Sienna Senior Living Inc.

Ladies and gentlemen, welcome to Ciena Senior Living Inc's fourth quarter 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 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, 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'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 a call today. 2024 has been a year of tremendous growth for Ciena. 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 Ciena for years to come. We have consistently achieved year-over-year growth in our operating 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 Siena's long-term care segment and by 15.3% in the retirement segment. Our long-term care homes are fully occupied with growing wait lists, supporting the operations for government funding increases and 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 points year over year to 92.9% in the fourth quarter. Monthly occupancy levels improved throughout the quarter and reached 93.1% 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, a 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 Kothra 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 Ciena 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 accretive to Ciena's AFFO per share. Ciena 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, a 256-bed long-term care home 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 in alliance 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 Ciena'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 12.5% 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 2021. retroactive funding in British Columbia, and higher private accommodation revenue. Total adjusted same property NOI increased by 22.6% to $45.5 million in Q4 2024, including 15.3% 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 BC 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 16.6% in our long-term care segment. Moving to slide 12. During Q4 2024, operating funds from operations increased by 33.1% 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 17.5% to $0.356 in Q4 2024. Adjusted funds from operations increased by 41.3% to $25.1 million compared to last year. The increase was due to higher OFFO and a decrease in maintenance capital expenditures, offset partially by a decrease in construction funding income. AFFO per share increased by 25.1% to $0.304 in Q4 2024, and our Q4 2024 AFFO payout ratio was 77.1%, After adjusting for one-time items, our payout ratio was 83.1%, and we are pleased with the significant improvement in 2024. Throughout the fourth quarter, we further strengthened our financial position and balance sheet. Ciena'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 Ciena'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. Ciena ended Q4 2024 with a debt to adjusted gross book value of 41.1% 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 8.5%, 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 OFFO due to the very short lease-up period as a result of a significant waitlist 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.