TORONTO, May 13, 2014 /CNW/ - Regal Lifestyle Communities Inc. ("Regal") (TSX:RLC) announced today results for the quarter ended March 31, 2014.
Q1 2014 Highlights:
- Compared to a year ago, results were substantially higher with revenue, net operating income ("NOI") and adjusted funds from operations ("AFFO") all up by 41.5%, 39.5% and 25.9%, respectively.
- Average portfolio occupancy remained above 94% for the second consecutive quarter.
- On March 31, 2014 Regal completed the acquisition of two homes for $43.7 million which increased total suite count by 9.7%.
"Our strong first quarter results were driven by both organic growth in our initial portfolio of ten homes as well as successful execution on our accretive acquisition strategy" said Mr. Simon Nyilassy, President & CEO. He added, "our four home acquisition in October 2013 has performed well and we look forward to a positive contribution in future quarters from our most recent acquisition of two homes, one in Ontario, and one in British Columbia."
The portfolio weighted average occupancy for the quarter of 94.3%, was in line with the previous quarter at 94.5%. On a same home basis, occupancy improved by 350 bps for the first quarter of 2014 compared to the first quarter of 2013. There remains opportunity for further improvements in occupancy in Brampton (Greenway) and in Ottawa (Valley Stream) where average occupancy in the quarter was 89.5% and 85.8%, respectively.
| (in $000's, except for per share amounts
and as otherwise indicated)
|Net Operating Income||$||7,431||$||5,327|
|AFFO per share - basic/dilutive||$||0.173||$||0.153|
|Dividends per share - basic/dilutive||$||0.180||$||0.175|
|Dividends as a % of AFFO||104.4%||114.5%|
| Effective Dividends (Weighted average
number of shares outstanding x Dividend
Rate x months) as a % of AFFO (3)
|(1)||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.|
|(2)||Dividends during the quarter were $3,802 compared to the first quarter of 2013 of $3,312. The increase compared to the comparable quarter in 2013 was due to the issuance of approximately 4.7 million shares since March 31, 2013, primarily due to acquisitions and earn-outs. Dividends include shares delivered to participants in the Dividend Reinvestment Plan; current participation in the plan is approximately 4.2% of outstanding shares.|
|(3)||The effective dividends paid as a percentage of AFFO ("pay-out ratio") is 101.4% for the quarter. The pay-out ratio was impacted by the closure of the most recent acquisitions on March 31, 2014 as Regal did not benefit from the NOI from the acquired homes during the quarter.|
Operating revenue and NOI increased in the first quarter of 2014 compared to the first quarter of 2013 due to growth within the initial ten homes and the addition of the four new homes acquired in October 2013. Operating revenue increased by 41.5%, with contribution to revenue by the four new homes accounting for 85.5% of the increase and the balance generated by the initial ten homes. NOI increased by 39.4%, of which 72.8% was contributed by the four new homes and the balance by the initial ten homes. As a result, AFFO increased by 25.9% from the first quarter of 2013. This strong performance reflects improvements in weighted average occupancy over the comparable quarter in 2013. The initial ten homes rose from 90.7% to 94.2% and the four new homes had weighted average occupancy of 94.4%.
Total mortgage debt is $260 million compared to $227 million at the end of the previous quarter. The increase is primarily due to the new debt obtained in conjunction with the acquisition of the two homes in the quarter. Regal's weighted average interest rate was 3.85% at the end of the quarter compared to 3.86% at the end of the previous quarter.
|(in $000's except as otherwise indicated)|| Quarter
|Weighted average occupancy %||94.3%||90.7%|
|Net operating income (NOI)(1)||$||7,431||$||5,327|
|General and Administrative ("G&A") expenses||$||1,179||$||1,075|
|G&A expenses as a % of revenue||6.1%||7.9%|
|Loss for the period and comprehensive loss||$||(1,691)||$||(711)|
|(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.|
Margins have improved on the initial ten homes to 40.7% compared to 39.0% in the first quarter of 2013. The margin for the portfolio is 38.4% in the first quarter of 2014.
General and administrative expenses of $1,179 were $104 higher than first quarter of 2013 primarily due to annual regulatory and audit fees, and additional expenses related to acquisitions.
The loss of $1.7 million was higher than the loss from the first quarter of 2013 of $0.7 million due to transaction costs of $1.4 million and increased finance costs associated with the acquisitions. The transaction costs relate to the acquisition of the two new homes in the quarter. These costs were funded in conjunction with the public offering.
At March 31, 2014 cash on hand was $14.4 million and the unused borrowing capacity on Regal's revolving credit facility and revolving loan remained at $20 million.
Debt to gross book value ("GBV") is 57.1% including the convertible debentures which is in our target range of 55% to 60% (65% if convertible debentures are utilized). The debt service coverage ratio for the quarter ended March 31, 2014 was 1.4 times. Regal's weighted average interest rate is 3.85% (4.04% 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 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. However, Regal is maintaining a shorter average maturity to start taking advantage of CMHC insured financing for which Regal expects to become eligible in 2014.
Investor Conference Call
Simon Nyilassy, President and Chief Executive Officer and Harold Atterton, Chief Financial Officer, will host a conference call on Wednesday May 14, 2014 at 2:30pm ET. The telephone numbers for the conference call are: Local (416) 695-7806 or Toll Free 1-888-798-9572. The participant passcode is #7497148.
The conference call can be replayed (Instant Replay) until June 14, 2014 by dialing: Local (905) 694-9451 or Toll Free 1-800-408-3053. The passcode for the Instant Replay is #8085800. 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. The Company's portfolio is comprised of 16 retirement communities consisting of over 2,100 suites, primarily located in the Province of Ontario and including a property located in each of the Provinces of British Columbia, Saskatchewan and Newfoundland and Labrador.
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.
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 ended March 31, 2014 ("Q1 2014 MD&A") contains a reconciliation of loss to FFO and a reconciliation of cash provided by (used in) operating activities to AFFO for the quarter ended March 31, 2014. Detailed descriptions of the terms are contained in Regal's Q1 2014 MD&A, available at www.sedar.com.
SOURCE: Regal Lifestyle Communities Inc.
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Regal Lifestyle Communities Inc.
Chief Financial Officer