Q2 2020 Sienna Senior Living Inc Earnings Call
Ladies and gentlemen, please continue to hold your conference call will begin momentarily.
[music].
Today's call is hosted by new Pen Jane President and Chief Executive Officer, and Karen Han Chief Financial Officer, Oh, CNS and you live in Inc.
Please be aware that certain statements all 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 section in the company's public filings, including its most recent mdna and yeah, you have for more information.
You also find more fulsome discussion of the company's result in its Mdna and financial statements for the period, which are posted on the dog <unk> can be found on the company's website cannot live in that C.
Today's call is being recorded and a replay will be available.
Instructions for accessing the call a posted on the company's website and the details are provided in the company's news releases.
The company has posted slides, which accompany the host remarks on the company's website under events and presentations with that I'll turn the call to Mr. James. Please go ahead Mr. James.
Thank you Dylan and good morning, everyone and thank you for joining us on our to do call. This morning.
This is my first conference call as the President and CEO Oxiana and with me today is carrying on our new Chief Financial Officer.
What's got it and I have deep roots in Seattle, and Cozy worked together for last five years in our previous roles.
Then dr. Cohen 19, or long term care has been particularly see this across Canada.
No doubt the last few months that'd be the most challenging and our company's 48 year old history, and I'm truly grateful for the support of my team and our stake holders as we navigate this difficult time.
My focus is on resident Senator people driven solutions to navigate sienna to this pandemic and beyond.
We will take all necessary steps to minimize the impact of new outbreaks and a potential second wave.
We will do everything we can to keep everyone healthy unsafe, while providing the best quality care and services for our seniors.
In order to stay connected with our team members and to show my support and brought it to you.
I started in portion business or residences in Ontario over the past weeks I've toured 11 residences and that has given me a much better insight into the incredible work. Our team members are going are doing on the ground.
It also gave me an opportunity to connected residents and their families.
We are encouraged that as of yesterday, we have no active cases, a core 19 and annual for residences.
We continue to make good progress in implementing important measures in a fight against Corbin 19, many of them offline in our six point action plan, we announced in early June.
Since the onset of the pandemic you have sourced over 4 million pieces, RPP well use that I residences.
We continue to build capacity to ensure adequate future supply of P.B. at all times.
We added additional health care expertise and have accelerated the hiring and retention of frontline staff members.
And we are enhanced training and reallocation of our team members and continue to make improvements to the way they engage with our residents and families.
Since early June given gauge for senior housing exports, whose expertise and background is nothing short of impressive.
Joe that MABA has been engaged as an executive advisor he's a former president and CEO of Mt. Sinai Hospital and during that time. He played a critical leadership role in managing Mount Sinai response to Sars.
Dr. Andrea Motor has been engaged as our chief medical consultant Dr. moderate as a family physician with deep expertise in long term care and advice will help us enhance our medical and physician practices and policies.
We have engaged dr., Alison Mcgee or as a cheap infection prevention and control consultant Dr. Mcgarry is a highly recognized infectious disease specialist and played a leading role into fight against our swear Canada.
Dr Moser and often mcgarry will also help us, but that's best practices in place and prepare us for future potential outbreaks in putting forward 19.
We have engaged marriage enticement to help us.
I don't have a best in class resident and caregiver engagement program that aligns with our focus on meaningful engagements with residents caregivers and families.
I'd now being CEO for nearly 60 days and have recently visited eight onto your long term care communities and see retirement residences across Ontario.
Most of the properties I visited had been an outbreak given the endemic and my visits are part of my tanker tour.
The main purpose of my tour is to show my appreciation for all outstanding efforts from our team members.
When most of the water was scared to even more grocery shopping our team members were coming into work every single day.
One of the main things that stood out for me was how the teams supported each other and have been doing everything they can during the pandemic.
Over the past months Weve gone to extensive means to ensure adequate staffing at our residences and the BM hard more than 900 full time and nearly 1000 part time staff members since the beginning of March.
Driven by the single site order, which require staff members to work at only one residents. We have increased the ratio full time to part-time from 47% to approximately 66%.
We are in the process of reviewing each property for the optimal mix, a part time and fulltime team members.
We believe that increasing the ratio whole time team members also benefit our residents and our operations.
As it provides more stability to our staffing and resident needs.
In April the government's, Ontario, and British Columbia, and also temporary pandemic day program for frontline workers.
We supplemented that program to cover key members not covered in the government pay program.
Moving to slide seven.
Inspired by the dedication and efforts of stocks members CNR together with the national senior living operators initiated the cares funds.
This fund provides a onetime financial grants of up to $10000 to eligible employees of long term care and retirement operators in Canada, we're facing extraordinary circumstances emitter endemic.
By July of this year that correspond has awarded more more than five 400 employees in the senior living sector over 1.8 million in emergency financial assistance.
