Sienna Senior Living Inc.

Ladies and gentlemen, welcome to Ciena Senior Living Inc's Q4 2021 conference call. Today's call is being hosted by Nitin Jain, President and Chief Executive Officer, and Karen Hong, Chief Financial Officer of 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 statement or information. Please refer to the forward-looking information and risk factors sections in the company's public filings, including its most recent MDNA and AIF, for more information. You will also find a more fulsome discussion of the company's results in its MDNA and financial statements for the period, which are posted on CEEDAR and can be found on the company's website, cianaliving.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'll now turn the call to Mr. Jain. Please go ahead, Mr. Jain.

Thank you, Andrew, and good morning, everyone, and thank you for joining us on our fourth quarter call today. Recent months have been marked with some exciting developments and important progress at Ciena. Our strategic priorities have been focused on enhancing team engagement, elevating the quality of life of our residents, and advancing our growth initiatives. This included notable investments in our operating platform, our properties, and the well-being of the residents and our teams. Our solid Q4 results reflect the impact of these investments. They also highlight generally improving fundamentals in the senior living sector and put us in a strong position to accelerate investments in strategic growth and value creation initiatives. Under this backdrop, demand for the services and care we offer continue to build in 2021. This was reflected in our strong queue for operating results. Occupancy in our retirement portfolio reached its highest level in nearly two years, and resident admissions in our long-term care communities continue to accelerate for most of the fourth quarter. Our retirement portfolio benefited from in-person tours and our robust marketing and sales programs. This resulted in strong lead generation and 140% increase in resident movements year over year in the fourth quarter. In December, average same-property occupancy levels reached 85.3% and further increased to 85.9% in January 2022, the eighth consecutive monthly increase. Since May of 2021, average same-property occupancy has improved by a total of 710 basis points. And along compared communities, admissions of new residents accelerated for most of the fourth quarter. Excluding the beds that are unavailable due to the capacity limitations and isolation requirements, safe property occupancy reached 95.3% at the end of 2021. We anticipate continued occupancy gains throughout 2022, given the long wait list of long-term care beds in Ontario and British Columbia. In recent months, the operating environment continued to improve, which has led to the easing of restrictions across our residences. There are currently no significant outbreaks in any of Siena's long-term care communities or retirement residences, with most of her residents and team members having received their booster shots, and the majority of her residents and team members' symptoms have been either mild or moderate. In 2021, we announced the launch of our new retirement platform, Espira, and the development of our new long-term care platform, both to be launched later this year. These platforms are expected to elevate the quality of life and care of her residents and include enhancements to their dining experience, activities, and programming. With respect to SPHERA, our recent efforts have been concentrated on team member training on new resident experience model, marketing initiatives, and the rollout of pilot programs of various concepts at selected tenant residences. In addition, we finalized the core brand and marketing elements for the launch of the offer platform in the second quarter of 2022. Development of our new long-term care platform is well underway and is aimed at providing holistic and integrated care. The platform is expected to be launched in Q3 of 2022. Now moving to our recent joint venture. On February 3, 2022, we announced that we entered into an agreement to acquire a 50% ownership interest in a portfolio of 11 retirement residences on an Ontario and Saskatchewan with our joint venture partner, Sabra Healthcare Reef, for a total of $308 million. This transaction, which we expect to close in late second quarter, will increase the number of our owned and managed retirement suites by 26%. The portfolio is currently owned by Extendicare and represents their entire private pay retirement portfolio in Canada. This is a high-quality portfolio with an average age of approximately six years, and it offers extensive amenities which reflect the changing lifestyle of seniors. With an approximate 6% unlevered yield in the first 12 months, all in closing, the acquisition is expected to be accreted to Ciena's OSFO and AFFO per share. The portfolio is located in growing communities in Ontario and Saskatchewan and will provide us with immediate scale, a platform for future expansion, and entry into a new province. We expect to capitalize on the growing demand for quality seniors living in each community. In Ontario, the assets are strategically located around the GTA and in southern Ontario. The portfolio will increase our footprint in the Niagara to London corridor and expand our position in the highly desirable berry market. Through the acquisition, we will also increase the number of memory care units, which are in high demand, and this will better position us to serve this growing segment. With excess land and four other properties, we also have the option for future development of over 200 suites, and once the transaction is complete, we will act as the manager of the 11 properties, which will deepen an already established relationship with Sabra. Now moving to our focus on development, our growth initiatives also include a significant expansion of our development pipeline. In December of 2021, we got approved for three additional long-term care redevelopment projects, including a first-of-its-kinds campus of care in partnership with Scarborough Health Network. The campus will combine Altamont Care Community and Rockliffe Care Community in Toronto onto a single site. Once the 478-bed campus is completed, it will support the growing need for seniors in the Scarborough area. We are also progressing well on several other projects in Ontario. In North Bay, construction started at the Northern Heights Care Community last November, where we are replacing the current 148 older C-class beds with 160 new beds. In addition, we expect to start construction at our communities in Keswick and Brantford to start during the first half of 2022. In Keswick, we will be replacing the current 60 long-term care beds with a 160-bed facility. And in Brantford, we will replace the current 122 long-term care beds with 160 new long-term care beds and add 147 suite retirement residents to create an integrated campus of care. In total, these six long-term care projects in Ontario comprise over 1,500 beds, or approximately two-thirds of CNS Class C beds. Planning for the balance of CNS Class C portfolio is well underway. In addition, construction of a 150-suite retirement residence in Niagara Falls with Reitman Senior Housing as a joint venture partner is well underway, and we expect to complete this development by the end of 2023. As part of the continuous review of our portfolio, we completed the sale of a 138-suite retirement residence in British Columbia at the end of January, and have agreed to also sell a 236-bed Class C long-term care home in GTA, which is expected to close in the second quarter. The net proceeds will be reinvested in our recent acquisition. Staffing remains a key focus as we grow our company and build our team for the future. Our goal is to become the employer of choice in seniors' living markets where we operate. We achieve this by offering a compelling team member experience and by nurturing a purpose-driven culture. We believe it helps differentiate a company and attract and retain a highly engaged workforce in a very tight and competitive labor market. One of these differentiators is SOAR, the Ciena Ownership and Rewards Program. SOAR will provide company shares to team members who have been with Ciena for one year or longer. This initiative is the first of its kind in Canadian seniors living, and I cannot think of anyone better suited to be invested as owners in a company than our team members. The rollout of this program is well underway and is estimated to represent an initial investment of approximately $3 million. We're also working on a number of initiatives to support the career growth of our frontline team, and to bridge the current labor gap in our sector. One of the government-sponsored programs is Big In, which supports frontline team members, in particular PSWs, who want to further their education in order to become a nurse. We are also participating in programs that offer placement at our residences for internationally educated nurses who require Canadian qualifications, and for college and university students to finish their education. Many of them will be offered permanent placements at C&R once they've completed the required practical work experience. With a team of approximately 12,000, our employees are our most important asset. Creating a positive experience for them and supporting personal and professional growth are key objectives as we grow our company and our team in the months and years ahead. With that, I'll turn it over to Karen for an update on our operations and financial results.

