Chartwell Retirement Residences

Hello, everyone. Thank you for joining us. And welcome to the Chartwell second quarter 2026 results conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Vlad Volodarski, CEO. Please go ahead.

Thank you, Kristen. Good morning and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website at charwell.com under the investor relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer, Jeffrey Brown, Chief Financial Officer, Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer, and Gordon Chiu, Chief Technology Officer. Before we begin, I direct you to the cautionary statements on slide 2 because during this call we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MD&A and other securities filings contain information about the assumptions, risks and uncertainties inherent in such forward-looking statements and details of such non-GAAP and other financial measures. More specifically, a directory to the disclosures in our Q2 2026 MD&A under the heading Risks and Uncertainties and Forward-Looking Information for a Discussion of Risks and Uncertainties. These documents can be found on our website or on CEDARplus website. Turning to slide 3. In Q2 2026, our teams delivered another strong quarter of operating and financial results, with FFO per unit increasing 17% compared to Q2 2025. This marks our 12th consecutive quarter of double-digit FFO per unit growth. We've been making great progress, advancing our portfolio growth and optimization strategy. Year to date, we have completed and announced over 1 billion of acquisitions, including our new partnership with Fengate Asset Management, spanning 23 properties and nearly 3,000 suites. In the last two years, we have invested over 3.2 billion in acquisitions of high quality, newer residences across the country at a significant discount to replacement costs. Our investment team continues to pursue other opportunities in the market and at the same time we're building our own pipeline for future growth through partnerships with reputable developers. In July we announced four development projects representing 828 suites across Quebec, Alberta and British Columbia. These projects will bring modern purpose-built residences in to attractive markets where demand continues to grow. We also continued our non-core asset disposition program Repositioning our portfolio towards high growth, newer, more efficient assets in our core markets. So far in 2026, we completed 167 million of non-core asset sales and announced agreement to sell two other properties for 132.8 million. Our operations teams are busy developing exciting programs for our residents. In wellness, dining experience, activities, care, marketing and sales, the teams are constantly enhancing our service delivery to cater to the evolving needs and wants of the new generation of seniors who are coming to our residences. Our strong financial results reflect the outstanding work of our residences teams and support teams across the country. Every day they deliver exceptional experiences to residents and families, and I'm deeply grateful for their dedication, professionalism, and commitment to continuous improvement. With that, I'll pass the mic to my partners. Karen will discuss our operating initiatives, Jeff will review financial results, and Jonathan will provide an update on our growth and portfolio optimization activities. Karen.

Thanks Vlad. Moving on to slide four, we had another strong quarter of leasing activity with a positive net permanent move in to permanent move out of plus 80 units with contributions from all operating platforms. Our marketing strategies continue to be very effective with an 11% increase in personalized tours from marketing sources quarter over quarter. Our conversion ratio of marketing initial contacts to personalized tours was We recently developed a new brand promise, Joy is Ageless, and launched a marketing campaign to share this message across TV, radio, out-of-home channels, Facebook, and YouTube. The campaign expanded Chartwell's reach through millions of video views, including over 5 million just combining YouTube and Facebook. In a La Presse study, a prominent Quebec online media platform, 81% of respondents agreed that the campaign projected a positive image of Chartwell. I encourage you to go to the homepage of our website and see this fresh and dynamic approach that focuses on today's generation of seniors and what brings them joy. In April, we hosted a very successful open house event that generated the highest number of personalized tours in the past 12 months, We are preparing for another open house event in September. Turning to slide five, in terms of expense control, we reduced our staffing agency costs by 43% year to date 2026 compared to 2025 through our continued focus on recruitment and retention activities. In order to continue to strengthen our sales and operating standards and initiatives across our residences, We have held several continuing education sessions this past quarter, including sales training for our retirement living consultants and general managers and communities of practice for our management teams. We also hosted a strategic planning and education event for the senior operations team focused on continuously improving and positioning our offerings to meet the expectations of the baby boomer generation of residents beginning to choose retirement living. In Q2, we have been very busy with integrating our new acquisitions, including the six homes in Ontario previously owned by Sifton, located in southwestern Ontario, Waterloo, and Mississauga, as well as Palermo Village in Oakville. By all accounts, these have gone very smoothly as we use our newly defined cross-functional approach that includes day one non-negotiables and then milestones at 30, 60, 90, and 120 days post-closing. We're also well into the operational integration of the Chartwell-Fengate properties in BC, Alberta, and Ontario, which we have been completing in tranches that will be finished by mid-August. Finally, I want to take a moment to talk about the progress that has been made at Churchill House, a 98-unit residence in North Vancouver. In 2025, we made the decision to reposition this property by concluding our assisted living arrangement with the Fraser Health Authority and returning 31 government-funded suites to private pay and investing $3 million in common area upgrades. I'm pleased to report that based on this strategy, occupancy has increased from 78% in January to 92% in July and the operating margin increased from approximately 48% prior to the change to 53%. I'll now turn it over to Jeff to take you through our financial results.

