we see large multistage developments happening over time that's sort of the key type of initiative. So, it's nuance from the standpoint that it's more development than IPP and we'll have an even longer sort of investment timeline to it.

That's amazing. Thanks, Paul and Shailen. Congrats again guys. I'll turn it back.

Thank you.

Next question will be from Jake Stivaletti at CIBC. Please go ahead.

Hi, gentlemen, congrats on the quarter. I just have a few quick questions. In regards to the Australian JV, what is the expected timing of full capital deployment? And is there any possible fund expansion with new partners?

Yes. So the Australian JV is exclusively with GIC. I think we're sort of building up to that. But the actual parameters are the same as our adjusting JV, which is roughly four years and then a couple extensions after that in paper. I think we expect to outperform that as we did in the original JV. So hard to talk about pacing beyond that, but certainly, more than likely all of it within four years, which has been the history. The big focus of our business is adding and growing to our set of investor relations. And so, I would expect that when we get into the precinct fund, for example, that we're likely to have additional investors or one or two initial investors in there, given that the characteristics of that fund are quite particular, and that it's big, and it's long term, and it has, development. So it's a particular audience there. But we've spent a lot of time landscaping that market. So I think for 2022, more broadly, even outside of Australia, our focus continues to be on broadening out our capital partner relationships with a number of these initiatives and we expect that we'll have good success both in the near term through the UK, in the U.S. and in some of the other new initiatives that we're working on. So, it is a priority for the business. And that's said, what I would call out is that we're very proud to be a big and long term partner of GICs, one of the biggest real estate investors in the world. And certainly, we've been able to talk with them both in Australia and Europe in very meaningful ways. So, we've never discount the opportunity to grow with an excellent, long term partner like GIC.

Thanks. And on the topic of the precinct fund, are there any specific regions you want to build on or perhaps you want to expand into?

As I said, I think we're quite focused on our existing markets. I mean, so when we think about Australia, I mean, again it's a market, not dissimilar from Canada in terms of the way the country is built up, and the number of large cities and so there's quite an established list of, let's say, 50 healthcare precincts in that market. And so, we'll be focused certainly in the top half of those very extensively, and so, we have quite an overall view of what that looks like today. And so that's quite clear in our minds, I guess. Maybe when we think about Canada, not sure if in the markets that we're looking at, it'd be probably a little bit more tailored and we would look to bring partners in on specific opportunities as opposed to a broader continuum of opportunities right now given size and given some of their unique characteristics. So -- and of course, we're focused here within the major markets in Canada in that constellation of healthcare research and education. So, there's a very defined opportunity set that we're focused on in any event in the Canadian market. So I'd start there. I guess over time, as we grow and evolve in the U.S. there will be many opportunities there. But that's further out from 2022 at this point.

Great. In speaking about the U.S., how do you intend to finance the equity portion of the acquisition?

Yes. I can speak to that, Jake. Thank you. Yes. So the REIT, I mean, as noted, where we have a 55% LTV asset level finance facility against the portfolio, and the equity portion of the REIT's contribution to find a portfolio in the initial term will be funded on balance sheet with existing liquidity and new corporate facilities. And as Paul has alluded to longer term, and by the end of 2022, we expect to have a U.S. co-investment partner on the portfolio to be able to recycle that equity and meet our target leverage objectives.

Great. Thanks. And for target leverage with this stabilize target range?

Yes. So we've been guiding to 45% to 50% proportionate loan to value. I call out that we're in that range right now. We'll take slightly above that range with the U.S. acquisition, and then post completion of the UK JV and bringing on the U.S. co-investment partner will be at the low end of that range.

Okay, great. Thanks. Congrats, again on the quarter, and I'll turn it back.

Next question will be from Tal Woolley at National Bank. Please go ahead.

Hi, Paul. Hi, Shailen how are you doing?

Great. Thanks.

Paul, can you just talk a bit about where the U.S. portfolio transaction came from? How you sourced it?

