MISSISSAUGA, ON, March 4, 2021 /CNW/ - Chartwell Retirement
Residences ("Chartwell") (TSX: CSH.UN) announced today its results
for the fourth quarter and for the year ended December 31, 2020.
Highlights
- Maintaining strong liquidity (1) position of
$516.2 million, which included
$126.8 million of cash and cash
equivalents at March 4, 2021.
- Focus on resident safety continues, with 90% of residents and
59% of staff in our Ontario Long Term Care ("LTC") homes, and 74%
of residents and 34% of staff in our retirement residences having
received vaccinations.
- Outbreaks and case counts continue to decline rapidly and are
limited to 16 residences as of March 4,
2021, with a total of 26 active resident cases.
- Same property adjusted net operating income ("NOI")
(1) declined 8.6% in Q4 2020 and funds from operations
("FFO") (1) down 16.2% in Q4 2020 from Q4 2019 as a
result of reduced occupancy and continued investments in resident
care and infection prevention and control measures.
"The COVID-19 pandemic has had a profound impact on the lives of
our residents, their families, and our employees. I am extremely
proud of how our people, from our residences' staff to our
corporate support teams, responded to this tremendous challenge.
Day after day they showed up and stepped up to put the safety and
well-being of our residents above anything else. Despite these
extraordinary efforts the virus tragically claimed the lives of
some of our residents. Our thoughts are with those who lost loved
ones to this disease," said Vlad
Volodarski, CEO. "This past year has been by far the
most challenging year in Chartwell's history. The impact of the
pandemic on our business has been significant - the large declines
in occupancy and the extraordinary investments incurred to protect
our residents resulted in elevated debt levels and reduced capital
allocation to our growth initiatives. Yet, I remain optimistic
about the long-term prospects of Chartwell. The accelerating growth
of the seniors population, the slow-down of new construction
starts, and the pent-up demand for our services will, I believe,
support occupancy recovery starting once various restrictions are
eased. Most of all, I am confident in the ingenuity, drive, and
commitment of our staff who are ready to welcome new residents and
create exceptional personalized experiences for them and peace of
mind for their families."
|
|
|
|
Three Months
Ended
December
31
|
Year Ended
December
31
|
($000s, except per
unit amounts and number of units)
|
2020
|
2019
|
2020
|
2019
|
Resident
revenue
|
$
|
219,034
|
$
|
221,061
|
$
|
873,966
|
$
|
860,595
|
Direct property
operating expense
|
$
|
156,381
|
$
|
152,837
|
$
|
622,499
|
$
|
590,016
|
Net
income/(loss)
|
$
|
12,182
|
$
|
(11,485)
|
$
|
14,879
|
$
|
1,067
|
FFO
(1)
|
$
|
43,496
|
$
|
51,883
|
$
|
165,861
|
$
|
199,729
|
FFO per unit
(1)
|
$
|
0.20
|
$
|
0.24
|
$
|
0.76
|
$
|
0.92
|
Weighted average
number of units outstanding (000s) (2)
|
218,312
|
216,950
|
218,212
|
216,167
|
In Q4 2020, resident revenue decreased $2.0 million or 0.9% primarily due to lower
occupancies and the disposition of properties, partially offset by
inflationary and market-based rental and service rate increases,
increased revenue from the provision of additional care and
services, pandemic-related flow-through reimbursements provided by
government to partially defray additional expenses incurred in 2020
related to the pandemic.
In Q4 2020, direct property operating expenses increased
$3.5 million or 2.3% primarily due to
pandemic-related expenses, and acquisitions and developments,
higher property tax and insurance expenses, partially offset by the
disposition of properties, lower food costs due to lower
occupancies and lower utilities expenses.
Higher gains on asset sales, lower depreciation and
amortization, and fair value gains recorded on financial
instruments were partially offset by lower revenues and higher
direct property operating expenses, share of net loss from joint
ventures, and higher finance costs resulting in Q4 2020 net income
of $12.2 million compared to a net
loss of $11.5 million in Q4 2019.
In Q4 2020, FFO decreased $8.4
million primarily due to lower same property adjusted NOI
(1), higher finance costs, lower management fees and
interest income.
For 2020, resident revenue increased $13.4 million or 1.6% primarily due to
flow-through reimbursements provided by government to partially
defray additional expenses incurred related to the pandemic,
inflationary and market-based rental and service rate increases,
and increased revenue from the provision of additional care and
services, partially offset by lower occupancies and the disposition
of properties.