Thank you, Karen. As shown on slide six, in Q2, 2026, net loss was 1.3 million compared to 5.7 million in Q2, 2025. FFO grew to 90.5 million in Q2 2026, an increase of 34% compared to Q2 2025, and our FFO per unit grew 4 cents or 16.7% to 28 cents in Q2 2026 compared to Q2 2025. Our reported FFO does not include 2.8 million or 1 cent per unit of income guarantees related to recently acquired properties. Q2 2026 FFO growth benefited from higher adjusted NOI of $27.6 million, partially offset by higher finance costs of $4 million and higher G&A expenses of $1.7 million. In Q2 2026, our same property occupancy increased 320 basis points to 94.3%, and our same property adjusted NOI increased $9.2 million, or 11.9%. We also had an 8.1% increase in our NOI per occupied suite. Slide 7 summarizes our same property operating results for each platform. All of our platforms posted occupancy gains in Q2 2026 compared to Q2 2025, and all are operating above 90% occupancy, which positively impacted our results. Our Western Canada platform same property adjusted NOI increased 4.4 million or 19.5%. Our Ontario platform same property adjusted NOI increased 3 million or 7.4%. And our Quebec platform same property adjusted NOI increased 1.8 million or 12.3%. Turning to slide 8, at August 7th, 2026, liquidity amounted to approximately $614 million, which included $219 million of cash and cash equivalents and $395 million of borrowing capacity on our credit facility. On May 7th, 2026, we filed the new final base shelf prospectus and new prospectus supplement for our ATM program to allow us to issue up to an additional 500 million of trust units, which will further support our transaction activity. During the three months ended June 30th, 2026, we raised total gross proceeds of 72.7 million through the program at an average price of 2174. Our balance sheet remains in a very strong position with interest coverage ratio of three and a half times and net debt to adjusted EBITDA ratio of 7.0 times. And we continue to improve our financing flexibility, having grown our unencumbered asset pool to $2.2 billion. For the remainder of 2026, our debt maturities include $227.1 million of mortgages with a weighted average interest rate of 2.8%, and a 250 million senior unsecured debenture with an interest rate of 6%. As of August 6th, 2026, we estimate the 10-year CMHC insured mortgage rate to be approximately 4.17% and the five-year unsecured debenture rate to be approximately 4.38%. I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities.

