Q2 2021 Sienna Senior Living Inc Earnings Call
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Ladies and gentlemen, thank you for Sandy by today's conference is scheduled to begin momentarily until that time your lines again will be placed on music hold thank you for your patience.
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Ladies and gentlemen, welcome.
Welcome to Sienna Senior living incorporated Q2, 2021 conference call. Today's call is hosted by Eaton, JV, President and Chief Executive Officer, and Karen Hahn, Chief Financial Officer of Sienna Senior living incorporated please be aware that certain statements or information discussed today are forward.
Actual results could differ materially the company does not undertake to update any forward looking statement or information. Please refer to the forward looking information and risk factors sections in the company's public filings.
Clothing is most recent M D and E and eight I F for more information you will also find a more fulsome discussion of the company's results and is M D and E and financial statements for the period, which are posted on SEDAR and can be found on the company's website Deanna living.
C. A today's call is being recorded and a replay will be available.
Instructions for accessing the call are posted on the company's website and the details are provided in the company's news release. The company has posted slides, which accompany the host's remarks on the company website under events and presentations with that I'll now turn the call to Mr. Jain. Please go ahead Mr. Jain.
Thank you Sharon good morning, everyone and thank you for joining us on our call today.
At the end and we believe it is a privilege to careful and serve Canada seniors.
We are continuing our relentless efforts to ensure the lipid utmost comfort dignity and respect.
Recent months have been marked with renewed optimism.
Theater view to the future and some exciting developments at our company.
Yes.
Over the past year, we conducted an in depth assessment of our retirement platform and identified opportunities that will set us apart in a competitive market.
We believe that by repositioning at the time in all patients we can fill our current GAAP and Canada and Canadian seniors living.
As part of this repositioning initiatives at a time and all patients will start operating under the brand name Aspira.
At the center of a new brand as a conviction that senior should be able to lift the life of <unk> with an increased emphasis on being a vital part of the local community.
Yeah.
Initially will enhance service offerings, such as dining and resident programs.
Culinary experience will feature more choices carefully curated ingredients healthier options wideband presentations and a greater emphasis on local products.
But to help the technology and the addition of signature programming.
Our resident engagement programs will focus on motivating residents to export more possibilities to get stronger and healthier.
Andrew Good morning engaged within their local communities.
In addition, our wellness programs will be expanded and more clearly communicated enabling our residents to discover more choices and create their own path.
That spirit, our name and enhanced product and service offerings will be launched later this year through the early 2022.
And will be supported by the widespread communications and our marketing campaign with a designated website for the new retirement platform.
Yeah.
We expect our speed up Brian and service offerings will support occupancy growth and contribute to improved financial performance as a result of better brand awareness and loyalty.
We are creating a distinct online presence for our retirement portfolio and we can more effectively drive traffic to our residences.
We also expect our new brand to support our talent attraction and retention efforts.
It is our belief that our consistent and comprehensive set of standards under the new brand will allow us to continue to scale our platform.
And support our continued growth.
Moving to development.
Our current joint venture at a time in development with Reichman senior housing in Niagara Falls is progressing well.
We started construction of the 150 suite Greenfield development in May which is expected to achieve an approximate development yield of seven 5%.
We also continue to make good progress on 160, <unk> long term care redevelopment in North Bay.
We expect to start construction later this year.
The new long term care community named Northern hikes care community will replace our waters educator community and is designed to the newest industry standards.
In early July the Premier of Ontario, and other senior members of the government participated in the site ceremonial groundbreaking event.
We are grateful to play an important role in building the future of seniors living in Canada to a development such as this we are also contributing to the long term economic growth in the region.
We are also making imaging upgrades to the older C class long term care portfolio independent of the timing of redevelopment.
To elevate the experience of our residents and the work environment for our team members, we're investing $2 million this year for capital upgrades and the common areas such as lobbies, Dr <unk> and recreation rooms.
These investments are made on top of regular annual maintenance capital expenditures.
