Toronto, Ontario--(Newsfile Corp. - June 16, 2017) - CHC Student Housing Corp. (TSXV: CHC) ("CHC" or the "Company") today reported financial results for the three months and full year ended December 31, 2016. The Company's audited annual financial statements (the "Financial Statements"), management's discussion and analysis ("MD&A") and related certifications for the three months and year ended December 31, 2016 (collectively, the "Annual Filings") have been filed and are available under CHC's profile on SEDAR at www.sedar.com.
Highlights during the quarter and the full year ended December 31, 2016 include:
- Property revenues of $1,494,823 and $5,301,521 respectively.
- Net Operating Income ("NOI") of $778,832 and $2,618,272 respectively.
- Net loss of $407,047and $650,890 respectively.
Summary of Selected Financial and Operational Information
The selected financial information below is based on and derived from the financial statements for the fourth quarter and full year 2016.
| Statement of financial position data | As at December 31 | |
| 2016 | 2015 | |
| Cash | $357,292 | $842,808 |
| Investment properties | $64,895,000 | $64,895,000 |
| Total assets | $65,800,979 | $66,353,022 |
| Total current financial liabilities | $53,891,181 | $20,641,033 |
| Total non-current financial liabilities | $5,064,000 | $38,155,301 |
| Total liabilities | $58,955,181 | $58,796,334 |
| Statement of comprehensive loss data | Three Months Ended December 31 | Full Year Ended December 31 | ||
| 2016 | 2015 | 2016 | 2015 | |
| Property revenues | $1,494,823 | $1,371,675 | $5,301,521 | $5,194,800 |
| Property operating expenses | ($715,991) | ($809,991) | ($2,683,249) | ($2,915,965) |
| Net Operating Income (NOI) | $778,832 | $561,684 | $2,618,272 | $2,278,835 |
| General & administrative expense | ($242,578) | ($370,795) | ($1,068,317) | ($1,479,927) |
| Transaction costs | ($46,500) | ($233,077) | $686,588 | ($2,538,019) |
| Interest income | - | $32 | $40 | $2,475 |
| Stock-based compensation | ($182,000) | - | ($149,000) | ($432,726) |
| Forfeiture of deposit | - | - | - | ($750,000) |
| Interest expense | ($714,801) | ($622,921) | ($2,738,473) | ($2,850,268) |
| Fair value adjustment on investment properties | - | ($4,176,166) | - | ($4,176,166) |
| Net loss | ($407,047) | ($4,841,243) | ($650,890) | ($9,945,796) |
| Net loss per share — basic and diluted | ($0.17) | ($2.07) | ($0.28) | ($4.26) |
| Funds From Operations (FFO)(1) | ($360,547) | ($432,000) | ($1,337,478) | ($3,231,611) |
| FFO per share | ($0.15) | ($0.18) | ($0.57) | ($1.38) |
| Adjusted Funds From Operations (AFFO)(1) | ($145,010) | ($518,650) | ($1,074,671) | ($2,934,289) |
| AFFO per share | ($0.06) | ($0.22) | ($0.46) | ($1.26) |
| Distributions of cash dividends | Nil | Nil | Nil | Nil |
| Weight average shares outstanding(2) | 2,335,181 | 2,335,181 | 2,335,181 | 2,335,181 |
(1) FFO & AFFO are non-IFRS performance measures. Please refer to the definitions of the MD&A as well as the reconciliation to net loss on page below.
(2) After giving retroactive effect to the 85 to 1 common share consolidation that occurred on February 19, 2015.
FFO & AFFO Reconciliation
The following table reconciles FFO and AFFO to net loss and comprehensive loss.
| Reconciliation from net loss to FFO & AFFO | Three Months Ended December 31 | Full Year Ended December 31 | ||
| 2016 | 2015 | 2016 | 2015 | |
| Net loss | ($407,047) | ($4,841,243) | ($650,890) | ($9,945,796) |
| Add: | ||||
| Transaction costs | $46,500 | $233,077 | ($686,588) | $2,538,019 |
| Fair value adjustment on investment properties | - | $4,176,166 | - | $4,176,166 |
| Funds From Operations (FFO) | ($360,547) | ($432,000) | ($1,337,478) | ($3,231,611) |
| Add (subtract): | ||||
| Stock-based compensation(1) | $182,000 | - | $149,000 | $432,726 |
| Amortization of financing transaction costs | $30,161 | $27,769 | $108,229 | $237,727 |
| Straight line rent | $3,376 | $3,481 | $5,579 | $3,505 |
| Capital expenditures | - | ($117,900) | - | ($376,636) |
| Adjusted Funds From Operations | ($145,010) | ($518,650) | ($1,074,670) | ($2,934,289) |
(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 in the period in which they occur. The three and twelve months ended December 31, 2016 adjustment for stock-based compensation/ (recovery) relates to the mark-to-market adjustment of options awarded in December 2014 and January 2015.
