Sienna Senior Living Inc.

Ladies and gentlemen, welcome to Siena Senior Living Incorporated's Q2 2021 conference call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and Karen Han, Chief Financial Officer of Siena Senior Living Incorporated. 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 statement or information. Please refer to the forward-looking information and risk factor sections in the company's public filings, including its most recent MD&A and AIF for more information. You will also find a 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, dianaliving.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's remarks on the company website under events and presentations. With that, I will now turn the call to Mr. Jain. Please go ahead, Mr. Jain.

Thank you, Shalom. Good morning, everyone, and thank you for joining us on our call today. At Ciena, we believe it is a privilege to care for and serve Canada's seniors, and we are continuing our relentless efforts to ensure they live with utmost comfort, dignity, and respect. Recent months have been marked with renewed optimism, a clearer view to the future, and some exciting developments at our company. Over the past year, we conducted an in-depth assessment of our retirement platform and identified opportunities that will set us apart in a competitive market. We believe that by repositioning our retirement operations, we can fill a current gap in Canadian seniors' living. As part of this repositioning initiative, our retirement operations will start operating under the brand name Aspira. At the center of a new brand is a conviction that seniors should be able to live the life they deserve with an increased emphasis on being a vital part of the local community. Initially, we'll enhance service offerings such as dining and resident programs. Our culinary experience will feature more choices, carefully curated ingredients, healthier options, vibrant presentations, and a greater emphasis on local products. With the help of technology and the addition of signature programming, our resident engagement programs will focus on motivating residents to explore more possibilities to get stronger and healthier and to be more engaged within their local communities. In addition, our wellness programs will be expanded and more clearly communicated, enabling our residents to discover more choices and create their own path. The SPRA name and enhanced product and service offerings will be launched later this year through the early 2022 and will be supported with a widespread communications and a marketing campaign with a designated website for the new retirement platform. We expect our Aspira brand and service offerings will support occupancy growth and contribute to improved financial performance as a result of better brand awareness and loyalty. We are creating a distinct online presence for our retirement portfolio. We can more effectively drive traffic to our residences. We also expect a new brand to support our talent attraction and retention efforts. It is our belief that a consistent and comprehensive set of standards under the new brand will allow us to continue to scale our platform and support our continued growth. Moving to development, our current joint venture retirement development with Reitman Senior Housing in Niagara Falls is progressing well. We started construction of the 150-suite Greenfield development in May and which is expected to achieve an approximate development yield of 7.5%. We also continue to make good progress on our 160-bed long-term care redevelopment in North Bay, where we expect to start construction later this year. The new long-term care community named Northern Heights Care Community will replace our Water's Edge Care Community and is designed to the newest industry standards. In early July, the Premier of Ontario and other senior members of the government participated in the site's ceremonial groundbreaking event. We are grateful to play an important role in building the future of seniors living in Canada. Through developments such as this, we are also contributing to the long-term economic growth in the region. We are also making immediate upgrades to the older C-class long-term care portfolio, independent of their timing of redevelopment. To elevate the experience of our residents and the work environment for our team members, we are investing $2 million this year for capital upgrades in the common areas such as lobbies, staff rooms, and recreation rooms. These investments are made on top of regular annual maintenance capital expenditures. Furthermore, we are proceeding with upgrading and installing 1,800 new air conditioning units in resident rooms at over 30 of our long-term care communities. We strongly believe that all residents' rooms should be air-conditioned and committed to this project prior to mandatory regulations coming into effect. Moving to slide eight, addressing vaccine hesitancy proved to be crucial. Our approach was focused on ensuring everyone is well-informed, which included a far-reaching communication and education plan and logistical support for our team members and residents to get the vaccine. We also have a vaccine contest to incentivize and thank our team members for getting vaccinated and have recently awarded cash prizes to three personal support workers. The most recent winner was Marcia Palmer, to whom I had the privilege to present a $10,000 check when her name was drawn after we reached our 85% vaccination targets across the company. Marseille was among the first team members to get vaccinated and has dedicated 19 years working as a PSW on night shifts at a St. George care community in central Toronto. According to our most recent vaccination data, 96% of our residents and 88% of our team members received their first dose of the vaccine, with 95% of our residents and 77% of our team members fully vaccinated. With many public health restrictions being lifted in our key markets in Ontario and British Columbia, we have been able to gradually reopen and welcome prospective residents and visitors to our residences. Together with our vigilant infection prevention and control measures, this contributed to the very low number of active COVID-19 cases across our portfolio in recent months. As of yesterday, none of our 83 owned or managed residences have any active COVID-19 cases. Our focus continues on improved quality of care and strengthening our ongoing review of quality of care based on quality indicators, clinical reviews, and inspection reports. We also continue our collaboration with the Senus Quality Leap Initiative. This is an initiative we joined last year to better understand quality outcomes and opportunities for improvements. Based on our initial report card from SQLI, our performance is in line with SQLI members and international benchmarks. Moving to occupancy, the improved operating environment resulted in the resumption of in-person tours and increased the number of residents moving into retirement and long-term care communities. The effort of our marketing and sales teams, who have been working on numerous initiatives, are also paying off. This quarter's online leads tripled year over year and resulted in a 147% increase in rent deposits and a 121% increase in move-ins compared to Q2 2020. These strong lead indicators are reflected in the occupancy improvements in our retirement portfolio. Same property retirement occupancy reached 80.6% at the end of second quarter and an increase of 200 basis points from the end of Q1. average occupancy continued to improve in July at 79.7%, an increase of 80 basis points from average occupancy of 78.9% in June. For the remainder of 2021, we forecast continued gradual occupancy improvements in our retirement portfolio based on the assumption that residences will remain open for in-person tours and continued pent-up demand. In a long-term care portfolio, we have made good progress with respect to new resident admissions. Q2 occupancy increased by 130 basis points from the previous quarter to 81.6%. This number is not adjusting for approximately 500 beds, which were unavailable, mainly as a result of capacity limitations in three- and four-bed ward rooms. A long-term care occupancy ended the quarter at 83.5%. and is expected to continue to improve in the second half of the year as admissions accelerate. As of now, the government has indicated that effective September 1st, 2021, occupancy targets required for full funding will be reinstated. This excludes unavailable beds. Given the long waiting list for long-term care beds in Ontario and the resumption of admissions of residents, we anticipate that we can achieve the necessary occupancy targets required for full funding at the majority of our residences. Excluding the impact of net pandemic expenses, we expect the financial performance of a long-term care portfolio in 2021 to be slightly below 2020. Our internal forecasts are based on the impact of earlier access restrictions on preferred accommodations and the possibility of not achieving the required occupancy targets at some of our residences. moving to a continued focus on diversity, inclusion, and fair compensation. With nearly 13,000 team members, our employees are Ciena's most important assets. Our commitment to corporate social responsibility in our team is highlighted in a mid-year update to our ESG report, which focuses on diversity in our approach to fair compensation and gender pay equity. At Ciena, over 95% of our workforce receives compensation above minimum wage, and approximately 80% of our frontline team members receive compensation that exceeds minimum wage by 50% or more. Furthermore, our predominantly female workforce is mirrored in our management teams, with approximately 80% of our top 380 leadership positions held by women. When it comes to gender pay equity, male and female frontline team members' compensation for similar position is comparable. Our strong and diverse team will support our effort to ensure that people live with utmost comfort, dignity, and respect. With that, I'll turn it over to Karen for an update on our financials.