Furthermore, we are proceeding with upgrading and installing eight to 800, new air conditioning units and revenue enrollments at over 30 of our long term care communities.
<unk>.
We strongly believe that all revenue strong should be a condition and committed to this project project mandatory regulations coming into effect.
Moving to slide eight addressed.
Addressing vaccine hesitancy proved to be crucial.
Our approach was focused on ensuring everyone is well informed which included in a far reaching communication and education plan.
And logistical support for our team members and residents to get the vaccine.
We also have a vaccine contest to incentivize and thank our team members for getting vaccinated and have recently awarded cash prizes to three personal support workers.
The most recent winner was Mircea Palmer to whom I have the privilege to present, a $10000 check when our name was drawn optical reach after we reached out 85% of vaccination targets across the company.
Marseille was among the first team members to get vaccinated and has dedicated 19 years working at the <unk> on night shifts at our St. George care community in Central Toronto.
According to our most recent vaccination data, 96% of our residents and 88% of our team members received their first dose of the vaccine with 95% of our residents and 77% of her team members fully vaccinated.
With many public health restrictions being lifted in our key markets in Ontario, and British Columbia.
We have been able to gradually reopen and welcome prospective residents and visitors to our residents.
Together with our vigilant infection prevention and control measures. This contributed to the very low number of active Covid 19 cases across our portfolio in recent months.
As of yesterday, none of our ADC owned or managed residences have any active covid 19 cases.
Yes.
Our focus continues on improved quality of care and strengthening our ongoing review of quality of care based on quality indicators clinical reviews and inspection reports.
We also continue our collaboration with the <unk> quality leaf initiative.
This is an initiative, we joined last year to better understand quality outcomes and opportunities for improvements.
Based on our initial report card from Eschew alive. Our performance is in line with Escola members and international benchmarks.
Moving to occupancy the improved operating environment resulted in the resumption of enforcement tours and increase the number of residents moving into a retirement and long term care communities.
Therefore, it up our marketing and sales teams who have been working on numerous initiatives are also paying off.
This quarter's online leads tripled year over year and resulted in a 147% increase in rent deposits and 121% increase in move ins compared to Q2.2020.
These strong lead indicators are reflected in the occupancy improvements and at a time and portfolio.
Same property at a time and occupancy reached 86% at the end of second quarter and an increase of 200 basis point from the end of Q1.
Average occupancy continued to improve in July at.
At 79, 7% an increase of 80 basis points from average occupancy of 70, 889% in June.
For the remainder of 2021, the forecast continued gradual occupancy improvements and other timing portfolio.
Based on the assumption that residences will remain open for enforcement tours and continued pent up demand.
And our long term care portfolio, we have made good progress with respect to new revenue admissions.
Q2 occupancy increased 130 basis points from the previous quarter to 81, 6%.
This number is not adjusting for approximately 500 beds, which are unavailable, mainly as a result of capacity limitations in three and four bed boardrooms.
Our long term care occupancy ended the quarter at 83, 5%.
And is expected to continue to improve in the second half of the year as admissions accelerates.
As of now the government has indicated that effective September <unk> 2021.
Occupancy targets required for full funding will be reinstated.
This excludes unavailable beds.
Given the long waiting list for long term care beds in Ontario, and the resumption of admissions of residents. We anticipate that they can achieve the necessary occupancy targets required for full funding at the majority of our residences.
Excluding the impact of net <unk> expenses, we expect the financial performance of our long term care portfolio in 2021 to.
To be slightly below 2020.
Our internal forecast are based on the impact of earlier access restrictions on preferred accommodations.
And the possibility of not achieving that acquired occupancy targets at some of our residences.
Moving to our continued focus on diversity inclusion and fair compensation.
With nearly 13000 team members our employees our CNS most important assets.
Our commitment to corporate social responsibility and our team as highlighted in our mid year update to our ESG report, which focuses on diversity and our approach to fair compensation and gender pay equity.
