Q1 2021 Sienna Senior Living Inc Earnings Call
Yeah.
Ladies and gentlemen, and welcome to Union Senior Living Inc. Q1, 2021 conference call. Today's call is hosted by didn't change President and Chief Executive Officer, and Karen Hahn, Chief Financial Officer of Sienna Senior living Inc.
Be aware that certain statements or information discussed today are forward looking and actual results could differ materially the company does not undertake to update any forward looking statements or information. Please refer to the forward looking information and the risk factors section in the company's public filings, including its most recent MD&A and Aif for more information.
We'll also find more fulsome discussion of the company's results in its M DNA and financial statements for the period, which are posted on SEDAR and can be found on the company's website at Sienna living Dot C. A T.
Today's call is being recorded and a replay will be available instructions for accessing the call are posted on the company's website and the details are posted.
Are provided in the company's news release, the company has posted slides, which accompany the host's remarks on the company's website under events and presentations with that I'll turn the call over to Mr. Jade. Please go ahead Mr. Jay.
Thank you Kevin Good morning, everyone and thank you for joining us on our first quarter call for 2021.
For over a year, we have taken critical steps to fight the pandemic, while providing the best quality of care for our seniors.
I would like to express my deepest gratitude to all of our team members, who have made a remarkable difference rep prioritizing the health and wellbeing of our residents and their colleagues.
While COVID-19 continues to have a profound impact here in Canada. The third wave has largely spared our senior living sector. The early vaccinations provide a crucial protection for residents and team members.
We are incredibly thankful that our sector was made a priority from the vaccination rollout and I encourage all Canadians who have not yet received vaccine to get it as soon as they can.
To date, approximately 95% of our residents and approximately 74% per team members have received their first goes other vaccine.
We address vaccination hesitancy by ensuring our residents and team members are well informed being.
We engaged our in house medical experts, Dr. <unk> and Dr. <unk> to provide additional information to Webinars and some questions about the COVID-19 vaccines.
These and other efforts supported a substantial increase in vaccination rates across our long term care and retirement platforms.
During the first quarter the number of residences with COVID-19 cases, and the severity of outbreaks have.
Have declined substantially and remained low subsequent to Q1.
As of yesterday, we have no active COVID-19 cases across any of our residences in British Columbia.
And 10 residences in Ontario have active COVID-19 cases with only three active resident cases across our portfolio.
This marks a significant improvement and represents a 99% decline since the beginning of 2021.
Moving to slide six.
The high vaccination rates helped us in returning to a more stable operating environment.
While our COVID-19 infrastructure remain strongly in place and includes active screening onsite rapid testing elevated staffing levels and a robust supply of personal protective equipment certain government mandated restrictions have recently eased as a result of improving conditions.
Most notably the Ontario, and BC governments have started to lift restrictions with respect to self isolation requirements for newly admitted residents.
In addition, communal dining and recreation activities in residences with high amortization rates are resuming and physical distancing rules are being relaxed, which is so very important for our residents health and mental well being.
And Ontario fully Immunised frontline staff are able to work at more than one location again to safely support additional staffing capacity across the health care sector.
In April we welcome Jennifer Andersen and to our leadership team to head up Sienna is long term care operations Jennifer.
Jennifer is a highly experienced operations operator, known for our focused approach to improving customer and team member experience and optimizing operational performance in our previous roles as chief of operations and service Excellence officer at WSI.
Workplace safety and insurance Board.
Now moving to our occupancy numbers.
Our marketing and sales teams have been working on numerous initiatives to support occupancy, including redesign sales incentive programs enhanced outreach and investments in online lead generation.
In addition team members and enhanced call center with longer operating hours made an average of 502, our 2000 outbound calls each week to prospective residents and their families.
All of these efforts resulted in an increase in leads and deposits in Q1 and help support occupancy dip.
Deposits in Q1 have increased by 10% compared to Q1 of 2020, and nearly 20% compared to the previous quarter.
In our retirement portfolio average same property occupancy was 78, 1% in Q1.
The decrease was primarily related to a decline in new residents moving in due to the impact of the pandemic, including access to restrictions.
Subsequent to Q1 monthly average same property occupancy improved modestly from 77, 7% in March to 77, 9% in April.
Afflicting, the numerous marketing and sales initiatives offset by the impact of the third wave of COVID-19.
Occupancy remains particularly impacted our residences located in COVID-19, hotspots, and we expect continued occupancy pressures until mid 2021.