Moving to government funding to date, the government of Ontario has announced 243 million in additional funding for the long term care sector and 20 million for the retirement sector to fund over 19 costs.
The government of British Columbia has also committed approximately 27 million in funding for costs in connection with mandating single site work locations and infection prevention and control.
The cover got the government, Ontario has announced that occupancy protection funding will be in place for long term care residences until the end up to 2020 residents in Ontario currently cannot be placed enrollments with three or four beds.
While accommodations are limited to a maximum two beds per room. The government, Ontario will continue to fund the beds at full capacity until the end of this year.
Our long term care off theaters will also receive full funding for long term care residences in Ontario in British Columbia, If a vacancies cost as a result of the closure of admissions of new residents because of an outbreak including corporate 19.
Okay.
The additional funding is crucial for long term care operators to help offset the significant costs driven by the pandemic.
And we are very grateful for the support and leadership of our government in the fight against over 19.
We will continue to advocate for additional funding and changes that benefit the sector as a whole.
Moving to preparing for the potential second wave.
Together with our healthcare advisors, we have been working on numerous initiatives and procedures to ensure the health and safety of our residents and team members and to prepare for a potential second wave.
These initiatives include increased training of staff members include cross training to ensure a more nimble team and the reeducation of frontline workers, which is focused on quality and safety.
In addition to ensure adequate stopping it all residences. We are also enhancing our clinical and infection control teams.
We have increased over 19 testing at our residences, including the biweekly testing of all team members. In addition to regular screening and we expect to continue to do so in the foreseeable future.
We also continue to build UPB capacity to ensure adequate supply at our residences at all times.
We are very thankful for a hospital partner support to care for and protect our residents and team members.
They have been sharing best practices and are assisting us to plan for a potential second wave.
Our hospital partners have been invaluable and promoting system integration and have helped us evaluate and implement additional measures processes and protocols.
We are committed to increase and transparent communications with our residents and their families.
We believe that maintaining an open lines of communication is very important to all of us.
Over the past six weeks, we have hostess 26 virtual town halls, and have issued 106 newsletters, you keep everyone informed of relevant developments programs and initiatives.
We also understand the importance of open and transparent communication with our team and have launched our stay connected video series in the series I answered anonymous question support staff members and this is Don in addition to regular virtual town Hall meetings.
Moving to our marketing and sales initiatives over the past few weeks, we've increased our marketing efforts intensified sales activities across over time and portfolio and connected with thousands of prospective residents.
These efforts have resulted in a significant increase over actively base.
Since the end of May our total number of leads have increased by approximately 30%.
We also continue to enhance our outreach strategy by leveraging our strong clinical ventless teams.
Our outreach is focused on hospitals community partners and professional organization with the aim to broaden our referral sources.
To further support these efforts we've relaunched our referral program, which is extended to our professional contacts as well as our residents early indicators are positive.
In addition, we have redesigned our sales incentive program, which is aimed at converting potential leads by the end of Q3.
Since we launched this program three weeks ago. It has resulted in more than 100, new commitments with resident scheduled to move and by September Thirtyth of this year.
In Q4 of the CRP, we'll be launching a new centralized call Center. This call center will enhance our communication and marketing efforts with current and prospective residents and their families.
As new temp team members and new residents have started to moving again the required to follow a mandatory 14 day isolation period.
This can be quite hard and we're doing everything to make this time as enjoyable as possible.
As part of a number of initiatives, we have launched our Staycation program, which includes personalized gifts access through technology and entertainment like in suite concerts.
We are quite encouraged by the momentum VC and the feedback we've received since reopening our residences.
During the month of July deposits of nearly doubled compared to the previous month.
With that I'll turn it over to Kevin will provide an update on our operating and financial performance.
Thank you Glenn and good morning, everyone.
Niton highlighted we did not leave any stone unturned to cycle that 19.
Magnitude and impact of the pandemic is reflected in our second quarter results, which include the extraordinary expenses to manage dependent.
I will start with our Q2 operating performance on slide 13.
Average occupancy in the long term care portfolio declined 92.6% in the quarter from 98.3% in the same period last year.
I wanted you mentioned long term care residences are fully funded for agencies that are caused by temporary closure of admissions due to upgrade and we will receive funding protection until the end of the year.
CNS average same property occupancy in the retirement portfolio declined to 83% in the quarter from 88.4% indistinct period last year.
During the quarter occupancy declined by 90 basis points in April and 70 basis points in each of May and June largely as a result of course with 19 restrictions that have reduced the move in activity and the ability to conduct inventory.
Must be recollection levels remained high at approximately 99% consistent with our experience prior to Cook 19.
Moving onto our Q2 financial result.
Our same property NOI up 31.8 million into Q decreased by 8.1 million or 20.4% over the prior year, mainly related to next endemic expenses of 7.7 million.
