Regal Lifestyle Communities Inc. Announces Results for the Quarter and Year ended December 31, 2014

TORONTO, Feb. 20, 2015 /CNW/ - Regal Lifestyle Communities Inc. ("Regal") (TSX:RLC) announced today results for the quarter and year ended December 31, 2014.

Q4 2014 Highlights:

  • The acquisition of nine homes in 2014 resulted in significantly higher revenue, net operating income ("NOI") and adjusted funds from operations ("AFFO") by 61.3%, 59.9% and 50.5%, over the same quarter in the prior year, respectively.
  • Same home NOI increased 3.1% over last year and accretive acquisitions contributed the balance of the growth.
  • Average portfolio occupancy in the fourth quarter was over 95%.

Mr. Simon Nyilassy, President and CEO, said:  "The quality and high level of operational standards in our homes continue to be reflected in Regal's results". He added, "We are also pleased to see the benefits of our acquisition efforts accruing to our shareholders through accretive growth in AFFO per share."

Financial Highlights





Quarter ended
December 31

Year ended
December 31

(in $000's, except for per share amounts
and as otherwise indicated)

2014

2013

2014

2013

Weighted Average Occupancy %

95.5%

94.5%

94.4%

91.7%






Operating Revenue

$    30,325

$      18,796

$102,630

$59,366

NOI(1)

$    10,985

$        6,868

$  39,183

$22,322

General & Administrative Expenses

$      1,181

$          969

$    5,073

$  3,937

G&A expenses as a % of revenue

3.9%

5.2%

4.9%

6.6%

Net loss for the period and comprehensive loss

$       (256)

$       (1,948)

$   (4,075)

$ (3,863)






AFFO (1)

$      5,483

$        3,642

$  19,819

$12,277

AFFO per share - basic

$      0.176

$        0.176

$    0.725

$  0.633

AFFO per share - dilutive

0.171

0.168

0.699

0.626

Dividends  as a % of AFFO

99.5%

99.6%

97.4%

110.6%



(1)

NOI and AFFO per share basic and dilutive are measures used by management in evaluating operating performance.  Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.

 

Weighted average occupancy for the quarter and year ended December 31, 2014 was higher than the quarter and year ended December 31, 2013 by 100 basis points ("bps") and 270 bps respectively.  This is as a result of increases in the initial ten homes and strong occupancies in the acquired homes.  General and administration expenses increased by $212 or 21.9% from the quarter ended December 31, 2013 to the quarter ended December 31, 2014.  This is due primarily to additional administration costs necessary to support growth. General and administration as a percentage of revenue has improved to 3.9% for the quarter ended December 31, 2014 compared to 5.2% for the quarter ended December 31, 2013.

AFFO improved from $3,642 ($0.176 per share basic and $0.168 dilutive) for the quarter ended December 31, 2013 to $5,483 ($0.176 per share basic and $0.171 dilutive) for the quarter ended December 31, 2014 representing an increase of 50.5%.  For the year ended December 31, 2014, AFFO was $19,819, ($0.725 per share basic and $.0.699 dilutive), representing an increase of 61.4% over the same period last year (14.5% on a per share basis).  Increases in AFFO were driven primarily by NOI from acquisitions and increased NOI from the initial ten homes reduced by higher general and administration and finance costs associated with the acquisitions.

Operating Performance







Quarter ended
December 31, 


Year ended
December 31,


(in $000's)

2014

2013

Increase

2014

2013

Increase








Same Home Occupancy

95.6%

94.0%

160 bps 

94.2%

91.4%

280 bps 








Same Home Revenue

$  14,882

$14,349

$      533

$58,310

$ 54,918

$    3,392








Same Home NOI (1)

$    5,650

$  5,479

$      171

$23,010

$ 20,933

$    2,077

Acquired Homes' NOI(1)

$    5,335

$  1,389

$    3,946

$16,173

$   1,389

$  14,784

Total NOI

$  10,985

$  6,868

$    4,117

$39,183

$ 22,322

$  16,861



(1)

NOI is a measure used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.

 

Acquisitions since the fourth quarter of last year, comprising one home in Ontario, seven homes in Quebec and one home in British Columbia, contributed $10,466 in revenue and $4,031 in NOI in the quarter, accounting for a majority of the increases of 61.3% and 59.9% respectively over the prior year's quarter. All of these recent acquisitions continue to enjoy high levels of occupancy, averaging 95.9% in the quarter, excluding the lease up property in Milton which is currently at 84.6%.

