Invesque Inc. Reports First Quarter 2024 Results
Divested $68 Million of Skilled Nursing Facilities During the Quarter,
Continuing to Focus on Seniors Housing Assets and Improving Balance Sheet
TORONTO, ON, May 9, 2024 – Invesque Inc. (TSX: IVQ.U and IVQ) (the “Company”) today reported its results for the three months ended March 31, 2024.
First Quarter and Subsequent Highlights
As previously announced, completed the following sales during the first quarter of 2024:
- On January 31, 2024, sold a seniors housing community in South Carolina for gross proceeds of US$4.0 million.
- On February 29, 2024, sold two skilled nursing facilities in Pennsylvania previously operated under a triple-net lease for gross proceeds of US$12.9 million.
- On March 5, 2024, sold three skilled nursing facilities in Texas and Missouri previously operated under a triple-net lease for gross proceeds of US$55.5 million.
As previously announced, on March 5, 2024, the Company executed an amendment to its credit agreement with KeyBank. Subject to the Company meeting specific conditions, including further repayment of the outstanding principal balance, the amendment provides for the reduction of several covenant requirements associated with the debt.
On April 15, 2024, IVQ Stock Holding Company, LLC (“ISHC”) completed its previously announced acquisition of 16,982,283 common shares previously owned by affiliates of Tiptree, Inc. Following the transaction, Tiptree no longer owns or controls any shares in the Company.
Reported funds from operations (“FFO”) (1) of US$0.04 per common share for the three months ending March 31, 2024. The Company reported adjusted funds from operations (“AFFO”) (2) of US$0.04 per common share for the three months ending March 31, 2024.
“In the past ninety days, the Company has made great strides on several fronts, including the execution of an important modification with our bank group, and a reduction of skilled nursing exposure. I look forward to working with Adlai and the team to further streamline and simplify our business.” commented Quinn Haselhorst. Mr. Haselhorst will assume the Chief Financial Officer role for Invesque effective May 10, 2024.
[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 evaluation operating performance. Please refer to the section “Non-IFRS Measures” in this press release for more information.
Financial Highlights
| Three months ended March 31, | ||
| (in thousands of U.S dollars, except per share values) | 2024 | 2023 |
| Revenue | $46,642 | $49,541 |
| Net income (loss) | $(6,244) | $(15,598) |
| FFO (1) | $2,504 | $6,903 |
| FFO per share | $0.04 | $0.12 |
| AFFO (2) | $2,081 | $6,571 |
| AFFO per share | $0.04 | $0.12 |
Balance Sheet and Portfolio Highlights
| (in thousands of U.S. dollars, except number of properties) | March 31, 2024 | December 31, 2023 | |
| Total assets | $749,343 | $828,283 | |
| Number of properties (3) | 58 | 66 | |
| Debt | $521,299 | $588,245 |
[3] Excludes two medical office buildings and three seniors housing communities held for sale as of March 31, 2024. Excludes two medical office buildings and one seniors housing community held for sale as of December, 2023.
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.
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, the disposition by the Company of assets. Forward-looking information is typically identified by terms such as “anticipate,” “believe,” “continue,” “expect,” “expectations,” “look,” “may,” “plan,” “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 and are subject to significant known and unknown risks, uncertainties, and other factors that are beyond the Company’s ability to predict or control 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. These risks include the inability of the Company to divest certain assets on terms favorable to the Company or at all. The Company’s actual results may differ because of various factors, including without limitation, the risks described in the Company’s current annual information form and management’s discussion and analysis, available on SEDAR+ at www.sedarplus.ca, 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 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, 2024, MD&A available on the Company’s website and on SEDAR at www.sedarplus.ca, which information is incorporated herein by reference, and the full reconciliation of which is included below.
FFO Tables
| Three months ended March 31, | ||
| 2024 | 2023 | |
| Net loss from continuing operations for the period | $(5,834) | $(11,013) |
| Add/(deduct): | ||
| Change in fair value of investment properties | (4,092) | (164) |
| Property taxes accounted for under IFRIC 21 | 4,451 | 9,058 |
| Depreciation and amortization expense | 3,458 | 3,626 |
| Amortization of tenant inducements | 61 | 61 |
| Accretion expense and amortization of non-cash adjustments to the 2016 Convertible Debentures | 2,148 | 725 |
| Change in fair value of financial instruments | 381 | 2,937 |
| Tansaction Costs | 276 | — |
| Debt extinguishment costs | — | — |
| Loss on sale of property, plant and equipment | (8) | (12) |
| Impairment of property, plant and equipment | 1,376 | — |
| Deferred income tax recovery | (889) | — |
| Allowance for credit losses on loans and interest receivable | 260 | 1,047 |
| Change in non-controlling interest liability in respect of the above | 2 | (35) |
| Adjustments for equity accounted entities | 1,302 | 824 |
| FFO from continuing operations | $2,892 | $7,054 |
| FFO from discontinued operations | (388) | (151) |
| Total FFO | $2,504 | $6,903 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,658,322 | 56,746,431 |
| Funds from operations per share | $0.04 | $0.12 |
AFFO Tables
| Three months ended March 31, | ||
| 2024 | 2023 | |
| Cash flows provided by (used in) operating activities | $640 | $(4,482) |
| Change in non-cash working capital | 3,514 | 9,197 |
| Less: interest expense | (10,597) | (9,919) |
| Less: change in non-controlling interest liability | (124) | (67) |
| Plus: loss from joint ventures | (1,206) | (24) |
| Plus: interest paid | 9,414 | 11,102 |
| Less: interest received | (170) | (144) |
| Plus: debt extinguishment costs | (412) | (9) |
| Plus: realized loss on currency exchange | 7 | (5) |
| Plus: amortization of lease asset | 36 | (62) |
| Plus: current income tax | — | 551 |
| Plus: non-cash portion of non-controlling interest expense | 14 | (38) |
| Plus: adjustments for equity accounted entities | 1,322 | 834 |
| Plus: deferred share incentive plan compensation | 15 | 340 |
| Less: capital maintenance reserve | (372) | (703) |
| Total AFFO | $2,081 | $6,571 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,658,322 | 56,746,431 |
| Adjusted Funds from operations per share | $0.04 | $0.12 |
Contact: ir@invesque.com