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spk07: Ladies and gentlemen, welcome to CNA Senior Living Inc's Q1 2021 conference call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and Karen Han, Chief Financial Officer of CNA Senior Living Inc. Please be aware that certain statements or information discussed today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statements or information. Please refer to the Forward-Looking Information and Risk Factors section and the company's public filings, including its most recent MD&A and AIF, for more information. You will also find more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted on CDAR and can be found on the company's website at cnliving.ca. Today's call is being recorded, and a replay will be available. Instructions for accessing the call are posted on the company's website, and the details are provided in the company's news release. The company has posted slides which accompany the host remarks on the company's website under events and presentations. With that, I'll turn the call over to Mr. Jain. Please go ahead, Mr. Jain.
spk06: Thank you, Kevin. Good morning, everyone, and thank you for joining us on our first quarter's call for 2021. For over a year, we have taken critical steps to fight the pandemic while providing the best quality of care for our seniors. I would like to express my deepest gratitude to all of our team members who have made a remarkable difference by prioritizing the health and well-being of our residents and their colleagues. While COVID-19 continues to have a profound impact here in Canada, the third wave has largely spared our senior living sector. The early vaccinations provided crucial protection for residents and team members. We are incredibly thankful that our sector was made a priority for the vaccination rollout and I encourage all Canadians who have not yet received vaccine to get it as soon as they can. To date, approximately 95% of our residents and approximately 74% of our team members have received their first dose of the vaccine. We address vaccination hesitancy by ensuring our residents and team members are well informed we engaged our in-house medical experts, Dr. Moser and Dr. McGeer, to provide additional information through webinars, answer questions about the COVID-19 vaccines. These and other efforts supported the substantial increase in vaccination rates across our long-term care and retirement platforms. During the first quarter, the number of residences with COVID-19 cases and the severity of outbreaks have declined substantially and remained low subsequent to Q1. As of yesterday, we have no active COVID-19 cases across any of our residences in British Columbia, and 10 residences in Ontario have active COVID-19 cases, with only three active resident cases across our portfolio. This marks a significant improvement and represents a 99% decline since the beginning of 2021. Moving to slide six, the higher vaccination rates helped us in returning to a more stable operating environment. While our COVID-19 infrastructure remains strongly in place and includes active screening, on-site rapid testing, elevated staffing levels, and a robust supply of personal protective equipment, certain government mandated restrictions have recently eased as a result of improving conditions. Most notably, the Ontario and BC governments have started to lift restrictions with respect to self-isolation requirements for newly admitted residents. In addition, Communal dining and recreation activities in residences with high immunization rates are resuming, and physical distancing rules are being relaxed, which is so very important for a resident's health and mental well-being. In Ontario, fully immunized frontline staff are able to work at more than one location, again, to safely support additional staffing capacity across the healthcare sector. In April, we welcomed Jennifer Anderson into our leadership team to help Sienna's long-term care operations. Jennifer is a highly experienced operator known for her focused approach to improving customer and team member experience and optimizing operational performance in her previous roles as Chief of Operations and Service Excellence Officer at WSIB Workplace Safety and Insurance Board. Now moving to our occupancy numbers. Our marketing and sales teams have been working on numerous initiatives to support occupancy including redesigned sales incentive programs, enhanced outreach, and investments in online lead generation. In addition, team members in our enhanced call center with longer operating hours made an average of 1,500 to over 2,000 outbound calls each week to prospective residents and their families. All these efforts resulted in an increase in leads and deposits in Q1 and helped support occupancy. Deposits in Q1 have increased by 10% compared to Q1 of 2020 and nearly 20% compared to the previous quarter. In our retirement portfolio, average same property occupancy was 78.1% in Q1. The decrease was primarily related to a decline in new residents moving in due to the impact of the pandemic, including access restrictions. Subsequent to Q1, monthly average same property occupancy improved modestly from 77.7% in March to 77.9% in April, reflecting the numerous marketing and sales initiatives offset by the impact of the third wave of COVID-19. Occupancy remains particularly impacted at residences located in COVID-19 hotspots, and we expect continued occupancy pressures until mid-2021. Based on our assumption that restrictions that retirement residences will continue to ease, we forecast gradual occupancy improvements during the second half of the year, supported by anticipated pent-up demand and our continued investments in our sales and marketing initiatives. In a long-term care portfolio, average occupancy declined to 80.3% in the first quarter from 97.9% in the same period last year due to access restrictions and capacity limitations in three- and four-bed ward rooms. Long-term care remains an essential needs service and the demand for long-term care beds continue to grow while a waiting list of over 38,000 in Ontario alone. Wave 3 has put tremendous pressure on hospitals and we are assisting these health partners through the safe admission of seniors to available beds in our residences. As admissions accelerate, we expect to reach the required occupancy targets over the next few months. The Government of Ontario extended its Occupancy Protection Funding for vacancies until August 31, 2021. Excluding