Invesque Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 11, 2023

There are 4 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to Invest First Quarter 20 20 Chief Conference Call. I will now turn the call over to Scott Hayes, Chief Financial Officer. Please go ahead, Mr. Hayes.

Speaker 1

Thank you. Good morning and

Speaker 2

thank you for joining our Q1 2023 conference call. I'm joined here today by Scott White, our Chairman and Chief Executive Officer and Ed Knight Chester, our Chief Investment Officer. Following our prepared We will open the line for questions. The Q1 earnings release, financial statements and MD and A are available on our website and a replay of this call will be available from 12:45 pm Eastern Time Today, it's at 11:59 p. M.

Speaker 2

Eastern Time on May 18. Please remember that today's call may include forward looking statements regarding future operations. Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today. We have identified such factors in our news release and other public filings. As we discuss our performance, please bear in mind that all amounts are in U.

Speaker 2

S. Dollars unless otherwise specified. I will now turn the call over to our CEO, Mr. Scott Higgs.

Speaker 3

Good morning, all, and thank you for joining the call. As I highlighted last quarter, 2021 and $20,000,000 We sold 43 assets for more than $435,000,000 drastically changing the makeup of our portfolio composition. With 80% of our pro form a NOI coming from senior stock investments, we are now for a dominantly private pay senior housing company that has been successful in our efforts to simplify the portfolio. We remain focused on ensuring that each one of our senior housing assets is integrated by one of our preferred senior housing operating partners. Since our last earnings call almost 6 years ago, We have further executed on that strategy.

Speaker 3

Capital report has been closed on the sale of the MetroWest Medical Office Building in Orlando, Florida, which we've achieved during our call and launch. The asset sold in April for $6,400,000,000 and our future proceeds were used to pay down property level debt. We continue to market the remaining 2 medical office buildings and have ongoing discussions with a potential buyer, but at this time have not entered into any definitive agreements. On April 1, we added a new operator to our roster of partners when we transitioned the day to day operations of 3 memory care communities to chapter 1. The chapter's team took over under offer operations under an interim management structure As of May 1, all licenses have been received and the new message from chapters and invest has fully commenced.

Speaker 3

This portfolio was previously managed by a small regional operator that struggled to achieve financial success of these assets over the last couple of years. I will touch on a bit more on the specifics at our new lease with Chapters and the Chapter's leadership team later on in the call. Our folks are doing long and successful relationships with the Chapter's team who is proud to have him on our team. We believe we touched on this last quarter, but on December 5, 2022, Envest acquired a mobile income by a 34 unit memory care community located in Carrollton, Texas. On April 10, The close of the acquisition of property as part of a ease in lieu of closure agreement borrowed over the next.

Speaker 3

Scott Higgs, we believe that we need a constant care management company. This community will ultimately be rolled into our natural lease with constant care and makes a Total number of communities owned by MS and managed by ConstantCare is 10. Lastly, I want to provide an update on the sale of our a new care portfolio that was announced as part of our March earnings release in ConverseCall. The due diligence period has expired as Bayer continues to move forward toward closing. We still anticipate that Sharon's actions will close prior to the end of the Q2.

Speaker 3

As we highlighted on our last call, Best will have only 9 skilled nursing facilities remaining in the portfolio following this step. Our shop operators are off to a good start in 2020, but I can see continuing to pick up NOI

Speaker 1

is increasing primarily

Speaker 3

due to annual resident rate increases who went into effect during the Q1. Asset, how better was this time last year continues to be a challenge for many of our Tom and I specifically is hyper focused on hiring additional home office support resources to provide their communities with Hiret support as well as training and development programs with the goal of hiring the right staff and working extremely hard to retain them. We expect to see continued NOI improvement from our larger shop relationships throughout 2023 and think additional upside remains in the longer term. Hayes.

Operator

I'll now turn

Speaker 3

it back to you with your financial results.

Speaker 2

Thank you, Chuck. For the 3 months ending March 31, FFO was $0.12 per share and AFFO was $0.12 per share. We continue to use proceeds from small transactions to delever and de risk our balance sheet and plan to use organic cash flow to ensure the proceeds in the best of turn. Our finance team is actively addressing near term maturities and managing the rising interest rate environment. As of March 31, approximately 74% of consolidated indebtedness features at the interest rate and approximately 82% of JV indebtedness into the fixed interest rate.

