Sienna Senior Living Inc.

Ladies and gentlemen, welcome to Ciena Senior Living Inc's Q2 2024 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 section of the company's public filings, including in 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 Plus and can be found on the company's website, sianaliving.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's website under Events and Presentations. With that, I will now turn the call over to Mr. Jain. Please go ahead, Mr. Jain.

Thank you, Brianna. Good morning, everyone, and thank you for joining us on our call today. Our second quarter demonstrates the strength and tremendous potential of our company. The effectiveness of our strategic initiatives to improve and expand our operations and the favorable demographics of an aging population is evident in our results. But most importantly, our strong performance is a reflection of the commitment of our 12,500 team members. They're the key reason behind our operational strength. For the past six quarters, we have consistently achieved year-over-year growth in operating results across both lines of our businesses. Supporting our long-term care results this quarter are fully occupied homes with higher revenues from preferred accommodations, and the increased government funding in Ontario, which offsets high inflation in recent years. On the retirement side, growing demand and limited new supply, combined with the targeting marketing and sales campaigns at homes with lower occupancy levels, were key drivers of improved occupancy and rate increases. Further supporting our results are enhancement to our leadership team and ongoing improvements to our operations that are focused on our residents' experience, including dining, engagement, and care. As a result, our total same property NOI increased by 7.2 million to 46.1 million year-over-year in the second quarter. This is an increase of 18.5 percent. During the second quarter, we continue to make steady progress towards a goal of stabilized retirement occupancy of 95 percent. Same property occupancy grew to 88.6 percent, which is an improvement of 180 basis point year-over-year since last year. Occupancy continued to strengthen in July and increased to 89%, just the highest monthly occupancy rate in over five years. Our marketing and sales initiatives included new digital and print campaigns. We also continued with our targeted onsite marketing and sales initiatives and focused on community outreach at homes with lower occupancy levels. Our success in driving occupancy, coupled with great increases, added to the strength of our second quarter results. Moving to slide six, further adding to our results are the demographic tailwinds in Canadian senior living. We are starting to see the first wave of baby boomers considering retirement living, a trend that will only intensify in the coming years as the number of seniors over the age of 85 is expected to reach approximately 1 million by 2026 and further grow by 65% over the following 10 years. Wait lists for long-term care beds continue to grow. In Ontario alone, the current wait list for bed is approximately 43,000. And in British Columbia, the average wait time for a long-term care bed is over 100 days. At the same time, construction starts of new retirement residences remain at all-time lows. These exceptional tailwinds are also starting to resonate with a growing investor base. At Ciena, we have seen a significant increase in invested interest, both from first-time investors and those returning to senior living. Being at the intersection of healthcare, hospitality, and real estate makes our company attractive to a broad range of investors. We believe that maintaining our strategy of owning a diversified portfolio of long-term care communities and retirement residences contributed to our sector-leading stock market performance and investor interest this year. Diversification adds to the financial strength of our business as it allows us to capture higher operating margins in our retirement portfolio while benefiting from stable, government-funded long-term care operations. We are also increasingly leveraging the programs and insights gained at our retirement operations in our long-term care communities and vice versa, all with the goals to better serve our residents and meet their evolving needs. For example, we are always looking for ways to add more hospitality elements to our long-term care operations while expanding care programs at our retirement residences to meet the changing demographics of our residents. We believe that this approach will further help us to distinguish our company as a senior living provider of choice. Moving to slide eight, we are pleased with the development progress we have made over the past year at our two projects under construction in North Bay and Brantford, which we expect to complete in the second half of 2025. With respect to our most recent redevelopment in Keswick, work for the new long-term care community is out for tender, and we expect to start construction later this year. The expected development yield for the 160-bed home, which will replace the current 60 beds and add 100 new long-term care beds, is approximately 8.5%. Combined, these developments will support the government's important goal of rebuilding Ontario's older long-term care homes and benefit the fast-growing seniors population. Team member engagement and retention remains a core focus of our initiatives. Our share ownership program is one of many ways we drive alignment. It fosters a deeper sense of ownership and commitment to a shared purpose and values, and creates alignment between our team members and our shareholders. During the second quarter, we issued shares to 1,400 of our new team members, bringing the total number of active participants to nearly 7,000. This is just one of many initiatives that we introduced at CNN in recent years to ensure we are aligned with our team members. Our signature program, Spark, which is a version of Dragon's Den, also remained very successful. During the quarter, we announced the winners of the second round of SPARC, which received 175 submissions. The winning idea came from two members in long-term care home in Cremor, Ontario, who came up with a tool that supports team members in reducing resident falls. In a pilot study using this tool, residents' falls were reduced by 68%. We are now planning the rollout of the falls prevention tool across our long-term care platform And we could not be more proud of Martina, who's an associate director of care, and Taylor, a PSW. And this idea earned them $15,000 in the first price. With that, I will turn it over to David for an update on our results.

Thank you, Nitin, and good morning, everyone. I will start on slide 11 for financial results. In Q2 2024, total adjusted revenues increased by 10.7% year-over-year to $219.5 million. This increase was largely due to rental rate and occupancy growth, as well as increased care revenue in our retirement segment, and a government funding increase, higher preferred accommodation revenue, and a WSIB refund, primarily in our long-term care segment. Total same property net operating income increased by 18.5% in Q2 2024 to $46.1 million compared to $38.9 million in Q2 2023. NOI in our long-term care segment increased by $5.5 million, largely due to higher revenues offset by inflationary expense increases. One area where we were able to consistently achieve cost reductions is in agency staffing. We were able to reduce costs by one-third from approximately $6 million in Q2 2023 to $4 million in Q2 2024. Minimizing agency staffing remains a key objective for CNF. In our retirement segment, same property NOI increased by $1.6 million in Q2 2024 compared to the last year, primarily as a result of rate growth as well as improved occupancy. Moving to slide 12, during Q2 2024, operating funds from operations increased by 21.6% to $26.1 million compared to last year, primarily due to higher NOI. OFFO per share increased by 21.4% to $0.357 in Q2 2024. Adjusted funds from operations increased by 14.6% to $22.4 million compared to last year. The increase was due to higher OFFO offset by a decrease in construction funding income and increased maintenance capital expenditures. AFFO per share increased by 14.6% to $0.307 in Q2 2024. In line with our strong results, we continued to improve Ciena's AFFO payout ratio, lowering it to 76.2% in Q2 2024. This was an 11.1 percentage point decrease compared to the year prior. With respect to our debt metrics, we have seen notable improvements and further strengthened our balance sheet. We maintained ample liquidity with $297 million at the end of Q2 2024, and we extended the weighted average term to maturity of our debt to 5.5 years from 5.1 years in Q2 2023. Our debt to adjusted EBITDA was 6.8 times at the end of Q2 2024 compared to 8 times at the end of Q2 2023, and our interest coverage ratio increased to 3.7 times in Q2 2024 compared to 3.5 times in Q2 2023. We ended Q2 2024 with debt to adjusted gross book value of 43.7% and $1 billion of unencumbered assets. This provides financial flexibility and supports our refinancing initiatives at attractive rates, in particular as we actively explore opportunities to refinance our upcoming debt expiry in the fourth quarter of 2024. We have the ability to refinance a portion of our expiring debt with proceeds from a new financing or up-financing of assets with CMHC-insured mortgages at interest rates significantly below those of other financing options. Our strong financial position will also support our growth initiatives, including the redevelopment of our older long-term care homes. We will continue to prudently manage our capital and staggered construction starts to ensure our debt ratios remain strong as we support the Ontario government in this important initiative. With that, I will turn the call back to Nitin for his closing remarks.