Long term care and NOI decreased by 5.9 million to 16.6 million year over year and retirement same property NOI decreased by 2.3 million to 15.1 million.
Excluding that pandemic expenses consolidated same property NOI decreased by 1.2% year over year, mainly due to the softness in retirement occupancy partially offset by increased rental rate increases in line with market conditions and timing of expenses.
Moving onto our pandemic senses.
We expect to continue to incur an increased level of expenses to support the cost of managing cobot Nike mainly comprised of investments in additional staffing employee pandemic pay program and procurement of ERP infection control and cleaning supplies.
It is important to note that there may be timing differences between the time of the current these expenses and the funding such expenses.
During the quarter, we recorded net pandemic expenses up 10.6 million related to managing Corbett 19.
Turning to slide 16.
Our CFO in Q2 was 16.7 million compared to 23.6 million in the prior year, a decrease of 6.9 million primarily due to net pandemic expenses.
Partially offset by mark to market adjustments on share based compensation lower current income taxes and lower net interest expense.
Q2 over AFFO per share with 24.9 cents compared to 35 to six cents in the prior year.
In terms of our balance sheet.
CNL maintains a strong financial position with significant liquidity and a substantial unencumbered asset pool.
Ian ended the second quarter with over 240 million in liquidity comprised of cash cash equivalents as well as available credit facility.
Subsequent to the end of Q2, we repeat 60 million our credit facility.
With our diversified debt profile and an unencumbered asset pool of approximately $540 million, we'd expect that we will continue to have access to multiple sources of financing.
We have limited debt maturities for the remainder of 2020, and we believe that we'll be able to successfully refinanced our CVD banker in the amount of 240 million net up its principal winter find coming due next year.
Our debt capitalization is well distributed between unsecured and secured debentures credit facility conventional mortgages and CMHC insured mortgages.
Looking at our debt metrics on slide 18.
Our debt to gross book value increased by 190 basis point to 48.5% year over year, mainly due to a 167 million drawdown from our credit facility.
Which 105 million has invested in short term investments during the quarter.
This provides the company financial flexibility.
We decreased our weighted average cost of that by 30 basis points to 3.4% year over year, primarily due to increasing the mix of floating rate debt to capitalize on the low interest rate environment.
Due to significant amount of net pandemic expensive debt to adjusted EBITDA increased to 8.6 years in Q2 from 6.7 years in the prior year.
Interest coverage ratio decreased to three pumping Q4 times in the prior year.
Factoring in the repayment of 60 million of our credit facility. Subsequent to Q2, our Q2 pro forma that you put book value would be 45.9% a decrease of 260 point.
And our Q2 pro forma debt to adjusted EBITDA, which improved by six months to 8.1 years.
DNS AFFO payout ratio increased to 94.4% in the second quarter from 62.5% in the comparable prior year period, mainly as a result of the net pandemic expenses.
We expect an increased level of expenses for some time and given the ongoing uncertainty around the impact in duration of public 19, we have withdrawn our 2020 guidance earlier this year.
In the meantime, we remain committed to providing periodic updates on the impact of course, knocking on our business operation and financial results.
With that new will provide for closing remarks.
Thank you Karen Cobot 19 has highlighted the urgency for our sector to come up at solutions to better serve and protect our seniors.
They represent a generation betters contributed so much to our society and to our country the oil to them to help them age with dignity.
I'm hopeful that collectively we will be able to address the challenges, we face and drive progress across our sector.
We're pleased with Ontario governments announcement on July 15 of a new funding model for the redevelopment of long term care.
The model is expected to accelerate the much needed construction and redevelopment of long term care homes across the province.
We have long advocated for a wide models such as this that recognizes regional development needs.
And our team is in the process of evaluating the impact of the revised model and we are committed to working with all stakeholders.
The construction and redevelopment projects will not only allow more seniors to engage in a new home, but the development of these homes will also have a positive economic impact resulting from increased employment opportunities.
We're also continuing the planning of our joint venture development of retirement home with signature retirement angiography calls the planned development is located in a market, we know well and expected to benefit from future demand in this community.
I am incredibly grateful for the up for our team who continue to demonstrate commitment compassion and resilience and I want to sincerely tank, our residents and their families for the encouragement and support.
I also want to acknowledge the many partners were supporting us in the fight against Corbin 19, and the Swift leadership, including our hospital partners the governments of Ontario in British Columbia, and many other key stakeholders.
With the support of our stakeholders and the exceptional expertise for team and advisors. We are implementing the learnings from recent months.
We've been working on numerous initiatives to keep our team members and residents healthy unsafe and an improved away we communicate with the residents and their families.
Our marketing efforts are showing a positive trend and commitments from future residents and development plans have been gaining momentum in recent weeks.