Based on our assumption that restrictions with our retirement residences will continue to ease the forecast gradual occupancy improvements during the second half of the year supported by anticipated pent up demand and our continued investments in our sales and marketing initiatives.
And our long term care portfolio average occupancy declined to 83% in the fourth quarter from 97, 9% in the same period last year due to access restrictions and capacity limitations in three and four bedrooms.
Long term care remains an essential need service and the demand for long term care beds continue to grow on a waiting list of over 838000 in Ontario alone.
<unk> III has put tremendous pressure on hospitals and we are assisting these health partners through the safe admission of seniors to available beds in our residences.
As admissions accelerates, we expect to reach that acquired occupancy targets over the next few months.
The government of Ontario extended its occupancy protection funding or vacancies until August 31 2021.
Excluding the impact of net pandemic expenses or recoveries, we expect the financial performance of the long term care portfolio in 2021 to be slightly below 2020.
Our internal forecasts are based on the impact of new and prolonged access restrictions during the third wave of the pandemic on preferred accommodation revenues, which are not covered by the governments occupancy protection funding and our additional investments to elevate resident experience.
While we expect a continued increased level of expenses in the near future. The positive impact of early vaccinations in senior living increasing vaccination rates among the general population and a return to a more stable operating environment, all give us renewed optimism.
Moving to slide eight.
Staffing remained challenging during the first quarter of 2021.
Qualified stock is in high demand by sector peers hospitals and other care providers.
As part of our ongoing talent acquisition strategy to attract and retain a highly engaged and seasoned team. We continue to collaborate with educational and government institutions and intensified our social media campaigns.
We have also increased our focus on team member mental health, including managing stress, gaining resilience and avoiding borne out.
We offer a variety of facilitated and self paced programs. In addition to providing resource materials and access to employee assistance programs.
I team members have gone through extraordinary lengths during the pandemic and many have made enormous sacrifices for prioritizing the health and well being of residents and their colleagues.
For some of them dismissed moving out of their family homes and into temporary accommodations for extended periods to keep residents save sacrificing time with their families.
Even at the cost of their own mental physical and emotional health.
To our team members are true heroes, whose selfless actions had a tremendous impact on our residents live during the pandemic.
Last year, we have launched a clear response, which provides one time financial grants to eligible employees of long term care and retirement operators in Canada.
We are facing extraordinary circumstances amidst the COVID-19 crisis.
Since may of last year. The fund held approximately 800 frontline staff with over $2 4 million in emergency financial assistance.
To continue to support to continue our support for this important initiative Sienna has made an additional 100000 contributions to the care funds. This week, which brings CNS corporate and board of directors contribution to approximately 700000.
Moving to our focus on diversity and inclusion.
<unk> and retaining our talented and diverse team at all levels of organization remains a key objective.
Diversity and inclusion have always been and always been an important part of Sienna and a diverse leadership team is a reflection of our overall workforce.
Today, 54% of our leadership team, including five of our 10 executive officers and one third of our independent Board members are female.
In addition, approximately 30% per leadership team, including free are about 10 executive officers identify as black indigenous are people of color.
We are very grateful for the continued government support that helps us cover some of the extraordinary pandemic expenses.
With the exception of funding related to accommodation all government funding is flow through funding, which means it has to be spent entirely on resident care.
Any amount that are not spend directly on resident care of pandemic expenses happy be to turn to the government.
We believe that government assistance programs will help address systematic issues our sector has been facing for many years. These issues were highlighted in two recently published reports.
And April Ontario's Auditor General issued a report which included findings on pandemic readiness and response in long term care.
This report was followed by the final report of the Ontario Long term care COVID-19 Commission, an independent commission investigating the pandemic in Ontario long term care system.
You were able to share our experience and observations during the pandemic with the commission with recommendation to the to the Ontario government are expected to help shape and strength in the future of long term care.
Recommendations include the need for additional staffing enhanced AIPAC training continued prioritization of personal protective equipment.
Stronger medical leadership enhanced collaboration with healthcare partners and urgent need to redevelop and expand homes to meet a growing societal need.
The Ontario government has already started to implement a number of the recommended improvements including an additional staffing.
And at Sienna, We've also taken numerous steps recommended by the commission.
Including stronger net medical leadership increased focus on family communication and enhanced AIPAC training.
As a mission driven company that puts about being and safety of our resident first we are well positioned and equipped to support the future of senior living.
Now moving to a development program. Our development plans include over $600 million in capital investment to redevelop our Ontario long term care portfolio over the next five to seven years.
