Q4 2020 Chartwell Retirement Residences Earnings Call
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Okay.
This conference is being recorded.
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Good morning, ladies and gentlemen, and welcome to the Chartwell retirement residences Q4, and year end 'twenty 'twenty financial results Conference call I would now like to turn the meeting over to D. C O blood flow Dar ski. Please go ahead.
Thank you Louise and good morning, and thank you for joining us today.
A slide presentation to accompany this conference call are available on our website at Chartwell Dot com under the Investor Relations tab.
Joining me, Karen Sullivan, President and Chief Operating Officer, Sherry Harris, Chief Financial Officer, and Jonathan Block, Chief investment and Chief Legal Officer.
Let me remind everyone that during this call we may make statements containing forward looking information on non-GAAP measures I direct you to our M DNA and other security filings for information about the assumptions risks and uncertainties inherent in such forward looking information and details of such non-GAAP measures more specifics.
I direct you to the added disclosures in our Q4 2020 MD&A under the heading COVID-19 business impact and related risks for a discussion of risks and uncertainties related to the pandemic. These documents can be found on our website or at SEDAR Dot com.
The COVID-19 pandemic has had a profound impact on the lives of our residents their families and our employees I am extremely proud of how our people from our residents to stop so on corporate support teams responded to this tremendous challenge day. After day, they showed up and stepped up to put the safety and wellbeing of our resident.
It's about anything else.
By these extra ordinary efforts the virus tragically claimed wireless of some of our residents our thoughts are with those who lost loved ones to this disease.
The impact of this pandemic on our business has been significant the large declines in occupancy on the extra ordinary investments encourage to protect our residents resulted in elevated debt levels and reduced capital allocation to our growth initiatives, yet I remain optimistic about the long term prospects of chartwell the accelerating.
Relative to the seniors population the slowdown of new construction starts and the pent up demand for our services will support occupancy recovery once the various restrictions are eased.
Most of all I am confident in the ingenuity dry drive and commitment of our staff, who are ready to welcome new residents and create exceptional personalized experiences for them and their families.
It was inspiring to see that despite the pandemic and related stress <unk> 44 per cent a child with employees, who responded to our employee engagement survey strongly agreed that they're very satisfied with Charlotte as a place to work at two percentage points increase from 2019.
It is also a lot of pain incidents that 96% of our residents and 95 per cent of the family members, who responded to our listening to serve you better survey stated the chartwell took important measures to keep residents safe during COVID-19, and 94 per cent of family members felt that their life was were safe at Chartwell.
We're pleased that the pace of vaccination rollouts to our residents and staff has recently increased as of March 31.
On a 'twenty 'twenty 'twenty, one and our Ontario long term care homes 90 per cent of our residents and 59 per cent of our staff.
<unk> first doses of vaccines and <unk> 84 per cent of residents in 46 per cent of staff received second doses.
Thailand residences 74 per cent of residents in 34 per cent of staff received the first doses of vaccines and 23 per cent of restaurants in 22 per cent of staff received second doses of vaccines.
Weeks, we have also seen a decline in the number of outbreaks of our residences on the decline in residences stuff case counts as of March 3rd 2021, 12th of about residents retirement residences and for long term care homes, wherein outbreaks with a total of residents case count of 25 with <unk>.
No active resident cases in our Ontario long term care homes.
There's more seniors are vaccinated in our residences out of the community at large with the expansion of rapid testing and the gradual easing of restrictions we expect the pace of new residents move ins and occupancy to begin to recover.
I will now turn the call over to Karen to provide you more insight on our operations Karen. Thank you plot turning to slide five I want to begin by talking about on measures that we've put in place in Q4 and the early part of 2021 to respond to wave two of the Pantone pandemic in our properties across the country are.
On infection prevention and control practices was augmented with additional senior level resources with both formal expertise and practical experience to support the long term care and retirement platforms.
Leaders were able to assist individual homes and residences that were in outbreak and develop enhanced education and compliance material to support all of our homes.
Included improved auditing tools and clearer expectations with respect to appropriate use of PPE hand, hygiene and surface cleaning.
This was particularly important with the introduction of new variants of the virus and the delay in the vaccine rollout.
The other key ingredient to managing effectively through the pandemic has been our centralized recruitment campaign to assist us to have appropriate staffing levels and to minimize the use of agency staff.
These initiatives included included working for Chartwell Wednesday, virtual hiring events and reassigning some of our corporate staff to assist with resume reviews interviews et cetera, all of which resulted in our ability to hire nearly 6000 employees since mid March.
We also put in place a centralized hub to assist our long term care homes to quickly access agency staff that had already received a negative COVID-19 tests and have received mandatory chartwell training.
Our long term care team in Ontario, as well as our properties in Alberta are also putting in place Pan viral antigen testing, which is an additional screening tool for staff family members and visitors in these homes with the most at risk residents.
