NexLiving Communities Reports Record Q4 2023 Operating and Financial Results

HALIFAX, NS, April 23, 2024 /CNW/ - (TSXV: NXLV) – NexLiving Communities Inc. ("NexLiving" or the "Company") announced operating and financial results for the three- and twelve-month periods ended December 31, 2023.

Stavro Stathonikos, President & CEO commented: "NexLiving has set an industry benchmark for organic growth with a +24% increase in same-property NOI in the quarter and +14% for the year. Our commitment to operational improvement and organic growth has more than offset any interest rate headwinds throughout the year. We achieved a 350 basis point margin increase year-over-year, which led to an exceptional +37% growth in FFO per share. As we look forward to 2024, we are focused on closing the highly accretive Devcore transaction, implementing operational efficiencies throughout the combined portfolio and directing free cash flow towards de-leveraging the balance sheet and highly accretive opportunities."

Summary of Results

• Suite count increased year-over-year from 1,016 to 1,166 (+15% Y/Y).
• Property revenue increased +46% to $4.8 million for the three-month period and +56% to $18.5 million for the twelve-month period ended December 31, 2023.
• Net operating income ("NOI") increased +61% to $2.9 million (60.4% margin) for the three-month period and +65% to $11.0 million (56.2% margin) for the twelve-month period ended December 31, 2023.
• FFO per share increased +52% for the three-month period and +37% for the twelve-month period, on a fully diluted basis.
• Same property NOI for the three-month period increased +24.0% as revenue grew by +7.7% and same property expenses declined by (11.5)%. The decrease in same property operating expenses was related to lower property taxes, maintenance, and insurance costs.
• Same property NOI for the twelve-month period increased +13.9% as revenue grew by +7.5% and same property expenses declined by (0.8)%. The decrease in same property operating expenses was related to lower property taxes, maintenance, and insurance costs, partially offset by higher cleaning and utility expenses.
• The portfolio remained highly occupied at 96.8% at December 31, 2023. New Brunswick occupancy was 97.8% and Ontario occupancy was 88.1%, as approximately one-third of the overall portfolio vacant units were attributable to the Company's suite repositioning program in the Ontario market.

Q4 2023 Operating and Financial Highlights:

As at	31-Dec-23	31-Dec-22	Change
Number of suites	1,166	1,016	150
Occupancy	96.8 %	96.8 %	-
Net Debt to GBV*	68.6 %	65.6 %	304 bps
Weighted average term to debt maturity (years)	4.6	2.8	1.8 yrs
Weighted average contractual interest rate	3.71 %	2.99 %	72 bps
Net asset value	74,633,442	69,896,825	6.8 %
Net asset value per share	$              4.49	$              4.73	(5.1) %

For the three months ended December 31	2023	2022	Change
Rental income	4,811,070	3,300,364	45.8 %
NOI	2,905,709	1,808,085	60.7 %
NOI margin	60.4 %	54.8 %	561 bps
Net income	(3,039,678)	2,366,603	(228.4) %
FFO*	856,708	499,818	71.4 %
FFO per share - diluted*	$              0.05	$              0.03	52.3 %
Dividends declared (per share)	$              0.01	$              0.01	-
FFO payout ratio*	19 %	30 %	(1,019) bps
Weighted average units outstanding - diluted	16,683,850	14,825,879	12.5 %
Same property revenue*	2,817,323	2,616,259	7.7 %
Same property operating expenses*	1,062,890	1,200,824	(11.5) %
Same property NOI*	1,754,433	1,415,435	24.0 %
Same property NOI margin*	62.3 %	54.1 %	817 bps

For the twelve months ended December 31	2023	2022	Change
Rental income	18,475,666	11,864,526	55.7 %
NOI	11,036,516	6,670,444	65.5 %
NOI margin	59.7 %	56.2 %	351 bps
Net income	(2,203,803)	7,513,188	(129.3) %
FFO*	2,837,887	1,859,846	52.6 %
FFO per share - diluted*	$              0.17	$              0.13	36.9 %
Dividends declared (per share)	$              0.04	$              0.04	-
FFO payout ratio*	23 %	32 %	(856) bps
Weighted average units outstanding - diluted	16,455,802	14,763,052	11.5 %
Same property revenue*	11,051,114	10,280,401	7.5 %
Same property operating expenses*	4,435,168	4,472,885	(0.8) %
Same property NOI*	6,615,946	5,807,516	13.9 %
Same property NOI margin*	59.9 %	56.5 %	338 bps

*Refer to section "Non-IFRS Financial Measures"

Fair Value of Investment Properties:

The Company's weighted average capitalization rate as at December 31, 2023, increased to 4.79% from 4.69% at December 31, 2022. The increase in capitalization rates reflects the volatility in market capitalization rates due to the decline in activity levels caused by the uncertain macroeconomic environment and the current level of interest rates. The loss in fair value recorded by the Company in the three month and twelve month periods ended December 31, 2023, was due to higher capitalization rates used to value the Company's investment properties, partially offset by forecasted NOI growth due to expected rent increases and operating expense efficiencies.

NCIB Activity:

During the three month period ended December 31, 2023, the Company purchased for cancellation 10,000 shares at a cost of $16,463, representing a weighted average price of $1.65. During the twelve month period ended December 31, 2023, the Company purchased for cancellation 74,650 shares at a cost of $167,924, representing a weighted average price of $2.25 per share.

Transaction Update:

On April 3, 2024, approximately 93.5% of the Company's shareholders voted in favour of the resolution in connection with the Company's previously announced transaction to acquire from Devcore Group Inc. and its related entities ("Devcore") a portfolio of multi-family assets in eastern Ontario and Quebec consisting of 16 properties and 991 units in exchange for share consideration and the assumption of existing mortgages (collectively, the "Transaction").

The Company and Devcore continue to make progress towards closing the Transaction and subject to receipt of final approval from the TSXV and all other conditions being satisfied or waived, including certain regulatory and lender approvals, the Company expects that the Transaction will close during the second quarter of 2024.

Refinancing Activity:

On April 3, 2024, the Company refinanced its mortgage on the 5 Woodhollow Park property and entered into a new $9.3 million CMHC-insured mortgage for a ten-year term with a fixed interest rate of 4.40%. The new mortgage replaced the maturing $7.5 million mortgage.

On April 23, 2024, the Company refinanced its mortgage on the 49 Noel property and entered into a new $9.4 million CMHC-insured mortgage for a ten-year term with a fixed interest rate of 4.18%. The new mortgage replaced the maturing $8.7 million mortgage.

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 across Canada. 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.sedarplus.ca.

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, which can be obtained on SEDAR at www.sedarplus.ca, under NexLiving's profile, as well as under Risk Factors section of the MD&A released on April 23, 2024. 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, FFO payout ratio, 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 23, 2024, 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 23, 2024. 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.

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