/C O R R E C T I O N from Source -- Chartwell Retirement Residences (IR)/
In the news release, Chartwell Announces Third Quarter 2018 Results, issued 08-Nov-2018 by Chartwell Retirement Residences (IR) over Cision, we are advised by the company that in the 8th paragraph, 2nd sentence, should read "In 2018 YTD, FFO was impacted by $3.1 million (2017 YTD - $2.6 million) of lease-up-losses and imputed cost of debt related to properties in development." rather than "In 2018 YTD, FFO was impacted by $4.8 million (2017 YTD - $2.6 million) of lease-up-losses and imputed cost of debt related to properties in development." as originally issued inadvertently. The complete, corrected release follows:
Chartwell Announces Third Quarter 2018 Results
MISSISSAUGA, ON, Nov. 8, 2018 /CNW/ - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) announced today its results for the three and nine months ended September 30, 2018.
Q3 2018 Highlights
"Our teams delivered solid results in the third quarter of 2018, as our focus on revenue management and cost control helped to offset the impact of lower occupancies in certain markets," commented Brent Binions, President and CEO. "We are confident that our investments in employee engagement and resident experience initiatives, combined with our innovative sales and marketing strategies, will continue to set us apart from the competition and produce sustainable value creation for our unitholders."
In Q3 2018, resident revenue and direct property operating expenses increased 7.0% and 6.2%, respectively, due to the growing contribution from developments and acquisitions, rental rate increases in line with competitive market conditions and higher direct operating expenses in the same property portfolio.
In Q3 2018, net income was $9.1 million compared to $10.2 million in Q3 2017. The decrease in net income was primarily due to higher direct property operating, general administrative and Trust ("G&A"), depreciation and finance costs partially offset by higher resident revenues and lower transaction costs.
In Q3 2018, FFO increased $2.8 million primarily due to higher adjusted NOI, partially offset by higher finance costs and G&A expenses.
In 2018 YTD, resident revenue and direct property operating expenses increased 8.4% and 7.0%, respectively, due to the growing contribution from developments and acquisitions and growth in resident revenue, primarily due to rental rate increases in line with competitive market conditions and higher direct operating expenses in the same property portfolio.
In 2018 YTD, net income was $31.6 million compared to $12.4 million in 2017 YTD. The increase in net income was primarily due to the gain on sale of properties, higher resident revenues and positive changes in fair values of financial instruments, partially offset by higher direct property operating, G&A, depreciation and finance costs.
In 2018 YTD, FFO increased $10.6 million primarily due to higher adjusted NOI and management fees, partially offset by higher G&A expenses and finance costs and lower interest income. In 2018 YTD, FFO was impacted by $3.1 million (2017 YTD – $2.6 million) of lease-up-losses and imputed cost of debt related to properties in development.
FFO per unit amounts in Q3 2018 and 2018 YTD were impacted by higher weighted average units outstanding from the public offering of Trust Units completed on November 24, 2017 to finance the acquisition of four properties in Alberta which closed on April 23, 2018.
In Q3 2018 and 2018 YTD, same property occupancy declined by 1.0 and 0.8 percentage points, respectively, primarily due to short-term competitive pressures from new developments in some Ontario markets.
In Q3 2018, same property adjusted NOI increased by $1.1 million or 1.6%, driven primarily by regular annual rental rate increases in line with competitive market conditions, partially offset by lower occupancies, higher staffing costs, communication, marketing and food expenses.
In 2018 YTD, same property adjusted NOI increased by $7.4 million or 3.7%, driven primarily by regular annual rental rate increases in line with competitive market conditions, higher ancillary revenues and lower utilities expenses, partially offset by lower occupancies, higher staffing and communication costs.
In Q3 2018 and 2018 YTD, G&A expenses increased by $1.7 million and $5.8 million, respectively, primarily due to higher staffing costs incurred to support the growing property portfolio and development activities, including management of Batimo projects.
At September 30, 2018, liquidity amounted to $372.9 million, which included $16.4 million of cash and cash equivalents and $356.5 million of available borrowing capacity on our credit facilities. In addition, Chartwell's share of cash and cash equivalents held in its equity-accounted joint ventures was $8.5 million.
The Interest Coverage Ratio on a rolling 12-month basis remained strong at 3.2 at September 30, 2018 compared to 3.5 at December 31, 2017. The Net Debt to Adjusted EBITDA ratio at September 30, 2018 was 7.8 compared to 6.9 at December 31, 2017.
Chartwell's financial statements, including its MD&A are available at www.chartwell.com. A detailed list of Chartwell's property portfolio can also be obtained under "Supplementary Information" in the "Investor Relations" section of the web site.
Work continues on the development pipeline of 1,742 suites with six projects in construction and six projects in pre-development. Options to acquire interests in development projects by Batimo Inc. are expected to add another 2,784 suites over time.
In Q3 2018, Chartwell acquired land in Pickering, Ontario and in Calgary, Alberta for the development of 415-suite and 384-suite retirement residences, respectively.
Investor Conference Call
A conference call hosted by Chartwell's senior management team will be held Friday, November 9, 2018 at 10:00 AM ET. The telephone numbers for the conference call are: Local: (416) 695-6725 or Toll Free: (866) 696-5894. The passcode for the conference call is: 8265951#. The conference call can also be heard over the Internet by accessing the Chartwell website at www.chartwell.com, clicking on "Investor Relations" and following the link at the top of the page. A slide presentation to accompany management's comments during the conference call will be available on the website. Please log on at least 15 minutes before the call commences.
The telephone numbers to listen to the call after it is completed (Instant Replay) are: Local: (905) 694-9451 or Toll Free: (800) 408-3053. The Passcode for the Instant Replay is 9763189#. These numbers will be available for 30 days. An audio file recording of the call, along with the accompanying slides, will also be archived on the Chartwell website at www.chartwell.com.
Chartwell's Distribution Reinvestment Plan ("DRIP") allows unitholders to have their monthly cash distributions used to purchase units without incurring commission or brokerage fees, and receive bonus units equal to 3% of their monthly cash distributions. More information can be obtained at www.chartwell.com.
Non-GAAP Financial Measures
SOURCE Chartwell Retirement Residences
Company Codes: Toronto:CSH.UN
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