Same home revenue and NOI increased 3.7% and 3.1%, respectively, for the quarter ended December 31, 2014 compared to the same quarter of the preceding year.  Revenue increases were the result of both higher average occupancy, which increased by 160 bps to 95.6%, and increases in monthly average rent per occupied suite.  Margins were essentially unchanged from the same quarter last year.

Same home revenue and NOI increased 6.2% and 9.9%, respectively, for the year ended December 31, 2014 compared to the same period last year.  Revenue increases were the result of increased occupancy which increased 280 bps to 94.2% and increases in monthly average rent per occupied suites.  As well margins increased to 39.5% from 38.1% as a result of improved revenue and expense management.

Financial Position

At December 31, 2014 net cash on hand was $1.0 million and the unused borrowing capacity on Regal's revolving credit facility and revolving loan was at $18.2 million.

Debt to gross book value ("GBV") was 57.8% including the convertible debenture which is at the lower end of in our target range of 55% to 60% (65% if convertible debentures are utilized). The debt service coverage ratio for the quarter ended December 31, 2014 was 1.4 times. Regal's weighted average interest rate is 3.99% (4.13% including convertible debentures). Regal's debt strategy is to obtain secured mortgage financing on a primarily fixed rate, property-by-property basis with staggered maturity dates once a property reaches a stabilized lease-up level.

Regal's objectives with respect to debt financing are to: (i) achieve and maintain staggered debt maturities to lessen exposure to interest rate fluctuations and re-financing risk in any particular period; and (ii) fix the interest rates and extend loan terms as long as possible when borrowing conditions are favourable.

Investor Conference Call

Simon Nyilassy, President and Chief Executive Officer and Harold Atterton, Chief Financial Officer, will host a conference call on Monday, February 23, 2015 at 9:00am ET.  The telephone numbers for the conference call are:  Local 416-340-2217 or Toll Free 1- 888-789-9572.  The participant passcode is # 7620615.

The conference call can be replayed (Instant Replay) until March 26, 2015 by dialing:  Local 905-694-9451 or Toll Free 1-800-408-3053.  The passcode for the Instant Replay is # 6072322.  The call will also be archived on the Regal website at www.regallc.com.

About Regal Lifestyle Communities Inc.

Regal Lifestyle Communities Inc. is a corporation incorporated under the laws of the Province of Ontario which owns a portfolio of retirement communities offering a continuum of care from independent serviced living to a full range of assisted living programs. The Company's portfolio is comprised of 23 private pay retirement communities, consisting of over 3,600 suites, primarily located in the Province of Ontario and including communities located in each of the Provinces of British Columbia, Saskatchewan, Quebec and Newfoundland and Labrador.

Forward-Looking Information

This press release contains forward-looking information that reflects the current expectations, estimates and projections of management about the future results, performance, achievements, prospects or opportunities for Regal and the seniors housing industry. The words such as "may", "would", "could", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "project", "continue" and similar expressions have been used to identify these forward-looking statements. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond management's control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.

While we anticipate that subsequent events and developments may cause our views to change, we do not intend to update this forward-looking information, except as required by applicable securities laws. 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 management's views as of any date subsequent to the date of this document. Management has attempted to identify important factors that could cause actual results, performance or achievements to vary from current expectations or estimates, expressed or implied, by the forward-looking information.

However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

These factors are not intended to represent a complete list of the factors that could affect us. See "Risks and Uncertainties" in the MD&A, "Risk Factors" in the prospectus and risk factors highlighted in materials filed with the securities regulatory authorities of Canada from time to time, including but not limited to Regal's most recent annual information form.

Non-IFRS Measures

FFO, AFFO, NOI, and Debt Service Coverage Ratio are not measures defined by International Financial Reporting Standards ("IFRS"). They are presented because management believes these non-IFRS measures are relevant and meaningful measures of Regal's performance. FFO, AFFO, NOI and Debt Service Coverage Ratio as computed may differ from similar computations as reported by other issuers and may not be comparable to those reported by such issuers. Regal's Management Discussion and Analysis of Results of Operations and Financial Condition for the quarter and year ended December 31, 2014 ("Q4 2014 MD&A") contains a reconciliation of net income (loss) to FFO and a reconciliation of cash provided by (used in) operating activities to AFFO and FFO for the quarter and year ended December 31, 2014. Detailed descriptions of the terms are contained in Regal's Q4 2014 MD&A, available at www.sedar.com.

SOURCE Regal Lifestyle Communities Inc.

For further information: Regal Lifestyle Communities Inc., Harold Atterton, Chief Financial Officer, (416) 777-9677, hatterton@regallc.com

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Regal Lifestyle Communities Inc.

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