Also continued to provide daily support through our critical incident command to ensure that we're meeting the various and evolving directives in all four provinces, where we operate in addition, our 24 seven hotline operated by registered nursing staff field at almost 10000 call from our homes throughout 2020.
We also continue to provide a consistent supply of approved personal protective equipment to our homes through both on a regular supplier as well as sourcing our own products. So that we can ensure timely distribution and take advantage of more stabilized prices as production improved.
I'm pleased to say that based on all of these efforts we have significantly reduced the number of outbreaks in case counts as just described by Bob I'm, especially proud of our long term care team in Ontario, who worked closely with their partners from local hospitals and public health care that can receive many complemented that with a response, including one ministry official who in the early and most.
Crucial days of an outbreak said and I quote I am blown away with the magnitude of work done by the home in the last 24 hours I have never seen anything like it.
Turning to slide six the other game changer of course has been the approval and distribution of the vaccine and the prioritization of our residents and staff in long term care on retirement residences. As Vlad mentioned this has led to almost all of our L. T C residence.
It's actually all now and three sorry.
Sorry, all of our long term sorry, almost all of our long term care residents and three quarters of our retirement home residents receiving at least the first dose of the vaccine. It has been so encouraging to see the immediate effect. This has had with the number of homes and in particular, the number of active cases declining dramatically from the height of.
<unk> to just over six weeks ago to today, where we have no residents in long term care and only a small number in our retirement residences, who are considered active cases.
We are also working hard to ensure that as more vaccine doses become available that our staffing residents have all of the information on facts they need to decrease the number of people who refused to be vaccinated.
This vaccination awareness campaign includes videos that stock could access at the home or to a QR code on their smartphone device.
Turning to slide seven I now want to talk about a recovery initiatives that we have and will continue to put in place to begin to welcome new residents to chartwell retirement residences across the country.
Theres no one more qualified to help seniors understand the benefits of living in a short overtime resident than those who live with US now that's why our marketing efforts have been focused on testimonial videos from actual residents focused on living life. Together. We also just completed a Facebook live on Youtube Webinar series to provide information on caregiving during.
Pandemic and comparing retirement living to living at home.
And based on the latest research from F. So we continue to dominate in terms of brand awareness in Ontario, Alberta, and British Columbia, all scoring a second in Quebec, where we have increased our unaided awareness in women over age 65 from 14 per cent six years ago to a new high of 83 per cent this year.
We have also adapted our sales tools robotically through the pandemic, including introducing technology to do virtual tours create video content to share with prospects and their families and allow residents to sign and send pieces on line. We've also update on our web pages to it clue suite plans and have introduced more digital collateral.
There is no doubt that this will serve us well as we continue in this new phase to address the pent up demand for our services, but these tools will also continue to be used to personalize and enhance the sales experience for the future.
As I mentioned last quarter, we're also focused on standardizing and enhancing our care service offerings, and our retirement residences, particularly in Ontario, as our turnover data has demonstrated people are staying longer in retirement homes, and we've put strategies and training in place to allow our residents to age in place and receive the support and care that they need where also.
On the initial stages of piloting virtual physician services and our retirement residences in Ontario to minimize the need to leave the home to attend a doctor's appointment and to improve the overall health outcomes for our residents.
Finally, we are undertaking a staffing optimization strategy to help us to increase full time employment and our residences and to ensure that we have appropriate staffing as carrier services change and evolve based on Chartwell, if new care assist program as we get closer to the one year anniversary of the World Health organization's declaration of a global pandemic I want to end.
With a word of gratitude for all of the people on the Chartwell team, who sacrificed their time and provided their expertise and most importantly dedicated themselves truly making people's lives better throughout this unprecedented here on March 11th we will be celebrating being chartwell is strong and our homes and residences across the country and recognize the EF.
Of these truly heroic employees I'd now like to turn it over to Sherri to discuss our financial results.
Thank you Karen.
As shown on slide eight in 2020 net income was $14 9 million compared to $1 1 million in 2019.
For 2000, 20-F F O with $165 9 million or 76 cents per unit compared to $199 7 million or 92 cents per unit in 2019.
Our same property adjusted NOI decreased by $26 million or eight 8% in 2020.
Same property occupancy was 85 two per cent in 2020 compared to $19 one per cent in 2019.
In 2020 same property occupancy declined 4.9 percentage points, primarily due to reduced move in activity, partially offset by reduced move out activity. Both as a result of the pandemic.
In addition to the impact of lower Occupancies on our 2020 results. We've made investments continued investments in resident and staff safety, resulting in unfunded pandemic expenses of approximately $7 $3 million.
As shown on slide nine in Q4, 2020, net income was $12 $2 million compared to a net loss of $11 5 million in Q4 2019.
For Q4, 'twenty 'twenty F. F O was $43 5 million or 20 cents per unit compared to $51 9 million or 24 cents per unit in Q4 2019.
