Chartwell Announces First Quarter 2025 Results

MISSISSAUGA, ON, May 8, 2025 /CNW/ - Chartwell Retirement Residences ("Chartwell") (TSX: CSH.UN) announced today its results for the three months ended March 31, 2025.

Highlights 

• Resident revenue increased by $59.6 million or 32.4% in Q1 2025 compared to Q1 2024.
• Net income was $33.2 million in Q1 2025 compared to net loss of $2.0 million in Q1 2024.
• Funds from operations ("FFO")⁽¹⁾ up 43.1% from Q1 2024.
• Same property adjusted net operating income ("NOI")⁽¹⁾ up 21.3% from Q1 2024.
• Same property adjusted operating margin⁽¹⁾ up 400 basis points ("bps") to 40.8% from Q1 2024.
• Weighted average same property occupancy up 530 bps to 91.5% from Q1 2024. 

"In Q1 2025, our teams once again delivered outstanding operating results. Their unwavering focus on creating exceptional resident experiences—combined with innovative sales and marketing strategies—drove strong occupancy gains, resulting in a 400 basis point expansion in operating margin and 21.3% growth in same-property NOI," said Vlad Volodarski, CEO of Chartwell. "Our continued investments in our management platform, portfolio optimization, and—most importantly—the strength and dedication of our people have positioned us to capitalize on unprecedented market dynamics in seniors housing, where demand is accelerating and new supply remains limited."

"We are committed to building on this momentum by further growing occupancy and cash flows. We now project reaching 92.2% occupancy by June 2025, progressing toward our year-end target of 95%. I am incredibly proud of our team's achievements and grateful for their steadfast commitment to delivering the personalized, memorable services that define the Chartwell experience."

Results of Operations

The following table summarizes select financial and operating performance measures:

For Q1 2025, resident revenue increased $59.6 million or 32.4% and direct property operating expense increased $28.7 million or 23.6%.

For Q1 2025, net income was $33.2 million compared to net loss of $2.0 million in Q1 2024 primarily due to:

• higher gain on disposal of assets, and
• higher resident revenue,

partially offset by:

• higher direct property operating expense,
• higher depreciation of property, plant, and equipment ("PP&E"),
• higher deferred tax expense,
• current income tax expense in Q1 2025 as compared to income tax benefit in Q1 2024,
• higher finance costs,
• higher transaction costs related to dispositions,
• higher general, administrative, and Trust ("G&A") expenses, and
• higher negative changes in fair value of financial instruments, primarily due to increases in trading prices of our Trust Units, and
• lower net income from joint ventures.

For Q1 2025, FFO was $56.2 million or $0.20 per unit, compared to $39.2 million or $0.16 per unit for Q1 2024.  The change in FFO was primarily due to:

• higher adjusted NOI of $27.4 million,
• higher adjusted interest income of $0.5 million,
• higher other income of $0.5 million, and
• lower depreciation of PP&E and amortization of intangibles assets used for administrative purposes of $0.2 million,

partially offset by:

• higher adjusted finance costs of $8.0 million,
• higher G&A expenses of $2.6 million, and
• lower management fees of $1.1 million.

For Q1 2025, FFO includes no Lease-up-Losses and Imputed Cost of Debt related to our development projects (Q1 2024 – $0.4 million). 

Financial Position

As at March 31, 2025, liquidity⁽¹⁾ amounted to $456.4 million, which included $61.4 million of cash and cash equivalents and $395.0 million of available borrowing capacity on our credit facilities. 

The interest coverage ratio⁽⁴⁾ was 2.8 at March 31, 2025, compared to 2.7 at December 31, 2024.  The net debt to adjusted EBITDA ratio⁽⁴⁾ at March 31, 2025 was 8.2 compared to 8.4 at December 31, 2024.

2025 Outlook and Recent Developments 

An updated discussion of our business outlook can be found in the "2025 Outlook" section of our Management's Discussion and Analysis for the three months ended March 31, 2025 (the "Q1 2025 MD&A").

