Sienna Senior Living Inc.

Ladies and gentlemen, welcome to Sienna Senior Living, Inc. 4th quarter 2024 conference call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and David Hung, Chief Financial Officer of Sienna 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 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 Cedar Plus 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's website under events and presentations. With that, I will now turn the call to Mr. Jain. Please go ahead, Mr. Jain.

Thank you, Novi, and good morning, everyone, and thank you for joining us on the call today. 2024 has been a year of tremendous growth for Sienna. We ended the year with the company's eighth consecutive quarter of NOI growth, further strengthened the balance sheet, and made great strides in the development pipeline. In addition, we entered the Alberta market with a highly attractive portfolio acquisition. But this has just the beginning. With the rapid growth of Canada's senior population driving demand, there is exceptional growth potential for Sienna for years to come. We have consistently achieved -over-year growth in our up-hitting results across both lines of business. It shows the strength and the potential of our company. In Q4 2024, adjusted same property NOI increased by 29% in Sienna's long-term care segment and by .3% in the retirement segment. Our long-term care homes are fully occupied with growing waitlists, supporting the operations for government funding increases in higher preferred accommodation revenues. On the retirement side, rising demand coupled with limited new supply was a key driver of continued occupancy improvements. In addition, our asset optimization initiatives and focused marketing and sales campaigns further supported the strong results. Moving to slide six, same property occupancy in the company's retirement segment increased by 300 basis point -over-year to .9% in the fourth quarter. Monthly occupancy levels improved throughout the quarter and reached .1% in January. This puts us on a path to achieve a stabilized occupancy target of 95% in the next 12 months. We also believe that there is significant opportunity to create value through our asset optimization initiatives at the number of retirement residences. These initiatives target a better market fit and include renovations, the change in suite mix, additional services, or the alternative use of property. One such example is a property in Durham region, an older but historic and beautiful building. This region has faced significant competition. To turn things around, we made some key operational changes and completed a major renovation. Within a year of completing the renovation, occupancy has now increased by more than 20%. We also just completed the renovation of another retirement home in North York and converted one of the floors to assisted living as a result of increasing demand for care in that area. We believe that we can achieve stabilized occupancy in that property over the next 12 months. We've also identified five assets in the company's retirement portfolio that will benefit from a range of optimization initiatives. With an average occupancy rate of 76% and margin of 22%, this group of properties is expected to achieve substantial NOI and margin growth. Yesterday, we announced two high quality acquisitions in Ottawa and in Mississauga that will be a great fit within the existing portfolio. We are acquiring Wild Pine Retirement Residence, our 165 suite retirement home in Ottawa suburb of Stittsville for approximately 48 million at a capitalization rate of 6.25%. This was built in 2019 and offers attractive amenities including luxury suites with balconies and patios, multiple dining rooms, and excellent health and fitness facilities. We are also acquiring Cauter Gardens, a 192 bed class A long-term care home in the city of Mississauga for approximately 32.6 million at a capitalization rate of 6.75%. The purchase price includes a $2 million capital allowance. Both acquisitions are located in markets where Sienna has an existing operating platform, enabling us to achieve synergies. The transactions will be completed at a significant discount to replacement costs and are expected to be immediately creative to Sienna's AFFO per share. Sienna is also on track to complete a number of previously announced acquisitions by the end of Q1. These acquisitions include the portfolio of four high quality continuing care homes in Alberta and the remaining 30% interest in Nicola Lodge of 256 bed long-term care homes in Metro Vancouver. Combined, we now have nearly $300 million of acquisitions on the contract and continue to remain active in the market seeking opportunities that are strategic fit. Redevelopment is an equally important way to grow and create value for us. The redevelopment of our LTC homes in Ontario enhances the quality of the portfolio through efficient and environment friendly buildings and aligns with the government target to build more long-term care beds at a time when wait lists continue to grow. We are on track to complete a long-term care development in North Bay and a campus of care project in Brantford later this year. And we are making good progress at a redevelopment in Keswick where construction started a few months back. The combined development cost for these three projects are exceeding $300 million and once completed and fully operational, each long-term care project is expected to grow Sienna's AFF per share by about 3%. And with that, I'll turn it over to David for an update on our financial results.