the impact of net pandemic expenses or recoveries, we expect the financial performance of the long-term care portfolio in 2021 to be slightly below 2020. Our internal forecasts are based on the impact of new and prolonged access restrictions during the third wave of the pandemic on preferred accommodation revenues, which are not covered by the government's occupancy protection funding and our additional investments to elevate resident experience. While we expect a continued increased level of expenses in the near future, The positive impact of early vaccinations in seniors living, the increasing vaccination rates among the general population, and the return to a more stable operating environment all give us renewed optimism. Moving to slide eight. Staffing remained challenging during the first quarter of 2021, as qualified staff is in high demand by sector peers, hospitals, and other care providers. As part of our ongoing talent acquisition strategy to attract and retain our highly engaged and seasoned team, we continue to collaborate with educational and government institutions and intensify our social media campaigns. We have also increased our focus on team member mental health, including managing stress, gaining resilience, and avoiding burnout. We offer a variety of facilitated and self-paced programs in addition to providing resource materials and access to employee assistance programs. Our team members have gone through extraordinary lengths during the pandemic and many have made enormous sacrifices for prioritizing the health and well-being of residents and their colleagues. For some of them, this meant moving out of their family homes and into temporary accommodations for extended periods to keep residents safe, sacrificing time with their families, often at the cost of their own mental, physical, and emotional health. Our team members are true heroes whose selfless actions had a tremendous impact on our residents' lives during the pandemic. Last year, we helped launch the CARES Funds, which provides one-time financial grants to eligible employees of long-term care and retirement operators in Canada who are facing extraordinary circumstances amid the COVID-19 crisis. Since May of last year, the Fund helped approximately 800 frontline staff with over 2.4 million in emergency financial assistance. To continue our support for this important initiative, Ciena has made an additional 100,000 contributions to the CARE funds this week, which brings Ciena's corporate and board of directors contribution to approximately 700,000. Moving to our focus on diversity and inclusion, attracting and retaining a talented and diverse team at all levels of organization remains a key objective. Diversity and inclusion have always been an important part of Ciena, and a diverse leadership team is a reflection of our overall workforce. Today, 54% of our leadership team, including five of our 10 executive officers, and one third of our independent board members are female. In addition, approximately 30% of our leadership team, including three out of our 10 executive officers, identify as black, indigenous, or people of color. We are very grateful for the continued government support that helps us cover some of the extraordinary pandemic expenses. With the exception of funding related to accommodation, all government funding is flow-through funding, which means it has to be spent entirely on resident care. Any amounts that are not spent directly on resident care or pandemic expenses have to be returned to the government. We believe that government assistance programs will help address systematic issues our sector has been facing for many years. These issues were highlighted in two recently published reports. In April, Ontario's Auditor General issued a report which included findings on pandemic readiness and response in long-term care. This report was followed by the final report of the Ontario's Long-Term Care COVID-19 Commission, an independent commission investigating the pandemic in Ontario's long-term care system. We were able to share our experience and observations during the pandemic with the Commission, whose recommendations to the Ontario government are expected to help shape and strengthen the future of long-term care. Recommendations include the need for additional staffing, enhanced IPAC training, continued prioritization of personal protective equipment, stronger medical leadership, enhanced collaboration with healthcare partners, and the urgent need to redevelop and expand homes to meet a growing societal need. The Ontario government has already started to implement a number of the recommended improvements, including additional staffing. And at Ciena, we have also taken numerous steps recommended by the Commission, including stronger medical leadership, increased focus on family communication, and enhanced IPAC training. As a mission-driven company that puts the well-being and safety of a resident first, we are well-positioned and equipped to support the future of senior living. Now moving to a development program, our development plans include over $600 million in capital investment to redevelop our Ontario long-term care portfolio over the next five to seven years. Two projects are slated to start later this year, beginning with a 160-bed long-term care home in North Bay, which will be replacing the existing 148 older C-class beds. The capital investment for this development is expected to be approximately $52 to $55 million, with an expected development yield of approximately 8%. Our second project will be announced shortly. We are also making good progress on our joint venture development project of a new retirement residence in Niagara Falls with construction scheduled to start later this quarter. Ciena has a 70% ownership in this 150-suite Greenfield joint venture development with Reitman Senior Housing. which is expected to achieve a development yield of approximately 7.5%. The total budgeted development cost for this project is approximately $49 to $51 million. Our development and redevelopment plans will focus on sustainability as we adopt environmental friendly designs and install energy efficient features and equipment, all with the goal to significantly reduce the environmental footprint of these homes. In addition, these new residences will support our enhanced infection prevention and control measures and will significantly improve resident and team member experience. With that, I'll turn the call over to Karen for a financial update.