Two projects are slated to start later this year beginning with a 160 <unk> long term care home and North Bay, which will be replacing the existing 148 older C class beds.
The capital investment for this development is expected to be approximately 52% to $55 million with an expected development yield of approximately 8%.
Our second project would be a non shortly.
We're also making good progress on our joint venture development project of a new retirement residents in the agro Paul with construction scheduled to start later this quarter.
C&I has a 70% ownership in the 150 Sweet Greenfield joint venture development with Reichman Senior housing, which is expected to achieve a development yield of approximately seven 5%.
The total budget of development cost for this project is approximately 49% to $51 million.
Our development and redevelopment plans will focus on sustainability as we adopt environmental friendly design and install energy efficient features and equipment all with the goal to significantly reduce the environmental footprint of these homes.
In addition, these new residences will support our enhanced infection prevention and control measures and will significantly improve resident and team member experience.
With that I'll turn the call over to care for a financial update.
Thank you Nick and good morning, everyone.
I will start on slide 14.
Our Q1 2021 financial results continued to be impacted by the pandemic as we continue to incur increased level of expenses to support the cost of fighting the pandemic and minimizing the impact of outbreak.
There are various programs for financial assistance provided by the government to support pandemic related expenses.
It is important to note that there can be timing differences between the time of not caring group expenses and funding such expenses.
In addition, any amounts that are not directly on resident care or pandemic expenses have to be returned to the government.
In Q1, 2021, we recorded a $9 9 million recovery pandemic expenses.
This was mainly due to day retroactive government funding $15 3 million per week.
However, some of our 2020 per amendment expenses incurred.
Billable from making long term care.
As reflected in our first quarter's results.
Excluding this retroactive funding the company's total net pandemic expenses for Q1 would have been $5 4 million, representing an improvement of $2 3 million compared to last quarter.
Moving to our Q1 financial results on slide 15.
Revenue decreased by two 7% year over year to $161 million this quarter.
Consolidated net operating income increased to $44 3 million this quarter compared to last year.
This was largely the result of the $15 3 million in retroactive funding I mentioned earlier, which led to a net pandemic recovery in the quarter.
Excluding this recovery our consolidated NOI decreased by nine 2% to $33 $2 million this quarter.
Retirement same property NOI decreased by 3 million from $12 8 million in Q1 compared to last year.
Excluding net pandemic expenses retirement same property NOI for Q1 decreased by $2 3 million, mainly due to lower occupancy partially offset by annual rental rate increases in line with market conditions.
Rent collection levels remained high at approximately 99% consistent with pre pandemic levels.
Long term care same property NOI increased by $10 7 million year over year.
Excluding the net recovery and then Nick expenses non comparable NOI for Q1 decreased by one 1 million to $19 5 million compared to last year, largely as a result of lower revenue from preferred recommendation.
Moving to slide 16.
Q1, OSF <unk> per share was $37 eight an increase of one 3% compared to the prior year.
Excluding net pandemic recovery OSF <unk> per share for the quarter would have decreased to 26, 9% year over year in Q1 <unk> per share was $39 four.
An increase of 1% compared to the prior year.
Excluding net pandemic recovery ASF one per share for the quarter would have decreased to 29.
Year over year.
DNS ASF, both payout ratio was 59%, Inc. First quarter exclude.
Excluding the net pandemic recovery.
Payout ratio would have been 80%.
Looking at our debt metrics in slide 17.
Our debt to gross book value decreased by 90 basis points to 46% Euro per year, mainly as a result of the repayment of credit facility.
We lowered our weighted average cost of debt by 30 basis points to three 3% year over year, primarily due to increasing our mix of floating rate debt and we increased coverage ratio for interest before per seven time.
Excluding the pandemic recovery this quarter interest coverage ratio would have been three five times.
Adjusted EBITDA was 6.2 years from Q1 2021, excluding the net pandemic recovery.
EBITDA would have been $8 four years.
In terms of our balance sheet.
<unk> continues to maintain a strong financial position and an investment grade credit rating and ended the first quarter was $213 million in liquidity and an unencumbered asset pool of $840 million.
Our debt is well distributed between unsecured debenture conventional mortgages, you must be insured mortgages and credit facility.
As mentioned, we expect an increased level of expense for some time, which will continue to affect some of Sienna key performance indicators.
Declared with respect to the company's operating performance.
With that I will turn the call back to you to any for any closing remarks.
