Q3 2021 Chartwell Retirement Residences Earnings Call
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This conference is being recorded so it goes to the homes that don't go as you see.
All participants please standby your meeting is ready to begin.
Good morning, ladies and gentlemen, welcome to the Chartwell retirement residences Q3, 2021 financial results conference call.
I'd like now to turn the meeting over to the CEO of <unk>. Please go ahead.
Thank you Chris Good morning, and thank you for joining us today.
There is a slide presentation to accompany this conference call available on our website at <unk> com under the Investor Relations tab joining.
Joining me are Kevin Sullivan, President and Chief operating Officer, Sherry Harris, our Chief Financial Officer, and Jonathan Black Young our chief investment as Chief Legal Officer.
Before we begin I direct you to the cautionary statements on slide two during the call. We may make statements containing forward looking information and non-GAAP measures are M. DNA and other securities filings contain information about the assumptions risks and uncertainties inherent in such forward looking statements in detail.
Such non-GAAP measures more specifically I direct you to the added disclosures in our MD&A for the year ended December 31, 2020 under the heading of COVID-19, the business impacts and related risks for a discussion of risks and uncertainties related to the pandemic.
These documents can be found on our website or on SEDAR dot com.
Following continued improvements in our leading indicators, we are now seeing occupancy gradually recovering.
Led by strong improvements in our Western Canada portfolio.
Having visited several of our residents as recently I know that our teams are focused on continuing occupancy recovery and are looking forward to welcoming new residents to their communities Karen.
Karen who will speak about various initiatives that we're putting in place to help them in this recovery.
While many infection prevention and control protocols introduced during the pandemic remain in place we continue and we continue to invest in residents and staff safety measures. The pandemic related expenses have been gradually coming back to more normalized levels.
The frequency and severity of COVID-19 outbreaks have declined thanks to high vaccination rates of our residents and staff and the community at large our mandatory stop vaccination policy has been in place at Ontario, and Western Canada. Since October 12, and will be effective in Quebec on November 15th we.
Serve and care for people, who are most vulnerable to this virus and we see it as our duty to do our best to protect them.
At this time vaccinations are the best defense available and that is why we are leading the retirement living sector with the implementation of this mandatory vaccination policy across the country.
Our long term care team has done an excellent job of meeting new residents to their homes or long term care portfolio is now at 96, 5% occupancy excluding that's taken out of inventory due to restrictions in admissions and three and four bed wards and bad debt reserves for isolation.
With the completion of our unit offering in August 2021 proceeds of which were partially used to repay our indebtedness, we created balance sheet flexibility to execute on our strategic objectives, including acquisition opportunities should they become available we continue to maintain significant liquidity of $338 6 million and unencumber.
Asset pool valued at over $1 billion.
We have now completed the construction of two new residents is the 172 suites Cherwell Guild with well welcomed its first residents in September and 122 apartments addition to Charles Montgomery village will have their first move in in late November both residences had strong pre leasing.
With Starwood Guild, with having 71% of which suites reserved and Montgomery, having 38 per cent reservations.
I will now turn the call over to Karen to provide her operational update.
Thanks, Brian turning to slide four I'm pleased to report that we continue to have only a small number of outbreaks in our retirement residences in long term care homes across the country, including no outbreaks at this time in Ontario, LTC homes are there with respect to the four homes that are currently an outbreak and to residents as the number of residents and staff affected us.
Very small and work with respect to larger outbreaks into retirement residences and smaller.
Communities in northern Ontario, the affected residents and staff are either asymptomatic or have relevant relatively mild symptoms the changing outcomes in our sector is due to the very high vaccination rates amongst our residents at 97, 5% of restaurants with at least one dose as well as chartwell mandatory vaccination policy for staff, which is in play.
And all of our homes and residences across the country. This includes moving forward with our policy in Quebec, where the provincial government recently decided not to proceed with a mandatory vaccination policy for health care workers. We believe strongly that this policy is essential in all of our homes to protect the vulnerable population that we serve the implementation of this policy has resulted.
And very few layoffs and terminations, thanks to our dedicated staff across the country committed to keeping our residents safe. We're also very pleased that our residents as well as.
Health care workers have been prioritized for the third dose booster shot with administration are completed and our LTC homes in Ontario, and well underway and our other platforms. We're also seeing provinces, including BC, Alberta, and Ontario, prioritize third doses for our employees.
