TORONTO, Aug. 12, 2020 /CNW/ - Invesque Inc. (TSX:
IVQ.U and IVQ) (the "Company" or "Invesque") today announced its
results for the three and six months ended June 30, 2020. The
Company also announced the upcoming transition of property
management and leasing services for the Company's medical office
buildings ("MOB") portfolio to Jones Lang
LaSalle ("JLL").
MOB Portfolio Management Transition to JLL
The Company is pleased to announce the upcoming transition of
property management and leasing services for Invesque's MOB
portfolio to JLL, a Fortune 500, industry-leading real estate
services firm. JLL's world-class platform manages over 4.6 billion
square feet of commercial real estate space across the world and
over 600 million square feet in the
United States and Canada.
Invesque entered the MOB market with the acquisition of Mohawk
Medical Properties Real Estate Investment Trust and its subsidiary,
Mohawk Medical Operating Partnership (I) LP (collectively, "Mohawk
REIT") in early 2018. Since the closing of the Mohawk REIT
acquisition, Mohawk Realty Advisors Ltd., and its affiliates
("Mohawk") have provided property management and leasing services
for the MOB portfolio. Today, Invesque's MOB platform consists of
15 properties spanning approximately 578,000 square feet across
seven markets in North
America.
"We appreciate all the hard work and support the Mohawk team has
provided us over the last two years. As we continue to focus on our
2020 asset management initiative to maximize profitability across
our various business lines, we concluded that now is the right time
to expand our capabilities for the MOB platform," noted
Adlai Chester, Chief Investment
Officer for the Company. "By partnering with JLL, we will leverage
the firm's best-in-class practices, robust leasing platform, and
breadth of real estate relationships across the globe. In addition,
JLL's capital markets group will allow Invesque to gain valuable
insight into the transaction and financing markets across
North America."
JLL is proactively engaging current tenants in Invesque's MOB
portfolio as they finalize the transition plan. The transition has
been a collaborative process, with all parties playing an active
role in data aggregation and document transfer, to ensure a
seamless transfer of property management for the MOB portfolio. The
completion of the transition from Mohawk to JLL is currently
anticipated to occur in the third quarter.
"We are excited about the opportunity to partner with Invesque
to manage the Company's medical office platform," said Ron Fiell, Vice President and National Practice
Lead - Property Management with JLL. "We believe that with our
best-in-class property management and leading technology platforms,
our dedicated team of leasing agents will be able to enhance the
operations of the Invesque medical office platform."
Second Quarter and Subsequent Highlights
- Announced a series of initiatives to preserve cash and
strengthen the balance sheet.
-
- Suspension of the dividend for all common shareholders
beginning April 1, 2020, which will
result in ~US$41 million of gross
cash preservation on an annual basis.
- Corporate level cost reductions, including executive
compensation changes, personnel cost reductions and other G&A
savings, resulting in ~US$2.5 –
US$3.0 million of reduced costs in
fiscal year 2020.
- Deferral of non-essential capital expenditures, which the
Company believes will result in an additional ~US$2.5 – US$3.0
million of cash savings in fiscal year 2020.
- Invesque's subsidiary management company, Commonwealth Senior
Living ("Commonwealth" or "CSL"), has been certified as a Great
Place to Work® by the Great Place to Work Institute for the second
year in a row. The certification process considered over 950
employee surveys from across 33 locations to evaluate more the 60
elements of team members' experiences.
- Commonwealth recognized as one of Argentum's "Best of the Best"
for its partnership with Babylon Microfarms on the roll-out of its
micro-farm concept within the CSL portfolio.
- Reported funds from operations ("FFO") of US$0.19 and US$0.44
per common share for the three- and six-months ending June 30, 2020, respectively. The Company reported
adjusted funds from operations ("AFFO") of US$0.17 and US$0.37
per common share for the three- and six-months ending June 30, 2020, respectively. Excluding the impact
of COVID-19 and severance costs, FFO was US$0.21 and AFFO was US$0.19 per common share for the three-months
ending June 30, 2020,
respectively.
