16:57:33 EDT Sun 09 Aug 2020
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Chartwell Retirement Residences Real Estate I
Symbol CSH
Shares Issued 215,574,970
Close 2020-07-10 C$ 9.02
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Chartwell confirms COVID-19 cases in 4 retirement homes

2020-07-10 17:26 ET - News Release

Ms. Sheri Harris reports

CHARTWELL PROVIDES BUSINESS UPDATE RELATED TO COVID-19 PANDEMIC

Chartwell Retirement Residences Real Estate Investment Trust has issued the following statement related to the continuing 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 its residents, their families and its staff during these challenging times. Through this pandemic, its employees are demonstrating exceptional courage, commitment and dedication working together to keep residents, their families and each other safe. The company is grateful to each and every one of them.

As of July 10, 2020, four of the company's retirement residences have confirmed positive COVID-19 cases, and there are no confirmed positive COVID-19 cases in the company's long-term-care residences.

The company's regional and corporate support teams continue to work diligently to provide clear direction and timely communications to the company's residences' teams to allow them to focus on uninterrupted service and care delivery to residents. The company appreciates the overwhelming expression of gratitude, encouragement and support it has received from its residents, their families and its staff. While the company is proud of the work it has done in these challenging times, it is committed to learning from its experiences to ensure that it continues to improve. In July, 2020, the company will be conducting "listening to serve you better" surveys of its residents, their friends and families, and its staff, and has begun virtual resident and family focus groups to obtain feedback which it will then use to further enhance its operational protocols.

Due to the uncertainty of the effects of COVID-19, on April 16, 2020, the company withdrew its 2020 outlook contained in its 2019 management's discussion and analysis. The COVID-19 pandemic has introduced significant uncertainties as discussed in the forward-looking information and COVID-19 risk section of the company's first quarter 2020 MD&A.

Restrictions on residence visits during this pandemic have had and are expected to continue to have a negative impact on occupancy levels as visits by or on behalf of prospective residents have been restricted. The company believes that occupancy in its retirement residences will continue to be temporarily affected as a result of lower-than-usual marketing, sales and move-in activity. Moveout activity continues to be below prior-year levels at this time. The attached table provides an update in respect of same-property retirement occupancy.

                              SAME-PROPERTY RETIREMENT OCCUPANCY

                                 One month ended           One month ended            One month ended
                                  April 30, 2020              May 31, 2020              June 30, 2020

Same-property occupancy                     85.7%                     84.5%                      83.4%
Change from the previous month (1)                                 (1.2 pp)                   (1.1 pp)

In the month ended June 30, 2020, same-property retirement occupancy declined by 1.1 percentage points compared with the month ended May 31, 2020. The pace of decline was slightly slower than in the previous month due to higher move-in activity partially offset by higher moveout activity. July rent and service charge collections have been consistent with past experience. The company's tenant credit quality remains strong given the typical investment profile of Canadian seniors in the company's target customer demographic.

The company has updated its protocols for move-ins and visits by or on behalf of prospective residents to ensure that it prioritizes the safety and well-being of its existing residents, while also addressing the needs of seniors in the community who require its services. In June, 2020, it began accepting move-ins in all its retirement residences, other than the small number that had positive confirmed cases, and it reactivated its marketing programs. Also in June, 2020, with the permission of public health authorities and the implementation of Chartwell-designed tour protocols to reflect additional safeguards related to COVID-19 risks, the company began prospective-resident, in-person visits in certain of its B.C. residences and the majority of its Quebec residences. In the coming week, it will begin in-person prospective-resident visits in Alberta and Ontario. Where it has not been able to conduct in-person prospective-resident visits, or where preferred by the prospective resident, it has begun using its newly launched technology to enable a live virtual tour experience to conduct prospective-resident visits.

The Ontario government has announced that occupancy protection financing will be in place for the company's long-term-care residences until Dec. 31, 2020. Ontario's long-term-care financing is delivered through four distinct envelopes allocated to personal care, programming, food and administration. The first three envelopes must be spent entirely on residents and are independently audited. Any surplus financing is returned to the government on filing of the annual audited long-term-care home financial returns.

The company expects to continue to incur higher-than-normal operating costs as a result of investments in additional staffing, staff recognition, meals and accommodation to support its staff, PPE and supplies.

Financial position

At July 10, 2020, liquidity (2) amounted to $386.5-million, which included $76.5-million of cash and cash equivalents and $310.0-million of available borrowing capacity on its credit facilities. In addition, Chartwell's share of cash and cash equivalents held in its equity-accounted joint ventures was $13.2-million.

In addition, it has over $950-million of unencumbered assets and a conservative capital structure that allows the company to access further debt, if needed.

The company will continue to evaluate further opportunities to increase liquidity, including the delay of non-essential capital expenditures and certain development and redevelopment projects. It expects to be able to meet all of its obligations as they become due, utilizing primarily the following sources of liquidity: (i) cash flow generated from 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.

About Chartwell Retirement Residences Real Estate Investment Trust

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.

We seek Safe Harbor.

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