Good morning, ladies and gentlemen, and welcome to the Northwest Healthcare Properties Real Estate Investment Trust, Fourth Quarter 2022 Results and Conference Call. At this time all lines are in a listen-only mode. Following the presentation we will conduct a question-and-answer session. . This call is being recorded on Friday, March 31, 2023. I would now turn the conference over to Paul Dalla Lana, Chairman and CEO. Please go ahead.

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. Together we are pleased to share results for the fourth quarter of 2022. But first I'd like to point out, that during today's call we may make forward-looking statements as defined under Canadian Securities Law. While such forward-looking statements reflect management's expectations regarding our business plans and future results, they are necessarily based on assumptions that are subject to uncertainties and risks, which could cause actual results to differ materially. We direct you to all of the risk factors outlined in our public filings. And now to the year and the quarter. Operationally the REIT's quality and defensive portfolio delivered strong results, including 2.9% same property net operating income on a year-over-year basis in Q4, 2022. The REIT’s portfolio occupancy of 97% is underpinned by a weighted average lease rate, about 14 years with 83% of the leases subject to rental indexation. With a portfolio comprising more than 2,100 tenants, the REIT is highly diversified and its tenants are performing well, including its top 10 hospital operators having an average EBITDA coverage of 2.3x. In 2022, revenue and net operating income both increased by approximately 20%. However, as a result of higher interest rates, temporarily elevated leverage and lower transaction volumes within the REIT’s capital platforms, AFFO per unit declined to $0.73, a 16.1% reduction compared with 2021. Subsequent to year end, the REIT entered into hedging arrangements to fix approximately $892 million of floating rate foreign currency debt facilities, which will immediately stabilize results and increase annualized AFFO by $0.05 per unit. Additionally, the REIT has actioned several accretive initiatives to improve per unit results, including $220 million of non-core asset sales and a focused completion of its U.S. joint venture initiative, which when combined with the UK JV are expected to generate between $425 million and $500 million of net proceeds in 2023 and add a further $0.03 to $0.05 per unit to AFFO. Considering the in-place hedges and incremental initiatives underway, the REIT anticipates AFFO per unit increasing by approximately 10% on an annualized basis over the course of 2023. Finally, as transaction volumes normalize and the REIT deploys it's approximately $4.5 billion of undeployed capital commitments at a pace comparable with historic levels, it expects a further $0.03 to $0.05 per unit in incremental earnings, with overall annualized results returning to the mid $0.80 per unit level. From a balance sheet perspective, at December 31, 2022, the REIT reported debt to gross book value, including convertible debentures of 56.1% on a proportionate basis. Considering the approximately $220 million of non-core asset sales, and in addition to its commitment to closing the UK JV Q2 ’23 and the U.S. JV later in ’23 and associated debt repayment the REIT anticipates leverage decreasing by almost 1200 basis points to 44.5%, which is its long term target. REIT has aggressively addressed its upcoming debt maturities and has refinanced $1.7 billion of expiring debt since the beginning of Q4, with the goal of extending term and increasing exposure to fixed rates. As a result, the REIT has now refinanced 67% of its 2023 debt maturities, extending its weighted average term to maturity to 3.1 years and its increased proportion of fixed debt, including hedges to 63%. Importantly, the REIT has done all of this, and at the same time reduced its weighted average cost of borrowing to 4.7%. The REIT would like to provide an update on its UK JV initiatives. Since last quarter, the REIT has secured a commitment with an institutional investor for a larger investment in the REIT’s UK portfolio that will now amount to between 70% and 80% of net equity in the UK platform and accelerate the REIT’s deleveraging strategy, while providing capital for future growth. The commitment is subject to diligence, final documentation and typical closing conditions, and is expected to complete in Q2 ’23. The U.S. joint venture initiative continues to progress, the REIT working towards commercial terms with qualified partners, and despite a difficult macroeconomic background, closing in the second half of 2023 remains the focus. Additionally, the REIT has identified $220 million of directly held non-core assets in the Americas, Europe and Australia. Sales processes are under way for select assets and marketing for the balance will begin in Q2 ‘23. Collectively, these transactions are anticipated to generate net proceeds of between $425 million and $500 million, which will be redeployed to repay higher costs and variable rate debt. From an investment perspective, the second half of 2022 was impacted by the rapid rise in interest rates and widening bid ask spreads on assets between buyers and sellers. As a result, transaction activity was muted. As we look towards the second half of 2023, we see pricing expectations beginning to converge and expect transaction volumes to begin normalizing. Nonetheless, Northwest had a successful ’22 from an acquisitions perspective with $1.1 billion of completed acquisitions highlighted by its entry into the United States market. The REIT remains constructive on long term demand factors that drive value creation and healthcare, real-estate globally and with more than $4.5 billion of available committed capital, it is well positioned to execute on new investment opportunities while remaining disciplined in its capital allocation strategies across eight global markets. Segmentally, I note the following

