Chartwell Announces Second Quarter 2016 Results
/EINPresswire.com/ -- MISSISSAUGA, ON--(Marketwired - August 04, 2016) - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) announced today its results for the three and six months ended June 30, 2016.
Q2 2016 Highlights
- Total adjusted funds from operations ("AFFO") up $5.7 million or 16.6%
- Same property net operating income ("NOI") up $4.2 million or 8.4%
- Same property occupancy increased 1.6 percentage points to 93.4%
"Following our strong first quarter 2016 performance, our operating platforms delivered excellent results in Q2 2016 with solid growth in same property NOI and with occupancies reaching 93.4%. We are pleased to see that our consistent focus on strengthening our management platform continues to translate into impressive operating results," commented Brent Binions, President and CEO. "Looking forward, we are confident that the strategic capital allocation and financing decisions we made in 2015 and 2016, particularly in repositioning our portfolio to higher quality, internally managed assets in Canada, will continue to support our future earnings growth."
Financial Highlights
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Three Months Ended Six Months Ended
June 30 June 30
($000s, except per unit amounts and
number of units) 2016 2015 2016 2015
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AFFO - continuing operations (1)(2) $ 39,809 $ 25,903 $ 78,286 $ 49,190
AFFO per unit diluted - continuing
operations (1)(2)(3) $ 0.21 $ 0.15 $ 0.42 $ 0.28
Total AFFO (2) $ 39,809 $ 34,152 $ 78,286 $ 65,488
Total AFFO per unit diluted (2)(3) $ 0.21 $ 0.19 $ 0.42 $ 0.36
Funds from operations ("FFO") -
continuing operations (1)(2) $ 42,304 $ 28,477 $ 82,648 $ 54,260
FFO per unit diluted - continuing
operations (1)(2)(3) $ 0.22 $ 0.16 $ 0.44 $ 0.31
Total FFO (2) $ 42,304 $ 37,679 $ 82,648 $ 72,274
Total FFO per unit diluted (2)(3) $ 0.22 $ 0.21 $ 0.44 $ 0.40
Distributions declared $ 26,564 $ 24,500 $ 51,468 $ 48,615
Distributions declared per unit $ 0.14 $ 0.14 $ 0.28 $ 0.27
Distributions declared as a
percentage of total AFFO (2) 66.7% 71.7% 65.7% 74.2%
Weighted average number of units
outstanding, diluted (000s) 193,265 190,361 193,082 190,142
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(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 second quarter of 2016 was $39.8 million ($0.21 per unit diluted) compared to $25.9 million ($0.15 per unit diluted) in the second quarter of 2015. For the six-month period ended June 30, 2016, AFFO from continuing operations was $78.3 million ($0.42 per unit diluted), an increase of $29.1 million or 59.2% compared to $49.2 million ($0.28 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, primarily due to higher staffing costs incurred to support newly acquired properties and higher unit-based compensation resulting from the appreciation in value of our Trust Units. For the six-month period ended June 30, 2016, AFFO from continuing operations was also impacted by retroactive funding for three redeveloped long term care properties.
Total AFFO was $39.8 million ($0.21 per unit diluted) in the second quarter of 2016, an increase of $5.7 million or 16.6% compared to total AFFO of $34.2 million ($0.19 per unit diluted) in the second quarter of 2015. For the six-month period ended June 30, 2016, total AFFO was $78.3 million ($0.42 per unit diluted) compared to $65.5 million ($0.36 per unit diluted) in the same period of 2015.
FFO from continuing operations in the second quarter of 2016 was $42.3 million ($0.22 per unit diluted) compared to $28.5 million ($0.16 per unit diluted) in the second quarter of 2015. For the six-month period ended June 30, 2016, FFO from continuing operations was $82.6 million ($0.44 per unit diluted) compared to $54.3 million ($0.31 per unit diluted) in the same period of 2015. Total FFO in the second quarter of 2016 was $42.3 million ($0.22 per unit diluted), an increase of $4.6 million or 12.3% compared to total FFO of $37.7 million ($0.21 per unit diluted) in the second quarter of 2015. For the six-month period ended June 30, 2016, total FFO was $82.6 million ($0.44 per unit diluted) compared to $72.3 million ($0.40 per unit diluted) in the same period of 2015. In addition to the items discussed above, FFO has been impacted by changes in the amortization of financing costs and debt mark-to-market adjustments.
Operating Performance
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Three Months Ended June 30 Six Months Ended June 30
($000s, except
occupancy rates and
percentage of
revenue) 2016 2015 Change 2016 2015 Change
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Same property
occupancy (1) 93.4% 91.8% 1.6pp 93.5% 91.8% 1.7pp
Same property NOI
(2) $53,554 $49,394 $ 4,160 $ 105,565 $ 97,226 $ 8,339
G&A expenses $ 9,126 $ 7,519 $ 1,607 $ 17,347 $ 16,187 $ 1,160
G&A expenses as a
percentage of
revenue (1) (2) 4.3% 4.1% 0.2pp 4.2% 4.4% (0.2pp)
Net income/(loss)
from continuing
operations $ 3,589 $28,956 $(25,367) $(15,961) $ 17,810 $(33,771)
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(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 second quarter of 2016 improved by 1.6 percentage points compared to the second quarter of 2015, with all operating platforms delivering strong occupancy gains.
Same property NOI increased by $4.2 million or 8.4% in the second quarter of 2016, and by $8.3 million or 8.6% in the six-month period ended June 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, lower marketing, utilities and insurance expenses, 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 $1.6 million in the second quarter of 2016 and by $1.2 million in the six-month period ended June 30, 2016, compared to the same periods of 2015, primarily due to higher staffing costs incurred to provide enhanced support to our communities 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 six months ended June 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 remeasurements of previously-held interests in joint arrangements as a result of step acquisitions.
Financial Position
At June 30, 2016, cash on hand amounted to $8.0 million and the available borrowing capacity under Chartwell's credit facilities was $73.9 million.
At June 30, 2016, the Indebtedness Ratio was 48.7%, compared to 49.7% at December 31, 2015. The Interest Coverage Ratio for the three and six months ended June 30, 2016 was 3.44 and 3.35 respectively, a strong improvement from 2.60 and 2.54 in the same periods of 2015. The Net Debt to Adjusted EBITDA ratio at June 30, 2016 was 7.2 compared to 6.4 at June 30, 2015. The contractual weighted average interest rate of Chartwell's mortgage portfolio was 3.97% at June 30, 2016 with an average term to maturity of 7.2 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 Friday, August 5, 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: 9430088#. 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 4154289#. 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 Q2 2016 MD&A available at sedar.com.
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
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