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 8:47am

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Post# 36033132

TD

Currently have a $15.00 target. GLTA

Q1/24 FIRST LOOK: RESULTS SLIGHTLY AHEAD; SPNOI GROWTH +24.7%

THE TD COWEN INSIGHT

Chartwell delivered strong Q1 results that were slightly ahead of our estimate/consensus expectations and highlighted by SPNOI growth of 24.7%. We expect management's unchanged outlook calling for continued occupancy gains, +5% growth in rental rates/ services income, and same-property NOI margins of 38% to deliver strong earnings growth for 2024.

Impact: SLIGHTLY POSITIVE

FFO/unit (f.d.) of $0.161 was +58% y/y, and ahead of our $0.150 estimate (consensus: $0.152). AFFO/unit of $0.148 was +74% y/y. The variance to our estimate was lower G&A/interest expense. Retirement fundamentals remained strong across Chartwell's portfolio and demonstrated a reversal of the typical seasonal headwinds in Q1. Average retirement occupancy continued to trend upwards versus Q4 and management expects this momentum to carry through the remainder of the year.

Operations

Q1 Retirement SPNOI was +24.7% y/y. Revenues were +12.1% y/y due to rental rate increases and higher same-property occupancy. Operating margins were +350bps y/y to 35.2%. Average same-property occupancy was +610bps to 86.2%, with Ontario +530bps to 83.5%, Quebec +620bps to 85.0%, and Western Canada +740bps to 92.8%. Occupancy has improved thus far in Q2, with Chartwell reporting 86.5% in April (+150bps YTD) and forecasting 87.1%/87.3% for May/June. Management noted it remains on track to meet its 95% same property occupancy target in 2025.

Acquisitions/Dispositions

On May 3, Chartwell acquired an 85% interest in the 361-suite Chartwell Le Prescott residence in Quebec from Batimo for $82mm. Chartwell also expects to close on an 85% interest in Chartwell Trait-Carre for $85mm in Q2. Both properties have high interest rate loans (8%+) that Chartwell intends to refinance with CMHC insured mortgages.
Given the recent funding announcements put forth by the Ontario government (+11.5% OA funding for LTC), management has terminated its forward sale contract ($64.5mm) at Ballycliffe (related to the Ontario LTC portfolio sale last year) and will commence a sales process. Management expects the value of the completed property to be higher than the forward sales price.
The dissolution of the Chartwell/Welltower JV (link), was pushed a quarter with expected close now in Q3.

Balance Sheet