Invesque Inc. Reports Fourth Quarter 2023 and Full-Year Results

TORONTO, March 15, 2024 /CNW/ - Invesque Inc. (TSX: IVQ.U) (TSX: IVQ) (the "Company") today reported its results for the three and twelve months ended December 31, 2023.

Fourth Quarter and Subsequent Highlights

As previously announced, on October 27, 2023, the Company received final licensure approval for a newly constructed seniors housing community in Parker, Colorado. The assisted living and memory care community is part of a joint venture between the Company and Health Dimensions Group.
As previously announced, on November 1, 2023, the Company sold two seniors housing communities in Georgia and two seniors housing communities in South Carolina for US$25.1 million.
As previously announced, on November 8, 2023, the Company executed an Amended and Restated Credit Agreement (the "A&R Credit Agreement") with a syndicate of lenders led by KeyBank. The A&R Credit Agreement extended the maturity from December 19, 2023, to March 31, 2025.
Reported funds from operations ("FFO")^¹ of US$0.03 and US$0.33 per common share for the three- and twelve-months ending December 31, 2023. The Company reported adjusted funds from operations ("AFFO")^² of US$0.03 and US$0.30 per common share for the three- and twelve-months ending December 31, 2023.
As previously announced, on January 31, 2024, the Company sold a seniors housing community in South Carolina for US$4.0 million.
On February 29, 2024, the Company sold two skilled nursing facilities in Pennsylvania for gross proceeds of $12.9 million. Proceeds generated by the sale were used to paydown the KeyBank credit facility.
On March 5, 2024, the Company executed an amendment to the A&R Credit Agreement (the "A&R Credit Agreement Amendment"). Subject to the Company meeting specific conditions, including further repayment of the outstanding principal balance, the A&R Credit Agreement Amendment provides for the following adjustments to the covenant requirements:
- Reduction of the minimum fixed charge coverage ratio
- Reduction of the minimum required liquidity
- Reduction of the assumed debt service coverage ratio for assets pledged to the borrowing base
On March 5, 2024, the Company sold two skilled nursing facilities in Texas and one skilled nursing facility in Missouri previously operated under a triple-net lease for gross proceeds of $55.5 million. Following the payoff of applicable property-level debt, proceeds were used to further paydown the KeyBank credit facility.

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¹ FFO is a measure used by management to evaluate operating performance. Please refer to the section "Non-IFRS Measures" in this press release for more information.

² AFFO is a measure used by management to evaluate operating performance. Please refer to the section "Non-IFRS Measures" in this press release for more information.

"I am pleased to announce the disposition of five skilled nursing facilities over the last 30 days. A few years ago, Invesque set out to become a predominately private pay seniors housing company and with only four skilled nursing facilities remaining in our portfolio today, the Company has successfully achieved that goal," commented Scott White, Chairman and Chief Executive Officer for the Company. "We will continue to focus on our seniors housing portfolio, which we believe is positioned well to take advantage of the expected increase in demand throughout 2024 and beyond. Where possible, we will continue to sell non-strategic assets, and make improvements to our balance sheet, as evidenced by the A&R Credit Agreement Amendment that was executed last week."

Financial Highlights

	Three months ended December 31,				Year ended December 31,
(in thousands of U.S dollars, except per share values)	2023		2022		2023		2022

Revenue	$	46,290	$	50,044	$	192,829	$	198,035
Net income (loss)	$	(38,308)	$	(30,965)	$	(99,240)	$	(48,810)
FFO	$	1,970	$	6,852	$	18,920	$	23,940
FFO per share	$	0.03	$	0.12	$	0.33	$	0.42
AFFO	$	1,613	$	5,611	$	17,128	$	22,071
AFFO per share	$	0.03	$	0.10	$	0.30	$	0.39

Balance Sheet and Portfolio Highlights

(in thousands of U.S. dollars, except number of properties)	December 31, 2023	December 31, 2022

Total assets	$828,283	$1,097,340
Number of properties³	66	77
Debt	$588,245	$765,457

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³ Excludes two medical office buildings and one seniors housing community held for sale as of December 31, 2023. Excludes three medical office buildings held for sale as of December 31, 2022.

About Invesque

The Company is a North American health care real estate company with an investment thesis focused on the premise that an aging demographic in North America will continue to utilize health care services in growing proportion to the overall economy. The Company currently capitalizes on this opportunity by investing in a portfolio of income-generating predominantly private pay seniors housing communities. The Company's portfolio includes investments primarily in independent living, assisted living, and memory care, which are operated under long-term leases and joint venture arrangements with industry-leading operating partners. The Company's portfolio also includes investments in owner-occupied seniors housing properties in which the Company owns the real estate, the licensed operations, and provides management services through Commonwealth Senior Living, LLC, a Delaware limited liability company ("Commonwealth").

