Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chartwell Retirement Residences (CWSRF, Financial) reported strong improvements in employee engagement and resident satisfaction, contributing to overall business success in 2024.
- The company achieved a significant increase in occupancy, with same-property occupancy rising by 590 basis points to 88% in 2024.
- Chartwell Retirement Residences (CWSRF) reduced staffing agency costs by 60% compared to 2023 through focused recruitment and retention activities.
- The company completed several strategic acquisitions, including a 50% ownership interest in five retirement residences in Quebec and an upscale suite in Victoria, BC, enhancing its portfolio.
- Chartwell Retirement Residences (CWSRF) maintained a strong liquidity position with approximately $283 million available, supporting future growth and acquisitions.
Negative Points
- Net income for 2024 was significantly lower at $22.4 million compared to $128.3 million in 2023, primarily due to the absence of a large gain on sale recorded in the previous year.
- Higher finance costs and deferred tax expenses partially offset the positive contributions from stronger operating results and lower G&A expenses.
- The company continues to face challenges in certain markets, requiring targeted incentives to support rapid occupancy growth.
- Chartwell Retirement Residences (CWSRF) is exposed to economic uncertainties, including potential trade disputes that could impact the business environment.
- The company is in the process of repositioning and selling non-core properties, which may take time and could impact short-term financial performance.
Q & A Highlights
Q: Can you provide details on the types of properties Chartwell is currently considering for acquisition?
A: Jonathan Boulakia, Chief Investment Officer, explained that Chartwell is looking at newer properties, generally below replacement costs, which fit well into their portfolio. They are primarily focused on stabilized assets in their existing markets, including Western Canada, Ontario, and Quebec.
Q: How should we think about the recognition of income guarantees from properties acquired in 2025?
A: CEO Vlad Volodarski noted that properties acquired in 2025, such as those on Vancouver Island, are not at very low occupancy levels, so the NOI guarantees will be utilized over a longer period. Properties from Batimo are closer to stabilized occupancy, so their guarantees will be realized over a shorter duration.
Q: What is the expected same-property NOI growth for 2025 given the rent growth and occupancy gains?
A: CEO Vlad Volodarski indicated that while specific guidance isn't provided, the expected growth should be healthy, driven by 4% rental rate growth and a target of 95% occupancy by year-end. The exact growth will depend on how quickly they achieve these targets.
Q: When do you expect market rent growth to accelerate beyond the consistent 4%?
A: CEO Vlad Volodarski expects that as more properties reach stabilized occupancy, the use of incentives will decrease, leading to higher market rate increases in 2026. The increases for existing residents are expected to remain aligned with cost increases.
Q: Are there any markets more susceptible to new development once the cycle kicks off?
A: CEO Vlad Volodarski mentioned that Quebec might see more development due to lower costs. Chartwell is considering expansions in Quebec, but overall development timelines depend on economic conditions and entitlement processes.
Q: Is there a difference in rent growth between new leases and renewals?
A: CEO Vlad Volodarski stated that it varies by property. Some properties may offer targeted incentives, while others with high occupancy might see higher market rate increases compared to rent increases for existing residents.
Q: How are you financing recent acquisitions, and what are the plans for the Rosemont, Montreal acquisition?
A: CFO Jeffrey Brown confirmed that the Victoria Harbor acquisition was funded through the credit facility. For the Rosemont acquisition, they are considering CMHC debt but have not finalized the decision, as the debenture market is becoming more attractive.
Q: What is the plan for the undeveloped land Chartwell owns across Canada?
A: CEO Vlad Volodarski explained that development timelines depend on economic conditions. They are working on entitlements for some lands and may sell others if they don't plan to develop them in the next 5 to 10 years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