The decrease is primarily due to lower same property adjusted NOI as a result on a lower occupancies higher finance costs, and lower management fees and interest income.
Turning to slide 10, I will discuss our same property operating platforms results.
Our same property adjusted NOI decreased $6 3 million or eight 6% in Q4 2020 compared to Q4 2019.
Same property occupancy was 82.2 per cent in Q4 2020 compared to $19 one per cent in Q4 2019.
Same property retirement occupancy was $81 four per cent for Q4, 'twenty 'twenty compared to $88 eight per cent for Q4 29 from.
Or a decline of seven four percentage points, which resulted in lower revenue of approximately $14 million compared to Q4 2019.
Occupancy in all of our retirement platforms with significantly reduced by lower move in activity as a result from the COVID-19, pandemic and resulting restrictions that black and Karen have discussed.
This was partially offset by lower move out activity, primarily due to reduced departures to long term care spaces.
In addition to the impact of lower Occupancies on our Q4 2020 per solves for our retirement operations. The following factors affected our results.
We have made investments and initiatives to enhance resident and staff safety and maintained and enhanced our staffing levels.
In Q4, 2020, we recognized a net $4 million a government reimbursements, which helped partially cover expenses incurred in prior quarters for our investments in infection prevention and staffing.
We have generated increased revenue from inflationary and market based rental and service increases and from the provision net of additional care and services as residents age in place longer and their service Center service needs increase.
Our food costs were lower due to lower Occupancies and.
And utilities and repairs and maintenance expenses were lower.
Our same property long term care home occupancy.
Was 87, 2% compared to 98 five per cent in Q4 2019.
A decrease of 11.3 percentage points as a result of reduced admissions and capacity limitations affecting b and C class shared accommodations, which now limit occupancy to two individuals.
Occupancy protection provided by the Ontario government has been extended to March 31st of 2021.
There are approximately 38000 individuals in need of long term care services on waiting lists today.
This is an increase of over eight per cent from pre pandemic levels.
We expect occupancies to recover and our L. T. Six due to the demand for this essential care service and with the introduction of highly effective vaccines expansion of rapid testing and as the pandemic subsides, we expect to recover occupancy in 2020 one.
For Q4, 'twenty 'twenty same property adjusted long term care NOI decreased 0.6 million or eight 2%.
Of this amount $1 2 million relates to incremental pandemic related expenses that have exceeded the special purpose funding allocated to date.
0.3 million relates to lower preferred accommodation revenues.
These factors were partially offset by the timing of expenses and lower repairs and maintenance expenses.
Turning to slide 11, you will see our monthly Occupancies for our same property retirement portfolio.
In January and February occupancy declined one point out and one one percentage points respectively.
The pace of decline in occupancy accelerated in December through February compared to what we experienced in the summer and fall 'twenty 'twenty.
And due to increased restrictions on visitation moving protocols resident activities and personalized tours that occurred during the second wave of the pandemic.
As flagged out at as more seniors are vaccinated in our residences and in the community and with the expansion of rapid testing and the easing of restrictions, we expect to move ins and occupancies to begin recovering.
We collected substantially all branch and service fees for January and February.
Consistent with our past experience.
As you can see on slide 12 at December 31st 2020, our liquidity amounted to $459 5 million.
Which included $70 1 million of cash on cash equivalents.
And $389 4 million of available borrowing capacity on our credit facility.
In addition, our share of cash and cash equivalents held on our equity accounted Jb's was $6 5 million.
At December 31, 2020, our unencumbered assets had a value of $1 billion.
Our mortgage maturities remain well staggered with an average term to maturity of six six years at December 31 2020.
Our interest coverage ratio was two nine times at December 31, 2020.
Our debt to gross book value calculated using the historical cost of our assets was $52 one per cent at December 31, 2020 on.
Our net debt to adjusted EBITDA ratio was nine four times.
Turning to slide 13.
At March 4th 2000, Twenty's liquidity about two to $516 2 million, which included $126 8 million of cash and cash equivalents and $389 4 million of borrowing capacity on our credit facilities.
Yeah.
Subsequent to December 31st 2020, we arranged additional C N H C insurance top out financing on seven properties totaling $55 million.
And also arranged one C. H C insured mortgage of $7 6 million on a property, which was previously unencumbered.
The weighted average term to mature maturity on these eight financings is nine five years and they are a weighted average interest rate of 2.21%.
In addition, we have refinanced $48 million of our 'twenty 'twenty, one mortgage maturities at a weighted average term to maturity of three nine years and a weighted average interest rate of $1 93 per cent.
As at March four in 2020, one we have $74 6 million of mortgage maturities remaining in 2021 that are proceeding in the normal course.
In addition.
On our equity accounted jbs.
We have $41 5 million of mortgage refinancings, which are also proceeding in the normal course for 2021.
