Mainstreet Health Investments Inc. Announces Second Quarter 2016 Results
TORONTO, AUGUST 10, 2016 – Mainstreet Health Investments Inc. (TSX: HLP.U) (the “Company”) today announced its results for the three and six months ended June 30, 2016. All dollar amounts are stated in US dollars unless otherwise noted.
Significant Activity
During the second quarter of 2016, the Company executed the following key transactions as part of an overall strategic initiative to position the Company as a long term owner of high-quality senior housing and care real estate:
- April 4, 2016: Completed the previously announced reverse takeover of Kingsway Arms Retirement Residences Inc. and changed the name to Mainstreet Health Investments Inc.
- April 29, 2016: Completed the previously announced acquisition of a senior healthcare property that completes an 11 building portfolio operated under a single master lease.
- June 2, 2016: Completed a public offering of the Company’s common shares in the amount of $95.0 million. On June 21, 2016, the Company issued additional common shares for gross proceeds of approximately $14.3 million upon the exercise of the underwriters’ over-allotment option.
- June 2, 2016: Completed the previously announced acquisition of ten senior housing and care properties with the proceeds from the public offering.
Please refer to the Recent Activities section of the Company’s Q2 2016 MD&A available on the Company’s website and at sedar.com for more information.
Financial Highlights
| (in thousands of U.S dollars) | Three months ended June 30, 2016 |
Six months ended June 30, 2016 |
| Revenue | $8,625 | $15,979 |
| Operating expense | $1,396 | $1,888 |
| Finance costs | $4,030 | $8,471 |
| Net loss and comprehensive loss | $(773) | $(2,178) |
| Funds from operations (“FFO”) (1) | $1,815 | $3,082 |
| Adjusted funds from operations (“AFFO”) (1) | $3,848 | $7,171 |
| (1) | FFO and AFFO are measures used by management to evaluate operating performance. Please refer to the section “Non-IFRS Measures” in this press release for more information. | ||||||||||
Revenues for the three and six months ended June 30, 2016, consist primarily of $6.3 million and $11.7 million, respectively, of rent received under triple-net leases with operators of the Company’s properties. The Company added 11 senior healthcare assets to the portfolio during the second quarter of 2016.
Operating expenses are comprised of management fees paid to an affiliate of the Company and general and administrative expenses. Finance costs are primarily comprised of interest expense relating to the financing of asset acquisitions.
Balance Sheet and Portfolio Highlights
| (in thousands of U.S. dollars, except number of properties) | June 30, 2016 | December 31, 2015 |
| Cash | $18,071 | $7,189 |
| Total assets | $418,882 | $279,053 |
| Number of owned properties | 21 | 10 |
| Debt | $181,156 | $144,692 |
The overall increase in the Company’s assets and debt is the result of the Company raising approximately $110.0 millionthrough a public offering in June and the acquisition of 11 senior housing and care properties. At June 30, 2016, cash on hand totaled $18.1 million, the available borrowing capacity on the Company’s secured credit facility was $31.6 millionand the Company’s debt to gross book value was 43.2%.
Subsequent Events
- On August 5, 2016, the Company closed on the previously announced acquisition of the Hearth at Greenpoint, a 186 suite independent living and assisted living community located near Syracuse, NY.
- The Company announced that it will provide mezzanine and preferred equity funding towards three seniors housing and care development projects located in the Southwest United States. All three projects will be developed by Mainstreet Property Group, LLC and are expected to begin construction this year. The transaction is subject to TSX acceptance and approval.
“We are excited to return to Canada with the launch of Mainstreet Health Investments,” said Adlai Chester, chief executive officer of the Company. “Our results this quarter are reflective of closing on several strategic transactions, the full effect of which will be reflected in future quarters. These transactions serve as a catalyst for our long-term strategy to create a high-quality portfolio of healthcare real estate.”
Investor Conference Call
A conference call hosted by the Company’s senior management team will be held Thursday, August 11, 2015 at 10:00 AM ET. The telephone numbers for the conference call are: Local: (647) 427-7450 or Toll Free: (888) 231-8191. The passcode for the conference call is: 50443678#. The conference will also be available via webcast at www.mainstreethealthinvestments.com/investor-events-and-presentations. Please log on at least 15 minutes before the call commences.
The telephone numbers to listen to the call after it is completed (taped replay) are: Local: (416) 849-0833 or Toll Free: (855) 859-2056. The Passcode for the taped replay is 50443678#.
About Mainstreet Health Investments
Mainstreet Health Investments Inc. is a North American healthcare real estate company with a growing portfolio of high quality properties located in the United States. Our properties are operated by best-in-class healthcare providers under long-term, triple net leases. Our mission is to create long-term shareholder value while providing an investment opportunity that matters. For more information, visit www.mainstreethealthinvestments.com.
Forward-Looking Information
This press release contains forward-looking information that reflects the current expectations of management about the future results and opportunities for the Company. Forward-looking statements generally can be identified by words such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans”, “project”, or “continue” or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect the Company’s current beliefs and are based on information currently available to management. 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 or performance to vary from those current expectations or estimates expressed or implied by the forward-looking information. See risk factors highlighted in materials filed with the securities regulatory authorities in Canada from time to time, including, but not limited to, the Company’s prospectus dated May 26, 2016 available on SEDAR at www.sedar.com.
Non-IFRS Measures
The Company reports its financial results in accordance with International Financial Reporting Standard (“IFRS”). Included in this news release are certain non-IFRS financial measures as supplemental indicators used by management to track the Company’s performance. The following measures, FFO and AFFO, do not have a standardized definition prescribed by IFRS.
The Company believes that these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. These measures may not be comparable to similar measures presented by other real estate investment trusts or enterprises, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. For a full definition of these measures and a reconciliation to net loss for the three and six months ended June 30, 2016, please refer to the Financial Measures section of the Q2 2016 MD&A available on the Company’s website and at sedar.com.
SOURCE Mainstreet Health Investments Inc. 
For further information: Investors: Mr. Randy Henry, Director – Investor Relations, 1-317-582-6971, rhenry@maininvest.com; Media: Ms. Ashley Mattox, Communications Manager, 1-317-582-6986, amattox@maininvest.com