Thank you, Nitin, and good morning everyone. I will start on slide 11 for financial results. In Q4 2024, total adjusted revenues increased by .5% year over year to $246.3 million. This increase was largely due to occupancy and rental rate growth as well as increased care revenue in the retirement segment. Adding to the increase were the significant contributions from the long-term care segment including a substantial government funding increase in Ontario which came into effect in Q2, retroactive funding in British Columbia and higher per private accommodation revenue. Total adjusted same property NOI increased by .6% to $45.5 million in Q4 2024 including .3% in our retirement segment and 29% in the long-term care segment. In the retirement segment, adjusted NOI increased by $2.7 million in Q4 2024 compared to the prior year largely as a result of improved occupancy and rental rate growth. In the fourth quarter, we revised our definition of same property to exclude assets which are expected to undergo optimization. We currently have five assets in our retirement portfolio that will benefit from a range of optimization initiatives. In the long-term care segment, NOI increased by $5.8 million largely due to significant annual funding increases and VC funding of $2.5 million recognized in the quarter offset by inflationary expense increases. After excluding one-time items, total adjusted same property NOI would have increased by .6% in our long-term care segment. Moving to slide 12, during Q4 2024, operating funds from operations increased by .1% to $29.4 million compared to the prior year primarily due to higher NOI, lower transaction costs and lower interest partly offset by higher income taxes. OSFO per share increased by .5% to 35.6 cents in Q4 2024. Adjusted funds from operations increased by .3% to $25.1 million compared to last year. The increase was due to higher OSFO and a decrease in maintenance capital expenditures offset partially by a decrease in construction funding income. ASFO per share increased by .1% to 30.4 cents in Q4 2024. And our Q4 2024 ASFO payout ratio was 77.1%. After adjusting for one-time items, our payout ratio was .1% and we are pleased with the significant improvement in 2024. Throughout the fourth quarter, we further strengthened our financial position and balance sheet. Sienna's liquidity was $435 million at the end of 2024 compared to $307 million at the end of 2023 largely as a result of proceeds from the company's equity offering in August 2024, partly offset by continued investments in our development portfolio. We also improved our interest coverage ratio to 3.9 times for the 12 months ended December 31, 2024 compared to 3.4 times in 2023. And we extended the weighted average term to maturity of Sienna's debt to 6.7 years from 5.9 years. In addition, we improved the debt to adjusted EBITDA to 6.4 times at the end of Q4 2024 compared to 8.4 times in the prior year. Sienna ended Q4 2024 with a debt to adjusted gross book value of .1% and approximately $1.1 billion of unencumbered assets. Sienna's strong financial position with no major debt maturities until Q1 2026 coupled with significant liquidity provides flexibility to navigate potential economic disruptions. It also supports Sienna's growth initiatives with respect to both acquisitions and developments. Our three development projects in Ontario have an average development yield of between 8 to .5% and once they are completed, they will make a significant contribution to Sienna's operating results. Two of our three projects are expected to be operational by Q4 2025 and immediately accretive to OFO due to the very short lease up period as a result of a significant wait list in Ontario. Going forward, we will continue to prudently manage our capital as we further expand the company's asset base through developments, growth through acquisitions and make improvements as part of our asset optimization initiatives. With that, I will turn the call back to Nitin for his closing remarks.

