Q4 2021 Chartwell Retirement Residences Earnings Call
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All participants your conference is ready to begin good morning, ladies and gentlemen, and welcome to the Chartwell retirement residences Q4, 2021 financial results conference call I would now like to turn the meeting over to steal Vlad followed Dar ski. Please go ahead.
Thank you Louise and good morning, and thank you for joining US today. There is a slide presentation to accompany this conference call are available on our website at Charles Dot Com under the Investor Relations tab.
Joining me are Kevin Sullivan, President and Chief Operating Officer, Sherry Harris, Chief Financial Officer, and Jonathan Block, Chief investment and Chief Legal Officer.
Before we begin I direct you to the cautionary statements on slide two during this call. We may make statements containing forward looking information and non-GAAP and other financial measures.
Our MD&A and other securities filings contain information about the assumptions risks and uncertainties inherent in such forward looking statements and details of such non-GAAP and other financial measures.
More specifically I direct you to the disclosures in our 2021 MD&A under the heading COVID-19 business impact and related risks for a discussion of risks and uncertainties related to the pandemic.
These documents can be found on our website at SEDAR Dot com.
Yeah.
Despite a significant negative impact of the prolonged COVID-19 pandemic has had on our business. Despite the tremendous challenges our teams had to overcome in the last two years and more recently combating the latest wave we have made important progress in putting more building blocks and our foundation to support recovery and future growth.
From our staffing optimization project recruitment initiatives employee referral program and employee training and development programs for our new child care assist and virtual physicians programs to our new resident referral program Charles block into our expanded business to business development programs innovative marketing and sales initiatives.
All of this and more have been accomplished in the last two years. These initiatives will continue to differentiate us from the competition and will undoubtedly serve us well for many years to come.
While the timing of a recovery hasn't been affected by this current wave are leading indicators website traffic initial contacts personalised tours and move ins are trending positively and are pointing to the beginning occupancy recovery in the spring.
Turning to slide four we remain committed to our strategy centered on highly engaged employees. They live in personalized experiences to our residents driving high resident satisfaction rates very satisfied residents are more likely to retard their friends to our residences, which will support growth in occupancy and ultimately cash flows.
We focus on our upscale and mid market service offering we invest in residences in urban and suburban settings, which we operate leveraging our national management platform, while our employee engagement resident satisfaction and occupancy declines from the pre pandemic levels. We believe we are on the path to recovery and growth to achieve.
But that 55% of highly engaged employees, 67%, a very satisfied residents and 95% same property occupancy in our retirement portfolio.
Every percentage points in occupancy growth is estimated to deliver 9 million or four cents per unit of incremental revenue.
To achieve our 2025 target we don't have to grow occupancy by nearly 18 percentage points from the 2021 average of 77, 1% no doubt. This is a big challenge, we believe with our dedicated teams across the country and the positive positive market dynamics and the foundation that we have strengthened in the past.
Two years, we will achieve these ambitious targets.
Potential growth embedded in our portfolio is significant and we're committed to realize it as long as is shown on slide five simply getting back to the pre pandemic occupancy of 88, 6% in our same property retirement portfolio is estimated to generate approximately $17 million of incremental NOI with additional $63 million.
Estimated to be generated from achieving our targeted 95% occupancy in our retirement portfolio.
While we expect that we will be able to complement this potential potential growth with new investments in acquisitions and development opportunities. Our primary focus has been and will continue to be operating our existing portfolio to its full potential.
On that note I will turn the call over to Karen to provide for an operational update.
Thanks, a lot.
Turning to slide six despite all the challenges with the pandemic 2021 showed signs of significant recovery with leading sales indicators higher year over year last four months with higher move ins and move outs in December occupancy gains higher than even 2019, and although the omicron waves began to impact our homes and residences Jeff.
Before the holiday season, resulting in enhanced the pandemic restrictions and increasing number of outbreaks in challenging staffing shortages I'm pleased to report that we have clearly turned the corner with respect to this wave of the pandemic. The number of outbreaks has reduced substantially in the last several weeks with today.
Only one long term care home and 20 retirement residences currently an outbreak.
Due to the high resident vaccination rates and our mandatory vaccination policy.
Or stop this wave was and continues to be much less severe with most people either asymptomatic or having only mild symptoms symptoms as always though our thoughts are with all of our staff and residents who have been affected.
We are grateful that we were also prioritized with respect to booster shot.
And as a result over 90% of our residents have received their third dose with fourth dose shops now underway in Ontario pandemic.
