TORONTO, Aug. 12, 2014 /CNW/ - HealthLease Properties Real Estate
Investment Trust (HLP.UN) ("HealthLease" or "the REIT") today announced
its financial results for the three and six months ended June 30,
2014. All amounts expressed are in Canadian dollars unless otherwise
Q2 2014 Highlights
FFO of $0.26/unit ($0.26 fully diluted), up 18%, from $0.22/unit in Q2
AFFO of $0.27/unit ($0.26 fully diluted), up 17%, from $0.23/unit in Q2
Debt to gross book value, including convertible debentures, of 55.3%
(49.0% without convertible debentures).
Payout ratio of 80.0% of AFFO.
In the second quarter, the REIT received gross proceeds of $75.0 million
pursuant to a bought-deal offering of units of the REIT that closed on
May 5, 2014. The proceeds from this offering were used to finance the
acquisition of seven senior housing and care facilities and to reduce
the REIT's indebtedness.
The REIT provided an update on the board-approved amendment to the
management agreement with its external manager, Mainstreet. The
amendment provides Mainstreet with an annual incentive fee which is
based on 15% of AFFO per unit above the incentive hurdle rate of $1.01
per unit of AFFO for 2014.
Subsequent to quarter-end:
Closed one of two previously announced Continuum Health Care properties
in Alberta. Sunrise Village High River consists of 176 units that
provide both assisted living and independent living services. The
second property with 107 units, Sunrise Village Encore, is expected to
close by September 2014.
"I am very pleased to report that we have delivered our ninth
consecutive quarter of growth and profitability," said Zeke Turner,
Chairman and CEO. "As we continue to grow our business, we maintain
our position of having one of the youngest portfolios in the senior
housing and care industry, a strong financial position and a
conservative payout ratio."
|Summary of Results||
|000's, except per unit data||For the three|
June 30, 2014
|For the three|
June 30, 2013
Funds from Operations (FFO) (1)||$9,017||$4,431||
Adjusted Funds from Operations (AFFO) (2)||$9,127||$4,666||
Weighted Units Outstanding (diluted)
FFO per unit (basic)
FFO per unit (diluted)
AFFO per unit (basic)
AFFO per unit (diluted)
Q2 2014 Financial Results
"FFO" is defined as net profit in accordance with IFRS adjusted as
follows: (i) plus or|
minus fair value adjustments on investment properties; (ii) plus or
minus gains or losses
from sales of investment properties; (iii) plus or minus other changes
in fair value of
financial instruments which are economically effective hedges; (iv) plus
costs expensed as a result of the purchase of a property being accounted
for as a
business combination; (v) plus distributions on exchangeable units; (vi)
income tax expense; and (vii) plus adjustments for property taxes
accounted for under
IFRIC 21, after adjustments for equity accounted entities and joint
to reflect FFO on the same basis as consolidated properties.
Adjusted funds from operations, or AFFO, is defined by the REIT as a
operating cash generated from the business. AFFO is calculated as FFO
to certain adjustments, including: (i) amortization of fair value
adjustments on mortgages, amortization of deferred financing costs, and
compensation expense related to deferred unit incentive plans,
(ii) adjusting for
any differences resulting from recognizing property rental revenues on a
basis, (iii) adding an amount in respect of Mainstreet development lease
owed or paid, and (iv) deducting a reserve for normalized maintenance
expenditures and leasing costs, as determined by the REIT. Other
may be made to AFFO as determined by our Trustees in their sole
Payout ratio is a measure of the distributions (inclusive of
distributions paid on|
Exchangeable Units) compared to the AFFO.
Revenue. Revenue is rental income from single tenant operators who are under
long-term triple-net leases and interest income from loans. Revenue
generated for Q2 2014 was $17.6 million, an increase from $8.6 million
one year ago. The increase was mainly attributed to the addition of 22
properties that generated additional revenue of $9.0 million and
interest income on mezzanine loans invested in senior housing
Net Operating Income. Net operating income, which is revenue less property expenses, for Q2
2014 was $16.8 million compared to $8.2 million in Q2 2013.
Net Profit. Net profit, which is revenue less all expenses (including non-cash
fair market value changes in investment properties and Exchangeable
Units), for Q2 2014 was $5.0 million, up from a net profit of $2.3
million for the same period one year ago. The increase was attributable
to additional income generating properties.
Funds from Operations ("FFO"). Funds from operations for Q2 2014 was $9.0 million or $0.26 per unit
($0.26 per unit fully diluted). The increase in FFO was driven by the
addition of new properties contributing to rental revenue.
Adjusted Funds from Operations ("AFFO"). Adjusted Funds from Operations, which is FFO subject to certain
adjustments, for Q2 2014 was $9.1 million or $0.27 per unit ($0.26 per
unit fully diluted). The increase in AFFO was driven by the addition of
new properties contributing to rental revenue.