spk00: Thank you, Nitin, and good morning, everyone. I will start on slide 14. Our Q1 2021 financial results continue to be impacted by the pandemic as we continue to incur an increased level of expenses to support the cost of fighting the pandemic and minimizing the impact of outbreaks. There are various programs and financial assistance provided by the government to support pandemic-related expenses. It is important to note that there can be timing differences between the time of incurring these expenses and the funding of such expenses. In addition, any amounts that are not spent directly on resident care or pandemic expenses have to be returned to the government. In Q1 2021, we recorded a $9.9 million recovery of pandemic expenses. This was mainly due to the retroactive government funding of $15.3 million to recover some of our 2020 pandemic expenses incurred in excess of available funding in long-term care. which is reflected in our first quarter's results. Excluding this retroactive funding, the company's total net pandemic expenses for Q1 would have been $5.4 million, representing an improvement of $2.3 million compared to last quarter. Moving to our Q1 financial results on slide 15, our revenue decreased by 2.7% year-over-year to $161.2 million this quarter. Consolidated net operating income increased to $44.3 million this quarter compared to last year. This was largely the result of the $15.3 million in retroactive funding I mentioned earlier, which led to a net pandemic recovery in the quarter. Excluding this net pandemic recovery, our consolidated NOIs decreased by 9.2% to $33.2 million this quarter. Retirement same property NOI increased by $3 million to $12.8 million in Q1 compared to last year. Excluding net pandemic expenses, retirement same property NOI for Q1 increased by $2.3 million, mainly due to lower occupancy, partially offset by annual rental rate increases in line with market conditions. Rent collection levels remain high at approximately 99%, consistent with pre-pandemic levels. Long-term care same property NOI increased by 10.7 million year over year. Excluding the net recovery of pandemic expenses, long-term care NOI for Q1 decreased by 1.1 million to 19.5 million compared to last year, largely as a result of lower revenues from preferred accommodation. Moving to slide 16, Q1 OFFO per share was 37.8 cents, an increase of 1.3 cents compared to the prior year. Excluding net pandemic recovery, OSFO per share for the quarter would have decreased to 26.9 cents year-over-year, and Q1 ASFO per share was 39.4 cents, an increase of 1.2 cents compared to the prior year. Excluding net pandemic recovery, ASFO per share for the quarter would have decreased to 29.2 cents year-over-year. CNS ASFO payout ratio was 59% in the first quarter, excluding the net pandemic recovery, the payout ratio would have been 80%. Looking at our debt metrics in slide 17, our debt to growth book value decreased by 90 basis points to 46% year-over-year, mainly as a result of the repayment of credit facilities. We lowered our weighted average cost of debt by 30 basis points to 3.3% year-over-year, primarily due to increasing our mix of floating rate debt, and we increased coverage ratio for interest to 4.7 times. Excluding the net pandemic recovery this quarter, interest coverage ratio would have been 3.5 times. Debt to adjusted EBITDA was 6.2 years in Q1 2021. Excluding the net pandemic recovery, debt to adjusted EBITDA would have been 8.4 years. In terms of our balance sheet, CNL continues to maintain a strong financial position and an investment-grade credit rating. and ended the first quarter with $213 million in liquidity and an unencumbered asset pool of $840 million. Our debt is well distributed between unsecured debentures, conventional mortgages, CMHB-insured mortgages, and credit facilities. As mentioned, we expect an increased level of expense for some time, which will continue to affect some of CNF's key performance indicators, in particular with respect to the company's operating performance. With that, I will turn the call back to Netanyahu for his closing remarks.