Hi, vaccination rates and improved outcomes have continued to lead to reduced restrictions in our residences across the country and people are now returning for in person tours families are joining us for delicious meals again, an exciting group activities are back on the calendar overall changes in capacity to access stores restaurants, gyms sporting events et cetera.
And the broader communities, where we operate are also leading to a new sense of normalcy that will help with overall confidence during the coming weeks, which are traditionally some of our best sales weeks of the year. This combined with pent up demand should result in occupancy improvements and our retirement residences across the country.
We are seeing signs of this in terms of improvements in our leading indicators, including a 35% increase in initial contacts and a 55% increase in personalized tours quarter over quarter and most importantly, an increase of 31% and permanent move ins with permanent move outs down 5% in Q3 2021 compared to Q3.
2020.
Specifically, we have seen a significant rebound in our western Canada properties, with Ontario, beginning to gain occupancy and Quebec occupancy stabilizing.
Turning to slide five our always on multimedia marketing campaign. Thank you know retirement living think again showcases the very best of aspects of retirement living including social connections leisure experiences and visits with families and friends are also well underway and producing our winter campaign, which has been an emphasis on the support in <unk>.
Carrier services that are available in our retirement residents from connection to staff to healthy and nutritious meals as well as housekeeping and maintenance and care services.
We're reinforcing our message towards a needs based audience for the winter months, our website Chartwell Dot Com just received a design makeover to improve the user experience based on an analysis of the web site data and changing market conditions. Our property oriented design was determined to be the best approach for the next iteration of the web site along with them.
Making property search the focal point on the homepage. We are also helping website visitors navigate through the property pages more easily early analysis shows positive results and generating inquiries and property material download and.
In Q3, we completed our fall sales training sessions with our retirement living consultants across the country with a focus on our sales process. They use of videos is an enhanced sales tool improvements to our prospect out of collection process and the advantages of our business development strategy with 11 business development managers now in place.
Across the country focused on building relationships with community Influencers, including health care professionals Realtors financial planners etcetera, we are increasing our referral base. This strategy along with the rollout of club Chartwell are resident referral program is designed to focus on prospects with the highest closing ratios specific.
Specifically, those who have been referred by a trusted source.
Finally, turning to slide six the operations team continues to focus on the chart will experience, including returning to in person training sessions for new stuff work also continues on our staffing optimization project to maximize full time positions in our residences and better align staffing levels to occupancy care and service levels.
Also with respect to staffing in Q3, we hired additional recruitment resources to assist us to sell frontline and managers vacancies in our homes.
Our new care assist program in Ontario has led to steady growth in care revenue month over month, and we are now augmenting this with access to virtual physician services in all of our residences in Ontario with plans to introduce both of these programs in Western Canada in 2022.
Our expenses continue to decrease as the pandemic restrictions ease and case counts have subsided. This includes a reduction in costs for PPE and additional pandemic related staffing. We are also pleased to see the Ontario provincial government make important steps to increase the staffing levels and our long term care homes, including funding to begin to move.
From an average of four hours of care per restaurant per day, which if passed well being trained in new legislation recently introduced by the government.
Now I'd like to turn it over to Sherri to discuss our financial results. Thank you Karen.
As shown on slide seven in Q3 2021, net income was 0.9 million compared to a net loss of $6 8 million in Q3 2024.
For Q3, 2021 episode was $33 9 million or 15 cents per unit compared to 38 million or 17 cents per unit in Q3 2020.
The decrease is primarily due to lower occupancy sales of non core properties and lower interest income, partially offset by lower finance costs and higher management fee revenue.
Slide eight summarizes our same property operating platform herself.
Our same property adjusted NOI decreased by 4.2 million or six 5% in Q3 2021 compared to Q3 'twenty 'twenty as a result of lower occupancy of 78, 2% in Q3, 2021 compared to 83, 2% in.
Q3, 'twenty 'twenty same.
Property and retirement occupancy was 76, 5% for Q3, 2021 compared to 82, 4% for Q3 2020 or a decline of five nine percentage points, which resulted in lower revenue of approximately $10 3 million compared to Q3 'twenty 'twenty.
On a sequential quarter basis, our western Canada platform achieved strong growth with weighted average same property occupancy increasing one nine percentage points from Q2 2021.
Our Ontario platform Occupancies began to stabilize during the quarter with a small sequential quarter decline.