I see many positive signs in the long term care communities and the time and residences and feel confident about the plan via put in place for a path forward.
Thank you for your participation of the call today Vietnamese Dash answer any questions you may have.
Thank you Sir as a reminder to ask a question you would need to press star one on your telephone to withdraw your question. Please press the pound key.
Please standby, while we compile the couponing roster.
I show our first question comes from Brendan Abrams from Canaccord Genuity. Please go ahead.
Hi, Good morning, and first of all I just want to congratulate you on your team on.
On really.
Challenging quarter, but everyone stepping up in terms of.
Protecting.
The residents and having zero cases right now so that's.
That's great.
Just wanted to touch on a few things just in terms the occupancy funding for the long term care I know it secured through 2020.
The end of 2020 whats here.
Expectation from the government after that.
If you've had any conversations with them.
Thank you Brian first of all for your for your comments.
This is the right thing to do at this time given that Theres really no vaccine at this at this moment and it is not only a difficult thing to limit the spread of corporate 19, but just the.
Being able to.
There are people who are for people in a in a room as difficult as well. So this is a key challenge for the province and for our sector.
This change I think that system has lost close to 5000 beds and capacity.
So I do not really have any guidance into what it would look like in the future, but we are committed to working with our hospital partners with the government to find a sustainable solutions going forward and as we have more insight will be will provide so.
Okay, Yes that makes that makes sense and.
Thank you touched on this in your opening remarks remarks, just in terms of upcoming debt maturity the series B.
Not too far from now I believe February 2021.
What do you see as the most likely a scenario or there may be option or two to.
To address this maturity and how do you think maybe the rate might compare to.
To the existing.
Debenture.
Yes, the existing debenture the rate is around 3.4% or so and depending on what we do with that and given the flexibility. We have ahead as a company there's opportunity for us to do an unsecured financing.
Potential to do some in mortgage financing or a blend of that.
Unfortunately business CMC program as it relates to until your long term care, but there are some assets in an unencumbered asset pool, which a retirement residences. So we might be able to swap. Some so at this point, we feel very confident in our inability to do so if you ever had.
Very positive conversations with lenders or the last month or so in terms of our path forward for series B.
So at this point, we are really looking at all different options, so via multiple plants into place and again as we have a bit more confirmed beyond what you might want to do we will be announcing it in due course.
Okay and give an idea of the just a follow up an idea of the clear title value.
Maybe a retirement portfolio, where there is.
Which is eligible for the CMHC financing.
Sorry branded I'm not sure I got the question is set up the value offer of that portfolio is that what do you were asking.
The value of the clear tidal assets in the retirement portfolio, which I guess, presumably you could.
Securities you may see financing on.
Yes, so we have $540 million in assets, which are unencumbered at the moment.
So some of them our retirement residences I do not have the split at top of me at this point, but I think thats when we look at Cvs become mind Thats one of the ways, we're going to look at it as well.
Okay and then just last question for me before returning to turn it over just in terms of maybe DNA and expectations.
Maybe for 2021 onward, obviously, I mean last quarter was unique and maybe even the next two as well and dealing with the heart of the pandemic.
Can you can you provide some color on on where you see maybe gionee.
Normalizing I should say it would it be fair to be somewhere between maybe last quarter and.
Maybe.
Q4 19.
Great Hi, Brendan Thanks for your comments at the beginning during the quarter. We spent on let's say our regular wages and benefits in Genie of about 5.6 million in the quarter.
And we know that Weve added up pandemic expenses.
The result of what we're managing and going forward or on a normalized basis, we expect to it to be back to normal levels.
At around 3.4% to 3.6% of revenues as we have yards in the past.
Okay. That's very helpful. Thank you I'll turn it over that Q.
Thank you.
Next question comes from Chris Cooper from RBC. Please go ahead.
Good morning.
Maybe just following up a long button is lines of questioning with respect to.
The depend damage expenses that were incurred in the quarter.
My my take is that the and the long term care side.
There could be some recovery of the of the net amount.
Kind of outstanding.
In the quarter.
And maybe ultimately the LTC pandemic expenses should should mostly be recovered what about what about retirement is that kind of 3 million.
A quarter of pandemic expenses.
Likely to persist and are is there any other government assistance that you could get on that side.
Right.
Hi, Chris so on the retirements side.
We have a little bit of government funding announcement last.
But really the impact of the pandemic on retirement has been significantly different between long term care and retirement and when we looked at our expenses across the Florida between the two segments. They really really two additional staffing to support a resident.
The employee pandemic pay program purchase of PPD, and I infection control cleaning supplies and when we looked at these two segments together, we expect that cost with water rate over time.
And for the remainder of the year, we'd be looking at approximately $4 million of pandemic expenses in our annualized mainly attributed to long term care segment and this is now faster in the possible additional government funding that might be announced later written in relation to the pandemic.
