Invesque Inc. Reports Second Quarter 2021 Results
Toronto, Ontario, August 11, 2021 – Invesque Inc. (TSX: IVQ.U and IVQ) (the “Company” or “Invesque”) today announced its results for the three and six months ended June 30, 2021.
Second Quarter and Subsequent Highlights
- Closed on all phases of the series of transactions underlying the Company’s new framework for its relationship with Symphony Care Network (“SymCare”) (collectively referred to as the “Transaction”)
- Under the initial phase of the Transaction, which was completed on April 30, 2021, Invesque sold the Symphony of Chesterton facility to SymCare for US$20.0 million, netting the Company approximately US$5.5 million in net cash proceeds
- The Company also transitioned four skilled nursing facilities, all of which were previously leased to SymCare, to Cascade Capital Group (“Cascade”) on April 30, 2021
- On June 1, 2021, the Company closed on the final phase of the Transaction, which included the sale of three additional skilled nursing facilities to SymCare for approximately US$55.5 million, netting the Company approximately US$10.5 million in net cash proceeds
- SymCare funded a non-refundable cash deposit into escrow as part of its obligation to purchase Symphony of Chicago West (“Chicago West”) on or before May 1, 2024, for US$30.5 million
- SymCare and Invesque entered into an amended and restated 15-year master lease for the remaining eight properties, which will continue to be operated by SymCare
- Invesque also restructured the outstanding loan agreements with SymCare and amended the Company’s warrant interest in SymCare
- SymCare now represents less than 11% of Invesque’s pro-forma NOI, a signification reduction from approximately 30% of the Company’s NOI in 2018 and approximately 24% of the Company’s pro-forma NOI as of the first quarter of 2021
- Closed on the sale of the Company’s ownership interests in four communities to Inspirit Senior Living (“Inspirit”) for approximately US$35.5 million on July 1, 2021
- The sale of the four communities to Inspirit represented attractive pricing of approximately US$125,000 per unit on a gross basis
- The disposition provided Invesque over US$15.0 million of net cash, inclusive of funds held in escrow released back to the Company at closing
- Broke ground on the development of a 100-unit assisted living/memory care facility in Parker, CO, which is expected to have a total project cost of approximately US$32 million
- The project will be developed by Ellipsis Partners (“Ellipsis”) pursuant to the Company’s exclusive development agreement with Ellipsis, and will be operated by Health Dimensions Group (“HDG”), one of the premier operators in the seniors housing and care space
- The project is anticipated be completed by the end of 2022 and will further grow the Company’s private pay portfolio
- Executed a series of financing transactions that reduced leverage by approximately 150 basis points relative to Q1 of 2021, will provide annual cash flow savings of approximately US$3.4 million, and will provide for annual accretion of approximately US$1.9 million. These transactions included the following:
- The Company utilized its corporate credit facility with KeyBank to refinance portfolio debt of approximately US$47 million, which allows for US$2.5 million of annual cash flow savings and approximately US$1.0 million of accretion
- The Company repaid in full the US$10 million outstanding debt on the Magnetar Capital (“Magnetar”) credit facility, which provides for annual cash savings and accretion of approximately US$900,000. The Magnetar credit facility was set to mature in July of 2021 and represented the highest priced debt in Invesque’s capital stack
- Named one of the Best Places to Work in Indiana by the Indiana Chamber of Commerce and Best Companies Group for the second consecutive year
- Commonwealth Senior Living, Invesque’s subsidiary management company, was certified as a Great Place to Work® by the Great Place to Work Institute for the third consecutive year
- Reported funds from operations (“FFO”) of US$0.18 and US$0.27 per common share for the three- and six-months ending June 30, 2021, respectively. The Company reported adjusted funds from operations (“AFFO”) of US$0.16 and US$0.27 per common share for the three- and six-months ending June 30, 2021, respectively
“While the operating environment continues to present challenges as we all continue the collective battle against the global health pandemic, I am extremely pleased with our results during the second quarter,” commented Scott White, Chairman & Chief Executive Officer for the Company. “From a demand perspective, the occupancy numbers continue to trend positively. Commonwealth Senior Living, our captive operating and management company, saw strong move-ins throughout the second quarter and into July of 2021. While the global health pandemic continues to dominate the headlines and present new and unforeseen challenges, we are confident that the industry is better prepared to navigate the rapidly changing environment and well positioned for a successful long-term recovery.”
