MISSISSAUGA, ON, May 9, 2024 /CNW/ - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) announced today its results for the first quarter ended March 31, 2024.
Q1 2024 Highlights
"Our teams have done a great job building on the strong momentum of occupancy growth with a 610 basis points increase over the last twelve months. We see this momentum continuing into the summer and expect to achieve 87.3% occupancy by June of this year. This occupancy growth drove significant improvements in our operating margins and cash flows in the quarter," commented Vlad Volodarski, Chartwell's CEO. "With the growing demand and limited new construction, we expect these positive trends to persist in 2024 and beyond. Our teams are focused on the execution of our successful operations, sales and marketing initiatives to accelerate this growth."
Operating Performance Trends
Financial Results
The following table summarizes select financial and operating performance measures:
Three Months Ended |
||||||
($000s, except per unit amounts, number of units, and occupancy) |
2024 |
2023 |
Change |
|||
Resident revenue |
183,920 |
165,824 |
18,096 |
|||
Direct property operating expense |
121,374 |
117,874 |
3,500 |
|||
Net loss |
(1,971) |
(9,253) |
7,282 |
|||
FFO(1) |
||||||
Continuing operations |
39,239 |
20,918 |
18,321 |
|||
Total |
39,239 |
24,338 |
14,901 |
|||
FFO per unit(1) |
||||||
Continuing operations |
0.16 |
0.09 |
0.07 |
|||
Total |
0.16 |
0.10 |
0.06 |
|||
Weighted average number of units outstanding (000s)(2) |
244,216 |
239,948 |
4,268 |
|||
Weighted average occupancy rate - same property portfolio(3) |
86.2 % |
80.1 % |
6.1pp |
|||
Same property adjusted NOI(1) |
56,798 |
45,539 |
11,259 |
|||
G&A expenses |
14,471 |
15,429 |
(958) |
|||
For Q1 2024, resident revenue increased $18.1 million or 10.9% and direct property operating expense increased $3.5 million or 3.0%.
For Q1 2024, net loss was $2.0 million compared to $9.3 million in Q1 2023 primarily due to:
partially offset by:
For Q1 2024, FFO from continuing operations was $39.2 million or $0.16 per unit, compared to $20.9 million or $0.09 per unit for Q1 2023. The change in FFO from continuing operations was primarily due to:
FFO from continuing operations for Q1 2024 includes $0.4 million of Lease-up-Losses(1) and Imputed Cost of Debt(1) related to our development projects (Q1 2023 – $0.8 million). Total FFO for Q1 2023 includes results of LTC Discontinued Operations of $3.4 million or $0.01 per unit.
Financial Position
As at March 31, 2024 liquidity(1) amounted to $290.5 million, which included $24.5 million of cash and cash equivalents and $266.0 million of available borrowing capacity on our credit facilities.
The interest coverage ratio(5) was 2.5 at March 31, 2024, compared to 2.3 at December 31, 2023. The net debt to adjusted EBITDA ratio(5) at March 31, 2024 was 9.7 compared to 10.2 at December 31, 2023.
2024 Outlook and Recent Developments
An updated discussion of our business outlook can be found in the "2024 Outlook" section of our Management's Discussion and Analysis for the three months ended March 31, 2024 (the "Q1 2024 MD&A").
Operations
We continue to experience strong demand fundamentals having achieved occupancy growth through the historically weaker winter season. Our same property portfolio occupancy increased from December to March by 50 bps compared to a 50 bps decline for the same period last year. We expect to reach 87.3% occupancy in our same property portfolio in June 2024, representing 640 bps growth over the prior year. Initial contacts and personalized tour activity remains robust, and we are experiencing strong conversion rates to permanent move-ins. We expect this positive momentum to continue throughout 2024. The growth in same property occupancy combined with our blended rental and service rate growth of 4.8%, resulted in a 12.1% increase in same property adjusted resident revenue in Q1 2024 compared to Q1 2023.
The chart included (Figure 1) provides an update in respect of our same property occupancy.