No sorry, you expect the the no pandemic expenses on the NOI light it'd be about 4 million for the balance of the or is that right now that we're hoping that that would be before any government funding announcement, okay. So it's across all right.
And then what about on the administrative side.
Oh, you've made a number of are engaged number of health care experts.
Just on that you know is there anything you can share that you've learned so far and maybe anything with respect to.
How long these engagements may last and in terms of.
Yes, the extraordinary admin expense.
Yes, So you know the our admin expense for this quarter, which related to endemic was 3 million, we expect it to be Cara call. It around 3 million for the balance of the year multimillion by quarter.
Clearly the expertise that we got from our key advisors in healthcare has been truly extraordinary and is to really help us get better prepare for the second quarter, making sure. We have good physician practices in place we expect.
Long term care.
Sector to be lot more.
Collaboration working with hospitals are having someone like Joe to advice us on those items is a key for us as well. So I think we shared many of the things that we are doing over the last 60 days based on that twice your GAAP and I truly believe that there's a real opportunity for us to maker key difference in our seniors and.
Both long term can residents with that advice so going forward.
The our DNA is what Ken talked about is call it three and 3.5% of 3.6% as percentage of revenue and if you have further information on it.
2021, and onwards will definitely do that on a timely basis.
Okay, Great and then maybe just one last question from me.
On the long term care side.
Have you noticed any any shift or change at all in the weight less for your residences.
I mean, the waitlist have gone longer or as you might notice in our long term care occupancy has gone down to 92%. It has and it's not going down because they're not people looking to more than it has gone down because of corporate 19. Many of the homes were shut down for taking any residence inn. So the waitlist as now close to 38000.
People and we do not see really any change in that.
And though and the wait list for your residences specifically.
Theres been no real real.
Material change a crack no material change thank you.
Maybe just Clari Fi.
I think I might get why you were asking but that's our growth I wanted to clarify that NOI would be in looking at about 4 million per month for the rest of the year.
Oh, Okay, and then that's mostly in the long term care segment effect.
Thank you.
Thank you.
Next question comes from Tommy Burn from RBC capital markets.
Okay.
Thanks, and good morning.
Okay, and as you kind of work to address some of the issues over the last few months.
What are some of the areas that you've identified in terms of them or are you need of addressing then secondly can you provide some color on the recommendations from from Paul buffer.
Sure. The first one I think it's really has been a learning not only.
For Canada, not only for Ontario, not only for long term care, but for Sienna because the things that door not today about the wireless.
No one knew it at three months back. So for example, the three things in my view, which make a lot of sense today, but there will not in place on the very beginning the first one being universal masking. This was implemented in in early April in long term care. We started a few days before director came out and now you see every place you go out do you see.
People getting a mask and if we would have started as much sooner or people knew.
They would have been a different outcome potentially for Canada. The single site staffing that has been a huge support and limiting corporate 19.
And the last one.
Universal testing, so we would have previously.
The test for not being done so you could have had asymptomatic patients for residents.
Living with people.
Who had no quoted at that point and without any universal testing that was not possible. So we think those three things.
Keith difference and we continue to look forward with the government to see how we can increased staffing and long term care. We have long advocated for it that the number of staffing needs to go up and from our pharma company perspective, adding the healthcare expertise and infection prevention and control expertise has been truly instrumental.
As you can when you go to hospital you.
As you would notice the amount of infection control you would have that is different and long term care long term care truly the residence Hall. So you when you going you know people bring in their own on furniture. The on bidding because it is supposed to be home like versus an acute care setting such as hospitals I will say those would be the key learnings in terms of Paul borrow.
On a ferros invest analysis on US we are reviewing it at the moment and we will figured it out some of the implementations from it.
Sorry, just any color on you mentioned that there are number recommendations that he made can you just can you maybe just harlan fewer sure item. The few of the ones that we've addressed even in the beginning is really enhanced training for our staff zeroed, making sure that people.
We are aware and reinforcing our zero tolerance policy as it relates to abuse those would be the two biggest ones that we already started as we were starting with.
Paul Board Affairs investigation, and the and the Big one is on communication with both residents and family members. So you know, that's where our call centers coming into place because you know when everyone was extremely busy with corporate 19 and dealing with it is difficult sometimes to attend to the phone and that keeps.
Family members guessing as to what is happening since they were not able to visit so those would be to three key areas staffing communication and training.
Got it that's helpful. Thank you.
And then just maybe switching gears looking at the retirement home occupancy erosion.
Pickup in July so maybe the indications today.
Your commentary seems a bit more positive can you just will provide some context on that slippage in July relative to some of the other months it seems to be in a bit more contrast, with some of your peers, we saw a bit less erosion and then just.
What you're seeing and perhaps the first few weeks of August here.