Thank you Karen looking ahead, we have a renewed optimism for our sector and our company.
The anticipated economic recovery, a positive impact of early vaccinations in senior living and the return to a more stable operating environment all support the outlook for Sienna.
We continue taking many actions to address the rising complexity of care staffing shortages and capital needs in the sector all of which were heightened by the pandemic.
In April we formed the Sienna Senior Foundation. The foundation allows us to raise funds for a variety of important causes in both Ontario, and British Columbia.
In connection with an enhanced focus on mental health and wellness in the communities. We serve Sienna donated 250000 to the Scarborough Health network in support of its new mental health hub, which will support quality care for seniors.
Through our work, we see countless tullow organizations, who provide amazing programs and services and support of Canadian seniors.
By launching the <unk> Foundation, we do our best and helping those who needed the most.
In everything we do we are guided by the belief that it is both a great privilege and a tremendous responsibility to serve Canada seniors to ensure that the little bit utmost dignity and respect.
I'm incredibly grateful for our team's unwavering commitment and compassion to fulfill this important mission.
During my visits to more than 30 residences during the pandemic I've experienced firsthand the desire to do everything they can to provide the highest level of care and services to our residents.
I also want to acknowledge the many stakeholders, who have supported us through the pandemic, including our residents their families sector associations Hospital partners federal and provincial governments and our shareholders.
Thank you for your participation on the call today, we are pleased to now answer any questions that you may have.
Hello, Ladies and gentlemen, if you have a question or comment at this time. Please press. The Star then the one key on your Touchtone telephone.
Question has been answered you question with yourself from the queue. Please press the pound key.
Our first question comes from Jonathan Culture with TD Securities.
Thanks, Good morning.
Good morning.
First first question just on the occupancy in the retirement portfolio you talked about.
Getting more leads and stuff like that so based on based on what Youre seeing right. Now do you think March will mark the low for occupancy.
I think it's hard to predict hi, good morning, Jonathon, it's hard to predict that we disclosed our April occupancy is up by 20 basis points and we see positive.
<unk> on leads and deposits I think its just too early to predict just depends on what happens with the province.
Ontario, and BC in terms of opening it up and Theyre moving some of the restrictions for access so it's too early to predict.
Okay.
Fair enough.
And then.
I guess.
On the development front.
You do have the one retirement development going on.
Do you see more opportunities on the retirement side or do you think you guys will be focused on getting your long term care facilities, the ones that need to be anyway. It's redeveloped.
So at <unk>, we are deeply committed to both sides of our business is long term care retirement. So we have two projects at the moment as you mentioned one in long term care one retirement.
We are looking at some intensification opportunities depending on timing.
Also continue to.
At some campus development at few of our sites, where we are building new long term care, you without either senior apartments or retirement suites, there and again, we will announce those programs as we get a bit further ahead, but no. It would not just be long term care you should see some development from <unk> as well which would incur.
A combination of joint ventures, and Densification Greenfields in campus.
Okay. Thanks, I'll turn it back.
Our next question comes from how much you <unk> with Scotiabank.
Thank you and good morning.
Just from the long term care occupancy projection that was extended.
So do you expect any further extension here.
Looking at.
You see occupancies at 80%, so how long do from day to get back to them.
Thank you.
Good morning, Matthew So with respect to the occupancy protection funding as I've mentioned has been extended to August 31.
And we are seeing gradual admissions from new placements as well as hospital transfers from <unk>.
<unk> is very important.
Health care system, and so we are seeing Inc.
Gradually and.
We expect that we will be reaching the occupancy target.
The coming months.
And so with that we offer.
Encouraging signs that our vaccination rates has been a very high and therefore limiting outbreaks, which is another factor that will help out with accelerating towards that mission.
Got it.
Okay, and then staying on the LTC funding, obviously 15 million received.
2020 expenses.
So do you expect further recovery here with respect to <unk>.
Last year, because I think there is still some thoughts from left 2 million Talbot.
That's for the $15 3 million that is based on the ministries.
Review as of December 31.
So we don't expect that there would be much more coming related to last year. We do have still expect expenses on our side of the funding programs our preference.
And with respect to this year in Q1, we continue to get monthly pandemic related funding.
But as we saw if we exclude the retroactive government funding.
We did continue to incur expenses higher than our monthly pandemic funding availability and for US that's really the focus is to compete to keep our residents and team members safe.
And what I would share with our high vaccination rates and our COVID-19 cases dramatically come down so has our pandemic expenses.
<unk> over quarter and so at this point.