In Canada we were on plan with portfolio occupancy remaining stable at approximately 90% and seeing parking revenues return to pre-COVID levels quarter-over-quarter. Additionally we continue to make progress on a number of life-sciences and ambulatory care initiatives, which are gaining momentum and expected to become part of the business in the near future. In the U.S., our newest region, our portfolio is performing as expected, with occupancy at 97% and an almost 10 year weighted average lease term. Northwest has successfully on-boarded and integrated the assets and respective management platform and continues to progress on our new leasing activities. In Brazil we were on plan with a steady 100% occupancy and continued strong constant currency SPNOI of 9.2%. Operationally we note that the REIT's major tenant in Brazil, Rede D'Or continues to deliver exceptionally strong results and is among Brazil's top 10 companies by market capitalization. Europe continues to perform well with occupancy and WALE stable at 97% and 16 years respectively. We continue to find good investment opportunities in Europe, allowing us to not only increase scale and critical mass in our existing markets, but also to consider opportunities in adjacent markets. And finally, in Australia, our largest market, occupancy remains steady at nearly 100%, delivering constant currency SPNOI growth of 6.7%, with a weighted average lease term of almost 16 years. Corporately, I would like to highlight that REIT published second annual sustainability report, also outlining key accomplishments and specific organizational doors for the future. I am pleased with the progress we’ve made during the quarter and post quarter, which advanced the REIT's strategic objectives and produced solid operating results. With deep strategic relationships, best-in-class regional operating platforms and a strong access to capital across the platform the REIT continues to transition for a more asset-light business, a best-in-class global health care real-estate investment manager. With that, I will now ask the operator to open up for questions.

Thank you. . Your first question comes from Michael Markidis from BMO. Please go ahead.

Hi! Good morning. Thank you for taking my questions. Just on the UK portfolio, congrats on securing the additional equity commitment. Could you maybe comment on sort of what the give and takes were in that transaction, and specifically I'm just curious as to where the valuation would come out relative to where it was marked as of Q4?

So, I’ll address sort of in two parts or maybe even three, but to the first, I think part of the decision that we made over the course of the last 90 days was to increase the size of the JV. There were a number of structural considerations to make it work efficiently, both for our partner and ourselves. And so we've spent the extra time figuring those things out and it allowed us to increase the size of the investment to a more conventional level there. I think we're not in a position to talk yet about valuation, but we'll be once all the i’s and t’s are dotted, which are expected certainly in the next 30 days or so. That's a quick update.

Okay, I appreciate that, thank you. Just of the plan to move ahead with the U.S. JV, it totally seems that you’re confident in that transaction, both in the press release commentary and on the call commentary. Just trying to reconcile that with the declassification of the U.S. portfolio from held for sale back just into normal income producing properties. Is that just an accounting technicality or is that just kind of circle – reconcile that change.

I'll pass that to Shailen. Thanks.

Yeah, hi Mike. Yeah, thanks for that question. You are correct in that. We've historically included our – both our U.S. portfolio and UK portfolio and assets held for sale. It is indeed an accounting technicality. We would have reclassified the assets and immediately classified in the U.S. assets into assets held for sale in Q2, 2022. And there is a technicality within IFRS that requires the assets to be sold or anticipated we sold within 1 year of the initial classification. So given that we expect the U.S. in the latter half of 2022 and accounting statements for us just to put it into - back into IPPS arrangement.

Got it. So even though you anticipate to sell it within a year of today or Q4, the accountants don't care, it didn't happen, or is not planned to happen within the year of initial classification.

Correct! It's not a rolling test. There's some technicality there. It's from the initial time of classification.