Sure enough. Thanks, you Pamina again, it's a bit.
Challenge when the universe of people, who disclose this information is very limited call. It two or three people I'm, just going on Ilim and Im guessing thats, we're comparing it to as well and really for US we saw slower decline in the in the beginning months. So year to date for example that we start if you look at.
The last three months a four month April May June and July.
The cumulative the kind of what oxy, 0.4%. So we are looking at a more from that perspective.
The thing we saw in our communities is that end of June is when long term care started to open up.
Definitely was a pent up demand of our residents who needed to go into long term care and Thats. What we saw that is really the major decline over occupancy it wasnt people moving to competitor.
Just but we also see pent up demand for retirement and Thats. The numbers, we shared in terms of a number of leads going up we have more than 100 deposits for people looking to move and before Q3, but there's usually a bit of lag between people, leaving forces people coming in and that's what we're experiencing.
Hi, guys I understand thank you.
I guess, just maybe last one for me just with respect to hospital management agreements.
Given sense of how long those will how long they will continue to I guess remain in place and.
Presumably.
The costs associated with those agreements incorporated into your I guess outlook for the pandemic related costs.
Correct. So starting with the last question first yes that cost is included in the pandemic related.
Cost going forward, there I would say auto country management agreements that Q, which have timeline to it I just not.
It's not decided finally EPS from hesitant to share the timeline.
The third one would be potentially a bit longer but the two should be coming out in short to medium term if they want to say that and again as we get a port. Furthermore, clarity if you would announce those dates.
Thanks, very much and I will turn it back.
Thank you Pammi.
Thank you. Our next question comes from Jonathan Culture from TD Securities. Please go ahead.
Thanks, Good morning.
Just a follow up.
Hobbies.
Question, there on that on the retirement side.
Yes in the in your disclosure you said that.
Composites and signed leases were nearly doubled July over June and double over July or nearly double over July of last year.
I guess two things one how long does it take for without to translate into occupancy.
Yes, so one of the deposits that I'm talking about Jonathan So there is usually.
A lag.
But we also are quite.
Focused on ensuring that people moving a bit sooner.
Because.
There is a conversation of potential second wave and no one really knows but people have talked maybe sometime in October. So we are acutely focused on having people moving by Q3, so the deposits that I'm, referring to the 100 or more.
They are all supposed to their due to move into for Q3.
And having said that we're also working towards how do we have people more win.
When a corporate 19 does come back a bit.
Bit more bigger way and that's what I talked about a staycation process of when people come in and the sub isolating.
Even though they are in the room. It does not mean they have to be uncomfortable. So there are lot of work that over time and team is doing to ensure that they're enjoying the timing of that 14 days rather than feel that they are.
They can go outside.
Okay does everybody moves and now have to sell parts for 14 days.
Thats correct.
Okay and then your.
So I guess your deposits in some signed leases were up nearly doubled versus.
Versus July last year how.
How did may and June compared to 2019 made drilled in terms of in terms of stops.
I don't have those numbers top of mind.
May and June again people are quite hesitant, because if you don't really know.
When this what happened even during the pandemic and if the home was auto retirement as it is not an outbreak we have people moving in because if.
We have decided to move and you have sold your house and you everything was done. So we have people move into obviously did that with the most precaution to ensure that were isolated.
You know that they're they're well taken care off and that we're not putting other such risk.
But that May and June active would be would be quite low.
Okay, No would it be fair to say that.
Well a july might be the the bottom in terms of occupancy based on based on the leads that you have.
But it's difficult for me to commit to something but we we hope so I mean, our deposits look promising to us and a number of deposits grow everyday which is our video is a positive sign.
So I hope that that's where that July could be the bottom.
But I think it's hard for me to committed at this point and again, we are committed to providing our monthly occupancy.
As needed.
To everyone.
Okay and then just.
One last one for me and on the long term care units that has obviously started to open up.
Do you see.
Any issues I guess, what Ken your occupancy get too given that you do have those 500 or so.
Word bets that you can no longer use and what do you think it gets too by the end of this year.
I would say our occupancy for remove those roughly 500 beds, which are taken away because of the four beds and be a funded for it.
We expect occupancy to go up to 90, 798%, they're very healthy weight, plus and again the reason to occupancy has not gone up it just because you could not except admissions, but there is a visible hi.
Im on the demand as we just talked about 38000 people in a wait list. So we expect that to go up unless you know homes going to shut down again because of corporate 19.
Okay, so that should be up sort of by the end of Q3, then that's that's our intention and thats, what you're seeing that people are moving into long term care.
Okay and its I guess, it's just way too early to figure out how any sort of funding would work. It if the government doesn't change on the change on those 5000 beds. Those 5000 board that's right.