For 2020, direct property operating expenses increased
$32.5 million or 5.5% primarily due
to pandemic-related expenses, acquisitions, and developments,
including pre-leasing and initial operating costs, and higher
property tax and insurance expenses, partially offset by lower food
costs due to lower occupancies, and lower marketing, repairs and
maintenance, and utilities expenses. Pandemic-related direct
property operating expenses include investments in staffing
including screening, employee meals and accommodation, compensation
to staff in our residences, personal protective equipment, and
supplies, all to support measures to reduce and prevent the spread
of COVID-19.
For 2020, net income was $14.9
million compared to $1.1
million in 2019. Net income, in addition to the items
described above, increased primarily due to gains on asset sales,
deferred tax recovery in 2020 as compared to deferred tax expense
in 2019, lower depreciation and amortization, and lower impairment
losses, partially offset by the absence of remeasurement gain in
2020 as compared to 2019, higher amortization of intangibles, share
of net loss from joint ventures, and higher finance
costs.
For 2020, FFO decreased $33.9
million primarily due to lower same property adjusted NOI
(1), higher finance costs, depreciation of property,
plant and equipment and amortization of intangible assets used for
administrative purposes, higher general, administrative and Trust
("G&A") expenses, lower interest income, and lower management
fees.
Operating Performance
|
|
|
|
Three Months Ended
December 31
|
Year Ended December
31
|
($000s, except
occupancy)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
Same property
occupancy (3)
|
82.2%
|
90.1%
|
(7.9pp)
|
85.2%
|
90.1%
|
(4.9pp)
|
Same property
adjusted NOI (1)
|
$
|
67,393
|
$
|
73,699
|
$
|
(6,306)
|
$
|
269,487
|
$
|
295,468
|
$
|
(25,981)
|
G&A
expenses
|
$
|
8,674
|
$
|
8,746
|
$
|
(72)
|
$
|
43,895
|
$
|
43,148
|
$
|
747
|
In Q4 2020, same property occupancy declined 7.9 percentage
points primarily due to reduced move-in activity partially offset
by lower move-out activity, both as a result of the pandemic.
In Q4 2020, same property adjusted NOI (1) decreased
$6.3 million or 8.6%, primarily due
to reduced revenue related to lower occupancy of $14.0 million, and higher property tax and
insurance expenses, partially offset by increases from a
combination of inflationary and market-based rental and service
rate increases and from the provision of additional care and
services, lower utilities and repairs and maintenance expenses, and
recoveries of pandemic-related expenses due to timing of government
reimbursements.
In Q4 2020, G&A expenses remained substantially the same as
in Q4 2019.
For 2020, same property occupancy declined 4.9 percentage points
primarily due to reduced move-in activity partially offset by
reduced move-out activity, both as a result of the pandemic.
For 2020, same property adjusted NOI (1) decreased
$26.0 million or 8.8%, primarily due
to reduced revenue related to lower occupancy of $35.7 million, net pandemic-related expenses of
$7.3 million and higher property tax
and insurance expenses, partially offset by increased revenue from
a combination of inflationary and market-based rental and service
rate increases and from the provision of additional care and
services, lower food costs due to reduced occupancy, and lower
marketing, utilities, and repairs and maintenance expenses.
For 2020, G&A expenses increased $0.7
million primarily due to a $0.7
million contribution to provide startup funding to support
the Senior Living CaRES fund ("the CaRES Fund") initiated by the
founding members, Chartwell, Revera Inc., Extendicare
and Sienna Senior Living, to
provide emergency funding and support to LTC home
and retirement residence employees.
Financial Position
At December 31, 2020,
liquidity (1) amounted to
$459.5 million, which included
$70.1 million of cash and cash
equivalents and $389.4 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 $6.5
million.
The interest coverage ratio (1) for the year ended
December 31, 2020 remained strong at
2.9 compared to 3.1 at December 31,
2019. The net debt to adjusted EBITDA ratio (1) at
December 31, 2020 was 9.4 compared to
8.3 at December 31, 2019.
