Q3 2020 Chartwell Retirement Residences Earnings Call
Our family and friends feel welcome and respected to this end we have adopted some of our strategies such as modifying our welcome to Chartwell program and making changes to some of the curriculum in our customer experience training for our frontline staff. We've also introduced new programs and initiatives, including developing a 14 day transition together program.
To assist residents who must isolate when they move in introducing specific customer service training for our screeners, who are the first point of contact for visitors.
Modifying our life enrichment best practices for Cobi 19, developing a healthy living series. So that residents can remain active and connected.
And modifying our care service offerings in Ontario retirement residences to ensure that we are meeting the needs of our current and future residents.
In terms of families and loved ones, we continue to send communication to them via email every week as well as more often at the home goes into outbreak or suspected outbreak. We're also seeing our residents families more often as visitor restrictions have eased and in many cases as loved ones have chosen to be designated as essential caregivers we.
I believe all of these efforts are helping our retirement residences feel like home for our residents and their loved ones and their loved ones feel welcome even during this challenging time.
I continue to be extremely proud of our chartwell strong team, including most importantly in our front line workers and our management teams and our residences as well as our corporate team members, who support our homes their hard work and dedication.
And fearless effort to contain this virus.
We will continue to help us to make People's lives better.
Better.
Yes.
Oh, sorry, now I'd like to start I'd like to turn it over to Sherri Earth [laughter].
Our chief financial Officer to talk about our financial results.
Thank you very much Karen.
As shown on slide eight in Q3 Twentytwenty, our net loss was 6.8 million compared to a net loss of 8.8 million in Q3 2019.
For Q3, Twentytwenty AFFO was 38 million or 17 cents per unit compared to $53.7 million or 25 cents per unit and.
In Q3 2019.
Our same property adjusted analyze decreased by 13 million or 17.2% in Q3 Twentytwenty.
Same property occupancy was 83.3% in Q3, 2020 compared to 89.7% in Q3 2019.
In our retirement residences same property occupancy declined to 82.5% in Q3, 2020 compared to 88.3% in Q3 2019.
Permanent move ins were 75% of previous year volumes and move out activity continued to be slightly below previous year levels.
Through Q3, we saw increases each month over the previous month and move in activity along with a slight increase in move out activity.
In addition to the impact of lower occupancy on our Q3 results, we have made investments and initiatives to enhanced enhance resident safety and staff safety and our pandemic expenses continued to exceed announced government funding by.
By approximately $4.1 million for Q3 2020.
The majority of our pandemic expenses are for additional styles to provide screening enhance cleaning disinfection to expand dining service hours to facilitate physical dispensing and in many of our retirement residences for additional care, where families were not able to provide assistance in person or where governments weren't.
Not able to provide homecare services.
Due dates investments and our Ontario long term care homes are not yet fully funded.
Reduced marketing food supplies and repairs and maintenance in our residences and contributions from our acquisitions and development, partially offset our reduced occupancy and unfunded handling related expenses.
Turning to slide nine I will discuss our same property operating platforms results.
In Ontario occupancy was 77.5% compared to 83.8% in Q3 2019.
And allied decreased $6.9 million or 18.3% due to lower occupancy and genentech related expenses net of funding of 2.4 million higher property taxes utilities and office expenses.
Which were partially offset by rental rate increases in line with competitive market conditions.
And lower food and marketing expenses.
In Western Canada, our occupancy was 88.3% compared to 95% in Q3 2019.
And allied decreased $1.5 million or 9.9% due to lower occupancy higher property tax staffing costs and office expenses, which were partially offset by rental rate increases in line with competitive market conditions got.
Government funding net of pandemic expenses, and lower food and marketing expenses.
In to that occupancy was 86.7% compared to 91.2% in Q3 2019.
And align decreased $3.4 million or 21.8% due to lower occupancy higher property taxes, resulting from a rebate in Q3 2019 for which there is not comparable amounts in Q3 2020.
Pandemic related expenses net of funding of zero point Sixmillion.
And staffing costs, which were partially offset by rental rate increases in line with competitive market conditions.
In long term care occupancy was 88.3% compared to 98.8% in Q3 2019.
