SOURCE: Chartwell Retirement Residences

Chartwell Retirement Residences

November 09, 2016 17:12 ET

Chartwell Announces Third Quarter 2016 Results

MISSISSAUGA, ON--(Marketwired - November 09, 2016) - November 9, 2016 - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) announced today its results for the three and nine months ended September 30, 2016.

Q3 2016 Highlights

  • Total adjusted funds from operations ("AFFO") up $10.2 million or 30.9%
  • Same property net operating income ("NOI") up $3.8 million or 7.3%
  • Same property occupancy increased 0.9 percentage points to 93.6%

"Building on the impressive results in the first six months of this year, our operating platforms delivered strong performance in Q3 2016, with exceptional growth in same property NOI and occupancies reaching 93.6%," commented Brent Binions, President and CEO. "With the continuing focus on enhancing resident experience through our offering of excellent services and quality care, strategic investments in upgrading our assets and growing our portfolio with high-quality developments and acquisitions, we are confident that we will continue to build long-term, sustainable value for our unitholders."

Financial Highlights

       
   Three Months Ended September 30  Nine Months Ended September 30
($000s, except per unit amounts and number of units)  2016  2015  2016  2015
                 
AFFO - continuing operations (1)(2)  $43,260  $33,047  $121,546  $82,237
AFFO per unit diluted - continuing operations (1)(2)(3)  $0.22  $0.18  $0.64  $0.46
                 
Total AFFO (2)  $43,260  $33,047  $121,546  $98,535
Total AFFO per unit diluted (2)(3)  $0.22  $0.18  $0.64  $0.55
                 
Funds from operations ("FFO") - continuing operations (1)(2)  $46,222  $35,559  $128,870  $89,819
FFO per unit diluted - continuing operations (1)(2)(3)  $0.24  $0.20  $0.68  $0.50
                 
Total FFO (2)  $46,222  $35,559  $128,870  $107,833
Total FFO per unit diluted (2)(3)  $0.24  $0.20  $0.68  $0.60
                 
Distributions declared  $27,043  $24,567  $78,511  $73,182
Distributions declared per unit  $0.14  $0.14  $0.42  $0.41
Distributions declared as a percentage of total AFFO (2)   62.5%   74.3%   64.6%   74.3%
                 
Weighted average number of units outstanding, diluted (000s)   193,591   190,846   193,252   190,383
                 
(1)Excludes results of Chartwell's U.S. operations.
(2)AFFO, AFFO per unit diluted, FFO, FFO per unit diluted and Distributions declared as a percentage of total AFFO are measures used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-GAAP Measures" in this press release.
(3)Includes dilutive effect of convertible debentures.
  

AFFO from continuing operations in the third quarter of 2016 was $43.3 million ($0.22 per unit diluted) compared to $33.0 million ($0.18 per unit diluted) in the third quarter of 2015. For the nine-month period ended September 30, 2016, AFFO from continuing operations was $121.5 million ($0.64 per unit diluted) compared to $82.2 million ($0.46 per unit diluted) in the same period of 2015. The increase in AFFO is primarily due to higher AFFO contributions from our same property portfolio, acquisitions and developments, partially offset by higher general and administrative ("G&A") expenses, as a result of higher staffing costs incurred to support newly acquired and development properties, and higher unit-based compensation resulting from the appreciation in value of our Trust Units. For the nine-month period ended September 30, 2016, AFFO from continuing operations was also positively affected by retroactive funding for three redeveloped long term care properties.

Total AFFO was $43.3 million ($0.22 per unit diluted) in the third quarter of 2016, an increase of $10.2 million or 30.9% compared to total AFFO of $33.0 million ($0.18 per unit diluted) in the third quarter of 2015. For the nine-month period ended September 30, 2016, total AFFO was $121.5 million ($0.64 per unit diluted) compared to $98.5 million ($0.55 per unit diluted) in the same period of 2015.

FFO from continuing operations in the third quarter of 2016 was $46.2 million ($0.24 per unit diluted) compared to $35.6 million ($0.20 per unit diluted) in the third quarter of 2015. For the nine-month period ended September 30, 2016, FFO from continuing operations was $128.9 million ($0.68 per unit diluted) compared to $89.8 million ($0.50 per unit diluted) in the same period of 2015.

Total FFO in the third quarter of 2016 was $46.2 million ($0.24 per unit diluted), an increase of $10.7 million or 30.0% compared to total FFO of $35.6 million ($0.20 per unit diluted) in the third quarter of 2015. For the nine-month period ended September 30, 2016, total FFO was $128.9 million ($0.68 per unit diluted) compared to $107.8 million ($0.60 per unit diluted) in the same period of 2015. In addition to the items discussed above, FFO has been affected by changes in the amortization of financing costs and debt mark-to-market adjustments.

Operating Performance

       
   Three Months Ended September 30  Nine Months Ended September 30
($000s, except occupancy rates and percentage of revenue)  2016  2015  Change  2016  2015  Change
                         
Same property occupancy (1)   93.6%   92.7%   0.9pp   93.5%   92.1%   1.4pp
                         
Same property NOI (2)  $55,896  $52,075  $3,821  $161,460  $149,301  $12,159
                         
G&A expenses  $8,264  $7,003  $1,261  $25,611  $23,190  $2,421
G&A expenses as a percentage of revenue (1) (2)   3.9%   3.7%   0.2pp   4.1%   4.2%   (0.1pp)
                         
Net income/(loss) from continuing operations  $2,425  $(4,310)  $6,735  $(13,536)  $13,500  $(27,036)
                         
(1)pp = percentage points
(2)NOI and G&A expenses as a percentage of revenue are measures used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-GAAP Measures" in this press release.
  