At C&I over 95% of our workforce receives compensation above minimum wage at.
At approximately 80% of our frontline team members to receive compensation that exceeds minimum wage by 50% or more.
Furthermore, our predominantly female workforce is mirrored in our management teams.
With approximately 80% of our top 380 leadership positions held by women.
When it comes to gender pay equity male and female frontline team members compensation for similar position is comparable.
Our strong and diverse team will support our effort to ensure that people live with atmos comfort dignity and respect.
With that I'll turn it over to Carol for an update on our financials.
Thank you Nick and good morning, everyone.
In recent months in person tours have resumed at our retirement residences and record in admissions.
Across many of our long term care residences.
At the same time incremental pandemic related expenses have started to moderate.
Anticipate further improvements as the pandemic subsides.
However, the timing of pandemic expenses versus the funding of such expenses continued to impact our financial results.
While our operating improvement has.
Secondly, our financial results remain below prior year levels.
As shown on slide 13 revenue decreased by 1% year over year to $162.7 million this quarter.
Consolidated net operating income decreased by two 8% to $31 million this quarter compared to last year.
This was largely the result of lower occupancy in our retirement portfolio and lower preferred accommodation revenue in our long term care portfolio, which was partially offset by lower net pandemic expenses rental rate increases in retirement and inflationary funding increases in long term care.
Retirement same property NOI decreased by $2.3 million to $12.8 million this quarter compared to last year.
Excluding net pandemic expenses retirement same property NOI for this quarter decreased by $2.8 million year over year to $13.7 million, mainly due to lower occupancy partially offset by annual rental rate increases in line with market condition.
Rent collection levels remained high at approximately 99% consistent with pre pandemic level.
Long term cash same property NOI increased by $1.5 million year over year to $18.1 million largely due to lower net pandemic expenses in this quarter.
Excluding net and then Nick expenses.
Long term care NOI for Q2 decreased by $2.4 million compared to last year to $20.5 million, mainly as a result of lower revenues from preferred accommodation.
During Q2, 2021, CNA incurred $3.8 million of net pandemic expenses.
This represents a decline of $1.6 million or 30% lower compared to Q1.2021 after adjusting for a retroactive pandemic funding, which would receive last quarter.
Although we continue to incur extra ordinary pandemic expenses quarter over quarter improvement was largely driven by the reduced reliance on agency staff.
Compared to Q2.2020, net <unk> expenses decreased by $6.8 million or a decrease of 64% largely as a result of additional government funding and a moderation of pandemic related costs related to additional staffing.
Q2, OSA full per share was $22 six.
A decrease of two <unk> compared to the prior year <unk>.
Excluding that pandemic expenses for the quarter <unk> per share would have decreased to $26.08 year over year.
In Q2 <unk> per share was 21.
A decrease of three 8% compared to the prior year.
Excluding that pandemic expenses for the quarter <unk> per share would have decreased to 24, 9% year over year.
Yeah.
Moving on to slide 15, looking at our debt metrics.
Our debt to gross book value improved by 270 basis points to 45, 5% as at June 30, compared to the end of 2020, mainly as a result of the pain our credit facility.
Debt to adjusted EBITDA improved to seven four years, and 2021 compared to $9 four years from 2020.
Our weighted average cost of debt was three 4% year to date 2021, a marginal increase from three 2% in 2020, while our total debt decreased by <unk> 5 million as of June 30, compared to the end of last year.
And our interest coverage ratio was three nine times year to date in 2021 compared to three one times in 2020, effectively returning to pre pandemic levels.
In terms of our balance sheet on slide 16.
<unk> maintains a strong financial position and an investment grade credit rating.
On June 3rd we issued $125 million in unsecured debentures at an interest rate of 282% maturing in March 2027 with.
With this financing we further reduce near term debt maturities and improved our long term debt ladder.
The debentures were issued at the lowest interest rate and longest maturity compared to any of our previous debenture offering.