I love accounting. Okay, moving on and the last one for me before I turn it back. Just on you know – I appreciate the color on the impact of the, all the transactions that you have planned and the potential impact of 10% on AFFO per unit. Just to clarify, does it actually you will get there for your full year 2023 number or is that a run rate you will get to plus 10% versus where we were again in 2022 at some point in the year.

Hi Michael! I'll respond to that. So it's a full year number, so the run rate will be a little bit higher and there's really – that doesn't include exactly future transactions, which would be additive to that number and clearly dependent on things happening. So it's really meant to be a specific number where we're talking about the immediate impact of the completed hedging initiatives which are in place today, and the JV and on core sale initiatives which are you know in the UK it is signed up and the U.S. and the $220 million to come. So just to bring some precision to that 10% as it were.

Okay, so just to elaborate on that, I think you had 72 in 2022, so approximately 10% and we just used 10% and it was 79 for this year, with some room for additional based on redeployment of capital normalization transaction volume.

Yes, I think it's a little bit above that, but I might suggest maybe that we can take that offline and get into the precision of it where you can show.

That would be great. Thanks so much, and I'll turn it back.

Your next question comes from Sairam Srinivas from Cormark Securities. Please go ahead.

Thank you, operator. Good morning to Paul Lana and Shailen. Just wanted to wrap my head around this UK JV amount or updated as such. Are you able to comment on the increase in size, the commitment at this point?

I'm not sure I totally follow, but just to be clear, the transaction that we announced in December, I guess late November, it was our last earnings call. You know it contemplated a 15% investment in our portfolio, and so that incremental news I guess just to sort of directly is that 15% has now become between 70% to 80%, which is more traditional to our current JVs and our preferred long term asset like structure of 20% to 30% look through ownership. So it's super consistent with that, and the reason as I mentioned again, we had always been desirous of this level of JV sell-down if you will, and what prohibited a set at the time and in the fourth quarter, or sorry, last year I guess was some technical issues around structure that limited what we could do and announce at the time. So we've been able to work through those in the interim and come to a more preferred long term level of ownership and structure, and so that's sort of the journey we've been on.

Alright, thanks again for that Paul. And my – probably the last question is on capital recycling. At this point, are you guys comfortable in saying you know which markets are – you know are those specific markets dominating the exit?

Yes, yes we are. So that $220 million is comprised of assets in most of our markets. It's reasonably evenly weighted, so – and again it's – these are all assets that we believe are performing assets that can sell and be within striking distance of our current book value. So it's, again we're looking closely at our portfolio and looking for where we want to deploy capital and focus our energies, and so that's been a healthy exercise and probably went, that 5% to 7% of our portfolio. I would think that that's over time going to be a pretty steady state exercise for us as we look to just refine and improve the things we're working on. So there is nothing in there that's particularly difficult or non-performing and we see it's quite a broad based mix of assets across multiple markets, which are all open and capable of perceiving them. It's a bit of a segue maybe into the demand for health care, real estate, and I guess we are seeing some exceptional demand across both Europe, Australasia, and of course the U.S. where we don't have very fluid markets, and we just echo that health care, real estate as maybe one of the larger of the alternatives, and it continues to be strongly in demand and highly defensive, and so we expect you know again, given that this is a broad based process with many assets selling sort of success and there aren’t any sharp edges to any one of the transactions or anything involved in it. So we're experiencing high demand. A number of these are under contract as we speak, and with the balance sort of in process, and so I expect that there'll be a continuum of announcements as we sort of chip away at it through the next couple of quarters.

That was very colorful. Thank you. I’ll turn it back.

Your next question comes from Pammi Bir from RBC Capital Market. Please go ahead.

Thanks. Hi! Good morning. Just with respect to the $425 million to $500 million I guess of the net expected proceeds on the initiatives, how did that breakdown between the non-core assets in the UK and U.S. JVs.

Hi Pammi! Good morning. I guess the specific breakdown will be disclosed as we execute on the transactions. As Paul had noted previously, the largest component you know of that – I mean, of those bucket of transactions would be the UK and we’ll be in a position to better comment on that over the coming quarter as that transaction is finalized.

Okay. I think if I recall, the UK JV, the – I think the total sort of aggregate expectant, sort of equity repatriation. If you were to get to that sort of 70% to 80%, which it seems like you have now, I think – am I right in recalling $350 million as sort of the rough figure?