Same property occupancy in the third quarter of 2016 improved by 0.9 percentage points compared to the third quarter of 2015, with all operating platforms delivering strong occupancy gains.

Same property NOI increased by $3.8 million or 7.3% in the third quarter of 2016, and by $12.2 million or 8.1% in the nine-month period ended September 30, 2016, compared to the same periods of 2015, driven primarily by higher occupancies, regular annual rental rate increases in line with competitive market conditions, partially offset by higher staffing costs incurred to improve services delivered to our residents, as well as higher food, supply and administrative expenses primarily related to occupancy growth.

G&A expenses increased by $1.3 million in the third quarter of 2016 and by $2.4 million in the nine-month period ended September 30, 2016, compared to the same periods of 2015, primarily due to higher staffing costs incurred to provide enhanced support to our residences including new acquisitions and developments, and higher unit-based compensation costs resulting from the appreciation in value of our Trust Units.

In addition to the items discussed above, net income from continuing operations for the three and nine months ended September 30, 2016 was impacted by depreciation of properties, amortization of limited life intangibles, transaction costs arising on business acquisitions and dispositions, changes in fair value of financial instruments, asset impairment provisions, gain on sale of assets and re-measurements of previously-held interests in joint arrangements as a result of step acquisitions.

Financial Position

At September 30, 2016, cash on hand, including cash from Chartwell's interests in equity-accounted investments, amounted to $11.3 million and the available borrowing capacity under Chartwell's credit facilities was $56.2 million.

At September 30, 2016, the Indebtedness Ratio was 49.0%, compared to 49.7% at December 31, 2015. The Interest Coverage Ratio for the three and nine months ended September 30, 2016 was 3.75 and 3.48 respectively, a strong improvement from 3.12 and 2.72 in the same periods of 2015. The Net Debt to Adjusted EBITDA ratio at September 30, 2016 was 7.3 compared to 7.1 at September 30, 2015. The contractual weighted average interest rate of Chartwell's mortgage portfolio was 3.92% at September 30, 2016 with an average term to maturity of 7.0 years.

Chartwell's financial statements, including its Management's Discussion and Analysis ("MD&A") are available at www.chartwell.com. A detailed list of Chartwell's property portfolio can also be obtained under "Supplementary Information" in the "Investor Relations" section of the web site.

Investor Conference Call

A conference call hosted by Chartwell's senior management team will be held Thursday, November 10, 2016 at 10:00 AM ET. The telephone numbers for the conference call are: Local: (416) 340-2217 or Toll Free: (866) 696-5910. The passcode for the conference call is: 5340233#. The conference call can also be heard over the Internet by accessing the Chartwell website at www.chartwell.com, clicking on "Investor Relations" and following the link at the top of the page. A slide presentation to accompany management's comments during the conference call will be available on the website. Please log on at least 15 minutes before the call commences.

The telephone numbers to listen to the call after it is completed (Instant Replay) are: Local: (905) 694-9451 or Toll Free: (800) 408-3053. The Passcode for the Instant Replay is 6128270#. The call, along with the accompanying slides, will also be archived on the Chartwell website at www.chartwell.com.

About Chartwell

Chartwell is an unincorporated, open-ended trust which indirectly owns and operates a complete range of seniors housing communities from independent supported living through assisted living to long term care. It is the largest owner and operator of seniors residences in Canada. Chartwell's aim is to capitalize on the strong demographic trends present in its markets to maximize the value of its existing portfolio of retirement residences, and prudently avail itself of opportunities to grow internally and through accretive acquisitions.

Chartwell's Distribution Reinvestment Plan ("DRIP") allows unitholders to have their monthly cash distributions used to purchase units without incurring commission or brokerage fees, and receive bonus units equal to 3% of their monthly cash distributions. More information can be obtained at www.chartwell.com.

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. The words "plans", "expects", "does not expect", "is expected", "budget", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. 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.

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 our views as of any date subsequent to the date of this document. We have attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. 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 and risk factors highlighted 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.

Non-GAAP Measures

Chartwell's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain financial measures to assess Chartwell's financial performance, which are measures not defined in generally accepted accounting principles ("GAAP") under IFRS. The following measures, FFO, FFO per unit diluted, AFFO, AFFO per unit diluted, NOI, Same Property NOI, G&A as a Percentage of Revenue, Interest Coverage Ratio, Indebtedness Ratio, Adjusted EBITDA, Net Debt to Adjusted EBITDA Ratio and Distributions Declared as a Percentage of Total AFFO, 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 "Non-GAAP Measures" section of the Q3 2016 MD&A available at sedar.com.

Contact Information

  • For more information, please contact:

    Chartwell Retirement Residences
    Vlad Volodarski
    Chief Financial Officer and Chief Investment Officer
    Tel: (905) 501-4709
    Fax: (905) 501-9107
    vvolodarski@chartwell.com