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CHC Student Housing Announces Results for the Quarter Ended and Year Ended December 31, 2019
April 30, 2020 7:30 AM EDT | Source: Bullet Exploration Inc.
Toronto, Ontario--(Newsfile Corp. - April 30, 2020) - CHC Student Housing Corp. (TSXV: CHC) ("CHC" or the "Company") announced today results for the quarter and year ended December 31, 2019. The audited financial statements and related Management's Discussion and Analysis ("MD&A") for the quarter and year ended December 31, 2019, are available under CHC's profile on SEDAR at www.sedar.com.
Highlights during the year ended December 31, 2019:
- Net Operating Income ("NOI") was lower by 3.6% at $2,781.638. This was due to the sale of the Kingston and Trois-Rivières Properties as well as increased operating costs at the London Property.
- Net loss of $877,636 was lower by $1,541,964 mainly due to lower NOI, offset by an increase in fair value adjustment of investment properties and lower fair value adjustment on mortgage payable.
- The Company sold the Trois-Rivières Property for $3,150,000 on December 18, 2019 and generated net proceeds of $470,293 after the discharge of the related mortgage.
At the Company's annual and special meeting of shareholders held on January 24, 2020 the shareholders approved the sale of the London Property. The sale closed on February 5, 2020 at a sale price of $55,000,000 and the Company received net proceeds from the sale of approximately $5,200,000 after the repayment of the $33,000,000 first mortgage and the $14,000,000 second mortgage on the property and the accrued and unpaid interest thereon, a prepayment penalty associated with the first mortgage, a balance of certain deferred interest on the second mortgage, a profit participation payment payable to the lender on the second mortgage, a prepayment penalty associated with the second mortgage and standard real estate transaction adjustments for matters such as property taxes and rental adjustments. As previously disclosed, the Company has sufficient funds from the sale of the London property to settle its debts, seek out alternative business opportunities which could potentially result in additional value for shareholders and provide a return of capital to its shareholders in an amount to be determined.
Summary of Selected Financial and Operational Information
The selected financial information below is based on and derived from the financial statements for the quarter and year ended December 31, 2019.
| Statement of comprehensive income (loss) data | Three Months Ended | Twelve Months Ended | ||
| 2019 | 2018 | 2019 | 2018 | |
| Property revenues | $1,184,375 | $1,178,240 | $4,554,620 | $4,617,516 |
| Property operating expenses | (492,213) | (432,874) | (1,772,982) | (1,731,301) |
| Net Operating Income (NOI) | $692,162 | $745,366 | $2,781,638 | $2,886,215 |
| Depreciation | (13,725) | (11,100) | (52,232) | (52,457) |
| General & administrative expense | (357,648) | (70,263) | (1,152,769) | (1,238,281) |
| Fair value adjustment of equity-based compensation | 19,000 | (43,000) | 34,000 | (5,000) |
| Fair value adjustment on investment properties | 539,764 | (24,764) | 1,039,764 | 240,986 |
| Fair value adjustment on mortgage payable | (32,980) | (1,119,605) | (236,508) | (1,119,605) |
| Interest | (1,128,273) | (722,326) | (3,259,072) | (3,141,458) |
| Loss on sale of investment property | (42,457) | - | (42,457) | - |
| Net Loss | ($324,157) | ($1,245,692) | ($887,636) | ($2,429,600) |
| Net loss per share - basic and diluted | ($0.12) | ($0.46) | ($0.33) | ($0.89) |
| Funds From Operations (FFO) (1) | ($788,484) | ($101,323) | ($1,648,435) | ($1,550,981) |
| FFO per share | ($0.29) | ($0.04) | ($0.61) | ($0.57) |
| Adjusted Funds From Operations (AFFO) (1) | ($801,581) | ($41,490) | ($1,607,048) | ($1,514,603) |
| AFFO per share | ($0.30) | ($0.02) | ($0.59) | ($0.56) |
| Weight average shares outstanding | 2,716,465 | 2,716,465 | 2,716,465 | 2,716,465 |
(1) FFO and AFFO are non-IFRS performance measures. Please refer to definition in section Non-IFRS Performance Measures on page 4 of the MD&A as well as the reconciliation from net income(loss) and comprehensive income(loss) below.
Revenues decreased by 1.4% or $62,896 year over year, primarily due to the sale of the Kingston Property in July 2018, the sale of the Trois Property in December 2019 and lower revenue at the Trois Property during the year offset by higher revenues at the London Property. General and administrative expenses decreased by 6.9% or $85,512 mainly due transaction costs paid in 2018 offset by lower wages and benefits, also in 2018, as a result of an adjustment to the board of directors' fees. In 2019 professional fees were higher offset by lower accounting fees and other costs. Interest expense increased by 3.7% or $117,614 primarily due to higher mortgage discharge fees in 2019 offset by lower interest expense due to lower rates also in 2019.
