Chartwell Retirement Residences (CSH-UN) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered strong growth momentum with a 57% highly engaged employee score, significant occupancy and operating margin improvements, and a net loss narrowed to $2.8 million from $7.5 million in Q2 2023.

• FFO increased 45.3% to $44.7 million ($0.18 per unit), and same property adjusted NOI grew 20.6% to $61.0 million.

• Weighted average same property occupancy improved by 660 bps to 87.2%, with forecasts to reach 88.7% by September 2024.

• Major Quebec acquisitions expanded the portfolio with high-quality, newer assets at a discount to replacement cost.

• Marketing strategies and strong leasing activity drove a 22% year-over-year increase in personalized tours and robust portfolio expansion.

Financial highlights

• Q2 2024 net loss was $2.8 million, improved from $7.5 million in Q2 2023, with resident revenue up $21.4 million to $189.6 million.

• FFO from continuing operations rose 72.6% year-over-year, and FFO per unit increased to $0.18 from $0.11.

• Same property adjusted NOI grew by $10.4 million (20.6%) to $61.0 million, with all platforms posting occupancy gains.

• Resident revenue for Q2 2024 was $189.6 million; direct property operating expense was $120.7 million.

• NOI margin improved to 20.6%, and FFO margin to 45.3%.

Outlook and guidance

• Same property occupancy is expected to reach 88.7% by September 2024, with continued growth and strong demand fundamentals.

• Market fundamentals remain robust, with demand for seniors housing projected to double over 20 years.

• Targeting a 38% same property NOI margin for 2024, with potential to reach low 40s as occupancy approaches 95%.

• Blended rental and service rate growth of 4.3% in Q2 2024, with positive momentum anticipated.

• Anticipate higher than historical market rate increases due to improving occupancies and lower new supply.