We ended the second quarter with $235 million and liquidity, an increase of 34 million since Q1, and an unencumbered asset pool of nearly $1.1 billion, an increase of approximately $247 million compared to the end of Q1.
Our debt is distributed between unsecured debenture conventional mortgages and seamlessly insured mortgages.
I will now turn the call back commitment for some closing remarks.
Thank you.
In a very different place than we were a year ago.
While we stay vigilant and are prepared for a possible fourth wave recent months have been marked with renewed optimism at sienna.
As I mentioned in my opening remarks at the center of our rebranding initiative is the conviction the senior should be able to lift the liza deserve with an increased emphasis on being a vital part of the local community.
We also continue to work with stakeholders to improve the way we care for our seniors and stay focused on advancing our long term care redevelopment.
The strength of our balance sheet and our operations will support our ambitious $600 million redevelopment plan to modernize long term care in Ontario.
I want to finish by thanking our team members, whose drive compassion and commitment will support this purpose by providing our residents with the highest level of care and services for years to come.
Thank you for your participation on the call today. We are now pleased to answer any questions you may have.
As a reminder, we have a question. Please press star one on your telephone keypad.
First question comes from the line of Jonathan <unk> from TD Securities.
Thank you good morning.
First question just spira.
Is that something that you guys contemplated prior to covid or does that come from some of the lessons.
What you've learned over the last 18 months.
So this is a new initiative as you know we have a brand new executive team.
One of the taste, we contemplated is how can we position our retirement platform differently.
Over the last five years since the.
The brand of the company to Sienna at that time, we had it on 11 retirement homes and today, we have 27 retirement homes that we own and we also managed.
Canadian portfolio Sabra health care REIT of additional eight homes.
And given our continued focus on growing this business, we probably will make sense to have a separate platform.
Common platform to really drive efficiency drive programming, and obviously help us to grow.
As we go further.
Okay.
Fair enough and then just on on the retirement occupancy.
Good to see that moving up how how is the trend.
So far in August.
I think it's too early to talk about August.
That is a bit of delay usually in getting the data July numbers. We just talked about that we are seeing continued.
Occupancy increase in July versus versus June.
We continue to see some improvements usually summer months are a bit slower. So I think it's hard to predict.
At this point, but we do expect for the balance of the year do continue to have a gradual increase in our occupancy.
Okay, and then just lastly, how would the leads.
Posits.
Care to similar time in 2019.
So I don't have the 2019 data just tougher farhad <unk> 2020, but.
Im assuming the reason you're asking 2019 is because of pulp.
Volatile 2021, so we don't really have that data readily available, but it's something that we can.
Provided at a later date Jonathan.
Okay. Thanks al.
Turn it back.
Thank you. Your next question comes from the line of Frank Liao from BMO capital markets.
Hi, Good morning, Dan Okay Alright.
Very good Frank good morning.
So my first question really comes through the night.
Im expenses, I see that which is fine, but on or whats your expectation for the remainder of this year.
<unk> 2002.
Do you expect like you know.
Keep trending lower to a certain level because I heard from Mike.
Okay.
Seemed like a C P a R.
So just wondering about your.
Hi, Frank.
I'll start answering the first product question.
I couldn't hear the second part clearly so let me know what I can fill up afterwards, we are very encouraged to see the direct correlation with our high taxes nation rate and are very low or no.
The case, count, which directly contributed to a reduction in pandemic expenses quarter over quarter.
And that also helps us being able to revive platform agency staff.
We expect that our pandemic expenses could further moderate some more.
We continue to see a stable operating environment.
However, we do continue to expect that our pandemic expenses could come in higher than pandemic funding.
One partly due to timing.
But also in our retirement business doesn't get the same amount of.
Funding. So we do expect that for some time.
And our unfunded pandemic expenses.
And looking ahead it is still hard to predict what our net pandemic expenses would be because we are staying very vigilant.
We have a forest waste that is looming.
That's correct. So my question I'm, sorry can you hear me better now.
A bit.
Alright, So my second question would be your comps.