Yes, Thats correct and sorry, I just want to correct. So you have not the movements have not started into long term care, but we are in the process speaking to lens and others as to how that would happen because again, the health and safety outcomes square. So we're just finalizing that so you might not so we might not see a big difference in Q3 as it comes to an average but it.
And that's something we're watching and it's more to do with win.
Yeah.
Everyone feel comfortable that we should be adding more people to long term care and not put us at risk.
Okay.
Thats It for me I'll turn it back thanks, Okay. Thank you Jonathan.
Thank you next question comes from Josh Thank Bob from Lauren Pain. Please go ahead.
Good morning, Hi, good morning.
Just wanted to clarify one thing.
I'm not sure if you guys have started moving.
People into the war rooms in New York LTC films.
Has that process started or you don't expect it to start.
So let me just clarify thing my answer probably confused that and so.
So first there is no and moving into long term care, Ontario at the moment, whether awarded an award the second what the second conversation is the four bedrooms would be only limited to two people in a rule.
So thats and that would stay until the end of 2020 as for directive.
Got it okay.
You mentioned.
That's your stock to patiently shows how gone up I think you said, 47% to 66%.
For the full time to part time ratios going up that's correct.
But our view allocating more stock to your patience then that is required.
What I'm trying to understand sure. So as we've talked about Karen mentioned the increase in.
Expenses for corporate 19, and the majority of that expense is related to staffing whether its screening whether it's additional staff to take care of residence and Thats, what we talked about roughly $4 million of expenses.
Going forward up but it does not factored in government funding. So we expect government funding would comment that those expenses would come down.
Okay.
And about your debt maturity.
You mentioned that you have $440 million of unencumbered assets, how much of that is assigned to your unsecured debenture pool.
Sure. So we have $540 million of unencumbered assets and our unsecured financing we have a 200 million dollar revolver at a 150 million dollar unsecured financing. So 350, the covenant we need to meet is 1.3, so call. It $450 million that has taken away for out of the fight 40 see a lot for close to 90, but.
11, or so and you can borrow additional 70 million.
From that unencumbered asset pool, our goal is to all his have some buffer and cushion and it.
And our refinancing which is coming due which a series b is backed by 26 long term care assets.
And just the value their 12, a long term care assets in it and be based on the saw the valuation work we've done.
We find between just a properties and the liquidity that we have we should have enough the ability to put.
To be able to refinance at the upcoming debt maturity of to 45.
Okay and just on.
Last one on margins so based on what you're seeing and hearing from the government.
Do you think your margins.
No margin profile has gone down your long term care margin profile has gone down or do you think auto will go down from where it was say last couple years.
Well imminently hi, yes.
So our long term carrying retirement margins have been impacted by our pandemic expenses, but really if we exclude those for Q2 and year to date those would be comparable to the 29 Keane margin.
And it's hard for us to just to follow up on it just gets harder for us to predict the model going forward and Thats why we are sharing.
Pandemic expense related expenses, excluding pandemic on margins stays consistent so.
I think it's too early for us to predict what the future might look like for both long term care retirement residences.
Thank you Thats it for me thank you.
Thank you.
Next question comes from came Anshu group does from Scotia Bank. Please go ahead.
Thank you and good morning, So first quarter next to you congrats to you that Tim Allen.
If you could give responsibilities differently.
How are you able attendees.
Okay.
We'll go to be.
It seems from.
Thank you Matt you for the question many of you might not know, but in fact started in my career in operations and attended Hotel School. So this is really coming back to my roots and to say that lost 60 days has been up LER I think that it would that waters to slow to describe the pace of what we have done as a team.
It is not lost on me that is truly is a privilege to be serving 12000 residence and 12000 team members.
I would say the highlight of my.
Last 60 days have been visiting 11 of our communities. It long term care treat retirement and speaking to team members. One on one end really talk about some of the heroics work that they're done.
During quarter 19, I mentioned in my script that than most of the water will scared of going to grocery store.
People, London to work some of them state into how long term care homes. So that they don't go back and in fact anyone at home. So there's really no awards to describe.
What the teams have done.
We did very pleased with the April with the Healthkit expertise, we were able to bring in two sienna be some of the best names in Canada, and healthcare and we have very strong operations team.
Very strong team at at our corporate office and I'm really confident about the path forward redevelopment program is you know is encouraging focus from the government on long term care to fix some of the challenges encouraging so I'm I'm encouraged and I'm optimistic about not only our sector, but definitely for Sienna.
Sure. Thank you again, we wish you all the very best.
For the rule ahead and that's it for me. Thank you. Thank you.
Thank you. Our next question comes from Troy Mclean from BMO capital markets. Please go ahead.
Good morning.
I just had one question.
Are you seeing competitors given what's happened in their retirement sector are you seeing competitors get more aggressive and either like discounting rents or.
More involved.
On the sales front, what are you seeing there any change from the prior couple of quarters.
