Invesque Inc. Reports First Quarter 2019 Results

TORONTO, ONTARIO, MAY 14, 2019 – Invesque Inc. (TSX: IVQ.U) (the “Company”) today announced its results for the three months ended March 31, 2019.

First Quarter Highlights

  • Expanded partnership with Constant Care Management Company with the closing of an US$8.1 million acquisition of a 100% private pay, memory care community located in Allen, TX.
  • Announced the acquisition of three assets currently operated by Symcare from various sellers for US$52.0 million with the consideration paid in cash and Invesque common shares at US$9.00 per share.
    • Consolidated the Company’s Symcare portfolio into a 15-year, cross collateralized master lease with fair market resets in 2025 and 2030.
    • Company will receive warrants for a 9.8% stake in the Symcare operating company.
  • Instituted a buyback program to repurchase a maximum of approximately 10% of the public float of 2022 Debentures and 2023 Debentures over a twelve-month period.
  • Reported funds from operations (“FFO”) of US$0.24 per common share for the three months ending March 31, 2019. The Company reported adjusted funds from operations (“AFFO”) of US$0.21 per common share for the three months ending March 31, 2019.
“The first quarter was highlighted by our commitment to enhance our relationships with key partners such as Constant Care Management Company and Symcare. The Symcare transaction allowed us to strengthen the credit underlying our portfolio while maintaining flexibility and the ability to participate in the upside of the operator and the skilled nursing industry broadly,” commented Scott White, Chairman and Chief Executive Officer of the Company. “As we look forward to the balance of 2019, I am excited about the pipeline of actionable opportunities we see ahead of us to substantially grow our portfolio. We will continue to creatively raise well priced capital to deploy into strategic assets to build a forever portfolio.”

Financial Highlights

Three months ended March 31,
(in thousands of U.S dollars, except per share values) 2019 2018
Revenue $29,224 $23,039
Net income $7,205 $2,319
Funds from operations (“FFO”) (1) $12,623 $11,707
Funds from operations per share $0.24 $0.27
Adjusted funds from operations (“AFFO”) (1) $10,976 $10,092
Adjusted funds from operations per share $0.21 $0.23

(1) FFO and AFFO are measures used by management to evaluate operating performance. Please refer to the section “Non-IFRS Measures” in this press release for more information.

Balance Sheet and Portfolio Highlights

(in thousands of U.S. dollars, except number of properties) March 31, 2019 December 31, 2018
Total assets $1,324,034 $1,283,959
Number of owned properties 100 98
Debt $778,415 $731,215
Debt / Gross Book Value 58.8% 57.0%


Subsequent Events

Ellipsis Acquisition and Expansion of Constant Care Management Company Partnership

The Company intends to enter into a definitive agreement to acquire three newly built, Class-A memory care properties for US$30.7 million in May 2019. The three properties, developed by Ellipsis Real Estate Partners (“Ellipsis”), are located throughout the greater Indianapolis area and will be leased to Constant Care Management Company. The acquisition will further enhance the Company’s payor mix as 100% of revenue is currently derived from private pay funding sources. The Company and Constant Care Management Company intend to amend the existing absolute net master lease agreement to renew the 15-year term and two five-year extension options.

The purchase price for the acquisition will be paid in the form of assumption of debt, repayment of a portion of the mezzanine loan, and issuance of Invesque common shares to Ellipsis and Constant Care Management Company. Invesque common shares will be issued at a price of $9.00 per share.

The acquisition will expand the Company’s relationship with Constant Care Management Company from four properties to seven properties upon closing. The Company continues to execute on the right to fund and purchase Constant Care Management Company’s new memory care developments.

“Constant Care Management Company has been one of our top performers from a coverage and occupancy standpoint,” commented Adlai Chester, Chief Investment Officer of the Company. “We are excited to continue to expand our relationship with this high-quality operator and broaden our partnership with Ellipsis to maintain a robust pipeline of new, Class-A senior housing properties.”

Joint Venture with Magnetar

The Company and Magnetar Capital (“Magnetar”) intend to enter into a definitive agreement to form a joint venture (“JV”) to own health care real estate with a focus on skilled nursing facilities. The JV will be owned approximately 65% by the Company and 35% by Magnetar and is expected to close in May 2019.

The Company will contribute nine properties that it currently owns to the JV, including four properties leased to Bridgemoor Transitional Care Operations, LLC (“Bridgemoor”) and five properties leased to The Ensign Group, Inc. The Company will manage the operations of the JV in exchange for an asset management fee equal to 25 basis points on gross asset value.

Magnetar will acquire its 35% interest in the JV in exchange for cash payable to the Company of US$23 million. The proceeds will be used to fund a portion of the Company’s transaction pipeline.

“We appreciate this additional opportunity to partner with Magnetar as we search for ways to strategically raise capital,” commented Scott Higgs, Chief Financial Officer of the Company.

Bridgemoor Loan

In connection with the JV transaction, the Company will provide a working capital loan of up to US$10 million to Bridgemoor and certain of its subsidiaries. Bridgemoor is the operator of four transitional care skilled nursing facilities in Texas that the Company will contribute to the JV. The Company will receive rights in a warrant for a 9.8% interest in Bridgemoor in connection with the loan commitment.

Investor Conference Call

A conference call hosted by the Company’s senior management team will be held Wednesday, March 15, 2019 at 10:00 AM ET. The telephone numbers for the conference call are: Local: (647) 427-7450 or Toll Free: (888) 231-8191. The passcode for the conference call is: 9189748. The conference will also be available via webcast at http://www.invesque.com/company-presentations/. Please log on at least 15 minutes before the call commences. The telephone numbers to listen to the call after it is completed (taped replay) are: Local: (416) 849-0833 or Toll Free: (855) 859-2056. The Passcode for the taped replay is 9189748.

About Invesque

Invesque is a health care real estate company with an investment thesis centered around the opportunity created by the global aging demographic trend. Invesque currently capitalizes on this opportunity by investing in a highly diversified portfolio of income generating health care properties located across the United States and Canada through long-term absolute net leases, joint ventures, and development capital. For more information, visit www.invesque.com.

Forward-Looking Information

This press release contains forward-looking information that reflects the current expectations of management about the future results and opportunities for the Company including without limitation information with respect to the intention to enter into agreements relating to the Ellipsis acquisition and the Magnetar joint venture. Forward-looking statements generally can be identified by words such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans”, “project”, or “continue” or similar expressions suggesting future outcomes or events. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company’s control, including without limitation the risk that the Company will not agree to final terms with respect to the Ellipsis acquisition or Magnetar joint venture or that, if agreements are entered into with respect to such transactions, the conditions for completion of either such transaction will not be satisfied or waived. Although the Company believes that the expectations in its forward-looking statements are reasonable, its forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information, including the assumption that the Company will agree to final terms with respect to the Ellipsis acquisition and Magnetar joint venture. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements. Additional risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in the Company’s public disclosure documents available at www.sedar.com, including in the risk factors described in the Company’s current annual information form. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Non-IFRS Measures

The Company reports its financial results in accordance with International Financial Reporting Standard (“IFRS”). Included in this news release are certain non-IFRS financial measures as supplemental indicators used by management to track the Company’s performance. These non-IFRS measures are FFO and AFFO.

The Company believes that these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. For a full definition of these measures and a reconciliation to net profit for the three months ended March 31, 2019, please refer to the Financial Measures section of the March 31, 2019 MD&A available on the Company’s website and on SEDAR at www.sedar.com.

For Information Contact:

Vineet Bedi
1-317-643-6778
vbedi@invesque.com