The pace of decline and our Quebec platforms slowed.
The following additional factors affected our same property retirement operations results.
With a reduction in the number and severity of COVID-19 outbreak, we have been gradually and safely reducing expenses to levels commensurate with our occupancies and service levels.
Net come down like expenses were 0.6 million in Q3 2021 compared to net pandemic expenses of $2 9 million in Q3 2020.
In Q2, 2021 we had net pandemic recoveries of $3 2 million.
In Q3, 2021 we generated higher revenue from inflationary and market based rental and service rate increases, including from the provision of additional care and services as residents age in place longer.
With fewer departures during the pandemic to long term care needs have increased.
We also experienced higher utilities and insurance expenses.
Our same property long term care home occupancy based on total capacity of licensed beds was 89% compared to 88, 3% in Q3 2020, an increase of 0.7 percentage points due to higher admissions.
For Q3, 2021 weighted average occupancy excluding the beds that are not available due to reduced capacity in three and four that boardrooms and rooms designated for isolation and cohort <unk> with 96, 5%.
Occupancy protection funding provided by the Ontario Government will continue until January 31 2022.
For Q3, 2021 same property adjusted long term care NOI increased 1 million or 16, 7% due to lower tender related expenses, partially offset by higher utilities and insurance expenses and lower retirement accommodation revenues.
Turning to slide nine you will see our monthly occupancies.
Pandemic and related government and health authority restrictions interactive have resulted in decreased occupancy levels due to reduced move in activity in our retirement residences compared to pre pandemic levels.
[noise] pandemic related restrictions interactive included restrictions affecting resident move ins prospect tours dining services group activities housekeeping visitation in both short and long term care long term lead among others.
With the large scale successful vaccination program pandemic related restrictions in both our residences and in the communities in which we operate continue to ease.
Current public Health agency of Canada modeling projects that the pandemic related restrictions can continue to be gradually lifted and that with public health measures like vaccine passports and masking mandates remaining in place through the fall and winter hospital capacity is not likely to be exceeded.
As a result, we believe there is a low likelihood of pervasive restrictions needing to be broadly reintroduced.
As these restrictions have been significantly lifted we have seen increases in personal tour bookings lease signings and permanent move ins.
In August 2021 our occupancy overall increased led by our western platform and demand for needs based move ins across the country.
Our Quebec residences have continued to experience declines in occupancy. We believe that is pandemic related restrictions continue to use move ins will continue recovering and occupancies in our retirement residences will continue to grow in 2022 supported by strong demographic growth, which increases to five 2% in 2020.
You too, but the 75 plus cohort in four provinces in which we operate.
Pent up demand it is likely that due to the isolation and reduced services available during the pandemic needs of older adults in the community have increased.
And there had been significantly lower construction starts since the onset of the pandemic compared to historical levels and as such there will be fewer new retirement relative residents openings relative to past levels.
Looking to our estimates for Q4 Occupancies.
Western Ontario continue to grow.
Their occupancies in October while Quebec occupancy declined, Ontario is expected to remain stable. The west just moving up in November with December notices not quite yet offset by leases and Quebec is expected to increase slightly in December.
Our November and December forecasts are based on leases and notices on hand, and as a results do not include need space move ins that would typically occur mid month.
<unk> is typically our strongest Smith in month of the year.
For comparison, our estimate up August 2021 on this basis was $76 three per cent for our same property retirement portfolio and our actual occupancy for August came in at 76, 6% to 30 basis points higher.
As you can see on slide 10, our interest coverage ratio was two nine times at September 30 of 2020 one.
Our debt to gross book value calculated using the historical cost of our assets was 48, 8% at September 30th 2021.
Our net debt to adjusted EBITDA ratio was nine six times.
Turning to slide 11.
At November 11th 2021 liquidity amounted to $338 6 million, which included $86 3 million of cash and cash equivalents and $252 3 million of borrowing capacity on our credit facilities.
In addition, our share of cash and cash equivalents held in our equity accounted J. These was $15 4 million.
At November 11th 2021 we have $22 2 million of mortgage maturities remaining in 2021 of which $3 5 million or C. N H C insured.
We have $204 5 million of mortgage maturities in 2022 of which $74 9 million or see them agency insured.
In addition, there are $15 1 million of remaining 2021 mortgage maturities and $10 9 million a 2022 mortgage maturities in our equity accounted J DS.