Financial Highlights
| Three months ended June 30, | Six months ended June 30, | |||
|---|---|---|---|---|
| (in thousands of U.S dollars, except per share values) | 2021 | 2020 | 2021 | 2020 |
| Revenue | $52,227 | $53,752 | $105,898 | $107,643 |
| Net loss | ($3,500) | $30,009 | ($1,700) | ($86,940) |
| Funds from operations (“FFO”) (1) | $10,075 | $10,453 | $15,107 | $24,483 |
| Funds from operations per share | $0.18 | $0.19 | $0.27 | $0.44 |
| Adjusted funds from operations (“AFFO”) (1) | $9,286 | $9,380 | $14,963 | $20,697 |
| Adjusted funds from operations per share | $0.16 | $0.17 | $0.27 | $0.37 |
(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) | June 30, 2021 | December 31, 2020 |
|---|---|---|
| Total assets | $1,399,877 | $1,498,424 |
| Number of properties | 112(1) | 121(2) |
| Debt | $977,129 | $1,052,471 |
(1) Excludes assets sold to Inspirit on July 1, 2021, and other assets held for sale as of June 30, 2021.
(2) Includes all Company Assets operated by SymCare as December 31, 2020, including properties that were sold to SymCare during 2021. Includes assets sold to Inspirit on July 1, 2021. Excludes other assets held for sale as of December 31, 2020.
Investor Conference Call
A conference call hosted by the Company’s senior management team will be held August 12, 2021, at 10:00 AM ET. The telephone numbers for the conference call are: Local: (647) 792-1241 or Toll Free: (866) 248-8441. The passcode for the conference call is: 6765752. 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: (647) 436-0148 or Toll Free: (888) 203-1112. The Passcode for the taped replay is 6765752.
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 the development of an assisted living/memory care facility in Parker, CO, and the impact of the refinancing of certain assets in the Company’s portfolio, including annual cash flow savings and accretion. 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 the development of the assisted living/memory care facility in Parker, CO does not proceed as currently contemplated or does not proceed on the current timetable or that the benefits of the refinancing of any assets in the Company’s portfolio, including annual cash flow savings and accretion, are realized. 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 development (including the costs thereof) of the assisted living/memory care facility in Parker, CO will proceed as contemplated and on the current timetable and that the benefits of the refinancing of any of the Company’s assets, including annual cash flow savings and accretion, will be realized. 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. In addition, the Company is subject to the risk and uncertainties related to the COVID-19 pandemic. In particular, a novel strain of coronavirus causing the disease known as COVID-19 has spread throughout the world, including across the United States and Canada, causing the World Health Organization to declare the COVID-19 outbreak a pandemic in March 2020. To contain the spread and impact of the pandemic, authorities throughout the United States and Canada have implemented measures such as travel bans and restrictions, stay-at-home orders, social distancing guidelines and limitations on other business activity. The pandemic has resulted in a significant economic downturn in the United States, Canada and globally, and has also led to disruptions and volatility in capital markets. The Company has already experienced negative impacts on its financial results due to the pandemic and is not able to fully quantify the impact that the COVID-19 pandemic will have on the Company’s financial results during 2021, but the Company expects that the pandemic could have a material adverse effect on its results of operations, financial position and/or cash flows, particularly if negative economic and public health conditions in the United States and Canada persist for a significant period of time. The ultimate impact of the pandemic on the Company’s financial results will depend on, among other factors, the duration and severity of the pandemic as well as negative economic conditions arising therefrom, the impact of the pandemic on occupancy rates in our communities, the volume of COVID-19 patients cared for across our portfolio, rent deferral rates, and the impact of government actions on the seniors housing industry and broader economy, including through existing and future stimulus efforts. The impact of COVID-19 has been partially offset to date by certain government stimulus programs which have helped to offset COVID-19 related expenses and compensate for lost revenues, but the Company is not able to provide assurance that such programs may continue to be available in the future. 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 to not 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. 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 six months ended June 30, 2021, please refer to the Financial Measures section of the June 30, 2021, 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