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Press release from Marketwire

Chartwell Announces Second Quarter 2012 Results

Friday, August 10, 2012

Chartwell Announces Second Quarter 2012 Results18:05 EDT Friday, August 10, 2012MISSISSAUGA, ONTARIO--(Marketwire - Aug. 10, 2012) - Chartwell Seniors Housing Real Estate Investment Trust (TSX:CSH.UN) ("Chartwell") announced today results for the three and six months ended June 30, 2012.Q2 2012 HighlightsAdjusted funds from operations ("AFFO") up 27.2% Same property net operating income ("NOI") up 5.0% with improved occupancies and strong expense controls. Recently acquired Maestro portfolio is performing slightly ahead of expectations. "We are pleased with the continued strong performance of each of our operating platforms and the benefits of our recent acquisition of the Maestro portfolio in partnership with Health Care REIT," commented Brent Binions, Chartwell's President and CEO. "The acquired portfolio is performing slightly ahead of expectations and the integration is progressing very well. We've also commenced a number of innovative initiatives in operations, sales, marketing and information technology that will accelerate the achievement of our strategic goals while at the same time continuing to successfully execute on our vision of Making People's Lives Better."Financial HighlightsThree Months Ended June 30Six Months Ended June 302012201120122011AFFO ($000s) (1)$27,825$21,876$50,046$42,125AFFO per unit diluted (1)$0.16$0.15$0.31$0.29Funds from operations ("FFO") ($000s) (1)$29,793$24,047$55,306$46,697FFO per unit diluted (1)$0.17$0.17$0.34$0.32Distributions declared ($000s)$24,331$19,571$44,105$39,083Distributions declared per unit$0.14$0.14$0.27$0.27Distributions declared as a percentage of AFFO87.4%89.4%88.1%92.8%Weighted average number of units outstanding, diluted (000s)172,594145,577162,873145,283(1) AFFO, AFFO per unit diluted, FFO and FFO per unit diluted are measures used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release. AFFO in the second quarter of 2012 was $27.8 million ($0.16 per unit diluted) compared to $21.9 million ($0.15 per unit diluted) in the second quarter of 2011, representing an increase of 27.2%. For the six-month period ended June 30, 2012, AFFO was $50.0 million ($0.31 per unit diluted) compared to $42.1 million ($0.29 per unit diluted) in the same period of 2011, an increase of 18.8%. Incremental contribution from the property portfolio, due to acquisitions and same property NOI growth and new management fees from the Maestro portfolio, were partially offset by higher interest expenses and general and administrative ("G&A") expenses incurred to support the significant growth in the property portfolio. Per unit amounts were impacted by the increases in the weighted average number of units outstanding compared to the prior.In the second quarter of 2012, FFO increased to $29.8 million ($0.17 per unit diluted) from $24.1 million ($0.17 per unit diluted) in the second quarter of 2011. For the six-month period ended June 30, 2012, FFO increased to $55.3 million ($0.34 per unit diluted) from $46.7 million ($0.32 per unit diluted) in the same period of 2011. In addition to the items discussed above, FFO has also been impacted by changes in the amortization of financing costs and the amortization of fair value adjustments on mortgages payable.Operating PerformanceThree Months Ended June 30Six Months Ended June 3020122011Increase/ (Decrease)20122011Increase/ (Decrease)Same property occupancy (1)89.5%89.0%0.5 pp89.7%89.1%0.6 ppSame property NOI ($000s) (2) (3)$51,791$49,323$2,468$102,652$97,379$5,273G&A expenses ($000s)$6,766$6,381$385$13,130$12,542$588G&A as a percentage of revenue3.1%3.4%(0.3 pp)3.1%3.4%(0.3 pp)Net loss ($000s)$(33,887)$(18,848)$(15,039)$(82,249)$(37,312)$(44,937)(1)pp = percentage points(2)NOI is a measure used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release.(3) Excludes the effects of foreign exchange on U.S. dollar revenue.Same property weighted average occupancy in the three and six months ended June 30, 2012, improved by 0.5 and 0.6 percentage points, respectively, compared to the same periods of 2011, primarily due to strong occupancy growth in the United States and in Western Canada.Same property NOI improved by $2.5 million or 5.0% and $5.3 million or 5.4% for the three and six months ended June 30, 2012, respectively, compared to the same periods of 2011. All operating platforms delivered same property NOI growth with the U.S. same property NOI growing by 15.0% and 12.4% in the three and six months periods ended June 30, 2012, respectively, compared to the same periods of 2011 on strong occupancy improvements and expense controls.G&A expenses increased by $0.4 million and $0.6 million in the three and six months ended June 30, 2012, respectively, compared to the same periods of 2011. The increases are primarily due to higher staffing costs to support the significant growth in the portfolio under management.In addition to the items discussed above, the net loss for the three and six months ended June 30, 2012 was impacted by higher depreciation and amortization charges resulting from acquisitions, acquisition related and convertible debenture issuance costs and changes in fair values of certain financial instruments.Financial PositionAt June 30, 2012, cash on hand amounted to $28.1 million and the unused borrowing capacity on the Credit Facility was $13.5 million. At June 30, 2012, the Indebtedness Ratio, excluding assets held for sale and related debt, was 54.5% (58.3% including convertible debentures), compared to 57.0% (59.2% including convertible debentures) at December 31, 2011. The Interest Coverage Ratio for the three and six months ended June 30, 2012 was 1.92 and 1.90, respectively, compared to 1.92 and 1.89 Interest Coverage Ratios in the same periods of 2011. The average term to maturity of the mortgage portfolio was 6.3 years with a contractual weighted average