spk06: Thank you, Karen. Looking ahead, we have renewed optimism for our sector and our company. The anticipated economic recovery, the positive impact of early vaccinations and senior living, and the return to a more stable operating environment all support the outlook for Ciena. We continue to take many actions to address the rising complexities of care, staffing shortages, and capital needs in the sector, all of which were heightened by the pandemic. In April, we formed the Ciena for Seniors Foundation. The foundation allows us to raise funds for a variety of important causes in both Ontario and British Columbia. In connection with an enhanced focus on mental health and wellness in the communities we serve, Ciena donated $250,000 to the Scarborough Health Network in support of its new mental health hub, which will support quality care for seniors. Through our work, we see countless fellow organizations who provide amazing programs and services in support of Canadian seniors. By launching the Ciena for Seniors Foundation, we do our best in helping those who need it the most. In everything we do, we are guided by the belief that it is both a great privilege and a tremendous responsibility to serve Canada's seniors to ensure that they live with utmost dignity and respect. I'm incredibly grateful for our team's unwavering commitment and compassion to fulfill this important mission. During my visits to more than 30 residences during the pandemic, I've experienced firsthand They desire to do everything they can to provide the highest level of care and services to our residents. I also want to acknowledge the many stakeholders who have supported us through the pandemic, including our residents, their families, sector associations, hospital partners, federal and provincial government, and our shareholders. Thank you for your participation on the call today. We are pleased to now answer any questions that you may have.
spk07: Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touch-tone telephone. If your question has been answered and you wish to move yourself from the queue, please press the pound key. Our first question comes from Jonathan Kelcher with CD Securities.
spk08: Thanks. Good morning. Good morning, Jonathan. First question, just on the occupancy and the retirement portfolio, you talked about the getting more leads and stuff like that. So based on what you're seeing right now, do you think March will mark the low for occupancy?
spk06: I think it's hard to predict. Hi, good morning, Jonathan. It's hard to predict that. We disclose our April occupancy is up by 20 basis points. And, you know, we see positive momentum on leads and deposits. I think it's just too early to predict. It just depends on what happens to the province. in both Ontario and BC in terms of opening it up and removing some of the restrictions for access. So it's too early to predict.
spk08: Okay. Fair enough. And then I guess on the development front, you do have the one retirement development going on. Do you see more opportunities on the retirement side, or do you think you guys will be focused on getting your long-term care facilities, the ones that need to be anyways, redeveloped?
spk06: So at Siena, we are deeply committed to both sides of our business, long-term care and retirement. So we have two projects at the moment, as you mentioned, one in long-term care, one in retirement. We are looking at some intensification opportunities depending on timing. We also continue to look at some campus development at a few of our sites where we are building new long-term care. We would add either senior apartments or retirement suites there. And again, we will announce those programs as we get a bit further ahead. But no, it would not just be long-term care. You should see some development from retirement as well, which would include a combination of joint ventures, intensification, greenfields, and campus development.
spk08: Thanks, I'll turn it back.
spk07: Our next question comes from Hamish Ugupta with Scotiabank.
spk03: Thank you and good morning. So, just on the long-term care occupancy protection that was extended until end of August, so do you expect any further extension here? I mean, I'm looking at, you know, your occupancy is at 80%. So how long do you think it will take to get back to 97% or so?
spk00: Good morning, Himanshu. So with respect to the occupancy protection funding, as I mentioned, it has been extended to August 31st. And we are seeing gradual admissions from new placements as well as hospital transfers because that support is very important in our healthcare system. And so we are seeing gradually and we expect that we will be reaching the occupancy target in the coming months. And so with that, we also see encouraging signs that our vaccination rate has been a very high and therefore limiting outbreaks, which is another factor that will help out with accelerating those admissions.
spk03: Got it. Okay. And then, you know, staying on the LTC funding, obviously $15 million received with respect to 2020 expenses. So do you expect further recovery here with respect to last year? Because I think there is still some shortfall left to be recovered.
spk00: For the $15.3 million, that is based on the ministry's review as of December 31st. So no, we don't expect that there would be much more coming related to last year. We do have still expenses on our BC side as the funding programs are different. And with respect to this year, in Q1, we continue to get monthly pandemic related funding. But as we saw, if we exclude the retroactive government funding of 15 million, we did continue to incur expenses higher than our monthly pandemic funding availability. And for us, that's really, you know, the focus is to continue to keep our residents and team members safe. And what I'd share is with our high vaccination rate and our COVID cases dramatically come down, so has our pandemic expenses quarter over quarter. And so at this point, it's hard to predict the duration and scope of the pandemic and therefore the scope and severity of the pandemic expenses. But we know we really want to thank you, our team members and residents and their families who have really supported our vaccination efforts and therefore keeping our residents safe.
spk03: Got it. Okay. Thank you. And then just turning to the Niagara Falls retirement residence development, I think the development yield is 7.5. What occupancy are you underwriting in that option, and how much is the lease period, you're assuming?