Thank you, Jeff. Turning to slide nine, we continue to execute on our portfolio strategy of enhancing our asset base to generate increased quality NOI. I'll highlight some of the deals that we've completed in and subsequent to Q2 2026. On June 2nd, 2026, we completed the acquisition of a 30% ownership interest in the Seasons Retirement Communities portfolio through a joint arrangement with FENGATE Asset Management. a leading alternative investment manager and real estate developer. The portfolio includes 23 seniors housing communities comprising 2,943 suites in Ontario, British Columbia and Alberta. The integration of these residences into Chartwell's management platform is well underway. The purchase price for our interest was $382.5 million and was partially satisfied by the proportionate assumption of approximately and a weighted average interest rate of 4.46% and a weighted average term to maturity of five years, with the remainder paid in cash. Under our agreement with FenGate, both parties have contractual rights that may result in our acquiring an additional 20% ownership in the portfolio upon the achievement of specified milestones. As part of the ongoing strategic partnership, Chartwell will have the option to participate in FenGate's future development of Retirement Residences in Ontario. Should Chartwell elect to participate in any such development, Chartwell will provide operations management services, and the parties will have certain put-in-call rights once the residence is stabilized. The partnership brings together two experienced organizations with a shared commitment to high-quality seniors housing and long-term stewardship of retirement residences. On June 3, 2026, we completed the acquisition of Palermo Village Retirement Residence, comprising 116 suites in Oakville, Ontario for $43 million, which was settled in cash. On July 2nd, 2026, we completed the sale of nine non-core properties in Ontario for $117.9 million. Net proceeds were $82.3 million after $2 million of transaction costs and repayment of $33.6 million of mortgages. On July 16, 2026, we completed the acquisition of a 50% ownership interest in Chartwell-le-Montcalm, a 283-suite retirement residence in Candiac, Quebec, for a purchase price of $43.3 million for foreclosing costs and work and capital adjustments. The purchase price included the proportionate assumption of the $22.3 million mortgage bearing interest at 6%, maturing on October 1st, 2026, with the balance settled in cash. On July 24th, 2026, we announced four new development projects in Alberta, British Columbia, and Quebec, representing 828 suites, offering a mix of seniors' apartments, independent living, and memory living. The projects are in partnership with experienced, vertically integrated developers in each jurisdiction, and Charlotte Wells Future Acquisition Pipeline. On August 4th, 2026, we entered into a definitive agreement to acquire a 100% ownership interest in a retirement residence in the greater Toronto area for a purchase price of $136 million. This transaction is expected to close in Q3, 2026. On August 4th, 2026, we also entered into a definitive agreement to sell a property in Ontario for $41.8 million. This transaction is subject to customary adjustments in accordance with the terms of the purchase and sale agreement and is expected to close in Q3 2026. And finally, on October 4th, 2026, we entered into a definitive agreement to sell a second property in Ontario for $91 million. This transaction is subject to customary adjustments in accordance with the terms of the purchase and sale agreement and is expected to close in Q3 2026. This property has an in-place CMHC insured mortgage with an outstanding balance of $21.3 million, bearing interest at 3.13%, maturing in 2028. In 2026, we continued to grow our portfolio under management by over $2 billion and invested $1 billion at our ownership share, not including our development pipeline commitments. We are doing so prudently, shifting capital from non-core assets to strategic core residences, while taking advantage of our strong access to capital, including through our ATM program. We continue to evaluate several interesting opportunities to grow and enhance the quality of our real estate portfolio. We remain disciplined in how we approach underwriting, diligence, and integration of our to deliver enhanced services to the residents, mitigate disruption to operations, and achieve our required investment returns. As disclosed with some examples above, we are engaged in discussions with local and national developers across the country and have created a meaningful pipeline of state-of-the-art assets to bring into our portfolio. We pursue such developments in a prudent manner with a preference for off-balance sheet development similar to our arrangement in Quebec. while ensuring that our balance sheet will be able to support our forward purchase commitments. We intend to continue on this path of optimizing our portfolio through strategic acquisitions, prudent off-balance sheet development with sophisticated partners, the diversification of our sources of capital and the divestiture of non-poor assets. I'll turn the call back to Vlad to wrap up.

Thank you, Jonathan. Turning to slide 10, I remain confident in the momentum of our business and our long-term growth prospects. The fundamentals supporting retirement living in Canada remain very strong. Demand continues to grow, while new supply is expected to remain limited for the foreseeable future. This creates a favorable backdrop for occupancy, NOI, and earnings growth. With 30,000 residents across the country and 12,000 dedicated team members, a sophisticated management platform and strong culture, Charwell is well positioned to benefit from these trends. We continue to grow and renew our portfolio through acquisitions, development partnerships and strategic capital recycling, adding newer and more efficient residences in attractive markets. At the same time, we are becoming a more sophisticated and efficient organization. Our teams continue to streamline processes, and adopt technology automation and AI-enabled tools responsibly, helping us serve residents better while improving productivity and execution across the business. Our culture remains one of our greatest strengths. It enables us to integrate newly acquired properties successfully and consistently deliver results that meet or exceed underwriting expectations. It also supports the strong pipeline of future growth opportunities we're building through acquisitions and development partnerships. Most importantly, our focus remains on our residents. We are committed to delivering exceptional experiences, enhancing wellness programs, expanding care and support services, and helping residents remain in the communities they know and love as their needs evolve. Initiatives such as our partnership with Dr. Greg Wells in developing Charwell's proprietary resident and employee wellness programs reinforce that commitment. What gives me the greatest confidence is our people. Their dedication, compassion and relentless focus on improving the lives of the residents is the foundation of our success. I'm incredibly grateful for everything they do. I will now close our remarks with a story from one of our residences as pictured on slide 11. Dining remains one of the defining elements of the Charwell experience and an important part of our hospitality strategy. This quarter, that commitment was recognized in Quebec, where our team at Charles Cité Jardin received the People's Choice Award at the Ouloué Lucan Chefs Challenge, and Charles Chevinigan earned the 2026 Bonjour Residence Signature Award for Excellence in Nutrition and Gourmet Dining. These recognitions reflect the dedication of our food services teams and our continued focus on delivering an exceptional resident experience. Thank you for your attention this morning. We would now be pleased to answer your questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Lorne Kelmer with Desjardins. Your line is open. Please go ahead.