Hard to predict the duration and scope of our of the pandemic and therefore the.
Scope.
<unk> upped the pandemic expenses, but we know we really want to thank you our team members and residents and their families who have really supported our vaccination effort and therefore, keeping our revenue.
Got it okay. Thank you.
And then just turning to the Niagara Falls, the Darden residents development.
The development using seven five watts.
Occupancy are you underwriting in that assumption and how much of the Liza field.
So the lease up period is.
Call it around two and a half years and the stabilized occupancy is between 90% to 95%.
Okay and the development cost.
Cost of land as well.
That's correct.
Okay. Thank you.
Yeah.
Our next question comes from Brendon Abrams from Canaccord Genuity.
Hi, good morning.
Maybe just circling back on the long term care redevelopment program.
It's a big spend over the next five to seven years, just wondering if internally you have said any kind of leverage targets, whether it's debt to EBITDAR that assets that you'd be.
Comfortable too.
To go up to and then maybe just a second question on this point would you be willing to explore entertain.
Joint venture or kind of a financial partner partners too.
Help fund the program.
Good morning, Brendan on the first one we have always talked about our debt to book value will be comfortable in the range of 48% to 52%.
And but the redevelopment program, maybe it will be closer to 52, but again as a reminder, this too is to book value and many of our assets had been on the books since 2010.
And our first went public so from a fair market perspective easily would be in the <unk> and even at the 52% level that we talked at book value will still be in the 40, So we take a pretty conservative way of <unk>.
Getting the development done and having assets, which will have.
Long period.
Licensing from a joint venture we are always open to finding the right partners and for US It's just not.
Capital, we continue to have good access to capital what we're really looking for is what's the right partnership model, which is the right thing for the community for team members for residents.
As we've talked in the past we are exploring a joint venture with.
With Scarborough Health network, which would be the right thing to do for <unk>.
For Scarborough, so as we progress those other partnerships, we are more interested in rather than just financial ones.
Right, Okay that makes sense and then maybe just on.
The return profile of some of these projects now there's obviously a lot of talk around inflation.
Cost inflation and commodity prices have increased recently.
How do you do.
Correct me, if I'm wrong, but I don't think the funding of the new developments.
It may be tied to.
Increases in CPI and that type of thing so how do you how do you see that impacting.
The return profile of some of these projects over the next few years.
So.
There has been.
This is the first development program after many years, which are which which works for some project. There is no. Other work for all and that again, we are thankful for the government to make it happen because in the last six years on the 500 beds, where redevelopment than it was.
Private not for profit municipal because of funding programs has been work for anyone.
It's hard to predict where we are headed we go project by project and Thats why we are cautious and not coming ahead and talking about projects that we've done on the pipeline when we get to a stage, where we can lock in some cost gets get a bit more confirmation from a pricing perspective from our from a general contractors and vendors.
In general that's one will come up and talk about developing yield and if cost continue to rise and the funding doesn't work then.
We will have to take a pause but.
We understand.
The government is active in redevelopment there is lot to be done close to 45000 beds between what's new and what's current so I think it's in everyone's best interest to get going so it's hard to predict what will happen with inflation and whether the funding would keep up or not but we are working with the information that we have at the moment.
Yes, no fair enough.
And then maybe just turning to the Commission's report, which you touched on.
In your opening remarks.
Pretty lengthy report was there from your perspective, one or two.
Recommendations that really stood out.
That you think would have a kind of a more near term impact on sienna.
And how that May impact.
Your operating margins going forward.
Sure.
The commission came up with close to 85 recommendations and.
As you know the government then all of the stakeholders will have to kind of prioritize the top ones in our mind that really the top on it staffing we have talked about it for quite some time.
Staffing levels were based on 20 years back or sold and people coming into long term care had a very different health requirement and that has not changed substantially. So if we do only one thing out of all the ones that have come out with the staffing which we are.
Pleased to see that the government has is already moving to four hours of care, which will be an excellent.
<unk>.
I think that'll be the first part of the funding for it. The second part is really going to be how you're staffed up because if you get four hours of care and you get additional funding for it but you cant hide any one you would be giving that money back to the government and that's not.
Not in the best interest of the residents. So we need a whole human capital strategy, which is how do we entice people coming into this sector.
How to staffing works whether is it related to integration.
So I think.
If we can solve that out of all the things that came out I think it will be probably have the biggest impact on the lives of our seniors.
Right. Okay. That's helpful I'll turn it over thank you.