With strong lending relationships and scheduled refinancings of our mortgage maturities in 2021 and 2022 are proceeding in the normal course.
Our mortgage maturities remain well staggered with an average term to maturity of six five years at September 30th 2021.
At September 30th 'twenty, 'twenty, one our unencumbered assets had a value of approximately $1 billion our ratio of unencumbered assets to unsecured indebtedness increased to two one times at September 30 of 2021.
We currently have three projects under construction construction, which are budgeted to acquire an additional $85 5 million over the next 18 months as noted on slide 12, we have recommenced construction of the 19th Suite addition to Chartwell rich plant retirement residents in Kamloops BC.
In addition, we regularly invest in capital in our owned portfolio with the goal of growing our property NOI and protecting and maintaining our properties.
We expect to continue to be selective in our capital allocations in 2021.
I'll now turn it over its flat.
Sheri.
I believe we're now on the path to recovery, our sales leading indicators continue to improve followed by gradual improvements in our Occupancies I am confident that the initiatives scares team has been implementing will go a long way in supporting our residences in their quest to deliver exceptional personalized experiences to our residents.
Which will continue to drive occupancy and cash flow recovery.
I know that our residents as teams are committed to our vision of making People's lives better and now more than ever excited to welcome new residents and to drive our post pandemic recovery.
The prospects of our sector remain bright we deliver much needed services and care to Canada seniors. This need has not gone away likely it has been exacerbated by the pandemic, creating a pent up demand for our services, which will support continued occupancy recovery.
My girlfriend population of people over the age of 75 is beginning to accelerate with 2022 growth projected at five 2%. This graph will remain robust over the next 20 plus years supporting demand for our services. There continues to be a shortage of LTC beds across the country and vials various governments are taking steps to reduce the <unk>.
Shortly it is unlikely that they will be able to fund new beds to fully satisfy this existing and growing demand retirement residences are well positioned to fulfill this void.
In the medium term the slow down of new construction starts during the pandemic will result in fewer new residents openings in 2022, and 2023 further supporting occupancy recovery in growth.
Housing markets remain robust across the country, which makes it easier for our prospect of residents to sell their homes and finance their retirement living all.
All these factors contribute to my optimism about the future of the senior living sector in general and Charlotte in particular, most of all my optimism is fueled by the tremendous dedication commitment and passion of our employees to all of you in our residences and corporate offices for everything you have and continue to do in supporting and serving our.
Residents their families and each other for your courage and sacrifice for your kindness and empathy for your resilience and tenacity and for doing the right thing all the time every time, thank you for everything.
We would now be pleased to answer your questions.
Okay.
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We will take the first question. Please go ahead Jonathan culture.
Okay.
Thanks, Good morning.
Orange up.
First question you just why do you seem very optimistic on a near term occupancy, but if we if we look at what you guys did in the quarter and just with the outlook that you've given to the end of the year. It is kind of behind what peers are reporting.
What do you what do you think that so is that maybe a function of you guys holding right or or what do you think it is.
Okay.
Yeah, we we had expected a bit faster occupancy recovery before and we.
Certainly if you look at the composition of our portfolio compared to peers, it's a bit different in that we are rather heavily weighted in Quebec with a more independent living residents.
Residents and those residents are we we said that the recovery actually they're probably will take longer because of the type of restrictions that would put our residents in Quebec. So during the pandemic, which was mandated by the government. We are seeing much better improvements in the more needs driven.
Actors off our portfolio and our expectation that that will continue through through the months of all through the coming months.
Okay. So if we if we look ahead to.
Next year.
What when do you think you sort of cross into overall occupancy growth.
Well we have been.
Showing gradual occupancy growth you see our western Canada plots for them has been doing pretty well since up as much July or Ontario platform Occupancies have stabilized.
As you can see the Quebec continues to come down and our expectation is that all four or three platforms will regard that talked about see girls now we historically been experiencing as you know.
Slowdown of occupancy in the winter months.
Our expectation is that this year, it's probably going to be less than normal because of the pent up demand that we have but we believe we have in the system.
Yeah.
Okay. So do you think you're getting to the low to mid Eighty's at some point next year.
Yeah, I mean, it is one of those Crystal ball question, it's kind of hard to predict my my expectation is that there is pent up demand people have not been able to move into senior living for a very long time articulate driven a population that needs.
It hasn't gone away and if anything.