"The environment continues to be challenging for operators as
the world continues to struggle with the current public health
pandemic. With that said, I am pleased with our results during the
second quarter with rental collections trending higher throughout
the quarter," commented Scott White,
Chairman & Chief Executive Officer for the Company. "We are
encouraged by the trends we are seeing within our Commonwealth
portfolio in June and July with an increase in inquiries and
potential move-ins."
Financial Highlights
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
(in thousands of U.S
dollars, except per share values)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Revenue
|
$
|
53,752
|
|
$
|
28,824
|
|
|
$
|
107,643
|
|
$
|
58,048
|
|
Net loss
|
$
|
(30,009)
|
|
$
|
(16,902)
|
|
|
$
|
(86,940)
|
|
$
|
(9,697)
|
|
Funds from operations
("FFO") (1)
|
$
|
10,453
|
|
$
|
10,445
|
|
|
$
|
24,483
|
|
$
|
23,341
|
|
Funds from operations
per share
|
$
|
0.19
|
|
$
|
0.19
|
|
|
$
|
0.44
|
|
$
|
0.44
|
|
Adjusted funds from
operations ("AFFO") (1)
|
$
|
9,380
|
|
$
|
9,918
|
|
|
$
|
20,697
|
|
$
|
20,894
|
|
Adjusted funds from
operations per share
|
$
|
0.17
|
|
$
|
0.18
|
|
|
$
|
0.37
|
|
$
|
0.39
|
|
(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)
|
June 30,
2020
|
|
December 31,
2019
|
|
|
|
|
Total
assets
|
$
|
1,583,396
|
|
|
$
|
1,630,738
|
|
Number of
properties
|
121
|
|
|
124
|
|
Debt
|
$
|
1,042,342
|
|
|
$
|
1,013,475
|
|
Business Update
Rental Revenue Collections
|
Month
ended
|
|
(all figures shown
are rounded)
|
April
2020
|
May
2020
|
|
June
2020
|
|
July
2020
|
|
|
|
Senior Housing Owner
Occupied Portfolio
|
|
99%
|
99%
|
|
99%
|
|
99%
|
Medical Office
Portfolio
|
|
96%
|
93%
|
|
93%
|
|
93%
|
Triple-Net Lease
("NNN") Portfolio
|
|
73%
|
85%
|
|
85%
|
|
85%
|
Total
Portfolio
|
|
90%
|
94%
|
|
94%
|
|
94%
|
|
|
|
|
|
|
|
|
Note: All figures
above represent actual rental revenue received as a percent of
total rental revenue due as per original contracts.
|
Rent Deferral Updates
The Company granted one NNN operator a rent deferral of 25% for
the month of May, which is currently being paid to Invesque in
equal monthly installments from June
2020 through May 2021.
In addition, the Company provided Symphony Care Network
("SymCare") a rent deferral of 50% for the month of April and a
rent deferral of 25% for the months of May, June, July, and August.
Invesque's management team is in active discussions with SymCare in
light of the impact of the COVID-19 pandemic on SymCare's
operations. The Company intends to reach a solution that maximizes
value for Invesque, while placing the SymCare portfolio in a
position to succeed during the pandemic and over the long-term.
COVID-19 Update
Invesque's management team has remained in close contact with
the Company's operating partners to understand the current and
prospective impact of COVID-19 to Invesque's properties. As of
August 7, 2020, the Company has
confirmed that 70 of its 106 seniors housing and skilled nursing
properties have been impacted by COVID-19 based on positive test
results for either residents or staff members over the last few
months. Of the 70 impacted communities, 39 are subject to NNN lease
agreements. However, as of August 7,
2020, there were only 29 total patients or residents with
COVID-19 being treated and quarantined in Invesque communities. The
current rate of incidences in the Company's portfolio is
significantly below peak activity observed across the portfolio in
mid-May and has been substantially similar since the first week of
July. The cases currently being observed in the Company's skilled
nursing facilities are generally direct admissions of COVID-19
patients from hospitals to improve capacity in local health systems
and are being cared for in dedicated COVID-19 units.
"The COVID-19 pandemic has impacted every operator within our
portfolio in one way or another," commented Scott White, Chief Executive Officer for the
Company. "Most of the impact in our portfolio was observed during
the months when cases were escalating throughout the U.S. and
Canada in April and May. While we
continue to see sporadic incidences of COVID-19 in our portfolio,
the number of active cases observed each week continues to
moderate. Now our operators, and the industry, will focus on
reaching out to families who need the services our communities
provide to enhance occupancy back to pre-COVID-19 levels."
