MARKHAM, Ontario, Feb. 19, 2020 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (SIA.TO) today announced its financial results for the three months and year ended December 31, 2019. The Audited Consolidated Financial Statements and accompanying Management’s Discussion and Analysis are available on the Company’s website at www.siennaliving.ca and on SEDAR at www.sedar.com.
“In 2019, we continued to invest in our team, our platform and our properties to further strengthen Sienna’s position in a growing sector,” said Lois Cormack, President and CEO of Sienna Senior Living. “With a balanced portfolio, extensive management expertise in seniors’ living, and a strong balance sheet, we are well positioned to achieve sustainable long-term growth and provide great resident experiences.”
2019 Financial and Operating Highlights
- Revenue increased by 1.6% to $172.2 million in Q4 2019, and 4.3% to $669.7 million in 2019;
- Total NOI decreased by 2.7% to $37.9 million in Q4 2019, and increased by 3.7% to $156.9 million in 2019;
- Average occupancy in Sienna’s long-term care (“LTC”) portfolio remained high at 98.2% in Q4 2019, and 98.3% in 2019;
- Average same property occupancy in Retirement was 86.1% in Q4 2019, and 87.9% in 2019;
- Diluted Operating Funds from Operations (“OFFO”) per share was $0.340 per share in Q4 2019 and $1.382 per share for 2019, slightly below the prior year.
Strong balance sheet
- Debt to enterprise value improved by 480 bps to 43.7% year-over-year, and debt to gross book value improved by 170 bps to 46% year-over-year;
- Debt to Adjusted EBITDA improved year-over-year to 6.7 years from 6.9 years;
- Weighted average cost of debt lowered by 30 bps to 3.6% year-over-year;
- Received a “BBB” investment credit rating with a “Stable” trend from DBRS, highlighting the strength of Sienna’s balance sheet;
- Issued $150 million aggregate principal amount of series A senior unsecured debentures at an interest rate of 3.109% per annum for a 5-year term in Q4 2019, which was used to pay down debt with higher interest rates and created a pool of unencumbered assets.
Financial and Operating Results:
|$000s except occupancy, per share and ratio data||Three months ended |
December 31, 2019
|Three months ended |
December 31, 2018
|Year ended |
December 31, 2019
|Year ended |
December 31, 2018
|Retirement Same Property – Average occupancy(1)(2)||86.1 %||91.8%||87.9%||91.7%|
|Retirement – Average total occupancy(1)(2)||85.0 %||91.8%||87.4%||91.7%|
|LTC – Average total occupancy||98.2 %||98.5%||98.3%||98.4%|
|LTC – Average private occupancy||97.9 %||98.6%||98.1%||98.3%|
|Operating Funds from Operations (OFFO)(3)||$22,754||$23,550||$91,886||$90,477|
|Adjusted Funds from Operations (AFFO)(3)(4)||$20,883||$21,738||$93,186||$93,065|
|Net income per share, diluted||$0.017||$0.006||$0.114||$0.155|
|OFFO per share, diluted(3)||$0.340||$0.357||$1.382||$1.405|
|AFFO per share, diluted(3)(4)||$0.313||$0.329||$1.402||$1.445|
|Dividends declared per share||$0.234||$0.230||$0.926||$0.908|
|Payout Ratio (3)(4)(5)||74.8 %||69.9%||66.0%||62.2%|
- The difference between Retirement same property occupancy and Retirement total occupancy is the results from January 1, 2019 to March 27, 2019 for the portfolio of ten Ontario seniors' living residences acquired on March 28, 2018, and the expansion at Island Park Retirement Residence, which is in lease-up period since it opened in July 2019.
- The quarter-over-quarter and year-over-year decline in Retirement same property occupancy and Retirement total occupancy is primarily related to the oversupply in the Ottawa market and new supply in the Kingston and South Surrey markets, in addition to temporary disruptions associated with property upgrades and renovations at a number of our residences.
- OFFO and AFFO for the three and twelve months ended December 31, 2019 include mark-to-market (recovery) expense adjustments on share-based compensation of ($424) and $1,027, respectively (2018 - ($582) and ($1,038), respectively).
- AFFO is impacted by the timing of maintenance capex spend.
- The payout ratio for Q4 2019 and the year ended December 31, 2019 increased 4.9% and 3.8% over the comparable period respectively, due to the Company's increase in its monthly dividend per share in Q4 2019 and a decrease in the Company's AFFO per share.
2019 Fourth Quarter Summary
Average occupancy in LTC remained high at 98.2%.
Average same property occupancy in Retirement was 86.1%. Contributing factors to the occupancy softness are related to the oversupply in the Ottawa market and new supply in the Kingston and South Surrey markets, in addition to temporary disruptions associated with property upgrades and renovations at a number of properties.
NOI decreased by 2.7% (or $1.0 million) to $37.9 million in Q4 2019, compared to Q4 2018, mainly related to lower occupancy in the Retirement portfolio.