And Allied decreased 1.5 million or 17.8% same property adjusted in allied decreased $1.2 million or 16% due to reduced preferred accommodation revenues and increase in nursing and pandemic expenses that exceeded government funding.
Turning to slide 10, you will see our monthly occupancy.
On October 2020 occupancy declined 0.3 percentage points.
The pace of decline in occupancy has steadily slowed since the onset of the pandemic in mid March with move in activity increasing each month.
Leasing activity has been slower in October with increased restrictions on in person tours in certain of our residences and with elevated COVID-19 cases in the community.
We collected substantially on rents and service fees for October and November consistent with our past experience.
As noted we continue our investments to protect our residents and staff and reduce the spread of COVID-19, we do anticipate costs decreasing as we move to a more steady state our priority must be to protect our residents and staff and as such our reduction in costs is expected to be gradual and will be based on careful.
Risk assessment we.
We will rationalize and improve schedules, where and while single site stopping restrictions remain in place.
And where we have added staff to provide additional services previously provided by families on home care that has not been available we will work with our residents to assess additional service revenue opportunities on a go forward basis.
In addition, some discretionary corporate projects will be preferred.
We continue to advocate for the government to fund the governments to fund incremental expenses and home care services that we have replaced out of necessity to ensure that our residents are cared for appropriately.
In addition, we are in the process of implementing the Canada emergency wage subsidy to to maintain quality jobs for our employees, who provide necessary services lakes.
We expect to apply for approximately $3 million to $4 million of staffing support for Q3 Twentytwenty.
As you can see on slide 11 at September Thirtyth, Twentytwenty or liquidity amounted to 357.8 million, which included 51.4 million of cash and cash equivalents.
And $306.4 million of available borrowing capacity on our credit facilities.
In addition, our share of cash and cash equivalents held in our equity accounted jvs was $7.6 million.
At September Thirtyth, Twentytwenty, our unencumbered assets had a value of 928.8 million.
Our mortgage maturities remain well staggered with an average term to maturity of 6.4 years at September Thirtyth Twentytwenty.
Our interest coverage ratio was three times as timber Thirtyth 2020.
Our debt to gross book value calculated using the historical costs of our assets was 52.6% at September Thirtyth Twentytwenty.
Our net debt to adjusted EBITDA ratio was 9.1 times since.
Consistent with our business strategy to build and purchase high quality stage, but the our new properties. Our portfolio. Currently includes several new properties in Lisa.
In Q3, Twentytwenty four newly developed property properties and one recently acquired property.
With an aggregate gross book value of 274.5 million.
And weighted average occupancy in Q3, Twentytwenty of 44.2% generated adjusted and ally of 0.7 million in Q3 2020.
Upon achieving the expected stabilized occupancy at 96%. These residences are estimated to generate annualized adjusted and a lot of 20.3 million our share of ownership.
Our net debt to adjusted EBITDA metric when calculated with the additional incremental NOI These properties as though stabilize.
Of $18.1 million would be 8.6 times.
Turning to slide 12 as life delegates at November 5th Twentytwenty liquidity amounted to $408.6 million.
We expect to be able to meet all of our obligations as they come due utilizing primarily cash flow generated from our operations property specific mortgages secured and unsecured credit facilities or term loans.
The pandemic has introduced significant uncertainties and we continue to monitor the situation closely.
We have 14.2 million of remaining mortgage maturities and 2020 of which 12.4 million or CMHC insured.
The MHC refinancings for 10 year terms are currently being arranged approximately 1.75%.
In Twentytwenty, one we have 244.3 million of mortgage maturities.
Of which 37.5 million are currently CMHC insured.
The strong lending relationships and scheduled refinancings, our mortgage maturities in Twentytwenty and Twentytwenty one are proceeding in the normal course with top opportunities available.
Projects under construction are budgeted to acquire an additional $109 million to completion. This includes 52.5 million related to the redevelopment of Chartwell Valley class, which we anticipate financing with construction financing.
Sorry, but she still too has achieved stabilized occupancy as defined in our agreements with atmel.
We expect to complete the acquisition [laughter], 5% interest in this project in Q4 Twentytwenty and are currently in negotiations on pricing.
We anticipate settling the purchase price by assuming the related construction financing a 37.3 million.
And repayment of the outstanding mezzanine loans 3.9 million with the balance to be paid in cash.