Growth, Portfolio Optimization, and Repositioning Activities
We continue to execute on our portfolio strategies of enhancing our asset base to generate increased NOI, acquiring new strategic facilities in core markets and selling non-core assets, including:
Liquidity and Financing
As at May 9, 2024, liquidity amounted to $279.5 million, which included $37.5 million of cash and cash equivalents and $242.0 million of available borrowing capacity on our Credit Facilities.
As of the date of this release, and for the remainder of 2024, we have $141.1 million of mortgage debt maturing at the weighted average rate of 3.32%. At May 9, 2024, 10-year CMHC-insured mortgage rates are estimated at approximately 4.57% and five-year conventional mortgage financing is available at 5.75%.
In May 2024, our $125.0 million unsecured term loan will be maturing. We expect to refinance or repay this loan with proceeds from CMHC financings on our unencumbered properties.
Quarterly Investor Materials and Conference Call
We invite you to review our Q1 2024 investor materials on our website at investors.chartwell.com
Q1 2024 Financial Statements
Q1 2024 Management's Discussion and Analysis
Q1 2024 Investor Presentation
A conference call hosted by Chartwell's senior management will be held Friday May 10, 2024, at 10:00 AM ET. The telephone numbers to participate in the conference call are: Local: (416) 340-2217 or Toll Free: 1-800-806-5484. The passcode for the conference call is: 8636626#. Please log on at least 15 minutes before the call commences to register for the Q&A. A slide presentation to accompany management's comments during the conference call will be available on the website. A live webcast of the call will be available at https://events.q4inc.com/attendee/898562151. Joining via webcast is recommended for those who will not be participating in the Q&A.
The telephone numbers to listen to the call after it is completed (Instant Replay) are: Local (905) 694-9451 or Toll-Free: 1-800-408-3053. The Passcode for the Instant Replay is 6025332#. These numbers will be available for 30 days following the call. An audio file recording of the call, along with the accompanying slides, will also be archived on Chartwell's website at investors.chartwell.com.
Footnotes
(1) |
FFO, FFO for continuing operations, Total FFO, including per unit amounts, adjusted resident revenue, adjusted direct property operating expense, adjusted NOI, adjusted operating margin, liquidity, interest coverage ratio, Lease-up Losses, Imputed Cost of Debt, and net debt to adjusted EBITDA ratio are non-GAAP measures. These measures do not have standardized meanings prescribed by GAAP and, therefore, may not be comparable to similar measures used by other issuers. These measures are used by management in evaluating operating and financial performance. Please refer to the heading "Non-GAAP Financial Measures" on page 6 of this press release. Certain information about non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary measures found in Chartwell's Q1 2024 MD&A, is incorporated by reference. Full definitions of FFO & FFO per unit can be found on page 13, same property adjusted NOI on page 14, adjusted NOI on page 14, adjusted operating margin on page 14, liquidity on page 20, interest coverage ratio on page 28, and net debt to adjusted EBITDA ratio on page 44 of the Q1 2024 MD&A available on Chartwell's website, and under Chartwell's profile on the System for Electronic Document and Analysis Retrieval ("SEDAR+") website at sedarplus.com. The definition of these measures have been incorporated by reference. |
(2) |
Includes Trust Units, Class B Units of Chartwell Master Care LP, and Trust Units issued under Executive Unit Purchase Plan and Deferred Trust Unit Plan. |
(3) |
'pp' means percentage points. |
(4) |
Refer to the "Significant Events – Portfolio Optimization" section on page 10 of the Q1 2024 MD&A. |
(5) |
Non-GAAP; calculated in accordance with the Trust indentures for Chartwell's 4.211% Series B senior unsecured debentures and 6.000% Series C senior unsecured debentures and may not be comparable to similar metrics used by other issuers or to any GAAP measures. |
(6) |
Forecast includes leases and notices as at April 30, 2024, and an estimate of mid-month move-ins of 20 bps for May and 40 bps for June, based on the preceding 12-month average of such activity. |
Forward-Looking Information
This press release contains forward-looking information that reflects the current expectations, estimates and projections of management about the future results, performance, achievements, prospects or opportunities for Chartwell and the seniors housing industry. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond our control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. Examples of forward-looking information in this document include, but are not limited to, statements regarding our business strategies, operational sales, marketing and optimization strategies including targets, and the expected results of such strategies, predictions and expectations with respect to industry trends including growth in the senior population, a deficit of long term care beds and the slow down of new construction starts, expectations with respect to taxes that are expected to be payable in the current and future years and statements regarding the tax classification of distributions, and occupancy rate forecasts. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These factors are more fully described in the "Risks and Uncertainties and Forward-Looking Information" section in Chartwell's Q1 2024 MD&A, and in materials filed with the securities regulatory authorities in Canada from time to time, including but not limited to our most recent Annual Information Form the ("AIF"). A copy of the Q1 2024 MD&A, the AIF, and Chartwell's other publicly filed documents can be accessed under Chartwell's profile on the SEDAR+ website at sedarplus.com.
