Regal Lifestyle Communities Inc. Announces Results for Period ending December 31, 2012
TORONTO, March 20, 2013 /CNW/ - Regal Lifestyle Communities Inc. ("Regal") (TSX:RLC) announced today results for the fourth quarter of 2012.
2012 Highlights:
- Operating and financial results are in line with the forecast
- Internal development opportunities are on target
- Developed relationships which are expected to support future acquisitions
"Since the completion of our initial public offering on October 16, 2012, our team has worked diligently to get Regal off to a solid start, so we are pleased to report that we have met the forecast for our initial period of operations" said Mr. Nyilassy, President and CEO.
Looking forward into 2013, Regal expects its stabilized properties to continue enjoying current high occupancy levels. Furthermore, the remaining lease up property, Greenway Retirement Village in Brampton, is expected to continue out performing forecast, having recently reached 79% occupancy.
There are several additional operational activities that will impact 2013.
- The conversion of 48 independent serviced living suites to 43 assisted living suites at Greenway Retirement Village, completed in December 2012;
- The $1.2 million, seven suite expansion in Renaissance Retirement Residence is underway and expected to be completed by the summer of 2013;
- Valley Stream Manor is converting 17 long term care beds to assisted living suites; and
- Construction of eight to ten additional suites in Plymouth Cordage Retirement Community replacing fourteen respite beds, as originally planned by the summer 2013.
Mr. Nyilassy added, "All of these activities will have a positive impact on our results. We have also been actively pursuing accretive acquisitions and anticipate completing several this year."
Financial Highlights
| (in $000's, except for per unit amounts) | Actuals for the three months ended December 31, 2012 |
Financial forecast (pro-rated)(1) |
||
| AFFO(2) | $ | 2,667 | $ | 2,557 |
| AFFO per unit - basic(2) | $ | 0.148 | $ | 0.152 |
| AFFO per unit - dilutive(2) | $ | 0.147 | $ | 0.150 |
| Dividends declared | $ | 2,604 | $ | 2,472 |
| Cash dividends per unit - basic | $ | 0.144 | $ | 0.147 |
| Cash dividends per unit - dilutive | $ | 0.143 | $ | 0.145 |
| Distributions paid as a % of AFFO | 97.6% | 96.7% | ||
| (1) | Financial forecast - refers to the financial forecast for the three-month period ended December 31, 2012 included in Regal's prospectus dated October 5, 2012; pro-rated to reflect Regal's ownership of the Initial Communities commencing on October 16, 2012. |
| (2) | AFFO, AFFO per unit basic and dilutive, FFO and FFO per unit basic and dilutive are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release. |
AFFO for the period was slightly ahead of the forecast by $0.1 million or 4.3%, with actual AFFO of $2.7 million compared to a forecast of $2.6 million. On a per unit basis, AFFO was in line with the forecast of $0.152 compared to actual results of $0.148.
Cash dividends during the period were $2.6 million compared to the forecast of $2.5 million, the increase of $0.1 million was due to the issuance of approximately 2.2 million shares for the over allotment and the earn-out on Valley Stream Manor and Barrhaven Manor. The pay-out ratio as a percentage of AFFO was 97.6% in line with the forecast of 96.7%.
Total mortgage debt is $198.5 million at December 31, 2012, compared to $207.6 million at the closing of the initial public offering. The reduction relates to the repayment of a $10.0 million of term loan on Greenway Retirement Village using a portion of the over allotment proceeds. The repayment of this debt also reduced Regal's weighted average interest rate from the forecast of 4.03% to 3.92% (3.61% after interest rate subsidy).
Operating Performance
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| (1) | Financial forecast - refers to the financial forecast for the three-month period ended December 31, 2012 included in Regal's prospectus dated October 5, 2012; pro-rated to reflect Regal's ownership of the Initial Communities commencing on October 16, 2012. |
| (2) | NOI is a measure used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release. |
Weighted average occupancy for the portfolio was in line with the forecast due to strong lease up in the period.
Revenue was $11.4 million compared to a forecast of $11.1 million. The increase of $0.3 million or 2.6% was due to improved occupancy and improvement in rate mix in the portfolio.