Regularly reinvest capital in our own property portfolio with the goal of growing our property analyze and protecting and maintaining our property [noise].
Due to restrictions in accessing our residences only emergency capital works were undertaken during the first wave of depends on it.
While we have begun to allow contractors into our buildings with very strict requirements on infection control practices, we do anticipate that our county Twentys capital about investments will be approximately 85% of our historical and.
I will now turn the call back to flat to Rob.
Thank you Sheri [laughter]. Thank you for your time and attention. This morning, we would now be pleased to answer your question is that one.
Oh, please open the lines.
Certainly thank you [noise].
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The first question is from Brandon Abrams. Please go ahead. Your line is now open.
Hi, good morning, everyone.
Yes.
Despite a difficult question to answer but just as it.
Pertains to retirement occupancy it looks to have stabilized here over the last few months at around 82% just wondering your expectations over the next few months.
And you know based on.
Which whichever indicators.
Youre looking at whether be deposits.
Site visitor tours et cetera, maybe just a.
You know would you expect a just a trend you know maybe a little bit upward a little bit downward.
Or or stay relatively flat through a kind of the fall and a remaining fall and winter.
Winter months, just maybe some color there sure so.
I'll give you some color sort of on [laughter] occupancy just overall since the pandemic and where where it is and where we said going so [noise].
Wave one we really as we all know what the society really shutdown. So we would have had very limited move ins and that's when you would have seen our our occupancy and decline when the summer came in we were able to start to open up we actually saw.
Improvements in our occupancy in August and into September sorry, you made it a little bit is influenced sorry in move ins and so we see that as a good sign October when we are now seeing waived to that's where we've a seen a bit of a dick.
Klein.
In in leases, but the other thing I would say is we're not shutting down across provinces. The way we were before it's being done in these pockets, where they see community spread and so we you know we saw that in October, but we're already starting to.
I see some of those communities open up so in Ontario, They put us in either high alert or alert status, but then they take a community out of Oh I've got started so that we can do personalized tours and I think we'll start to see a pick up where that happens and the other thing I would say.
Is.
The need for the seniors who are living at home are not changing if anything they're increasing so you know that that I think Uh huh.
Those those needs will have to be filled I think people are probably thinking about whether they can actually stay home for the winter as opposed to whether they need care and service in retirement homes and then we have a number of strategies in place as well, whether it's our make up a friend or a neighbor referral program.
Or winter State program so UBS.
That's just a bit of color on where we see that going yeah. Brad of course in this environment nobody will be able to give you any kind of definitive answers or numbers of where we're seeing what is really going to be dependent on the severity of restrictions that remain in place or the openness that remain in place and and you know where do.
In all we can to encourage people and have held them understand the safety and precautions that we're taking our residents is to make that to help with their decision to move in scaring pointed out the pent up demand I believe is in the system and when these restrictions are lifted or the case counts in the community starts to.
Go down my expectation is that we will start seeing much better pace of move ins and recovery, but when that will happen is at this point of time very hard to predict.
Yes, no of course, a difficult to forecast in this environment for sure and maybe just.
On a related topic of rental rates it looks like.
Overall itself. It's you know you've been able to hold rates fairly from maybe even increase in certain instances.
You know where occupancy is you know within your portfolio and the sector I know historically.
You know that's not really an area, where you want it to a lot of the reduced rates are given set those because it could be a bit of a slippery slope I'm. Just wondering if you know if that philosophy.
You know may have to change.
Over the near or maybe medium term, especially as.
Potentially some of your.
Yeah competitors, who are not as well capitalized smaller operators.
Ah depending on what they do with market condition. So I'm just wondering if you get to give some color there.
Our philosophy is not changing we are offering value to our residents and lifestyle and quality of lifestyle that we provide in our homes and we are not going to be a competing on discounts with other people, we much rather understand the customer.
I would love to understand needs, what exactly they value and what exactly matters to them and then do our best to address those needs and if it ends up being a few hundred dollars discount that might be it but in many cases, that's not what the customer really wants and especially in these circumstances, where you think about safety when you think about well.
Staff and quality of services that people provide this.
The discounters, probably is not the first thing that anybody is thinking when they come to the residences and so not only our philosophy is not changing as probably the more reinforced in the situation like today.