spk06: So, you know, the lease period is, I'll call it around two and a half years, and the stabilized occupancy is between 90 to 95%.
spk03: Okay. And the development yield includes the cost of land as well?
spk06: And that's correct.
spk03: Okay. Okay. Thank you. I'll turn it back.
spk07: Our next question comes from Brandon Abrams with Canaccord Genuity.
spk01: Hi. Good morning. Maybe just circling back on the long-term care redevelopment program, obviously, you know, it's a big spend over the next five to seven years. Just wondering if internally you've set any kind of leverage targets, whether it's debt to EBITDA or debt to asset that you'd be comfortable to go up to? And then maybe just a second question on this point. Would you be willing to explore or entertain a joint venture or kind of financial partners to help fund the program?
spk06: Good morning, Brendan. On the first one, we have always talked about our debt-to-book value will be comfortable in the range of 48% to 52%. And with the redevelopment program, maybe it will be closer to 52%. But again, as a reminder, it's to book value. And many of our assets have been on the books since 2010 when Sienna first went public. So from a fair market perspective, it easily would be in the 40s. And even at the 52% level that we talked at book value will still be in the 40s. So we think it's a pretty conservative way of getting development done and having assets which will have a long period of licensing. From a joint venture, we are always open to finding the right partners. And for us, it's just not capital. We tend to have good access to capital. What we are really looking for is what's the right partnership model, which is the right thing for the community, for team members, for residents. As we have talked in the past, we are exploring a joint venture with Scarborough Health Network, which will be the right thing to do for Scarborough. So as we progress, those are the partnerships we are more interested in rather than just financial ones.
spk01: Right. Okay, that makes sense. And then maybe just on... the return profile of some of these projects. There's obviously a lot of talk around inflation and cost inflation and commodity prices have increased recently. Correct me if I'm wrong, but I don't think the funding of the new developments is maybe tied to increases in CPI and that type of thing. So how do you see that impacting maybe the return profile at some of these projects over the next few years?
spk06: So, you know, this is the first development program after many years which works for some projects. It's not going to work for all. And that, again, we are thankful for the government to make it happen because in the last six years, only 500 beds were redeveloped, whether it was private, not-for-profit, municipal, because the funding program just didn't work for anyone. So, you know, it's hard to predict where we're headed. We go project by project, and that's why we are cautious in not coming ahead and talking about projects which are in the pipeline. When we get to a stage where we can lock in some costs, get a bit more confirmation from a pricing perspective from our general contractors and vendors in general, that's when we'll come up and talk about development yield. And if costs continue to rise and, you know, the funding – doesn't work, then we would have to take a pause. But we understand that the government is active in redevelopment. There's a lot to be done, close to 45,000 beds between what's new and what's current. So I think it's in everyone's best interest to get going. So it's hard to predict what will happen with inflation and whether the funding would keep up or not. But we are working with the information that we have at the moment.
spk01: Yeah, no, fair enough. And then maybe just turning to the commission's report, which you touched on in your opening remarks, you know, pretty lengthy report. Was there, you know, from your perspective, one or two, you know, recommendations that really stood out, you know, that you think would have kind of a more near-term impact on Ciena and how that might, you know, impact your operating margins going forward?
spk06: Sure. You know, the commission came up with close to 85 recommendations and, you know, as the government and all the stakeholders would have to kind of prioritize the top ones. In our mind, really the top one is staffing. You know, we have talked about it for quite some time. The staffing levels were based on, you know, 20 years back or so when people coming into long-term care had a very different health requirement and that has now changed substantially. So if we do only one thing out of all the ones that have come out, which is staffing, which we are pleased to see that the government is already moving to four hours of care, which will be an excellent result. I think that will be the first part of the funding for it. The second part is really going to be how you staff that, because if you get four hours of care and you get additional funding for it but you can't hire anyone, you would be giving that money back to the government, and that's not in the best interest of the residents. So we need a whole human capital strategy, which is, you know, how do we entice people coming into this sector? How does staffing work? Is it related to immigration? So I think if we can solve that out of all the things that came out, I think it will probably have the biggest impact on the lives of our seniors.
spk01: Right. Okay. That's helpful. I'll turn it over. Thank you. Thank you.
spk07: Our next question comes from Joanne Chen with BMO Capital.
spk10: Good morning. This may be sticking to the data unfunded expenses during this Q1. It was nice to, of course, see that trend down. Can we expect that to continue into Q2 as well, and obviously through the back half of the year when restrictions ease?