Thank you, David. The fundamentals in Canadian Sienna living remain exceptionally strong. Our ability to meet the growing demand of an aging population depends on a stable and engaged workforce. At Sienna, investing in a team has made a real difference by focusing on engagement, recognition and a culture of ownership. We have improved our retention in a sector with high turnover. For a second year in a row, we were able to reduce turnover by about 30%, which has further reduced Sienna's reliance on agency staff and contributed to strength of our results. With respect to our long-term care portfolio, we expect to benefit from the continued stability of this segment in 2025. The target for long-term care NOI growth, excluding one-time and retroactive amounts, is in the low single-digit percentage range in line with inflation. With respect to the company's retirement operations, we expect same property NOI to benefit from continued occupancy and rental rate increases. The 2025 NOI growth target in the retirement segment is approximately 10%. With occupancy steadily improving towards our 95% target, we also expect you to see margin growth of approximately 100 to 150 basis point in 2025 compared to the prior year. We expect Sienna's growth through acquisitions and development to continue. With nearly $300 million of acquisitions under contract and a significant pipeline, we plan to continue our acquisition activities in 2025. On the development side, we're excited to approach the finish line on two projects later this year. Given the outstanding sector dynamics, our growing operations with the addition of $600 million of acquisitions and developments and a very strong balance sheet supporting future growth, we have never been more confident about the opportunities ahead. On behalf of all of us at Sienna, I want to thank our team members, the residents, families, our shareholders and all of you on this call for your continued support. And with that, we will take your questions.

This time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Lornie Comar with Desjardins Capital Market.

Thanks. Good morning, everyone, and congrats on a nice finish to 2024. Maybe just on the repositioning program, I know you guys had bad success with that before. I was wondering if you could give us a little bit more color in terms of timing, yields and costs at this point.

Hi, good morning, Lorn. Great question. So we have been talking about this for really a year. We used to call them high opportunity homes. And we had around 15 homes nearly a year back in that portfolio. And we are now down to five. But some of them were low hanging food where you're making some operational changes and those don't really have much capital reason, but have significant impact on occupancy and NOI growth and margins. There's a subset of them which needs capital, which we did a few already. And we have plans to do a few more this year, around three or four of those projects. And then there are a few which need some repositioning in a different way, where at this stage, the plans are too early to share in terms of what time of yields we can see. But from a margin perspective, I mean, these are retirement homes. These fives are at a margin of 22%. Our same property is 37.3. We expect that to grow this year. We expect to grow the year after. So we see significant opportunity in those five homes as we progress.

Okay. So these five, I guess, are kind of the ones that need the most TLC of this 15-home portfolio, the 15-home grouping.

I wouldn't say that. I mean, the capital investment we have in the homes where we have done major renovation has been in the range of $2 to $4 million. So these are not that capital intensive in the scheme of things. Sometimes when you're changing services, it just takes time to do that right, you know, because you might have people living on the floor. So when you're trying to fix that floor, it has some impact on residents. When you're adding new services, you're looking at market study to ensure that you get it right. Sometimes you're working with other partners, you know, in terms of an alternate use of the property. So there's multiple reasons why they take long. So I think there would be these properties are at the same level of complexity as your result others. It's just we have, you know, it's a time to fix these five now.

Oh, fair enough. And then maybe on the development side, you guys mentioned you got two that are expected to conclude at the end of the year. One more currently in the pipeline. Have you guys looked at any other project that you looked at adding to the pipeline this year?

Absolutely. We're close. We need to develop another call is 1500 to 2000 beds, depending on how much additional capacity we would add, including homes in the GTA. We see encouraging signs recently the city of Mississauga reduced the development charges significantly. More needs to happen for development to happen in GTA. We have some very interesting and big projects in GTA that that could become viable in the short to medium term. However, we would be cautious. You know, these developments on a scale of development are very low risk. You know, the government back, they get full within a couple of months. But we also don't want to commit too much to development all at one time. So we would pace ourselves. You know, you can expect a project or two maybe this year and then we'll end up pacing after that.

OK, perfect. And then just one last quick one for me. Just wondering what the blended rent growth and retirement in the retirement portfolio was for 24.

It would have been close to four and a half percent on a blended rate

basis. Perfect. Thank you very much.

Your next question comes from the line Tom Callahan with BMO Capital Markets.