Okay, and then maybe just on the unfunded pandemic related costs of just over 4 million is that.
Yeah, a level that you would expect to incur over the next few quarters just for modeling purposes.
Yeah, I mean, it is a bit hard to predict and we continue to advocate with various government and in relation to incremental funding.
Last night, there was an announcement from the Ontario government, which will be absorbed about 1.2 million of the Ontario retirement expenses that we would have Ah. We would have included in our results and.
On a go forward in terms of monthly expenses, we wouldn't look too and stabilize the number there Brendan for now.
Right. Okay. That's helpful I'll turn it over thank you.
Thank you. The next question is from Jonathan Culture. Please go ahead.
Thanks, Good morning.
First first question just on the insurance suit you talked a little bit about me Mdna about didnt.
Increasing rates, one cousin insurance typically run historically as a percentage of revenue.
Okay, well, we'll we'll now turn on that we'll have to get to that number but as you know our expenses are let's say in the retirement of the 16% labor.
10% foods and Realty taxes and utilities after that whatever is left is as not as much in sort of overall expenses.
Yeah, I'd be guessing right now our number probably less than $10 million in insurance premiums yeah for the year.
Thats historical so I don't know if that I understood I was trying to get well, yes, I'm just trying to get a sense of.
Hi, good profit if I double that.
What that would sort of be thanks.
And is that sort of the way to think about it going to be that high.
Oh well.
No. It's all going to be that high I will maybe turn it over to Jonathan just to give you a bit more color on what were seeing there in the marketplace were up in the middle of the renewal process right. There sure. So it is it is a very hard market and insurance generally and all old bosses and I'm sure.
And is partly due to the industry running and partly due to our market on insurance. So we're working on our renewal him renews pretty shortly.
We're looking at our retention levels are deductible levels and and a premium you pay.
We so we haven't settled on what that will be but we're pretty confident at this point.
But we're going to have appropriate coverage.
And and you know being mounted premium increases yet to be determined, but so we'd be looking to now.
Yes, yes, 40% would be a number that we're certainly not think it's going to be more than thats, probably more scale.
He said all that we don't think that ensuring climate properly or appropriate to reflect the actual risk, but we think there is a we think about risk has been greatly mitigated by or will be greatly mitigated by legislation.
Legislation in Ontario.
That would protect.
Service providers like us to the extent you raised your nitrogen come to the extent repaid guidelines and that legislation is already embracing busy so.
We think that the risk of error of them that's been reduced.
Okay.
That's helpful.
Switching gears, just I know you probably won't see as much because you're in the negotiations with the audible but.
Oh, how was that.
How has that changed versus the last couple of assets or other change relates versus the last couple of assets that you bought bottom earlier this year.
How are they looking for difference and valuations.
Oh, So you know to just start off we we are very keen im excited to get those buildings connected to our existing building to do.
And as you noted we're negotiating the price so we can't really or won't really get into where we expect to land on that.
But we are in those negotiations and we expect to close in the next few months in terms of change there haven't been a ton of transactions over there. So it's hard to see how pricing has changed generally there's a lot of uncertainty.
Due to the pandemic and I guess hesitancy buyers parts to deploy capital and that has been tempered by.
What we see is a very low interest rates, so all that to say.
Not a whole lot of data points out there and we're we're in the vicar discussions with basketball purchase price so more to come on that.
Okay.
And then just last one for me, Ontario Government I think last week announced so that's it's selling some.
The excess land for.
Purpose built long term care development is that something that you guys would look at any of those three parcels.
We are we are looking at those three parcels each of them comes with a different requirements on size of bill. So we are actively looking at that as we look.
We use to redevelop or existing quasi homes and and these new programs, which we also currently look huh.
Okay, and then with those and maybe you can or cant answer those but would those would those properties given that there is a long term care component would it would it sort of limit the buyer group to basically.
Operator's current operators and LTC properties.
It's still a little early to answer that question, but I I'm I suspect it would given the fact that there isn't LPG component and and I don't think there are a lot of people looking to enter the space that don't have that kind of operating experience. So I suspect the answer is yes.
Or they can eat management or they will be Matt.
Okay. Thanks, a lot I'll turn it back.
Yeah.