Yes, I think we'll probably need to go offline on that. I think obviously this disclosure has been over a period of time, FX rates have changed, the percentage sell-down has changed, so I think we'll need to get into a bit of that detail. But I call out that over the next quarter specific numbers will come out of, out of net proceeds from that transaction.

Okay, all right. Maybe just on the U.S. portfolio, can you talk about maybe where does that process sit at this point? You know I think you mentioned that you're still engaged with qualified partners. Is it pricing, is it lining up financing or kind of all of the above that's maybe stalled or tempered to for the progress on it?

Yeah, so I think a few questions in there. So again, we are still looking at pricing within the context of our IFRS book value, so that's something that we believe is achievable or certainly within striking distance of that. I think maybe I've previously spoken just about sort of capital formation moments and so I think what I would say is the U.S. was sort of the quickest and sharpest sort of turn off and it really happened broadly speaking in the middle of last year. It has started to return, and that's really around stabilized, long term asset values and some financing. Obviously we've been able to successfully put financing in place on the portfolio and turn it out and bring certainty to that, so that's helped our discussions. So I think that combination of you know pricing visibility, you know just a little bit more confidence in your future asset values and obviously us having put in place term financing, which has now happened just in this last 90 days, have sort of unlocked the log game if you will to get that process moving. It's followed a little bit internally, you know behind our UK JV, just in terms of resources and pushing to get things done. So you know we're confident that there's a strong market for – as we recall a widely diversified, ambulatory sort of portfolio in the U.S. and we're experiencing good discussions in that regard. So we expect things to start to move now, reasonably efficiently.

Thanks Paul, that’s helpful. Maybe just switching gears with respect to MPW, you know the sale of the health core portfolio. I'm just curious you know, your thoughts on that transaction and where pricing came in?

Well, we were surprised to see how strong the pricing was to say it mildly. I think when we looked through it and have a very close analysis of all the pluses and the minus, it's probably a sub-five cap rate. We also view our own assets to be relatively stronger in the moment, so it certainly supports the valuations we have today in place. And I guess just calling out even in the moment, where you know we have a more difficult investment climate, you know that demand for the types of assets that we have is exceptionally strong and this would be another good example of that. So we were part of that process just to be fair, and we are very disciplined about what we wanted to do, but kudos to MPW for getting that off and obviously we are the – you know we are on the other half of that portfolio, so we understand it very well, and we like that assets that we have.

Got it. Just last one for me. Just given where you know – where the balance sheet is, and with respect to the U.S. portfolio being issued, that's something that’s still in progress. Just you know how you're feeling about putting more capital to work at this point, or is that – is it really just predicated on getting the U.S. JV buttoned down first.

Yes. So number one, two, three, four to ten priorities are around completing our sort of balance sheet initiatives, and that's clearly focused. We know why we've had a couple of soft quarters again around carrying assets on our balance sheet and having maximum flexibility to do that. So we're quite focused to transition from that moment to you know what we see as a more stable long term moment, which is around the corner here. So I think a lot of this work will be done in the context of – by the end of our second quarter and you know when we report on that, which would have significant progress on almost everything on that list by that time, so we're feeling good about that. You know, there are a small number of very strategic things that we need to consider in the interim, but our focus is very much around getting back to that steady state and then positioning the business for you know all of the things that we've been talking about over time.

Thanks so much. I'll turn it back.

Your next question comes from Tal Woolley from NBF. Please go ahead.

Hi! Good morning.

Good morning.

Again, on the dispositions. Can you give us an estimate of just how much NOI and how much secured debt is attached to those asset?

I don't have that handy Tal, so if I could, you know we'll get it. Shailen I think it may even be an IR debt that comes out a little later on, but again you know, roughly it's in line with the portfolio I would say, around debt levels and nothing else, an average mix of assets, and you know I'll come back on NOI when we speak. But again, it's a representative sample of assets across multiple markets in the REITs.

And Tal just building on that, if you used our weighted average cap rate, that 5.4% level, I think that's fair, and then our weighted average leverage level is fair as well.

Okay, thank you. So just in terms of borrowing right now, I guess like you guys have lots of options given the market you know that you're in about. Can you just maybe talk a little bit about where you're seeing rates in each of the markets and what's your most effective way to borrow right now?

