Northwest Healthcare Properties Real Estate Investment Trust (TSX: NWH.UN) announced on Sunday that it has reached a conditional agreement with Vital Healthcare Property Trust (‘Vital’) for the internalisation of Vital’s management. The deal, known as the ‘Internalization’, will see Northwest receive NZ$214 million (approximately $170 million USD) in cash.

Northwest, a Toronto-based REIT, stated that the transaction is strongly aligned with its ongoing strategy. The company aims to simplify its operations and reallocate capital back to North America.

Zachary Vaughan, Chief Executive Officer of Northwest, commented on the agreement. “We are pleased to enter into an agreement for the Internalization of Vital, which will deliver immediate operational and financial benefits for both Northwest and Vital,” he said. “Internalizing Vital’s management is fully aligned with our strategy to simplify our business, reallocate capital back to North America, and create value for our unitholders. This transaction further strengthens our balance sheet and demonstrates our continued commitment to disciplined capital allocation. For Vital, the Internalization is expected to deliver enhanced returns to unitholders (including Northwest as Vital’s largest unitholder) and solidifies Vital’s position as a leading investor in and developer of healthcare infrastructure in the Australasian market.”

Northwest will use the cash proceeds to further reduce its debt and to fund accretive growth initiatives. The REIT anticipates that the internalisation will lead to operational efficiencies, including significant reductions in general and administrative expenses, simplified operations, and a lower headcount.

Vital, which is the largest unitholder of Northwest, will finance the Internalization through a concurrent capital raise. Northwest has confirmed it will not participate in this capital raise, allowing Vital to expand its unitholder base and overall liquidity.

The closing of the Internalization remains conditional on several matters. These include obtaining regulatory approvals, securing Vital lender consents, and Vital successfully completing a capital raise of at least NZ$175 million, net (approximately $140 million). Northwest will remain Vital’s largest unitholder, retaining an approximate 24% equity interest following the capital raise. Northwest has committed to maintaining this existing unitholding until February 2026 and will continue to hold two representative seats on Vital’s Board.

The transaction is currently expected to be completed on December 31, 2025. However, the closing could be delayed into the first quarter of 2026 if more time is needed to satisfy all conditions.