Regal Lifestyle Communities Inc. Announces Results for the Quarter ended June 30, 2015
TORONTO, Aug. 12, 2015 /CNW/ - Regal Lifestyle Communities Inc. ("Regal") (TSX:RLC) announced today results for the quarter ended June 30, 2015.
Q2 2015 Highlights:
- Same home revenue increased 1.7% over last year and accretive acquisitions contributed the balance of the growth.
- Average portfolio occupancy in the second quarter of 2015 was over 94% and 80 basis points higher than Q2 2014.
- On June 18, 2015, Regal announced that it had entered into an arrangement agreement with Revera Inc. ("Revera") and Health Care REIT, Inc. ("HCN") pursuant to which Revera and HCN have agreed to indirectly acquire all of Regal's outstanding common shares for $12.00 in cash per common share by way of plan of arrangement (the "Arrangement").
Financial Highlights
| (in $000's, except for per share amounts |
Quarter |
Quarter |
Quarter |
||||||
| Weighted Average Occupancy % |
94.1% |
93.3% |
95.5% |
||||||
| Operating Revenue |
$ |
30,118 |
$ |
23,296 |
$ |
30,586 |
|||
| NOI(1) |
$ |
11,385 |
$ |
9,096 |
$ |
11,675 |
|||
| General & Administrative Expenses |
$ |
1,375 |
$ |
1,327 |
$ |
1,269 |
|||
| G&A expenses as a % of revenue |
4.6% |
5.7% |
4.1% |
||||||
| Net income (loss) for the period and comprehensive income (loss) |
$ |
133 |
$ |
(2,851) |
$ |
253 |
|||
| AFFO (1) |
$ |
5,727 |
$ |
4,623 |
$ |
6,061 |
|||
| AFFO per share - basic |
$ |
0.184 |
$ |
0.180 |
$ |
0.194 |
|||
| AFFO per share - dilutive |
$ |
0.178 |
$ |
0.173 |
$ |
0.188 |
|||
| Dividends as a % of AFFO |
95.3% |
99.2% |
90.0% |
(1) NOI, AFFO and AFFO per share basic and dilutive are measures used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.
Weighted average occupancy for the quarter ended June 30, 2015 was higher than the quarter ended June 30, 2014 by 80 basis points ("bps") but was down by 140 bps from the quarter ended March 31, 2015. The increase over last year was primarily as a result of strong occupancies in the homes acquired in 2014. General and administration expenses in the quarter ended June 30, 2015 increased by $48 or 3.6% from the quarter ended June 30, 2014 and increased $106 or 8.6% from the quarter ended March 31, 2015. The current quarter included $113 of one time charges related to write off of professional fees and other costs related to acquisitions which are no longer being pursued. General and administration as a percentage of revenue was 4.6% for the quarter ended June 30, 2015 compared to 5.7% for the quarter ended June 30, 2014 and 4.1% for the quarter ended March 31, 2015.
AFFO grew to $5,727 ($0.184 per share basic and $0.178 dilutive) for the quarter ended June 30, 2015 from $4,623 ($0.180 per share basic and $0.173 dilutive) for the quarter ended June 30, 2014 and decreased from $6,061 ($0.194 per share basic and $0.188 dilutive) for the quarter ended March 31, 2015 representing a 23.9% increase and a 5.5% decrease respectively. Increases in AFFO compared to last year were driven primarily by NOI from acquisitions, reduced by a decrease in NOI within the 14 homes within Regal's portfolio going into 2014 as a result of higher operating costs primarily relating to higher energy costs. AFFO was further reduced due to higher general and administration and finance costs associated with the acquisitions. The decrease in AFFO compared to the previous quarter was driven by reduced NOI and higher general and administration.
Operating Performance
| (in $000's) |
Quarter |
Quarter |
Increase |
Quarter |
Increase |
||||||||||
| Same Home Occupancy |
93.4% |
93.5% |
(10) bps |
95.5% |
(210) bps |
||||||||||
| Same Home Revenue |
$ |
19,606 |
$ |
19,284 |
$ |
322 |
$ |
20,097 |
$ |
(491) |
|||||
| Same Home NOI (1) |
$ |
7,104 |
$ |
7,266 |
$ |
(162) |
$ |
7,528 |
$ |
(424) |
|||||
| Acquired Homes' NOI(1) |
$ |
4,281 |
$ |
1,830 |
$ |
2,451 |
$ |
4,147 |
$ |
134 |
|||||
| Total NOI |
$ |
11,385 |
$ |
9,096 |
$ |
2,289 |
$ |
11,675 |
$ |
(290) |
(1) NOI is a measure used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.
Acquisitions in 2014 comprising of one home in Ontario, seven homes in Quebec and one home in British Columbia, contributed $10,513 in revenue and $4,281 in NOI in the quarter, accounting for a majority of the increases of 29.3% and 25.2% respectively over the prior year's quarter. The acquired homes continue to enjoy high levels of occupancy, averaging 95.7% in the quarter, excluding the lease-up property in Milton which was at 84.6%.
Same home revenue increased and NOI decreased 1.7% and 2.2% respectively, for the quarter ended June 30, 2015 compared to the same quarter last year. Same home revenue and NOI decreased by 2.4% and 5.6% respectively compared to previous quarter. Revenue decreases compared to the prior quarter were the result of lower occupancy. The increase in revenue compared to last year was offset by an increase in operating expenses driven primarily by higher compensation expense and utility costs in 2015. Same home occupancy of 93.4% was 10 bps lower than the same quarter last year and 210 bps lower than the previous quarter.