Yes. I can. SOB, is an institutional vendor, and marketed process in the U.S. So that I think sort of was the front door. I think over the course of the year, a good bit of 2021, we've been working through the asset level things with our team and support relationships there in the U.S. that we may speak to in the near term. So we've got quite a full team with U.S. coverage for the better part of 2021. And I guess as with all things our journey there has been really getting our mind around for profit segment of healthcare, which is again, a little bit more entrepreneurial than we've seen in other markets that we're in today. So that's been quite a journey, and we've gotten quite comfortable with how that works and what the nuances are in comparison to the businesses that we own and run today. So I think, that's been the -- and in the essence had lots of between advisors and related support people, lots of good advice and getting through this. And I think we've found high degree of comfort and being able to underwrite the business and get our arms around the opportunity. So, that's been our focus to it and as you've probably become aware it's a very liquid and competitive market. So clearly, our ability to work through that efficiently and deliver certainty to the institutional vendors here was a differentiating factor as we got this deal over the line. So, it's been a big initiative, but comfortably in place today.

And in terms of like, the partnership model for the U.S. are you looking to utilize like some of your existing relationships, given that you guys have had a good working history and some success? Or are you looking to bring in someone new, just because this market is kind of different?

I wouldn't rule anything out at this point, Tal. I think we're, we're still formulating that. But I think this portfolio offers perhaps a discrete investment opportunity versus maybe a broader, bigger strategy as a starting point, and so we're open to that. Whereas some of the other things we've done in our businesses really cut across the market and we were looking for broader sort of commitments and more programmatic type investment. So that's one of the nice things about this investment is it stands on its own, it's a good investment. And that's a little bit why we're straddling the line, perhaps between co-investing, and JV to use our own model. So I think the good news is there's lots of potentially interested partners and so the portfolios I think highly attractive to a broad range of institutional investors. So we expect to move through this quite quickly and given now that we're clear and cover on this and have the ability to talk directly. So I think this one could open up the possibility for some different participants. But again, as I said, I wouldn't go out. And our business model is heavily on existing partners and growing existing relationships. So this point, it's a little open. Sorry, I can't be more specific, but I think there are a number of possibilities here, just given the construct and the liquidity in the market and the demand for these types of assets and investments. And we see a very attractive sort of risk return profile in that sort of core plus type range, which is again, slightly different than some of our other strategies, which are very core and very long term.

Okay. And you mentioned in your remarks in that presentation, that the acquisition cap rates are about 100 basis points higher in the U.S. than they are in some of the other jurisdictions where you operate. In your work here, can you sort of talk to us just a bit about why you think those acquisition cap rates are a little bit higher? And if like, how closable do you think, is that gap in the U.S. versus the other jurisdictions over time? Or should we be looking for that at all?

Yes. I would say there are some nuances in the U.S. So, certainly at the MOB, part of the portfolio very, very liquid defined market. We have plus $10 million transactions in the market today as an example of the type of volume that happens here. I think, quite a well understood market and probably pretty proximate to the other things that we see around the world with cap rates now for the best quality stuff certainly in the mid to low fours as an example, it's not in this portfolio, exactly. But that's probably comparable across a lot of markets that we see in the MOB space. I think where maybe some of the nuances is in the ambulatory outpatient space, where we're seeing slightly wider cap rates to that probably 100 basis points above that, in general, maybe 150, if you get into some acute care, and depending on the covenants and related things associated with it. And that's probably where the U.S. market is more evolved, both in terms of the size and scale of those asset classes, as well, as sort of the precision that the markets are bringing to their thinking there. And so, we would see that probably is the biggest difference to other markets that we're in where large acute care spaces is very well bid and might be at the most pointy end of things. I think in the U.S. there's a continuum of cap rates across the nature of the hospital and the nature of the covenant. And so that market is quite evolved. And that's where we've spent our time making sure that we understood that combination of things in order to get comfortable with pricing. And that's how we think about broadly speaking, sort of broadly MOB is around five in this portfolio and outpatient and ambulatory stuff in the low 60s, and it kind of gets into the plan that we've talked about. That's what we've ended up.

Okay. And then just on the UK joint venture, you sort of trying to signal getting this one across the line for the past year. Is there any particular like hits or something in a deal that's making this difficult right now? Or is this just the process of just trying to get a feel for what it's like to close one of these things?