spk00: Hi, Joanne. Are you referring to the decline in net pandemic expenses?
spk10: Yes, it was 5.4 million this quarter, down from the 7.7, you said, in Q4?
spk00: So, no, the main difference in Q4 versus Q1 is attributed to the high vaccination rate. We're very pleased with the high vaccination rate of 95% amongst our residents and 74% amongst our team members. And that really has been a game changer. and a turning point to the experience at our residences. And because of that, we have fewer residences with COVID cases and much fewer resident cases, as well as the severity of those cases has been much lessened. And so we've always talked about the magnitude of our pandemic expenses does largely depend on how many residences have COVID as well as the severity of those outbreaks. And because we've had good outcomes with the vaccination, we were able to, in correlation, been able to maintain a more stable level of pandemic expenses. But I would just say that I know we're still very much in our third wave. And so it is still hard to predict what would be that level of pandemic expenses, which is directly tied to a number of COVID cases, the general population is still being vaccinated. So at this point, it's hard to say, you know, what would next quarter's pandemic expenses would be. But we do continue to get monthly pandemic funding from the government in support of that. Okay.
spk10: I get that. That's still helpful. Maybe just circling back to the previous question with respect to achieving that on a long-term care side, the occupancy, eventually the target of 97%. Do you think that's something that could be achieved in 2021 timeframe, assuming that things really do open up back up in the second half of the year?
spk06: So we have been, during the pandemic, depending on which location you're at, we have been accepting residents to long-term care throughout this time. The pace is obviously much more lower than what would be otherwise. When we talk about 97%, it would not include the three and four bedrooms. And our healthcare sector is an acute, challenging place. And once COVID is over, there's a backup of multiple surgeries which have to happen. So I think it's in the best interest of not only healthcare, but for everyone in general that we find capacity in long-term care when it is safe to do so. So for us, it's trying to get to 97% because there is a long waiting list. And for seniors, being in a hospital long-term is not the best scenario because that's not a home-like atmosphere as a long-term care home or retirement home is. But we have to do it safely. So again, I think at this stage, we continue to work with healthcare partners. As you might know, that admission to long-term care is not owned by any operator. It's really owned by the community access centers across. So we are working closely with them. We want to support families, support healthcare partners, and see if we can get to that number.
spk10: Okay, got it. Sorry?
spk00: Sorry, Joanne. And just to add to that, you know, the third and fourth beds remain unavailable because we find that, you know, that has been a big challenge during the pandemic management. And also we've set aside certain beds for self-isolation. And so those beds are part of, continue to be unavailable and those beds are not included in that 97% occupancy target. And so that directive to keep those beds available would remain.
spk10: Okay, got it. Maybe just one last one for me on the development side for the Class C beds. Could you just remind me again the percentage of beds that would be Class C that would fit into that criteria for you guys?
spk06: So you're saying how many do we have? Is that what your question is?
spk10: Yeah, yes.
spk06: We have around 2,200 Class C beds. Okay.
spk10: Okay, no, that's super helpful. And, okay, all right, I will turn it back. Thanks very much. Thank you.
spk07: Our next question comes from, yes, I'm Paul with Laurentian Bank.
spk05: Good morning. Hi, good morning. Just a quick question. I'm trying to understand... why your long-term care occupancy continues to go down sequentially given the kind of demand that is there and it is a necessity-based service. So what is driving your occupancy down? Are you not getting enough patients, enough residents from the system or you're not taking new residents?
spk06: Yes, as I talked about, admissions into long-term care is not really controlled by any operator or owner. It's really controlled by long-term care health. So the biggest thing has been if a home is in outbreak, as we just talked about, many of long-term care homes are in outbreak, so that is not a safe time to be moving residents. And this is a calm time, and even though the number of resident cases are low, we still have team member cases. So it's more driven by when is it safe to do so. That really is what's driving the change. In Sienna's case, because of our site, there have been locations which are not in outbreak or which are not in areas where there are restrictions. So we have been admitting into long-term care homes there. It's more a factor of when Ontario Health and others think it's safe to do so in consultation with us. So it's more to do with that than anything that an operator or owner would do.
spk05: So even if a staff member is positive, they will not send residents to that home?
spk06: Yes, that's, again, some public health might be different, but overall that continues to be the case, that if you have more than two people who they feel got COVID from a particular location, that home would be an outbreak and there would be no one new resident coming into that home. So that's the case.