Turning to slide 14, we currently have three projects under construction, which are budgeted to require an additional $92 6 million for 2021 and beyond.
In addition, we regularly invest capital in our own property portfolio with the goal of growing our property NOI and protecting and maintaining our properties due.
Due to restrictions accessing our residences only on emergency capital works were undertaken during the first wave of the pandemic we.
We expect to continue to be selective in our capital allocations in 2020 one.
Turning to slide 15, Chartwell the T cell to achieve stabilized occupancy in 2020, and we expect to complete the acquisition of an 85 per cent ownership ownership interest in this project for a purchase price of approximately $60 6 million in Q2 'twenty.
'twenty one.
We anticipate settling the purchase price by assuming the related construction financing of $37 3 million and the repayment of the outstanding mezzanine loan of $4 million with the balance to be paid in cash.
I will now turn the call back to Vlad to wrap up thank.
Thank you Sherry.
<unk> has had a large impact on our business in 2020, and the first two months of 2020 one it.
Its impacts will continue to be felt in 'twenty 'twenty. One in this environment, we remain focused on maintaining strong liquidity and a cautious and selective in our capital allocation decisions.
Well I'm looking to the remainder of 2020, one with cautious optimism we are in need driven business on our residents come to us for social engagement and support with activities of daily living I believe these needs have not changed on the contrary they have likely been exacerbated during depends on at various restrictions put on the daily lives.
Our residents and the society at large caused the slowdown on the move in activity and many more seniors on in a normal year remainder of their homes with limited support I believe that with the continuing progress in vaccinations. These restrictions will be gradually lifted on moving activity will accelerate.
Long term prospects for our business remain bright.
The growth in population of people over the age of 75 is beginning to accelerate with 'twenty 'twenty two growth of five 3%. This growth will remain robust over the next 20 plus years this should support increasing demand for our services.
There continues to be shortage of LTC beds across the country and while various governments are taking steps to reduce the shortage. It is unlikely that they will be able to funds new batch to fully satisfy this existing and growing demand retirement residences are well positioned to fulfill that void.
In the medium term the slow down of new construction starts during the pandemic will result in fewer new building openings in 'twenty 'twenty, two and 'twenty 'twenty three further supporting occupancy recovery Chartwell has always had a strong corporate culture I believe they spend dynamic is always further strengthened it this culture built on growing.
Our extraordinary people are focused on delivering exceptional personalized experiences to our residents our knowledge of our customers and our strong national brands are the key ingredients of our future success.
Want to finish by thanking all of our employees from residences to corporate offices people, who demonstrated tremendous drive ingenuity and commitment in these most challenging circumstances people, who volunteered in our homes and outbreaks often staying in hotels for weeks and months people, who stopped at nothing to keep our <unk>.
<unk> their families and stop sales.
There are thousands of individual stories of courage and sacrifice their thousands of expressions of graduate student encouragement from our residents and families.
Chartwell employees, thank you for everything.
Thank you for your time and attention. This morning, we would now be pleased to answer your questions.
Yes.
Thank you we will now take questions from the telephone line do you have a question and you're using a speakerphone. Please lift your handset before making your selection to have a question. Please press star one on your devices keep had just a question on with the webcast. Please note I'm sorry, when prompted by the system. Please clearly state your name to register your cash.
You may cancel your question at any time by pressing star too. So please press star one at this time. If you have a question there will be a brief pause while participants register and we thank you for your patience.
So we have our first question Brendan.
Brendon Abrams. Please go ahead.
Hi, Good morning, and I would also extend my gratitude to everyone at chartwell for their hard work over.
The past 12 months.
Just on the topic of August same property occupancy I know you know no one really has a crystal ball on on the future. But you indicated you know you are cautiously optimistic in terms of.
Pent up demand and.
You know the future outlook there is demographics play.
Play in your favor just wondering what are the leading indicators that you and your team would be focused on over the next few months to see where occupancy will be trending is it inbound calls.
Foot traffic in terms of tours like maybe just some visibility or color there on.
Some of those leading indicators you you'll be looking at.
Absolutely and you know, we have very robust tracking and reporting on our online presence through all channels and that flows through our virtual call center into call tracking and then tracking prospects on and tours and we do see trending.
Recently with leading indicators being improved and we think that's going to be a factor of several things it'll be the easing of restrictions.
We do think there will be some benefit to the negative media attention drawing that distinction between long term care average retirement and we have recent studies from from Ipsos Reid that would support a better understanding of that difference and we believe that it will be a strong contributor to decision made.
King once the 75 plus population in the community is vaccinated as well.
On all of those things and while we cannot predict short term recovery on the timing. We believe that this will be positive for us on a go forward parents also spoken about the improved sales strategies. We've implemented during this timeframe and we will continue to leverage that was on the go forward.