Investor Conference Call
A conference call hosted by the Company's senior management team
will be held August 13, 2020 at
10:00 AM 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: 8672199.
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: (416) 849-0833 or Toll Free: (855) 859-2056. The Passcode
for the taped replay is 8672199.
About Invesque
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. For more information, please visit www.invesque.com.
Forward-Looking Information
This press release contains forward-looking information that
reflects the current expectations of management about the future
results and opportunities for the Company, including without
limitation information with respect to the transition of property
management and leasing services for Invesque's MOB portfolio to
JLL, the Company's rent deferrals and certain expected cash savings
as a result of cost reductions and capital expenditure deferrals.
Forward-looking statements generally can be identified by words
such as "outlook", "objective", "may", "will", "expect", "intend",
"estimate", "anticipate", "believe", "should", "plans", "project",
or "continue" or similar expressions suggesting future outcomes or
events. By their nature, forward-looking statements are subject to
numerous risks and uncertainties, some of which are beyond the
Company's control, including without limitation the risk that
the transition of property management and leasing services
for Invesque's MOB portfolio to JLL is not effected as currently
expected, that the Company experiences higher rental deferrals than
currently anticipated and that the Company's expected cash savings
are not achieved. Although the Company believes that the
expectations in its forward-looking statements are reasonable, its
forward-looking statements have been based on factors and
assumptions concerning future events which may prove to be
inaccurate. Those factors and assumptions are based upon currently
available information, including the assumption that the transition
of property management and leasing services for Invesque's MOB
portfolio to JLL will be effected as currently expected, that
benefits will be realized as a result of such transition, that the
Company's currently anticipated rental deferrals do not change
materially and that there are no unexpected capital expenditures
required or other costs that offset the expected cash savings. Such
statements are subject to known and unknown risks, uncertainties
and other factors that could influence actual results or events and
cause actual results or events to differ materially from those
stated, anticipated, or implied in the forward-looking statements.
Accordingly, readers are cautioned not to place undue reliance on
the forward-looking statements. Additional risks, uncertainties,
material assumptions and other factors that could affect actual
results are discussed in the Company's public disclosure documents
available at www.sedar.com, including in the risk factors described
in the Company's current annual information form. In addition, the
Company is subject to the risk and uncertainties related to the
COVID-19 pandemic. In particular, a novel strain of coronavirus
causing the disease known as COVID-19 has spread throughout the
world, including across the United
States and Canada, causing
the World Health Organization to declare the COVID-19 outbreak a
pandemic in March 2020. To contain
the spread and impact of the pandemic, authorities throughout
the United States and Canada have implemented measures such as
travel bans and restrictions, stay-at-home orders, social
distancing guidelines and limitations on other business activity.
The pandemic has resulted in a significant economic downturn in
the United States, Canada and globally, and has also led to
disruptions and volatility in capital markets. The Company has
already experienced negative impacts on its financial results due
to the pandemic and is not able to fully quantify the impact that
the COVID-19 pandemic will have on the Company's financial results
during 2020, but expect that the pandemic could have a material
adverse effect on its results of operations, financial position
and/or cash flows, particularly if negative economic and public
health conditions in the United
States and Canada persist
for a significant period of time. The ultimate impact of the
pandemic on the Company's financial results will depend on, among
other factors, the duration and severity of the pandemic as well as
negative economic conditions arising therefrom, the impact of the
pandemic on occupancy rates in our communities, the volume of
COVID-19 patients cared for across our portfolio, rent deferral
rates, and the impact of government actions on the seniors housing
industry and broader economy, including through existing and future
stimulus efforts. The forward-looking statements contained in this
document 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 news release are certain non-IFRS financial measures as
supplemental indicators used by 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 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 and a
reconciliation to net profit for the three months and six months
ended June 30, 2020, please refer to the Financial Measures
section of the June 30, 2020 MD&A
available on the Company's website and on SEDAR at
www.sedar.com.
SOURCE Invesque Inc.