Thank you. The next question is from Chris <unk>. Please go ahead.
Good morning.
I wanted to circle back on Brendans questions regarding occupancy.
Appreciate we can't.
With restriction that we don't know what the pace of move ins might be.
But what about overall lead generation, how is that trending on a year over year basis.
I mean, I would imagine part of the change would be commensurate with the.
How much marketing that you're doing but just any color on lead generation and.
Just also curious on virtual tours versus inversion tours. If you maybe there's just not enough information at this point, but if you've noticed any.
Difference in closing ratios between the two types of activity.
I guess it varies month by month, depending on what the restrictions are in place are out there clearly when everybody you know people hear the escalation and number of community cases, you know that the natural reaction from people is to hunker down and not really start looking for moving so.
The lead generation has been slower compared to prior periods, it's better than it was in the middle of the first wave of fan dynamics. So I think it follows sort of discussion that Karen had answering Brandon question, it's better than wave one it's not as good as last year and that's applicable to lead generation initial contacts move ins.
All of our kind of leading indicators are going in the same direction, it's not as good as last year, but better than what we saw in wave one.
And I just want to comment we can do personalized tours and come back and Western Canada. It's it's just at Ontario wherever it we're restricted and not fit for our homes are in high alert on alert, which is changing on a weekly basis. They are poor communities in and out mostly in.
Ben all in our case it was reduced the number of homes a week over week that we're in those higher staff. The category I'd also say, it's just like all of US are getting used to a webex and all of the different zoom whatever we are using to do business on our sales.
Four cents I would suggest on a very good job of learning how to use the new technology to do and they're not just virtual tours of personalized virtual tours.
With our prospects and their families and in our trading has gone very well. So you know I I think the fact that we have with this kind of technology now has been very advantageous for US and then people do of course you know.
Come into I'd be able to sign their lease and sort of see there, they're a sweet before they actually move in.
Okay. Thanks, that's good color.
And then maybe a series of questions just regarding different legislation that's out there.
The this year the wage subsidy.
Do you expect it to potentially receive more funding in Q4, and just technical perspective, how how how is this going to.
So through on the financials.
And then.
Two other quick ones that bill to 18 that was alluded to sort of timetable as to when that May pass and then the occupancy protection funding in long term care.
No I think it's till December [laughter] any kind of update on what's happening there that's it for me. Thanks.
Sure. So I'll take passes first and it's a function of the revenue decline and the factors for that time period and the federal Federal government program and those factors have been changing the program has been announced to go through to June of Twentytwenty. One at this point, but the factors will decline.
Over time, so we do expect that we will continue to be eligible for certain entities. Its defined at the eligible employer level. We will record. This the same way we are recording other government funding, which is in our retirement residences hi, It is net in the expenses.
And in our Ontario long term care homes. It is growth so you'll see at revenue and and experiment.
So now it's again it'll be mass depending on the revenue decline and the factors in place for the government for Q4, but it should continue on and so at this point, we announced on timeframe is touching 2021.
And in terms of the occupancy protection.
We would have I mean, it's about 4500 beds that come out of the system by closing the three and four backwards too I'm not smart enough to occupancy and we are very optimistic that that will continue on through two through the next wave of the pandemic into 2021 and as long as we're in this.
Position of only two occupancy in those rooms.
For a bill to 18.
In reading, so we would expect it to become long soon.
Good I know that it's a.
Got bill or proposed by a number of detriment of the majority government. So we don't expect there to be any issues, but.
Absolutely yes.
And we are hoping that once that is in place that mitigates some of our insurance issues discussions as well.
Absolutely thanks very much.
Thank you. The next question is from he meant you could Jeff. Please go ahead.
Thank you and good morning.
So just on the coal would cases in your portfolio. It seems that the number of homes.
In outbreak in November a much less than the number of homes in I'll dig into a bump up say to me.
So is the way you know the public health is that getting a woman outbreak has the definition change is fine.
Oh is it mostly because youre chocolate that disappeared was flying more testing has been done most people the causes being followed.
Yeah, Yeah, I. So a few things I'd say first of all we do understand the virus that or and the asymptomatic.
Nature of it. So that's that's been helpful and where I said in my remarks that that testing is better it's better than it was and again that helps and there's more sort of consistent testing.