Yes. So I mean, the real time driver for us has been around evaluation initiative through onboarding Aspen and splitting the property in Utco, which we did in the fourth quarter of last year. So I guess, as we were leaning into the UK JV and some of the early messages probably hadn't anticipated that. And that exercise, obviously, we've decided to do our balance sheet at 100% and take the benefit of that. So, that's been the real timing delay, I think bringing it from year till now, it's a pretty traditional process. You're right. It takes a little bit longer to find a long term programmatic partner. So, we're in the short strokes of ironing out all those things now and we take the appropriate amount of time to get the I would just say, and that's how we're calling it the goal here is a £1.5 billion long term, evergreen JV. So there is a lot to do to get that in the same way that took us a good amount of time to get our first Australian core JV set up and established. So, I wouldn't say there's anything particularly complicated about that other than we chose to sort of pause and come back with the value creation down and start with a clean starting point. So that's really what's happened for us and that's by design. And so we're quite comfortable with where we are in the process, and now bringing to conclusion in the next short while. Obviously in between now, and then we've put permanent financing in place. So that's another big step along the way. And that financing, again supports, broadly speaking, the JV as it goes forward, and gives us a good tool. So that's another significant milestone that's come post year end, and just as we lean into to finalize things.

Okay. And then, just a couple of questions for Shailen here. Unsecured market, still a goal for this year? Or we'll see what happened.

Yes. I think we've talked about getting our leverage metrics into those, I mean, into that range for unsecured. And I'd say, I mean, even including this current U.S. transaction, that's going to temporarily increase leverage, our debt metrics are very much tracking, when we look through to the UK, and -- I mean, the UK, JV enter U.S. co-investment partners. So our metrics are tracking. I think it's really as I mentioned before, around, I mean, the question now is really where does unsecured fit within our portfolio, recognizing the broader REIT strategies evolving to become a little bit more capital light. And really, I'd say the real potential for unsecured is that our JV levels are at our portfolio levels. So we look at a portfolio like Vital that scale quite substantially, that has opportunities in that market. We look at the UK, as I mean, in the context of its JV strategy, which could also have a debt capital market solution. So I think it's really, I mean, it's a little bit nuanced right now in terms of where unsecured fits within the market. But our leverage objectives remain unchanged to ensure that we have that option should we choose to. We also note that that market, in general, has priced out a little bit wider over recent weeks, given some of the geopolitical instability and the relative price, if you may have may not be as attractive at a global level.

Got it. And then, just lastly, Shailen. Getting to the tail end of my forecasts on the income statement. Cash taxes and discontinued ops, just wondering give us, I know, it's difficult at the start of the year and the changes in the portfolio, but they're a decent placeholder number we could use for cash taxes. And I just don't know what the -- what we can expect the rundown on the discontinued ops pleased to be?

Yes. So start with discontinued ops first, and then really over the last 12 months, our discontinued operations have really comprised, I mean, the NAV are related to the Aspen Healthcare Group, but we made that acquisition and then sold it completely down within two quarters. So, I don't -- I mean, there's no real rundown on that. That transactions fully complete. So you won't see anything flows through there in 2022. In terms of cash taxes, it is a little bit nuanced. I would say if you looked at 2021 holistically, and straight lined that 2021 number across 2022 for your forecast, that's probably fair. I know, there is a bit of quarterly volatility, but it's really driven by the timing of accruals and the timing of some of the more nuanced, I mean, nuance tax treatment in regions. But I'd say a few straight line that over the course of the year, you're fine. But we can go offline and talk about that a little bit more detail if you'd like.

No. That's perfect. Thanks, guys.

Next question will be from Mario Saric at Scotia Bank. Please go ahead.

Hi, good morning. Maybe just sticking to the U.S. portfolio expansion. What's kind of -- I think you would notice that about 90% of the income is indexed. What's been the kind of rent growth in the portfolio over the past couple years and in terms of underwriting what type of rent growth that you're looking for the portfolios?

Yes. Thanks, Mario. It's Paul. I'll take that. By and large, this portfolio has fixed rent steps at around 2.5% built in. So the vast majority of those are contractual. So it's not precisely indexed CPI, but more contractual. And I think that's a characteristic that we see more commonly in the U.S. and perhaps some of our existing markets, but certainly prevalent in this portfolio. So it's quite sort of built in, I guess, it's a short answer.

Got it. Perfect. Okay. And then, within the portfolio, is there any value attributable to kind of development or redevelopment upside? Or is the evaluation essentially, a stabilized valuation?

Yes. So, again, this portfolio has a small number of development projects, I'm going to go -- I don't remember here, but I'll say three and about somewhere around $25 million to $30 million of built in expansion. They're sort of expected to happen in the relatively near term. And they are also quite contracted and come in, they might just go offline, they're around those final numbers. And Shailen, if you have those?

Yes. I don't have those offhand. But we will follow up. I think, Mario, one point I'd add is the 5.5% cap rate that we quote is on in place.

Okay. And then what would the average debt cost be on the property level debt?

