Mainstreet Health Investments Inc. Reports Third Quarter 2016 Results

Announces Acquisition of Two Additional Canadian Properties

TORONTO, Nov. 8, 2016 /CNW/ - Mainstreet Health Investments Inc. (TSX: HLP.U) (the "Company") today announced its results for the three and nine months ended September 30, 2016.  All dollar amounts are stated in US dollars unless otherwise noted.

Third Quarter Highlights

  • Reported adjusted funds from operations ("AFFO") of $0.23 per common share
  • Announced acquisitions of interests in seven seniors housing and care properties and investments in five mezzanine loans
  • Announced a $74 million public offering of subscription receipts
  • Completed the previously announced acquisition of an assisted and independent living property near Syracuse, New York

The Company also announced that on November 4, 2016, it acquired a 50% interest in two assisted and independent living properties located in Timmins, Ontario and Sudbury, Ontario, together with the operating assets related thereto, on a joint venture basis with Autumnwood Lifestyles Inc. ("Autumnwood").  The two properties comprise a total of 177 assisted living and 66 independent living suites and will be subject to the joint venture arrangements entered into by the Company and Autumnwood.  The aggregate purchase price for the 50% interest in the two properties was approximately $22.6 million (assuming an exchange rate of Cdn$1.00 equals US$0.7456), which was financed by the assumption of approximately $12.9 million of property level indebtedness, cash on balance sheet and approximately $2.6 million of the Company's common shares issued to certain minority interest vendors at $10.10 per common share.

"Our third quarter results were in line with our expectations," said Adlai Chester, chief executive officer of the Company. "We were pleased to announce additional strategic acquisitions during the quarter as we look to expand our quality portfolio."

Financial Highlights





(in thousands of U.S dollars)

Three months
ended
September 30, 2016


Nine months
ended
September 30, 2016





Revenue

$

11,037


$

27,017

General and administrative expenses

$

955


$

2,843

Finance costs

$

2,396


$

10,867

Net income (loss) and comprehensive income (loss)

$

2,137


$

(41)

Funds from operations ("FFO") (1)

$

6,046


$

9,128

Adjusted funds from operations ("AFFO") (1)

$

5,511


$

12,680





(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.

 

Revenues for the three and nine months ended September 30, 2016, consist primarily of $10.9 million and $26.8  million, respectively, of rental revenue under triple-net leases with operators of the Company's properties. The Company acquired 12 seniors housing and care properties between June 2016 and August 2016.

General and administrative expenses are comprised primarily of management fees paid to an affiliate of the Company, payroll and deferred share compensation, and professional fees.

Finance costs are primarily comprised of interest expense on the Company's credit facility and mortgages payable and the amortization of loan fees. 

Balance Sheet and Portfolio Highlights





(in thousands of U.S. dollars, except number of properties)

September 30, 2016


December 31, 2015





Cash

$

7,911



$

7,189


Total assets

$

452,775



$

279,053


Number of owned properties

22



10


Debt

$

216,990



$

144,692


 

The overall increase in the Company's assets and debt is the result of the acquisition of 12 senior housing and care properties between June and August 2016.

Subsequent Events
On November 1, 2016, the Company announced it completed the previously announced acquisitions of interests in seven seniors housing and care properties and investments in five mezzanine loans.  The transaction were financed in part through a $74 million public offering which closed on October 6, 2016.  Concurrent with the completion of these acquisitions, the Company terminated its existing asset management agreement with an affiliated company, and internalized its management and support team.

On November 1, 2016, the Company exercised the accordion feature on its existing credit facility (the "Facility"), increasing the Facility's capacity from $200 million to $285 million.  The Facility is now comprised of a term loan with capacity of $200 million and a revolving line of credit with a capacity of $85 million. Also on November 1, 2016, the Company used proceeds from the additional capacity to repay in full three existing mortgages totaling approximately $35.5 million on properties located in Chesterton, Indiana; Mooresville, Indiana and Topeka, Kansas.

Please refer to the Recent Activities section of the Company's Q3 2016 MD&A available on the Company's website and on SEDAR at www.sedar.com for more information.

Investor Conference Call
A conference call hosted by the Company's senior management team will be held Wednesday, November 9, 2016 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: 94475585#. The conference will also be available via webcast at www.mainstreethealthinvestments.com/investor-events-and-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 94475585#.

About Mainstreet Health Investments
Mainstreet Health Investments Inc. is a health care real estate company with a portfolio of high quality properties located in the United States and Canada. Our properties are operated by best-in-class health care providers primarily under long-term, triple net leases. Our mission is to create long-term shareholder value while providing an investment opportunity that matters. For more information, visit www.mainstreethealthinvestments.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. 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. Such forward-looking statements reflect the Company's current beliefs and are based on information currently available to management. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing our views as of any date subsequent to the date of this document. We have attempted to identify important factors that could cause actual results or performance to vary from those current expectations or estimates expressed or implied by the forward-looking information. See risk factors highlighted in materials filed with the securities regulatory authorities in Canada from time to time, including, but not limited to, the Company's annual information form available on SEDAR at www.sedar.com.

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 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 and nine months ended September 30, 2016, please refer to the Financial Measures section of the Q3 2016 MD&A available on the Company's website and on SEDAR at www.sedar.com.

SOURCE Mainstreet Health Investments Inc.

For further information: Investors, Mr. Randy Henry, Director - Investor Relations, 1-317-582-6971, rhenry@maininvest.com; Media, Ms. Ashley Mattox, Communications Manager, 1-317-582-6986, amattox@maininvest.com


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