NexLiving Communities Reports Record Q1 2023 Operating and Financial Results, Announces Normal Course Issuer Bid and Declares Quarterly Dividend

HALIFAX, NS, May 25, 2023 /CNW/ - (TSXV: NXLV) – NexLiving Communities Inc. ("NexLiving" or the "Company") announced operating and financial results for the three months ended March 31, 2023.

Stavro Stathonikos, President & CEO commented: "Over the past year, we secured over 70% of our mortgage book at an average rate of 3.79%. Our strategic acquisitions and 13% organic growth have more than offset the impact of higher interest rates, driving a material 103% year-over-year increase in FFO per share. Going forward we continue to see a positive operating environment as supply-demand imbalances persist in our core markets."

Summary of Results

• Suite count increased to 1,166 from 705 at March 31, 2023 (+65% Y/Y) as the Company continued to execute on its acquisition pipeline.
• Property revenue increased +65% to $4.2 million for the three-month period, driven by the acquisition of high quality properties and rental rate increases.
• Net operating income ("NOI") increased +82% to $2.3 million (55% margin) for the three-month period.
• Same-property NOI increased +13.2% for the quarter, driven by a 6.0% increase in same property revenue and a 1.3% decrease in same property expenses. The lower expenses are primarily due to a reduction in property tax rates in New Brunswick, partially offset by approximately $50,000 in non-recurring repair and maintenance expense associated with damage caused by a winter storm that affected certain New Brunswick properties. Excluding the winter storm impact, same-property NOI increased +17.1% for the quarter.
• The portfolio remained highly occupied at 97.1% at March 31, 2023, up 33 basis points over the quarter. Approximately 40% of the vacant units were attributable to the Company's suite repositioning program in the Ontario market, which is progressing ahead of expectations. New Brunswick occupancy was 98.1%, with approximately half of the vacancy being related to recent acquisitions of newly constructed properties, which the Company expects to lease up in the near term.
• FFO per share grew +103% for the quarter on a fully diluted basis.

Q1 2023 Operating and Financial Highlights:

As at	31-Mar-23	31-Dec-22	Change
Number of suites	1,166	1,016	150
Occupancy	97.1 %	96.8 %	33 bps
Debt to total assets	67.7 %	66.0 %	171 bps
Debt to GBV*	67.3 %	66.0 %	131 bps
Weighted average term to debt maturity (years)	4.0	2.8	1.1 yrs
Weighted average contractual interest rate	3.60 %	2.99 %	61 bps
Investment properties	245,636,406	203,071,000	21.0 %
Total assets	247,634,890	205,715,083	20.4 %
Total liabilities	167,730,200	135,818,258	23.5 %
Net asset value	79,904,690	69,896,825	14.3 %
Net asset value per share	0.242	0.238	1.4 %

For the three months ended March 31	2023	2022	Change
Rental income	4,205,209	2,553,345	64.7 %
NOI	2,329,164	1,278,089	82.2 %
NOI margin	55.4 %	50.1 %	533 bps
Net income	2,644,781	1,178,982	124.3 %
FFO*	555,613	270,515	105.4 %
FFO (cents per share) - diluted*	0.18	0.09	102.9 %
Dividends declared (cents per share)	0.05	0.05	-
Weighted average units outstanding - diluted	310,060,787	306,345,962	1.2 %
Same property revenue*	2,705,455	2,553,345	6.0 %
Same property operating expenses*	1,259,116	1,275,527	(1.3) %
Same property NOI*	1,446,339	1,277,818	13.2 %
Same property NOI margin*	53.5 %	50.0 %	342 bps

*Refer to section "Non-IFRS Financial Measures"

Acquisition Activity:

On February 28, 2023, the Company completed the acquisition of a 100% interest in Northpoint Management Inc. ("Northpoint") from Sheaco Holdings Inc. for $40.0 million. Northpoint's assets consist of two multi-family buildings comprising 75 units each located at 2251 Mountain Rd. and 2261 Mountain Rd., Moncton, New Brunswick. The purchase price for the acquisition was satisfied with the issuance of 37.5 million common shares at a price of $0.20 per share, approximately $31.7 million in mortgage debt and cash on hand.

Findlay Estates Refinancing:

On May 25, 2023, the Company refinanced its maturing mortgage on the Findlay Estates property and entered into a new $18.2 million CMHC insured mortgage for the property at a 5-year fixed interest rate of 3.78%. The new mortgage replaced the maturing $15.2 million mortgage.

Fair Value of Investment Properties:

The Company's weighted average capitalization rate as at March 31, 2023, decreased to 4.67% from 4.69% at December 31, 2022. The decrease was primarily due to the acquisition of new properties. For the Company's same property portfolio, there was no change to the weighted average capitalization rate of 4.74%. The gain in fair value recorded by the Company in the three month period primarily reflects forecasted NOI growth due to expected rent increases.

