Q: This morning I read your comments on NWH.UN where you stated in your view risk had increased and it didn't need to be owned. I've owned it for quite some time and am still in a plus position on it but admit to not really following it for some time now. Kind of parked it and forgot about it ...... Could you elaborate on your thesis and go over the parts of the business you don't care for and why ? And why risk has increased ? Thanks Garth .....
5i Research Answer:
In addition to (very weak) momentum, our concern lies in the distribution and debt levels. While cheap, the distribution is at risk of being cut, and debt is too high. A recent joint venture which would have reduced financial exposuree collapsed. NWH is selling assets to reduce debt, but of course growth prospects will also be impaired with less assets. While occupancy remains good at 97%, payout ratio with no cut is going to be above 100% in 2024.