Generation Healthcare REIT : September 2016 Quarter Update

11 November 2016

The Manager

Company Announcements Office ASX Limited

Level 4, Exchange Centre 20 Bridge Street

Sydney NSW 2000

Generation Healthcare REIT (ASX Code: GHC) 30 September 2016 Quarter update

Generation Healthcare REIT ("GHC") is pleased to provide the following unaudited update for the 3-month period ended 30 September 2016.

GHC has initiated quarterly updates following Northwest Healthcare Properties REIT's (TSX: NWH.UN, "NWR") investment in GHC and acquisition of the Manager of GHC (Generation Healthcare Management Pty Ltd) as announced on 27 June 2016.

NWR recognises its interest in GHC as an equity accounted investment and reports this information on a quarterly basis to the Toronto Stock Exchange.

Commenting on the September quarter, Miles Wentworth, GHC's Chief Executive Officer, said "GHC's performance is tracking in line with our expectations.

Good progress on the Casey Private Hospital and Frankston Private Hospital projects continued during the quarter and we have now commenced the design process for the Albert and Grey Street projects (in joint venture with Epworth) following the planning permit being issued in August 2016.

We are also very pleased to have added to the Fund's organic growth pipeline following the recently announced Epping Medical Centre transaction. This provides an exciting opportunity to create a major integrated health campus for Melbourne's Northern suburbs over time."

Key portfolio metrics

30 Sept 2016	30 June 2016
Portfolio Value (including deposits on Investment Properties)	$494.3 million	$481.9 million
Weighted Average Lease Term to Expiry (WALTE)1	12.2 years	12.2 years
Occupancy1	98.7%	98.6%

1 By income.

Underlying net operating income

Unaudited 3 months to 30 Sept 2016 $'000	Unaudited 3 months to 30 Sept 2015 $'000
Net profit attributable to unitholders of the parent	4,725	4,050
Adjusted for:	(462)	(390)
- Straight line lease revenue recognition
- Net (gain)/loss on change in fair value of:	642	660
- Investment properties
- Derivatives	469	2,098
- Derivatives included in share of net profit of equity accounted investments	-	106
- Lease surrender and new tenant incentives associated with change of significant tenant	162	(1,213)
- Gains arising on additional investment in the Divine Logistics Trust	(35)	-
- Non-controlling interest attributable to the above adjustments	(97)	-
- Other	14	14
Underlying net operating income	5,418	5,325
Underlying net operating income per unit	2.47 cents	2.51 cents

Consolidated statement of profit or loss and other comprehensive income

Unaudited 3 months to 30 Sept 2016 $'000	Unaudited 3 months to 30 Sept 2015 $'000
Revenue	8,484	8,090
Rental income
Other property income	1,024	756
Interest	900	1,582
Other income	10,408	10,428
Net change in the fair value of investment properties and deposits	(642)	(660)
Net change in the fair value of derivatives	(469)	(2,098)
Gains arising on additional investment in the Divine Logistics Trust	35	-
(1,076)	(2,758)
Total income	9,332	7,670
Expenses	(1,593)	(1,487)
Property expenses
Finance costs	(1,882)	(1,700)
Responsible Entity's fund management fee	(699)	(608)
Other expenses	(136)	(127)
Total expenses	(4,310)	(3,922)
Share of net profit of equity accounted investment	-	302
Total net profit	5,022	4,050
Other comprehensive income	-	-
Other comprehensive income
Total comprehensive income	5,022	4,050
Net profit / total comprehensive income attributable to non-controlling interests	(297)	-
Net profit / comprehensive income attributable to unitholders of the Fund	4,725	4,050
Basic and diluted earnings per unit	2.16 cents	1.91 cents

Consolidated statement of financial position

Unaudited 30 Sept 2016 $'000	Audited 30 Jun 2016 $'000
Current assets	2,827	2,610
Cash and cash equivalents
Trade and other receivables	3,513	3,267
Non-current assets	6,340	5,877
Trade and other receivables	20,632	20,497
Loans carried at amortised cost	7,717	7,430
Investment properties	480,013	467,624
Deposits on investment properties	14,300	14,300
522,662	509,851
Total assets	529,002	515,728
Current liabilities	9,074	11,626
Trade and other payables
Borrowings	49,301	398
Derivatives	3,532	3,292
Distribution payable	-	9,646
Non-current liabilities	61,907	24,962
Trade and other payables	3,264	3,164
Borrowings	113,246	146,299
Derivatives	12,174	11,945
128,684	161,408
Total liabilities	190,591	186,370
Net assets	338,411	329,358
Equity attributable to unitholders	241,578
Issued units		243,739
Retained earnings	64,443	59,718
Equity attributable to unitholders of the parent	308,182	301,296
Non-controlling interests	28,062
		30,229
Total equity	338,411	329,358
Net tangible assets per unit attributable to unitholders2	$1.38
		$1.40

2 Net tangible assets per unit adjusted to exclude the amount attributable to non-controlling interests.