Yes. Say 275 to 290, somewhere in there.

And the term for them?

Yes. So we've taken, I mean, similar to what we did in the UK, where we entered into a market, we are seeking a co-investment partner, or long term JV partner in the case of the UK. We kept the debt structure relatively flexible for the time being. I've sort of put on a one year facility. I'm pricing inside of 3%. So at about 2.9% floating. I'm swapping that out would bring us into about 3.5%, if we put on a full one year swap there. But the intention would be to bring in our co-investment partner, and then seek ultimately their long term leverage targets and put in the more long term finance at that point. I call out the liquidity around the MOB market, as well as some of the posts as well, some of the ambulatory care assets is highly liquid. And then when we look at the acute care hospitals, that were financing in the portfolio as well, we see lots of liquidity.

Yes. And so the target Mario is sort of on a five-year facility would be in the low three straight now. Three and three and a quarter, which is what we'd expect to do when we finalize the equity part of the transaction.

Right, perfect. Okay, so I was looking for, so call it a 250-ish, kind of spread to acquisition cap rate ?

And very low below the line, right. So it's virtually all in place, and very limited. Very limited cost below the line.

Okay. Paul, your comment on kind of bringing a JV partner in it. It sounded like the partner that you're thinking of bringing and be specific to the transaction, as opposed to kind of a springboard partner for a much bigger U.S. JV fund, if I can call about. Is that's a fair assessment?

I may just bring some nuance to that. So I don't want to over read into this. We're having a wide ranging discussions, but we're in clearly some specific ones. What I would say is that I think the ideal partner for us is always somebody that we can do more with over time. I think what might be different about this is this might be a discrete opportunity set, as opposed to a large programmatic one. So that's maybe the nuance that I would bring to that, whether or not that's -- and we would always hope that the partner has the willingness and capacity to do other bigger things over time. So that's maybe the precision that bring with that client.

Got it. And just kind of curiosity, what would make this transaction kind of discrete in your terms?

Yes. I think it's scale, it's diversification. And again, and it's big enough to stand up. So I think that would be the way we would think about it. And I think we've had a lot of feedback in that direction. Of course, the ability to grow over time and are more sort of overarching strategies implies, and so we clearly would like to see something that could link to that, but it may not be as direct as a large programmatic JV to get started. It also is a getting started transaction for us. So we're aware of that. And I think we approach it with that flexibility maybe as to however extent.

Okay. And then, I guess, in terms of deciding upon this portfolio, given the market liquidity, you've highlighted, presumably there was other opportunities, kind of as a starter portfolio like what was it? In particular, if you had to point to one thing, what was it in particular that really attracted you to this portfolio over others in terms of deciding that this was the first time deal with?

Yes. So, we like the diversification of the portfolio and really that being across that continuum of care, sort of sub segments. So we like that a lot. We're investors in all of these categories. We like the fact that it was relatively management on intensive. So even the MOBs tend to have large single tenants and are not particularly multi-tenant driven MOBs there are a couple, but as a starting point, again, acknowledging some of the earlier comments around platform and intensity, which we know very well. We like those attributes. And so, and we felt that that mix of returns, obviously combined with attractive in searching and so I think it was those three things that led us in this direction. We looked at many billions of dollars of transactions in the U.S. over the course of the year and had a lot of chance to think about things. And, of course, it also gave us the scale to get started and focus which is helpful versus single asset sort of things.

Perfect. Okay. And then, I guess my last question or area focus parts. Can you clarify your comments on inflation, which, as you pointed out, has been very topical. Recently globally, you mentioned the terms of rent growth expectations, I just want to clarify that they kind of highlighted CPI at 5% historically, into and you think that rents can increase that 70% of the access? So are you saying that like you expect rent growth in 2018 should be something close to 4%, is my understanding correct?

Exactly. I could have cut to it as elegantly as that I would have, Mario. But I think we have more than 70%, probably close to 75% of the portfolio with either direct relationships do indexation or fixed increases. So, we have a high correlation to increasing inflation is broadly speaking in our plan, we're certainly think, potentially up to another 100 basis points above where we've been in a global environment. And once we get above that level, then some of the cats and collars that we haven't placed come in, so that doesn't track as cleanly, it probably goes to 70% of that. So we'll get between 3.5 and 4, it's pretty much 100%. And above that it's 70% on the index part of our business. So that helps the precision. It's a pretty direct relationship obviously and it's pretty close to 4 CPI budget, but we do have cats and collars in place in various places.