I would also say that the key to this is to have less invasive more rapid testing.
And and.
No federal loan programs, the federal government and provincial governments have been looking at that it looks like there could be some thing and there's talk about a long term care retirement homes with these vulnerable populations long term care in particular being a prioritized and Ah for that for sure. So.
Our processes have been defined any we were we were developing processes in wave one there now in place and we have these I pack specialists that helping in long term care, we have we don't.
We feel like our partners and the health care system. That's time are helping through hospitals and public health et cetera. So that those things are all helping us to be better positioned in wave two but you can't underestimate that you know this that there is you know.
At this point, obviously no vaccine for this and and our folks are vulnerable. So it's why we continue to any particular focus on the need for less invasive rapid testing for our sector, which I think will help with the spread and also help us to fulfill.
Our role in retirement, which is to make sure that we're providing Karen services for those residents as well.
Sure.
In terms of middle of the definition like if the stock has been to covert positive.
The yield on the Bill did it maybe a die a woman to Albany or would you sort of you also stopped acquired do you then well be able to hold the dog so public health determine whether it's an outbreak or not and I would say that there is not complete consistency between public how across the country. So.
It does depend.
And then we as chartwell decide because you can either be in suspect to be not an outbreak he could be in suspected outbreak.
Particularly let's say if you have maybe one staff member and they are not had a lot of contact in their home and isolating and then there are our outbreaks now sometimes we decide as well at chartwell, even if you're in suspected outbreaks that will put some of the measures in place that are more what we call.
Level for outbreak, but at the end of the day that the actual.
Determination of an outbreak is made by public health.
Got it and then the lungs, all holders of noted I'll break so I'm, assuming the new additions or the mortgage on it Mr turned in those homes.
How long you know you admission was not we will not be allowed that.
Well it would depend on the length of the outbreaks that some of the outbreaks Ken I happen to be over within 14 days and so it can be very short and then others you know it.
Can be longer it it just really depends.
And so I can't give you an exact number but at a minimum of Oh 14 days.
Got it Okay, and then you know in terms of the discussion will focus favorites and secondly.
If I remember correctly when youre in dire focus the first move was on safety and I'd be marketing will seem slogan was going to go to a pause.
At this time, you know the market he or she is going to be ongoing as usual on the site as well along with the additional safety protocols. I mean have you snore Barlow your fuel marketing can be.
No we have a marketing campaign in place and have for the last number of months.
And we never completely closed down even in wave one for submissions that we had very few and and then that would have picked up certainly in the summer and we've been running our marketing campaign, just just like the the rock and the rest of the country that provinces, we're balancing between.
I mean.
Safety, which is first always will be first and foremost, but that how do we make sure that were also providing care in services to residents are to seniors are in need and the community. So for sure. We are still open for business and.
Balancing that with I'm, making sure that we have the highest I packed standards and and and good programs for our residents. So that they stay connected as well because its both physical and emotional or focus that we have.
Got it and then just switching gears on the C pulse cookie into why expectations next year. I'll. Then you can you can get back to 2019 levels well totaled 31 or do you think it might take longer than that and all the people I mean your comments you made a comment that reduction in cost will be gradual.
Oh I'm in how Brad you want to do a team. So you know that should be given the circumstances.
Well. These are the questions that we actually having a very hard time, we're asking ourselves. These questions. All the time because the answer to all of this is depends right I fundamentally believe that there is a pent up demand in the system I fundamentally believe that people that couldn't move in now for seven months.
The need hasn't changed and so they need the services and they're struggling in their homes.
And so when the restrictions are over when the sentiment changes in in the public we should see improved demand for our services and recovering of occupancy your question about whether it's going to happen in the first quarter of 2021 second quarter of the 2021 or next month, we just don't know.
So it's really hard to answer these questions because we just don't know when things will open up and when they spent of the mental materialize to our homes, but I do believe that fundamental it will.
No. That's helpful. I totally understand and then just finally, a couple of questions on the balance sheet that is making it goes on changed I think we all global change too negative.
What could trigger a potential change in credit they didn't care and then how much room do you have more on the better the dollar just conversations.
Right, well and we've maintained ongoing discussions with DBRS and as you mentioned you know the rating was maintained and we have indicated that we will be a little higher on our dot levels and that slight dvrs has indicated.
