MISSISSAUGA, ON, Feb. 27, 2025 /CNW/ - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) announced today its results for the fourth quarter and year ended December 31, 2024.
"I am proud of our teams who delivered outstanding results in virtually every area of our business in 2024. From the strong improvements in employee engagement and resident satisfaction, to occupancy and earnings growth, to the record volumes of acquisition and financing activity, our people made 2024 an exceptional year. We at Chartwell know that all this starts with great service, and I am grateful to our teams in the field for their unwavering dedication to their residents.
We have also made great progress in our transition to a more agile and scalable operating platform. We do it by further enabling our residence management teams to develop local strategies, make faster decisions and take bold actions. Our corporate support teams develop and implement tools, including technology solutions, deliver high quality training and targeted assistance to enable our residence teams to outperform," commented Vlad Volodarski, Chartwell's CEO.
"I am confident that with the continuing efforts in these areas of operational excellence, portfolio growth and optimization, and prudent capital management, in the positive demand/supply environment, we will continue delivering strong results in 2025 and beyond."
The following table summarizes select financial and operating performance measures:
Three Months Ended |
Year Ended |
||||||
($000s, except per unit amounts, number of units, and percentages) |
2024 |
2023 |
Change |
2024 |
2023 |
Change |
|
Resident revenue |
218,445 |
179,946 |
38,499 |
799,923 |
687,324 |
112,599 |
|
Direct property operating expense |
138,707 |
118,853 |
19,854 |
509,179 |
463,361 |
45,818 |
|
Net income/(loss)(2) |
3,544 |
(13,173) |
16,717 |
22,378 |
128,273 |
(105,895) |
|
FFO(1) |
|||||||
Continuing operations |
57,663 |
39,246 |
18,417 |
197,462 |
122,151 |
75,311 |
|
Total |
57,663 |
39,099 |
18,564 |
197,462 |
133,190 |
64,272 |
|
FFO per unit(1) |
|||||||
Continuing operations |
0.21 |
0.16 |
0.05 |
0.76 |
0.51 |
0.25 |
|
Total |
0.21 |
0.16 |
0.05 |
0.76 |
0.55 |
0.21 |
|
Weighted average number of units outstanding (000s)(3) |
275,494 |
243,262 |
32,232 |
260,119 |
241,688 |
18,431 |
|
Weighted average same property occupancy rate(4) |
90.1 % |
85.0 % |
5.1pp |
88.0 % |
82.1 % |
5.9pp |
|
Same property adjusted NOI(1) |
63,356 |
55,381 |
7,975 |
244,423 |
205,601 |
38,822 |
|
Same property adjusted operating margin(1) |
37.2 % |
35.7 % |
1.5pp |
37.3 % |
34.8 % |
2.5pp |
|
G&A expenses |
10,334 |
13,455 |
(3,121) |
49,460 |
60,450 |
(10,990) |
|
Fourth Quarter Results
For Q4 2024, resident revenue increased $38.5 million or 21.4% and direct property operating expense increased $19.8 million or 16.7%.
For Q4 2024, net income was $3.5 million compared to net loss of $13.2 million in Q4 2023 primarily due to:
partially offset by:
For Q4 2024, FFO from continuing operations was $57.7 million or $0.21 per unit, compared to $39.2 million or $0.16 per unit for Q4 2023. The change in FFO from continuing operations was primarily due to:
partially offset by:
For Q4 2024, FFO from continuing operations includes $0.2 million of Lease-up-Losses and Imputed Cost of Debt related to our development projects (Q4 2023 – $0.6 million). Total FFO for Q4 2023 includes results of discontinued operations from the Ontario Long Term Care platform ("OLTC Platform") of $0.2 million.
Annual / Year End Results
For 2024, resident revenue increased $112.6 million or 16.4%, and direct property operating expense increased $45.8 million or 9.9%.
For 2024, net income was $22.4 million compared to $128.3 million in 2023 that included the gain on sale of $178.7 million due to the sale of the OLTC Platform(5). The remaining differences are due to:
partially offset by:
For 2024, FFO from continuing operations was $197.5 million or $0.76 per unit, compared to $122.2 million or $0.51 per unit for 2023. The change in FFO from continuing operations was primarily due to:
partially offset by:
For 2024, FFO from continuing operations includes $1.1 million of Lease-up-Losses and Imputed Cost of Debt related to our development projects (2023 – $2.3 million). Total FFO for 2023 includes results of discontinued operations from the OLTC Platform of $11.1 million or $0.04 per unit.