Recent Developments
The following table provides an update in respect of our same
property retirement occupancy:
|
One month
ended
October 31,
2020
|
One month
ended
November 30,
2020
|
One month
ended
December 31,
2020
|
One month
ended
January 31,
2021
|
One month
ended
February 28,
2021
|
|
|
|
|
|
|
Same property
retirement occupancy
|
81.9%
|
81.5%
|
80.8%
|
79.8%
|
78.7%
|
Change from the previous month (1)
|
(0.3pp)
|
(0.4pp)
|
(0.7pp)
|
(1.0pp)
|
(1.1pp)
|
The pace of decline in occupancy has accelerated in December,
January, and February due to the increased restrictions on
visitation, move-in protocols, resident activities, and
personalized tours during the second wave of the pandemic. As
of March 3, 2021, the vaccination
program in our Ontario LTC homes has resulted in 90% of
residents and 59% of staff having received first doses of vaccines,
and 84% of residents and 46% of staff having received second doses
of vaccines. In our retirement residences, as of March 3, 2021, 74% of residents and 34% of staff
have received first doses of vaccines, and 23% of residents and 22%
of staff have received second doses of vaccines. Outbreaks and case
counts have significantly declined in recent weeks, with 12 of our
retirement residences and four of our Ontario LTC homes currently
declared in COVID-19 outbreak by public health, with total active
resident case counts limited to 26, with no active resident cases
in our Ontario LTC homes. As more seniors are vaccinated in
our residences and in the community at large, with expansion of
rapid testing, and the gradual easing of the restrictions, we
expect move-ins and occupancies to begin recovering.
Subsequent to December 31, 2020,
we arranged additional CMHC-insured, top-up financings on seven
properties totalling $55.0 million,
and one CMHC-insured mortgage of $7.6
million on a property which was previously unencumbered. The
weighted average term to maturity of these eight financings is 9.5
years bearing a weighted average interest rate of 2.21%. In
addition, we have refinanced $48.0
million of our 2021 mortgage maturities at a weighted
average term to maturity of 3.9 years and a weighted average
interest rate of 1.93%. As at March 4,
2021, we have $74.6 million of
mortgage maturities remaining in 2021, refinancing of which is
proceeding in the normal course. In addition, Chartwell's
share of remaining 2021 mortgage maturities held in its
equity-accounted joint ventures as at March
4, 2021, is $41.5 million,
refinancing of which is also proceeding in the normal
course.
At March 4, 2021, liquidity
(1) amounted to $516.2
million, which included $126.8
million of cash and cash equivalents and $389.4 million of available borrowing capacity on
our credit facilities. In addition, Chartwell's share of cash and
cash equivalents held in our equity-accounted joint ventures was
$13.5 million. 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.
Investor Conference Call
A conference call hosted by Chartwell's senior management team
will be held Friday, March 5, 2021
at 10:00 AM ET. The
telephone numbers for the conference call are: Local: (416)
340-2217 or Toll Free: (800) 806-5484. The passcode for the
conference call is: 1251063#. The conference call can
also be heard over the Internet by accessing the Chartwell website
at www.chartwell.com, clicking on "Investor Relations" and
following the link at the top of the page. A slide
presentation to accompany management's comments during the
conference call will be available on the website. Please log on at
least 15 minutes before the call commences.
The telephone numbers to listen to the call after it is
completed (Instant Replay) are: Local 905-694-9451 or Toll-Free
1-800-408-3053. The Passcode for the Instant Replay is 8361479#.
These numbers will be available for 90 days following the call. An
audio file recording of the call, along with the accompanying
slides, will also be archived on the Chartwell website at
www.chartwell.com.
Footnotes
|
(1)
|
FFO, FFO per unit,
same property adjusted NOI, adjusted NOI, liquidity, interest
coverage ratio and net debt to adjusted EBITDA ratio are measures
used by management in evaluating operating and financial
performance. Please refer to the cautionary statements under
the heading "Non-GAAP Financial Measures" in this press
release.
|
(2)
|
Includes Trust
Units, Class B Units of Chartwell Master Care LP, and Trust Units
issued under Executive Unit Purchase Plan and Deferred Trust Unit
Plan.
|
(3)
|
'pp' means
percentage points.
|
COVID-19 Risk Factors
Please refer to the
2020 MD&A to review risk factors to Chartwell relating to
COVID-19.
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 "COVID-19 Business Impacts and Related Risks" section, and
the "Risks and Uncertainties and Forward-Looking Information"
section in Chartwell's 2020 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
condensed consolidated interim 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, 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 2020 MD&A available on
Chartwell's website and at www.sedar.com.
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
For more information, please contact:
Chartwell Retirement Residences
Sheri Harris, Chief Financial Officer
Tel: (905) 501-6777
slharris@chartwell.com
SOURCE Chartwell Retirement Residences