Has moved it to a negative outlook.
And you'll see that you know Sally.
Sally could for example is a project that is five years in the making and we felt compelled to move ahead with that and given the economics and fundamental returns thing that were compelling along with our other development projects. So that will be a little higher or we are the range. The DB Ross is provided on net debt to EBITDA is.
Eight to 10 is there a range for triple B low and that is available in their world report.
Got it okay. Thank you so much. Thank you for the call large on the book.
Thank you. The next question is from Tom Lee. Please go ahead.
Hi, good morning, everybody.
Good morning.
How many of your Swedes rate now would sort of be.
Granted from being marketed traditionally covered I'm, assuming that you've got breaks or you know where were seeing the cases right now of a broader population.
Jim about sort of how many like of your sleep right now or so.
Well, we cannot do the typical.
Yeah, you will see that list of properties or an outbreak on our website on the call that 19 banner third during the entire third highest 13 retirement homes was as of yesterday, where we have outbreak. So there are no visits or move ins or anything that's happening and those 13 homes and then we have homes that are in various.
Zones in Ontario, where they tours are are not allowed because of the community spread into locations, where these homes are are and so that's about 50, yeah, but were assessed definitely without still marketing and still doing virtual tours.
Tourism and.
Sales or.
Our occurring even in those homes, it's just that personalized tours.
Right.
And I guess like as we've had to adopt your lucky you eat into the sort of virtual tours.
Are you talking about the of the view now that like.
This is a.
The customer response is pretty decent the cost to you know, it's an attractive cost profile to do a lot of the stuff were sort of like you think this is going to become part of your you know way forwards and post handler, yes.
Yeah, it's interesting right, there's always things that you learn through crises and salmon.
Certainly I think this will just be a tool in our tool kit and that we would have fat.
Family members, who have you know been helping reticence try to select a home. This is always we've had this and they've been out of town and now we'll be able to use this technology to help that adult daughter, let's say see the retirement resident virtually so.
Yeah, absolutely think this will stay as part of the size of what we do and it was it was a great personal experience for me I recently moved to a parent into a home and my answer is based in Vancouver on the island and we actually both got to see where where my parent was moving too so.
It was it was a really positive experience for her to know where her sister whats going now.
Got it thanks.
And so you had mentioned sort of over the course of Q3 that the move out rate has ticked up without surprisingly close.
Anything surprising it up immediately ticking up or anything particular, drivable I know nothing really surprising and you know it was in the timeframe that things were reopening and and that is where we would have seen some increased move out rates and.
And there is a point at which you know in our retirement residences that isn't the right setting and moving long term care is not very different different setting.
So that is certainly what's to be expected as things reopen do that nothing surprising yeah. Okay.
Okay.
And I have to think but you know the cost of providing your services.
Finally to stay elevated for a bit here, while we're continuing through this growth continuing through this.
You do you think that you'll be able to a new area, but.
Our unit price so our unit packaging with service revenues to try and better optimize and manage that cost better.
Certainly weve seen a you know we're now that we have sort of more of the playbook for how we manage and tools in place in terms of data and reporting on that we are now sort of much more much more able to manage dots that so we've got tools in place and then maybe I'll turn.
Next to Karen to speak about some of our other strategies. Yeah. So that's an example of our costs are that bad PT. He is definitely stabilized. Its you know the unit price for all kinds of math gallons et cetera is reduced.
You know, we're working hard to continue to.
Ah recruit our own stock.
Because you know agency costs are higher so we have a pretty fulsome national campaign to do that and staffing costs are our highest cost so that will certainly help as well.
I and you know we are looking as well at how do we provide additional care in retirement homes for people, who maybe are on the waiting list for a long term care or wanting to stay with us longer which could help with additional revenue there.
Yes.
Okay.
And then just on the Bally clip a redevelopment.
Could you maybe walk through like how you sort of expect the cash flows to play out just under this new funding regime. Just so we have an idea like how to think about it it sounds like you're still because we're going to have to front most of the upfront construction lead acquisition cost that kind of stuff and then this development grant.
Kicks, then somewhere during that process maybe.