interest rate of 5.22%.In the second quarter of 2012, Chartwell renewed its $85.0 million Credit Facility for an additional 364-day period expiring on June 22, 2013. Under the terms of the renewal, the interest rate on outstanding balances was reduced by 40 basis points to bank prime plus 1.25% or the applicable bankers' acceptance rate plus 2.25%.Recent DevelopmentsIn May 2012 Chartwell announced that it, along with its joint venture partner ING Real Estate Australia pty ("ING") entered in the agreement to sell a portfolio of five communities located in New York State. Chartwell owns a 50% interest in these communities. The purchase price for 100% of the portfolio is U.S. $290.0 million. The purchaser is expected to assume debt with an outstanding balance of U.S. $199.2 million as of June 30, 2012 with the balance of the purchase price, net of working capital adjustments and holdbacks to be settled in cash.In June 2012, Chartwell also announced that it entered into an agreement to sell six communities located outside of its core states of Florida, Colorado and Texas for U.S. $165.5 million. The purchaser is expected to assume debt with an outstanding balance of U.S $106.8 million as of June 30, 2012 with the balance of the purchase price, net of working capital adjustments and holdbacks to be settled in cash.These divestitures are in line with Chartwell's strategy to focus its U.S investments in its core states of Florida, Texas and Colorado. Subject to regulatory, lender approvals and certain other closing conditions, these transactions are expected to close in the fourth quarter of 2012.Chartwell's financial statements, including its Management's Discussion and Analysis ("MD&A"), are available at www.chartwellreit.ca. A detailed list of Chartwell's property portfolio can also be obtained under "Supplementary Information" in the "Investor Relations" section of the web site. Investor Conference CallA conference call hosted by Chartwell's senior management team will be held Monday, August 13, 2012 at 9:00 AM ET. The telephone numbers for the conference call are: Local (416) 849-5562 or Toll Free (866) 269-7096. The conference call can also be heard over the Internet by accessing the Chartwell website at www.chartwellreit.ca, clicking on "Investor Relations" and following the link at the top of the page. A slide presentation to accompany management's comments during the conference call will be available on the website. Please log on at least 15 minutes before the call commences. The telephone numbers to listen to the call after it is completed (Instant Replay) are: Local (416) 915-1035 or Toll-Free (866) 245-6755. The Passcode for the Instant Replay is 616736#. The call, along with the accompanying slides, will also be archived on the Chartwell website at www.chartwellreit.ca. Chartwell is a real estate investment trust which indirectly owns and operates a complete range of seniors housing communities from independent supportive living through assisted living to long term care. It is one of the largest participants in the seniors housing business in North America. Chartwell's aim is to capitalize on the strong demographic trends present in its markets to maximize the value of its existing portfolio of seniors housing communities, and prudently avail itself of opportunities to grow internally and through accretive acquisitions.Chartwell's Distribution Reinvestment Plan ("DRIP") allows unitholders to have their monthly cash distributions used to purchase units without incurring commission or brokerage fees, and receive bonus units equal to 3% of their monthly cash distributions. More information can be obtained at www.chartwellreit.ca.Forward-Looking Information This press release contains forward-looking information that reflects the current expectations, estimates and projections of management about the future results, performance, achievements, prospects or opportunities for Chartwell and the seniors housing industry. The words "plans", "expects", "does not expect", "is expected", "budget", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are based upon a number of assumptions and are subject to a number of known and unknown risks and uncertainties, many of which are beyond our control, and that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. While we anticipate that subsequent events and developments may cause our views to change, we do not intend to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents our views as of the date of this press release and such information should not be relied upon as representing our views as of any date subsequent to the date of this document. We have attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimated expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These factors are not intended to represent a complete list of the factors that could affect us. See "Risks and Uncertainties" in our 2011 MD&A and risk factors highlighted in materials filed with the securities regulatory authorities in Canada from time to time, including but not limited to our most recent Annual Information Form. Non-IFRS MeasuresFFO, AFFO, and NOI are not measures defined by International Financial Reporting Standards ("IFRS"). They are presented because management believes these non-IFRS measures are relevant and meaningful measures of Chartwell's performance. FFO, AFFO and NOI as computed may differ from similar computations as reported by other issuers and may not be comparable to those reported by such issuers. Chartwell's Q2 2012 MD&A contains a reconciliation of Net Income/Loss to FFO and the calculation of AFFO for the three and six months ended June 30, 2012. Detailed descriptions of these terms are contained in Chartwell's 2011 MD&A, available at www.sedar.com.FOR FURTHER INFORMATION PLEASE CONTACT: Vlad VolodarskiChartwell Seniors Housing Real Estate Investment TrustChief Financial Officer(905) 501-4709(905) 501-4710 (FAX)vvolodarski@chartwellreit.cawww.chartwellreit.ca