Invesque Reports Second Quarter 2023 Results
Meaningful Progress on Portfolio Repositioning Continues
Toronto, Ontario, August 14, 2023 – Invesque Inc. (TSX: IVQ.U and IVQ) (the “Company”) today announced its results for the three and six months ended June 30, 2023.
Second Quarter and Subsequent Highlights
The Company had a busy second quarter, continuing to streamline and strengthen the portfolio through dispositions, operator transitions, and an acquisition. As previously announced:
- On April 1, the Company entered into a 15-year lease with Chapters Living to manage three standalone memory care communities that were previously managed by Memory Care of America.
- On April 7, the Company sold the MetroWest Medical Center in Orlando, Florida, for US$6.4 million, utilizing proceeds to repay indebtedness associated with its remaining medical office buildings.
- On April 10, the Company acquired a 34-unit memory care community in Carrollton, Texas, which was subsequently leased to Constant Care Management Company pursuant to a long-term lease.
- The Company sold seven assets previously leased to SymCare during the second quarter, and the eighth and final asset was sold in early July, at which time Invesque ceased to lease any properties to SymCare. The total sales price for the eight skilled nursing facilities was US$121 million.
- Adlai Chester assumed the role of Chief Financial Officer in addition to EVP –Investments, effective August 1.
- On August 7, the Company announced that, in connection with the ongoing negotiations with its primary credit facility lender, it has agreed to certain payment restrictions on the amount that the Company will pay debentureholders towards the partial redemption currently scheduled to occur on September 30, 2023, of the Company’s 8.75% convertible debentures due on September 30, 2026 (the “Debentures”).
Reported funds from operations (“FFO”)[1] of US$0.10 and US$0.22 per common share for the three- and six-months ending June 30, 2023. The Company reported adjusted funds from operations (“AFFO”)[2] of US$0.10 and US$0.22 per common share for the three- and six-months ending June 30, 2023.
“Our team executed on a number of critical matters over the last 90 days. I am very pleased that we accomplished the sale of the SymCare portfolio, which represents a huge step in our efforts to become a predominantly private pay seniors housing portfolio,” commented Scott White, Chairman & Chief Executive Officer. “Our primary focus is on extensions of our largest credit facility and the partial redemption of the Debentures. We also remain vigilant about the assets comprising our portfolio and ensuring that we have the right operator in each of those assets. I am proud of our efforts year to date and believe that our Company is prepared to take advantage of the significant demand for seniors housing projected the coming years.”
[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 two medical office buildings and one skilled nursing facility held for sale as of June 30, 2023. Excludes three medical office buildings held for sale as of December 31, 2022.
Financial Highlights
| Three months ended June 30, | Six months ended June 30, | ||||
|---|---|---|---|---|---|
| (in thousands of U.S dollars, except per share values) | 2023 | 2022 | 2023 | 2022 | |
| Revenue | $50,257 | $49,732 | $99,798 | $98,326 | |
| Net income (loss) | $(45,926) | $(7,681) | $(61,524) | $(4,344) | |
| FFO | $5,824 | $6,457 | $12,727 | $10,364 | |
| FFO per share | $0.10 | $0.11 | $0.22 | $0.18 | |
| AFFO | $5,927 | $7,059 | $12,498 | $10,253 | |
| AFFO per share | $0.10 | $0.12 | $0.22 | $0.18 | |
Balance Sheet and Portfolio Highlights
| (in thousands of U.S. dollars, except number of properties) | June 30, 2023 | December 31, 2022 | |
|---|---|---|---|
| Total assets | $923,486 | $1,097,340 | |
| Number of properties[1] | 70 | 77 | |
| Debt | $656,423 | $765,457 |
Investor Conference Call
A conference call hosted by the Company’s executive team will be held on August 14, 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 405992#.
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 ability to refinance or extend the maturity on its existing credit facility and limitation of the Company’s ability to successfully amend payments required to be made in respect of the partial redemption of the Debentures currently scheduled to occur on September 30, 2023. 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 and 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 Company will not be able to refinance or extend the maturity on its existing debt facility or be able to extend the repayment required in connection with the partial redemption, 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 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 June 30, | Six months ended June 30, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Net loss from continuing operations for the period | $(46,256) | $(9,236) | $(57,269) | $(3,568) |
| Add/(deduct): | ||||
| Change in fair value of investment properties | 49,811 | 21,508 | 49,647 | 21,467 |
| Property taxes accounted for under IFRIC 21 | (5,371) | (2,864) | 3,687 | 5,651 |
| Depreciation and amortization expense | 3,633 | 3,758 | 7,259 | 7,477 |
| Amortization of tenant inducements | 61 | 61 | 122 | 121 |
| Accretion expense and amortization of non-cash adjustments to the 2016 Convertible Debentures | 775 | 647 | 1,500 | 1,569 |
| Change in fair value of financial instruments | (9,475) | (3,848) | (6,538) | (16,687) |
| Change in fair value of contingent consideration | — | — | — | — |
| Transaction Costs | 655 | — | 655 | — |
| Loss on sale of property, plant and equipment | — | 672 | (12) | (661) |
| Impairment of property, plant and equipment | — | — | — | — |
| Deferred income tax recovery | (959) | — | (959) | (1,127) |
| Allowance for credit losses on loans and interest receivable | 13,123 | 494 | 14,170 | 470 |
| Change in non-controlling interest liability in respect of the above | (35) | (32) | (70) | 98 |
| Adjustments for equity accounted entities | 4 | (5,155) | 828 | (5,132) |
| FFO from continuing operations | $5,966 | $6,005 | $13,020 | $9,678 |
| FFO from discontinued operations | (142) | 452 | (293) | 686 |
| Total FFO | $5,824 | $6,457 | $12,727 | $10,364 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,736,310 | 56,721,704 | 56,741,343 | 56,713,789 |
| Funds from operations per share | $0.10 | $0.11 | $0.22 | $0.18 |
AFFO Tables
| Three months ended June 30, | Six months ended June 30, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Cash flows provided by (used in) operating activities | $8,002 | $6,196 | $3,520 | $8,119 |
| Change in non-cash working capital | (2,046) | 1,288 | 7,151 | 2,793 |
| Less: interest expense | (9,893) | (9,781) | (19,812) | (19,461) |
| Less: change in non-controlling interest liability | (69) | (140) | (136) | (376) |
| Plus: loss from joint ventures | 1,872 | 4,373 | 1,848 | 3,925 |
| Plus: interest paid | 8,186 | 9,580 | 19,288 | 20,071 |
| Less: interest received | (112) | (151) | (256) | (270) |
| Plus: debt extinguishment costs | 366 | 254 | 357 | 594 |
| Plus: realized loss on currency exchange | (24) | — | (29) | — |
| Plus: amortization of lease asset | (64) | — | (126) | — |
| Plus: current income tax | 441 | — | 992 | — |
| Plus: transaction costs for business combination | — | — | — | — |
| Plus: non-cash portion of non-controlling interest expense | (37) | (35) | (75) | 91 |
| Plus: adjustments for equity accounted entities | 14 | (3,968) | 848 | (4,087) |
| Plus: deferred share incentive plan compensation | (6) | 173 | 334 | 313 |
| Less: capital maintenance reserve | (703) | (730) | (1,406) | (1,459) |
| AFFO | $5,927 | $7,059 | $12,498 | $10,253 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,736,310 | 56,721,704 | 56,741,343 | 56,713,789 |
| Funds from operations per share | $0.10 | $0.12 | $0.22 | $0.18 |
Contact: ir@invesque.com