Okay, well, that's definitely helpful and maybe just in terms of operating margins.
You know I think you know if I did the math correctly for the retirement segment same property operating operating margins dropped from 40 per cent to 37 per cent.
Between 2019, and 2020, obviously, you know 'twenty 'twenty, one it's still going to be impacted by the pandemic, but you know if you look forward you know maybe the 'twenty 'twenty two do you think you can.
Do you think operating margins can bounce back to 2019 levels are in that 40 per cent range or would you expect maybe.
Maybe the structural operating margins of the business to be slightly lower maybe somewhere in between 2019 and 2020.
Brian on I don't think we can be that precise at the present time. So you look at our 2020.
And there's a lot of I would call it noise in the numbers. There's extraordinary expenses, there's government funding that offset these to some degree there is significant additional staffing costs.
And so those margins, obviously are not comparable to the prior pre pandemic levels as occupancies recover and I hope, they're recover too better than pre pandemic levels overtime, we should see that impacting the margins overall.
On the other thing that I would point out is and this is maybe more specific to Ontario, where we are going to already introduced additional care services to our residents and solve the homes. We think that that trend will continue and as you know these additional services come at a bit lower margins on.
What you get on the pure rent.
So that may impact over the long run on the margins for Ontario, Blackberries, specifically now the margins may come down, but we certainly will be profitable delivering those services to the residents overall profitability should go up.
Right No no fair enough on the AR on the outlook there and just last question from.
From me before I turn it over I think you would dispose of six properties.
During the quarter.
It looks to be about 157000 per suite.
I'm, just wondering what that would translate into on a cap rate basis and you know.
Maybe just the investment environment right now in terms of perspective buyers or you know are they looking at 2019, our you know N O Y N S.
Estimates or.
Just wondering if theres any color or visibility on valuation around.
The assets disposed up during the quarter.
Sure.
Jonathan first.
First of all address the sales so those are.
Sales were what we would consider non core assets that didn't fit within our strategy and so the cap rates on those hum.
Maybe let's roll on but they were low based on in place on a lot from from.
The market generally.
We are seeing a little less market activity due to the pandemic, but based on what we are seeing cap rates do not seem to have changed from pre pandemic levels Chartwell, though is still taking a conservative approach in our underwriting of potential acquisitions based on all the uncertainties out there.
Right. Okay. That's helpful I'll turn it over thank you.
Thank you Brendan.
Thank you on next question is from.
Mr. Wang Chen.
Please go ahead.
Hey, good morning, everyone. Thanks, so much for providing the data on supply I just wondering just looking at the numbers.
In terms of the 4000, Sweden typing is listed.
That has you know within our immediate competition to chartwell, what sort of timing are we looking on and in terms of it coming on line and I guess, how does this compare to what we were seeing in 2019.
Yes, Joanne so theres 4000 give or take suites that we see us competing with our properties in these markets those over than five kilometer radius from our existing properties. This compares to I believe last year's number was 5200, so it's a bit lower than what we are seeing before the <unk>.
Frame for deliveries will be 'twenty, 'twenty, one and maybe early 2022.
And as I pointed out in my remarks that there was a significant decline on the construction starts during 2020 I think the numbers that cushman and Wakefield had was one three per cent of inventory comparing to four five per cent of inventories that we saw in the previous years in terms of the starts so that that is a significant decline on that.
Would result in a significantly fewer projects opening in 2022 and 2023.
Alright, and I guess, you're not seeing really even right now any pick up kind of at the same pace in terms of on the construction right now right.
The belt line project.
Moving ahead.
A lot on any significant way, including ourselves is as you can see that we are we just started one long term care redevelopment this year and deferred a number of other projects that we're ready for construction, but given the uncertainty we are pausing for a second there.
And maybe just circling back on in terms of the disposition them I mean, what what is your thinking now around are there further capital recycling opportunities.
For this year.
Our total dispositions are more non core assets.
On the short answer is yes.
Hey.
We will always you will see us.
Closing of assets that we don't believe a fit.
The long term strategy for Chartwell, so that happens every year and we'll we'll continue I will just say that predicting the timing of such dispositions is very difficult because these are non core assets.
And.
There is a limited pool of buyers and we will have to take our time to determine that so in terms of predicting the volume of these dispositions. It's it's really hard on the timing.
Oh for sure.
We all want that Crystal ball right.
And it's encouraging to see that yeah. So the cost of course are allowed to most of the problems now can I might be a little bit early knock on wood. So restrictions in terms of a logged out but could you maybe talk to how you're seeing the trend with respect to some of the pathway towards in person so far in February.
In March.
Joanna we will answer this question on the moment I just wanted to ask Louise whether people can hear us well on the call because it sounds like there's some cross calls going on.
No. It's all very clear on my side Sir.
Okay. Thank you Oh, sorry.
