Canaccord on Q2
Canaccord Genuity - Morning Summary - Wednesday, January 16, 2013
Amica Mature Lifestyles Inc. (ACC : TSX : C$9.26) - Buy - Target:C$11.25
FFO per share climbs 7% year-over-year; maintaining BUY rating and C$11.25 target
Amica generated funds from operations (FFO) per diluted share of $0.11 in Q2/F13 (quarter ended November 30, 2012), up 7% from $0.10 earned in Q2/F12. The y/y growth was due to a strong increase in monthly average revenue per available suite (MARPAS), as well as the contribution from internal consolidations completed over the past year. Occupancy picking up. Same-property occupancy from the stabilized portfolio was 94.7% at the end of Q2/F13, up an impressive 230 bps from 92.4% at the end of Q2/F12. Healthy occupancy gains in Amica's mature communities in Ontario more than offset increased vacancy at properties in British Columbia. Lease-up continues to progress well. Despite slower than expected leasing progress at the recently acquired Amica at Quinte Gardens, overall Amica continues to make progress at its five properties in lease-up. Occupancy for the lease-up assets at the end of Q2/F13 was 65.9%, up 420 bps from 61.7% at the end of F2012 (May 31, 2012). Management expects occupancy to increase to more than 69% following 29 net pending move-ins, anticipated within the next two months. Amica continues to deliver solid MARPAS growth. Stabilized same community MARPAS increased once again and has now been positive for 35 consecutive months. Q2/F13 same community MARPAS increased by an impressive 6.5% over the year-ago period. This increase was driven by a combination of healthy occupancy increases and rising rental rates. Maintaining BUY rating and C$11.25 target. In our view, Amica's focus on best-in-class luxury seniors housing assets should continue to result in above average cash flow growth and total returns. We are maintaining our BUY rating and C$11.25 target price based on our sum--of-the-parts valuation ($10.73/share for ownership operations + $0.54/share for management operations).