TORONTO, Nov. 11, 2020 /CNW/ - Invesque Inc. (TSX: IVQ.U)
(TSX: IVQ) (the "Company" or "Invesque") today announced its
results for the three and nine months ended September 30,
2020. The Company is also pleased to announce the amendment
of Invesque's corporate credit facility and provide an update on
the Company's relationship with Symphony Care Network
("SymCare").
Amendment of the Company's Corporate Credit Facility
The Company has modified its senior credit facility led by
KeyBank, which includes an incremental surge period through
June 30, 2021 (originally scheduled
to expire December 31, 2020).
The incremental surge period allows the Company to maintain its
leverage on the consolidated level with the existing unencumbered
asset pool.
Throughout the incremental surge period, the corporate leverage
covenant has been increased to 65.0% and the facility pricing has
been increased by 15 basis points. Additionally, the Company's
fixed charge coverage ratio covenant is permanently reduced from
1.75x to 1.60x.
"We are grateful for the continued commitment and partnership of
our bank group," stated Scott Higgs,
Chief Financial Officer for the Company. "This credit facility
modification provides short-term additional liquidity to execute on
our portfolio management initiatives while setting up Invesque for
success and stability into the future."
New Framework for SymCare Relationship
The Company has executed a non-binding memorandum of
understanding ("MOU") with SymCare. Currently, SymCare operates 16
facilities for the Company under a triple-net ("NNN") lease
structure which represents approximately 25% of Invesque's
pro-forma net operating income ("NOI").
Under the terms of the MOU, the Company has agreed to sell to
SymCare, and/or transition to a new operator, approximately 50% of
Invesque's existing assets operated by SymCare. Invesque and
SymCare will enter into an amended and restated 15-year,
absolute-triple net master lease, with enhanced lease coverage, for
the remaining properties to be operated by SymCare (collectively,
the "Transaction").
Once the Transaction is consummated, NOI from SymCare will
represent less than 15% of the Company's pro-forma NOI. Invesque
anticipates closing the Transaction during the first quarter of
2021. As the MOU is non-binding, there are no assurances that the
Transaction will be completed on the terms contemplated in the MOU
or at all.
Third Quarter and Subsequent Highlights
- Completed the transition of property management and leasing
services for the Company's medical office buildings ("MOB")
portfolio to JLL, a Fortune 500, industry-leading real estate
services firm
- Executed an interest rate reduction ("IRR") on the U.S.
Department of Housing and Urban Development ("HUD") loan underlying
Keepsake Village at Greenpoint ("Keepsake Village"), and executed a
refinancing of the loan underlying Commonwealth Senior Living at
Christiansburg ("Christiansburg") utilizing Fannie Mae's Structured
ARM program
-
- 110 basis points reduction in interest rate on the HUD loan
underlying Keepsake Village while maintaining the maturity date of
the loan of September 2047
- 300 basis points reduction in the interest rate for the
Christiansburg loan with a 36-month interest-only period
- The Keepsake Village IRR and the Christiansburg refinancing, in
aggregate, reduce Invesque's annual debt service payments by over
US$500,000
- Reported funds from operations ("FFO") of US$0.25 and US$0.69
per common share for the three- and nine-months ending September 30, 2020, respectively. The Company
reported adjusted funds from operations ("AFFO") of US$0.22 and US$0.60
per common share for the three- and nine-months ending September 30, 2020, respectively.
"While our partners continue to navigate the challenging
operating environment under the current public health pandemic, I
am pleased with our results and steady rental collections over the
last quarter," commented Scott
White, Chairman & Chief Executive Officer for the
Company. "I am excited to welcome JLL as a strategic partner with
the successful transition of property management and leasing
services for our MOB portfolio this past quarter. We continue to
focus on our portfolio management initiatives to ensure we are
maximizing the value of each asset within our portfolio."
Financial Highlights
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
(in thousands of U.S
dollars, except per share values)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
55,429
|
|
$
|
38,550
|
|
$
|
163,007
|
|
$
|
96,598
|
Net loss
|
$
|
(60,749)
|
|
$
|
(2,346)
|
|
$
|
(147,689)
|
|
$
|
(12,043)
|
Funds from operations
("FFO") (1)
|
$
|
13,728
|
|
$
|
12,507
|
|
$
|
38,211
|
|
$
|
35,575
|
FFO per
share
|
$
|
0.25
|
|
$
|
0.23
|
|
$
|
0.69
|
|
$
|
0.66
|
Adjusted funds from
operations ("AFFO") (1)
|
$
|
12,499
|
|
$
|
10,711
|
|
$
|
33,196
|
|
$
|
31,606
|
AFFO per
share
|
$
|
0.22
|
|
$
|
0.20
|
|
$
|
0.60
|
|
$
|
0.59
|
(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)
|
September 30,
2020
|
|
December 31,
2019
|
|
|
|
|
Total
assets
|
$1,527,175
|
|
$1,630,738
|
Number of
properties
|
120
(1)
|
|
124
|
Debt
|
$1,044,966
|
|
$1,013,475
|
(1) Includes all
Company assets currently operated by SymCare, including those that
are contemplated to be sold and/or transitioned under the MOU.
Excludes other assets held for sale.
|
Business Update
Rental Revenue Collections
|
|
|
Month
ended
|
(all figures shown
are rounded)
|
July 2020
|
August
2020
|
September
2020
|
|
|
|
|
Senior Housing Owner
Occupied Portfolio
|
99%
|
99%
|
99%
|
Medical Office
Portfolio
|
93%
|
93%
|
93%
|
Triple-Net Lease
("NNN") Portfolio
|
85%
|
86%
|
86%
|
Total
Portfolio
|
94%
|
94%
|
94%
|
Note: All figures
above represent actual rental revenue received as a percent of
total rental revenue due as per original contracts.
|
COVID-19 Update
Invesque's management team has remained in close contact with
the Company's operating partners regarding the current and
prospective impact of COVID-19. As of November 6, 2020, the Company has confirmed that
77 of its 105 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 77
impacted communities, 40 are subject to NNN lease agreements. Also,
as of November 6, 2020, there were
only 28 total patients or residents with COVID-19 being treated and
quarantined in the Company's 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 primarily 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 Adlai Chester, Chief Investment Officer for the
Company. "The number of COVID-19 cases directly impacting our
communities has remained consistent for several months now. Many of
our operators have implemented protocols to allow families to visit
with residents and patients in our communities, and families
seeking assisted living and post-acute care can tour many Invesque
communities. While a vaccine will provide the greatest level of
confidence to completely re-open all of our communities, we are
encouraged by the steps our operators have taken to resume
activities that create some semblance of normalcy. We will continue
to support our operators however we can as they recover from the
COVID-19 pandemic."
Investor Conference Call
A conference call hosted by the Company's senior management team
will be held November 12, 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: 5953538.
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 5953538.
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 restructuring of the
Company's relationship with SymCare. 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
restructuring of the Company's relationship with SymCare will not
be completed on terms consistent with the MOU or at all. 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 restructuring of the Company's relationship with SymCare will
be completed on terms consistent with the MOU and on the timeline
described in this press release. 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 Standards ("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 nine months
ended September 30, 2020, please refer to the Financial
Measures section of the September 30,
2020 MD&A available on the Company's website and on
SEDAR at www.sedar.com.
SOURCE Invesque Inc.