Invesque Inc. Reports Fourth Quarter and Full-Year 2022 Results
Invesque Sold $224 Million of Non-Strategic Assets in 2022 Continuing to Execute on its Strategy to Simplify the Portfolio and Focus on Private Pay Seniors Housing
Toronto, Ontario, March 15, 2023 – Invesque Inc. (TSX: IVQ.U and IVQ) (the “Company”) today announced its results for the three and twelve months ended December 31, 2022.
Fourth Quarter and Subsequent Highlights
- During the fourth quarter and subsequent to year-end, the Company made continued progress on its strategy to exit the medical office portfolio.
- On November 28, 2022, the Company sold the Brantford Medical Center in Brantford, ON, for approximately CAN$7.8 million. Having completed the sale, the Company no longer owns any medical office properties in Canada.
- On January 20, 2023, the Company entered into a purchase and sale agreement to sell MetroWest Medical Center in Orlando, FL, for US$6.4 million. The transaction remains subject to the purchaser’s right to terminate the purchase agreement as a result of (i) due diligence findings, (ii) title and survey objections, and (iii) other closing conditions. The Company expects to consummate the transaction before the end of the second quarter.
- The Company has two remaining medical office buildings in the United States. Sales of both are expected to occur over the next few months.
- On February 27, 2023, the Company entered into a purchase and sale agreement to sell eight skilled nursing facilities the Company currently leases to SymCare for US$125 million. The transaction remains subject to the purchaser’s right to terminate the purchase agreement as a result of (i) due diligence findings, (ii) title and survey objections, and (iii) other closing conditions. The Company expects to consummate the transaction before the end of the second quarter.
- Named one of the Best Places to Work in Indiana by the Indiana Chamber of Commerce and Best Company Group for the fourth consecutive year.
- Reported funds from operations (“FFO”)(1) of US$0.12 and US$0.42 per common share for the three and twelve months ending December 31, 2022. The Company reported adjusted funds from operations (“AFFO”)(1)of US$0.10 and US$0.39 per common share for the three and twelve months ending December 31, 2022.
“Over the last two years we have exited approximately $450 million in non-strategic assets as we streamline and simplify our portfolio, our balance sheet, and our story. I am very pleased with the pace of executing this transformation of our company,” commented Scott White, Chairman & Chief Executive Officer. “I am also delighted to announce that we have reached an agreement to sell the remaining SymCare leased properties. This is a key element of the strategy we announced last year to become a predominantly private pay seniors housing company. At closing, we estimate that 80% of our portfolio’s NOI will be related to seniors housing investments, a substantial increase from the beginning of 2021.”
Financial Highlights
| Three months ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| (in thousands of U.S dollars, except per share values) | 2022 | 2021 | 2022 | 2021 |
| Revenue | $50,044 | $47,851 | $198,035 | $196,147 |
| Net Income (loss) | ($30,965) | ($5,453) | ($48,810) | ($12,235) |
| FFO(1) | $6,852 | $5,996 | $23,940 | $26,748 |
| FFO per share | $0.12 | $0.11 | $0.42 | $0.47 |
| AFFO(1) | $5,611 | $5,317 | $22,071 | $25,046 |
| AFFO per share | $0.10 | $0.09 | $0.39 | $0.44 |
(1) FFO and AFFO are measures 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) | December 31, 2022 | December 31, 2021 |
|---|---|---|
| Total assets | $1,097,340 | $1,301,011 |
| Number of properties | 77(2) | 102(3) |
| Debt | $765,457 | $893,746 |
(2) Excludes three medical office buildings held for sale as of December 31, 2022.
(3) Excludes the asset held for sale as of December 31, 2021.
Investor Conference Call
A conference call hosted by the Company’s senior management team will be held on March 16, 2023, at 10:00 AM EST. The telephone numbers for the conference call are Local Toronto: (647) 794-4605, or North American Toll-Free: (888) 204-4368. The passcode for the conference call is 8323836. The conference will also be available via webcast at https://www.invesque.com/company-presentations/. 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: (647) 436-0148, or North American Toll Free: (888) 203-1112. The Passcode for the taped replay is 8323836.
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 (“Commonwealth”).
