Chartwell Retirement Residences (CSH-UN) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was CAD 23.6 million, down from CAD 158.2 million in Q3 2023, which included a CAD 178.9 million gain on sale from LTC transactions.

• FFO from continuing operations rose 54.8% to CAD 55.9 million, with total FFO up 43.2% year-over-year, driven by strong core property performance and lower G&A expenses.

• Same property adjusted NOI increased 17.1% to CAD 63.6 million, with all platforms achieving occupancy growth and operating margin up 200 basis points.

• Weighted average same property occupancy reached 88.5%, up 610 basis points year-over-year, and is forecast to reach 90.2% by December 2024.

• Over CAD 1.2 billion in announced transactions year-to-date, focusing on acquiring high-quality assets and divesting non-core properties.

Financial highlights

• Q3 2024 resident revenue was CAD 208 million, with direct property operating expense at CAD 128.4 million.

• Revenue for the rolling 12 months ended September 30, 2024, was CAD 915 million; adjusted EBITDA was CAD 302 million.

• Q3 2024 FFO per unit from continuing operations was CAD 0.20, up from CAD 0.15 in Q3 2023.

• Market capitalization stood at CAD 4.3 billion, with liquidity of CAD 385 million as of September 30, 2024.

• YTD 2024 FFO from continuing operations was CAD 139.8 million (CAD 0.55/unit), up from CAD 82.9 million (CAD 0.34/unit) in 2023.

Outlook and guidance

• Same property occupancy expected to reach 90.2% by December 2024 and 95% in 2025, with positive demand trends and robust move-in activity.

• Targeting 2025 employee engagement of 55% and resident satisfaction of 67%.

• Market imbalance and limited new supply expected to drive higher occupancy and rent growth.

• 1 percentage point increase in occupancy estimated to generate CAD 8.4 million in high-margin revenue.

• Ontario expected to drive most occupancy and NOI growth in 2025, with Quebec and Western Canada maintaining high occupancy.