Pandemic related restrictions in our homes and residences across the country have also recently.
If I can be relaxed and prospects are now returning for in person.
In person tours, and we're welcoming jungle with visitors and reintroducing group activities and social gathered gathering.
Fortunately our staff are returning to work and our reliance on agency staffing has reduced significantly even with the impact of this most recent wave our occupancy dip is within the normal range of previous winter seasons, and our leading indicators have improved including significant increases in initial contacts personalized tours leases and move into <unk>.
January and February 2022, compared to the same months in 2021.
Turning to slide seven our marketing strategies in Q4 featured new content showcasing our residents and staff at Chartwell cities are done and got to know which highlighted the theme of support in connection in the spring we will be shifting towards an emphasis on the important connections and sense of community in our retirement residences.
This will include a four day open house in early April .
As part of our recovery efforts, we have introduced new occupancy focused incentive compensation programs for our sales teams and general managers as well as the profit sharing program for all our managers based on occupancy resident satisfaction and employee engagement. We also recently received the results of our annual brand awareness survey conducted by Ipsos research and.
I'm pleased to report that we continue to dominate in terms of brand awareness in English, Canada, all scoring second in Quebec, where we continue to increase our unaided awareness was target audience with our target audience.
And although the effects of the pandemic still linger there were improvements in the perception that retirement residents or residences or face.
As an important step towards restoring confidence in our congregate living sector spin.
Specific questions that Chartwell is a brand you would be willing to recommend and as a company that cares about its residents and staff of both showed improvement year over year.
Finally, turning to slide eight the operations team continues to focus on the chart will experience, including developing new content and preparing to return to in person training sessions for frontline staff and managers not only do we believe that this training will assist us to meet our 2025 resident satisfaction cool, but we know that very satisfied residents are much more likely to refer.
Their friends and relatives to a chart we'll have them.
Also as part of our recruitment efforts, we are piloting an employee referral program as well as working on strategies to support our homes with their local recruitment efforts. We're also continuing our staffing optimization optimization project to create more full time positions in our residences and better align staffing levels to occupancy care and service levels.
Overall, our expenses continue to decrease as the pandemic restrictions ease and case counts have have subsided.
This includes a reduction in the cost for PPE and additional pandemic related staffing as well as efforts to combat inflationary pressures. For example, we recently moved to direct delivery dairy distribution from milk processors a.
Wishes, resulting in not only savings, but also reduced packaging.
And finally, we were very pleased to see the most recent announcements from the Ontario provincial government, which recognized depends on our costs and our long term care homes, both from 2020 , one as well as related to the most recent comic con way.
Now like to turn it over to Sherri to discuss our financial results. Thank.
Thank you Karen.
As shown on slide nine net income in 2020 one was.
It was $10 1 million compared to $14 9 million in 2020.
For 2021.
With $132 3 million or 59 cents per unit.
Compared to $165 9 million or 76% and 2020.
Our same property adjusted NOI decreased by $33 3 million or 12, 3% in 2020 one.
It's really due to lower occupancy in our same property retirement operations, which reduced revenue by $50 6 million.
This was partially offset by higher revenue from both inflationary and market based rental and service rate increases.
And from the provision of additional care and services as resident retention is increase.
Combined with lower expenses.
Same property occupancy was 78, 2% in 2020 one.
3rd% to 85% in 2020.
So 'twenty one same property occupancy declined six eight percentage points.
Positive trends through 'twenty, 'twenty, one, including increasing monthly move in activity through the year higher move ins in aggregate for 2020 , one compared to 2020.
Lower move in activity in aggregate for 2021 compared to 2020 did not offset declining occupancy from the onset of the pandemic.
Until July 2021, when occupancy stabilized and then begin increasing gradually preachy December 2021 .
As shown on slide 10 in Q4 2021, net income was $18 7 million compared to net income of $12 2 million in Q4 2020.
For Q4, 2021 .
Oh It was 20.
24 million or 12 cents per unit.
Third to $43 5 million or 20 cents per unit in Q4 'twenty 'twenty.
The pandemic and associated government restrictions have continued to be the primary driver for the decline in financial performance.
Alright, the decrease in episode per unit compared to Q4, 'twenty 'twenty is primarily due to lower same property adjusted NOI, which decreased by $12 2 million.
Higher amortization of internally developed software intangible assets of $2 5 million.
G&A expenses as a result of some compliance related costs and lower support from government programs, which together amounted to $1 8 million.
Lower adjusted NOI as a result of the disposition of noncore assets.