Thank you, Nitin, and good morning, everyone. In recent months, in-person tours have resumed at our retirement residences, and resident admissions have accelerated across many of our long-term care residences. At the same time, Incremental pandemic-related expenses have started to moderate and we anticipate further improvement as the pandemic subsides. However, the timing of pandemic expenses versus the funding of such expenses continues to affect our financial results. While our operating improvement has improved significantly, our financial results remain below prior year levels. As shown on slide 13, Revenues decreased by 0.1% year-over-year to $162.7 million this quarter. Consolidated net operating income decreased by 2.8% to $31 million this quarter compared to last year. This was largely the result of lower occupancy in our retirement portfolio and lower preferred accommodation revenues in our long-term care portfolio, which was partially offset by lower net pandemic expenses, rental rate increases in retirement, and inflationary funding increases in long-term care. Retirement-stained property NOI decreased by 2.3 million to 12.8 million this quarter compared to last year. Excluding net pandemic expenses, retirement-stained property NOI for this quarter decreased by 2.8 million year-over-year to 13.7 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 $1.5 million year-over-year to $18.1 million, largely due to lower net pandemic expenses in this quarter. Excluding net pandemic expenses, long-term care's NOI for Q2 decreased by $2.4 million compared to last year to $20.5 million, mainly as a result of lower revenues from preferred accommodation. During Q2 2021, Hiena incurred 3.8 million of net pandemic expenses. This represents a decline of 1.6 million or 30% lower compared to Q1 2021, after adjusting for retroactive pandemic funding, which we received last quarter. Although we continue to incur extraordinary pandemic expenses, the quarter-over-quarter improvement was largely driven by the reduced reliance on agency staff. Compared to Q2 2020, net pandemic expenses decreased by $6.8 million, or a decrease of 64%, largely as a result of additional government funding and a moderation of pandemic-related costs related to additional staffing. Q2 OSFO per share was $0.226, a decrease of 2.3 cents compared to the prior year. Excluding net pandemic expenses for the quarter, OSFO per share would have decreased to 26.8 cents year over year. And Q2 ASFO per share was 21 cents, a decrease of 3.8 cents compared to the prior year. Excluding net pandemic expenses for the quarter, ASFO per share would have decreased to 24.9 cents year over year. Moving on to slide 15, looking at our debt metrics. Our debt to gross book value improved by 270 basis points to 45.5% as of June 30th compared to the end of 2020, mainly as a result of repaying our credit facilities. Debt to adjusted EBITDA improved to 7.4 years in 2021 compared to 9.4 years in 2020. Our weighted average cost of debt was 3.4% year-to-date 2021, a marginal increase from 3.2% in 2020, while our total debt decreased by $85 million as of June 30th compared to the end of last year. And our interest coverage ratio was 3.9 times year-to-date in 2021 compared to 3.1 times in 2020, effectively returning to pre-pandemic levels. In terms of our balance sheet on slide 16, Ciena maintains a strong financial position and an investment-grade credit rating. On June 3rd, we issued $125 million in unsecured debentures at an interest rate of 2.82% maturing in March 2027. With this financing, we further reduced near-term debt maturities and improved our long-term debt ladder. The debentures were issued at the lowest interest rate and longest maturity compared to any of our previous debenture offerings. We ended the second quarter with $235 million in liquidity, an increase of $34 million since Q1, and an unencumbered asset pool of nearly $1.1 billion, an increase of approximately $247 million compared to the end of Q1. Our debt is distributed between unsecured debentures conventional mortgages, and CMHC-insured mortgages. I will now turn the call back to Nitin for his closing remarks.