Sure.
Thank you.
Mike.
Well I mean at a certain level.
And Bob.
ETE right now okay.
Was not need.
Okay.
So youre going forward, even after covid.
Frankly I think.
Again, the voice is a bit muffled.
I think they all have palm just working from different places at times I think what the question is is the permanent aspect depend emmick expenses potentially.
We continue believe that.
There might be a small impact, but not really not really huge.
Let's say if people continue to wear masks for a period of time mass cannot come down significantly price. They usually caused by <unk>. They went up to nearly $1 now they are back to that 5% price pricing is so so even if there is a limit if there is some limitations on getting some PPE I don't think that will have a significant impact on <unk>.
Expenses.
Restrictions are coming off so and if there is if there.
If it continues to be some vigilance and long term care to a small amount we do expect that pipe to be funded going forward as well.
Okay. Thank you that's great clarification.
Alex Murray Goulburn.
I'm, sorry can you repeat that.
Hello.
Sorry, sorry, I can even better now.
Yes. Thank you.
Yes. Thank you that's great color on my second question is.
Regarding the long weekend for LTC beds.
Just wonder if I'll say with husky and changing in Q1.
Do you expect any spill over.
Your LTC.
Tenants for tenants, who are looking for LTC patch your retirement homes.
I mean, it's.
It's possible, but usually there is two way different kind of residents in the Commons in long term care. So you might have residents and retirement, who are looking to move into long term care. So they might stay a few extra months, while they are looking for long term care space usually.
Residents, who are who are looking for long term care will not necessarily move really into retirement.
Got it got it.
Okay.
Last thing I see you guys had a great.
Unsecured debt and I, just wonder how is the conversation with the rating agencies and.
I just wanted to get some color from there.
I mean, I think color is pretty clear on their rating confirmation that was really the extent of what we can talk about it was no different.
Going through.
Getting awaiting confirmation, which we could show everyone has to go before you issue that debt.
Okay, Alright, thank you very much.
I'll turn it back thank you.
Frank.
Your next question comes from Simon <unk> with Google.
From Scotia Bank.
Thank you and good morning.
So on the long term care or what could be or mtc occupancy by the end of August.
Where do you need to be fully funded.
Hi, Himanshu.
We have been working very closely with the various links to move in residents on an expedited basis.
And we do see that there is.
Traction being gained.
It's hard to predict where we would be ending at the end of August.
And we did end the quarter at 83, 5% on an unadjusted basis, meaning without removing the unavailable debt.
<unk>, which we expect I would not be included in the occupancy target.
We do expect that they'll come September that the majority of our homes would be meeting the occupancy targets and for us more a small portion of our homes that it's really a matter of time to get to that target and that the impact would not be significant in our overall years results.
Yes.
And I was wondering can you quantify the impact I know you said theres going to be small in the context of affordability.
But what could be the September number.
The Tuesday Wednesday.
Yes.
Because it is hard to predict each month, where our occupancy would be it is equally hard to predict what that impact would be.
We are working very hard to move in the residence.
Very quickly as we know it is.
Our centrally controlled by the lens and that administrative process does take some time.
Okay. That's fair enough and then even sticking to LTC again, there was a funding shortfall in Q2.
Do you expect to catch up to the next.
A few quarters.
I would say, it's much better as the effects of the country the advocates.
For those funding shortfall to be made whole, but we don't really know if that will happen or not so we are hopeful but thats not something.
We can confirm our count on at this moment.
Okay, That's fair enough and then just.
Moving to the retirement home occupancy I mean, you've seen some will go up in the last two months.
And does it Goldman consistent with the overall market.
Overall buckets.
No I mean, it is quite different for each markets. There are markets, such as Ottawa, which continue to have.
A challenge because of <unk>.
Because of supply and then.
Occupancies, even lower but supply challenge becomes even even bigger so no it's not consistent across markets, but however, overall, we're seeing an occupancy change across our markets.
Amount of it would differ from market to market.
