Invesque Inc. Reports First Quarter 2023 Results
AFFO per share Increased 100% Compared to 1Q 2022 as
Senior Housing Portfolios Continue Recovery
Toronto, Ontario, May 10, 2023 – Invesque Inc. (TSX: IVQ.U and IVQ) (the “Company”) today announced its results for the three months ended March 31, 2023.
First Quarter and Subsequent Highlights
- As previously announced, on January 20, 2023, the Company entered into a purchase and sale agreement to sell MetroWest Medical Center in Orlando, FL, for US$6.4 million. The sale occurred on April 7, 2023, and the Company used proceeds to repay indebtedness associated with its remaining medical office buildings.
- As previously announced, on February 27, 2023, the Company entered into a purchase and sale agreement to sell eight skilled nursing facilities the Company currently leases to SymCare. The due diligence period associated with the transaction has lapsed, and buyer’s obligations to close are supported by a US$2 million non-refundable deposit. Parties are completing documents required for closing and seeking final regulatory approvals. The Company expects to consummate the transaction before the end of the second quarter.
- On April 1, the Company entered into a 15-year lease with Chapters Living (“Chapters”) to manage three standalone memory care communities in Texas (2) and Arkansas (1). Chapters managed the portfolio under an interim management structure during the month of April and received full licensure approval effective May 1. These communities were previously managed by Memory Care of America.
- On April 10, the Company closed on the acquisition of a 34-unit memory care community in Carrollton, Texas. The community is being operated by Constant Care Management Company (“Constant Care”), one of the Company’s preferred operating partners, pursuant to a long-term lease. The Company had previously acquired the first mortgage on the community through a HUD Note Sale Auction on December 5th, 2022. The Company’s investment is less than $90,000 per unit.
- Reported funds from operations (“FFO”)[1] of US$0.12 per common share for the three months ending March 31, 2023. The Company reported adjusted funds from operations (“AFFO”)[2] of US$0.12 per common share for the three months ending March 31, 2023.
“We continue to make strides repositioning our portfolio for future success and creating a portfolio of private pay seniors housing assets, operated by some of the country’s best operators” commented Scott White, Chairman & Chief Executive Officer. “I am thrilled to add Chapters to our roster of operating partners, and very excited we were able to acquire an additional community for the Constant Care team to manage.” Regarding the Company’s operating performance, Chief Investment Officer Adlai Chester remarked, “This quarter illustrates the outcome of our strategy to streamline our portfolio and focus on our strongest producing assets. Our portfolio included nearly 20 fewer properties compared to the first quarter of 2022, but our bottom-line results doubled, which was precisely the desired outcome.”
[1] FFO is a measure used by management to evaluate operating performance. Please refer to the section “Non-IFRS Measures” in this press release for more information.
[2] AFFO is a measure used by management to evaluate operating performance. Please refer to the section “Non-IFRS Measures” in this press release for more information.
[3] Excludes three medical office buildings held for sale as of March 31, 2023.
Financial Highlights
| Three months ended March 31, | ||
|---|---|---|
| (in thousands of U.S dollars, except per share values) | 2023 | 2022 |
| Revenue | $49,541 | $48,594 |
| Net income (loss) | $(15,598) | $3,337 |
| FFO | $6,903 | $3,906 |
| FFO per share | $0.12 | $0.07 |
| AFFO | $6,571 | $3,194 |
| AFFO per share | $0.12 | $0.06 |
Balance Sheet and Portfolio Highlights
| (in thousands of U.S. dollars, except number of properties) | March 31, 2023 | December 31, 2022 | |
|---|---|---|---|
| Total assets | 1,082,108 | 1,097,340 | |
| Number of properties[1] | 77 | 77 | |
| Debt | 769,970 | 765,457 |
Investor Conference Call
A conference call hosted by the Company’s executive team will be held on May 11, 2023, at 10:00 AM EST. The dial-in numbers for the conference call are Local Toronto: (416) 764-8650, or North American Toll-Free: (888) 664-6383. The conference will also be available via webcast at https://www.invesque.com/company-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) 764-8677, or North American Toll Free: (888) 390-0541. The Passcode for the taped replay is 864983#.
About Invesque
The Company is a North American health care real estate company with an investment thesis focused on the premise that an aging demographic in North America will continue to utilize health care services in growing proportion to the overall economy. The Company currently capitalizes on this opportunity by investing in a portfolio of income-generating predominantly private pay seniors housing communities. The Company’s portfolio includes investments primarily in independent living, assisted living, and memory care, which are operated under long-term leases and joint venture arrangements with industry-leading operating partners. The Company’s portfolio also includes investments in owner-occupied seniors housing properties in which the Company owns the real estate, the licensed operations, and provides management services through Commonwealth Senior Living, LLC, a Delaware limited liability company (“Commonwealth”).
