Continued Progress Improving the Balance Sheet Via Refinancings and Asset Sales
TORONTO, Aug. 8, 2024 /CNW/ - Invesque Inc. (TSX: IVQ.U) (TSX: IVQ) (the "Company") today announced its results for the three and six months ended June 30, 2024.
Second Quarter and Recent Highlights
On June 24, 2024, the Company sold a skilled nursing facility in Glendale, Wisconsin for gross proceeds of US$5.1 million, bringing total asset sales year to date to $77.5 million.
During the second quarter, the Company refinanced and/or extended the maturity of $209.5 million of debt. These refinancings, along with the Glendale, Wisconsin SNF sale, reduced the KeyBank credit facility by approximately $33.0 million and increased the Company's consolidated average debt maturity to nearly three years.
The Company reported funds from operations ("FFO")1 of US$0.03 and $0.07 per common share for the three- and six-months ending June 30, 2024, and reported adjusted funds from operations ("AFFO")2 of US$0.02 and US$0.06 per common share for the three- and six-months ending June 30, 2024.
"We made further progress reducing our KeyBank credit facility during the second quarter and expect to continue to do so during the second half of 2024 with additional refinancings and asset sales on the horizon", commented Kari Onweller, EVP of Investments and Investor Relations of the Company. "Our primary goal as a Company right now is to right size leverage, and to achieve that goal, we expect to continue disposing assets in the coming months."
Financial Highlights
Three months ended June 30,
Six months ended June 30,
(in thousands of U.S dollars, except per share values)
2024
2023
2024
2023
Revenue
$
43,099
$
50,257
$
86,741
$
99,798
Net income (loss)
$
(15,815)
$
(45,926)
$
(22,058)
$
(61,524)
FFO
$
1,424
$
5,824
$
3,928
$
12,727
FFO per share
$
0.03
$
0.10
$
0.07
$
0.22
AFFO
$
1,111
$
5,927
$
3,192
$
12,498
AFFO per share
$
0.02
$
0.10
$
0.06
$
0.22
_____________________________
1 FFO is a measure used by management to evaluate operating performance. Please refer to the section "Non-IFRS Measures" in this press release for more information.
2 AFFO is a measure used by management to evaluate operating performance. Please refer to the section "Non-IFRS Measures" in this press release for more information.
Balance Sheet and Portfolio Highlights
(in thousands of U.S. dollars, except number of properties)
June 30, 2024
December 31, 2023
Total assets
$730,351
$828,283
Number of properties3
49
66
Debt
$516,088
$588,245
_____________________________
3 Excludes two medical office buildings and eleven seniors housing communities held for sale as of June 30, 2024. Excludes two medical office buildings and one seniors housing community held for sale as of December 31, 2023.
About Invesque
The Company is a North American health care real estate company with an investment thesis focused on the premise that an aging demographic in North America will continue to utilize health care services in growing proportion to the overall economy. The Company currently capitalizes on this opportunity by investing in a portfolio of income-generating predominantly private pay seniors housing communities. The Company's portfolio includes investments primarily in independent living, assisted living, and memory care, which are operated under long-term leases and joint venture arrangements with industry-leading operating partners. The Company's portfolio also includes investments in owner-occupied seniors housing properties in which the Company owns the real estate, the licensed operations, and provides management services through Commonwealth Senior Living, LLC, a Delaware limited liability company.
Forward-Looking Information
This press release (this "Press Release") contains certain forward-looking information and/or statements ("forward-looking statements"), that reflect and are provided for the purpose of presenting information about management's current expectations and plans relating to the future, including, without limitation, the disposition by the Company of assets. Forward-looking information is typically identified by terms such as "anticipate," "believe," "continue," "expect," "expectations," "look," "may," "plan," "should," "will," and other similar expressions that do not relate solely to historical matters and suggest future outcomes or events. Readers should not place undue reliance on forward-looking statements and are cautioned that forward-looking statements may not be appropriate for other purposes. Forward-looking statements in this Press Release are based on current beliefs, expectations, and certain assumptions and are subject to significant known and unknown risks, uncertainties, and other factors that are beyond the Company's ability to predict or control and may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. These risks include the inability of the Company to divest certain assets on terms favorable to the Company or at all. The Company's actual results may differ because of various factors, including without limitation, the risks described in the Company's current annual information form and management's discussion and analysis, available on SEDAR+ at www.sedarplus.ca, which risks may be dependent on market factors and not entirely within the Company's control. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations as of the date of this Press Release and speak only as of the date of this Press Release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which are given as of the date hereof, and not to use such forward-looking statements for anything other than the intended purpose. Further, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements contained in this Press Release are expressly qualified by this cautionary statement.