Thanks, morning, guys. Maybe just to follow up on on the the rent growth topic there, can you just talk a bit about kind of how you see that growth unfolding over the course of not just this year, but but into twenty twenty six as occupancy kind of marches towards that that ninety five percent range?

I good morning, Tom. You know, we are very optimistic as we are now seeing many of our homes above the ninety five percent mark and a limited supply. So from a market rate market rate perspective, because for any development to work, you know, they would have to charge significantly higher rates than what what we are charging in many of our homes. So we see that we don't see that trend change for a I would say. I would call it medium term at least because any development for this asset is called it four to five years, even if you have land today. So we don't see that to change. We also see opportunity. We where we see a big opportunity within Siena, for example, is fixing our care margins, even though our care revenue has gone up, our margin has not matched. So we see a tremendous opportunity there as well. And that just annual rent increases in general. You know, the US has been much ahead of of annual rates versus Canada. So we have not fully made up for inflation in the past, and we do expect to do that over the next couple of years.

OK, great. That's helpful. Maybe just switching gears, Nitin, you talked a bit about the acquisition pipeline there and then rain active on that front, you know, big picture or high level. Can you just talk a little bit about what you're seeing in the market today and our opportunities weighted to to one piece of the business versus the other or fairly fairly good opportunities on both sides?

I can answer that, Tom. So we continue to see a very robust acquisition pipeline somewhere in the range of one hundred and fifty to two hundred million dollars. One of the strengths of our business is the fact that we are a diversified business. So we are looking at both sides of the business, both long term care retirement as well as campuses of care. And I think that the fact that we purchased a long term care home as well as retirement residents, you know, speaks to the fact that we are looking at both both markets at this point in time.

OK, perfect. I'll I'll pass it back. Congrats on the results,

guys. Your next question comes from the line of Jonathan Keltcher with Judy Cowan.

Thanks. Good morning. Just just sticking with that, the pipeline on the acquisition front, one hundred fifty to two hundred million. Would you be comfortable in like both assets you just bought were were stabilized? Would you be comfortable in bringing on non stabilized retirement homes?

Good morning, Jonathan. We would be comfortable that we are very confident of our platform. Many of the opportunities we are seeing, though, are are not in that unstabilized place. So the property we just bought in Stichwell is in fact is a higher than ninety five percent occupancy. So, you know, in the long term care home, obviously we bought is full of four homes you bought in Alberta are all full. So we would be open to it. But the opportunities we are currently reviewing do not have homes which are highly unstabilized.

OK, fair enough. And then in the MD&A on the on the five properties in the optimization portfolio, I think you talked a little bit or use the word potential alternative use. Are you are you just talking about maybe switching a floor to assisted living or is there anything more to that? And can we think about maybe selling one or one or two of those properties?

I mean, our portfolio overall is quite new and because recently acquired it, the only thing which we are which is older in our portfolio is long term care homes, which are which is a huge development opportunity. So other than one or two properties here or there, we don't really see a lot of dispositions from a Sienna perspective. And the alternative views, you know, could easily include what you just talked about there, for example, in North York, it was more independent living. And now we have added assisted living to it. In some cases, working with government to see if there is a need to add additional beds for services that is important to them. So it's really would be a combination of those things.

OK. And then lastly, I think you talked on the development, maybe starting one or two projects this year. Have I guess two two parts here, have you have you identified them? And if so, are either one or both going to include a campus of care?

So we have identified them around four years back because it's been a painful journey for some of these development projects. Once that we're looking at would be all long term care only. And in many cases bigger than the current property, because that's where we see the synergies of construction cost and making sure that the yield is in the eight percent plus range. So I think we could potentially see some bigger homes than smaller ones from the past.

OK,

that's that's it for me. I'll turn it back. Thanks. Thank you.

Your next question comes from the line of Himanshu Gupta with Scotiabank. Thank you

and good morning. So on the long term care outlook of low single digits in line with inflation, I mean, is there any potential to pick some margins here or we should simply look at absolute LTC NOI, excluding one time and then grow at the rate of inflation?