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, statements regarding the Company’s utilization of proceeds of dispositions and statements regarding the closing of the sale of certain of the Company’s medical office buildings. Forward-looking information is typically identified by terms such as “anticipate,” “believe,” “continue,” “expect,” “expectations,” “look,” “may,” “plan,” “project,” “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 of the Company’s management, including that any conditions relating to the sale of the Company’s medical office buildings or the sale of the Company’s Symcare leased facilities will be satisfied or waived and such transactions will be completed when currently expected. Forward-looking statements in this Press Release are subject to significant known and unknown risks, uncertainties, and other factors that are beyond the Company’s ability to predict or control, including the risk that the sale of one or more of the Company’s medical office buildings will not close due to the inability to satisfy closing conditions, 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. The Company’s actual results may differ as a result of various factors, including without limitation, the negative impact of COVID-19 pandemic on the Company’s business and the business of operators/tenants, including without limitation, uncertainty regarding the duration and severity thereof and negative economic conditions arising therefrom, uncertainty regarding implementation and impact of existing and future stimulus and other Covid-19 relief legislation, laws, orders, and guidance throughout the United States and Canada may be available to operators/tenants to offset the costs and conditions related thereto, and the extent to which support may terminate upon termination of any federally declared public health emergency, the negative effect of travel bans and restrictions, stay-at-home orders, social distancing guidelines, limitations on other business activities, staffing shortages, increased costs, and the impact on occupancy rates in our communities in connection therewith, rent deferral rates, the ability of operators/tenants to comply with infection control and vaccine protocols, and the long-term impact of vaccines on facility infection rates; the status of the economy; the status of capital markets, including, without limitation, availability and cost of capital; issues facing the health care industry, including, without limitation, compliance with, and changes to, regulations and payment policies, responding to government investigations and settlements and operators’/tenants’ ability to cost effectively obtaining and maintaining adequate liability and other insurance; the risk that the Company’s operators/tenants and borrowers may become subject to bankruptcy or insolvency proceedings; changes in financing terms; competition throughout the health care and senior housing industries; the operating results or financial condition of operators/tenants, including, without limitation, their ability to pay rent and repay loans, the Company’s ability to transition, buy, or sell properties with profitable results as and when anticipated, and occupancy levels; the effect of other factors affecting the Company’s business and facilities outside of the Company’s or operators’/tenants control, including without limitation, natural disasters, other health crises or pandemics, governmental action, particularly in the healthcare industry, protests, strikes, and shortages in supply chains, as well as the risks described in the Company’s current annual information form and management’s discussion and analysis, available on SEDAR at www.sedar.com, 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 of the Company 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 September 30, 2022, MD&A available on the Company’s website and on SEDAR at www.sedar.com, which information is incorporated herein by reference, and the full reconciliation to which are included below.
FFO Tables
| Three months ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Net loss from continuing operations for the period | ($25,993) | $111 | ($42,010) | ($6,523) |
| Add/(deduct): | ||||
| Change in fair value of investment properties | 17,545 | 1,891 | 52,978 | 11,441 |
| Property taxes accounted for under IFRIC 21 | (2,798) | (2,725) | 26 | 1,226 |
| Depreciation and amortization expense | 5,744 | 3,995 | 17,059 | 22,063 |
| Amortization of tenant inducements | 60 | 65 | 242 | 292 |
| Accretion expense and amortization of non-cash adjustments to the 2016 Convertible Debentures | 679 | – | 2,883 | _ |
| Change in fair value of financial instruments | 21 | (12,556) | (23,129) | (20,137) |
| Change in fair value of contingent consideration | – | (1,263) | – | (258) |
| Loss on sale of property, plant and equipment | – | (1,160) | 3,009 | (1,214) |
| Impairment of property, plant and equipment | 4,513 | 1,100 | 4,513 | 1,100 |
| Deferred income tax recovery | – | – | (1,127) | – |
| Allowance for credit losses on loans and interest receivable | 9,239 | 530 | 16,461 | 1,196 |
| Change in non-controlling interest liability in respect of the above | (50) | (152) | 10 | (497) |
| Adjustments for equity accounted entities | (1,995) | 15,438 | (7,422) | 15,852 |
| FFO from continuing operations | $6,965 | $5,274 | $23,493 | $24,541 |
| FFO from discontinued operations | (113) | 722 | 447 | 2,207 |
| Total FFO | $6,852 | $5,996 | $23,940 | $26,748 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,488,064 | 56,412,206 | 56,634,772 | 56,312,407 |
| Funds from operations per share | $0.12 | $0.11 | $0.42 | $0.47 |
AFFO Tables
| Three months ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Cash flows provided by (used in) operating activities | ($2,375) | $7,362 | $11,912 | $18,680 |
| Change in non-cash working capital | 8,817 | (1,840) | 10,891 | 5,104 |
| Less: interest expense | (9,644) | (10,171) | (38,760) | (44,221) |
| Less: change in non-controlling interest liability | 2 | 108 | (446) | 379 |
| Plus: loss from joint ventures | 2,249 | (14,806) | 6,395 | (14,906) |
| Plus: interest paid | 8,810 | 9,875 | 40,293 | 45,882 |
| Less: interest received | (135) | (120) | (549) | (643) |
| Plus: debt extinguishment costs | (247) | 71 | 337 | 1,016 |
| Plus: realized loss on currency exchange | 409 | – | 409 | – |
| Plus: amortization of lease asset | 671 | – | 671 | – |
| Plus: transaction costs for business combination | – | – | – | – |
| Plus: non-cash portion of non-controlling interest expense | (54) | (156) | (5) | (646) |
| Plus: adjustments for equity accounted entities | (1,979) | 15,652 | (6,352) | 16,932 |
| Plus: deferred share incentive plan compensation | (184) | 173 | 192 | 793 |
| Plus: write-off of deferred financing costs from refinancing | – | – | – | – |
| Less: capital maintenance reserve | (729) | (831) | (2,917) | (3,324) |
| AFFO | $5,611 | $5,317 | $22,071 | $25,046 |
| Weighted average number of shares, including fully vested deferred shares: Basic | 56,488,064 | 56,412,206 | 56,634,772 | 56,312,407 |
| Funds from operations per share | $0.10 | $0.09 | $0.39 | $0.44 |
Contact: ir@invesque.com