Financial Position
At June 30, 2015 net cash on hand was $0.2 million and the unused borrowing capacity on Regal's revolving credit facility was at $9.4 million.
Debt to gross book value ("GBV") was 57.9% including the convertible debenture which is at the lower end of in our target range of 55% to 60% (65% if convertible debentures are utilized). The debt service coverage ratio for the quarter ended June 30, 2015 was 1.71 times. Regal's weighted average interest rate was 3.97% (4.12% including convertible debentures, 4.00% including the revolving credit facility). Regal's debt strategy is to obtain secured mortgage financing on a primarily fixed rate, home-by-home basis with staggered maturity dates once a home reaches a stabilized lease-up level.
Regal's objectives with respect to debt financing are to: (i) achieve and maintain staggered debt maturities to lessen exposure to interest rate fluctuations and re-financing risk in any particular period; and (ii) fix the interest rates and extend loan terms as long as possible when borrowing conditions are favourable.
Arrangement
On June 18, 2015, Regal announced that it had entered into an arrangement agreement with Revera, HCN and HCN-Revera Joint Venture ULC (the "Purchaser"), a joint investment vehicle of Revera and HCN, pursuant to which the Purchaser has agreed to acquire all of the outstanding common shares of Regal at a price of $12.00 per common share in cash by way of a plan of arrangement. A special meeting of shareholders of Regal is scheduled to be held on August 18, 2015 to approve the Arrangement. Full details and the terms and conditions of the Arrangement are described in the management information circular dated July 14, 2015 ("Shareholder Meeting Circular") of Regal which is available under Regal's profile at www.sedar.com.
Investor Conference Call
Simon Nyilassy, President and Chief Executive Officer and Harry Atterton, Chief Financial Officer, will host a conference call on Thursday, August 13, 2015 at 9:00 AM ET. The telephone numbers for the conference call are: Local 416-340-2217 or Toll Free 1-888-789-9572. The passcode is #6575118.
The conference call can be replayed (Instant Replay) until September 13, 2015 by dialing: Local 905-694-9451 or Toll Free 1-800-408-3053. The passcode for the Instant Replay is #5229467. The call will also be archived on the Regal website at www.regallc.com.
About Regal Lifestyle Communities Inc.
Regal Lifestyle Communities Inc. is a corporation incorporated under the laws of the Province of Ontario which owns a portfolio of retirement communities offering a continuum of care from independent serviced living to a full range of assisted living programs. The Company's portfolio is comprised of 23 private pay retirement communities, consisting of over 3,600 suites, primarily located in the Province of Ontario and including communities located in each of the Provinces of British Columbia, Saskatchewan, Quebec and Newfoundland and Labrador.
Forward-Looking Information
This press release contains forward-looking information within the meaning of applicable
securities laws that reflects the current expectations, estimates and projections of management about the future results, performance, achievements, prospects or opportunities for the companies following the Arrangement and expectations regarding whether the Arrangement will be consummated, including whether conditions to the consummation of the Arrangement will be satisfied or the timing for completing the Arrangement. The words "may", "would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "project", "continue", "predict", "potential", or the negative of these terms or other similar expressions have been used to identify these forward-looking statements.
While we anticipate that subsequent events and developments may cause our views to change, we do not intend to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing management's views as of any date subsequent to the date of this document. Management has attempted to identify important factors below that could cause actual results, performance or achievements to vary from current expectations or estimates, expressed or implied, by the forward-looking information.
The following factors could cause actual results to differ materially from those discussed in the forward-looking information: failure to satisfy the conditions to completion of the Arrangement, including approval by shareholders of the special resolution approving the Arrangement; court approval and certain regulatory approvals in Canada; the occurrence of any event, change or other circumstance that could give rise to the termination of the Arrangement Agreement; retention of employees, tenants, suppliers and other personnel being adversely affected by uncertainty surrounding the Arrangement; and the inability to successfully integrate the operations of the companies following completion of the Arrangement.
However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. 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 not intended to represent a complete list of the factors that could affect us. See "Risks and Uncertainties" in the MD&A, "Risk Factors" in our Annual Information Form dated March 31, 2015 and risk factors highlighted in materials filed with the securities regulatory authorities in Canada from time to time, including but not limited to our Shareholder Meeting Circular. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing management's views as of any date subsequent to the date of this press release.
Non-IFRS Measures
FFO, AFFO, NOI, and Debt Service Coverage Ratio are not measures defined by International Financial Reporting Standards ("IFRS"). They are presented because management believes these non-IFRS measures are relevant and meaningful measures of Regal's performance. FFO, AFFO, NOI and Debt Service Coverage Ratio as computed may differ from similar computations as reported by other issuers and may not be comparable to those reported by such issuers. Regal's Management Discussion and Analysis of Results of Operations and Financial Condition for the quarter ended June 30, 2015 ("Q2 2015 MD&A") contains a reconciliation of net income (loss) to FFO and a reconciliation of cash provided by (used in) operating activities to AFFO and FFO for the quarter ended June 30, 2015. Detailed descriptions of the terms are contained in Regal's Q2 2015 MD&A, available at www.sedar.com.
SOURCE Regal Lifestyle Communities Inc.
Regal Lifestyle Communities Inc., Harold Atterton, Chief Financial Officer, (416) 777-9677, [email protected]
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