Yeah, thanks, I mean, for that question. Our outlook is to grow in the low single digits on the long term care side. We don't focus as much on the market side in long term care because of the significant amount of government funding that we get specifically for care. So what we would be looking for in that sector within that segment would be low single digit growth coupled with the significant development that we're doing in that sector. And, you know, again, on the development side, each of these projects would be accretive to our AFO per share by about three percent. So that's where we're going to get the summit of the additional growth on long term care.

Got it. That's helpful. And then moving to the retirement home side, you know, same property margin expansion of 100 to 150 basis point this year. Will that reach stabilized margin levels once you achieve 100 to 150 basis point? Or do you think there will be still scope for improvement beyond that?

So we had a very good 2024 from a revenue perspective where, you know, we are turning our focus in addition to that, is margin expansion as well. We, you know, we target 100 to 150 basis point next year. You know, we see tremendous opportunity even after that, because for lack of a better word, this would be some complexity. But I think there is further opportunity to grow that margin. Our margin pre pandemic was 44 percent. It's too early to say whether we'll get all the way there. But we continue to see a lot of opportunity between 37 and that 44 percent number.

OK, that's fair enough. And then on the optimization portfolio. I mean, obviously you mentioned the same property pool and the way to increase by 10 percent. Would you say the optimization portfolio should increase more than 10 percent? I mean, just by the very fact of 20 percent margin and 75 percent occupancy?

Yeah, we would. We would see no margin growth, sir, excuse me, year over year, no growth in excess of 10 percent. Again, our margins on these five properties would be around 22 percent. So, you know, over the next while, we would expect that they would get back towards our same property margin. So definitely we would expect to see significant growth on that portfolio.

OK, that's again very helpful. And then these five properties, like, are they suffering from new supply in that area? Is it older products? Like, why are these, you know, five properties the way they are right now?

Sure, I think it's a combination of those things. For example, the property, we use an example in the Durham region that was oversupplied. You know, the couple of homes are in smaller markets in a province. So, you know, we are seeing some challenges there in terms of NOI growth, even though occupancy is OK there. In some cases, the market has changed. You know, we gave you an example of North York where it was more independent living in the past, and now the demand is for dedicated assisted living floors. So it would be a combination of those things.

Thank you. Last question is on the acquisition. I think it was done in the Ottawa market. I mean, based on commentary, you know, Ottawa has been oversupplied market in the past. So, you know, rational for adding in that market.

Absolutely. You know, there's a lot of conversation how demand is outpacing supply. And I think using Ottawa would be a perfect example because that market used to be notoriously oversupplied. Even though there was always healthy demand, supply always outpaced. That has changed significantly. And to just use our properties, we have two other properties closer to the one that we just bought. They were in the low 80% range, struggled, in fact, to stay in that range in Q1, 2023. Both of those homes are combined at about 95% now. The home we just bought at Wild Pine is above 95%. So the idea that there is less supply and demand is outpacing supply, in fact, has come true. And that is a great market. That is a perfect market to actually make that example.

Thank you, Ratan and David. I'll turn it

back. Thank

you. Your next question comes from the line of Juliano Thornhill with the National Bank Financial.

Hey, guys. Good morning. First question is just on the ministry extension on your third and fourth beds there. Is the one-year timeline better than you hoped for? And I'm just wondering what the rationale was there from their standpoint.

Listen, this is not a policy direction, but I would tell you our point of view. Given that there are 46,000 people on the wait list, we don't see any path of closing any of these homes. The path is to redevelop them or to invest capital in those buildings. We do expect these license to continue to be extended in a period of time. And the government deciding to do it and to fund it fully and to do it on an annual basis, I think that's just part of the process in our mind. But we do not see any significant risk of any form in bed closures for those older homes.

And then just is there any progress on the Alberta announcement, whether or not there'll be some catch up funding there for where you just entered in the market?

