Generation Healthcare REIT : Sales of Generation Healthcare Management to Northwest Healthcare REIT

Microsoft Word - GHC ASX Announcement _FINAL_ - 26 June 2016.docx

27 June 2016

Sale of Generation Healthcare Management and Units in Generation Healthcare REIT to NorthWest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN)

APN Funds Management Limited (APNFM), as responsible entity of Generation Healthcare REIT (GHC), notes the sale of 100% of Generation Healthcare Management Pty Limited (GHM), the Investment Manager of GHC, along with an option to sell approximately 27.1 million GHC securities held by GHM, APN Property Group Limited (APN), Miles Wentworth (CEO of GHC) and Chris Adams (Director of GHM), to Canadian listed NorthWest Healthcare Properties Real Estate Investment Trust (NorthWest) (the Transaction).

Upon exercise of the option, and taking into account other GHC units controlled by it, NorthWest would own an approximate 19.9% interest in GHC upon settlement of the Transaction, continuing the strong alignment between investors and the Manager of GHC.

GHC's strategy will not be altered as a result of the Transaction. GHC will continue to be a healthcare real estate specialist fund with a focus on active portfolio management to maximise rental growth and occupancy, supplemented by the pursuit of value-enhancing opportunities.

APNFM will remain as the responsible entity of GHC and any future change of responsible entity would require the approval of GHC unitholders. In addition, APN has agreed to provide certain services to NorthWest for a transition period of up to 2 years to ensure a successful transition. Messrs Wentworth and Adams will continue in their respective roles, having contracted with NorthWest for up to 2 years. The vendors will retain a material economic interest by way of recognised but deferred performance fees in accordance with GHC's existing fee arrangements for this period, payable subject to certain conditions. Other staff of the Manager have been made offers to continue in their current roles to ensure a 'business as usual' approach to the operation of GHC and to provide for the continuity in existing relationships with tenants, investors, financiers and other key stakeholders of GHC, including in respect of current major development projects.

The Transaction provides GHC investors with access to the resources and expertise of NorthWest, a leading global healthcare real estate investment and management platform, which has operations and investments in Australia and New Zealand as well as in Canada, Germany and Brazil.

NorthWest is the manager of, and has an interest of approximately 24% in, Vital Healthcare Property Trust (Vital), a New Zealand Stock Exchange listed owner of healthcare real estate which has significant investments in Australia. NorthWest have advised that they intend to continue to manage and operate GHC and Vital as independent funds.

NorthWest will put in place appropriate governance arrangements to ensure that GHC continues to be managed independently of Northwest's other healthcare real estate interests in the region, as appropriate. Retaining APNFM as an independent responsible entity and retaining the current management team are key aspects of these arrangements.

APNFM's Independent Chairman, Geoff Brunsdon, said: "This transaction is supported by the Independent Directors of APNFM. NorthWest is a highly credentialed and experienced global healthcare real estate manager whose skills will complement those of the existing management team. GHC is well placed to continue its strong growth and track record of performance. The strength of NorthWest in combination with maintenance of the existing management arrangements and management team means there should be no adverse financial impact on GHC unitholders as a result of the transaction. Indeed, given NorthWest's ambition to grow their platform, the Independent Directors of APNFM believe this is an attractive outcome for GHC's unitholders."

NorthWest Chairman and CEO Paul Dalla Lana said "We are delighted to have acquired the management of, and made a significant investment in, Generation Healthcare REIT. As a dedicated global healthcare property business, NorthWest brings significant healthcare investment skills and we look forward to utilising our broader platform to enhance and build on the excellent work undertaken by the GHM team to date to create value for GHC's investors."

For further information, please contact: Miles Wentworth

Chief Executive Officer

Generation Healthcare REIT T: +61 3 8656 1000

About Generation Healthcare REIT Generation Healthcare REIT (ASX code: GHC), is Australia's only ASX listed healthcare real estate investment entity.

The Fund owns 17 properties including hospitals, medical centres, laboratories, residential aged care facilities and other purpose-built healthcare facilities. The Fund partners with high quality healthcare tenants with strongly diversified income streams. The Fund has total assets of approximately $439 million with investments located in Victoria, New South Wales and Queensland.

generationreit.com.au

About APN Funds Management Limited

APN Funds Management Limited (APNFM) is the Responsible Entity of Generation Healthcare REIT. The Board of APNFM consists of four directors, three of which, including the Chairman are Independent Directors. APNFM is a wholly owned subsidiary of APN Property Group Limited (APN) (ASX code: APD), a specialist real estate investment manager.

Since 1996, APN has been actively investing in, developing and managing real estate and real estate securities on behalf of institutions, superannuation funds, high net worth and individual investors. APN's focus is on delivering superior investment performance and outstanding service. Performance is underpinned by a highly disciplined investment approach and a deep understanding of commercial real estate.