Chartwell Announces Strong First Quarter 2012 Results

MISSISSAUGA, ONTARIO--(Marketwire - May 8, 2012) - Chartwell Seniors Housing Real Estate Investment Trust (CSH-UN.TO - News) ("Chartwell") announced today results for the three months ended March 31, 2012.

Highlights





--  Adjusted funds from operations ("AFFO") up 9.7% 

--  Same property net operating income ("NOI") up 5.8% on solid growth in

    all operating platforms 

--  On May 1, 2012, completed the previously announced acquisition of the

    Maestro portfolio 



"The strong growth in our operating and financial performance in 2011 continued into the first quarter of the new year," commented Brent Binions, President and CEO. "Looking ahead, with improving economic forecasts for both Canada and the United States, and the significant increase in the size and scope of our Canadian property portfolio resulting from the completion of the accretive Maestro Acquisition (as defined below), we are optimistic we will see another year of solid growth and enhanced results in 2012."

Financial Highlights





Three months ended March 31,                              2012         2011 

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AFFO ($000s) (1)                                      $ 22,217     $ 20,250 

AFFO per unit diluted (1)                             $   0.15     $   0.14 

                                                                            

Funds from operations ("FFO") ($000s) (1)             $ 25,512     $ 22,650 

FFO per unit diluted (1)                              $   0.17     $   0.16 

                                                                            

Distributions declared ($000s)                        $ 19,774     $ 19,512 

Distributions declared per unit                       $   0.14     $   0.14 

Distributions declared as a percentage of AFFO            89.0%        96.4%

                                                                            

Weighted average number of units outstanding,                               

 diluted (000s)                                        153,153      144,987 

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(1) AFFO, AFFO per unit diluted, FFO and FFO per unit diluted 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.                                                          



AFFO in the first quarter of 2012 was $22.2 million ($0.15 per unit diluted) compared to $20.3 million ($0.14 per unit diluted) in the first quarter of 2011, representing an increase of 9.7%. Growth in AFFO was primarily driven by incremental contribution from the property portfolio due to acquisitions, and same property NOI growth offset by slightly higher general, administrative and trust ("G&A") expenses, higher interest expense, lower management fee income, and approximately $0.4 million in marketing and lease-up costs related to two development projects opened in the period. There were no similar marketing and lease-up expenses in the first quarter of 2011.

FFO in the first quarter of 2012 increased to $25.5 million ($0.17 per unit diluted) from $22.7 million ($0.16 per unit diluted) in the first quarter of 2011, representing an increase of 12.6%. In addition to the items discussed above, FFO in the first quarter of 2012 was impacted by changes in the amortization of financing costs and debt mark-to-market adjustments.

Operating Performance





                                                                  Increase/ 

Three months ended March 31,                 2012         2011   (Decrease) 

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Same property occupancy (1)                  90.0%        89.4%       0.6pp 

                                                                            

Same property NOI ($000s) (2) (3)        $ 50,858     $ 48,057     $  2,801 

                                                                            

G&A expenses ($000s)                     $  6,363     $  6,161     $    202 

G&A expenses as a percentage of                                             

 revenue (1)                                  3.1%         3.3%      (0.2pp)

                                                                            

Net Loss ($000s)                         $(48,363)    $(18,464)    $(29,899)

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(1) pp = percentage 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.                                        

(3) Excludes the effects of foreign exchange on U.S. dollar revenue.        



Same property weighted average occupancy for the three months ended March 31, 2012 improved to 90.0% compared to the 89.4% in same period last year, driven by strong occupancy growth in the U.S., Western Canada and Quebec, partially offset by a slight decline in Ontario occupancy.

Same property NOI showed strong growth in the first quarter of 2012, rising 5.8% compared to the first quarter of 2011. The Canadian same property retirement portfolio generated a 4.4% increase in NOI compared to the same period last year due to higher ancillary revenues from additional care and services provided to its residents, occupancy improvements and rental rate growth. The U.S. same property portfolio delivered strong NOI growth of 9.9% in the first quarter of 2012 primarily due to occupancy rising to 90.0% from 87.7% last year and rental rate growth. The Canadian long term care portfolio also generated a solid 4.1% increase in same property NOI due primarily to higher government funding provided for direct resident care, and lower energy costs.

As a percentage of revenues, G&A expenses improved to 3.1% in the first quarter of 2012 compared to 3.3% in last year's first quarter. G&A expenses increased by $0.2 million for the three months ended March 31, 2012 compared to the same period last year due primarily to higher reserves for certain self-insured liabilities and the settlement of one self-insured claim.