spk05: Right. Okay. And then I saw that your resident vaccination is quite high, like almost about 90%, but your staff vaccination levels are still in the 70s. So is there a choice? Do the members have a choice in terms of getting vaccinated or not?
spk06: That's correct. So, you know, as a country, we have made the decision that it's a choice. It's not mandatory to get vaccination. We have around 75%. which we believe is really a result of all the work we have been doing in terms of encouraging an education. You know, similar, our hopes and our work is to make it as high as possible, but that is one of the only ways for it to ever go away. So, you know, the rate has been close to 70%. We have been inching forward a percent, percent and a half every week, and we are looking internally and talking to other organizations healthcare partners in general to see what else can we do to drive that rate much, much higher.
spk05: And is that, I don't know, is it related to the fact that you're not getting enough, like there is no staff availability, that you are still allowing people who are not willing to get vaccinated to, you know, continue working there?
spk06: Yeah, so in countries, you know, in many other countries which had access to vaccination much sooner than Canada, you know, 70% is a pretty good place because there is vaccination hesitancy across the general population. So it's not around, obviously staffing is a challenge, but that's been across the sector. So it's not that, you know, no one wants to make it mandatory because you'll have staffing issues. You know, the governments in Canada have decided it is not going to be mandatory. So it's hard for individual companies such as us to take that stance. But again, we are looking at other ways to provide incentive and to encourage team members to get vaccination or to be vaccinated.
spk05: That's it for me. Thank you.
spk06: Thank you.
spk07: Our next question comes from Tal Woolley with National Bank.
spk09: Hi, good morning. How are you doing?
spk00: Very good. Morning, Tal.
spk09: I apologize if I had multiple converse calls. Just number one, has there been any net funding received or expected for Q2 in terms of reimbursement of prior pandemic expenses?
spk00: So our pandemic funding, we still continue to get monthly allocations. And based on that, our pandemic expenses are continuing to exceed that monthly funding. However, no, we are continuing to report quarterly our pandemic expenses to the government. And based on that information, they will determine if the funding needs to be adjusted. As we saw for last year, that was the reason for the outcome. for our quarterly expense reporting that they had supported us with the extra 15.3 million of retroactive funding related to 2020 pandemic expenses.
spk09: So if I'm, if I'm understanding it correctly, it's that, you know, you're still running sort of in a net deficit position now. And then the hope is over time that that can be reconciled with the government. So I just, but nothing has been, you haven't had any sort of outsized reimbursements or anything to date in Q2.
spk00: That's right.
spk06: Yeah. I mean, our approach, Tal, has been that, you know, we need to spend what we need to spend to keep residents and team members safe. and you know the government has been very supportive throughout the process for all owners operators to uh to cover uh those expenses and we know that at the end of the day you might have a deficit uh in the short term but we are we are okay with that because we know that's the right thing to do okay um and then i think you mentioned earlier uh i think it was a question jonathan had asked that uh you were
spk09: not sure exactly whether March was sort of the bottom of the retirement occupancy cycle, but you are, you know, in your outlook statement, uh, you know, sort of indicating a recovery in the second half, I guess, uh, you know, like what gives you the confidence that, you know, you expect to turn to really prominent.
spk06: I mean, our number of leads, I mean, that's usually is a very good indicator. So, you know, a number of leads they're up versus last year, they're up versus last quarter. We see some good things from a deposit perspective. So some of the indicators that we have internally we see we are quite hopeful of. The easing of restrictions, you know, with if people are fully vaccinated, the amount of isolation they have to do is changing because that has been a barrier for many seniors moving into retirement space. So, you know, there are multiple things, not one, which gives us hope that, you know, our occupancy will come up. It's just hard to give specific guidance at the moment, and our view is that it will be the second half of the year where we will see some positive movement in occupancy.
spk09: Okay. And then just pivoting back to the Commission report again, so with the report out and the Minister's subsequent comments that seem supportive of a different proposed development model going forward, are you hearing any commentary yet from the government about how they are looking at greenlighting new developments that are currently in the pipeline?
spk06: Sure. So, you know, there's close to 30,000 beds which have to be rebuilt and another 15,000 which needs to be built just to keep up with current demand. And that number is just the first step. I think there will be more beds needed over time. So, frankly, there is a need for all sorts of different models and ownership structures to make this possible for seniors. You know, for example, last year there were multiple announcements where government is investing directly with hospitals and building long-term care beds. There have been announcements from companies such as us, which are building long-term care beds, the ones, for example, we announced in North Bay. They're, you know, by municipalities and others. So in our view, it will take all sorts of ownership model to solve this challenge. And at the end of the day, it's really around ensuring that the people who are providing care, they care for seniors and their fellow team members. That's our culture. We are after accountability and operational excellence. So for us, we think that's more important than an ownership structure or any capital structure behind it.