Financial Position
As at December 31, 2024, liquidity(1) amounted to $314.3 million, which included $20.1 million of cash and cash equivalents and $294.2 million of available borrowing capacity on our credit facilities.
The interest coverage ratio(6) was 2.7 at December 31, 2024, compared to 2.3 at December 31, 2023. The net debt to adjusted EBITDA ratio(6) at December 31, 2024 was 8.4 compared to 10.2 at December 31, 2023.
2025 Outlook and Recent Developments
An updated discussion of our business outlook can be found in the "2025 Outlook" section of our Management's Discussion and Analysis for the year ended December 31, 2024 (the "2024 MD&A").
Operations
The chart included (Figure 1) provides an update in respect of our same property occupancy.
We continue to experience strong demand fundamentals having achieved a smaller seasonal dip than historical periods during the weaker and unpredictable winter season. Our same property portfolio occupancy for March 2025 is expected to be 91.1%, 20 bps lower than December 2024 occupancy of 91.3%. Our initial contacts, personalized tours, and leasing signing activity remains strong and we expect this positive momentum to continue in 2025.
Growth and Portfolio Optimization Activities
We continue to execute on our portfolio strategies of enhancing our asset base to generate increased NOI, acquiring new strategic properties in core markets and selling non-core properties, including:
Liquidity and Financing
On October 24, 2024, CMHC confirmed the termination of our Large Borrower Agreement ("LBA") and the transition to a Large Borrower Risk Management Framework (the "LBRMF"). The LBRMF provides a more flexible financing environment and improved liquidity and removes previous financial covenant and cross collateralization requirements.
On October 28, 2024, we issued $150.0 million of 4.400% Series D senior unsecured debentures (the "Series D Debentures") due on November 5, 2029. The net proceeds of the Series D Debentures was used to repay existing indebtedness, including indebtedness under our secured credit facility and term loan, and to partially finance certain previously announced acquisitions of retirement residences expected to close in the fourth quarter of 2024.
On November 14, 2024, we filed a prospectus supplement to establish an at-the-market equity distribution program (the "ATM Program"). The ATM Program allows Chartwell to issue up to $250.0 million of Trust Units from treasury to the public from time to time during the term of the ATM Program at its discretion. The ATM program is expected to remain in place until the earlier of May 30, 2026 or the issuance and sale of the Trust Units qualified for distribution under the ATM Program. During the year ended December 31, 2024, Chartwell issued 1,228,500 units under the ATM Program at an average price of $15.90 per Trust Unit for total gross proceeds of $19.5 million. Commission and other costs amounted to $0.4 million.
As at February 27, 2025, liquidity amounted to $282.9 million, which included $43.7 million of cash and cash equivalents and $239.2 million of available borrowing capacity on our Credit Facilities.
As of the date of this release, we have $343.8 million of mortgage debt maturing in 2025 with a weighted average interest rate of 5.29%. At February 27, 2025, 10-year CMHC-insured mortgage rates are estimated at approximately 3.84% and five-year unsecured debenture rate to be approximately 4.31%.
Quarterly Investor Materials and Conference Call
We invite you to review our Q4 and Year End 2024 investor materials on our website at investors.chartwell.com
A conference call hosted by Chartwell's senior management will be held Friday, February 28, 2025, 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: 5540514#. 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/258949534. 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 5548581#. 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 2024 MD&A, is incorporated by reference. Full definitions of FFO & FFO per unit can be found on page 20, same property adjusted NOI on page 21, adjusted NOI on page 21, adjusted operating margin on page 21, liquidity on page 28, interest coverage ratio on page 45, and net debt to adjusted EBITDA ratio on page 46 of the 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 definitions of these measures have been incorporated by reference. |
(2) |
2023 included a gain on sale of $178.7 million due to the sale of the OLTC Platform. |
(3) |
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. |
(4) |
'pp' means percentage points. |
(5) |
Refer to the "Significant Events – Portfolio Optimization" section on page 12 of the 2024 MD&A. |
(6) |
Non-GAAP; calculated in accordance with the Trust indentures for Chartwell's 4.211% Series B senior unsecured debentures, 6.000% Series C senior unsecured debentures, and 4.400% Series D senior unsecured debentures, and may not be comparable to similar metrics used by other issuers or to any GAAP measures. |
(7) |
Forecast includes leases and notices as at January 31, 2025, and an estimate of mid-month move-ins of 10 bps for February and 30 bps for March, 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 portfolio 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 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 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. Except as required by law, Chartwell does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or for any other reason.