Operations

We continue to benefit from our well positioned property portfolio, strong management platform, and the robust industry supply and demand fundamentals. We experienced only a modest 10 bps occupancy decline in our same property portfolio from December to March—the historically weaker winter season—and expect to grow to 92.2% occupancy by June 2025. There continues to be strong momentum in initial contacts, personalized tour activity and conversion to permanent move-ins as we track toward our 95% occupancy target by December 2025.

Figure 1 provides an update in respect of our same property occupancy.

Growth and Portfolio Optimization Activities

We continue to execute on our portfolio strategy of enhancing our asset base to generate increased NOI, acquiring new strategic properties in core markets, selling non-core properties, and repositioning underperforming properties including:

• On March 1, 2025, we completed the previously announced acquisition of a 632-suite retirement residence in Montreal, Quebec for a purchase price of $136.0 million. The residence was rebranded Chartwell Rosemont Les Quartiers.
• On March 10, 2025, we acquired the remaining 15% ownership interest in Chartwell Trait-Carré, a 361-suite retirement residence in Charlesbourg, Quebec from Batimo for $17.2 million before working capital adjustments and closing costs. The purchase price included the proportionate assumption of the $66.5 million financing in place at closing, with the balance settled in cash. We now have 100% ownership interest in this residence. In addition, we repaid the assumed financing following closing of the transaction.
• On April 1, 2025, we acquired Chartwell Le Florilège, a 345-suite retirement residence in Quebec City, Quebec from Batimo. The purchase price of $112.9 million was partially settled through the assumption of a $77.6 million variable rate mortgage bearing interest at the Canadian Overnight Repo Rate Average ("CORRA") plus 1.95% and maturing in six months. The remainder of the purchase price, subject to normal working capital and other closing adjustments, was paid in cash.
• On April 1, 2025, we acquired Chartwell L'Envol, a 360-suite retirement residence in Quebec City, Quebec from Batimo. The purchase price of $117.8 million was partially settled through the assumption of a $65.4 million variable rate mortgage bearing interest at CORRA plus 1.95% and maturing in six months. The remainder of the purchase price, subject to normal working capital and other closing adjustments, was paid in cash. In addition, a loan of $4.2 million extended by Chartwell to Batimo was settled at closing.
•  On May 5, 2025, we entered into a 15-year lease agreement with the Ottawa Hospital for one of our residences in Ottawa, Ontario. Under the terms of the lease, we will receive annual lease payments of $2.3 million, subject to escalators. We expect to incur one-time leasing costs of approximately $2.7 million.

Liquidity and Financing

On November 14, 2024, we filed a prospectus supplement to establish an at-the-market equity distribution program (the "ATM Program"). The ATM Program allows Chartwell to issue up to $250.0 million of Trust Units from treasury to the public from time to time during the term of the ATM Program at its discretion. The ATM program is expected to remain in place until the earlier of May 30, 2026, or the issuance and sale of the Trust Units qualified for distribution under the ATM Program. During the three months ended March 31, 2025, Chartwell issued 5,571,010 units under the ATM Program at an average price of $16.74 per Trust Unit for total gross proceeds of $93.3 million. Commission and other costs amounted to $1.4 million.

On March 6, 2025, we issued $200.0 million of 3.650% Series E senior unsecured debentures (the "Series E Debentures") due on May 6, 2028, and $200.0 million of 4.500% Series F senior unsecured debentures (the "Series F Debentures") due on March 6, 2032. The net proceeds of the Series E Debentures and the Series F Debentures were used to repay indebtedness under our secured credit facility, to repay the remaining $75.0 million outstanding on our unsecured term loan, and to partially finance acquisitions.

As at May 8, 2025, liquidity amounted to $450.4 million, which included $55.5 million of cash and cash equivalents and $394.9 million of available borrowing capacity on our Credit Facilities.

