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 May 10, 2024 7:28am

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Post# 36032989

RBC

Potential here for them to raise their target. GLTA

May 9, 2024

Chartwell Retirement Residences
Q1 ahead of us, in line with Street; solid operating momentum

TSX: CSH.UN | CAD 12.80 | Outperform | Price Target CAD 14.00

Sentiment: Positive

Our view: CSH reported Q1/24 FFOPU of $0.16 vs. $0.10 last year (+58% YoY), ahead of our $0.14E and in line with the Street’s $0.16E (range of $0.14E–0.17E). The +$0.02/unit variance to our call was mainly in NOI ($0.015/unit), as we had modelled heavier seasonality in operating costs, with the balance from lower G&A. Although results were in line with the Street, our overall take leans positive. SP NOI growth accelerated to 25% as the operational recovery gained steam. As well, robust tour activity and strong conversion rates point to further occupancy and margin momentum ahead, while leverage also improved. Conference call on May 10 at 10AM ET (1-800-806-5484; ID 8636626).

Highlights:

SP NOI up strong 24.7% YoY from higher occupancy and higher rents and service rates. QC led (+33.3%), followed by ON (+25.8%) and Western Canada (+20.1% YoY). SP NOI margins were +350 bps YoY to 35% (recall that CSH had previously cited a 38% 2024 target vs. 34% in 2023).
SP-occupancy increased across regions, with Q1 rising to 86.2% (+150 bps QoQ, +610 bps YoY). Notably, April advanced to 86.5% (+40 bps MoM), marking +90 bps from Dec-2023 vs. CSH’s average -180 bps for Dec–Apr in 2017–19. CSH forecasts May rising to 87.1% and June to 87.3% (+640 bps YoY).
Acquisitionsandportfoliooptimizationadvancing.PreviouslyannouncedretirementacquisitionsfromBatimoprogressed,with the May purchase of an 85% interest in Le Prescott (97.7% occupied) for $80MM and an 85% interest in Trait-Carre (94.6% occupied) on track to close in Q2/24 for $86MM. In March, CSH commenced the operational closure of Heritage Glen (323 suites) as it works to optimize its portfolio. It also invested $16MM into the same-property portfolio to modernize residences—more colour expected on the call on the capex outlook.
Ballycliffe LTC sale terminated (for now). With respect to the $65MM forward sale of the Ballycliffe LTC development, CSH exercised its option to terminate the contract, as it expects the value of the completed project to exceed the contract price as a result of LTC funding increases. However, CSH expects to recommence the sale process on project completion. The wind-up of the Welltower JV was pushed to Q3/24, with estimated net proceeds unchanged at $78MM.
Debt/EBITDA 9.7x (-0.5x QoQ, -1.8x YoY), with $280MM of available liquidity from cash ($38MM) and undrawn lines ($242MM). With respect to its $125MM (3.95%) unsecured term loan maturing this month, CSH expects to refinance/repay with CMHC- insured financing proceeds (current rates on 10Y terms at ~4.6%)