HALIFAX, NS, April 14, 2023 /CNW/ – (TSXV: NXLV) â NexLiving Communities Inc. (“NexLiving” or the “Company”) announced operating and financial results for the three months and year ended December 31, 2022.
Stavro Stathonikos, President & CEO commented: “We achieved strong operating and financial results for 2022, with same-property NOI growth coming in at 6.1% for 2022. Our acquisitions and rent increases more than offset the impact of higher interest rates and drove an 84% year over year growth in FFO per share.”
Summary of Q4 and 2022 Results
- Property revenue increased +61% to $3.3 million for the three-month period and +58% to $11.9 million for the year, driven by the acquisition of high quality properties and rental rate increases during the period.
- Net operating income (“NOI”) increased +56% to $1.8 million (54.8% margin) for the three-month period and +57% to $6.7 million (56.2% margin) for the year.
- Suite count increased to 1,016 from 705 (+44% Y/Y) at December 31, 2021 as the Company continued to execute on its acquisition pipeline. Subsequent to year-end, the Company completed the acquisition of an additional 150 suites (see Subsequent Events).
- Same-property NOI increased +1.4% for the fourth quarter and +6.1% for the year. During the fourth quarter, the Company recorded approximately $42,000, in non-recurring property management expenses associated with a transition of certain properties to a new property manager, partially offset by rental rate increases and cost controls. Excluding the one-time property management transition costs, same-property NOI increased +5.7% for the quarter and 7.2% for the year.
- The portfolio remained highly occupied at 96.8% at December 31, 2022, down 211 basis points from a year ago. Approximately 40% of the vacant units were attributable to the Company’s suite repositioning program in the Ontario market, which is progressing ahead of expectations. Occupancy at the Company’s New Brunswick properties was 97.9% and the majority of vacant units have been re-leased subsequent to year-end at higher rents as attractive supply and demand fundamentals continue to persist.
- FFO per share grew +128% for the fourth quarter and +84% for 2022, on a fully diluted basis.
Q4 and FY2022 Operating and Financial Highlights:
|
As at December 31 |
2022 |
2021 |
Change |
|
Number of investment properties |
30 |
25 |
5 |
|
Number of suites |
1,016 |
705 |
311 |
|
Occupancy |
97 % |
99 % |
-211 bps |
|
Debt to total assets |
66.0 % |
57.7 % |
8.3 % |
|
Debt to GBV* |
66.0 % |
65.7 % |
24 bps |
|
Weighted average term to debt maturity (years) |
2.8 |
2.1 |
0.7 yrs |
|
Weighted average contractual interest rate |
2.99 % |
2.12 % |
87 bps |
|
Investment properties |
203,071,000 |
125,162,000 |
62.2 % |
|
Total assets |
205,715,083 |
143,758,717 |
43.1 % |
|
Total liabilities |
135,818,258 |
82,956,832 |
63.7 % |
|
Net asset value |
69,896,825 |
60,801,885 |
15.0 % |
|
Net asset value per share |
0.24 |
0.22 |
10.4 % |
|
For the three months ended December 31 |
2022 |
2021 |
Change |
|
Rental income |
3,300,364 |
2,056,306 |
60.5 % |
|
NOI |
1,808,085 |
1,162,446 |
55.5 % |
|
NOI margin |
54.8 % |
56.5 % |
-175 bps |
|
Net income |
2,366,603 |
3,988,755 |
(40.7) % |
|
FFO* |
499,818 |
155,318 |
221.8 % |
|
FFO (cents per share) – diluted* |
0.17 |
0.07 |
128.4 % |
|
Dividends declared (cents per share) |
0.05 |
0.05 |
– |
|
Weighted average units outstanding – diluted |
294,999,511 |
209,394,033 |
40.9 % |
|
Same property revenue* |
1,847,588 |
1,775,704 |
4.0 % |
|
Same property operating expenses* |
866,827 |
808,176 |
7.3 % |
|
Same property NOI* |
980,761 |
967,528 |
1.4 % |
|
Same property NOI margin* |
53.1 % |
54.5 % |
-140 bps |
|
For the year ended December 31 |
2022 |
2021 |
Change |
|
Rental income |
11,864,526 |
7,525,715 |
57.7 % |
|
NOI |
6,670,444 |
4,251,009 |
56.9 % |
|
NOI margin |
56.2 % |
56.5 % |
-26 bps |
|
Net income |
7,513,188 |
9,404,367 |
-20.1 % |
|
FFO* |
1,859,846 |
609,314 |
205.2 % |
|
FFO (cents per share) – diluted* |
0.63 |
0.34 |
83.6 % |
|
Dividends declared (cents per share) |
0.20 |
0.20 |
0.0 % |
|
Weighted average units outstanding – diluted |
295,261,040 |
177,635,604 |
66.2 % |
|
Same property revenue* |
7,264,811 |
6,910,549 |
5.1 % |
|
Same property operating expenses* |
3,219,536 |
3,096,876 |
4.0 % |
|
Same property NOI* |
4,045,275 |
3,813,673 |
6.1 % |
|
Same property NOI margin* |
55.7 % |
55.2 % |
50 bps |
|
*Refer to section “Non-IFRS Financial Measures” |
Acquisition Activity:
On December 16, 2022, the Company acquired a portfolio of two properties in Saint John, New Brunswick for $34.3 million. The acquisition included an adjacent parcel of land that is approved for a future development project of up to 85 units. Including the land parcel in the acquisition price, the blended capitalization rate is 4.75%. The consideration was satisfied with a combination of cash on hand and $25.7 million of mortgages bearing interest at a weighted average interest rate of 3.06% with a weighted term to maturity of 3.5 years.