Maybe you can just give us an idea of how the quero, yes, there's two components of the funding we will front all costs until the building is completed then there is a 17% on certain costs grant that comes into play once the building is billed and then there's capital funding subsidiary that will be trickling in over the next 25 years.
Okay.
So, it's but I'd be out of the construction crop up and how that's how long would you expect the construction process to be for like a project with them.
We expect to open it in the first quarter of 2023.
Okay got it perfect. Thanks, very much guys.
Thank you.
<unk>.
Thank you Linda.
The next question is from Tony Blair. Please go ahead.
[noise] bakes into our everyone just with respect to the credit facility noticed some changes in terms of the occupancy requirements. There can you maybe just comment on whether you're seeing any I guess broader changes in underwriting I guess, a among lenders whether it's you know loan to value.
Or even spreads.
Oh, no we're not seeing so credit facility the special circumstance, where the secured assets that are securing these this facility a there's an occupancy requirement on those assets and obviously doing pandemic or some of them fall held below and we work with our lenders to make sure that they can.
You need to maintain their borrowing capacity for us and the discussions have been very positive, but its unique to that particular facility. So the general lender requirements from what were seeing in our negotiations with CMS C or the lenders on other type of financings have not really changed.
Good to hear I guess, just in terms of I guess sticking to the credit facilities and the I guess trend change from DBRS two to negative is there any change in the cost or was that only occurred on a rating change.
Only occurs on the rating change.
Got it.
Yeah, I'm not sure if you have it available but have there been any instances where residents. Perhaps you know contracted coal did hopped are moving in enter into retirement over the last few months.
Oh the residents now the homes that are in outbreak have residents who contracted coal of it. So you know some of them may have most recently I'm not sure. Your question Pablo maybe if it's clarified.
Yeah, just seeing if you know whether you.
You know really trying to get a sense of I guess, you know the infection prevention, that's been implemented and it seems to be going well, but of course, you know the number of outbreaks have increased as the pandemic has has research. So I guess you know just trying to get a sense of it's from existing residents.
Where maybe outside parties or family members came in.
Or ways or whether you just trying to get a pulse and whether you know the ability to prevent you residents from contract yet you know it's working.
Yeah, I mean, Karen described all the activities that we pay in conjunction with the public health partners to prevent the spread of the virus. The reality, though is our homes are located in communities and communities have increased number of COVID-19 cases were not in a full locked down and will I hope, we'll never be idle.
I think we will and that means people come into our homes that service providers. Its families. It's our employees and you know it that's when they outbreaks happen that we work with public health to trade the context understand where were specifically this this virus gain but it's all of these.
People that are bringing the virus into into the homes, including our residents who are going out to the community for visits into that just popped out of their homes hospital appointments. So it's all of these things and that's why we cannot stress enough.
They need in their rapid testing for our homes you know we have been saying from the beginning of they spend dynamic there's probably not a silver bullet that's going to solve all our problems. We've now I think fixed everything that we could they the remainder piece. If this rapid testing because even nowadays improved testing regime that we.
Having ontario, it still takes at least 48 hours for the test to come in and people shedding. This virus five days before they become symptomatic and so you. Two days is just too long. If we had this rapid tests I think this would solve a lot of our problems and put more people into kind of safe environment, and we knew exactly how to deal with.
People, who are positive we know exactly how to deal with people who are positive. We just don't know whether they're positive.
Fair enough.
Yeah, I know for sure hopefully this is this do testing does come through and thanks for the color I guess, just really one last one for me.
Just on build to 18, you know it cost Weve got effectively eliminate the risk risks associated with the existing I guess proposed or three proposed class action that have been filed.
It mitigates the risk it doesn't eliminate the risk because there's there's nothing that would stop a plane to its councils and I guess restating or re characterizing or claims I just think it's going to make the bar a very or the threshold very high in terms of improving.
Any damage caused is is is is worthy of losses. So [noise].
I don't think anything can eliminate the risk they are going to be for these lawsuits over time over all sorts of stuff, but it sure whos.
Thanks, very much I will turn it back.
Yes.
Thank you and there are no further questions registered at this time.
So I will turn the meeting back over thank you.
Thank you Anna and thank you everybody for joining us today as always if you have any further questions. Please do not hesitate to give any of US a call goodbye have a gradually again.
Yeah.
Thank you.
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