These factors were offset with improvements from both higher revenue and inflationary and market based rental and service rate increases as well as from the provision of additional care and services with resident retention increased.
Higher adjusted NOI from acquisitions and development properties currently in lease up.
Lower finance costs and higher management fee revenue.
Yeah.
Slide 11 summarizes our same property operating platforms results.
Our same property adjusted NOI decreased by 12 point too.
Were 17, 9% in Q4, 2021 compared to Q4, 'twenty 'twenty, primarily due to lower occupancy in our same property retirement operations of $7 2 million.
Increased net pandemic expenses in our same property retirement operations of $5 7 million.
Q4, 'twenty 'twenty, we have been in a recovery position and our net recoveries were $4 million.
In Q4, 2021 we are in a net pandemic expense position of $1 7 million.
In addition, we incurred higher agency staffing costs of $3 6 million and our same property retirement residences as a result of stock shortages not of vacancies.
Same property retirement occupancy was 76, 8% for Q4, 2021 compared to 81, 3% for Q4 2020 or a decline of four five percentage points.
Q4, 2021 that showed the first full quarter sequential increase in occupancy since the onset of the pandemic.
Permanent move ins increased 54% in Q4, 2021, compared to Q4, 'twenty 'twenty and compared to Q3, 2021 move ins increased 14%.
Were also lower in Q4, 2021 than in Q4 2020 in Q3 2021 .
On a sequential quarter basis, our western Canada platform that she's strong road with weighted average same property occupancy increasing two one percentage points from Q3 of 2021.
Our Ontario platform Occupancies began to stabilize during the quarter with a sequential increase of 0.9 percentage points from Q3 of 2021.
And the pace of decline in our Quebec platforms slowed.
With Western Canada strong growth in occupancy in the latter half of 2021, we achieved NOI growth in this platform of three 8% compared to Q4 of 2020.
Both Ontario, and Quebec experienced declines as a result of the factors I described lower occupancy not pandemic expenses compared to recoveries in Q4 of 2020 and higher agency costs to fill vacancies due to staff shortages. These.
These were partially offset by higher revenue from inflationary and market based rental and service rate increases and from the provision of additional care and services to our residences.
Our trend on retirement operations net pandemic expenses had been improving significantly in the latter half of 2021 even with reduced government supports.
The spread of Homochrome rapidly increase from December 20th of 2020 , one and continued through the holiday agree more of our stuff had to isolate do exposure to the virus to continue to provide services to our residents we had to engage more agency staff, which resulted in the increase in costs.
Additional expenses of $2 million were incurred in the latter half of December .
Fight. This we finished Q4 with $1 7 million in that expense.
We now two years into the pandemic have a greater degree of confidence in our ability to return to normalized staff levels quickly and expect to do so as government directives are lifted and as homes come out of outbreak.
That said, we are two months into Q1 of 2022, and we will see elevated expenses as a result of the on the crime wave.
We came into the on the ground wave with no residences and outbreak on December 15th of 2021 at the peak of all Mccahon, we had just over 100 homes with some level of endocrine restriction. We are now down to as of today 21 residences as Caren described with generally limited cases.
There are two named temporary factors that drive our costs up to.
Stop vacancies and government directives.
As government restrictions on our operations and general and specific to our residences in outbreak are easing we expect expenses associated with heightened operational requirements to decline quickly as it has in previous waves.
We expect that Q1 2022 net pandemic expenses in our retirement operations could be in the range of six to 9 million.
The level of costs will depend on how quickly the omicron wave receipts, the necessity to replace stuff vacancies with agencies and overtime.
And a continued government restrictions.
And further government supports for costs associated with the restrictions that have been imposed.
We have also experienced significantly higher agency staffing costs in Q4, 'twenty, 'twenty, one which amounted to $3 6 million for replacement of existing stuff.
Historically, our reliance on agencies has been very limited as we would prefer to have our chartwell staff, who were selected to be part of our culture and trained in our trauma programs.
Agency cost has started to elevate in several locations that were experiencing tight labor markets prior to the pandemic the.
The pandemic has exacerbated the situation.
As a result agency costs continue to increase in 2021, which amounted to an increase of $7 million or two 7% of total compensation costs for the full year of 2021 compared to 2020.
As Karen noted our staffing optimization project will assist in ensuring we are focused on optimizing fulltime jobs and matching staffing levels to occupancy care and service levels and significantly reducing our reliance on agency staff.