In addition to the items discussed above, the net loss for the three months ended March 31, 2012 was impacted by the depreciation of properties, the amortization of limited life intangibles, changes in deferred income tax expense/recovery. Changes in the fair value of Chartwell's convertible debentures, Class B limited partnership units of Master Care LP, Subscription Receipts (as defined below) and the option component liability relating to Chartwell's long-term incentive plan, as well as convertible debentures issuance costs and transaction-related costs expensed in the quarter cumulatively increased net loss by $35.2 million.

Recent Developments

On March 9, 2012, Chartwell completed its public offering of $135.0 million of 5.7% convertible debentures, maturing on March 31, 2018, and 24,913,125 subscription receipts (the "Subscription Receipts") at $8.20 per Subscription Receipt. The net proceeds of the offering, after underwriters' commissions and other costs of the offerings, were $325.3 million and were used by Chartwell to repay amounts outstanding on its Credit Facility, to redeem all of its issued and outstanding 5.9% convertible debentures, which occurred on March 16, 2012, and to fund its share of the net purchase price of the Co-Owned Properties (as defined below), including acquisition-related expenses. Upon closing of the Maestro Acquisition on May 1, 2012, the Subscription Receipts were converted into trust units of Chartwell.

During the first quarter of 2012 Chartwell purchased the 70-suite Chartwell Select Georgian Traditions Retirement Residence in Collingwood, Ontario from Spectrum and their joint-venture partner. The purchase price was $15.5 million, before closing costs, and was settled through the assumption of debt of $11.4 million, settlement of an outstanding mezzanine loan of $0.9 million, settlement of outstanding accounts receivable of $0.9 million, with the remaining balance, net of working capital adjustments, paid in cash.

In the first quarter of 2012, Chartwell completed construction of two new retirement residences in Kitchener and Oshawa, Ontario, adding 212 suites to its portfolio.

On April 23, 2012, Chartwell acquired a 50% interest in Renaissance Retirement Residence in Kamloops, British Columbia from Spectrum. The purchase price was $7.7 million and was settled through the assumption of debt of $4.7 million, settlement of an outstanding mezzanine loan of $0.7 million, settlement of outstanding accounts receivable of $0.8 million, with the remaining balance, net of working capital adjustments, paid in cash.

On May 1, 2012, Chartwell completed the previously announced acquisition of the Maestro portfolio (the "Maestro Acquisition") in co-ownership with Health Care REIT, Inc. ("HCN"). Chartwell and HCN each acquired a 50% undivided interest in 39 properties with 7,662 suites (the "Co-owned Properties"). HCN acquired 100% interest in three other properties with 525 suites. Chartwell will manage all 42 properties. The purchase price for the Co-Owned Properties was $849.8 million and was settled through the assumption of debt of $449.8 million, with the balance, net of working capital adjustments, paid in cash.

Chartwell's financial statements, including its MD&A, are available at www.chartwellreit.ca and on SEDAR at www.sedar.com. A detailed list of Chartwell's property portfolio can also be obtained under "Supplementary Information" in the "Investor Relations" section of the Chartwell web site.

About Chartwell

Chartwell is a real estate investment trust which indirectly owns and operates a complete range of seniors housing communities from independent supportive living through assisted living to long term care. It is one of the largest participants in the seniors housing business in North America. Chartwell's aim is to capitalize on the strong demographic trends present in its markets to maximize the value of its existing portfolio of seniors housing communities, and prudently avail itself of opportunities to grow internally and through accretive acquisitions.

Chartwell's Distribution Reinvestment Plan ("DRIP") allows unitholders to have their monthly cash distributions used to purchase units without incurring commission or brokerage fees, and receive bonus units equal to 3% of their monthly cash distributions. More information can be obtained at www.chartwellreit.ca.

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. The words "plans", "expects", "does not expect", "is expected", "budget", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify 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 our 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 our views as of any date subsequent to the date of this document. We have attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimated 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 in Canada from time to time, including but not limited to our most recent Annual Information Form.

Non-IFRS Measures

FFO, AFFO, and NOI 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 Chartwell's performance. FFO, AFFO and NOI as computed may differ from similar computations as reported by other issuers and may not be comparable to those reported by such issuers. The MD&A contains a reconciliation of net income/loss to FFO and the calculation of AFFO for the three months ended March 31, 2012. Detailed descriptions of these terms are contained in the MD&A, available at www.sedar.com.