Forward-Looking Information

This press release (this "Press Release") contains certain forward-looking information and/or statements ("forward-looking statements"), that reflect and are provided for the purpose of presenting information about management's current expectations and plans relating to the future, including, without limitation. Forward-looking information is typically identified by terms such as "anticipate," "believe," "continue," "expect," "expectations," "look," "may," "plan," "project," "should," "will," and other similar expressions that do not relate solely to historical matters and suggest future outcomes or events. Readers should not place undue reliance on forward-looking statements and are cautioned that forward-looking statements may not be appropriate for other purposes. Forward-looking statements in this Press Release are based on current beliefs, expectations, and certain assumptions of the Company's management and are subject to significant known and unknown risks, uncertainties, and other factors that are beyond the Company's ability to predict or control and 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 Company's actual results may differ as a result of various factors, including without limitation, the risks described in the Company's current annual information form and management's discussion and analysis, available on SEDAR at www.sedar.com, which risks may be dependent on market factors and not entirely within the Company's control. 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. These forward-looking statements reflect current expectations of the Company as of the date of this Press Release and speak only as of the date of this Press 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.

There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which are given as of the date hereof, and not to use such forward-looking statements for anything other than the intended purpose. Further, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements contained in this Press Release 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 Press Release are certain non-IFRS financial measures as supplemental indicators used by the Company's management to track the Company's performance. These non-IFRS measures are NOI, FFO, and AFFO. The Company believes that these non-IFRS financial measures provide useful information to both the Company's 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, please refer to the Financial Measures section of the December 31, 2023, MD&A available on the Company's website and on SEDAR at www.sedar.com, which information is incorporated herein by reference, and the full reconciliation to which are included below.

FFO Tables

	Three months ended December 31,		Year ended December 31,
	2023	2022	2023	2022
Net loss from continuing operations for the period	$ (33,592)	$ (25,993)	$ (90,110)	$ (42,010)
Add/(deduct):
Change in fair value of investment properties	13,506	17,545	64,716	52,978
Property taxes accounted for under IFRIC 21	(2,310)	(2,798)	(46)	26
Depreciation and amortization expense	4,181	5,744	15,182	17,059
Amortization of tenant inducements	60	60	243	242
Accretion expense and amortization of non-cash adjustments to the 2016 Convertible Debentures	1,939	679	9,463	2,883
Change in fair value of financial instruments	4,286	21	(14,214)	(23,129)
Transaction Costs	(541)	—	787	—
Debt extinguishment costs	3,270	—	3,270	—
Loss on sale of property, plant and equipment	(10)	—	(22)	3,009
Impairment of property, plant and equipment	5,147	4,513	8,783	4,513
Deferred income tax recovery	1,605	—	(312)	(1,127)
Allowance for credit losses on loans and interest receivable	1,097	9,239	15,732	16,461
Change in non-controlling interest liability in respect of the above	(64)	(50)	(163)	10
Adjustments for equity accounted entities	4,256	(1,995)	6,939	(7,422)

FFO from continuing operations	$ 2,830	$ 6,965	$ 20,248	$ 23,493
FFO from discontinued operations	(860)	(113)	(1,328)	447

Total FFO	$ 1,970	$ 6,852	$ 18,920	$ 23,940
Weighted average number of shares, including fully vested deferred shares: Basic	56,659,499	56,488,064	56,703,764	56,634,772

Funds from operations per share	$ 0.03	$ 0.12	$ 0.33	$ 0.42

AFFO Tables

	Three months ended December 31,		Year ended December 31
	2023	2022	2023	2022
Cash flows provided by (used in) operating activities	$ (2,193)	$ (2,375)	$ 6,031	$ 11,912
Change in non-cash working capital	3,115	8,817	9,006	10,891
Less: interest expense	(9,500)	(9,644)	(38,625)	(38,760)
Less: change in non-controlling interest liability	(11)	2	(242)	(446)
Plus: loss from joint ventures	(4,527)	2,249	(4,133)	6,395
Plus: interest paid	8,545	8,810	37,385	40,293
Less: interest received	(499)	(135)	(774)	(549)
Plus: debt extinguishment costs	3,387	(247)	3,740	337
Plus: realized loss on currency exchange	(14)	409	(21)	409
Plus: amortization of lease asset	(25)	671	(217)	671
Plus: current income tax	(110)	—	882	—
Plus: non-cash portion of non- controlling interest expense	(51)	(54)	(147)	(5)
Plus: adjustments for equity accounted entities	4,271	(1,979)	6,984	(6,352)
Plus: deferred share incentive plan compensation	(72)	(184)	71	192
Less: capital maintenance reserve	(703)	(729)	(2,812)	(2,917)

AFFO	$ 1,613	$ 5,611	$ 17,128	$ 22,071
Weighted average number of shares, including fully vested deferred shares: Basic	56,659,499	56,488,064	56,703,764	56,634,772

Funds from operations per share	$ 0.03	$ 0.10	$ 0.30	$ 0.39