Fair Value of Investment Properties:
The Company’s weighted average capitalization rate as at December 31, 2022, decreased to 4.69% from 4.75% at December 31, 2021. The decrease was primarily due to the acquisition of five properties during 2022, of which two were in Ontario and are valued at a capitalization rate below the portfolio average. This was partially offset by an expansion in the capitalization rates used to value the majority of the Company’s properties. For the Company’s same-property portfolio, the weighted average capitalization rate was 4.72% as at December 31, 2022 (2021 â 4.64%). The gain in fair value recorded by the Company reflects forecasted NOI growth due to expected rent increases along with lower property taxes in New Brunswick.
Subsequent Events
On February 28, 2023, the Company completed the acquisition of a 100% interest in Northpoint Management Inc. (“Northpoint”) from Sheaco Holdings Inc. Northpoint’s assets consist of two multi-family buildings comprising 75 units each located at 2251 Mountain Road and 2261 Mountain Road, Moncton, New Brunswick. The $39.6 million purchase price for the acquisition was paid by the issuance of 37.5 million common shares at a price of $0.20 per share for deemed proceeds of $7.5 million, a $30.7 million mortgage bearing interest at 4.19% with a ten-year term and a $1.0 million bridge loan with the remainder using cash on hand.
About the Company
The Company continues to execute on its plan to acquire recently built or refurbished, highly leased multi-residential properties in bedroom communities in Atlantic Canada and Ontario. The Company aims to deliver exceptional living experiences to our residents and provide comfortable, affordable housing solutions that cater to a wide range of demographics. The properties offer a range of modern and updated 1- and 2-bedroom suites, with a variety of amenities and features that allow residents to experience a hassle-free and maintenance-free lifestyle. The Company is committed to investing in its properties to ensure that they are modern and up-to-date. For its recently acquired properties in Ontario, the Company has undertaken a targeted value-add capital program to modernize and reposition the large existing suites. The Company currently owns 1,166 units in New Brunswick and Ontario. NexLiving has also developed a robust pipeline of qualified properties for potential acquisition. By screening the properties identified to match the criteria set out by the Company (proximity to healthcare, amenities, services and recreation), management has assembled a significant pipeline of potential acquisitions for consideration by the Company’s Board of Directors.
For more information about NexLiving, please refer to our website at www.nexliving.ca and our public disclosure at www.sedar.com.
Forward-Looking Statements
This news release forward-looking information within the meaning of applicable Canadian securities laws (“forward-looking statements“). All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “projects”, “estimates”, “forecasts”, “intends”, “continues”, “anticipates”, or “does not anticipate” or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements contained in this news release include, but are not limited to, management’s expectations of additional rental increases to come into effect by year end and the further enhancement of the Company’s financial results. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. These forward-looking statements reflect the current expectations of the Company’s management regarding future events and operating performance, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual events could differ materially from those projected herein and depend on a number of factors. These risks and uncertainties are more fully described in regulatory filings, including the Company’s Annual Information Form, which can be obtained on SEDAR at www.sedar.com, under NexLiving’s profile, as well as under Risk Factors section of the MD&A released on April 18, 2022. Although forward-looking statements contained in this new release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this new release speak only as of the date of this news release. Except as required by applicable securities laws, the Company does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
Non-IFRS Financial Measures
The Company prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases, as a complement to results provided in accordance with IFRS, NexLiving discloses financial measures not recognized under IFRS which do not have standard meanings prescribed by IFRS. These include FFO, FFO (cents per share) â diluted, Debt to GBV and same-property metrics (collectively, the “Non-IFRS Measures“). These Non-IFRS Measures are further defined and discussed in the MD&A dated April 13, 2023, which should be read in conjunction with this news release. Since these measures are not recognized under IFRS, they may not be comparable to similar measures reported by other issuers. The Company presents the Non-IFRS measures because management believes these Non-IFRS measures are relevant measures of the ability of NexLiving to earn revenue and to evaluate its performance and cash flows. A reconciliation of these Non-IFRS measures is included in the MD&A dated April 13, 2023. The Non-IFRS measures should not be construed as alternatives to net income (loss) or cash flows from operating activities determined in accordance with IFRS as indicators of the Company’s performance.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
SOURCE NexLiving Communities Inc.
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