Oh, it's it's very local Troy as you know so at markets, which have not had new competitors moving in we always look at it as dynamic pricing. So we will adjust those.
For most cases, you know Bob you have at rental increases go in and the residents are extremely supportive they understand all the amazing work, we have done when an opportunity was a cure for retirement residences. They all talked about how they're very happy the government is paying the staff extra you know that be that we they understand.
All the steps, we've taken that with screeners of the door. So not one of them talked about cost that really talked about ensure that we can to do everything we can keep everyone safe.
That's great and then just one final question.
The LDC redevelopment program has been tweet by the government.
Would it be fair to say that the read about redeveloping the assets.
Or has those has the timing of the redevelopment Redeveloping. These assets has that changed at all and and the last quarter given what's happening in the industry or do you expect to start that something in the near term.
I think the timing a change in the sense that previously we talked about Vspro redevelopment program was not really financially feasible because it is not possible to construction cost with the same in north bay than it would be on young and Eglinton and Toronto. So the fact that as regional it factors in the development.
Fees that you have to pay the land cost so I do take.
They would be there would be some pickup on it obviously, that's the conversation to habit stakeholders, ensuring what the processes, how streamline the processes to start building again.
Lenders or our pipe.
Given the space in terms of construction financing as well so that will continue on but again. These are all the conversations with with lenders with stakeholders with hospitals.
That will be the conversation moving forward as to Harvey Harvey do that.
Thank you I appreciate the color and have a great day that Detroit.
Thank you.
As a reminder to ask your question you would need to press star one on your telephone to withdraw your question. Please press the pound key.
Our next question comes from Cow will lead from National Bank. Please go ahead.
Hi, good morning, everybody.
Hi, good morning tile.
Asked this question on another on one of your peers calls.
What sort of.
Regulatory changes or operational changes.
Would you like to see that where you think that would really help.
Deliver.
Sort of better better care during this period.
Do you sort of have an idea of like the two or three things that could really make an impact right now.
I think the three things I talked about as it relates to corporate 19, three things have been nearly universal masking and you can make it a bit more broad and just talk what PPD in a bigger way. That's I think that the focus will continue on.
It was very difficult, even though because of this size and our platform you had access to PPD, but I would tell you it was.
But difficult to ensure that you have continued supply. So we are shoring up supply at this time and we have a better for break.
The single site staffing better but it was.
Great beneficial for us.
And the last one is an already universal testing. So I do think these three things should continue on and then we do have increase some staffing as well to ensure that we are putting extra work around screening and everything so I can't depending on what comes out of this pandemic, if it's going to business as usual unless it depend disappears there our learnings.
And it whether it relates to infection control, whether it's looking at staffing mix from full time to part time I think it has been a crisis and high and then I wish it wasn't here, but I think this would.
Make things or have.
Different driven the focus on many of the things that we've talked about before.
Okay.
And then just on the balance sheet.
You Similarly, like you'd pay repaid about 60 million.
The credit facility drawdown.
Q3, and that would still leave you give or take on started another lever in for me, but probably about a 90 to 100 million dollar.
Cash balances, we intensive the carry that much.
For the foreseeable future.
Yes, hi, how no.
Going to depend America early days, we wanted to be very prudent from an enterprise risk management perspective, and we wanted to make sure that all times, we have sufficient cash on hand with no quick access to financing.
Ability to support additional staffing needs.
Well persist pp annual now that we've learned more from that.
Thats why we thought that no we had the ability to repay some of that back although we expect maintained a higher level of cash on hand.
Okay.
And then the call center, but you're rolling out at both outsourced are you doing that in house yourself.
No. It's a call center, which is fully would be fully owned by Fianna with people, who understand seniors who know what's more important to residents it would be our our sienna team members whether clean in this.
In our sector, so that would be a key focus for us and we will we will start with the right mix and we will make it bigger as it generates more and more leads.
Okay.
Sorry, Karen just lastly, I just want to make sure that.
Because of the pandemic expenses.
But you're sort of expecting to see correct you'd said about 4 million in July for the balance of beer and then about 3 million in DNA.
What's your best guess at this point, yes, let me clarify that.
4 million per month, and align with most of that in long term care.
And then 3 million for the balance of the year in Genie.
Let's call it.
In each month, GMI, and therefore, the 4 million Tal.
Does not include any government funding. So we expect government funding to commitment that would reduce that number four.
Got it okay. Thanks, very much everybody.
Thank you Charles.
Thank you I shouldn't further questions in the queue at this time I like to turn the call back to Mr. anything Jane President and CEO for closing remarks.
Thank you Dylan.
Thank you to all up to you and thank you for joining our call. This morning on behalf of our entire management team and our board of directors I want to thank you for your continued support and I Hope all if you have a great day. Thank you. Thank you.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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