MARKHAM, Ontario, Nov. 13, 2019 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today announced its financial results for the three and nine months ended September 30, 2019. The Unaudited Condensed Interim Consolidated Financial Statements and accompanying Management’s Discussion and Analysis are available on the Company’s website at www.siennaliving.ca and on SEDAR at www.sedar.com.
“During the third quarter, we continued to strengthen our balance sheet by further optimizing our capital structure and effectively managing our debt maturities,” said Lois Cormack, President and CEO of Sienna Senior Living. “We believe that the strength of our balance sheet, a balanced portfolio and sophisticated operating platform were key factors for Sienna’s recent “BBB” investment grade credit rating with a “Stable” trend from DBRS, and supported our subsequent inaugural unsecured debt financing of $150 million in November.”
Financial Highlights
Third quarter financial performance
- Revenue increased by 1.8% to $167.9 million in Q3 2019, compared to Q3 2018;
- Average occupancy in Sienna’s long-term care (“LTC”) portfolio remained high at 98.2%;
- Average same property occupancy in Retirement was 86.9%;
- Total same property NOI decreased slightly by 0.8% in Q3 2019, compared to Q3 2018;
- Diluted Operating Funds from Operations (“OFFO”) and Diluted Adjusted Funds from Operations (“AFFO”) per share remained at levels slightly below the prior year at $0.364 per share and $0.368 per share, respectively.
Strong balance sheet
- Debt to gross book value lowered by 180 basis points (“bps”) to 46.5% year-over-year;
- Debt to Adjusted EBITDA decreased year-over-year to 6.6 years from 6.9 years;
- Weighted average cost of debt lowered by 20 bps to 3.7% year-over-year.
Subsequent events
- Subsequent to Q3 2019, Sienna received a “BBB” investment grade credit rating with a “Stable” trend from DBRS, highlighting the strength of its balance sheet, balanced portfolio and sophisticated operating platform;
- On November 4, 2019, the Company issued $150 million aggregate principal amount of series A senior unsecured debentures at an interest rate of 3.109% per annum, maturing on November 4, 2024.
Financial and Operating Results:
| $000s except occupancy, per share and ratio data | Three months ended September 30, 2019 | Three months ended September 30, 2018 | Nine months ended September 30, 2019 | Nine months ended September 30, 2018 | ||||||||
| Retirement same property – Average occupancy | 86.9% | 91.4% | 88.6% | 91.6% | ||||||||
| Retirement acquisitions and development – Average occupancy(1) | 12.9% | n/a | 85.5% | n/a | ||||||||
| Retirement – Average total occupancy | 85.8% | 91.4% | 88.2% | 91.6% | ||||||||
| LTC – Average total occupancy | 98.2% | 98.7% | 98.3% | 98.3% | ||||||||
| LTC – Average private occupancy | 98.0% | 98.6% | 98.1% | 98.2% | ||||||||
| Revenue | $167,947 | $165,048 | $497,573 | $472,529 | ||||||||
| Operating expenses | $127,785 | $124,529 | $378,570 | $360,216 | ||||||||
| NOI(2) | $40,162 | $40,519 | $119,003 | $112,313 | ||||||||
| Net income | $3,763 | $5,000 | $6,435 | $9,581 | ||||||||
| Operating Funds from Operations (OFFO)(2)(3)(4) | $24,208 | $23,975 | $69,132 | $66,927 | ||||||||
| Adjusted Funds from Operations (AFFO)(2)(3)(4)(5) | $24,492 | $24,416 | $72,303 | $71,327 | ||||||||
| Net income per share, diluted | $0.057 | $0.076 | $0.097 | $0.152 | ||||||||
| OFFO per share, diluted(3)(4) | $0.364 | $0.365 | $1.042 | $1.048 | ||||||||
| AFFO per share, diluted(3)(4)(5) | $0.368 | $0.372 | $1.089 | $1.116 | ||||||||
| Dividends declared per share | $0.233 | $0.228 | $0.692 | $0.678 | ||||||||
| Payout Ratio(6) | 63.3% | 61.3% | 63.5% | 60.0% | ||||||||
Notes:
- Retirement acquisitions represent the financial and operating results from January 1, 2019 to March 27, 2019 of the portfolio of ten Ontario seniors' living residences acquired on March 28, 2018, which consists of 1,245 private-pay independent supportive living and assisted living suites. Retirement development consists of the 57-suite expansion at Island Park Retirement Residence, which opened in July 2019, and has an average occupancy of 12.9% for the three months ended September 30, 2019 due to the lease-up period.
- NOI, OFFO and AFFO are not measures recognized under International Financial Reporting Standards (“IFRS”) and do not have standardized meanings prescribed by IFRS. NOI, OFFO and AFFO are supplemental measures of a company's performance, and management of the Company believes that NOI and OFFO are relevant measures of the Company’s earnings performance, and AFFO is a relevant measure of the Company’s ability to earn cash and pay dividends. The IFRS measurement most directly comparable to OFFO and AFFO is net income and cash flow from operating activities, respectively.
- The Company adopted IFRS 16, Leases ("IFRS 16") on January 1, 2019. The comparative period's non-IFRS measures have been restated to reflect IFRS 16 as if it was adopted on January 1, 2017.
- OFFO and AFFO per share for the three and nine months ended September 30, 2019 include mark-to-market expense (recovery) adjustments on share-based compensation of $(211) and $1,451, respectively (2018 - $212 and $(458), respectively). Excluding these mark-to-market adjustments on share-based compensation, OFFO and AFFO per share would increase (decrease) by $(0.003) and $0.022 for the three and nine months ended September 30, 2019, respectively (2018 - $0.003 and $(0.007), respectively).
