Mr. Scott White reports
INVESQUE INC. REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS
Invesque Inc. has released its results for the three and 12 months ended Dec. 31, 2019. Amounts are in U.S. dollars unless otherwise stated.
Greenfield transition completion and highlights
The company is pleased to announce the receipt of licensure approval and the successful transfer of the assets formerly operated by affiliates of Greenfield Senior Living to Commonwealth Senior Living and Heritage Senior Living.
Under the arrangements with Commonwealth (which is owned by affiliates of Invesque) and Heritage, the company will benefit from a higher share of portfolio net operating income (NOI):
With 34 communities and almost 2,400 units under management, Commonwealth is the largest seniors housing operator in Virginia (27 communities) and one of the largest operators of seniors housing in the mid-Atlantic.
Commonwealth is now the company's largest source of NOI, representing over 25 per cent of Invesque's NOI on a pro forma basis.
The company completed a smooth transition of two communities to Heritage:
The two communities, located in Pennsylvania and New Jersey, are near other Invesque communities operated and managed by Heritage, thus providing strategic overlap and operational efficiencies.
The company's communities operated by Heritage represent over 8 per cent of Invesque's NOI on a pro forma basis.
The company sold the last remaining Greenfield-operated property, located in Arlington, Tex., on Feb. 28, 2020.
"We are excited to have successfully completed the transition of the former Greenfield assets in an expeditious manner with little to no disruption to the residents," commented Adlai Chester, chief investment officer for the company. "We will continue to utilize our high-quality preferred operators to reposition certain assets where we can create synergies and economies of scale. The Greenfield transition showcases our approach to streamline our portfolio with the right operator for each asset and submarket."
Fourth quarter and subsequent highlights:
- The company closed on the previously announced acquisition of three private-pay senior living communities comprising 196 units with 234 beds operated by Commonwealth. The closing represents the last three communities comprising the 20-community Commonwealth transaction announced on May 22, 2019:
The aggregate purchase price for the second tranche was approximately $55.0-million (U.S.).
The consideration was financed through a combination of the assumption of existing debt of approximately $34.5-million (U.S.), the issuance of approximately $12.1-million (U.S.) of preferred interests in the company's acquisition vehicle subsidiary and cash.
The preferred interests are similar to those issued at the closing of the first tranche of Commonwealth communities announced Aug. 1, 2019, and will be initially exchangeable by holders into common shares of the company at a fixed exchange price of $9.75 (U.S.) per Invesque common share. The preferred interests have an initial dividend rate of 6.50 per cent per annum.
- The company executed a purchase and sale agreement to acquire a 32-unit (36-bed) stand-alone memory care community operated by Constant Care Management Company in Rogers, Ark., for approximately $8.2-million (U.S.):
The community is close to 100 per cent occupied and continues to increase the company's private-pay seniors housing portfolio exposure.
The acquisition will be financed through a combination of debt and cash on hand.
Upon closing of the acquisition, the community will be added to the existing master lease and expand the company's relationship with Constant Care from seven to eight communities.
- The company closed on an approximately $1.2-million (U.S.) mezzanine loan to Ellipsis Partners to finance the development of a 38-unit (42-bed) Class A, free-standing memory care community outside of Grand Rapids, Mich., which will be operated by Constant Care upon completion:
The community is currently under construction and is being developed by Ellipsis, one of Invesque's strategic development partners, with an expected completion date of summer 2020.
The company obtained an option to purchase the community at fair market value after completion.
The company renewed its normal course issuer bid (NCIB) with an authorization to repurchase for cancellation approximately 5 per cent of Invesque's outstanding common shares as of Nov. 1, 2019, over the next 12 months.
The company was named one of the 2020 best places to work in Indiana by the Indiana Chamber of Commerce and Best Companies Group.
The company reported funds from operations (FFO) of 19 U.S. cents and 85 U.S. cents per common share for the three and 12 months, respectively, ended Dec. 31, 2019. The company reported adjusted funds from operations (AFFO) of 18 U.S. cents and 76 U.S. cents per common share for the three and 12 months, respectively, ended Dec. 31, 2019.
"With another $440-million (U.S.) of acquisitions under our belt in 2019 and a strategic shift to a majority private-pay portfolio, I am extremely pleased with the scale and diversification we have achieved with the Invesque portfolio," commented Scott White, chairman and chief executive officer for the company. "We have been laser focused on disciplined growth over the last four years to enhance diversification and mitigate operator and concentration risk. As we look forward to 2020, our key focus area will be portfolio management and opportunistically divesting non-core assets at favourable pricing to continue to redeploy capital with our preferred partners."
(in thousands of U.S dollars, except per-share values)
Three months ended Dec. 31, Year ended Dec. 31,
2019 2018 2019 2018
Revenue $51,809 $29,953 $148,407 $113,927
Net income (loss) 6,684 (33,775) (5,359) (12,275)
Funds from operations (FFO) (1) 10,547 8,596 46,122 48,219
Funds from operations per share 0.19 0.16 0.85 0.96
Adjusted funds from operations (AFFO) (1) 9,603 10,300 41,223 43,105
Adjusted funds from operations per share 0.18 0.19 0.76 0.86
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(1) FFO and AFFO are measures used by management to evaluate operating performance.
Investor conference call
A conference call hosted by the company's senior management team will be held March 12, 2020, at 10 a.m. ET. The telephone numbers for the conference call are: local: 647-427-7450 or toll-free: 888-231-8191. The passcode for the conference call is 5936508. The conference will also be available by webcast. Please log on at least 15 minutes before the call commences. The telephone numbers to listen to the call after it is completed (taped replay) are: local: 416-849-0833 or toll-free: 855-859-2056. The passcode for the taped replay is 5936508.
About Invesque Inc.
Invesque 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. Invesque currently capitalizes on this opportunity by investing in a highly diversified portfolio of income-generating properties across the health care spectrum. Invesque's portfolio includes investments in independent living, assisted living, memory care, skilled nursing, transitional care and medical office properties, which are operated primarily under long-term leases and joint venture arrangements with industry-leading operating partners. Invesque's portfolio also includes investments in owner-occupied seniors housing properties, in which Invesque owns the real estate and provides management services through its subsidiary management company, Commonwealth Senior Living.
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