Thanks. Good morning, everyone. Just wanted to get an idea on the same property and OI growth outlook now that occupancies have largely reached stabilized levels. And, you know, how much longer do you think you guys can do double digit same property and OI growth? And what are the levers that should continue to drive that?

Sure. Good morning, Lauren. So we have outlined in our three year strategy that we think we can continue to deliver rate growth above 4% and DOE growth below 4%. And that combined, I think you can model out what that can drive in NOI growth and that we also have substantial occupancy growth opportunities still in our growth portfolio. So that portfolio sits around 90% occupancy. And so as we continue to sort of pursue our acquisition and portfolio optimization strategy that will also drive significant NOI growth in the business.

Okay. And then On the development agreements, the BATIMO one I think was pretty explicit, but for the other three, just wanted to get an idea if there were different mechanisms like puts and calls that you have with BATIMO, or if the acquisition is more fixed in terms of timing, who's in the driver's seat, and if for some reason, like if you were in a position from a balance sheet perspective, to acquire one of these assets on stabilization or completion, would you still be forced to do so? Or is there some wiggle room there?

Yes, I'll take that one. So each one has its variation, but they are largely based on the BATIMO model. So that model is that we align with a vertically integrated developer. applying on and sign off on the plans and specs and the location. We provide operations management services and lease it up. And the variation in these models is on some of them we will commit to acquire 50% interest at construction completion and the balance on stabilization and on others that acquisition is done at stabilization entirely.

OK, but I just want to get a sense of like is so when you get to completion, it's like you have to buy it or do they put it to you? I just try to get an understanding of how that part of the process works.

Again, there are slight variations in the agreements, but generally there will be a put call mechanism.

And similarly to the Battingwood structure, we view these developments as our own. Like the buildings will be our travel name from the day of opening. So we are basically getting access to future acquisition opportunities without taking on the development risk and construction risk.

Okay, understood. And then maybe just one last one. I was wondering, do you guys see any more meaningful opportunities to leverage the Chartwell platform and grow the management business? Obviously, the Seasons deal was one such opportunity. Just wondering if there's anything else out there, whether you actually acquire any interest in the portfolio or not.

Well, that is the principal difference, Loren. We are not going to be in a third party management business where we do not have significant ownership interest in the real estate portfolio. The way the market prices, I guess, this business is called the value that is created by management that creates the real estate. So for us, the strategy is part of our strategies to diversify our capital sources and potentially the more partnerships with other capital providers. But we will always aim to retain a significant ownership interest in the properties.

Okay, thank you so much. I'll turn it back.

Your next question comes from the line of Jonathan Kletcher with TD Cohen. Your line is open. Please go ahead.

Thanks. Good morning. Just going back to the same property results. First, maybe on the occupancy, if I look, I see Western Canada and Quebec occupancy kind of held flat versus Q1, but Ontario was was down a little bit. Maybe give us some color as to why.

Yeah. That is more seasonal and we are seeing growth in all of the platforms and are forecasting that same property portfolio now to get up to that 95% level in September.

Okay. So just a function of a kind of a tougher winter slash spring and it's not really a

Nothing indicative of that portfolio other than the seasonality of that winter season.

Okay. And then secondly, on the expense side, the same property expense side, on the occupied suite, it's fine, like up 3.5%, I think. But the overall same property expenses were up 7%. Maybe give a little bit of color as to why. Was that just sort of elevated marketing spend or... timing on spend. What kind of drove that?

I think it was primarily timing. So Q1 expenses were probably a little lighter and Q2 a little heavier because of that. And if you look at year to date expense level, it's probably more balanced and more indicative of that run rate spend growth or expense growth.

Okay. So if I look at The first half this year in terms of overall expense growth for the same property, kind of think of that for the second half.

Yeah, and some of it is a function of the continued occupancy growth. So if you look at the DOE preoccupied suite, it was up 1.9% the first half.

Yep. Yep, for sure. Okay, thanks. I'll turn it back.

Your next question comes from the line of Himanshu Gupta with Scotiabank. Your line is open. Please go ahead.

Thank you and good morning. So just going back on this Ontario occupancy dip in Q2, I think you mentioned mostly feasibility and that has come back in Q3. So just wondering, was there any pricing adjustments made to bring back the occupancy in Q3?