Speaker 2

Consistent with our strategy as previously outlined on 8%, we announced Head. Proposed enhancement in terms of a 6% 2018 convertible insurance are due in September 2023.

Speaker 1

Proposed investments increased the interest rate of 50% to 8

Speaker 2

Additionally, the proposed enhancements include the redemption on a pro rata basis of $22,000,000 of the outstanding principal. The company, including our Board of Directors, unanimously recommend such enhancements and feel that the best of the terms are in the best interest of all investors. These firms will allow us to continue executing on our strategy, which we believe will create significant value for all stakeholders. As previously discussed, we believe using our normal course issuer bid to buyback common equity and convertible ventures is among our best pieces of capital. Since the inception of our normal course issuer bid through April 30, we have retired nearly 701,000 common equity shares at an average price of $1.51 per share And $1,730,000 of convertible to future units averaging a CD1 percent of page value.

Speaker 2

I will now turn things over to Adlai Chester.

Speaker 1

Thank you, Scott. HSAV Electric's portfolio EBITDA coverage remained just under 1.0 times period ended December 31, 2022. As of December 31, the trailing 12 month occupancy of Big Life's full net assets and Big Life's stock portfolio was 77% As we mentioned last quarter, most of our senior housing operators increased resident rents by 5% to 6% during the Q1. We have started to see the impact of increased improved ROIs for several operators and expect even further increases to average rates in NOI in Q2. We expect that because one of our department's operators rolled out their annual rate increase in house residents on March 1.

Speaker 1

The increases in rental rates have been an important tool Viewed by our operators, offers continued increases in expenses operating cash. While certain markets remain challenging, our shop operates Head. Scott touched briefly on the transition of a portfolio of memory care assets uniquely managed by a small regional operator. We transitioned the community to a new operator, Chapter 3, about 45 days ago. Investment Chapters have entered into a 15 year master lease 2.5% annualized closure using the lease year 4.

Speaker 1

Chapter 11, James Shrinker, is a relatively new operator based in St. Louis, Missouri that is focused on improving the lives of seniors and passion for memory care. Jenny has a tracker up there to success in this industry, and we are really excited to add him and the team partner with our preferred operating partner. A portfolio which includes 2 assets in San Antonio, Texas and 1 in Little Rock, Arkansas, specifically with our chapter set out the mandate performed in 2022. We are happy to report that in the 45 days, we've already seen positive traction on occupancy and rental rates for overall NOI growth in communities as Chairman's chapter of TableLight's mix business is better managed.

Speaker 1

We look forward to a long successful relationship with the chapter statement. As As I mentioned earlier, we successfully completed the acquisition of a 34 Unit Memory Care Facility in Charleston, Texas on April 10. At closing, we entered into a new senior lease a property management company, one of our preferred operating partners and operates community. The acquisition was unique as we were able to leverage the relationship with one of our lenders To acquire the property at a very attractive basis, including interest price and additional capital to be up to the top of your standard, Less than $90,000 per unit, which is a substantial discount to replacement costs. Because we have With many lenders in our industry, we may see more to more opportunities to acquire underperforming properties and partner with our best in class operating relationships to improve the performance of our communities.

Speaker 1

Finally, I'd like to comment on our pending transactions. We are very encouraged that the due diligence period has expired to the portfolio and that we are working toward pursuing this transaction. The financial environment remains very challenging and bringing a transaction to close is no small feat.

Speaker 3

Since we

Speaker 1

get a transaction partner, we can see a number of factors beyond the first price, Working with credible groups that have a track record of the technicalities being built is important consideration for all of us. As we continue to work to turn these transactions to closing, We'll continue to proactively evaluate our portfolio and understand which makes you right for additional investment in this position. That wraps up our prepared remarks for the Q1 of the conference call.

Speaker 3

Ladies and gentlemen, this concludes your conference call for

Powered by Quartr
Earnings Conference Call
Invesque Q1 2023
00:00 / 00:00