FFO for the three and twelve months ended December 31, 2016 amounted to ($360,547) or ($0.15) per share and ($1,337,478) or ($0.57) per share respectively. AFFO for the three and twelve months ended December 31, 2015 was a loss of ($145,010) or ($0.06) per share and ($1,074,671) or ($0.46) 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 December 31 | Full Year Ended December 31 | ||
| 2016 | 2015 | 2016 | 2015 | |
| Cash used in operating activities | $68,190 | ($262,281) | ($333,418) | ($827,773) |
| Add (subtract): | ||||
| Transaction costs | - | $233,077 | - | $2,538,019 |
| Changes in non-cash working capital | ($213,605) | ($584,506) | ($649,870) | ($3,307,958) |
| Depreciation | 404 | ($1,701) | ($10,656) | ($7,914) |
| Interest expense | ($684,640) | ($595,152) | ($2,630,244) | ($2,612,541) |
| Cash interest paid on mortgages payable | $684,641 | $809,813 | $2,549,518 | $2,410,514 |
| Write off of deposit on property | - | - | - | ($750,000) |
| Capital expenditures | - | ($117,900) | - | ($376,636) |
| Adjusted Funds From Operations | ($145,010) | ($518,650) | ($1,074,670) | ($2,934,289) |
Going Concern
The Company's consolidated financial statements are prepared on a going concern basis. The Company's ability to continue as a going concern is subject to a number of risks and uncertainties. The Company has incurred net losses and used significant cash resources in its operating activities since incorporation. It has relied upon financing to fund its operations and acquisitions, primarily through debt and private equity placements.
If the Company is otherwise unable to satisfy its current liabilities through suitable agreements for debt refinancing, equity financing or other measures, planned operations could be scaled back and a portion of the Company's asset could be sold. Additionally, the going concern assumption may no longer be appropriate for the consolidated financial statements and adjustments may be necessary to the carrying values of the assets and liabilities, the reported net loss and the classifications used in the statements of financial position.
As announced by the Company in April 2017, CHC's board of directors has established a special committee to oversee a process to identify, examine and consider strategic and financial alternatives potentially available to the Company with a view to enhancing shareholder value. Such alternatives may include, but are not limited to, a sale of the Company or all or a portion of its assets, a merger or other business combination, a recapitalization or any combination thereof. As a result of this process and subsequent to year end, CHC has entered into a conditional agreement with a third party for the sale of certain properties owned by the Company. The transaction is subject to due diligence which is currently ongoing and has not yet been satisfied or waived, and various other customary closing conditions. If the transaction is consummated, it is expected that it would close in the third quarter of 2017. There can be no assurance that the transaction will proceed or that it will proceed on the contemplated terms unless and until the conditions to the completion of the transaction, and in particular due diligence, are satisfied or waived. The Company will disclose material developments if, as and when they occur.
Bi-Weekly Update on Status of Management Cease Trade Order
The Company is currently subject to a management cease trade granted on May 5, 2017 by its principal regulator, the Ontario Securities Commission, under National Policy 12-203 - Management Cease Trade Orders ("NP 12-203"), following the Company's announcement on May 1, 2017 (the "Default Announcement") that it would not be in a position to file the Annual Filings on or before May 1, 2017, as required under applicable securities laws, due to the Company's working capital position.
Although the Annual Filings have now been filed, the Company continues to be delayed in the filing of its interim financial statements for the quarter ended March 31, 2017 (the "Q1 2017 Interim Financial Statements") which were due to be filed on or before May 30, 2017 under applicable securities laws. The Company expects that these interim financial statements and related MD&A and certifications will be filed on or before June 30, 2017.
Other than as disclosed in the Company's bi-weekly update press releases dated May 18, 2017 and June 1, 2017 and as disclosed in this press release, there are no material changes to the information contained in the Default Announcement. In addition: (i) the Company is satisfying and confirms that it intends to continue to satisfy the provisions of the alternative information guidelines under NP 12-203 and issue bi-weekly default status reports for so long as the delay in filing the Q1 2017 Interim Financial Statements is continuing, each of which will be issued in the form of a press release; (ii) other than as disclosed in this press release, the Company does not have any information at this time regarding any anticipated specified default subsequent to the default in filing the Annual Filings and Q1 2017 Interim Financial Statements; (iii) the Company is not subject to any insolvency proceedings; and (iv) there is no material information concerning the affairs of the Company that has not been generally disclosed.
About CHC Student Housing Corp.
CHC Student Housing Corp. is Canada's only publicly traded company offering high-quality purpose-built student housing properties strategically located on campus or in close proximity to universities and colleges providing students a safe and secure living environment, affordable prices and high-quality amenities. CHC is focused on student housing in primary and well understood secondary markets in Canada.
Non-IFRS 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 period ended December 31, 2016 and available on the Company's profile on SEDAR at www.sedar.com.
Cautions Regarding Future Plans and 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 complete proposed or contemplated transactions; the state of the real estate sector generally; recent market volatility; CHC's ability to secure the necessary financing or to be fully able to implement its business strategies; and other risks and factors that CHC is unaware of at this time. A variety of factors, many of which are beyond the 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 as a result 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 more information, please contact:
Mark Hansen, President and Chief Executive Officer
CHC Student Housing Corp.
Telephone: (647) 288-9355
Email: mhansen@chcrealty.ca