Yeah, it's coming back into Q3, as Jeff pointed out. There wasn't any specific pricing adjustments. The way the seasonality works, particularly in Ontario, it's always a bit more pronounced than the rest of the country. And if you think about what causes the seasonality decline, it's not the departures as much. Thank you very much. So this is nothing unusual and generally to be expected. I mean, for the last couple of years, you couldn't see it because the occupancy was growing very quickly everywhere. But this is a more usual seasonality pattern that we're seeing this year.

Thank you. That's helpful. And then maybe any markets in Ontario or in general on your watch list, you know, beginning to see more new supply or more construction activity going on or maybe you know impact from new LTC supplies?

Not really I mean there's no new construction to speak of that has started at this point that we know of obviously we announced a few projects they will start in Q3 there'll probably be some others but at this point of time nothing's on the watch list remember it takes now anything that's being built is large buildings so it takes at least two years to build them So they're not going to become competition for at least two years, if not longer. And so from our perspective, we haven't seen much construction going on anywhere in our markets. As we spoke before, there were some markets that got impacted more than others because of the pre-COVID oversupply like Durham and Ottawa. And so they're coming back and maybe it's just going to take a little longer for those to come back. And again, it just depends on the properties. Many of our properties in those markets are full today.

Thank you. Just turning attention to the growth portfolio, NOI margins obviously pretty nice there, almost mid-40s. Occupancy, obviously you mentioned 90% and there's more room for occupancy. Do you see more operating leverage as well as that occupancy goes up, margins can stabilize at what levels?

Hi Himanshu, we do see some more opportunity operating margin level as occupancy continues to grow in that portfolio and that contains all the acquisitions we've been doing over the last couple of years. So they're typically newer, larger, higher margin opportunity properties.

and are they more like going to be around like 50% stabilized or like just above mid 40s? Like in any sense, I know these are larger demon properties vintage.

Sorry, Himanshu, can you repeat that question within some static?

My question was that the growth NOI margin, do you think that will stabilize at like high 40% margin or 50% margin? Given, as you mentioned, these are newer properties, larger properties as well.

I think there's just a variety of properties in this bucket. So it's some of them will definitely be in 50. Some of them will be lower. It's probably safer to assume that they will be kind of mid 40s, a little higher than our same property portfolio margins. But it really depends on the composition of that bucket. And as you know, changing now quarterly.

Yeah, no, that's a good point, thank you. And maybe just a last question on the acquisition disposition activity. I mean, GDA acquisition you announced looks like a larger property. Anything on the pricing on dollar per suite basis? Any color on that GDA property, on pricing?

Yeah, it's a larger, correctly, it's a larger property. You know, it's done at a sort of similar cap rates that we've been seeing lately for good quality properties in strong markets. So kind of high five, low six is what our underwriting would be on this property.

And that continue to be a certain discounted replacement costs on these ones.

We think it's at some discount to replacement costs, although, I mean, I think Jonathan spoke about it at the last call. That gap has been narrowing now as both construction costs growth stabilized and there's more capital chasing high quality properties. So it's certainly not a 30% discount to replacement costs as we've been seeing before, but we think it's still below replacement costs today.

Okay, and maybe just the last one here on, and I know you've been active on dispositions. Any change in like the disposition strategy in the context of, you know, competition review earlier this year? I mean, are you still targeting older properties or now, you know, certain markets where you might have higher concentration as well?

No, there's no change in our disposition strategy. We've identified a number of non-core assets. that we do plan on moving out of the portfolio over the next two or so years and we're seeing, as Vlad mentioned, a lot of new capital in the sector and we would expect to see success in selling those non-core assets as we see a lot of interest. The competition issues are Very local. So we have properties across the country and we are a big player. But when we're looking at any competitive issues, it's at the very micro level. So as those issues come up, we have sufficient scale to address it. But right now, it's not really affecting our strategy.

Okay, very helpful. And I'll turn it back. Thank you, Grace.

Your next question comes from the line of Pammy Beer with RBC Capital Markets. Your line is open. Please go ahead.

Thanks. Good morning. I just wanted to come back to the 95% state property occupancy target. I think just based on the forecast for Q3, I think you'll need to hit maybe 96% as an average for Q4. So I'm just curious, you know, what signs are you seeing that maybe give you the confidence that we'll see that pick up?

Well, our leasing, as Karen pointed out, has been pretty strong. So we're seeing continuing strong demand for our services. And historically, our Q4 is the strongest leasing season. So it starts in September, goes to November, December. And so we expect that those historical trends will continue and we will see a strong pickup in the Q4.

and I guess Vlad, is the bulk of that really coming from Ontario?

