Chartwell Retirement Residences T.CSH.UN

Alternate Symbol(s): CWSRF

Healthcare

Chartwell Retirement Residences is a Canada-based open-ended real estate trust. The Company is engaged in the business of serving and caring for Canada’s seniors. The Company owns and operates a range of seniors housing residences, from independent supportive living through assisted living to long term care. The Company operates through the Retirement Operations segment. It provides resident services and care in settings, such as independent living apartments (IL), independent supportive living-apartments (ISLA), independent supportive living-suites (ISLS), assisted living (AL), and long term care (LTC), among others. The Company’s portfolio groupings are the same property; acquisitions and development; and dispositions and repositioning. Its Retirement Operations property portfolio includes Western Canada, Ontario, Quebec, and others. The Company serves over 25,000 residents in four provinces across the country.

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Chartwell Retirement Residences

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Post by retiredcfon Mar 08, 2024 9:02am

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Post# 35922359

RBC

Slightly positive from TD and slightly negative from RBC (although balanced by other factors). GLTA

March 7, 2024

Chartwell Retirement Residences
Q4 light, though operating traction through 2024 to date is encouraging

TSX: CSH.UN | CAD 12.32 | Outperform | Price Target CAD 14.00

Sentiment: Negative

Our view: CSH reported Q4/23 FFOPU of $0.16 vs. $0.14 last year (+15% YoY), below RBC/Street at $0.17E/$0.17E (tight range of $0.16-0.17). On balance, our initial read is modestly negative, with the shortfall to our forecast mainly from lower NOI (G&A was also higher, partly offset by lower net interest costs). Nonetheless, we’re encouraged by traction on key fronts, particularly with occupancy through 2024-to-date tracking ahead of CSH’s typical seasonal decline. As well, agency costs have dropped to below pre-pandemic levels, with CSH guiding solid advances in NOI margins for 2024, partly aided by further occupancy gains and rate growth. CC Mar-08 @ 10 a.m. ET (1-800-806-5484; ID 8931311).

Highlights:

SP NOI up strong 21.5% YoY (+14.3% YTD) from higher occupancy and higher rents/service rates, partly offset by higher costs for staffing, marketing, food, and repairs. QC led (+39%), followed by ON (+24%), and Western Canada (+11.6% YoY).
Good SP-occupancy momentum across regions, with Q4 rising to 84.1% (+270 bps QoQ, +460 bps YoY). CSH forecasts March at 85.5% (flat MoM), with April rising to 85.7%, up 80 bps from Dec. vs. its -180 bps average Dec-Apr change in 2017-2019.
Margins up, with more gains expected in 2024. SP NOI margin rose to 35% in Q4 (vs. 31% Q4/22). For 2024, CSH expects margins to improve to 38% (vs. 34% in 2023), supported by further occupancy advances, +5% rents/service rates (vs. +4.5% in 2023). Agency staff costs declined to 5% of total staff costs in Q4/23 (7% in 2023 vs. 13% in 2022) and are below pre-pandemic levels.
Debt/EBITDA 10.2x (-0.7x QoQ, -0.9x YoY), with $368MM available liquidity from cash ($32MM) and undrawn lines ($336MM).
Capital recycling update. In Q4, CSH sold two operationally closed retirement homes for $16MM (incurred $1.6MM of closure costs in 2023, incl. $1MM in NOI). In Feb-2024, CSH sold another property for ~$4MM. The previously noted forward sale of Ballycliffe LTC may occur on different terms than the $65MM contracted price as development will not be done by Apr-1/24. The wind-up of the Welltower JV is on track for Q2/24, though CSH’s estimated net proceeds increased to $78MM (+$7MM).
Acquisitions coming. The previously announced acquisition (Trait-Carre) from Batimo is now scheduled for Q2/24 at a cost of $85MM (for 85% interest). In Q4, Batimo also exercised its put rights for CSH to acquire an 85% interest in Le Prescott with an estimated value of $85MM (for 100%; 95.8% occupancy).