Alright back to you in July that I apologize for this interruption I'm sorry. Your question was can you repeat the question again that'd be wary and end March tours and indicators Joanna I think that's your question just confirming okay, yes exactly yep.
Yeah, certainly I mean February would've been on certainly impacted by wave two mm for the majority.
It's already on February there were a lot of restrictions in place you will find in our MD&A. We've done a chart for you in the outlook section that describes the restrictions and each province and that hopefully that is helpful, but that would've reduced tour activity in February.
We are seeing an uptick in March.
And we're you know we're pleased with that uptick that we are seeing we do think that as restrictions ease.
On the pent up demand will come into play, but as we said we can yes.
The Crystal ball question that Brendan mentioned and maybe it's difficult to project. The long term fundamentals are there and the decline in construction starts will impact in 2022 and 2023 towards the end of the year.
Okay.
Maybe just one last one from me, perhaps switching to the balance sheet side of things, let's see ample liquidity are currently and we're just wondering how have your discussions I guess lifting derived from progressing with respect to our deleveraging and Ah you're current.
Reading them are they you know looking at this.
More on further ahead in terms of taking on more a patient to wait and see approach.
Yeah, we continue to maintain conversations with them and they certainly understand at this time that you know this is a once in 100 year of an interest that we are prudently managing through and are are being cautious.
And then the time frame there they've got like can you remind me in terms of a kind of a threshold they would like you to reach.
In terms of your debt to EBITDA.
Yeah. So the net debt to EBITDA range is eight to 10, so when they had changed or a triple b level rating from stable to negative that was because of our trending in that range. We were at 9.4 for 2020.
Alright, okay.
Well within the range.
Hum.
Okay.
That's it for me I'll turn it back thank you very much.
Sure.
Thank you on next question is from Lilly.
Please go ahead.
Hi, good morning, everybody.
Good morning Tao.
On the development side, what are some of the conditions that you think will need to be in place before you sort of start more actively green lighting projects ago.
Well, we need to see better clarity as to the pace of recovery and improvement.
Improvement in our credit metrics.
Coming with increase in earnings because of the occupancy recovery. So it all boils down back to occupancy tile and and really pace of recovery.
And I guess like one of the questions about how this is Blake.
How important is development for chartwell for the long term because I could sort of paint a picture where do you feel like you guys. Maybe you don't need to be in that business like you've got a great set of assets.
And that should hopefully improve over the next several years like you.
Having that development arm and having about development pipeline critically important to a long term future of the company.
We do believe that it is critically important for a number of reasons. The first reason is because there is a long term need and demand for this product that will continue for a very long time that needs to be served so it could be served by other people I suppose on they'll just buy.
Chartwell, but for a child well it is important because we developed properties that we then crouch to operate and that we built for ourselves that that that really built to our specifications design and functional plans on that.
Make it efficient for us to operate and most importantly create great experiences for the residents.
Those are harder to achieve if we were just buying properties, who are built by somebody else. So while acquisitions, we like to do the development. We've always said was are probably more core to our external growth strategy than that simply acquisitions. So from those and obviously those developed.
So we see better returns that we can achieve by buying properties from other people now obviously this goes in cycles in some markets. The answer is a little bit different but the development is a long term strategy for us and the current Pos shouldn't be interpreted as we are getting out of the development activities.
Forever.
Okay.
And then just from your language around the occupancy recovery like another.
G&A expenses going up you know it will take some time and I guess.
I just wanted to get maybe a little bit more clarity on what you meant by some is that medical canola, but like you know, it's it's maybe longer than what we're expecting or its just that you know what this is day.
Its tough its tough to pinpoint the exact time frame, so we're being sort of deliberately kind of broaden our language.
Yeah. So it really is difficult as you know we I am that we have been.
In this industry for a long time. So you know over 20 years and you think back to the post financial crisis in the U S and we would've had a one quarter, where we actually increased once the housing market reopened about 300 basis points in occupancy in one quarter and so we are being.
On we do not have the crystal ball and it.
Pent up demand is the unknown and we will see what happens this isn't the same as the financial crisis, because it's been very different there have been some significant opportunities out of that to distinguish retirement and long term care and we will wait and see how that proceeds we do see week over week now things are improving each week.
Traffic to our website personal tours in the first week of March are up and so it's just too early to say with any certainty when that recovery will happen.
Okay.
And then just on my vaccinations.
The right way needed a frequent question, but like how how long until you think you work you know sort of quote unquote done at a target rate on appropriate level.
Hmm.
Like how do you sort of like measure would be you know that that's sort of what about what the target zone.
So it's Karen it's been amazing in the last two.
Two to three weeks, how we've gone from a I'll give you. An example in Quebec, we were at 12% of our residents and within two weeks, we are closer to 80%. So it's for the first dose so it's happening very quickly.