- AFFO is impacted by the timing of maintenance capital expenditures.
- Payout Ratio is calculated using dividends declared per share divided by the basic AFFO per share for the respective periods.
2019 Third Quarter Summary
Average occupancy in LTC remained high at 98.2%.
Average same property occupancy in Retirement was 86.9%. Contributing factors to the occupancy softness are the oversupply in the Ottawa market, high attrition rates to LTC in the portfolio acquired in 2018, adjustments to the operating and sales platform, and property upgrades and renovations at a number of properties.
NOI decreased by 0.9% (or $0.4 million) to $40.2 million in Q3 2019, compared to Q3 2018, related to softness in Retirement occupancy, partially offset by annual rental rate increases.
LTC delivered a 1.5% same property NOI growth in Q3 2019, compared to Q3 2018.
Retirement same property NOI decreased by 3.7% in Q3 2019, compared to Q3 2018, largely as a result of lower occupancy.
Revenue increased by 1.8% (or $2.9 million) to $167.9 million in Q3 2019, compared to Q3 2018. The increase was driven by additional and inflationary increases in flow-through funding in LTC, as well as annual rental rate increases in Retirement.
Operating expenses increased by 2.6% (or $3.3 million) to $127.8 million in Q3 2019, compared to Q3 2018. The increase was mainly a result of additional expenses associated with flow-through funding and annual inflationary increases in LTC.
The Company generated net income of $3.8 million in Q3 2019, representing a decrease of $1.2 million compared to Q3 2018. The decrease was primarily related to fair value adjustments on interest rate swap contracts in Q3 2019, partially offset by lower transaction costs.
OFFO increased by 1.0% (or $0.2 million) to $24.2 million in Q3 2019, compared to Q3 2018. The increase was primarily related to lower interest expense on long-term debt and lower current income taxes, partially offset by a decrease in same property NOI in the Retirement portfolio.
AFFO increased by 0.3% (or $0.08 million) to $24.5 million in Q3 2019, compared to Q3 2018. The increase was primarily related to the increase in OFFO noted above.
2019 Nine Months Summary
NOI increased by 6.0% (or $6.7 million) to $119.0 million over the comparable prior year period. The increase is driven by contributions from acquisitions and same property NOI growth.
Retirement delivered a 0.9% year-over-year same property NOI growth, largely driven by rental rate increases, partially offset by lower occupancy.
LTC delivered 2.3% year-over-year same property NOI growth, predominantly resulting from inflationary funding increases. Average occupancy in LTC remained high at 98.3% year-over-year, consistent with the prior year.
Revenue increased by 5.3% (or $25.0 million) to $497.6 million over the comparable prior year period. The increase is mainly due to revenues generated from the 2018 acquisitions, as well as additional and inflationary increases in flow-through funding in LTC.
Operating expenses increased by 5.1% (or $18.4 million) to $378.6 million over the comparable prior year period, which included a tax refund of $1.3 million in Q1 2018. The increase is mainly due to additional expenses associated with flow-through funding in LTC, as well as expenses incurred by the 2018 acquisitions.
The Company generated net income of $6.4 million year-over-year, representing a decrease of $3.1 million over the comparable prior year period. The decrease was primarily related to fair value adjustments on interest rate swap contracts, incremental interest expense and depreciation and amortization incurred from the 2018 acquisitions and an increase in mark-to-market adjustments on share-based compensation, partially offset by lower transaction costs and NOI growth.
OFFO increased by 3.3% (or $2.2 million) to $69.1 million over the comparable prior year period. The increase is mainly due to income generated from the 2018 acquisitions, as well as same property NOI growth, partially offset by incremental interest expense on the properties acquired in 2018.
AFFO increased by 1.4% (or $1.0 million) to $72.3 million over the comparable prior year period. The increase is mainly related to the increase in OFFO noted above, partially offset by higher maintenance capital expenditures due to timing and the 2018 acquisitions.
Conference Call
The conference call will be on Thursday November 14, 2019 at 8:30 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 8283619. A webcast of the call will be accessible via Sienna's website at: www.siennaliving.ca/investors/events-presentations. The webcast of the call will be available for replay until November 14, 2020 and archived on Sienna's website.
About Sienna Senior Living
Sienna Senior Living Inc. (TSX:SIA) is a leading seniors' living provider with 84 seniors' living residences in key markets in Canada. Sienna offers a full range of seniors' living options, including independent living, assisted living, long-term care, and specialized programs and services. Sienna also provides expert management services. Sienna is committed to national growth, while driving long-term value for shareholders. The Company's approximately 12,000 employees are passionate about helping residents live fully every day, and were the driving force behind Sienna being named one of Canada's Most Admired Corporate Cultures in 2017. For more information, please visit www.siennaliving.ca.
Forward-Looking Statements
Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as "anticipate," "continue," "could," "expect," "may," "will," "estimate," "believe," “goals” or other similar words and include, among other things, statements related to the Company's financial results or strategic plans. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions, including the funding of long-term care/residential care facilities by government entities. Other material factors or assumptions that were applied in formulating the forward-looking statements contained herein include the assumption that the business and economic conditions affecting the Company's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity and government regulations.
Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements. These forward-looking statements reflect current expectations of the Company as at the date of this news release and speak only as at the date of this news release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Nitin Jain
Chief Financial Officer & Chief Investment Officer
(905) 489-0787
Nitin.Jain@siennaliving.ca