Probably harder for them to stay in their homes now with fewer supports so my expectation is that that will drive the short term recovery and as I spoke about in my prepared remarks mid to long term recovery.
Factors are very positive from both of them demographic growth perspective, and the slowdown of new home openings.
Okay. Thanks, I'll turn it back.
Thank you we will take the next question. Please go ahead Himanshu Gupta.
Thank you and good morning.
Joining me I'll keep asking this question in Quebec I didn't you mentioned you have more scale independent living cause them scared us what is the average age of evidence in your platform.
It's a very different compared to what you do in all the regions.
It it's not that different it's a little bit younger, but really it's a question of.
Needs when people move in the retirement residences are pretty much in the rest of the country and those are the people that need today assistance with activities of daily living.
Like Niels housekeeping medication administration.
And things like that in Quebec people. The majority of people move in more for kind of social reasons and have less of a need in that with with activities of daily living.
Got it and then.
There's almost seems turnkey, but what could be the XI XI cold brew coffee deal.
This team can go on for another six months before you see any type of deal.
So our leading indicators that we spoke about a well on a few calls now continue to point to an occupancy recovery across the board in all of our platforms. We are seeing a good improvements in our initial contacts personalized tours and we are getting.
More leases signed now than we had in the past and so that all points to the beginning of occupancy recovery across the board.
Okay. Good and then just shifting to Ontario plants home Oh December occupancy almost flattish in July.
I mean, but saw heightened vaccination not many COVID-19 cases columns.
Was it in line with your internal expectations on both.
Is it only few market, you're just going down though he called me at all.
Is it across the board.
Yeah, we do have some challenging markets for sure and including them. We have a number of homes in the Ottawa area that were challenged even before the pandemic. So oh. Some of that is is that and that's why I said you know the occupancy.
Cover it hasn't been as quick as we had hoped but.
We are really pleased with these leading indicators and what they are showing.
Also I would point out in Ontario, where we do have assisted living and memory living units we are seeing.
A stronger recovery.
And I'm also more positive month over month tear revenue and we introduced them during the pandemic, our new care assist program for our residents to purchase additional carrier services in Ontario.
Helps them age in place longer than we do have less turnover than in the past so all of those things as well.
The host of things that I said in my prepared remarks around our marketing campaigns.
Our website update our overall sales process and our focus on resident referrals, which are you know the of all of the prospects. These are the ones that converts the most.
We see this as really positive also sheri and I both mentioned in our remarks that this is the best part of our year for leasing.
So that gives us optimism as well.
Okay. Thank you.
And then also similar lines you guys have said before that Paul Douglas told me to the whole months behind U S and dozens of the shingles recovery do you still believe that.
He can answer thanks for the question and the actual stringency measures that were in place in Canada did persist for quite a bit longer than they did in the U S.
Thank God has contributed to the delay in the two most stringent provinces would be Ontario, and Quebec, which is where our portfolio was weighted too and well come back shows up on the Stringency index with number two as it related to retirement residences. It was the most stringent in terms of residents.
Thank retirement residents specific restrictions.
Got it thank you and probably the last question.
On the cost structure, Oh, Madhu use agency hiring into both most of the rest of the platform and what kind of Beach Special did you see in Tibet <unk> during the quarter.
Yes, we have been throw out the spend dynamic we had to use agency staffing them pretty much everywhere because of various reasons and we need to increase staffing levels in the homes to keep residents safe historically and now we have been using agencies more in Quebec.
Particularly in the areas like Quebec City that had even pre pandemic significant challenges.
Challenges with staffing them.
We have a project that is ongoing within the company, where we are looking to.
Standardize scheduling increase the percentage of hours delivered by full time employees and provide additional flexibility for people to select their part time shifts and we expect that as a result of that project, we will be able to reduce the use of agency staff and in our homes and also.
With kind of a reduction of government subsidies for people to stay at home and we hope that theres going to be more people.
Available to work in retirement residences across the country.
Thank you I was on.
Yeah.
Thanks.
Thank you we will now take the next question. Please go ahead Frank.
Hi, good morning, everyone.
Hello.
So I'm just wondering about the LTC occupancy like it's good to see the occupancy rebounded to about 89% this quarter with higher admissions and I just wonder I just wanted to get your Oh.
Opinion on the expectations in terms of the occupancy by the end of this year and moving to 2022.
L P C from.
Well our occupancy in our long term care portfolio. If you exclude the isolation that we require.