Our same property long term care home occupancy based on total capacity of licensed beds was 19, 5% compared to 87, 2% in Q4 of 2020, an increase of 3.3 percentage points due to higher admissions.
For Q4 of 2021 weighted average occupancy excluding the beds that are not available due to reduced capacity in three and four of that work rooms.
Rooms designated for isolation and cohort Ing was 97, 1%.
Effective February one 2022, the Ontario government confirmed funding for isolation beds, and the third and fourth that would warrant rooms that are currently unavailable for occupancy in.
In addition, the Ontario government is reinstated and occupancy targets, including the outbreak occupancy funding protections that existed prior to the pandemic.
For Q4, 2021 .
<unk> property adjusted long term care NOI increased zero point $1 million or one 9%, primarily due to lower pandemic related expenses compared to Q4, 'twenty 'twenty, partially offset by higher staffing costs.
On February 4th of 2022, the Ontario government confirmed and clarify eligibility for incremental Covid prevention and containment funding.
We expect based on these newly released guidelines that we will be reimbursed for the vast majority of the direct resident care expenses that we have incurred to date or approximately $5 7 million in Q1 of 'twenty to 'twenty two.
As well as funding for the elevation in containment and prevention costs with the AMA runways.
Turning to slide 12, you'll see our monthly same property retirement occupancies.
Same property occupancy decreased to 76, 6% or 0.4 percentage points in January 2022, and is forecasted to decline by 0.50 0.4 percentage points for February and March 2022 respectively based on normal leases and notices as I have you.
Turning to 'twenty to 'twenty two.
These expected occupancy trends are consistent with our historical experience.
Sales and leasing activities slowed in late December and early January 2022, as a result of the new one the contra and wave.
These activities began rebounding in the second half of January and for the full month of January 2022, all of our leading sales indicators were higher compared to January of 2020 one.
Sales and leasing activities have continued to improve in February 2022, compared to both January 2022 and February 2021 in.
In Q4, 2021 our same property portfolio of move ins exceeded Q4, 2020 by 54% as to January of 'twenty to 'twenty two.
That's remained below pre pandemic levels, we expect occupancy to begin to recover and our same property portfolio as restrictions are eased and as we move into the spring leasing season, our acquisition and development portfolio has shown continued lease up progress growing weighted average occupied suites I 114th week.
Three suites since September of 'twenty or 'twenty one.
Yeah.
Turning to slide 13 at December 31st 2021 liquidity amounted to $438 9 million, which included $95 5 million of cash and cash equivalents and $343 4 million of borrowing capacity on our credit facility.
In addition, our share of cash and cash equivalents held in our equity accounted Jb's was $5 1 million.
At December 31st a 2021 we have $223 3 million of mortgage maturities remaining in 2022 of which $75 2 million are currently see MHC insured with strong lending relationships and scheduled refinancings of our mortgage maturities in 2022.
Our proceeding in the normal course.
Our mortgage maturities remain well staggered with an average term to maturity of six three years at December 31 of 2021.
At December 31st of 2021 our unencumbered assets had a value of approximately $1 billion and our ratio of unencumbered assets to unsecured indebtedness increased to two times at December 31st 2021.
I will now turn the call back to blast to wrap up. Thank you Sherry as pandemic related restrictions ease we expect the positive trends in our leading indicators will begin translating into occupancy growth.
Assuming no new pandemic waves, we believe more robust occupancy growth driven by the pent up demand could be expected in the second half of 2022.
Given low in place occupancy larger than usual occurrence of market incentives being offered by our competitors and some elevated construction activity in some of our top markets of Ottawa, Quebec City, Durham, and New York regions of Ontario, We expect rent and services right golf in 2022 to be between two and 3% slightly below our historical growth.
Right.
The rapid escalation of construction costs over the last several years I mean, it's top of the market rates are required for most new developments to be economically viable. It is likelihood the gap between the rates in existing residences in new developments will further widen as occupancy to recover in future years. So we believe there will be opportunity for higher.
Growth in market rates.
One percentage point growth in our rent and services rate is estimated to generate approximately $6 8 million of additional revenue.
There continues to be challenges with availability of labor in our sector. We have been investing significant time and resources in our employee engagement recruitment and retention initiatives, we expect labor cost growth will be higher than our historical experience it would range between three and 4%.
Hi, unionization rates and collective agreements spanning two to four year terms smooths out the impact of labor cost growth over several years, one percentage point increase in total compensation cost is estimated to increase expenses by approximately $2 6 million.