Yes Tal, I think there's a lot in that. I guess it's a very regional specific question as we get into it, so happy to take the more specifics offline. I would call out as we think through the REITs global capital stack, you know and really what's come through over the last couple of quarters. It's really been the corporate part of the capital stack that we've been exceptionally focused on, and I call out that a lot of that was short term, high cost floating rate debt, which is coming off the balance sheet, either has or is about to as we conclude on our JV initiatives. At a regional level, we're still seeing liquidity to be able to finance our assets. Credit spreads, although we've seen them widened, you know in the broader markets we haven't seen that come through at the asset level yet, but happy to go through more specifics on that offline.

Yeah, and maybe what I’d just call out is that you know in the context of both Q3 and Q4 and you know the year-to-date, the issue we've obviously had, you know a very successful long term REFI’s of both the UK, you know the U.S. portfolio, you know the balance of our beyond corporate, the balance of our 2023 initiatives are really asset level financing in regions and we're – we'll be done in the normal course, and so I would think that we're not seeing a shortage of the availability of finance. Obviously the terms of it have changed over the last 12 months, but that's one good thing about health care that we've seen, is that there seems to be you know a relatively strong support, and we at an underlying portfolio level have a strong portfolio that can support appropriate financing. So I don't think we're seeing any hedges in terms of completing 2023 and beyond while we're looking into 2024 stuff, and we're starting to see some stability in terms of what has been maybe the market moment around you know the points of inflection on what would be short and longer term financing in the two to three year kind of window where everyone's been trying to understand where is inflation going, where are longer term rates going, and we're just starting to see a little bit more stability there, where it helps us to take decisions for even longer term things.

Okay. And then I guess just more broadly, you know this is a fairly sizable acquisition. For you over $1 billion and you know a big chunk of that obviously being the U.S. You're going to be doing some selling here of properties heading into the early part of 2023. What do you think the investment plan looks like in terms of acquisitions and development spending for 2023?

Yes. No, that's an excellent question. So I think the first answer is, as we’ve said, you know an extreme focus on sort of completing the initiatives that we've just talked about, ahead of doing anything new or significantly new. But I think maybe just guiding to sort of general levels of activity. We have $4.5 billion that are 100% numbers including debt of committed capital. You know that's going to grow with the JV, so I think that would be our capacity and traditionally we've sort of looked at that and said, let's roll that out over the terms of those commitments. So you know three to four years are typically those windows. So ultimately when we see markets kind of return, and when the business is positioned to be able to move forward, I would think that that's a pretty steady state level of activity somewhere between $1 billion and $1.5 billion a year. So if we – if markets open up again or firm up I guess, and we're able to complete the activity that we just talked about, our own balance sheet activity, you know the second half of the year could be presumably half of that as an average, and that would be maybe a subject to reasonable estimate.

Is there any particular geographies that you're still like – you know that I think will prevent particularly interesting opportunities in the short term or is that more just of a general comment?

Yeah, I think it's a little bit, a little bit general, but of course you know at any given time certain things shine brighter or less brighter. But I think you know the emphasis for us in doing things over the next little while will be maybe – you know it would probably have a strategic overtone to it, and that would be coming back to our sort of key strategies that either will be very relationship driven with one of our operators looking for specific things to do. It could be very driven by sort of healthcare precincts. So you've heard me talk a little bit about some of the things we're seeing here in Canada and Australia. We've talked about that before on these calls. Those would be things that would probably get to the top of the list for us that you know have a strategic and sort of long lasting overtone to development. I think we have been positioning pretty meaningfully for development in the business. We have sort of $500 million of projects underway. They are all tracking according to plan and most of those projects as you recall are 100% lapped with the vast majority of execution risk on the tenant, so sort of cost plus if you will, and we expect all of those projects to wind out over time and complete and move into IPP in a normal fashion. A lot of those of course are at Vital, so we see the proportional impact of that, but we also have a number on balance sheet ourselves. The new development world I think is a little bit muted right now as we look at both corporate priorities of the business, but also just the construction moment continues to be challenging where we're seeing. You know still some inflation pressures in pricing coming through construction. We're obviously seeing a moment with our operators where efficiency is becoming particularly important and we're seeing clearly a very disciplined approach to cost of capital and risk adjusted cost of capital as we look at expansion. So I would say within the development world, as I said almost everything that we'll look at for the balance of the year will be expansions with our existing operators, you know in that strategic relationship sort of bucket.