Forward-Looking Information
This press release (this “Press Release”) contains certain forward-looking information and/or statements (“forward-looking statements”), that reflect and are provided for the purpose of presenting information about management’s current expectations and plans relating to the future, including, without limitation, statements regarding the Company’s utilization of proceeds of dispositions and statements regarding the closing of the sale of eight skilled nursing facilities the Company currently leases to SymCare. Forward-looking information is typically identified by terms such as “anticipate,” “believe,” “continue,” “expect,” “expectations,” “look,” “may,” “plan,” “project,” “should,” “will,” and other similar expressions that do not relate solely to historical matters and suggest future outcomes or events. Readers should not place undue reliance on forward-looking statements and are cautioned that forward-looking statements may not be appropriate for other purposes. Forward-looking statements in this Press Release are based on current beliefs, expectations, and certain assumptions of the Company’s management, including that any conditions relating to the sale of the Company’s Symcare leased facilities will be satisfied or waived and such transactions will be completed when currently expected. Forward-looking statements in this Press Release are subject to significant known and unknown risks, uncertainties, and other factors that are beyond the Company’s ability to predict or control, including the risk that the sale of one or more of the Company’s medical office buildings will not close due to the inability to satisfy closing conditions, and may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The Company’s actual results may differ as a result of various factors, including without limitation, the negative impact of COVID-19 pandemic on the Company’s business and the business of operators/tenants, including without limitation, uncertainty regarding the duration and severity thereof and negative economic conditions arising therefrom, uncertainty regarding implementation and impact of existing and future stimulus and other Covid-19 relief legislation, laws, orders, and guidance throughout the United States and Canada may be available to operators/tenants to offset the costs and conditions related thereto, and the extent to which support may terminate upon termination of any federally declared public health emergency, the negative effect of travel bans and restrictions, stay-at-home orders, social distancing guidelines, limitations on other business activities, staffing shortages, increased costs, and the impact on occupancy rates in our communities in connection therewith, rent deferral rates, the ability of operators/tenants to comply with infection control and vaccine protocols, and the long-term impact of vaccines on facility infection rates; the status of the economy; the status of capital markets, including, without limitation, availability and cost of capital; issues facing the health care industry, including, without limitation, compliance with, and changes to, regulations and payment policies, responding to government investigations and settlements and operators’/tenants’ ability to cost effectively obtaining and maintaining adequate liability and other insurance; the risk that the Company’s operators/tenants and borrowers may become subject to bankruptcy or insolvency proceedings; changes in financing terms; competition throughout the health care and senior housing industries; the operating results or financial condition of operators/tenants, including, without limitation, their ability to pay rent and repay loans, the Company’s ability to transition, buy, or sell properties with profitable results as and when anticipated, and occupancy levels; the effect of other factors affecting the Company’s business and facilities outside of the Company’s or operators’/tenants control, including without limitation, natural disasters, other health crises or pandemics, governmental action, particularly in the healthcare industry, protests, strikes, and shortages in supply chains, as well as the risks described in the Company’s current annual information form and management’s discussion and analysis, available on SEDAR at www.sedar.com, which risks may be dependent on market factors and not entirely within the Company’s control. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations of the Company as of the date of this Press Release and speak only as of the date of this Press Release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which are given as of the date hereof, and not to use such forward-looking statements for anything other than the intended purpose. Further, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements contained in this Press Release are expressly qualified by this cautionary statement.
Non-IFRS Measures
The Company reports its financial results in accordance with International Financial Reporting Standard (“IFRS”). Included in this Press Release are certain non-IFRS financial measures as supplemental indicators used by the Company’s management to track the Company’s performance. These non-IFRS measures are NOI, FFO, and AFFO. The Company believes that these non-IFRS financial measures provide useful information to both the Company’s management and investors in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. For a full definition of these measures, please refer to the Financial Measures section of the March 31, 2023, MD&A available on the Company’s website and on SEDAR at www.sedar.com, which information is incorporated herein by reference, and the full reconciliation to which are included below.
FFO Tables
| Three months ended March 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Net loss from continuing operations for the period | $(11,013) | $5,667 |
| Add/(deduct): | ||
| Change in fair value of investment properties | (164) | (41) |
| Property taxes accounted for under IFRIC 21 | 9,058 | 8,515 |
| Depreciation and amortization expense | 3,626 | 3,719 |
| Amortization of tenant inducements | 61 | 61 |
| Accretion expense and amortization of non-cash adjustments to the 2016 Convertible Debentures | 725 | 922 |
| Change in fair value of financial instruments | 2,937 | (12,839) |
| Loss on sale of property, plant and equipment | (12) | (1,333) |
| Deferred income tax recovery | — | (1,127) |
| Allowance for credit losses on loans and interest receivable | 1,047 | (24) |
| Change in non-controlling interest liability in respect of the above | (35) | 130 |
| Adjustments for equity accounted entities | 824 | 23 |
| FFO from continuing operations | $7,054 | $3,673 |
| FFO from discontinued operations | (151) | 233 |
| Total FFO | $6,903 | $3,906 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,746,431 | 56,706,423 |
| Funds from operations per share | $0.12 | $0.07 |
AFFO Tables
| Three months ended March 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Cash flows provided by (used in) operating activities | $(4,482) | $1,923 |
| Change in non-cash working capital | 9,197 | 1,505 |
| Less: interest expense | (9,919) | (9,680) |
| Less: change in non-controlling interest liability | (67) | (236) |
| Plus: loss from joint ventures | (24) | (448) |
| Plus: interest paid | 11,102 | 10,491 |
| Less: interest received | (144) | (119) |
| Plus: debt extinguishment costs | (9) | 340 |
| Plus: realized loss on currency exchange | (5) | — |
| Plus: amortization of lease asset | (62) | — |
| Plus: current income tax | 551 | — |
| Plus: transaction costs for business combination | — | — |
| Plus: non-cash portion of non-controlling interest expense | (38) | 126 |
| Plus: adjustments for equity accounted entities | 834 | (119) |
| Plus: deferred share incentive plan compensation | 340 | 140 |
| Less: capital maintenance reserve | (703) | (729) |
| Total AFFO | $6,571 | $3,194 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,746,431 | 56,706,423 |
| Adjusted Funds from operations per share | $0.12 | $0.06 |
Contact: ir@invesque.com