Okay.
Danny.
Our occupancy moved up.
Certainly the last few months are you all seem like more concessions are you aggressively marketing that's one.
So usually when we say concessions are approaches there might be a one time incentive to malls such as moving cost of others. We don't really reduce rates that's not a good recipe for success because you have the residents with you and if someone new coming in has a significant lower.
Rental rates, but does not sit well with the current residents. So we do offer onetime incentives and Thats really approach has not changed so theres no significant incentive which is driving this is really working with our with our marketing team.
Meaning following up on leads our centralized call centers. So I think there are multiple reasons why we are seeing.
This growth marked incentives is not necessarily one of them.
Okay.
Things like smaller operators or you know your competitors offering more concessions today to lease up their quota.
Maybe one off we really haven't heard anything systematic himanshu.
Okay awesome. Okay. So maybe just last question from my side on development projects.
So I'll just I'll just be MLB.
How many more to go on at the same time.
And then the limits.
How much.
<unk>.
You're going to allocate to.
Yes, we feel I think at peak getting a little $150 million of active projects in the development I think that that is pretty reasonable and depending on the size of the project that could be 3% to four projects because there could be one completely winding.
Down where it's fully constructed and next one is just getting started where you just buy land. So I think you could have three or four projects in active development in very different stages and the risk of development is also quite different and retirements do you have the risk of both the construction or the development risk and the lease up risk in the long term care.
The risk is more on the first part on construction costs and development costs. So we do feel given.
A big chunk of our development is going to be a long term care that potentially it is less risky from a lease up perspective.
We can ensure that we can have a control on costs and other things.
Awesome. Thank you guys and I'm talking about.
Thank you.
Next caller.
From National Bank.
Hey, good morning.
Hi, good morning, good morning.
I wanted to start with something maybe a little less financial I'm, just wondering like if you can explain to us.
On the ground process.
<unk>.
During the redevelopment like if I'm a resident in our facility.
Rather than one of your facilities in a market, where you are going to be redeveloped that facility.
You construct the new facility.
<unk> moved over.
Is there a leasing process that'd be olds facility that we should be aware of.
How do you how should we think about moving costs things like that like bear at that kind of stuff can you just talk a little bit about the nuts and bolts of like that actual process.
Sure. So I think the way you describe this call is exactly how it works.
Any cost they.
There would be some moving costs as you're moving to residents and there is usually a provision by the ministry and we definitely have into their debt as part of the development costs. It is not material because we are moving people across.
Across the town.
It does take a bit of time, because moving residents to.
To another place you cannot really just high two buses and move everyone. In ongoing Covid is a slow deliberate process used to limit the number of people in each week. So for 160 bed home that process could take a couple of months to do it properly and staffing.
You might have some stuff in the new place in some of the old you might be hiring some contract staff because there would be a bit of a.
<unk> com for a period of time, because you might have to kitchen is running at the same time, so but those costs are not material and are factored as part of our.
Developing yield.
And the old and the older facility like do you stop admissions Blake.
Four months in advance I don't know exactly when you would stop admissions in that market.
I mean, not really because everyone gets moved over to the new place unless youre going down in capacity, which we are not doing so are we actually going from 148 beds using the knock. The example to actually 160 and then a couple of other places.
The two projects, which are approved for US. We are also going up in capacity. So it does not we don't really limit admissions or any period of time.
And as we get closer to.
These projects getting completed or are you going to able to disclose to us what the.
NOI was on the existing properties. So we have an idea of what the.
The pickup will be.
Sure I think we can we can start to provide some.
Disclosure on it just to when we compare the NOI from an existing building and compared to NOI of new building and just two.
Clarify when we do talk about developing deal you're talking the new NOI for the new home over the construction cost with a new home.
And one could say that we are not factoring in the NOI from the current <unk> that would be true power, it's a bit of an apples to oranges comparison, because you have a seabed license, which is going to expire in next five to seven years.