Thank you.
Our next question comes from Julian Chen with BMO capital.
Good morning.
Maybe sticking to the net.
During Q1, I would like to of course see that come down can we expect that to continue into Q2 as well and obviously from the back half day everyone.
No.
Restrictions.
Hi, Joanne are you referring to the decline in net.
Thank you expenses.
So from $5 4 million this quarter down from this level.
Alright, and so forth.
So the main difference in Q4 versus Q1 is.
Attributed to the high vaccination range.
We're very pleased with the high vaccination rate of 95% amongst our residents and 74% amongst our key members and that really has been a game changer.
Turning to the experience that our residents.
And because of that.
Half.
Fewer residences with COVID-19 cases.
And much fewer resident cases, as well as the severity of the Acacia has been much lessened and so we've always talked about the magnitude of our pandemic expenses largely depend on how many residences have COVID-19 as well as the severity of the outbreak.
And because we've had.
Good.
It comes with the vaccination, we were able to.
In correlation been able to maintain a more stable level of pandemic expenses, but I would just say that no. We're still very much in north <unk> wait and so it is still hard to predict what would be that.
Level of pandemic expenses, which is directly tied to the number of COVID-19 cases as the general population is still being vaccinated. So at this point.
Hard to say what would net quarters pandemic expenses.
But we do continue to get monthly pandemic funding from the government.
Alright got that.
That's still hopeful maybe interest.
Circling back to the previous question with respect to that.
Achieving net.
Long term care side occupancy essentially the target of 97%.
We think that's something that could be achieved.
In 2021 time frame, assuming that you know.
Really do open up back up in the second half a day here.
So we have been doing.
During the pandemic, depending on which location Europe average.
We have been accepting residents to long term care throughout this time.
The peso is obviously much more lower than what would be otherwise when we talk about 97%. It would not include the $3 four bedrooms.
And our health care sector as an acute.
A challenging place at once COVID-19 is over there as a backup of multiple surgeries, which are which have to happen. So I think it's from the best interest of not only held.
Healthcare, but for everyone in general that we find capacity in long term care relative safe to do so.
So for US, it's just trying to get to 97% because there is a long waiting list and for seniors being in a hospital long term is not the best.
Scenario, because thats not a home like atmosphere.
Long term care home water to comment on this.
But you have to do it safely. So again I think at this stage, we can we continue to work.
With the health care partners as you might know that admission to long term care is not owned by any operator is really owned by.
The community access centers across so.
We are working closely with them we want to support.
Family support health care partners.
Want to be and see if we can get to that number.
Okay got it.
Sorry go ahead, sorry, Joanna just to add to that.
Third in force that.
We mean unavailable because we find that note that has been a big challenge.
These pandemic management and also with set aside that's.
For self isolation.
And so those beds are a part of.
<unk> to be available and those that are not included in that 97% occupancy target and still that directive to keep those got it.
With me.
Okay got it and maybe just one last one from me on day development for Us.
Could you just.
Remind me.
The percentage of beds.
That would be a policy that would fit into that criteria free right.
So are you, saying how many do we have is that what you're.
Yes.
Yes.
We have around 2200 costs EBIT okay.
Okay, No that's super helpful.
And Ah, Okay, Alright, I will turn it back thanks very much.
<unk>.
Our next question comes from.
Paul with Laurentian Bank.
Good morning.
Hi, good morning.
Just a quick.
Quick question.
I'm trying to understand why your long term yes.
I'll keep on seed continues to.
Go down sequentially.
Given the kind of demand that is there and.
It does it misses SKU base.
So what is driving your occupancy down because you're not getting enough patients.
Residents from the.
<unk>.
The system.
Youre not taking new visits.
Yes, so as I talked about.
Admissions into long term care is not really control by any operator, our owner is really controlled.
To help so the biggest thing has been if a home is an outbreak as we just talked about many of long term care homes had an outbreak so that as modest sales time to be moving residents and this was a comp time and even though the number of resident cases are low we still have key member cases. So it's more driven by then is it safe to do so that's real.
Is what's driving the change.
In CNS case.
Of course.
<unk> of our size they have been locations, which are not an outbreak or which are not in areas, where there are restrictions. So we had been estimating into long term care homes. There. So it's more a factor of when Ontario health and.
And others.
I think it's safe to do so and in consultation with us. So it's more to do with that than that anything that an operator owner would do.
So even if a staff member is.
Pause do what they've been.
Nordson residents to that hole.
Yes.
