IVQ will take off 2024 and beyond..here is an 8 point analysis from my Financial Firm
1. 3rd quarter FFO was 7 cents per share and there are about 56 million shares so that is about $3,920.000 USD per quarter.
Laurentian Bank is suggesting 8 cents per quarter in 2024 with no acquisitions or additional sales which is about $4,480,000 USD per quarter.
2. This money has normally (2022) gone to retire some of the debentures BUT the KEY-BANK consortium DEMANDED that most of the ‘extra’ cash flow go to reduce their leverage (banks want to be paid first) and they carry the biggest stick. This obviously has an effect on short term equity and bond prices since the redemption of bonds (time frame) and equity dividend is more uncertain.
IVQ is making money. This sector normally has a price multiple of at least 10X the FFO to determine the value of the business. That would put the market cap at closer to $160,000,000 million (currently at less than $20,000,000 or close to 1 years profit.
3. Interest is being paid and REVENUE is well above payments needed to cover interest (about $20,000,000 more than needed to cover debt payments)
4. KeyBank consortium line of credit was extended to March 2025 (higher interest rate). The BIG factor/risk here is the time frame for selling the last LONG TERM CARE position (skilled nursing) which is the #1 goal at this time or at least moving the debt to the government agency HUD (Federal Housing Administration ) which will allow them more freedom with their FFO (similar to free cash flow) and in particular, redemption of their bonds.
5. Interest rates are projected to fall 1.75% over the next 24 months. Looking out into late 2024 and 2025 that will reduce interest costs which will have a positive effect on FFO (funds from operations).
6. There is still significant bed space in IVQ so gains can come organically as occupancy improves. (This is on top of inflationary increases).
7. Once the last ‘long term care’ portfolio (skilled nursing) is sold off and the line of credit retired there ‘should’ be enough to make a substantial dent in the U series bonds due in January 2025 and some of the V series bonds due in September 2026.
8. Once Invesque is almost 100% private pay (retirement home) the company should be more attractive as an acquisition and a price closer to book value be attainable.
Source Credit: Henderson, Yahoo Finance