Not to fill and keep for isolation and restrictions on the admission to three and four bed wards, which took some beds out of inventory. If you exclude those bets we're actually at 96, 5% occupancy which is stabilized occupancy for the long term care portfolio.
Occupancy protection that the government put in place.
Gains in place until the new year, and we will continue to our expectation is to continue to run at this full occupancy and a.
Less restrictions on the admissions and three and four but the words are lifted those bats will continue to have to be supported by the government financially, but it will not be accepting residents windows.
Alright, Thank you and just.
Switching gears to the capital recycling front I saw you you know.
This coastal gizmo vishal good retire them hold me, Ontario Ah Yeah.
Frank do you see the pricing is getting better now and I Wonder do you see more opportunities down the road, we're going into 2022.
We're actually seeing.
These four more acquisition and disposition I suppose to the portfolio or properties that we have sold and have been selling historically, our noncore properties for child wells are usually smaller homes in smaller markets.
This portfolio is no different and we are seeing interesting acquisition opportunities in the marketplace. There's also more competition for those opportunities.
And so there's really no guarantee that we'll be successful in pursuing any of these but it's good to see that our there are some opportunities now.
Okay, I guess, just a follow up on that where do you see about competition.
Because.
My Canadian entities, or it's more U S private equity.
Hi, it's Jonathan.
What we're seeing.
I suppose more competition from U S equity shops.
But we're also looking to accomplish in the Canadian market as well so.
Consistent increased.
Interest in our sector, which is which is always a good thing.
Okay. Thanks.
My last question I guess on the financing side, you know that the EBITDA has improved.
Quite well to a quite sometimes oh I'll start conversation with your I wonder like cost of conversation with the rating agency like do you expect to you know like I said unless I'm Curt tariffs do you guys. Do you guys think about to me the creature.
As a result of the current trend.
I mean, certainly we are with the recent equity issue that has improved our net debt to EBITDA and we definitely want to see go forward improvements by improving EBITDA and that will happen with occupancy recovery and I think the combination of those things will resolve.
Our improvements to CIT operating but I would.
Let's say that we need to continue to move the dial on improving EBITDA as well.
Alright, Thank you I'll turn it back.
Thank you we will now take the next question. Please go ahead Hanmi birth.
Good morning.
With respect to Quebec, you have the majority of the restrictions being lifted or are still and there are still some in place.
No. They haven't been lifted so they were a little bit behind the other provinces, but now and very much in line with the rest of the country.
Okay, and so I believe.
I mean, I think you've broken up we can't hear you.
Yeah, Chris are you there.
Yes, I am here, we will go on to the next question. Please go ahead.
Julie.
Hi, good morning, everyone.
Good morning, so sharing when I looked at my forecast versus what you guys reported.
Last night.
On the retirement side I got the occupancy you know roughly roughly where I thought it would be but the NOI was significantly lower and.
I'm wondering if you can just sort of walk through between Q1 to Q2 to Q3.
What some of the changes were there because.
It seems to me like it's something something was off from my forecasting and I'm just trying to understand.
With some of the differences were because with the drop in occupancy between Q1, and Q2 was a lot greater.
And there was not as much of an NOI impact.
Yeah. Thanks, Tom Good morning, and we've certainly had the benefit of them with the additional measures that we've put in place through the pandemic as a result of the restrictions that were in place that had increased our costs, including additional staffing in P. P. E. We had benefited from.
Support for a number of those initiatives and in Q2, we would've had recoveries of about $3 $2 million in terms of art in that pandemic position in.
In Q3, we would be in a pandemic expense position is 0.6 million. So that creates a significant shift over the quarters. We have maintained our staffing levels and expenditures through the pandemic and as a result, as we transition through occupancy recovery we do.
Expect to get back to pre pandemic margins in a on the other side of the pandemic.
And so fair to say to you that like.
Your net pandemic expenses are probably going to be lower going forward.
But we're still probably going to see a little bit of recovery still over time too.
Yeah, Oh, yeah.
Yeah, that's that's up their statements certainly through the months of Q3, we saw the pandemic expenditures start to decline with the lifting of restrictions and we also have in Q3 Tao our additional expenses for utilities, just because of the seasonality in air conditioning and cooling in the summer and it's just more expensive than our shoulder season.
That's in Q2 and that would certainly have impacted the Q2 to Q3 comparison.