Normal Course Issuer Bid:

The Company announced today that the TSX Venture Exchange (the "Exchange") has conditionally accepted a notice filed by the Company of its intention to make a Normal Course Issuer Bid (the "NCIB"). The notice provides that the Company may purchase up to 26,000,000 Common Shares ("Shares") in total, being approximately 9.8% of the Company's Public Float (as that term is defined in the policies of the Exchange), during the 12-month period commencing May 30, 2023 and ending May 30, 2024.

The price which the Company will pay for any such Shares will be the prevailing market price at the time of acquisition. The actual number of Shares which may be purchased pursuant to the NCIB and the timing of any such purchases will be determined by management of the Company and will be facilitated by Independent Trading Group (ITG), Inc. All Share purchases under the NCIB will be made on the open market through the facilities of the Exchange, other designated exchanges and/or alternative Canadian trading systems, and will be purchased for cancellation. The funding for any purchase pursuant to the NCIB will be financed out of the working capital of the Company.

The Board of Directors believes that, from time to time, the trading price of the Common Shares does not reflect the value of its business and its future prospects. Accordingly, depending upon future price movements and other factors, the Board believes that its Common Shares are an attractive investment (and an appropriate use of available corporate funds), and that the NCIB is in the best interests of the Company and represents an opportunity to enhance value for its shareholders.

A copy of the Company's notice filed with the Exchange may be obtained, by any shareholder without charge, by contacting [email protected].

Dividend:

The Company's board of directors has approved and declared a dividend of $0.0005 per common share for the quarter ending June 30, 2023, representing $0.002 per share on an annualized basis. The dividend is payable on, or after June 30 to shareholders of record at the close of business on June 6.

The Company designates these taxable dividends to be paid to its holders as eligible dividends and will notify the holders such dividends are being paid as eligible dividends for the purposes of the Income Tax Act (Canada) and corresponding provincial legislation.

DSU Grants:

On May 25, 2023, the board of directors, in accordance with the terms of the company's DSU plan, approved the issuance of 2,779,000 DSUs to directors, management and consultants of the company. The DSUs vest over three years in accordance with the provisions of the company's DSU plan.

About the Company

The Company continues to execute on its plan to acquire recently built or refurbished, highly leased multi-residential properties in bedroom communities in Atlantic Canada and Ontario. The Company aims to deliver exceptional living experiences to our residents and provide comfortable, affordable housing solutions that cater to a wide range of demographics. The properties offer a range of modern and updated suites, with a variety of amenities and features that allow residents to experience a hassle-free and maintenance-free lifestyle. The Company is committed to investing in its properties to ensure that they are modern and up-to-date. For its recently acquired properties in Ontario, the Company has undertaken a targeted value-add capital program to modernize and reposition the large existing suites. The Company currently owns 1,166 units in New Brunswick and Ontario. NexLiving has also developed a robust pipeline of qualified properties for potential acquisition. By screening the properties identified to match the criteria set out by the Company (proximity to healthcare, amenities, services and recreation), management has assembled a significant pipeline of potential acquisitions for consideration by the Company's Board of Directors.

For more information about NexLiving, please refer to our website at www.nexliving.ca and our public disclosure at www.sedar.com.

Forward-Looking Statements

This news release forward-looking information within the meaning of applicable Canadian securities laws ("forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "projects", "estimates", "forecasts", "intends", "continues", "anticipates", or "does not anticipate" or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements contained in this news release include, but are not limited to, management's expectations of additional rental increases to come into effect by year end and the further enhancement of the Company's financial results. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. These forward-looking statements reflect the current expectations of the Company's management regarding future events and operating performance, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual events could differ materially from those projected herein and depend on a number of factors. These risks and uncertainties are more fully described in regulatory filings, including the Company's Annual Information Form, which can be obtained on SEDAR at www.sedar.com, under NexLiving's profile, as well as under Risk Factors section of the MD&A released on April 13, 2023. Although forward-looking statements contained in this new release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this new release speak only as of the date of this news release. Except as required by applicable securities laws, the Company does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Non-IFRS Financial Measures

The Company prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases, as a complement to results provided in accordance with IFRS, NexLiving discloses financial measures not recognized under IFRS which do not have standard meanings prescribed by IFRS. These include FFO, FFO (cents per share) – diluted, Debt to GBV and same-property metrics (collectively, the "Non-IFRS Measures"). These Non-IFRS Measures are further defined and discussed in the MD&A dated April 13, 2023, which should be read in conjunction with this news release. Since these measures are not recognized under IFRS, they may not be comparable to similar measures reported by other issuers. The Company presents the Non-IFRS measures because management believes these Non-IFRS measures are relevant measures of the ability of NexLiving to earn revenue and to evaluate its performance and cash flows. A reconciliation of these Non-IFRS measures is included in the MD&A dated April 13, 2023. The Non-IFRS measures should not be construed as alternatives to net income (loss) or cash flows from operating activities determined in accordance with IFRS as indicators of the Company's performance.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

SOURCE NexLiving Communities Inc.

[email protected].