Invesque : Q2 Results Conference Call Transcript

FINAL TRANSCRIPT

Invesque Inc.

Second Quarter 2023 Conference Call

Event Date/Time: August 14, 2023 - 10:00 a.m. E.T.

Length: 18 minutes

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CORPORATE PARTICIPANTS

Scott White

Invesque Inc. - Chief Executive Officer

Adlai Chester

Invesque Inc. - Chief Financial Officer & EVP, Investments

CONFERENCE CALL PARTICIPANTS

Tal Woolley

National Bank - Analyst

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PRESENTATION

Operator

Good morning, ladies and gentlemen. Welcome to Invesque's Second Quarter 2023 Conference

Call.

I will now turn the call over to Scott White, Chief Executive Officer. Please go ahead, Mr. White. Scott White - Chief Executive Officer, Invesque Inc.

Thank you, Operator, and thank you, all, for joining our second quarter 2023 conference call. I'm joined today by Adlai Chester, our Chief Financial Officer and Executive Vice President of Investments.

The second quarter earnings release, financial statements, and MD&A are available on our website, and a replay of this call will be available 12:45 p.m. Eastern Time today until 11:59 p.m. Eastern Time on August 28th.

As always, 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 US dollars unless otherwise specified.

With that, I'll turn to some of the highlights for the second quarter. Our team was very busy continuing to execute on our simplification strategy.

The highlight of the quarter was the completion of the SymCare portfolio sale for $121 million, which we previewed on our last call. Seven of the eight assets were sold on June 1st, with the final asset closing after the quarter-end in July. This transaction represents significant progress in the reduction of

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our skilled nursing exposure and was a major priority for the Company. Following the sale, Invesque no longer leases any assets to SymCare, and we've reduced our skilled nursing portfolio to just nine properties.

In addition to the SymCare sale and as announced on our earnings call in May, we sold one medical office building during the second quarter. The sale of the MetroWest Medical Centre in Orlando, Florida for $6.4 million occurred in April and represents another step in simplifying our portfolio and our balance sheet as we continue to look to exit our medical office portfolio.

We have two remaining medical office buildings and are actively marketing both of them for sale. I expect that they'll be sold within the next 12 months.

We touched on this briefly last quarter, but at the beginning of the second quarter, we added a new operator, Chapters Living, to our triple-net portfolio. The Chapters Living team signed a long-term lease for three memory-care communities located in Texas and Arkansas that were previously leased to another operator.

It has been more than 90 days since the transition, and we're pleased with the progress Chapters Living has made with implementing policies and processes that should result in improved operations and financial results. I'm excited about having Chapters Living as one of our operators and look forward to seeing continued progress from this portfolio.

The second quarter results for our SHOP operators were solid, including continued growth in occupancy and net operating income. Our Commonwealth and Heritage portfolios have both hit and maintained pre-pandemic occupancy levels, an achievement few operators in the industry have achieved to date. The Commonwealth portfolio has seen additional occupancy growth so far in the third quarter,

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and I'm hopeful that the steady growth we have seen over the last four quarters will continue for the rest of the year and into 2024.

Our operators have not only been successful growing census, but also revenue per resident. Specifically, Commonwealth grew year-over-year average revenue per resident day by 6 percent, and Heritage achieved growth of 5.2 percent.

Additionally, Commonwealth and Heritage continue to see improvements in the availability and retention of staffing, which has been an ongoing challenge for more than three years. We expect this will result in more modest operating expense growth going forward.

We remain bullish on the senior's housing industry and believe that the efforts we have taken over the last two to three years, to focus our portfolio specifically on this asset type, will prove beneficial in the coming years as the demand for seniors housing reaches a level we have never seen before.

As we have highlighted a number of times recently, the Company strategically set out to simplify with a focus on pruning the portfolio and improving our balance sheet. We made significant progress on the portfolio front via dispositions and operator transitions and are now hyper-focused on the balance sheet.

I'll now turn the call over to Adlai, who, as of August 1st, has assumed the role of Chief Financial Officer in addition to EVP of Investments. Adlai will review our financial results for the quarter and touch on a few noteworthy items relating to our KeyBank credit facility. Lastly, he'll provide an update on transaction activity in our company.

Adlai Chester - Chief Financial Officer & EVP, Investments, Invesque Inc.

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