Well, there's more opportunity in Ontario, so it's fair to say that it should come mostly from Ontario, although, again, Sometimes people ask us a question, what's the highest occupancy that you can normally maintain? And our answer is we don't have the data points to point to to say, you know, it was 98% five years ago, so it should be that. We do have properties that are running at 100% occupancy for three years in a row without a day of revenue loss. So that's a long-winded answer to say that we also expect contributions from Western Canada and Quebec. They have less opportunity, but they can continue to grow occupancy in the properties that are not yet at 100%.

Okay, and then just maybe to clarify, none of the pickup, I guess, in Q4 would really be a result in any sort of shift in the mix, maybe any asset sales that are currently in the same property bucket but might be sold in Q4?

At this time, we do not have any significant plans to show or at least deals are not progressed far enough for that to happen on scale that would change that composition of that bucket significantly.

Got it. Okay. And then just, you know, again, nice to see some of the, I guess, new partnerships from a development standpoint. Can you talk about maybe what else is in the works and how that pipeline may or may not maybe expand over the next year or so?

Sure. So we've announced for, as you know, we have an established partnership in Quebec and we expect the pipeline to continue to grow through that partnership. In the rest of the country, we have either established or are working on A couple, at least, partnerships in each of the provinces that we hope will be modeled on the Baltimore relationship. And we've had success, as we've announced, and we would expect to announce more in the coming quarters.

And maybe just to build on that, somewhere in our investor presentation, we identified opportunity to build close to 6400 suites across our portfolio. They're all not going to be built in the next couple of years, but this is over a longer period of time. All of these are potential opportunities. either because we have excess land that we already own or the discussions that are progressing with various development partners. There's been quite an increased interest from developers in our asset class now that the multi-residential development is not progressing as fast. So our expectation is certainly, and the team is working very hard to continue to build more of that pipeline going forward. Having said all of that, we do have guidelines that we established for ourselves to make sure that our future purchase commitments are not going to put an excessive strain on our balance sheet.

That's very helpful. Thanks very much, Vlad. I will turn it back.

Your next question comes from the line of Juliano Thornhill with National Bank. Your line is open. Please go ahead.

Hey, guys. Good morning, everyone. I just wanted to stick with the development partnership announcements. I guess my first question is, I know Western Canada is probably a little more skinnier in your portfolio, but why do these make good investments for you right now and for the future? Like, is it something about the market that you like or just supply demand in that area?

Well, it's a combination of things. We're only going to the markets that we think that has growth potential, has access on that demand. The other part of it is we're building buildings that are new generation of buildings that we think will be a lot more desirable for the new generation of seniors that we serve that would have larger amenity areas and more robust service offering that both between our operations team and real estate team we're designing shape and form and you know as much as we like investing capital back to the existing property portfolio and upgrading our own properties and we're doing quite a good job at that new buildings have something that these old buildings cannot offer and you cannot buy with money repositioning the older buildings and so this is all done with the goal of improving our portfolio to the newer new age of residences and creating growth opportunities for ourselves where we do not have to compete with others for high quality properties.

And just kind of get into the terms of the terms of the partnerships. Is this yourselves kind of dictating the terms or are you just because you have introduced quite a few kind of new structures now? I'm just wondering if that was more like a mutual agreement or if this was like you had to make the terms for the projects just to get them by with the partner rather than keeping a kind of more standard development like the TEMO structure?

Our objective is to standardize these terms and base them on the BADMO model. Of course, every time you talk to a different counterparty, they're going to have their own interests, and what's important to them might not be the same as what's important to another party, so there will be some variations to those agreements. But by and large, we're on the same model, which I described are all coming with vertically integrated partners who put on their balance sheet the development. We provide the management and the oversight and the design oversight and we acquire at the back end either a construction completion or a stabilization or some kind of mix of the two. So at a high level, they are all on the same terms. And just if cap rates compress or expand, is there anything like who ultimately kind of captures that value? Is there anything to protect you or your partner in a scenario like that? We have in most of our agreements some level of protection for those types of scenarios.

Okay, thank you. That's all.

We have reached the end of the Q&A session. I will now turn the call back to Vlad Volodarski, CEO, for closing remarks.

Thank you, Chris Lin, and thank you everybody for joining us today. If you have any further questions, please do not hesitate to give us a call. Goodbye.

This concludes today's call. Thank you for attending. You may now disconnect.