And you know, it's hard to say exactly it's going to happen on the state, but honestly in the next couple of weeks I think the numbers that <unk> said are are going to go out like in long term care, where we're very close to being there on a residence with 90 per cent for strokes 84 per cent.
Second and Uh Huh.
<unk> sort of right behind them in terms of their prioritization. So I think that part is happening quite quickly.
I don't have the SaaS side is there like a target that you're wanting to GAAP.
Well, yeah again eat all day.
They definitely moved the residents to the forefront but on the.
The numbers in long term care are already quite high on both first and second dose so.
Yeah again, maybe on <unk>.
Again, it's hard to say, but maybe more like three or four weeks and we're looking at those numbers being quite high.
That's great. Thank you.
Thanks Al.
Thank you next question is from auditing culture.
Please go ahead.
Thanks, Good morning.
Just just sticking with towels questioning there on on the vaccine your 90 per cent long term care and at.
At least for the first dose.
And my guess is everybody's been offered or is that sort of the level that you.
I think you'll get to an in retirement and that sort of level you can get to the overall.
Yeah, I think so and maybe even in long term care, a little bit higher sometimes it can be that they came to do the the vaccine and somebody was out in the hospital or they weren't feeling great and not they don't have COVID-19, but they're not having a good day, so I actually think it could be even higher.
Higher than that where we want to always continue to pushes with our staff.
And make sure that day or also taking the vaccine I think for the most part residents are very quick to roll up their sleeves, and we are doing a lot of education and promotion of these vaccinations line with our stuff.
Right. So I'd assume that some people can't get up for allergies or whatever and then yeah. So.
So people just saying knows there's not been a very small amount. It has been we've been really pleased so far.
Okay. That's.
That's great and just switching.
I guess back to the capital side, you're you're committed to buying with teasdale.
You said, it's stabilized whats can you remind us what the definition of stabilized students with your agreement with bottom up.
Stabilized is 90% occupancy for two months two consecutive months.
Okay. So is that the property still in and around 90 per cent, but more.
More or less yes.
Okay.
And your you did walk away from one of the projects are you guys agreed to walk away from the.
To put on not maybe you could give us a little bit of color there.
Sure. So we would have.
On normal course, when basketball as a project, we would take a look at it and evaluate it as we would any other.
But since doing that.
Taking a step back re looked at the project on both sides and we looked at the project and decided that.
We we weren't comfortable with the programming that was that was being developed for that project. So both parties agreed that it was best to part ways amicably.
On the bathroom on will go off on and design it.
Lisa.
Okay. That's that's it for me thanks.
Hey, Jonathan.
Thank you next question is from Himanshu Gupta Keith.
Please go ahead.
Thank you and good morning, So just just staying on the batch of more acquisition.
Total property, Quebec.
Quebec, what Kathy would that imply on in place and Hawaii on stabilized NOI.
The cap rate would be in the low sixes on on our invoices on one.
Oh, Okay, and do you think there's any closer to what it would have traded and pre pandemic level.
Yeah as I said, we haven't really seen cap rates move much from pre pandemic levels. So the answer is yes.
Awesome.
And then if I look at Ah, It's almost about 300000, plus suite and Oh is that'd be the basement cost today on different dummied hubs.
No Moshe this is a special project you got to understand this is a second phase of the project that we already colon are calling with vacuum over we bought 85 per cent in phase one back in 2017, so the 2017.
On deal was where they prebuilt our common areas for both phases and so now the second phases just units and therefore valuation is incremental to the first phase and so 320 is on the high end of the per unit valuation, but it is only because the first phase was on the low end of overall VAT.
So if you put it two phases together the evaluation is around 250000, a door give or take maybe 270 and this is more in line with what the valuations are supposed to be on a per door basis.
Got it. Thank you. Thank you for clarification, there and then just shifting to the rent growth I think in the MD&A. You mentioned you expected on three per cent in Ontario, and Quebec.
Is that in line with the overall market.
And then how does your range compared with the new supply, which is getting delivered in your markets.
Sorry on the second part of your question I'm not sure. If you could just repeat that for me sure. So how does that compare to the new supply which is getting delivered in your market. So you know for example, the Cuba would be back to mobile, but T, which is all 90% occupancy.
You know what what range are you charging day compared to in place all day, both the D, which is on by chance on for example.
Well in terms of rental rate increases this would be consistent with what we would have experienced in 2020. So we're not changing our expectations in terms of 'twenty 'twenty, one when new supply comes on we certainly have.
Hobby on our tool kits locally the ability to compete with them individually on centers we are overall.
Have a value proposition that is about the customer experience and service to our customers. So.
It wouldn't be adjusting our rates relative to local market conditions.
Got it so so maybe like an older properties target, let's say, 10% less other than New York properties are bothersome.
But from a non be the case.
I don't think there's a standard that occurs it really depends on the local market dynamics and the service offering and our reported a player reputation on some of our older homes have wonderful reputation.
On.