About Chartwell
Chartwell is in the business of serving and caring for Canada's seniors, committed to its vision of Making People's Lives BETTER and to providing a happier, healthier, and more fulfilling life experience for its residents. Chartwell is an unincorporated, open-ended real estate trust which indirectly owns and operates a complete range of seniors housing communities, from independent living through to assisted living and long term care. Chartwell is one of the largest operators in Canada, serving over 25,000 residents in four provinces across the country. For more information visit www.chartwell.com.
For more information, please contact:
Chartwell Retirement Residences
Jeffrey Brown, Chief Financial Officer
Tel: (905) 501-6777
Email: [email protected]
Non-GAAP Financial Measures
Chartwell's condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain financial measures to assess Chartwell's operating and financial performance, which are measures not defined in generally accepted accounting principles ("GAAP") under IFRS. The following measures: FFO, FFO per unit, same property adjusted NOI, adjusted NOI, adjusted operating margin, liquidity, interest coverage ratio and net debt to adjusted EBITDA ratio as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS. They are presented because management believes these non-GAAP measures are relevant and meaningful measures of Chartwell's performance and as computed may differ from similar computations as reported by other issuers and may not be comparable to similarly titled measures reported by such issuers. For a full definition of these measures, please refer to the Q1 2024 MD&A available on Chartwell's website and on SEDAR+.
The following table reconciles resident revenue and direct property operating expense from our financial statements to adjusted resident revenue and adjusted direct property operating expense and NOI to Adjusted NOI from continuing operations and Adjusted NOI and identifies contributions from our same property portfolio, our growth portfolio, and our repositioning portfolio:
($000s, except occupancy rates) |
Q1 2024 |
Q1 2023 |
Change |
|||
Resident revenue |
183,920 |
165,824 |
18,096 |
|||
Add: Share of resident revenue from joint ventures (1) |
33,616 |
30,428 |
3,188 |
|||
Resident revenue from LTC Discontinued Operations (2) |
- |
61,815 |
(61,815) |
|||
Adjusted resident revenue |
217,536 |
258,067 |
(40,531) |
|||
Comprised of: |
||||||
Same property |
161,193 |
143,819 |
17,374 |
|||
Growth |
24,687 |
21,519 |
3,168 |
|||
Repositioning |
31,656 |
92,729 |
(61,073) |
|||
Adjusted resident revenue |
217,536 |
258,067 |
(40,531) |
|||
Direct property operating expense |
121,374 |
117,874 |
3,500 |
|||
Add: Share of direct property operating expense from joint ventures (1) |
22,572 |
21,723 |
849 |
|||
Direct property operating expense from LTC Discontinued Operations (2) |
- |
56,653 |
(56,653) |
|||
Adjusted direct property operating expense |
143,946 |
196,250 |
(52,304) |
|||
Comprised of: |
||||||
Same property |
104,395 |
98,280 |
6,115 |
|||
Growth |
15,654 |
14,815 |
839 |
|||
Repositioning |
23,897 |
83,155 |
(59,258) |
|||
Adjusted direct property operating expense |
143,946 |
196,250 |
(52,304) |
|||
NOI |
62,546 |
47,950 |
14,596 |
|||
Add: |
11,044 |
8,705 |
2,339 |
|||
Adjusted NOI from continuing operations |