Net operating income was in line with the forecast but operating margins were slightly lower than plan by 1.1%. This was due to operating expenses of $7.0 million being higher than the forecast of $6.7 million. The increase of $0.3 million or 4.6% was due to higher occupancy and higher marketing spending, management fees (due to higher revenue), Retirement Homes Regulatory Authority fees and seasonal employee costs.
General and administrative expenses were $0.1 million or 9.6% below the forecast with actual costs for the period of $0.6million, compared to a forecast of $0.7 million. The primary reason for the improvement was due to lower spending in public company costs and professional fees during the period.
Net Loss was higher than the forecast primarily because transaction costs of $4.1 million were not included in the forecast. These costs relate to the acquisition of initial properties and are not period costs. The majority of these costs were related to land transfer tax and were funded in conjunction with the initial public offering. Also, interest expense was $1.5 million compared to a forecast of $1.6 million which was $0.1 million or 6.2% below the forecast. This reduction primarily relates to the repayment of $10.0 million loan on Greenway Retirement Village utilizing a portion of the over-allotment proceeds.
Financial Position
At December 31, 2012, cash on hand was $6.0 million and the unused borrowing capacity on Regal's revolving credit facility and revolving loan was $20.0 million.
Debt to gross book value was 55% at the bottom of the target range. The debt service coverage ratio for the 265-day period ended December 31, 2012 was 1.48 times. Regal's weighted average interest rate was 3.61%, including interest rate subsidy. Regal's debt strategy is to obtain secured mortgage financing on a primarily fixed rate, on a property-by-property basis with staggered maturity dates once a property reaches a stabilized lease-up level. Regal's objectives are to: (i) achieve and maintain staggered debt maturities to lessen exposure to interest rate fluctuations and re-financing risk in any particular period; and (ii) fix the interest rates and extend loan terms as long as possible when borrowing conditions are favourable.
Investor conference call
A conference call hosted by Regal's senior management team will be held tomorrow, March 21, 2013 at 9:00 a.m. (ET). The telephone numbers for the conference call are: Local (416)-340-2217 or Toll Free 1-866-696-5910. The participant passcode is #9026238.
The telephone numbers to listen to the call after it is completed (Instant Replay) are: Local 905-694-9451 or Toll Free 1-800-408-3053. The passcode for the Instant Replay is #474094. The call will also be archived on the Regal website at www.regallc.com.
About Regal Lifestyle Communities Inc.
Regal Lifestyle Communities Inc. is a corporation incorporated under the laws of the Province of Ontario. With the completion of its recent initial public offering and related transactions, the Company acquired a portfolio consisting of income-producing retirement communities offering primarily independent serviced living and assisted living programs. The Company's portfolio is comprised of ten "current generation" retirement communities with an average age of approximately five years, consisting of over 1,400 suites, primarily located in the Province of Ontario and including a property located in each of the Provinces of Saskatchewan and Newfoundland and Labrador.
Forward-Looking Information
This press release contains forward-looking information that reflects the current expectations, estimates and projections of management about the future results, performance, achievements, prospects or opportunities for Regal and the seniors housing industry. The words such as "may", "would", "could", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "project", "continue" and similar expressions have been used to identify these forward-looking statements. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond management's control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.
While we anticipate that subsequent events and developments may cause our views to change, we do not intent to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing management's views as of any date subsequent to the date of this document. Management has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimated expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These factors are not intended to represent a complete list of the factors that could affect us. See "Risks and Uncertainties" in the MD&A, "Risk Factors" in the prospectus and risk factors highlighted in materials filed with the securities regulatory authorities of Canada from time to time, including but not limited to Regal's most recent annual information form.
Non-IFRS Measures
FFO, AFFO, NOI, and Debt Service Coverage Ratio are not measures defined by International Financial Reporting Standards ("IFRS"). They are presented because Management believes these non-IFRS measures are relevant and meaningful measures of Regal's performance. FFO, AFFO, NOI and Debt Service Coverage Ratio as computed may differ from similar computations as reported by other issuers and may not be comparable to those reported by such issuers. Regal's 2012 MD&A contains a reconciliation of net loss to FFO and a reconciliation of cash flows from operating activities to AFFO for the 265-day period ended December 31, 2012. Detailed descriptions of the terms are contained Regal's 2012 MD&A, available at www.sedar.com.
SOURCE: Regal Lifestyle Communities Inc.
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