Perfect. And you probably mentioned this in prior calls, however, in terms of timing, like what's -- the CPI is 4% in Q4 2021. Generally is there a time lag between when it releases across or geographies or is it fairly indexation?

Yes. I think we see that inflation indexation typically kicking in annually. So, yes, I mean, into quarter, right, but over the course of 2021, 2021, need to reset 2022 and so forth.

Okay. That is it for me. Thank you.

Thank you. . And your next question is a follow up from Jake Stivaletti. Please go ahead.

Hi, guys. Sorry. Just one quick follow up. It's on behalf of Scott Thompson. He's listening to the webcast, but isn't able to dial in. Would you be able to provide a breakdown of the private versus public funding within the U.S. acquisition?

Hi Jake. We can follow up with you on that number specific. I just don't have it in front of me.

Okay. Thank you. I'll turn it back now.

Thank you. And at this time we up, I'm sorry, we do have a next question. coming from Pammi Bir. Please go ahead.

Thanks. Just really one question for me. It sounds like you're keeping your options open to U.S. co-investment partner. But I'm just curious, are you down the path in terms of possibly having one in place? And then just given the, I guess, the work that we saw that in UK venture, that obviously took more time. But I guess really the question and second part of that question is, is there a degree of confidence that you will have a partner for 2022?

So. Yes. 100% to both. So, the UK is ahead of the U.S. just in terms of execution. So we are very confident. I think maybe just stepping back and maybe just highlighting again that the business has taken a very significant direction over the last five years in terms of asset management or funds management for America or Australia and having that discussion. And so, I think we have established ourselves as a fantastic partner, and certainly a very capable investor on behalf of large scale institutions around the world. And we're looking to build on that and we have some great discussions and progress on these two initiatives and some of the other things that we've been talking about. So underpinning all of that, again, it's important to know that we're starting to see this business and really, really attract and grow. So this isn't new territory for us. And we do know that from investors in both Europe and Asia and Americans that they're strong appetite for healthcare real estate, that's probably a secular shift, as all of us have been following the alternative scene. So I think where Northwest is still finding its way is that we've been looking for a very significant larger long term partners and I think as the business evolves, what we're seeing opportunities for more discreet investments, like the U.S. one that I've just mentioned, and that's probably where things start to move a little bit quicker and where we can be more nimble in our thinking. But nonetheless, we continue to see the opportunity to bring in a suite of very high quality partners to help us in our broadly speaking core strategies, and that's our focus. The combination of all of that, though, I think, is getting pretty interesting. And we start to see runaway gain over the near term to more than double our committed capital in the strategies. Those are big words to say. I think we have the credibility to connect the dots there. And so that's a big step change for the business and obviously, it has significant earnings and value components to it. And I think that's probably as we see an area of the business accelerating more than anything, something that we call out. And, again, it's not insignificant today, we saw a 60% increase in our asset management revenue this past year. And, again, we could see similar types of growth in the near term, as we continue to leg out the strategies as announced. So, I think it's a big important part of our business, and it does drive trends driving business, increasingly in the 2020s.

That's good color. Just maybe, as a add on to that, the partners that you're speaking to it sounds like it's pretty broad, but that include possible U.S. partners?

Absolutely. Absolutely. Yes. I mean, we've again consciously started to customize it a little bit wider and a little bit more geographically focused. And again, this U.S. portfolio, as an example, offers lots of opportunity for that, of course, some of the other things that we're thinking about in other markets also appeal to large U.S. investors. And we would just broadly say that most of the institutions that we've been able to survey are again, as they are underweight alternatives, they're very much underweight healthcare. And we think that combination of long term index cash flow with a little bit of growth is a very attractive proposition. So, we're seeing a lot of positive reception from investors around the globe in terms of the asset class and in the healthcare industry. So very, very constructive moment for what we're doing and where we're going. Certainly, there's some heightened interest in areas of health care, such as life sciences, but we think that really, when we get back and peel that onion back to the interest in the stuff that we're doing at the core of healthcare precincts and the core of our inventory outpatient strategies and these are really broad based strategies, and so they're appealing to quite a range of investors.

Thanks very much, Paul. I will turn it back. Thanks.

Thank you. And at this time, we have no further questions. Mr. Dalla Lana please proceed.

Okay, well, thank you very much. Appreciate all of you joining us for our Q4 2021 conference call and wish you a good day. 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 this time, we do ask that you please disconnect your lines.