Invesque Inc. Reports Fourth Quarter and Full Year 2019 Results
Toronto, Ontario, March 11, 2020 – Invesque Inc. (TSX: IVQ.U and IVQ) (the “Company” or “Invesque”) today announced its results for the three and twelve months ended December 31, 2019.
Greenfield Transition Completion and Highlights
The Company is pleased to announce the receipt of licensure approval and successful transfer of the assets formerly operated by affiliates of Greenfield Senior Living (“Greenfield”) to Commonwealth Senior Living (“Commonwealth”) and Heritage Senior Living (“Heritage”) (together the “Transition”).
- Under the arrangements with Commonwealth (which is owned by affiliates of Invesque) and Heritage, the Company will benefit from a higher share of portfolio net operating income (“NOI”).
- With 34 communities and almost 2,400 units under management, Commonwealth is the largest seniors housing operator in Virginia (27 communities) and one of the largest operators of seniors housing in the Mid-Atlantic.
- Commonwealth is now the Company’s largest source of NOI, representing over 25% of Invesque’s NOI on a pro forma basis.
- The Company successfully completed a smooth transition of two communities to Heritage.
- The two communities, located in Pennsylvania and New Jersey, are near other Invesque communities operated and managed by Heritage, thus providing strategic overlap and operational efficiencies.
- The Company’s communities operated by Heritage represent over 8% of Invesque’s NOI on a pro forma basis.
- The Company sold the last remaining Greenfield-operated property, located in Arlington, TX, on February 28, 2020.
“We are excited to have successfully completed the transition of the former Greenfield assets in an expeditious manner with little to no disruption to the residents,” commented Adlai Chester, Chief Investment Officer for the Company. “We will continue to utilize our high-quality preferred operators to reposition certain assets where we can create synergies and economies of scale. The Greenfield transition showcases our approach to streamline our portfolio with the right operator for each asset and submarket.”
Fourth Quarter and Subsequent Highlights
- Closed on the previously announced acquisition of three private pay senior living communities comprising 196 units with 234 beds operated by Commonwealth (the “Second Tranche”). The closing represents the last three communities comprising the 20-community Commonwealth transaction announced on May 22, 2019.
- The aggregate purchase price for the Second Tranche was approximately US$55.0 million.
- The consideration was funded through a combination of the assumption of existing debt of approximately US$34.5 million, the issuance of approximately US$12.1 million of preferred interests (the “Preferred Interests”) in the Company’s acquisition vehicle subsidiary, and cash.
- The Preferred Interests are similar to those issued at the closing of the first tranche of Commonwealth communities announced August 1, 2019 and will be initially exchangeable by holders into common shares of the Company at a fixed exchange price of US$9.75 per Invesque common share. The Preferred Interests have an initial dividend rate of 6.50% per annum.
- Executed a purchase and sale agreement to acquire a 32-unit (36-bed) stand-alone memory care community operated by Constant Care Management Company (“Constant Care”) in Rogers, Arkansas for approximately US$8.2 million.
- The community is close to 100% occupied and continues to grow the Company’s private pay seniors housing portfolio exposure.
- The acquisition will be funded through a combination of debt and cash on hand.
- Upon closing of the acquisition, the community will be added to the existing master lease and expand the Company’s relationship with Constant Care from seven to eight communities.
- Closed on an approximately US$1.2 million mezzanine loan to Ellipsis Partners (“Ellipsis”) to fund the development of a 38-unit (42-bed) class-A, freestanding memory care community outside of Grand Rapids, Michigan which will be operated by Constant Care upon completion.
- The community is currently under construction and is being developed by Ellipsis, one of Invesque’s strategic development partners, with an expected completion date of summer 2020.
- The Company obtained an option to purchase the community at fair market value after completion.
- Renewed the Company’s normal course issuer bid (“NCIB”) with an authorization to repurchase for cancellation approximately 5% of Invesque’s outstanding common shares as of November 1, 2019 over the next 12 months.