Some public helps might be different but overall that continues to be the case, but if if.
If you have more than two people, who they feel got COVID-19 from a particular location that home would be an outbreak and there would be no. One no one new resident coming into that home. So that that's the case.
Right, Okay and then.
I saw that your.
Adjusted and vaccination is quite high almost about 90%, but it was stopped lax emission levels Huston and to <unk>.
Is that a choice.
Does it members have a choice in terms of.
Getting vaccinated.
Correct.
But you know as a country. We have made the decision that it's a choice its not mandatory to get vaccination, we have around 75%, which we believe is really a result of all the work <unk> been doing in terms of encouraging and education.
Similar our hopes is and our work is to make it as high as possible, but that as that is one of the one of the only ways for it to ever go away. So the rate has been closer to 70%. We have been inching forward a percent per cent and have every week and we're looking internally and talking to.
Other.
Healthcare partners in general to see what else can we do to drive that rate much much higher.
And is that.
I don't know is it relative to the fact that youre not getting enough like Theres no staff with Liberty that you are still allowing people who are not willing to get vaccinated too.
We continue working day, yes.
So in countries.
<unk>.
And many other countries, which had access to vaccination much sooner than Canada.
70% is a pretty good place because there is vaccination hesitancy across the general population.
So it's more it's not around obviously staffing is a challenge.
But that is that's been across the sector. So it's not that no one wants to make it mandatory because you'll have staffing issues.
The governments in Canada have decided it is not going to be mandatory so it's hot for individual companies such as asked you to take that stance, but again, we are looking at other ways to provide incentives to encourage team members to get vaccination.
Vaccinated.
That's it from me thank you.
Acute.
Our next question comes from Tal Woolley with National Bank.
Hi, good morning.
In.
Erica.
Good morning.
I just wanted I apologize if I'm.
Multiple conference calls just number one has there been any net funding would be.
Or expected.
For Q2.
Reimbursement of prior 10 day defenses.
So.
And then make funding.
We still continue to get monthly allocation.
And based on that our pandemic expenses are continuing to feed that monthly funding.
However, we are continuing to report quarterly our pandemic expenses the government.
And based on that information it would be to Permian.
<unk> needs to be adjusted as we saw for last year that was.
For the outcome.
For our quarterly expense reported that they had supported us with the extra $15 3 million.
Proactive funding related to 2020 pandemic expenses.
So if I'm if I'm understanding you correctly.
Youre still running sort of in a net deficit position now and then the hope is over time.
That could be reconciled with the government. So but nothing has been you haven't had any sort of outsize.
Reimbursements or anything to date in Q2.
Correct, yes.
Approach Tal has been that we need to spend what we need to spend to keep residents and team members safe and the government has been very supportive throughout the process for all owners operators too to cover those.
<unk> expenses, and we know that at the end of the day you might have a deficit in the short term, but we are okay with that because we know that's the right thing to do.
Okay.
And then I think you mentioned earlier I think.
So the question Jonathan to that.
You were not sure exactly whether March was sort of the bottom of the retirement occupancy cycle.
Cycle, but you are you know in your outlook statement.
You know sort of indicating a recovery in the second half I guess.
Like what gives you that confidence.
You expected to burn.
So the requirement.
Yes, I mean, a number of lease I mean, thats usually is a very good indicator. So a number of leads are up versus last year. They are up versus last quarter. We saw some good.
Ah things from a deposit perspective, so some of the indicators that we have internally we see.
Might hope law, the easing of restrictions with if people are fully vaccinated.
The amount of isolation. They have to do is changing because data has been a barrier for many seniors moving into retirement space. So there are multiple things not one which gives us hope that.
Our occupancy will come up it just hard to give specific guidance at the moment in our view is that it will be the second half of the year will be.
Maybe we'll see some positive movement in occupancy.
Okay.
And then just pivoting back to the commission per foot again, so with the reported out and the ministers. Subsequent comments that seems supportive of a different proposed development model going forward like are you hearing any commentary yet.
Government about how they are looking at green lighting, new developments that are currently in the pipeline.
Sure so yeah.
There is close to 30000 beds, which has to be rebuilt and another 15000, which which needs to be built just to keep up with current demand and that number just.
The first step I think there'll be more beds in EBIT per tonne.
So frankly, there is there is a need for all sorts of different models and ownership structures to make this possible procedures.
For example, last year, there were multiple announcements where government is investing directly EBIT hospitals and building long term care beds. There have been announcements from companies such as US which are building long term capex. The one for example, we announced in our space.
