Sienna Senior Living Inc.

Ladies and gentlemen, welcome to Ciena Senior Living Inc's Q4 2023 conference call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer and David Hung, Chief Financial Officer of Ciena 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 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, siennaliving.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 over to Mr. Jain. Please go ahead, Mr. Jain.

Thank you. Good morning, everyone, and thank you for joining us on our call this morning. Last year, we outlined where we see significant growth potential in our business over the next few years and how it will contribute to the expansion of Ciena's net operating income. Our consistently strong financial performance in 2023, which was driven by our focus on optimizing revenue and costs, indicating that we are on the right track. Each quarter throughout the year, we were able to achieve notable improvements in our same property net operating income in both lines of our businesses, resulting in a 16.5% increase year over year. Moving to slide five, our primary focus last year was to grow our business. Nowhere was this more evident than in our long-term care operations. Average occupancy was 97.6% in the fourth quarter, with occupancy exceeding the 97% required for full government funding. Further supporting our results were higher preferred accommodation revenues, and significantly reduced agency staffing cost as a result of our ability to fill vacant positions with our own team members and minimize agency usage whenever possible. We entered the year with a 21.1% increase in the same property NOI in Q4 compared to last year. Our results show the significant progress we have made in closing the gap left behind by the pandemic. However, there's still work to be done to get back to the NOI levels we used to generate prior to 2020 and we are committed to fully closing that gap. With respect to retirement operations, same property occupancy grew to 88.2% in Q4 of 2023. This was an improvement of 20 basis points year over year and 130 basis points since the third quarter. We continue to make steady progress towards our goal of stabilized occupancy of 95%. Supporting this goal is our intensified focus on high opportunity homes with low occupancy levels. combined with this continued strong performance across the balance of our portfolio. Addressing the high opportunity properties will remain a key focus for us in 2024. Our results were further supported by average rate increases approximately of 5%. We ended the year with same property NOI growth of 11.8% year-over-year in Q4 2023. Based on the occupancy forecast, we expect same property occupancy to improve by approximately 150 basis point to 89% for the full year of 2024. With the return of seasonal occupancy patterns, we expect some softness over the winter months before the resumption of occupancy growth. Moving to slide seven, throughout 2023, we continue to take advantage of select opportunities to expand our business. We started and ended the year by acquiring properties that we had already been managing for some time, including our Woods Park campus of care in Barrie, Ontario, and an additional 30% interest in Nicola Lodge in BC, where we now own 70% of the 256-bed long-term care community. In the fourth quarter, we made an inaugural entry into the Alberta market. We entered into a management contract for a retirement residence in a prime location in Calgary, which is owned by Sabra Healthcare REIT. Sabra is one of our largest joint venture partners, and this transaction underscores a strong relationship. We now manage 21 properties on behalf of Sabra or a joint venture with them, including the 12 properties we acquired together in 2022. In December, we completed construction of a retirement residence in Niagara Falls. The first residence started to move in at the end of January, and leasing is progressing well. We own 70% of Elgin Falls in partnership with the Reitman Group, and once this home is stabilized, we will have the option to acquire the remaining 30% interest. Together with the long-term care development in North Bay and our campus of care project in Brantford, these three projects are expected to improve our AFFO payout ratio in the mid to high single-digit percentage ranges once they are stabilized. With respect to future expansion plans, our strong balance sheet and active asset management initiatives will allow us to pursue opportunities to further grow and improve our company through acquisitions and strategic partnerships. Moving to our focus on our team members. Throughout last year, we continue to make team member engagement and retention a core focus of our initiatives, as staffing remains undoubtedly one of the biggest challenges in our sector. We invested in training and development, made significant improvements to the onboarding process, and enhanced the shift scheduling system. We also awarded shares to an additional 800 team members as part of Ciena's Share Ownership Program. To date, approximately three quarters of all eligible team members are now shareholders. In SPARC, the platform where team members can share their ideas is a great success and continues to generate hundreds of new ideas. The grand prize of 2023 was awarded to a team member for an idea on donating excess food to Canadians living with food insecurity. To date, we have donated thousands of meals through a partnership with Second Harvest. Combined, these initiatives are having a significant impact. We were able to increase team member engagement for the third consecutive year, and retention was up nearly 11% compared to last year. We believe that these improvements directly impact our ability to serve our residents. And with that, I'll turn it over to David for an update on our results.

Thank you, and good morning, everyone. I will start on slide 10 for financial results. In Q4 2023, total adjusted revenues increased by 13.3% year-over-year to $218.9 million. This increase was largely due to rental rates growth and increased care revenue in our retirement segment, as well as flow-through funding for direct care, annual inflationary funding increases, and higher occupancy in our long-term care segment. Total night operating income increased by 17.5% to $38.2 million this quarter compared to Q4 2022 mainly due to same property NOI growth in both lines of business and the acquisition of a campus of care in Q1 2023. Same property NOI in our long term care segment increased by 21.1% to $19.7 million in Q4 2023 due to funding increases, high occupancy levels in our long-term care homes, which enable us to receive full funding, and higher preferred accommodation revenues. Our retirement same property NOI increased by 11.8% to $18 million in Q4 2023 compared to last year, primarily as a result of rate growth, as well as improved occupancy, and was further supported by lower net pandemic and incremental agency expenses. Year over year, we reduced agency staffing costs by approximately $8.9 million to $5.8 million in Q4 2023. Agency costs, which are predominantly covered by flow-through government funding, have now returned to pre-pandemic levels. Moving to slide 11, during the fourth quarter of 2023, operating funds from operations increased by 24.9% to $22.1 million compared to last year, primarily due to higher NOIs. OFFO per share increased by 24.7% to 30.3 cents in Q4 2023. Adjusted funds from operations increased by 2.6% to $17.8 million compared to the last year. The increase was largely due to higher OFFO offset by higher spending on maintenance capex as a result of timing of repairs and investments in our building systems ahead of the winter months, as well as a decrease in construction funding income. ASFO per share increased by 2.5% to $0.243 in Q4 2023. In line with our results, we made notable improvements to our ASFO payout ratio in 2023, lowering it by 240 basis points year-over-year to 96.3% in Q4 2023. For the full year, we lowered the payout ratio to 90.9% in 2023 and this is an 840 basis improvement compared to 99.3% in 2022. Looking ahead, we expect continual improvements to our payout ratio. With respect to our debt metrics, we have seen notable improvements and further strengthened our balance sheet. We maintained ample liquidity of $307 million at the end of 2023. We increased our debt service coverage ratio to 1.9 times year-over-year from 1.8 times in 2022, and extended the weighted average term to maturity of our debt to 5.9 years from 4.5 years at the end of 2022. We ended 2023 with a debt to gross book value of 44.6% and $1 billion of unencumbered assets. This provides financial flexibility and supports our refinancing initiatives at attractive rates. In particularly, we were actively exploring opportunities to refinance our debt expiry in the fourth quarter of 2024. We have the option to refinance a portion of our expiring debt with proceeds from the financing or up-financing of assets with CMHC insured mortgages at interest rates that are below those of other financing options. With that, I will turn the call back to Nitin for his closing remarks.