These homes get redevelop versus a new <unk> license, which is going to last for 30.40 50 years. So I do think there is a bit off the.
The comparison issue, but you're right from a just from a pure financial model perspective, you would need to know how much is coming out and how much is going into so you can factor in the incremental and we can start providing that visibility as we get closer to two openings.
Okay that would be helpful. And then my last question.
This is like the redevelopment.
Long term care facilities that you have to do.
You're sort of in control of the timing I would say like youre not entirely controllable timing because the government is kind of playing off and everything.
It feels like it's sort of in control of the timing how should we think about your ability to scale the retirement business when youre going to have.
This redevelopment process toward.
Consume a fair bit of capital simultaneously.
Yes.
That's a fair point you Stephen we have done material retirement transactions I mean, we have a very robust balance sheet a lot of availability due to kashi without even going to capital markets at the moment and our debt, which is up 45, 5% debt to book value. So it's not even mark to fair market value will begin.
Low 40% of the leased so we do have even room in our balance sheet to go up in debt during the time off.
Active construction.
So at this stage given a program of $150 million to $200 million because all the things. We just talked about even if you wanted to develop all 12 long term care homes, you cannot really do that Theres a ministry process, you have to get license approved yet to buy land.
So that process is going to take five to seven years.
Call it $100 million to $150 million of active construction on any given period of time, which we don't think is very material given.
The size of our Bal.
Balance sheet, and then we have done big acquisitions in the past where the carbon growth.
Access capital markets and Thats not something you can always rely on necessarily but we have had good success or the over the past five six years and we do hope that continues that way, which was recently confirmed when we access the unsecured market for our $125 million offering.
So for so long way of saying that we don't feel we don't feel constrained that by doing one we would necessarily give up on the growth opportunity on another.
Okay. That's fair. Thanks I appreciate it thank you.
Your next question comes from the line of yes.
Thanks, Paul.
With the bank.
Good morning.
Hello, Good morning, guys.
Just want to.
Understand.
New realist artist Ms Aman home platform.
What is the most distinguishing factor between your existing platform and this new platform.
Yes, I think those both of the detail yes.
We will be going through <unk>. So the official again, we're naming it.
Showing the name of it today all of the programming that comes along with it we provided some details.
Further on programming it on well being so we are shedding some of it. However, the majority of it will come out later this year early next year, because we are still in the early stages of it I would say the.
The few reasons to rebrand the first one is to just reflect how the company has changed from 11 retirement homes.
The new branded them all to C&I and with the local name to currently today when it is a half nearly half of the part of the business. So that's one second as we have grown through acquisitions. Each one of the homes that we bought have been on platforms at times their own way of doing things, so having a consistent way of doing things across the platform. We believe is up.
<unk>.
It's going to have significant.
Impact on service delivery on team member experience and also.
Also how we solve those homes going forward. So those would be some of the things that we can share today, but I think the more details as we progress through the year.
So if I understand this correctly. This is rebounding another new platform this definitely.
I would say, it's a combination of both like there. It's not just a name change because then it will be just rebranding it as coming up with how we do service delivery you talked about a focus on few different things, how we do food differently, how they just hold the programming differently. How do we think the wellbeing program. It would also have some impact on the program.
Our team members. So no. It's just not a named chain. It has other operational aspects to it.
Okay.
And then moving on to the JV you talked about.
Dominic home JV.
Are you providing.
Any mezzanine funding anything.
This project in our view.
Do you have to be.
I think in the future by then just talk to your partners.
Any of those conditions.
There is no mezzanine financing and this reference senior housing there theyre very established operators and builders in the retirement space. We're a well respected we've gone through it we will get a conventional construction financing on this project and our intent going into this projects to eventually own all of it so after a certain period of time.
Jim.
We will eventually go into whole retirement home.
Right.
Trying to understand is are there any.
Thank you.
Signing up to buy that property at a certain GAAP rate or anything like that no.
Usually they are at a fair market value at that point, because it will be much further out so theres no pre negotiated cap rates in this situation there will be bought at fair market value.