There by municipalities and other so in our view it will take all short all sorts of ownership model while after to solve this.
Solve this challenge and at the end of the day, it's really around ensuring that the people who are providing care the care for seniors and their fellow team members.
Our culture, we are after the accountability and operational excellence. So for US we think that's more important than our ownership structure or any capital structure behind.
And is it fair to say, though that like if they did decide to move in a direction and let's hope that that doesn't really take disrupt anything that's sort of in the hopper so to speak.
Sienna open too.
Do you mean no during some of the redevelopment under this kind of model.
We will always open to different kind of things, but it's hard to really comment on that without knowing what that structure would look like so for us we will be happy.
And the senior living work for 50 years, and we are going to continue to do this work.
So there are different ways of doing it we would be we would be open to it but again, it's as the commission has also talked about.
<unk>.
Upfront about it that it's not about ownership, it's about what the what is at the core of the company. Our mission driven are you Oscar the care.
Or for senior then that has really been our mission so Bob.
It is not in our view, it's not about ownership, it's about really what you.
What do you stand for.
Okay.
Then my last question it is true.
It goes back to the pre pandemic.
The government had proposed sort of the big restructuring of the local health integration networks to be Ontario health teams approach.
Just wondering like has that all been completed and.
Are there any changes that suddenly become because I think that was ongoing just as the pandemic started and I don't I don't really know how that structure.
<unk>.
Changed or handle handled the whole handled the whole.
Situations.
Yeah, it's been it's been ongoing there have been very active throughout this pandemic working with.
Hospital, working with long term care sector to make it possible they've been working through a different structure and they are combined.
What used to be called <unk> and home services as well so.
They are well underway.
To put the right structure together to support we've had alcohol calls.
With them as to what we are trying to work collaboratively with the hospitals on others to ease the pressure on the hospital system. So no I think its well on its way from our viewpoint.
No Big changes then in terms of like how everything.
How big do you want to kind of work with lots of share network.
Okay.
Non nothing and in our view will be positive because if long term care is on the table and decision gets made I think there'll be better decisions for for everyone, including long term care. So we think that's a that's a good change.
Okay, great. Thanks.
Thank you.
Our next question comes from <unk>, <unk> with RBC capital markets.
Thanks, Doug Good morning, just maybe along the same lines of the questioning around the Commission's report I'm. Just curious have you had any conversations about your specific projects and.
Perhaps under this suggested model of separating care from construction.
Have there been any conversations with the with the government and then just secondly.
And any further clarity on what exactly is net by mission driven.
So.
I don't have an answer for the second one again I think.
Commission at 85 recommendations and they're the ones, which are a lot more.
<unk> got a much bigger impact than just focus on the structure of it then stopping being the very first month.
We have development agreements that we are signing current clean off to be one of them, which was which was the recent menu.
Many other owners and operators of all different kinds of signing.
Development agreements under the current structure so in our view it's.
Stability is important we just one project as you talk about north face is going to be around $55 million of cost and or many years there'll be close to more than a half a billion dollars. So the more stability better in our view that the amount of demand there is for long term care.
There could be different structure as possible.
To get to that stage. So if there's a different structure with work flow through people like a petri that's okay by us.
From our perspective, we are committed to.
The way, we are developing today and kind of how we provide care. So it's really hard for us to comment on what might happen in the future, but our current development agreements in our current development plans are predicated on the current structure.
Got it.
Just maybe one last one from me and I'm not sure. If this was maybe.
Clarified earlier, but just to.
The $15 3 million in Retroact retroactive funding that was received in the quarter.
Curious, what's the difference between that amount and the 11 million that you cite.
As your Q1 adjustment retroactive funding.
Senior ebb and flow calculation.
So hi, Bobby.
I think that might be a after tax.
Different.
Between the 15 and the $11 million.
You're referring to.
Okay I thought the after tax in them with 7 million relative.
Relative to the $11 million.
So.
I think it's not exactly sure which number two.
But on a consolidated basis, our net recovery was $9 9 million.
GAAP number in.
Slide 20.
20, 657 percentage will now get a $2 7 million recovery adjustments that we would have.
Okay, maybe we'll follow up offline on that one.
That's it from me thanks very much.
Q.
And I'm not showing any further questions at this time I would like to turn the call back over to net.
Thank you Kevin. Thank you everyone for joining the call today and on behalf of the entire Sienna team I want to thank all of you for your continued support.
Thank you very much.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.