LTC same property NOI decreased by 1.2% in Q4 2019, compared to Q4 2018, mainly due to timing of expenses.
Retirement same property NOI decreased by 3.7% in Q4 2019, compared to Q4 2018, largely due to lower occupancy, partially offset by rental rate increases in line with market conditions.
Revenue increased by 1.6% (or $2.7 million) to $172.2 million in Q4 2019, compared to Q4 2018. The increase was mainly a result of inflationary increases and timing of flow-through funding in LTC, partially offset by decreases in Retirement revenues due to occupancy.
Operating expenses increased by 2.9% (or $3.7 million) to $134.3 million in Q4 2019, compared to Q4 2018. The increase was mainly a result of inflationary increases and timing of expenses associated with flow-through funding in LTC, partially offset by a decrease in Retirement’s variable operating expenses in accordance with occupancy levels.
The Company generated net income of $1.1 million in Q4 2019, representing an increase of $0.8 million compared to Q4 2018. The increase was primarily related to fair value adjustments on interest rate swap contracts in Q4 2019, partially offset by higher deferred income taxes and lower NOI.
OFFO decreased by 3.4% (or $0.8 million) to $22.8 million in Q4 2019, compared to Q4 2018. The decrease was primarily related to lower NOI and non-recurring administrative expenses, partially offset by lower interest expense and lower current income taxes.
AFFO decreased by 3.9% (or $0.9 million) to $20.9 million in Q4 2019, compared to Q4 2018. The decrease was primarily related to the decrease in OFFO noted above.
2019 Year End Results Summary
NOI increased by 3.7% (or $5.6 million) to $156.9 million over the comparable prior year period. The increase is driven by full year contributions from Retirement acquisitions in 2018 and same property NOI growth in LTC, reflecting the benefit of owning a balanced portfolio of retirement and long-term care residences.
Retirement same property NOI decreased 0.3% year-over-year, while operating margins remained consistent with the prior year, primarily attributed to lower occupancy, partially offset by rental rate increases in line with market conditions and lower labour and property expenses.
LTC delivered 1.4% year-over-year same property NOI growth, primarily attributed to additional and inflationary funding increases. Average occupancy in LTC remained high at 98.3% year-over-year, consistent with the prior year.
Revenue increased by 4.3% (or $27.7 million) to $669.7 million over the comparable prior year period. The increase is mainly due to full year revenues generated from the Retirement acquisitions in 2018, as well as additional and inflationary increases in flow-through funding in LTC.
Operating expenses increased by 4.5% (or $22.1 million) to $512.9 million over the comparable prior year period, which included a tax refund of $1.3 million in Q1 2018. The increase is mainly due to additional expenses associated with flow-through funding and inflationary increases in LTC, as well as expenses incurred in connection with the 2018 acquisitions.
The Company generated net income of $7.5 million, representing a decrease of $2.3 million over the prior year. The decrease was primarily related to fair value adjustments on interest rate swap contracts, incremental interest expense and depreciation and amortization incurred from the 2018 acquisitions and an increase in mark-to-market adjustments on share-based compensation, partially offset by lower transaction costs and NOI growth.
OFFO increased by 1.6% (or $1.4 million) to $91.9 million over the comparable prior year period. The increase was primarily attributable to NOI growth and lower current income taxes, partially offset by an increase in interest expense and administrative costs primarily related to mark-to-market adjustments on share-based compensation and non-recurring expenses.
AFFO increased by 0.1% (or $0.1 million) to $93.2 million over the comparable prior year period. The increase was mainly related to the increase in OFFO noted above, partially offset by an increase in maintenance capital expenditures due to the 2018 acquisitions.
The conference call will be on Thursday February 20, 2020 at 9:30 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 5560239. A webcast of the call will be accessible via Sienna's website at: www.siennaliving.ca/investors/events-presentations. The webcast of the call will be available for replay until February 20, 2021 and archived on Sienna's website.
About Sienna Senior Living
Sienna Senior Living Inc. (SIA.TO) is a leading seniors' living provider with 83 seniors' living residences in key markets in Canada. Sienna offers a full range of seniors' living options, including independent living, assisted living, long-term care, and specialized programs and services. Sienna also provides expert management services. Sienna is committed to national growth, while driving long-term value for shareholders. The Company's approximately 12,000 employees are passionate about helping residents live fully every day, and were the driving force behind Sienna being named one of Canada's Most Admired Corporate Cultures. For more information, please visit www.siennaliving.ca.
Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as "anticipate," "continue," "could," "expect," "may," "will," "estimate," "believe," “goals” or other similar words and include, among other things, statements related to the Company's financial results or strategic plans. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions, including the funding of long-term care/residential care facilities by government entities. Other material factors or assumptions that were applied in formulating the forward-looking statements contained herein include the assumption that the business and economic conditions affecting the Company's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity and government regulations.
Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements. These forward-looking statements reflect current expectations of the Company as at the date of this news release and speak only as at the date of this news release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Chief Financial Officer & Chief Investment Officer