TSX:CSH.UN - Post Discussion
Post by
retiredcf on Nov 10, 2022 9:48am
TD
Have an $11.50 target. GLTA
Chartwell Retirement Residences
(CSH.UN-T) C$8.09
Q3/22 First Look: Results Largely In Line; Slight Occupancy Gain Event
Q3/22 results. Conference call today at 9:00 AM ET (1-800-408-3053; passcode: 6479378#).
Impact: NEUTRAL
FFO/unit (f.d.) of $0.135 was -11% versus Q3/21, and largely in line with our $0.139 estimate and consensus of $0.14. AFFO/unit of $0.118 was also largely in line with our estimate (Exhibit).
Chartwell's retirement portfolio's same-property occupancy increased 60bps q/q and 50bps y/y to 77.6%, driven largely by further occupancy gains in Western Canada. Same property occupancy increased further to 78.1% in October and management expects occupancy to end December at ~78.2%, albeit this will likely prove conservative as the forecast does not account for mid-month move-ins. Management reaffirmed its expectation for occupancy to chart a further recovery in 2023.
Chartwell continues to incur elevated operating expenses in its retirement homes, largely due to higher staffing and agency costs. In Q4, management estimates agency staffing costs will be $3mm-$5mm. That said management expects to gradually bring agency costs down during 2023. Furthermore, to combat the current inflationary pressures, Chartwell noted it began increasing renewal rates a further 75bps in August, on top of the previous 3.00% average renewal rate increase.
Operations
Retirement SPNOI was +6.1% y/y adjusted for net pandemic expenses and -1.1% when including pandemic related costs. Revenues were +4.8% y/y due to rental rate increases and higher same-property occupancy. Operating margins were +40bps y/y to 34.3% as higher revenue was partially offset by higher agency costs, food, and utilities. Occupancy was +60bps q/q, largely driven by a +160bps gain in Western Canada to 85.6%. Ontario was +50bps to 75.0%, while Quebec increased 20bps to 76.6%.
Balance Sheet
As at November 9, 2022, Chartwell had $182.4mm of liquidity ($24.9mm cash; $157.5mm capacity on credit lines). Leverage was +50bps lower q/q to 50.5%.
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