- Named one of the 2020 Best Places to Work in Indiana by the Indiana Chamber of Commerce and Best Companies Group.
- Reported funds from operations (“FFO”) of US$0.19 and US$0.85 per common share for the three and twelve months, respectively, ending December 31, 2019. The Company reported adjusted funds from operations (“AFFO”) of US$0.18 and US$0.76 per common share for the three and twelve months, respectively, ending December 31, 2019.
“With another US$440 million of acquisitions under our belt in 2019 and a strategic shift to a majority private pay portfolio, I am extremely pleased with the scale and diversification we have achieved with the Invesque portfolio,” commented Scott White, Chairman and Chief Executive Officer for the Company. “We have been laser-focused on disciplined growth over the last four years to enhance diversification and mitigate operator and concentration risk. As we look forward to 2020, our key focus area will be portfolio management and opportunistically divesting non-core assets at favorable pricing to continue to redeploy capital with our preferred partners.”
Financial Highlights
| Three months ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| (in thousands of U.S dollars, except per share values) | 2019 | 2018 | 2019 | 2018 |
| Revenue | $51,809 | $29,953 | $148,407 | $113,927 |
| Net income (loss) | $6,684 | ($33,775) | ($5,359) | ($12,275) |
| Funds from operations (“FFO”) (1) | $10,547 | $8,596 | $46,122 | $48,219 |
| Funds from operations per share | $0.19 | $0.16 | $0.85 | $0.96 |
| Adjusted funds from operations (“AFFO”) (1) | $9,603 | $10,300 | $41,223 | $43,105 |
| Adjusted funds from operations per share | $0.18 | $0.19 | $0.76 | $0.86 |
(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.
Balance Sheet and Portfolio Highlights
| (in thousands of U.S. dollars, except number of properties) | December 31, 2019 | December 31, 2018 |
|---|---|---|
| Total assets | $1,630,738 | $1,283,959 |
| Number of owned properties | 124 | 98 |
| Debt | $1,013,475 | $731,215 |
| Debt / Gross Book Value | 62.1% | 57.0% |
Investor Conference Call
A conference call hosted by the Company’s senior management team will be held March 12, 2020 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: 5936508. The conference will also be available via webcast at https://www.invesque.local/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) 849-0833 or Toll Free: (855) 859-2056. The Passcode for the taped replay is 5936508.
About Invesque
Invesque 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. Invesque currently capitalizes on this opportunity by investing in a highly diversified portfolio of income generating properties across the health care spectrum. Invesque’s portfolio includes investments in independent living, assisted living, memory care, skilled nursing, transitional care and medical office properties, which are operated primarily under long-term leases and joint venture arrangements with industry leading operating partners. Invesque’s portfolio also includes investments in owner-occupied seniors housing properties in which Invesque owns the real estate and provides management services through its subsidiary management company, Commonwealth Senior Living. For more information, please visit www.invesque.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, including without limitation information with respect to expected additional NOI and AFFO resulting from the Transition, the pro forma NOI from Heritage, the closing of the acquisition of a stand-alone memory care community operated by Constant Care and the proposed divestment of non-core assets. 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. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company’s control, including without limitation the risk that any one or more of the portfolios acquired will not be integrated into the Company as currently expected, the risk that expected increases to NOI and AFFO as a result of the Transition do not materialize and the risk that the Company is not able to divest its non-core assets on terms that are acceptable to it. Although the Company believes that the expectations in its forward-looking statements are reasonable, its forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information, including the assumption that the assets related to each of the transactions described in this press release will be integrated into the Company as currently expected. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements. Additional risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in the Company’s public disclosure documents available at www.sedar.com, including in the risk factors described in the Company’s current annual information form. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document 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 news release are certain non-IFRS financial measures as supplemental indicators used by 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 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 and a reconciliation to net profit for the three months and twelve months ended December 31, 2019, please refer to the Financial Measures section of the December 31, 2019 MD&A available on the Company’s website and on SEDAR at www.sedar.com.
For Information Contact:
1-317-643-4017
ir@invesque.com