spk09: And is it fair to say, though, that if they did decide to move in a direction, and let's hope that that doesn't really disrupt anything that's sort of in the hopper, so to speak, is Sienna open to doing some of the redevelopments under this kind of split model?
spk06: You know, we'll always open to different kinds of things, but it's hard to really comment on that without knowing what that structure would look like. So for us, you know, we have been in the senior living work for 50 years, and we are going to continue to do this work. So if there are different ways of doing it, we would be open to it. But, again, as the commission has also talked about, you know, and I think we're pretty upfront about it, that it's not about ownership. It's about what is at the core of the company. Are you mission-driven? Are you after the care? for seniors, and that has really been our mission. So in our view, it's not about ownership. It's about really what you stand for.
spk09: Okay. And then my last question, you know, this sort of goes back to the pre-pandemic. You know, the government had proposed sort of a big restructuring of the local health integration networks to the Ontario health teams approach. And I'm just wondering, like, has that all been completed, and are there any changes that still need to become? Because, I mean, I think that was ongoing just as the pandemic started, and I don't really know how that structure, you know, changed or handled the whole situation.
spk06: Yeah, it's been ongoing. They've been very active throughout this pandemic, working with – Hospital working with long-term care sector to make it possible. You know, they've been working through different structure and they've combined what used to be called CCAC and home services as well. So I think they're well on their way to kind of put the right structure together to support. We have had multiple calls with them as we're trying to work collaboratively with the hospitals and others to ease the pressure on the hospital system. So no, I think it's well on its way from our viewpoint.
spk09: And no big changes then in terms of like how everything, you know, how the new unsanitary health is going to work with the long-term care network. It hasn't really affected anything.
spk06: No, nothing. And in our view, it would be positive because, you know, if long-term care is on the table when a decision gets made, I think there will be better decisions for everyone, including long-term care. So we think that's a good change.
spk09: Okay. That's great. Thanks, Nitin.
spk06: Thank you.
spk07: Our next question comes from Pam E. Burr with RBC Capital Markets.
spk04: Thanks, and good morning. Just maybe along the same lines of the questioning around the Commission's report, I'm just curious, have you actually had any conversations about your specific projects and perhaps under this suggested model of separating care from construction? Have there been any conversations with the government? And then just secondly, has there been any further clarity in what exactly is meant by mission-driven?
spk06: So I don't have an answer for the second one. Again, I think, you know, the commission had 85 recommendations, and they're ones which are a lot more going to have a much bigger impact than just focus on the structure of it and staffing being the very first one. We have development agreements that we're signing currently, North Bay being one of them, which was recent. Many other owners and operators of all different kinds are signing development agreements under the current structure. In our view, stability is important. One project, as we talked about North Bay, is going to be around $55 million of cost. And over many years, it will be close to more than a half a billion dollars. So the more stability, the better. In our view, the amount of demand there is for long-term care, there could be different structures possible to get to that stage. So if there's a different structure with work for a few people like a P3, that's okay by us. From our perspective, we are committed to the way we are developing today and how we provide care. So it's really hard for us to comment on what might happen in the future. but our current development agreements and our current development plans are predicated on the current structure.
spk04: Got it. Just maybe one last one for me, and I'm not sure if this was maybe clarified earlier, but just with the $15.3 million in retroactive funding that was received in the quarter, I'm just curious, what's the difference between that amount and the $11 million that you cite as your Q1 adjustment? for retroactive funding in your FFO calculation.
spk00: So, hi, Tommy. I think that might be an after-tax difference between the $15 million and the $11 million. I think you're referring to that.
spk04: Okay, I thought the after-tax amount was $7 million relative to the $11 million.
spk00: So I think it's not exactly sure which number we're referring to, but on a consolidated basis, our net recovery was 9.9 million. So if we take that number and apply the 26.57% to it, that will get us to the 7 million recovery adjustment that we would have.
spk04: Okay. Maybe we'll follow up offline on that one. That's it for me. Thanks very much. Thank you.
spk07: And I'm not showing any further questions at this time. I'd like to turn the call back over to Nathan.
spk06: Thank you, Kevin. Thank you, everyone, for joining the call today. And on behalf of the entire Ciena team, I want to thank all of you for your continued support.
spk07: Thank you very much. Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.
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