"We have achieved another year of strong financial performance at Leisureworld, generating a 23% increase in Net Operating Income and a 29% increase in Adjusted Funds from Operations, compared to 2011. Our performance enabled us to increase our monthly shareholder dividend by 5.9% in December, resulting in a current dividend rate of $0.90 per share on an annualized basis," said Dino Chiesa, Interim CEO and Chairman of Leisureworld. "During 2012, we advanced our growth strategy with the acquisition of three luxury retirement residences in the Greater Vancouver Area, bringing Leisureworld's Royale retirement residence brand to the BC marketplace, and we added another Class A, Long-term Care home to our existing LTC portfolio through the acquisition of the Madonna home in Orleans, Ontario, just outside Ottawa. These growth initiatives were complemented by increased government funding in our LTC portfolio, our continued focus on disciplined cost management, and peak LTC occupancy rates."
"Our Board of Directors has identified its preferred candidate for the role of President and CEO of Leisureworld, and we expect to make a formal appointment announcement in the coming weeks," added Mr. Chiesa. "Looking ahead, our growth strategy will remain focused on: ensuring exceptional quality seniors care and services, supporting and increasing our occupancy rates, maintaining disciplined cost management, building our presence across the continuum of seniors' living in Canada, and maintaining a strong balance sheet and reliable shareholder dividends."
For the quarter ended December 31, 2012, Leisureworld's Net Operating Income (NOI) increased 24.1% to $15.0 million, compared to $12.1 million in the fourth quarter a year ago. The Company's LTC operations generated NOI of $11.4 million, compared to $10.3 million for the fourth quarter 2011. The increase was primarily attributable to the inclusion of NOI from the Madonna acquisition and increased accommodations revenue, partly offset by higher property operating costs. Leisureworld's retirement residence portfolio generated a $1.9 million increase in NOI mainly as a result of the acquisition of the BC Portfolio. NOI for the Company's Home Care operations was consistent with the comparable quarter of 2011 at $0.7 million, as increased personal support contract volumes were offset by higher staffing costs to accommodate increased volumes and an increase in operating costs.
Leisureworld generated $6.9 million in Funds from Operations (FFO) in the fourth quarter of 2012, an increase of 44.6% from $4.8 million in the fourth quarter a year ago. The increase reflects higher NOI in the quarter and a $0.3 million decline in taxes, partly offset by an increase in net finance charges and higher administrative expenses, net of transaction costs. Higher net finance charges resulted from the incremental debt financing costs associated with the acquisitions, as well as the one-time premium associated with the early redemption of outstanding bonds amounting to $15.7 million. Management believes that this early redemption will yield future interest savings and has also undertaken initial steps towards refinancing the remaining outstanding bonds prior to maturity.
Adjusted Funds from Operations (AFFO) for the fourth quarter of 2012 increased 22.7% to $8.3 million, compared with $6.8 million in the fourth quarter of 2011. Increased AFFO was primarily attributable to increased FFO in the quarter, partly offset by lower income support and higher maintenance capital expenditures. The decrease in income support was due to the full utilization of the escrow amount related to the Ontario Portfolio in the third quarter.
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