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 approximately 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 audited consolidated 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 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) |
Q4 2024 |
Q4 2023 |
Change |
2024 |
2023 |
Change |
Resident revenue |
218,445 |
179,946 |
38,499 |
799,923 |
687,324 |
112,599 |
Add (Subtract): |
||||||
Share of resident revenue from joint ventures (1) |
39,485 |
33,159 |
6,326 |
142,430 |
126,765 |
15,665 |
Resident revenue from LTC Discontinued Operations (2) |
- |
258 |
(258) |
- |
167,326 |
(167,326) |
Share of resident revenue from non-controlling interest (3) |
(1,382) |
- |
(1,382) |
(2,710) |
- |
(2,710) |
Adjusted resident revenue |
256,548 |
213,363 |
43,185 |
939,643 |
981,415 |
(41,772) |
Comprised of: |
||||||
Same property |
170,141 |
155,196 |
14,945 |
655,652 |
590,138 |
65,514 |
Growth |
51,750 |
23,627 |
28,123 |
147,332 |
90,194 |
57,138 |
Repositioning |
34,657 |
34,540 |
117 |
136,659 |
301,083 |
(164,424) |
Adjusted resident revenue |
256,548 |
213,363 |
43,185 |
939,643 |
981,415 |
(41,772) |
Direct property operating expense |
138,707 |
118,853 |
19,854 |
509,179 |
463,361 |
45,818 |
Add (Subtract): |
||||||
Share of direct property operating expense from joint ventures (1) |
25,137 |
22,566 |
2,571 |
92,177 |
87,219 |
4,958 |
Direct property operating expense from LTC Discontinued Operations (2) |
- |
405 |
(405) |
- |
151,671 |
(151,671) |
Share of direct property operating expense from non-controlling interest (3) |
(697) |
- |
(697) |
(1,374) |
- |
(1,374) |
Adjusted direct property operating expense |
163,147 |
141,824 |
21,323 |
599,982 |
702,251 |
(102,269) |
Comprised of: |
||||||
Same property |
106,785 |
99,815 |
6,970 |
411,229 |
384,537 |
26,692 |
Growth |
30,854 |
15,462 |
15,392 |
87,231 |
59,592 |
27,639 |
Repositioning |
25,508 |
26,547 |
(1,039) |
101,522 |
258,122 |
(156,600) |
Adjusted direct property operating expense |
163,147 |
141,824 |
21,323 |
599,982 |
702,251 |
(102,269) |
NOI |
79,738 |
61,093 |
18,645 |
290,744 |
223,963 |
66,781 |
Add (Subtract): |
||||||
Share of NOI from joint ventures |
14,348 |
10,593 |
3,755 |
50,253 |
39,546 |
10,707 |
Share of NOI from non-controlling interest |
(685) |
- |
(685) |
(1,336) |
- |
(1,336) |
Adjusted NOI from continuing operations |
93,401 |
71,686 |
21,715 |
339,661 |
263,509 |
76,152 |
Add (Subtract): |
||||||
NOI from LTC Discontinued Operations |
- |
(147) |
147 |
- |
15,655 |
(15,655) |
Adjusted NOI |
93,401 |
71,539 |
21,862 |
339,661 |
279,164 |
60,497 |
Comprised of: |
||||||
Same property |
63,356 |
55,381 |
7,975 |
244,423 |
205,601 |
38,822 |
Growth |
20,896 |
8,165 |
12,731 |
60,101 |
30,602 |
29,499 |
Repositioning |
9,149 |
7,993 |
1,156 |
35,137 |
42,961 |
(7,824) |
Adjusted NOI |
93,401 |
71,539 |
21,862 |
339,661 |
279,164 |
60,497 |
Weighted average occupancy rate: |
||||||
Same property portfolio |
90.1 % |
85.0 % |
5.1pp |
88.0 % |
82.1 % |
5.9pp |
Growth portfolio |
87.9 % |
77.2 % |
10.7pp |
86.4 % |
74.1 % |
12.3pp |
Repositioning portfolio |
84.5 % |
81.7 % |
2.8pp |
84.4 % |
85.1 % |
(0.7pp) |
Total portfolio |
88.7 % |
83.3 % |
5.4pp |
87.1 % |
81.9 % |
5.2pp |
(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. |
(3) |
