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Regal Lifestyle Communities Inc. Announces Results for the Quarter Ended June 30, 2014

TORONTO, Aug. 12, 2014 /CNW/ - Regal Lifestyle Communities Inc. ("Regal") (TSX:RLC) announced today results for the quarter ended June 30, 2014.

Q2 2014 Highlights:

  • Compared to a year ago, results were substantially higher with revenue, net operating income ("NOI") and adjusted funds from operations ("AFFO") all up by 76.3%, 84.5% and 68.8%, respectively.
  • Same home NOI increased 15.6% over last year and accretive acquisitions contributed the balance of the growth.
  • Average portfolio occupancy, remains over 93%.
  • On June 6, 2014 Regal completed the acquisition of seven homes for $160 million which increased total suite count by 67%.

Mr. Simon Nyilassy, President and CEO, said:  "We are very pleased with our results.  We have now acquired thirteen homes in eight communities and three different provinces over the past nine months and they have all made immediate, positive contributions to our operations and cash flow per share."  He added, "together with the significant cash flow growth in our original group of ten retirement homes, we have delivered another strong quarter".

Financial Highlights








Quarter ended
June 30, 

For the Six months
ended June 30,

(in $000's, except for per share amounts
and as otherwise indicated)

2014

2013

2014

2013

Weighted Average Occupancy %

93.3%

89.9%

93.7%

90.3%






Operating Revenue

$    23,296

$    13,214

$    42,627

$    26,877

NOI

$      9,096

$      4,930

$    16,527

$    10,257

General & Administrative Expenses

$      1,327

$         943

$      2,506

$      2,018

G&A expenses as a % of revenue

5.7%

7.1%

5.9%

7.5%

Loss for the period and comprehensive loss

$     (2,851)

$        (625)

$     (4,542)

$     (1,336)






AFFO (1)

$      4,623

$      2,739

$      8,265

$      5,632

AFFO per share - basic/dilutive

$      0.180

$      0.144

$      0.353

$      0.297






Dividends  as a % of AFFO

99.2%

121.2%

101.5%

117.8%

 

(1)

NOI and AFFO per share basic and dilutive are measures used by management in evaluating operating performance.  Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.



Weighted average occupancy is higher for the quarter and six months ended June 30, 2014 than the quarter and six months ended June 30, 2013 by 340 basis points ("bps").  This is as a result of increases in the initial ten homes and high occupancies in the acquired homes.  General and administration expenses increased by $384 or 40.7% from the quarter ended June 30, 2013 to the quarter ended June 30, 2014.  This is due primarily to additional administration costs necessary to support the acquired homes. General and administration as a percentage of revenue has improved to 5.7% for the quarter ended June 30, 2014 compared to 7.1% for the quarter ended June 30, 2013.

 AFFO improved from $2,739 ($0.144 per share) for the quarter ended June 2013 to $4,623 ($0.180 per share) for the quarter ended June 30, 2014 representing an increase of 68.8%.  For the six month period ended June 30, 2014, AFFO was $8,265 ($0.353 per share), representing an increase of 46.8% over the previous six month period.  Increases in AFFO were driven primarily by NOI from acquisitions and increased NOI from the initial ten homes reduced by higher general and administration and interest costs associated with the acquisition.

Operating Performance













Quarter ended
June 30, 


For the Six months
ended June 30,


(in $000's)

2014

2013

Increase

2014

2013

Increase








Same Home Occupancy

93.2%

89.9%

330 bps (1)

93.7%

90.3%

340 bps (1)








Same Home Revenue

$14,421

$13,214

$    1,207

$28,905

$26,877

$    2,028








Same Home NOI (2)

$  5,697

$  4,930

$       767

$11,596

$10,257

$    1,339

Acquired Homes' NOI(2)

$  3,399

$         -

$    3,399

$  4,931

$         -

$    4,931

Total NOI

$  9,096

$  4,930

$    4,166

$16,527

$10,257

$    6,270

 

(1)

Bps-basis points

(2)

NOI is a measure used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.



Acquisitions since the second quarter of last year, comprising five homes in Ontario, seven homes in Quebec and one home in British Columbia, contributed $8,875 in revenue and $3,399 in NOI in the quarter, accounting for a majority of the increases of 76.3% and 84.5% respectively over the prior year's quarter.  The latest quarter included just 25 days of operations from the homes in Quebec and, accordingly, significant further growth in revenue and NOI can be expected in the third quarter.  All of these recent acquisitions continue to enjoy high levels of occupancy, averaging 94.9% in the quarter, excluding the lease up property in Milton.