But we do expect those to come down over time.
Okay and are you guys getting any you know like we we didn't have much of a flu season last year are you getting any sort of color from public health or anything like that sort of what maybe to expect this year or are you going to be outlook, maybe you know.
Hopefully it'd be nice when it didn't really have a significant one again.
That that would be.
Oh very hopeful that that's the case, so far I would tell you because we look at the trend.
We look at the trend.
As the season started which really flu season starts in September and we are slightly less than we were last year. So that's hopeful. We also have a very significant campaign are.
Going on right now to encourage both our residents and our staff to get the flu shot and we were yeah. Our group of residents are always the first ones are where.
There was availability for them. So that is also going well.
Okay, and just I've asked.
The marketing machine start to get humming again here, but.
The questions that you're getting.
From prospective tenants.
Are you are you having to sort of deal with new request new concerns like how.
What sort of the tenor between now pre pandemic and post pandemic.
Yeah, I mean, they would certainly ask and want to understand what the restrictions are the nice part is in the last Oh short, while we've been able to talk about how the restrictions have.
Lifted and changed so there's there's just.
Such a better feel in our homes right now because.
People are eating in the dining room.
You know three of their friends instead of just with one or in their room on occasion.
During outbreaks et cetera. So I you know I I would say that the most positive part is that our personalized tours are back and so people are coming into the homes.
And you know, there's just such a better feel for that but of course, they want to understand if there are those restrictions and they ask those questions.
Okay, and then just just the terminology just to make sure I understand exactly.
What you're talking about when you're talking about needs based.
You're basically saying like these are tenants Hughes.
Whether their physical ability to remain at home has been compromised.
Or the family about a tenant have to sort of move move quickly to get to find to find our residents versus more I would guess you would say plan with tenants.
Yeah, So I kind of the way to think about it.
Yes that is the way to think about it I mean, we get we get residents moving in in the month that they actually contact us and those are the most needs driven and sometimes they even kind of out of a hospital or or maybe they've had some support at home, but people are going back to work.
And so that's changing as well.
So you know those are the most need space, but I would also say that you know people age sort of slowly over time and and sometimes.
We encourage people to to look into retirement living as early as possible and I would say, we're starting to see some of those people, who maybe we talked to even pre pandemic, who have now aged in place and really need our services.
And our care assist program I think is helping with that because.
You know, we always have provided meals and housekeeping, but now you know people are focused on having met management.
Perhaps assistance with.
Bordering to the dining room et cetera.
Okay and then.
I think for Oh, My last one can you just talk a little bit more about the tariff system program and is this something that is differentiable and can competitors sort of policy on what you're trying to do there yeah. I mean, we've always sold additional care services, we've just standardized our offerings.
Package them in a way that I think is an easier for prospects to understand.
And and for us to deliver as well. So I you know I think it is a differentiator and a definitely.
Our focus for homes, particularly in Ontario, where that was third and fourth.
Beds are closed in long term care and there's a lot of as we know a pressure on the long term care system.
So that was part of our focus in putting that together so that people could stay with us safely and also perhaps in some cases, when it's appropriate choose choose us rather than long term care.
And again, just respect with the retirement occupancy forecast to be clear what you said earlier was that the.
<unk>.
It reflects the leases you have in hand, it does not reflect any need based stuff, which clearly is also part of the business. So if things go normally you would be.
It wouldnt be shocking if you if you came in ahead of those numbers.
Correct. That's that is what we would anticipate we've included leases and notices on hand, and as Karen and I mentioned, our leading indicators aren't ticking up and December is always a typically a good move in month for us. So I am cautiously optimistic on that front our figures at August we came about 30.
This points ahead of that but August is a relatively low move in month typically so just to give you some indication of where I would see potential upside in that number.
Okay, that's great. Thanks, everybody.
Okay.
Thank you once again, please press star one on your devices keypad. If you have a question.
We will take the next question. Please go ahead.
Amit Birk.
Oh, sorry about that I'm not sure what happened there but.
Just maybe coming back to about 30 basis points, perhaps better than expected to tick up in August.
Would that be.
From the unanticipated need need space move ins.
Secondly is there a good day.
Stork, all sort of pattern or asking it.
What are those needs. These movements can can you know drive on a monthly basis. If you took sort of a long term average.
You know, we it really has a bit of seasonality, Chile, Tony I mean, when we're in a positive leasing season.