Distributions. For Q2 2014, distributions paid on weighted average outstanding units,
including distributions on Exchangeable Units, totaled $7.3 million, or
$0.21 per unit which translates into a payout ratio of 80.0% for Q2
Cash. At June 30, 2014, the REIT had cash-on-hand amounting to $4.0 million
and restricted cash of $3.9 million.
Operating Line of Credit. At June 30, 2014, the REIT had a secured operating line of credit of
US$250 million secured by 24 properties in the U.S.; US$30 million was
available on the secured operating line at the end of the quarter.
Debt to Gross Book Value. Debt to gross book value is calculated by dividing total indebtedness,
net of loan costs, by the total assets of the REIT. At June 30, 2014,
the debt to gross book value was 55.3%, inclusive of convertible
debentures issued in November 2013, compared to 53.7% for the same
period one year ago. The debt to gross book value without convertible
debentures is 49.0 % as of June 30, 2014.
Interest Coverage Ratio. Interest coverage ratio, a measure of credit risk, is calculated by
dividing net operating income by net interest expense. For the quarter ended June 30, 2014, interest coverage ratio was 3.29
times, while the weighted average cost of debt was 4.3%.
Equity and Exchangeable Units. At June 30, 2014, the REIT had 37.2 million units outstanding, including
Exchangeable Units. The REIT's closing unit price on August 8, 2014
was $10.82 per unit which resulted in a market capitalization of $402.5
Acquisition of Senior Care Properties
On May 16, 2014, the REIT acquired the SP III Senior Care Portfolio
consisting of four U.S. senior housing and care properties located in
North Carolina, Pennsylvania and Virginia. Additionally, through the
development partnership with Mainstreet, the REIT acquired a senior
housing and care facility located in Indiana. The five facilities were
purchased for the aggregate purchase price of US$67.3 million.
Subsequent to the quarter, the REIT acquired one of two Alberta senior
care and housing facilities as part of the previously announced
acquisition of the Continuum II Portfolio for the aggregate purchase
price of C$53.3 million. The second facility is expected to close by
|HealthLease Owned Properties|
*The REIT has non-amortizing mortgages on these two properties in
The REIT has the option to purchase the properties on maturity of the
for the principal loan balance outstanding plus US$1.00.
HealthLease will host a conference call, August 13, 2014, at 9:00 am ET
to discuss its second quarter financial results. To access the
conference call, please dial 647-427-7450 or 1-888-231-8191. Please
connect approximately 10 minutes prior to the beginning of the call to
ensure participation. The conference call will be archived for replay
by telephone until Wednesday, August 20, 2014 at midnight. To access
the archived conference call, dial 1-855-859-2056 and enter the
reservation number 74194957.
Supplemental Financial Information
This news release is not in any way a substitute for reading
HealthLease's financial statements, including notes to the financial
statements, and Management's Discussion and Analysis. The REIT's
Fiscal Second Quarter and Management Discussion and Analysis have been
filed on SEDAR and can also be viewed in the Investor Information
section of HealthLease's website at www.hlpreit.com.
About HealthLease Properties Real Estate Investment Trust
HealthLease Properties Real Estate Investment Trust (TSX: HLP.UN) owns
one of the youngest and highest quality portfolios of seniors housing
and care facilities with 52 properties - 13 in two Canadian provinces
and 35 in eight U.S. states, for a total of 5,224 beds. The facilities
are leased to experienced tenant operators who have significant
operational experience. The leases are structured as long-term and
triple-net: features that provide stability and dependability to the
REIT's cash flow and distributions. The REIT's best-in-class portfolio
meets the growing demands of modern seniors by emphasizing features
such as hotel-like design, private rooms and baths and
hospitality-inspired amenities. For more information, visit www.hlpreit.com.
This news release contains forward-looking statements which reflect the
REIT's current expectations regarding future events. The
forward-looking statements involve risks and uncertainties, including
those set forth in the REIT's AIF dated March 11, 2014 under the
section "Risk Factors", a copy of which can be obtained at www.sedar.com. Actual results could differ materially from those projected herein.
The REIT disclaims any obligation to update these forward-looking
The REIT reports its financial results in accordance with IFRS.
Included in this news release are certain non-IFRS financial measures
as supplemental indicators used by management to track the REIT's
performance. These non-IFRS measures are Net operating income (NOI),
Funds from operations (FFO), Adjusted funds from operations (AFFO),
payout ratio, weighted average cost of capital and debt to gross book
value (Debt to GBV). See the sections entitled "Summary of the Key
Performance Indicators for the Three and Six Months Ended June 30,
2014" in Management's Discussion & Analysis of Results of Operations
and Financial Condition for the three and six months ended June 30,
2014 for the definitions of these non-IFRS measures.
The REIT 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 REIT. These measures do not
have a standardized meaning prescribed by IFRS and, therefore, may not
be comparable to similar measures presented by other real estate
investment trusts or enterprises, nor should they be construed as an
alternative to other financial measures determined in accordance with
SOURCE HealthLease Properties Real Estate Investment Trust