Got it and just one last one.
What.
How many beds are you losing.
If the Goldman sees that there won't be more than two bits in any room.
Mtc.
Sure.
Yes.
Please share that.
<unk> would have about 353.
Third and fourth best.
In our portfolio that currently we are not moving and residents to based on the Ministry of regulation.
Okay. That's it for me thank you.
Thank you.
Our next question comes from the line of <unk> <unk> from RBC capital markets.
Thanks, and good morning, just.
Maybe coming back to the spirit platform can you just comment on the cost associated with the launch and.
I'm just curious if you anticipate maybe ultimately driving some new sources of revenue.
That youre currently generating.
Sure the cost we expect for this $1 billion in capital and made a couple of hundred thousand dollars in operating expenses most of it is really related to.
Our new website, which.
Would have a whole idea of.
Creating more online leads and selling online so we feel.
That will further enhance our lead generation and second others could be things such as signage.
And some physical changes to the to the building. So that's really that is the extent of it.
There are markets, where there is quite a bit of competition. So again.
Going back to then the two intensive this is for us to have a common platform. So we can have some common programs across the portfolio and second is to really rethink the service offerings that we have so we do expect that to generate some additional revenue whether it's true occupancy increases.
Whether through.
Charging for additional programming again, I think it's too early for us to.
Due to share those because we're still in the planning phase for that.
Got it that's helpful and just maybe one more for me and maybe some of the recent retirement transactions that we've seen in the market.
Any comments on what trends youre seeing in pricing in the retirement space and maybe any initial thoughts on the on the Blackstone selection transaction with with Rivera.
Yes, I don't have any.
Other information than what's disclosed.
The transaction you just talked about what we are seeing is that our pricing is even tighter than pre pandemic levels and part of it is reflected in the financing cost that people are seeing.
Whether it's <unk> financing, whether its unsecured financing for field the borrowers who can do unsecured financing in senior housing, although its conventional financing rates continued to be quite attractive and.
And that obviously changes your.
End of the day, what's your cash flow that is left behind after paying your interest expense.
And also the quality of the assets that are coming and the amount of capital that has been changing senior housing asset. So we are in fact seeing pricing even tighter than it was in pre pandemic level.
That's what we have seen from our perspective.
Based on the valuation work that Karen led for our unsecured financing, we have not seen any and each.
Up uprising cap rates for the properties that behalf.
Got it and maybe just coming back to that transaction by chance did you did you look at those assets at all or are you familiar with them.
We do look at transaction side time to time I think it will be I don't think it would be right for me to comment on specific transactions.
Okay.
Maybe just coming back to I guess the overall.
Look for the retirement segment of your portfolio is it fair to say then given where you are today and sort of still.
Focused on emerging from the pandemic.
Retirement transactions are probably low priority at this stage.
I wouldn't say, so I think part of it.
Our strong platform is to be able to do multiple things at the same time and we have shown that while you were dealing with the first wave second wave third wave.
We're also working on a redevelopment program. So we can actually have two development projects and the swing in your working one retirement, one long term care and we have two other.
Development projects, which are in towards final stages.
We launched a new platform, which had a lot of planning behind it so we do.
We do feel quite confident about our team in Nevada about our ability to execute if we find the REIT transaction, but to your point, we have we have.
Have to be cautious so it's not growth is not the only thing that we are focused on we are also focused on ensuring that we can come back to salt.
Pre pandemic levels as it relates to occupancy and other retirement division in long term care.
So we have to do all of those things, but I don't think that will preclude us from participating in any REIT transaction. If it comes along.
Got it thanks, very much and I will turn it back.
<unk>.
At this time there are no further questions I would like to turn the call back over to Mr. James for closing remarks.
Thank you Sharon. Thank you everyone on behalf of our management team and our board of directors I want to thank you for your continued support and I Hope you have a great rest of the summer.
Thank you.
This concludes today's conference you may now disconnect.
Okay.
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