Non-GAAP; represents Chartwell's proportionate share of the resident revenue and direct property operating expense of our non-controlling interest, 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) |
Q4 2024 |
Q4 2023 |
Change |
2024 |
2023 |
Change |
|
Net income/(loss) |
3,544 |
(12,758) |
16,302 |
22,378 |
(60,941) |
83,319 |
|
Add (Subtract): |
|||||||
B |
Depreciation of PP&E |
49,225 |
38,955 |
10,270 |
166,371 |
154,005 |
12,366 |
D |
Amortization of limited life intangible assets |
485 |
632 |
(147) |
2,195 |
2,690 |
(495) |
B |
Depreciation of PP&E and amortization of intangible assets used for |
(1,125) |
(1,127) |
2 |
(4,092) |
(4,461) |
369 |
E |
Loss/(gain) on disposal of assets |
941 |
(5,770) |
6,711 |
(53,963) |
(12,074) |
(41,889) |
J |
Transaction costs arising on dispositions |
491 |
192 |
299 |
5,518 |
1,167 |
4,351 |
H |
Impairment losses |
- |
10,273 |
(10,273) |
- |
10,898 |
(10,898) |
F |
Tax on gains or losses on disposal of properties |
(2,744) |
(869) |
(1,875) |
(255) |
27,231 |
(27,486) |
G |
Deferred income tax |
7,166 |
(3,419) |
10,585 |
34,752 |
(24,510) |
59,262 |
O |
Distributions on Class B Units recorded as interest expense |
231 |
234 |
(3) |
927 |
936 |
(9) |
M |
Changes in fair value of financial instruments |
(1,660) |
10,752 |
(12,412) |
19,875 |
21,964 |
(2,089) |
Q |
FFO adjustments for Equity-Accounted JVs |
1,196 |
2,151 |
(955) |
3,887 |
5,246 |
(1,359) |
U |
Non-controlling interest |
(87) |
- |
(87) |
(131) |
- |
(131) |
FFO |
57,663 |
39,246 |
18,417 |
197,462 |
122,151 |
75,311 |
|
Weighted average number of units (000) |
275,494 |
243,262 |
32,232 |
260,119 |
241,688 |
18,431 |
|
FFOPU |
0.21 |
0.16 |
0.05 |
0.76 |
0.51 |
0.25 |
|
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) |
Q4 2024 |
Q4 2023 |
Change |
2024 |
2023 |
Change |
|
Net income/(loss) |
3,544 |
(13,173) |
16,717 |
22,378 |
128,273 |
(105,895) |
|
Add (Subtract): |
|||||||
B |
Depreciation of PP&E |
49,225 |
38,955 |
10,270 |
166,371 |
154,005 |
12,366 |
D |
Amortization of limited life intangible assets |
485 |
632 |
(147) |
2,195 |
2,690 |
(495) |
B |
Depreciation of PP&E and amortization of intangible assets used for |
(1,125) |
(1,127) |
2 |
(4,092) |
(4,461) |
369 |
E |
Loss/(gain) on disposal of assets |
941 |
(5,539) |
6,480 |
(53,963) |
(190,747) |
136,785 |
J |
Transaction costs arising on dispositions |
491 |
229 |
262 |
5,518 |
1,665 |
3,853 |
H |
Impairment losses |
- |
10,273 |
(10,723) |
- |
10,898 |
(10,898) |
F |
Tax on gains or losses on disposal of properties |
(2,744) |
(869) |
(1,875) |
(255) |
27,231 |
(27,486) |
G |
Deferred income tax |
7,166 |
(3,419) |
10,585 |
34,752 |
(24,510) |
59,262 |
O |
Distributions on Class B Units recorded as interest expense |
231 |
234 |
(3) |
927 |
936 |
(9) |
M |
Changes in fair value of financial instruments |
(1,660) |
10,752 |
(12,412) |
19,875 |
21,964 |
(2,089) |
Q |
FFO adjustments for Equity-Accounted JVs |
1,196 |
2,151 |
(955) |
3,887 |
5,246 |
(1,359) |
U |
Non-controlling interest |
(87) |
- |
(87) |
(131) |
- |
(131) |
FFO |
57,663 |
39,099 |
18,564 |
197,462 |
133,190 |
64,272 |
|
Weighted average number of units (000) |
275,494 |
243,262 |
32,232 |
260,119 |
241,688 |
18,431 |
|
FFOPU |
0.21 |
0.16 |
0.05 |
0.76 |
0.55 |
0.21 |
|
SOURCE Chartwell Retirement Residences (IR)
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