As of the date of this release, for the remainder of 2025, we have $416.4 million of mortgage debt maturing with a weighted average interest rate of 4.96%. At May 8, 2025, 10-year CMHC-insured mortgage rates are estimated at approximately 3.97% and five-year unsecured debenture rate to be approximately 4.36%.

Quarterly Investor Materials and Conference Call

We invite you to review our Q1 2025 investor materials on our website at investors.chartwell.com 

Q1 2025 Financial Statements
Q1 2025 MD&A
Q1 2025 Investor Presentation

A conference call hosted by Chartwell's senior management will be held Friday, May 9, 2025, at 10:00 AM ET.  The telephone numbers to participate in the conference call are: Local: (416) 340-2217 or Toll Free: 1-800-806-5484. The passcode for the conference call is: 5368824#.  Please log on at least 15 minutes before the call commences to register for the Q&A. A slide presentation to accompany management's comments during the conference call will be available on the website. A live webcast of the call will be available at https://events.q4inc.com/attendee/501506819. Joining via webcast is recommended for those who will not be participating in the Q&A. 

The telephone numbers to listen to the call after it is completed (Instant Replay) are: Local (905) 694-9451 or Toll-Free: 1-800-408-3053. The Passcode for the Instant Replay is 1275834#. These numbers will be available for 30 days following the call. An audio file recording of the call, along with the accompanying slides, will also be archived on Chartwell's website at investors.chartwell.com. 

Footnotes

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 Chartwell and the seniors housing industry. 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 our control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. Examples of forward-looking information in this document include, but are not limited to, statements regarding our business strategies, operational sales, marketing and portfolio optimization strategies including targets, and the expected results of such strategies, predictions and expectations with respect to industry trends including growth in the senior population, a deficit of long term care beds and the slow down of new construction starts, expectations with respect to taxes that are expected to be payable in the current and future years and statements regarding the tax classification of distributions, and occupancy rate forecasts. 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 more fully described in the "Risks and Uncertainties and Forward-Looking Information" section in Chartwell's 2024 MD&A, and in materials filed with the securities regulatory authorities in Canada from time to time, including but not limited to our most recent Annual Information Form the ("AIF"). A copy of the 2024 MD&A, the AIF, and Chartwell's other publicly filed documents can be accessed under Chartwell's profile on the SEDAR+ website at sedarplus.com. Except as required by law, Chartwell does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or for any other reason.

About Chartwell

Chartwell is in the business of serving and caring for Canada's seniors, committed to its vision of Making People's Lives BETTER and to providing a happier, healthier, and more fulfilling life experience for its residents. Chartwell is an unincorporated, open-ended real estate trust which indirectly owns and operates a complete range of seniors housing communities, from independent living through to assisted living and long term care. Chartwell is one of the largest operators in Canada, serving approximately 25,000 residents in four provinces across the country. For more information visit www.chartwell.com. 

For more information, please contact:
Chartwell Retirement Residences
Jeffrey Brown, Chief Financial Officer
Tel: (905) 501-6777
Email: [email protected] 

Non-GAAP Financial Measures

Chartwell's condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain financial measures to assess Chartwell's operating and financial performance, which are measures not defined in generally accepted accounting principles ("GAAP") under IFRS. The following measures: FFO, FFO per unit, same property adjusted NOI, adjusted NOI, adjusted operating margin, liquidity, interest coverage ratio and net debt to adjusted EBITDA ratio as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS. They are presented because management believes these non-GAAP measures are relevant and meaningful measures of Chartwell's performance and as computed may differ from similar computations as reported by other issuers and may not be comparable to similarly titled measures reported by such issuers. For a full definition of these measures, please refer to the Q1 2025 MD&A available on Chartwell's website and on SEDAR+.

The following table reconciles resident revenue and direct property operating expense from our financial statements to adjusted resident revenue and adjusted direct property operating expense, and NOI to Adjusted NOI, and identifies contributions from our same property portfolio, our growth portfolio, and our repositioning portfolio:

The following table provides a reconciliation of net income/(loss) to FFO:

SOURCE Chartwell Retirement Residences (IR)