Sure of course.
And then just shifting to the retirement home occupancy obviously.
But in January and February.
Can you share how much was moving the ball down compared with last year. The first two months.
And so we certainly have seen a reduction in move outs in particular to long term care and to a hospital.
And residents are aging in place longer with US move outs are down are they would've been down significantly in January and February with the restrictions that were put in place, particularly in Ontario and Quebec.
Uh huh.
Okay, Okay, that's fair enough.
And then just a clarification on the operating expenses I think you mentioned $4 million of government reimbursement in quarter four.
Was it more skewed retirement home villages and was it mostly related to expenses in Q4 or anything related to Q2 on Q3 as well.
Yeah, some of that would've been so about 4 million relates to our retirement residences and some of that would be a recovery of expenditures that we had made earlier in the year on year to date and our long term care homes are unfunded pandemic expenses are $3 $2 million and in total we have seven three.
Milligan of unfunded pandemic expenses overall for chartwell.
Got it okay that's great.
And then the last question from me.
I think on the NOI margin improvement on visibility.
And I know that question has been also a deal as well my question is moving around you know the let's say the southern stopping cost at the diamond homes at 80% occupancy a will that stay the same is true your occupancy goes to 85% you know what other expense items on incremental variable cost would be good.
If occupancy were to move, let's say five points or 10 funds from here.
So we've maintained our staffing levels. Despite the occupancy reductions largely to ensure we can facilitate things like extended dining dining times increased disinfection screening time. So all of our staff levels have been maintained on augmented through the pandemic.
As our occupancy has declined on.
In some cases, we've also had to access agency sales and and that would have elevated our costs in 2020, and we don't foresee that when we move up we would need to add stuff, what I would say on carrying a lot of both spoken about this as there is on an opportunity our residents are aging in place longer.
With us we have implemented the care assist program and we will augment services, where people choose to stay with us longer and and it is an appropriate placement for them.
Got it so there's definitely an element of fixed cost from here, that's great and it's just one last one on your question the residents with general what's needed.
Does the dining and go back to the D or other restrictions still apply to that.
Just thinking how quickly even though the diamond who go back to like on multiple days, yeah, So and it unfolds differently in different provinces and even within the.
Province on there you know still considered to be more hotspots. So.
It's not based purely on this home it's been vaccinated. It is more of the area of the province that they're in.
That restrictions are starting to be reduced so just very recently for example.
On the Quebec City area I've got no saguenay have been able to I'd be back in there dining rooms to eat them, but not in Montreal. So you know it is it's based on public health analysis are around the community.
But I think you know vaccines go hand in hand with US right. So one is going to affect the other.
Going forward.
Okay. Thank you and I'll turn it back.
Okay.
Thank you and our last question is from.
Eric Chicago.
Please go ahead.
Hi, Good morning, Thanks for having me can you hear me.
Good morning, Yes, we can hear you Eric.
Excellent. Thank you on.
My question I think I think 'twenty 'twenty was a very challenging year for everybody and I think I'm looking forward to our on a far different 'twenty 'twenty. One as is everybody else. My question is actually focused however on some of the.
Let's call. It negative press that may have come forward from some of the L. P. C. In particular advocates across Canada throughout Ontario, I'm I'm I'm wondering I've seen some press regarding large pension funds.
And their holdings within Chartwell has there been a conversation regarding any of those larger funds on what are the impacts of those changes and I'm quite curious as well or there.
Are there background thoughts on how to ensure chartwell is and maintained itself as an ethical investor as the world seems to be moving towards ethical investments as a whole.
Eric Thank you for the question.
They're always focus in the last several years, even before it depends on mix from the large investors on the matters of environmental social and governance ESG matters and the pandemic certainly accelerated towards acerbate as or increase the volume of these discussions and we have.
Continue to be open to talk to all of our investors and in many conversations people continue to bring up ESG matters and we had these conversations with a number of different investors.
If you look at our Investor presentation, we've updated is where the whole section on ESG and also we added a section on specifically to long term care properties, because as you pointed out a lot of negativity in the media was also very ill informed with respect to how the long term care are operating.
And in the country. So we want to make sure that everybody is very clear about those are facts that relates to our long term care, specifically and to chartwell as.
An entity that are investors who are on.
Who care about ESG matters are care to investing so that that is always at the top of our minds, and especially with azure and they spend dynamic and we're doing.
Everything we can to be as transparent as possible and as clear as possible in our communications with investors on general public about what chartwell stands for and what we're trying to achieve.
Thank you kindly.
Thank you Eric.
Thank you so Mr. On the Das conditioners on last question on return on and back over to you.
Thank you very much everybody and I appreciate your time.
Do you have any further questions don't hesitate to reach to any one of us at anytime thanks very much bye.
Thank you. Your conference has now ended please disconnect your lines at this time, we thank you for your participation.
Okay.