Non-IFRS Measures
The Company reports its financial results in accordance with International Financial Reporting Standard ("IFRS"). Included in this Press Release are certain non-IFRS financial measures as supplemental indicators used by the Company's management to track the Company's performance. These non-IFRS measures are NOI, FFO, and AFFO. The Company believes that these non-IFRS financial measures provide useful information to both the Company's 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, please refer to the Financial Measures section of the March 31, 2024, MD&A available on the Company's website and on SEDAR at www.sedarplus.ca, which information is incorporated herein by reference, and the full reconciliation of which is included below.
FFO Table
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Net loss from continuing operations for the period
$ (15,128)
$ (46,256)
$ (20,962)
$ (57,269)
Add/(deduct):
Change in fair value of investment properties
7,585
49,811
3,493
49,647
Property taxes accounted for under IFRIC 21
(1,609)
(5,371)
2,842
3,687
Depreciation and amortization expense
3,497
3,633
6,955
7,259
Amortization of tenant inducements
60
61
121
122
Accretion expense and amortization of non-cash adjustments to the 2016 Convertible Debentures
2,383
775
4,531
1,500
Change in fair value of financial instruments
777
(9,475)
1,158
(6,538)
Change in fair value of contingent consideration
—
—
—
—
Transaction Costs
42
655
318
655
Debt extinguishment costs
—
—
—
—
Loss on sale of property, plant and equipment
(18)
—
(26)
(12)
Impairment of property, plant and equipment
454
—
1,830
—
Executive severance
3,060
3,060
Deferred income tax recovery
(716)
(959)
(1,605)
(959)
Allowance for credit losses on loans and interest receivable
195
13,123
455
14,170
Change in non-controlling interest liability in respect of the above
(171)
(35)
(169)
(70)
Adjustments for equity accounted entities
1,299
4
2,601
828
FFO from continuing operations
$ 1,710
$ 5,966
$ 4,602
$ 13,020
FFO from discontinued operations
(286)
(142)
(674)
(293)
Total FFO
$ 1,424
$ 5,824
$ 3,928
$ 12,727
Weighted average number of shares, including fully vested deferred shares: Basic
56,678,639
56,736,310
56,668,537
56,741,343
Funds from operations per share
$ 0.03
$ 0.10
$ 0.07
$ 0.22
AFFO Table
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Cash flows provided by (used in) operating activities
$ (97)
$ 8,002
$ 543
$ 3,520
Change in non-cash working capital
(1,150)
(2,046)
2,364
7,151
Less: interest expense
(9,809)
(9,893)
(20,406)
(19,812)
Less: change in non-controlling interest liability
(188)
(69)
(312)
(136)
Plus: loss from joint ventures
(1,448)
1,872
(2,654)
1,848
Plus: interest paid
9,926
8,186
19,340
19,288
Less: interest received
46
(112)
(124)
(256)
Plus: debt extinguishment costs
—
366
(412)
357
Plus: realized loss on currency exchange
3
(24)
10
(29)
Plus: amortization of lease asset
(8)
(64)
28
(126)
Plus: current income tax
—
441
—
992
Plus: non-cash portion of non- controlling interest expense
(170)
(37)
(156)
(75)
Plus: adjustments for equity accounted entities
1,392
14
2,714
848
Plus: deferred share incentive plan compensation
(74)
(6)
(59)
334
Plus: executive severance
3,060
—
3,060
—
Less: capital maintenance reserve
(372)
(703)
(744)
(1,406)
AFFO
$ 1,111
$ 5,927
$ 3,192
$ 12,498
Weighted average number of shares, including fully vested deferred shares: Basic