FFO & AFFO Reconciliation
The following table reconciles FFO and AFFO to IFRS net income (loss) and comprehensive income (loss):
| Reconciliation from net income (loss) to FFO & AFFO | Three Months Ended | Twelve Months Ended | ||
| 2019 | 2018 | 2019 | 2018 | |
| Net Loss | ($324,157) | ($1,245,692) | ($887,636) | ($2,429,600) |
| Add: | ||||
| Fair value adjustment on investment properties | (539,764 | 24,764 | (1,039,764) | (240,986) |
| Fair value adjustment on mortgage payable | 32,980 | 1,119,605 | 236,508 | 1,119,605 |
| Loss on sale of investment property | 42,457 | - | 42,457 | - |
| Funds From Operations (FFO) | ($788,484) | ($101,323) | ($1,648,435) | ($1,550,981) |
| Add (subtract): | ||||
| Fair value adjustment of equity-based compensation (1) | (19,000) | 43,000 | (34,000) | 5,000 |
| Amortization of financing transaction costs | 9,169 | 21,543 | 73,771 | 48,191 |
| Straight line rent | (3,266) | (4,710) | 1,616 | (16,813) |
| Adjusted Funds From Operations (AFFO) | ($801,581) | ($41,490) | ($1,607,048) | ($1,514,603) |
(1) Compensation expense for option grants is based on the fair value of the options at the grant date and is recognized over the period from the grant date to the date the award is vested. A liability is recognized for outstanding options based upon the fair value as the Company is a mutual fund corporation and there are retraction rights to the share conditions attached to the common shares. During the period in which options are outstanding, the liability is adjusted for changes in the fair value with such adjustments being recognized as expense/(recovery) in the period in which they occur. These options were granted in November 2013 and expired in December 2018. The twelve months ended December 31, 2019, adjustment for stock-based compensation/(recovery) relates only to the mark-to-market adjustment of the deferred share unit plan (DSU Plan) granted in September 2016 and October 2017.
FFO for the three months ended December 31, 2019, and 2018 amounted to ($788,484) or ($0.29) per share and ($101,323) or ($0.04) per share, respectively. AFFO for the three months ended December 31, 2019, and 2018 was ($801,581) or ($0.30) per share and ($41,490) or ($0.02) per share, respectively.
The following table reconciles IFRS cash used in operating activities to AFFO:
| Reconciliation from cash used in operating activity to AFFO | Three Months Ended | Twelve Months Ended | ||
| 2019 | 2018 | 2019 | 2018 | |
| Cash used in operating activities | ($415,835) | ($130,900) | ($715,450) | ($1,720,613) |
| Add (subtract): | ||||
| Net changes in working capital | (266,766) | 253,210 | (416,960) | 541,802 |
| Depreciation | (13,725) | (11,100) | (52,232) | (52,457) |
| Interest expense on mortgages payable | (1,119,104) | (700,783) | (3,185,301) | (3,093,267) |
| Cash interest paid | 1,013,849 | 548,083 | 2,762,895 | 2,809,932 |
| Adjusted Funds From Operations | ($801,581) | ($41,490) | ($1,607,048) | ($1,514,603) |
Financial Position
The Company had cash on hand of $281,316 as at December 31, 2019, a decrease of $563 from December 31, 2018. Total assets at December 31, 2019, were $55,619,225 compared to $57,938,603 at December 31, 2018 a decrease of $2,319,378. This decrease was mainly due to the sale of the Trois-Rivieres Property in December 2019 along with the settlement of the vendor take back mortgage receivable. This was offset by an increase in the fair value of the London Property.
About CHC Student Housing Corp.
CHC Student Housing (TSXV: CHC.H) was previously Canada's only publicly traded company that invested in multi-residential student housing properties.
Following the sale of the Company's London Property on February 5, 2020, the Company ceased to have active operations and no longer met the continued listing requirements for the TSX Venture Exchange ("TSXV"). Therefore, effective February 10, 2020, the Company's listing was transferred from the TSXV to the NEX. The NEX is a separate board of the TSXV that provides a trading forum for listed companies that have fallen below the TSXV's continued listing requirements.
The trading symbol for the Company was changed from CHC to CHC.H. There is no change in the Company's name, no change in its CUSIP number and no consolidation of capital. The symbol extension differentiates NEX symbols from Tier 1 or Tier 2 symbols within the TSX Venture market. The Company is classified as a 'Real Estate' company.
As previously disclosed, the Company has sufficient funds from the sale of the London property to settle its debts, seek out alternative business opportunities which could potentially result in additional value for shareholders and provide a return of capital to its shareholders in an amount to be determined.
Non-IFRS Performance Measures
The Company's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures: net operating income (or "NOI"), funds from operations (or "FFO"), FFO per share, adjusted funds from operations (or "AFFO") and AFFO per share, are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS, and should not be compared to or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance determined in accordance with IFRS. However, these non-IFRS measures are recognized supplemental measures of performance for real estate issuers widely used by the real estate industry, particularly by those publicly traded entities that own and operate income-producing properties, and the Company believes they provide useful supplemental information to both management and readers in measuring the financial performance of the Company. Further details on non-IFRS measures are set out in the Company's Management's Discussion and Analysis for the year ended December 31, 2018 and available on the Company's profile on SEDAR at www.sedar.com.
Forward Looking Information
This press release contains forward-looking information within the meaning of Canadian securities laws. Forward-looking information is provided for the purposes of assisting the reader in understanding the Company's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Such information includes, without limitation, information regarding the business strategies of CHC. Although CHC believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. CHC cautions investors that any forward-looking information provided by CHC is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: CHC's ability to find and complete any alternative business opportunities; the state of the economy and market conditions generally; and other risks and factors that CHC is unaware of at this time. A variety of factors, many of which are beyond CHC's control, affect the operations, performance and results of the Company and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the risks discussed in CHC's materials filed with Canadian securities regulatory authorities from time to time, copies of which may be accessed through CHC's profile on SEDAR at www.sedar.com. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information.
The forward-looking information included in this press release relate only to events or information as of the date hereof. Except as specifically required by applicable Canadian law, CHC undertakes no obligation to update or revise publicly any forward-looking information, whether because of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Neither the TSX Venture Exchange ("TSXV") nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:
CHC Student Housing Corp.
Simon Nyilassy
President and CEO
(416) 504-9380
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/55191