Chartwell Provides Business Update Related to COVID-19 Pandemic
MISSISSAUGA, ON, Oct. 14, 2020 /CNW/ - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) issued the following statement related to the ongoing COVID-19 pandemic:
Business Update
As Canada's largest owner and operator of seniors living residences with 196 residences and 29,300 suites under management, Chartwell plays a vital role for our residents, their families and our staff during these challenging times and our priority continues to be their safety and wellbeing. As case counts have increased this fall, our employees continue to stay focused and dedicated, demonstrating exceptional courage and commitment, working together to keep our residents, their families and each other safe.
Due to the uncertainty of the effects of COVID-19, on April 16, 2020, we withdrew our 2020 Outlook contained in our 2019 MD&A. The COVID-19 pandemic has introduced significant uncertainties as discussed in the "Forward-Looking Information and COVID-19 Risk" section of our Q2 2020 MD&A.
As of October 14, 2020, eight of our retirement residences and five of our long term care homes have been declared by public health to be in COVID-19 outbreak.
Restrictions on residence visits during this pandemic continue to have a negative impact on our occupancy levels. Tours by or on behalf of prospective residents were not permitted in our retirement residences during the beginning of the pandemic. The gradual reopening that occurred through the summer months has allowed the majority of our retirement residences to have on-site personalized tours unless in outbreak. Recently, restrictions were introduced in respect of personalized tours for residences in regions of Ontario experiencing higher community cases. We continue to utilize our live virtual personalized tours where we are not permitted to conduct in-person prospective resident tours, or where preferred by the prospective resident.
The following table provides an update in respect of our same property retirement occupancy:
One month ended | One month ended | One month ended | One month ended | |
Same property retirement occupancy | 83.5% | 82.9% | 82.4% | 82.2% |
Change from the previous month (1) | (0.6pp) | (0.5pp) | (0.2pp) | |
The pace of decline in same property retirement occupancy continued to slow, with move-in activity steadily increasing month-over-month in 2020 and representing approximately 65% of September 2019 volumes. Move-out activity continues to be below previous-year levels and in September 2020 was approximately 85% of September 2019 primarily due to reduced departures to long term care, particularly in Ontario. Same property retirement leasing activity in September 2020 represented approximately 70% of September 2019.
Our tenant credit quality remains strong given the typical investment profile of Canadian seniors in our target customer demographic. Substantially all September and October rent and service charges have been collected, consistent with our past experience.
We expect to continue to incur higher-than-normal operating costs in our retirement residences and long term care homes as a result of investments in additional staffing, in particular related to screening, housekeeping, extended dining services, additional care services, personal protective equipment and supplies.
The Ontario government has announced additional funding of over $500 million for long-term care as follows:
- $405 million for infection prevention, staffing and personal protective equipment;
- $61.4 million for minor capital repairs and renovations;
- $40 million to support homes affected by the changes in occupancy due to COVID-19; and
- $30 million to hire more infection prevention and control staffing.
Although the details of the new funding are not fully available, we estimate that this will defray a substantial portion of the investments in measures to prevent and contain the spread of COVID-19, including enhanced care and staffing levels, that we have made in our long term care homes to date.
Financial Position
At October 14, 2020, liquidity (2) amounted to $391.0 million, which included $85.0 million of cash and cash equivalents and $306.0 million of available borrowing capacity on our credit facilities. In addition, Chartwell's share of cash and cash equivalents held in its equity-accounted joint ventures was $12.7 million.
At October 14, 2020, we have $38.1 million of mortgage maturities remaining in 2020, of which $12.4 million are CMHC insured, and includes $23.9 million related to a mortgage on a property acquired from Batimo Inc. ("Batimo") in the first half of 2020, that we expect to replace with a CMHC-insured mortgage. We have $244.9 million of mortgage maturities in 2021, of which $37.5 million are CMHC insured. We have strong lending relationships and scheduled refinancings of our mortgage maturities in 2020 and 2021 are proceeding in the normal course. In addition, we have over $925 million of unencumbered assets and a conservative capital structure that allows us to access further debt if needed.
We will continue to evaluate further opportunities to increase liquidity, including accessing CMHC top-up programs as we have historically and delaying certain capital investments, potential development and redevelopment project expenditures. We expect to be able to meet all of our obligations as they become due utilizing primarily the following sources of liquidity: (i) cash flow generated from our operations, (ii) property-specific mortgages, and (iii) secured and unsecured credit facilities.
Footnotes | |
(1) | 'pp' means percentage points. |
(2) | Liquidity is a measure used by management in evaluating operating and financial performance. Please refer |
About Chartwell
Chartwell is an unincorporated, open-ended real estate trust which indirectly owns and operates a complete range of seniors housing communities, from independent supportive living through assisted living to long term care. It is the largest operator in the Canadian seniors living sector with over 200 quality retirement communities in four provinces, including properties under development. Chartwell is committed to its vision of Making People's Lives BETTER and to providing a happier, healthier and more fulfilling life experience for its residents. For more information, visit www.chartwell.com
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 Chartwell and the seniors housing industry. 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 our control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. 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 more fully described in the "Risks and Uncertainties" section in Chartwell's 2019 MD&A and in materials filed with the securities regulatory authorities in Canada from time to time, including but not limited to our most recent Annual Information Form.
Non-GAAP Financial Measures
Chartwell's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain financial measures to assess Chartwell's operating and financial performance, which are measures not defined in generally accepted accounting principles ("GAAP") under IFRS. The following measures, FFO, FFO per unit, same property adjusted NOI, liquidity, interest coverage ratio and net debt to adjusted EBITDA ratio as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS. They are presented because management believes these non-GAAP financial measures are relevant and meaningful measures of Chartwell's performance and as computed may differ from similar computations as reported by other issuers and may not be comparable to similarly titled measures reported by such issuers. For a full definition of these measures, please refer to the Q2 2020 MD&A available on Chartwell's website and at www.sedar.com.
SOURCE Chartwell Retirement Residences
Chartwell Retirement Residences, Sheri Harris, Chief Financial Officer, Tel: (905) 501-6777, slharris@chartwell.com
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