A big a lot and when it's not you know when we're in January and February which is a little lower they tend to be a little softer. So so this is the time of year. When they are typically a little bit higher you know we won't have visibility to that until we get into December and we'll just have to see how that that.
Plays out.
Got it.
With respect to the mandatory stock vaccinations, you know it seems like there hasn't been any real material impact to date, but are you expecting any perhaps potential increase reliance on maybe agency staff as a result of that.
No. It wasn't in the end a very small number of our frontline staff, who did not comply with the policy. So.
Just have not been big ramifications from from the vaccination policy. It's been very positive I think and also a good selling feature for them.
Prospects are in our retirement homes to know that the staff for all vaccinated.
And we certainly do have initiatives around reducing agency utilization, that's not our preferred approach, but we've become more coordinated and centralized about I am certainly that's part of how we are bringing our costs down and would expect that to continue.
Through next year. So what's you know there are a number of initiatives that well when you think improve that result.
Maybe just to add some extension of that sharing with them.
What percentage.
Percentage of English.
For any agency based versus what that might've been perhaps pre pandemic.
We'll have to get back to you. Upon now that we don't have the numbers at our fingertips, but they certainly have been a lot higher during the pandemic than they were pre pandemic again. It also depends on the market as I mentioned in Quebec City, we had historically been running higher agency.
<unk> cost because of the staffing challenges that we had there but in terms of specific numbers, we'll have to get back to you.
Okay got it.
And then just.
Maybe coming back to the margin.
All your commentary around the occupancy pick up and I guess declining pandemic related costs what are perhaps some of your initial thoughts as we think about maybe.
But just in terms of what the margin pick up could be.
Secondly is it fair to say that Q3 marked a trough.
Well I think over time, we would expect to be back to our pre pandemic levels and bladder as mentioned we have a typical winter that are and we have seasonality that I spoke about earlier around utilities as well in the winter months being you know more extensive and.
Terms of heating.
So that will that certainly plays into things, we do believe that with pent up demand and the improvements that we're seeing in our leading indicators some of that traditional winter depth will be alleviated.
But we would look to you know occupancies recovering and bringing down our expenses and to be on the other side and returning to pre pandemic levels of margins.
But it's not just one.
For me, maybe just coming back to the dispositions.
Can you just provide some color on new locations like which markets, where it goes in and perhaps do you expect it to NOI.
[noise] Yeah. These portland's were not core to our portfolio they were smaller properties and smaller Ontario communities.
We are we're very grateful for the transition.
Continues that our stuff that's shown great professionals in Peru.
And of course, our focus has been on Hum, our residents and making sure that they're in good hands and with the quality of the occupancy on the assets tools was in the mid Eighty's.
And the sale price for cap rate on these sales was consistent I think with.
Similar properties in similar locations that we're seeing which is in the mid to high six cap rate.
The impact to NOI is not really material.
Due to the size of the assets.
Thanks, very much I'll turn it back thank you.
Thank you we will now take the next question. Please go ahead Himanshu Gupta.
Hi, guys, sorry, there's a cold up here.
My question was on the disposition about attack rate.
And if I heard it correctly, you mentioned mid to high six cap it was that on normalized and Hawaii all in play.
Also in Hawaii that would be on normalized NOI would be at the higher stakes and on in place in the mid twos.
Got it. Thank you and then just one more question how's the operating cost but occupied sweeps clothing.
Has that begun to we know what kind of ignored mall.
And then a question regarding you know how variable or fixed.
Running cost at all.
Occupancy, where the more high points Hollywood.
Okay.
Yeah.
Sure. Thank you Mitchell and I mean, certainly you know as we move.
Move forward through increasing our occupancy levels, there will be lower incremental variable cost associated with that then there would have been historically because we have maintained our staffing levels through the patent on it I don't see any additional costs that you would find on the increased occupancy would be food and supplies.
And you've seen that level of food cost because of lower occupancies and so I would expect that that wage go up when they go forward and so hopefully that turns out you know currently as Occupancies have come down our cost per occupied suite has been.
Going up.
And we are bringing that was access costs now back down into a more normalized levels gradually and safely.
Got it thank you.
Yeah.
Thank you Dan.
There are no further questions registered at this time I'd like now to turn the meeting back over to Mr voted our ski.
Thank you everybody for joining us today as always if you have any further questions. Please do not hesitate to give us a call.
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Yeah.