There is a lot of discussion. So Alberta is going through a pretty big process in getting feedback from the industry. We have been one of the participants who have been asked to provide input and we have done that. It remains to be seen whether they will act on it because there is a it actually goes also to the structure of how things are organized there. But overall, we find the province very focused on building capacity, very focused on ensuring that this is a very viable sector. So whether it happens in next two months or takes a bit longer time, we continue to be optimistic that there would be the right funding change to continue to make the long term care viable there.

OK, and just the last one is for David is just do you anticipate any other CMHC coming through the pipeline? I know you had, you know, 150 million or so, then you did unsecured. Is this kind of a source of proceeds that you anticipate coming in 2025 now to fund some of the acquisitions?

Well, CMHC was extremely helpful in 2023 and 2024. Rates were very low. We had a number of unencumbered properties. So we over the last 18 months, we've financed over 200 million dollars on that. We see that slowing in 2025. The unsecured bond market has become pretty attractive. And so CMHC might still be an option, but not nearly as big as it was in the over the last 18 months.

OK, thanks, guys.

Your next question comes from the line of Sirens Renewas with Cormark Securities.

Thank you, operator. Good morning, David Nithin. Congratulations on the good 2024. Just really looking at the occupancy trending over here and, you know, going back to your commentary on occupancy, you said 95 percent in the next 12 months. How are you thinking about the balance between occupancy and growing the average rents in these weeks?

Thank you, Sairamit. We think those things don't really have a lot of convergence in our mind because the reason occupancy has been going up significantly is where demand is outpacing supply in these markets. And I think that is independent of rents. We have talked about how the US rents went up much higher. I think in the last three years, we heard around 10 percent rental rate increases to catch up to inflation. We saw significant inflationary pressures in Canada. The rental growths have been lower. So we do think the pace is appropriate rather than a big shock to the system. So we do see that going on in the future. And then as you get to 95 percent occupancy, and there are many of our homes which are way above 95 percent occupancy in that portfolio, pretty close to 100 percent. And we see tremendous opportunity there from a market rent perspective when a resident leaves. And the average length of stay is around two and a half to three years. So the opportunity to mark to market is very real in our portfolio on an annual basis.

That's a good point. And maybe just thinking about the product mix of these properties. And historically you added independent supportive living into suites and you changed the mixes overall. How has that actually impacted margins? Can you just give us some color in terms of how we're thinking between the margins between the different products or service types?

Absolutely. We have talked about it before, that the decline of the margin from, call it 44 percent, someone was driven by occupancy. Now we are pretty close to that occupancy number. So the decline in margin at the moment is frankly all, it's two points. One is it's driven by a lot more care revenue with not very high margin in many cases. And another portion is just some of the staffing things that we have to fix over time as the home gets fully stabilized. So it'll be a combination of both of those things. Our care revenue usually would have lower margin overall. But we see a lot of opportunity from where we are today versus where it could be on a stabilized basis. And that's the journey we are on for the next couple of years.

That's good, Kalanathan. And maybe just the last question on the transaction market. David used to put about $150 million of pipeline there. Can you give us some color on the kind of sellers you're seeing out there and the source of the transaction pipeline as such?

Yeah, I mean it really varies. It can range from independent, an independent group of owners they developed. They're now looking to sell because that's not their primary line of business. It could be larger operators that are selling one or two of their properties. It really is a mixture of vendors at

this time. All right, guys. Thank you for that. And congratulations again. I'll turn it back.

Thank you.

Your next question comes from the line of Tammy Beer with RBC Capital Markets.

Thanks. Good morning. Just wanted to come back to the five repositioning assets. What's the timeline that you're looking at or budgeting for in terms of reaching stabilized occupancy? There's been two levels there.

Hi, Tammy. Good morning. I would say it's a bit early to answer that just yet because some of them, you know, you're working with external partners, benefits to reuse, or you're working with hospital partners or others to lease some part of the building. So it's a combination of those. You know, a renovation project usually takes around six, seven months from the very beginning until it's ready and then there's a bit of a lease period. So I would say these projects would be, you know, call it 12 to 24 months.

