Poesy with her cake, Poesy’s fifth birthday party, Amica, Toronto, Ontario, Canada (Photo credit: gruntzooki)
ACC : TSX : C$8.90
BUY
Target: C$11.25
COMPANY STATISTICS:
52-week price range: $8.50 – 10.01
Current dividend $ 0.42
Current yield: 4.7%
Shares o/s (M): 30.7
Float o/s (M): 25.6
Market capitalization ($M): $ 274
Float capitalization ($M): $ 228
Debt/GBV 53%
Volume (000s): 38
Major shareholders: Manji brothers ~ 17%
EARNINGS SUMMARY:
FYE May 31 F2011A F2012A F2013E F2014E
FFO: $ 0.41 $ 0.34 $ 0.46 $ 0.66
P / FFO: 21.5x 26.4x 19.2x 13.6x
AFFO:
$ 0.53 $ 0.59
P / AFFO:
16.7x 15.0x
COMPANY DESCRIPTION:
Amica Mature Lifestyles Inc. (ACC: TSX) is a premier brand manager and owner of luxury independent living retirement communities in major urban centres across Canada.
Amica reported FFO per diluted share of $0.12 in Q3/F13, up 15% from $0.10 in Q3/F12. The year-over-year growth reflects the impact of internal
consolidations completed over the past year as well as strong growth in MARPAS. AFFO per diluted share for Q3/F13 was $0.129, slightly below
$0.133 in the year-ago period, and below our estimate of $0.14. The variance to our forecast was due to higher than forecast interest expense as
well as the slower than expected pace of lease-up at Amica at Quinte Gardens.
Occupancy increased year-over-year. Occupancy for Amica’s mature portfolio improved materially year-over-year from 90.8% at the end of
Q3/F12 to 94.5% at the end of Q3/F13. Excluding Amica at Thornhill, which was newly classified as a mature property despite still being in the lease-up phase, occupancy for Amica’s mature properties was 95.9%, a level not seen since 2008.
Occupancy at lease-up properties continues to improve. At the end of Q3/F13, Amica had five properties in lease-up, with an average occupancy of
68.4%, up 670 bps from 61.7% at the end of F2012. Including 34 net pending move-ins, management expects occupancy at lease-up communities
to increase to nearly 73% over the next few months.
Highest MARPAS growth since 2004. In Q3/F13, same-property MARPAS increased by 6.8%, as compared to Q3/F12, as occupancy improved and
rental rates increased. We note that this is the strongest quarterly growth in MARPAS since 2004, and we expect the growth to continue as occupancy remains tight and Amica’s pricing power improves.
Maintaining BUY rating, and C$11.25 target. Despite slower than expected occupancy gains at Amica’s lease-up communities, we expect the company to post strong cash flow growth as its stabilized communities continue to post strong MARPAS growth. We remain of the view that Amica’s focus on best-in-class luxury seniors housing assets will continue to deliver exceptional value to shareholders.
We maintain our BUY rating and C$11.25 target price based on our sum-of-the-parts valuation ($10.74/share for ownership operations + $0.52/share for management operations).
