Real estate stocks in Canada have been on a rough ride lately. Higher interest rates, inflation worries, and slowing housing markets have spooked investors. Some have rushed for the exits. But for those willing to look a little deeper, this could be a golden opportunity, especially in real estate investment trusts (REITs) that focus on sectors built for stability.
One of the smartest places to put your money right now could be NorthWest Healthcare Properties REIT (TSX:NWH.UN). This REIT isn’t tied to shopping malls or downtown office towers. Instead, it owns and manages healthcare real estate — think hospitals, medical clinics, and doctor offices. That gives it a bit of a moat, because healthcare doesn’t stop when the economy slows down.
Why NorthWest works
NorthWest’s portfolio includes 171 income-producing properties across Canada, Europe, Brazil, Australia, and New Zealand. These aren’t short-term leases, either. Most of its tenants are healthcare providers on long-term agreements. That means steady income, lower turnover, and more predictable cash flow for investors.
So, how has NorthWest been doing lately? In its most recent earnings report for the first quarter of 2025, the REIT reported revenue from investment properties of $111.6 million. That’s a drop of 16.4% from the same time last year, but there’s context behind the number. The REIT sold off some non-core properties, which brought in one-time cash but reduced top-line revenue.
When you strip out those sales, the core business looks stronger. Same property net operating income (SPNOI) actually increased by 4.5%, climbing to $73.8 million. That shows growth where it counts. And geographically, the strength was spread across all regions, including Canada, Australia, and Brazil.
Cash is king
On the leasing front, things also look healthy. NorthWest completed 280,000 square feet of leasing activity in the quarter, with a solid 89% renewal rate. That tells us tenants want to stay put, a great sign for income stability going forward.
Now let’s talk dividends, because that’s likely what caught your attention in the first place. NorthWest currently pays an annual dividend of $0.36 per unit. At today’s price of around $4.82, that gives investors a yield of 7.5%. That’s well above average, especially for a REIT that isn’t in a high-risk sector.
Even better, the dividend looks more sustainable than it used to. The REIT reported adjusted funds from operations (AFFO) of $0.10 per unit in Q1 2025, up from $0.09 a year ago. Its payout ratio also improved, from 105% down to 92%. While still a touch high, the direction is encouraging. A payout ratio under 100% means the company is generating enough cash to cover the dividend. And the fact that it’s heading lower is a positive trend for future stability.
Looking ahead
Behind the scenes, NorthWest has been tightening up its balance sheet. In Q1, it completed $260 million in asset sales, including a major sale of shares in Assura PLC worth $209 million. That deal alone generated a gain of $32.3 million, which was used to pay down debt. Leverage dropped to 50.4% at the end of the quarter, and has since fallen to 48.6%. That’s a good move in a high-rate environment.
For investors with a long-term mindset, this matters. Less debt means lower risk, more financial flexibility, and potentially stronger returns. And unlike office or retail REITs, healthcare REITs tend to be more insulated from economic cycles. People get sick whether or not interest rates go up.
Over time, as the REIT continues to clean up its balance sheet and the market regains confidence in real estate, the stock could rebound. That would add capital gains on top of your income. And since the units are affordable, it’s easy to add more as you go.
Bottom line
NorthWest Healthcare Properties REIT isn’t a flashy stock. But it doesn’t need to be. It’s built for long-term investors who want to earn passive income from a stable, global, and growing sector. The dividend is strong, the business model is steady, and the price is right.