And then I guess just a couple more housekeeping questions. Just broadly speaking Shailen, like what's a decent number for us to think about for our cash taxes?

Yes, I think we've had a couple of discussions on this historically if I recall, and obviously it's been – I mean you do have some quarterly volatility around cash taxes, you know when we noted that we are global and we have a complex global transfer pricing structure. Cash taxes, 15% of management fee income is generally where it's been coming through, noting that the management fee is really the only real part of our business that does attract cash taxes, so on an annualized stabilized basis, 15% is a fair number.

Okay. And then just lastly on the fees, you know obviously it’s a bit of a down year on a proportionate basis for the fees. I'm expecting then you'd maybe expect to see some of that recover this year. And then, wondering if there's a good way to sort of think about, within that fee bucket how much of it is sort of like a recurring fee in nature and how much of it was episodic?

Yeah, sorry, there's a lot in that Tal, so – and it’s a really good question, so I'll just encourage Shailen to sort of bring some precision offline here. But I think from our standpoint if we're looking ahead and stabilize it. You know the business broadly speaking is probably growing in to a stabilized fee level that's pretty consistent with what we reported this year as fees in total, and I think the activity based things will go on above that, right. And so we have, as we mentioned, a significant amount of undeployed capital. So if we overlay that and grow the business, that would be a good starting point. But I'll let Shailen, maybe offline bring some precision to that. And again it was – you know it was a year where we were lower on activities, a little bit lower on incentive fees, and so we see those things restoring over time practically, and in a slightly larger base, because we'll be growing assets under administration. Obviously both the U.S. and UK bring significant transaction fees as well. So these are big initiatives that will generate meaningful fees in 2023.

Okay, that's great. Thanks gentlemen.

. Your next question comes from Mario Saric from Scotiabank. Please go ahead.

Hey! Good morning, guys. I do want to come back to the UK portfolio for a second. So the disclosed fair value of it was up about $50 million quarter-or-quarter to $957 million. It looks like you don't break down the UK versus Europe in terms of the IFRS cap rate. But that European IFRS cap rate was up 40 basis points quarter-over-quarter to 5%. The $50 million increase in the UK portfolio, that’s simply the function of FX or were there other adjustments made this quarter versus the Q3?

Yeah. Thanks Mario. The sterling has appreciated relative to the CAD. So that $50 million is attributable to FX.

Okay and can you share what the UK cap rate is as part of the broader Europe IFRS cap rate of 5%.

Yeah Mario, I think over the course of the quarter, as we conclude on the transaction, we can speak to the UK cap rate more specifically. I know that we had our acquisition cap rates disclosed over recent quarters, and I use that as a base.

Okay. And then kind of tying that into the commentary on the expected net proceeds for 2023, I just want to kind of flush that out a little bit more. So on page 23 of your MD&A you highlight the fair value of the UK portfolio, the fair value of the U.S. portfolio and the associated debt for both of those portfolios. If I look at the equity, just simply fair value minus debt, that will translate to $530 million in the UK and $330 million in the U.S. Can you remind me of whether there was any other leverage that we should factor into those two portfolios when we're thinking about the net equity from the two of them?

Yeah, no, there most definitely is. I’d call out – I think there’s a lot of put and takes there, and then I'd also call out that as we think through our net proceeds from the transactions, we include adjustments for working capital and other related items. So we can perhaps get into that offline. But when we think about our aggregate proceeds, from the three pools of disposition activities on that non-core asset sales, the UK and the U.S., I think we've given you the broad guidance at that $425 million to $500 million of net proceeds.

Okay. And just in terms of the full degree of that exposure, from 60% to 37% or so, where do you see that ending up by year end after having completed all of the expected capital recycling?

Yeah, I'll turn that. I'll invert your numbers a little bit. We talk about the percentage of fixed rate exposure. So we – I mean post the hedging that we have completed, our fixed rate exposure has gone up to about 67%, so floating 30% plus. We expect that to continue to increase. I’d call out that the primary area for increase and then where we have more floating rate debt than we'd desired in a long term is in Australia within our JV platforms. So we will continue to work through with our partners around bringing in more fixed rate debt there. We do have a target at 70% plus on fixed rate debt. So I think we are getting close to that, but obviously in the context of the current market, we continue to evaluate that target and look towards increasing them.

