Regal Lifestyle Communities Inc. Announces Results for the Quarter Ended September 30, 2014
TORONTO, Nov. 6, 2014 /CNW/ - Regal Lifestyle Communities Inc. ("Regal") (TSX:RLC) announced today results for the quarter ended September 30, 2014.
Q3 2014 Highlights:
- Compared to a year ago, results were significantly higher with revenue, net operating income ("NOI") and adjusted funds from operations ("AFFO") all up by 116.7%, 124.6% and 102.2%, respectively.
- Same home NOI increased 10.9% over last year and accretive acquisitions contributed the balance of the growth.
- Average portfolio occupancy is over 94%.
- Full quarter contribution from the seven homes acquired on June 6, 2014 contributed $3,450 of NOI.
Mr. Simon Nyilassy, President and CEO, said: "Our portfolio of 23 private pay retirement homes has once again generated impressive results, marking the fifth consecutive quarter of strong growth in virtually every category." He added: "The strength of the portfolio is underscored by the industry leading occupancy that we continue to enjoy in successive quarters."
Financial Highlights
Quarter ended |
Nine months ended September 30 |
|||||||
(in $000's, except for per share amounts |
2014 |
2013 |
2014 |
2013 |
||||
Weighted Average Occupancy % |
94.2% |
90.8% |
94.0% |
90.5% |
||||
Operating Revenue |
$ |
29,678 |
$ |
13,693 |
$ |
72,305 |
$ |
40,570 |
NOI (1) |
$ |
11,671 |
$ |
5,197 |
$ |
28,198 |
$ |
15,454 |
General & Administrative Expenses |
$ |
1,386 |
$ |
950 |
$ |
3,892 |
$ |
2,968 |
G&A expenses as a % of revenue |
4.7% |
6.9% |
5.4% |
7.3% |
||||
Net income (loss) for the period and comprehensive income (loss) |
$ |
722 |
$ |
(579) |
$ |
(3,820) |
$ |
(1,915) |
AFFO (1) |
$ |
6,071 |
$ |
3,003 |
$ |
14,336 |
$ |
8,635 |
AFFO per share - basic |
$ |
0.195 |
$ |
0.158 |
$ |
0.550 |
$ |
0.456 |
AFFO per share - dilutive |
0.188 |
0.158 |
0.530 |
0.456 |
||||
Dividends as a % of AFFO |
89.9% |
110.6% |
96.6% |
115.3% |
(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 three and nine months ended September 30, 2014 was higher than the three and nine months ended September 30, 2013 by 340 basis points ("bps") and 350 bps respectively. This is as a result of increases in the initial ten homes and high occupancies in the acquired homes. General and administration expenses increased by $436 or 45.9% from the quarter ended September 30, 2013 to the quarter ended September 30, 2014. This is due primarily to additional administration costs necessary to support recent acquisitions. General and administration as a percentage of revenue has improved to 4.7% for the quarter ended September 30, 2014 compared to 6.9% for the quarter ended September 30, 2013.
AFFO improved from $3,003 ($0.158 per share basic and dilutive) for the quarter ended September 30, 2013 to $6,071 ($0.195 per share basic and $0.188 dilutive) for the quarter ended September 30, 2014 representing an increase of 102.2% and 19.0% on a per share (dilutive) basis. For the nine months ended September 30, 2014, AFFO was $14,336 ($0.550 per share basic and $0.530 dilutive), representing an increase of 66.0% over the same period last year and 16.2% on a per share (dilutive) 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 |
Nine months |
|||||||||||
(in $000's) |
2014 |
2013 |
Increase |
2014 |
2013 |
Increase |
||||||
Same Home Occupancy |
93.8% |
90.8% |
300 bps (1) |
93.7% |
90.5% |
320 bps (1) |
||||||
Same Home Revenue |
$ |
14,523 |
$ |
13,693 |
$ |
830 |
$ |
43,428 |
$ |
40,570 |
$ |
2,858 |
Same Home NOI (2) |
$ |
5,765 |
$ |
5,197 |
$ |
568 |
$ |
17,360 |
$ |
15,454 |
$ |
1,906 |
Acquired Homes' NOI (2) |
$ |
5,906 |
$ |
- |
$ |
5,906 |
$ |
10,838 |
$ |
- |
$ |
10,838 |
Total NOI |
$ |
11,671 |
$ |
5,197 |
$ |
6,474 |
$ |
28,198 |
$ |
15,454 |
$ |
12,744 |
(1) |
Bps-basis points |
(2) |
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 third quarter of last year, comprising five homes in Ontario, seven homes in Quebec and one home in British Columbia, contributed $15,155 in revenue and $5,906 in NOI in the quarter, accounting for a majority of the increases of 116.7% and 124.6% respectively over the prior year's quarter. As the third quarter includes a full quarter of results from the homes in Quebec we have seen a significant growth over the second quarter, as anticipated. All of these recent acquisitions continue to enjoy high levels of occupancy, averaging 95.2% in the quarter, excluding the lease up property in Milton which is currently at 82.5%.
Same home revenue and NOI increased 6.1% and 10.9%, respectively, compared to the same quarter of the preceding year. Revenue increases were the result of both higher average occupancy, which increased by 300 bps to 93.8%, as well as increases in monthly average rent per occupied suite. These revenue increases combined with effective cost management resulted in an even greater improvement in NOI.
Same home margins also increased over the same quarter last year from 38.0% to 39.7%, primarily as a result of the occupancy gains mentioned above, combined with cost management initiatives which kept expense increases broadly consistent with higher occupancy levels and inflation.
Financial Position
At September 30, 2014 net cash on hand was $3.6 million and the unused borrowing capacity on Regal's revolving credit facility and revolving loan was at $19.1 million.
Debt to gross book value ("GBV") was 58.0% including the convertible debenture 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 September 30, 2014 was 1.5 times. Regal's weighted average interest rate is 3.98% (4.12% 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.
Investor Conference Call
Simon Nyilassy, President and Chief Executive Officer and Harold Atterton, Chief Financial Officer, will host a conference call on Friday, November 7, 2014 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 # 9807900.
The conference call can be replayed (Instant Replay) until December 8, 2014 by dialing: Local 905-694-9451 or Toll Free 1-800-408-3053. The passcode for the Instant Replay is # 6887381. 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 three and nine months ended September 30, 2014 ("Q3 2014 MD&A") contains a reconciliation of income (loss) to FFO and a reconciliation of cash provided by (used in) operating activities to AFFO for the quarter ended September 30, 2014. Detailed descriptions of the terms are contained in Regal's Q3 2014 MD&A, available at www.sedar.com.
SOURCE: Regal Lifestyle Communities Inc.
For further information: please contact: Regal Lifestyle Communities Inc., Harold Atterton, Chief Financial Officer, (416) 777-9677, [email protected]
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