73,590 |
56,655 |
16,935 |
|||
Add: NOI from LTC Discontinued Operations |
- |
5,162 |
(5,162) |
|||
Adjusted NOI |
73,590 |
61,817 |
11,773 |
|||
Comprised of: |
||||||
Same property |
56,798 |
45,539 |
11,259 |
|||
Growth |
9,033 |
6,704 |
2,329 |
|||
Repositioning |
7,759 |
9,574 |
(1,815) |
|||
Adjusted NOI |
73,590 |
61,817 |
11,773 |
|||
Weighted average occupancy rate: |
||||||
Same property portfolio |
86.2 % |
80.1 % |
6.1pp |
|||
Growth portfolio |
79.6 % |
73.5 % |
6.1pp |
|||
Repositioning portfolio |
82.0 % |
82.9 % |
(0.9pp) |
|||
Total portfolio |
84.5 % |
80.1 % |
4.4pp |
(1) |
Non-GAAP; represents Chartwell's proportionate share of the resident revenue and direct property operating expense of our Equity-Accounted JVs, respectively. |
(2) |
Represents the resident revenue and direct property operating expense related to LTC Discontinued Operations, respectively. |
The following table provides a reconciliation of net income/(loss) to FFO for continuing operations:
($000s, except per unit amounts and number of units) |
Q1 2024 |
Q1 2023 |
Change |
||||
Net income/(loss) |
(1,971) |
(12,590) |
10,619 |
||||
Add (Subtract): |
|||||||
B |
Depreciation of PP&E |
35,342 |
39,237 |
(3,895) |
|||
D |
Amortization of limited life intangible assets |
615 |
739 |
(124) |
|||
B |
Depreciation of PP&E and amortization of intangible assets used for administrative |
(1,055) |
(1,144) |
89 |
|||
E |
Loss/(gain) on disposal of assets |
(638) |
(2,712) |
2,074 |
|||
J |
Transaction costs arising on dispositions |
1,992 |
402 |
1,590 |
|||
F |
Tax on gains or losses on disposal of properties |
(351) |
- |
(351) |
|||
G |
Deferred income tax |
1,053 |
(7,477) |
8,530 |
|||
O |
Distributions on Class B Units recorded as interest expense |
232 |
234 |
(2) |
|||
M |
Changes in fair value of financial instruments |
3,285 |
2,509 |
776 |
|||
Q |
FFO adjustments for Equity-Accounted JVs |
735 |
1,720 |
(985) |
|||
FFO |
39,239 |
20,918 |
18,321 |
||||
Weighted average number of units (000) |
244,216 |
239,948 |
4,268 |
||||
FFOPU |
0.16 |
0.09 |
0.07 |
||||
The following table provides a reconciliation of net income/(loss) to Total FFO for total operations:
($000s, except per unit amounts and number of units) |
Q1 2024 |
Q1 2023 |
Change |
||||
Net income/(loss) |
(1,971) |
(9,253) |
7,282 |
||||
Add (Subtract): |
|||||||
B |
Depreciation of PP&E |
35,342 |
39,237 |
(3,895) |
|||
D |
Amortization of limited life intangible assets |
615 |
739 |
(124) |
|||
B |
Depreciation of PP&E and amortization of intangible assets used for administrative |
(1,055) |
(1,144) |
89 |
|||
E |
Loss/(gain) on disposal of assets |
(638) |
(2,701) |
2,063 |
|||
J |
Transaction costs arising on dispositions |
1,992 |
474 |
1,518 |
|||
F |
Tax on gains or losses on disposal of properties |
(351) |
- |
(351) |
|||
G |
Deferred income tax |
1,053 |
(7,477) |
8,530 |
|||
O |
Distributions on Class B Units recorded as interest expense |
232 |
234 |
(2) |
|||
M |
Changes in fair value of financial instruments |
3,285 |
2,509 |
776 |
|||
Q |
FFO adjustments for Equity-Accounted JVs |
735 |
1,720 |
(985) |
|||
FFO |
39,239 |
24,338 |
14,901 |
||||
Weighted average number of units (000) |
244,216 |
239,948 |
4,268 |
||||
FFOPU |
0.16 |
0.10 |
0.06 |
||||
SOURCE Chartwell Retirement Residences (IR)
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