Okay. Just my last question. I think Paul you remarked that, like after everything is said and done, in terms of the recycling and the debt repayment and whatnot, you do expect to return to a kind of stabilized $84 per unit in the mid $0.80 versus the $0.79 or so which would represent the 10% increase. Year-over-year as we talked about, like I thought mid $0.80, $0.84 per unit, the payout ratio is about 95%. So the dividend yield today or this ratio today is north of nine – it’s one of the higher ones in the universe. What's the reasonable kind of payout ratio target for you longer term and are you comfortable with kind of the distribution policy and kind of the puts and takes into it as your business model evolves into a 20% to 30% core investment model.

Yeah, so it's a big journey that I know we've talked about. But I just say, sort of probably first off Mario, I think the 10% number should be taking us up into the low $0.80’s to begin with. So you know the goal here quite quickly was the execution of all the things that we've said or in balance sheet should be, you know to have obviously the distribution covered and be down the road. In terms of what would be a normal year and adding to that, I think that gets us into the mid – a little bit above mid 80’s and that's a starting point for that journey as we go to substantially more asset light and again, I think we've had some discussions around this. If I recall, my own discussions that journey in coming from again just over 50%, maybe 50% to 55% look through ownership into the 20% to 30%. Those numbers are driving us into $1 more or less as AFFO and leverage as we've said always in that 40% to 45% range, which we think we can get quite close to here just with the balance sheet initiatives that we've talked about in 2023. So going from that middle $0.80’s number up to $1 is the journey from, look through ownership, where we are, less the two JVs that we've talked about, down through the rest of the platform and that's the initiative that we're on. Again that more capital light initiative, which I think is good. We have significant assets continuing on balance sheet, beyond the UK and the U.S. and so over time we'll be looking at the ways to bring those into a more capital light format. And so again, don't want to underestimate the intensity of getting through the U.S. and UK initiatives, which have clearly sort of been year long projects for us now. But we're confident of doing that now that markets have restored obviously. We have an agreement in the UK, so that’s in full execution. The U.S. a little bit behind, but we do expect post that, that there's more to come and we'll be approaching it in a logical and disciplined way. But again, back to continuing to see strong demand for the underlying assets and in their characteristics and finding the right types of capital for them is important for us. And I'll just remind that all of our capital commitments have traditionally been exceptionally long term. They've had growth capacity built in. They've had healthy fees and incentives and those characteristics are things that we've have been sticking to as we've gone through this process as opposed to shorter term, maybe more expedient solutions that didn't meet those kind of long term things. So again, these are very core long term assets for us. We're looking for core long term partners and a real ability to grow in key markets. Obviously, the U.S. has a lot of possibilities. The UK is a very particular market that we like and has some really good tuck-in opportunities. So just some context to where it's going, but I think that would be consistent with where we've been and again, other than the delay here over the last six and three to six months more to get execution done, we are still on that same platform.

Got it. Part of the genesis of the question when you think about it, in getting to that 20% to 30% co-investment or look through as you put it, that would entail reducing your ownership interest in some of your higher yielding markets like Brazil and Canada. So I appreciate the color in terms of kind of the longer term target $0.84 per unit. And I don't expect you to answer the question, maybe I'll ask it anyways, because given how much is going on in the business today, like that $1 available per unit you are referring to is that four to five years out, two to three years out, like how should we think about the timing of that metric?

Yeah, I think certainly much closer to the latter than the former and I think listen, that the business has a sense of urgency to move forward down, and clearly this has been a cathartic moment for us in terms of taking decisions and then moving maybe more in parallel than in sequence and so I'd leave you with those takeaways. It's another destination as known, and now we want to move efficiently to get there, and clearly using internal capital, attractive, acceptable valuations is the key. I guess what we won't be doing is using public capital in this pricing level. So it's very safe to say that we see quite a disconnect here, and we're immediately focused on closing that as quickly as we can.

And just one last clarification. Again the $1 that you are referring to, that assumes that 20% to 30% essentially co-investment or look through in each of your regions, is that fair?

Correct, yeah.

Okay. Great! Thanks for the color Paul. I appreciate it.

Paul, there are no further questions at this time. Please proceed with your closing remarks.

I’ll be brief and thank everyone and we’ll look forward to speaking again. I appreciate that. Have a good day!

Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.