Thank you, Nitin, and good morning, everyone. I will start on slide 13 for financial results. With the operating environment continuing to improve in the fourth quarter, we saw a significant increase in resident move-ins across the retirement platform and admissions of residents accelerated at our long-term care community. We are also encouraged by the moderation of pandemic-related expenses and the continued pandemic funding support we are receiving from our government. These positive developments are reflected in our financial results. In Q4 2021, revenues increased by 3.2% year-over-year to over $174 million. Net operating income increased by 16.7% to $33.4 million this quarter compared to last year. Retirement-seemed property NOI increased by $2 million to $13.9 million compared to last year, primarily due to occupancy improvements, annual rental rate increases in line with market conditions, and decreases in net pandemic expenses. This was partially offset by higher agency staffing costs, utilities costs, and insurance premiums. Rent collection levels remained high at approximately 99% consistent with pre-pandemic levels. CNS long-term care same property NOI increased by 2.4 million to 18.5 million compared to last year, primarily due to annual inflationary funding increases, timing of retroactive pandemic funding, and a decrease in pandemic expenses. This was partially offset by lower preferred accommodation revenues from lower occupancy in private and semi-private rooms, which are not covered by occupancy protection funding, higher utilities cost and insurance premiums, and increased repairs and maintenance expenses. For the full year, same property NOI increased by 11.3% or 14 million to 137.5 million compared to last year. Total net pandemic expenses decreased by 7.6 million to 200,000 this quarter compared to last year. The decrease was mainly due to the moderation of pandemic costs and retroactive government funding of 2.6 million for unfunded expenses we incurred in 2020 and Q1 2021. Over the past two years, we have seen significant cost pressures on agency costs due to staffing shortages, increased insurance premiums in the seniors living sector, and rising utilities costs in line with the overall market. We expect that continued occupancy gains, rental rate increases in our retirement portfolio, and an improving operating environment will help mitigate these cost pressures and support our operating margins in 2022 and beyond. We expect pandemic expenses to further moderate as the pandemic subsides, while related government funding gradually declines. Moving to slide 14. During Q4, operating funds from operations increased by 29% to 18.3 million compared to last year, primarily due to higher NOI, lower administrative expenses, and lower interest expense on long-term debt, partially offset by higher current income taxes. Q4 OSFO per share increased by 28.9% to 27.2 cents. For the full year, OSFO per share increased by 11.7%. Adjusted funds from operations increased by 25.7% to $16.6 million compared to last year, primarily due to the same reasons of the increase in OSFO, partially offset by higher maintenance capital expenditures. ASFO per share increased by 26% this quarter to 24.7 cents. For the full year, ASFO per share increased by 4.5%. ASFO payout ratio was 94.7% for the quarter and 86.3% for the full year. Moving on to our debt metrics on slide 15. Our debt to gross book value improved by 350 basis points to 44.7% at the end of 2021, compared to 48.2% at the end of 2020, mainly as a result of reducing the drawdowns on our credit facilities. Debt to adjusted EBITDA improved to 7.9 years at the end of 2021, compared to 9.4 times last year. Interest coverage ratio improved to 3.7 times in 2021, compared to 3.1 times last year. and we have limited debt maturities over the next two years. Moving to slide 16, we continue to maintain a strong balance sheet. This was evident in the renewal of CBRS issuer credit rating and our senior and security venture rating of BBB with stable trends in October 2021. We also maintain significant liquidity, which has exceeded 200 million for the past eight quarters. In connection with the recently announced joint venture acquisition, we have secured 150 million acquisition term loans at 145 basis points over the floating VA rate for a 12 month term to support the financing of this transaction. We ended the year well capitalized with 226 million in liquidity and an unencumbered asset pool of 1.1 billion. This underscores the resiliency and strength of our business and supports our growth plans going forward. I will turn the call back to Nitin now for his closing remarks.