Invesque Inc. (TSE: IVQ.U) on Thursday updated shareholders on its continued separation from Symphony Care Network (SymCare) during its first quarter earnings call, with an intended 50 percent drop in SymCare assets long term.
The Carmel, Ind.-based real estate investment firm began the first phase of its divestiture with the $20 million sale of its Chesterton facility to Symphony on April 30, followed by a new lease with Skokie, Il. REIT and management company Cascade Capital Group.
Lease terms involve a 10-year initial period and two five-year renewal options for four SymCare facilities — base rent will be $3.4 million the first year of the lease, then $5 million in the second year and $5.5 million year three.
Invesque Chief Executive Scott White expects the company’s relationship with Cascade to grow from the initial transaction, when questioned by BMO Capital Markets analyst Jenny Ma.
“We’ve always said that we want to have a finite number of operators that we can have long term growth opportunities with, and Cascade is certainly one of those. I would expect over time that we could grow that relationship,” White added.
The Invesque CEO expects to sell four more Symphony properties back to SymCare in the second quarter.
“The investment team has been hard at work over the last couple of months executing on a mix of strategic initiatives as part of our ongoing portfolio management efforts,” White noted during the call. “But our work is not done yet. As part of the final phases of the new framework with Symphony, we have executed a purchase and sale agreement to sell up to four additional facilities currently operated by Symphony back to Symphony in the coming months.”
As a final part of its memorandum of understanding with Symphony, Invesque is working to finalize an amended and restated 15-year master lease for its seven remaining properties, and restructure outstanding loan agreements.
The Symphony portfolio will represent 11 percent of Invesque’s net operating income once all transactions are completed, a significant decrease from 25 percent prior to the MOU.
Invesque started talks to distance itself from Symphony after tenant Bridgemoor Transitional Care brought in zero revenue in the third and fourth quarters last year.
Other asset updates in the first quarter included the sale of four Inspirit Senior Living communities to Inspirit for $35.5 million, three completed Commonwealth Senior Living expansion projects in Virginia, and two refinancing transactions, also in the Commonwealth portfolio.
Invesque reported $53.7 million in revenue for the first quarter ended March 31 and a net income of $1.8 million during the same financial period.
Funds from operations per share was 9 cents, down significantly from 21 cents during the first quarter last year. Analysts on average expected Invesque FFO to be 16 cents.
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