Same home revenue and NOI increased 9.1% and 15.5%, respectively, compared to the same quarter of the preceding year.  Revenue increases were the result of both higher average occupancy, which increased by 330 bps to 93.2%, as well as increases in monthly average rent per occupied suite.  These revenue increases combined with effective cost management resulted in an even greater improvement in NOI.

Same home margins also increased significantly over the previous quarter from 37.3% to 39.5%, primarily as a result of the occupancy gains mentioned above, combined with cost management initiatives which kept expense increases broadly consistent with higher occupancy levels and inflation.

Financial Position

At June 30, 2014 cash on hand was $12.5 million and the unused borrowing capacity on Regal's revolving credit facility and revolving loan remained at $20 million.

Debt to gross book value ("GBV") is 58.5% including the convertible debenture which is in our target range of 55% to 60% (65% if convertible debentures are utilized). The debt service coverage ratio for the quarter ended June 30, 2014 was 1.47 times. Regal's weighted average interest rate is 4.04% (4.17% including convertible debentures). Regal's debt strategy is to obtain secured mortgage financing on a primarily fixed rate, property-by-property basis with staggered maturity dates once a property reaches a stabilized lease-up level.

Regal's objectives are to: (i) achieve and maintain staggered debt maturities to lessen exposure to interest rate fluctuations and re-financing risk in any particular period; and (ii) fix the interest rates and extend loan terms as long as possible when borrowing conditions are favourable. However, Regal is maintaining a shorter average maturity to start taking advantage of CMHC insured financing for which Regal expects to become eligible in 2014.

Investor Conference Call

Simon Nyilassy, President and Chief Executive Officer and Harold Atterton, Chief Financial Officer, will host a conference call on Wednesday August 13, 2014 at 9:00am ET.  The telephone numbers for the conference call are:  Local 416-340-2217 or Toll Free 1- 888-789-9572.  The participant passcode is # 2962972.

The conference call can be replayed (Instant Replay) until September 13, 2014 by dialing:  Local 905-694-9451 or Toll Free 1-800-408-3053 .  The passcode for the Instant Replay is # 7512279.  The call will also be archived on the Regal website at www.regallc.com.

About Regal Lifestyle Communities Inc.

Regal Lifestyle Communities Inc. is a corporation incorporated under the laws of the Province of Ontario. The Company's portfolio is comprised of 23 retirement communities consisting of over 3,600 suites, primarily located in the Provinces of Ontario and Quebec including a property located in each of the Provinces of British Columbia, Saskatchewan and Newfoundland and Labrador.

Forward-Looking Information

This press release contains forward-looking information that reflects the current expectations, estimates and projections of management about the future results, performance, achievements, prospects or opportunities for Regal and the seniors housing industry. The words such as "may", "would", "could", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "project", "continue" and similar expressions have been used to identify these forward-looking statements. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond management's control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements.

While we anticipate that subsequent events and developments may cause our views to change, we do not intend to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing management's views as of any date subsequent to the date of this document. Management has attempted to identify important factors that could cause actual results, performance or achievements to vary from current expectations or estimates, expressed or implied, by the forward-looking information.

However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

These factors are not intended to represent a complete list of the factors that could affect us. See "Risks and Uncertainties" in the MD&A, "Risk Factors" in the prospectus and risk factors highlighted in materials filed with the securities regulatory authorities of Canada from time to time, including but not limited to Regal's most recent annual information form.

Non-IFRS Measures

FFO, AFFO, NOI, and Debt Service Coverage Ratio are not measures defined by International Financial Reporting Standards ("IFRS"). They are presented because management believes these non-IFRS measures are relevant and meaningful measures of Regal's performance. FFO, AFFO, NOI and Debt Service Coverage Ratio as computed may differ from similar computations as reported by other issuers and may not be comparable to those reported by such issuers. Regal's Management Discussion and Analysis of Results of Operations and Financial Condition for the quarter ended June 30, 2014 ("Q2 2014 MD&A") contains a reconciliation of loss to FFO and a reconciliation of cash provided by (used in) operating activities to AFFO for the quarter ended June 30, 2014. Detailed descriptions of the terms are contained in Regal's Q2 2014 MD&A, available at www.sedar.com.

SOURCE Regal Lifestyle Communities Inc.

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