OK, and then in the interim as the rentals are happening, is there any impact to the existing NOI? Meaning, are you taking any suites offline? Just trying to see if the, you know, I think you quoted that 22% margin. Is that kind of hanging in there for a little while, or does it drop off until you ramp back up?

Usually we have not seen in the two buildings where we did a significant renovation. We in fact did not see a lot of decline in margin. And it's driven by, you know, the average occupancy is quite lower. So there's enough suites where you can do that work. We also see, you know, that it creates quite a bit of excitement when you are renovating a building. You know, we do a very, the team does an excellent job of showcasing what the final product would look like. The buying decision and retirement usually is not immediate. You know, people when they're coming in, they're planning either a few months out or a month out. And since these renovations are four or five months, they could see that how, you know, they could be, they could be a place where they're moving in either right before it or right at that time. So we have not seen any margin decline or even occupancy decline when we've done those renovations in the past.

OK, that's helpful. And then, you know, as these, you know, once these are stabilized, would these be assets that perhaps you maybe cycle out of and where you maybe maximize the value cycle out of it and maybe move into or redeploy that into perhaps some stronger markets or would these just be, you know, continue to own them?

Yeah, I mean, at this stage, they all make strategic sense to us. We think we can get to stabilize and this would be pretty aligned with the portfolio that we have now. We don't really have a lot of properties for disposition. You know, I would call it one or two at a time. We haven't done one, I think, in a couple of years. So I would say never say never, but it's a very small number of properties that we think might not get to what we want them to do for Sienna.

OK, that's helpful. Last one for me, just on the, that 95% stabilized occupancy target, I just want to clarify, does that include, sorry, that I'm assuming does not include these repositioning properties. This is just in reference to the same property bucket, correct?

That is correct. It's only in reference to the same property bucket.

Yeah, OK. Thanks very much. I'll turn it back.

Your next question comes from the line of Dean Wilkinson with CIBC.

Thanks. Morning, guys. That and at the risk of politicizing the conversation, we're in the midst of a provincial election. There's been a lot of talk about housing, but it seems to me as I look at these platforms, there's a bit of a silence around the more acute issue of seniors housing. Has anyone had conversations with you or an industry wide around that? And if you had the opportunity to give them some advice around this issue, what would that be?

Thank you, Dean. I think your answer is in the question that you, I don't want to politicize this either. I would say senior housing has been a hot topic. And the reason why it is not a hot topic because it has never gone away from being a big priority for government. And for example, you heard a lot, you know, we talked about Miss Sager cutting the development charges to a point I think there is they're not all the way there. But they talked a lot about housing, but long term care was included in it. You know, we also see continuous focus from government in building more and more beds in all the areas that you're active in. So we have not seen any decline of any way, shape or form on the priority of adding more capacity, especially for long term care.

It's just how we get there, I guess, is kind of the challenge, right? It seems hard to kind of put shovels in the ground with the economics as they as they sit right now.

I would say yes, no. You know, we are. Yeah, you're right. We have we should have built a lot more. But when you don't build for 20 years, because nothing happened between 2004 and nearly 2020, 21. And we are in a place where you have aging demographics. So so we we're building a lot more beds as a sector than we ever built in the past. But, you know, it is going to take quite a bit of time to actually make that a reality. These projects do take a significant amount of time to go from from sourcing land all the way to construction. So I continue to be optimistic that, you know, the trend will continue. You know, the the focus from government on fixing the funding and also the focus on construction funding. We see we think that will continue on. Alberta is a new market for us. But it's the same discussion there where government is focused on building more capacity and understanding that unless operating funding is appropriate, people will not build just because of the construction funding. So I think that will continue on and we'll build more beds. Would that be enough to meet the aging demographics? I think that question remains to be answered.

Yeah, it seems like we're all getting older faster than we can. We can build these things. Appreciate the comments. Thanks, guys.

Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.