We primarily finance our portfolio with long term fixed rate debt and strive to stagger our debt maturities to avoid large volumes of renewals in any given year and 'twenty 'twenty. Two we have $223 3 million of debt maturing at a weighted average rate of $3 seven 2% current 10 year C. M. A C in five years.
Eventually when mortgage rates are approximately $2 nine and 4% respectively.
One percentage point change in interest rates would result in a change in our interest costs of $1 4 million in 2022 for maturing and variable debt.
2022 is going to be a transition year transition from the pandemic to recovery of growth as we discussed we have put in place significant number of strategies to bring this growth to reality as fast as possible.
Ingenuity drive and commitment of our people have proven to be incredible and it has them who gave me confidence in our ability to realize this growth to all nearly 16000 employees across the country. Thank you for everything.
We would now be pleased to answer your questions.
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The first question is from Jonathan culture.
Please go ahead.
Thanks, Good morning.
First question. The first question just on I guess on the occupancy front.
Is it are you are you seeing that sort of general softness or are there are a number of homes or geography or are causing.
Occupancy that sort of thing and I'm thinking of Ontario, and the mid seventies.
Ah well certainly there are challenges and cut back they they.
I, just I would say in the fall, but they were lagging the other the other provinces and Quebec City would.
Certainly have a continued to be a challenge.
Some of that comes from the more independent nature of our of our product as well as the restrictions are in the initial waves, but they as I said they were stabilizing them and we had more significant occupancy gains in December and in all of our provinces. So.
You know they the omicron wave has impacted the occupancy recovery.
But that said I would say that are our leading sales indicators are are clearly improving and based on this and that reduced restrictions that we have in all of our recovery strategies I expect that we will gain occupancy in the spring with more substantial recovery in <unk> in the second half of the year.
And maybe to add to that Jonathan you asked specifically about Ontario, I think it would be fair to say, that's kind of going to the east and we had more challenges the Ottawa market continues to be overbuilt in occupancy it would be a bit lower there are as always do a region.
Okay, and then you said that the sales indicators or are better than last year, how close would they be to creep ends up levels.
By the time, we're in thanks, Jonathan for the question by the time, we're in February of 2022 either pretty consistent with February of 2020.
Okay. That's Oh, there's good news and then just lastly slide five.
Which is a helpful slide.
You're you're using pre pandemic margins for that and I and you talked a couple of times about the crusher on stopping class how realistic do you think it is that you you do get back to a.
Pre pandemic.
Or any markets.
Yeah, I mean, I think getting back to pre pandemic operating margins is going to happen towards.
Early twenties twenty-three and coming from increased occupancy combined with the stopping optimization project, bringing down those agency costs that have really elevated in 2020 and in 2021, and so I do feel that that is a realistic in terms of achieving the pre pandemic margins.
Okay. That's it for me thanks.
Thank you next question is from my Macho Cooktop.
Please go ahead.
Thank you and good morning, So just a follow up on on to occupancy or.
Just wondering how's your Ontario occupancy trending compared to your competitors or broader market and our and do you think you were underperforming and if yes why.
Hum.
Interesting question I I guess it seems that that we are underperforming in some cases the composition of portfolios are very different the size of the portfolios are very different their locations and concentrations are very different they the only sort of answer I could give you for example, I mentioned, the Ottawa market, where we have been.
Under performing.
Are all of the portfolio metrics.
That is because of the and it has high competition in that market. Its been overbuilt for a number of years and we have a large concentration of our studio suites and in that market, which are generally the less desirable having said all of that the initiatives apparel team has been putting in place and increasing as as an exam.
Our child care assist program, that's been implemented in a number of different markets a.
Staffing optimization project and ourselves and marketing initiatives I think will drive both the occupancy and also rates rental rates.
That particular market and across our portfolio.
Other part is as we've spoken before them, we are not as readily introducing discounting in our properties, we want to ensure that our retirement living consultants build their relationships with their prospective tenants and then tailor. These.
Dentists, because they required to give some to what the residents really need and that May result, in some florida lease up compared to some other people who would broadly discount.
And we've always prepare to take that slower lease up or diminishing the value of brands and the margins over time.
Alright. Thank you. So so it looks like you know the strategy going forward would be very similar to what you had been doing best concessions, but it would be more to the meat.
Oh, and then on to but Oh No game you know you have given some color already.
Just wondering you know what do you think of the more independent bottler Dale well what do you have.
And.
And you know those more independent seniors them to back all the child bought inside device to come to them at homes right now, but a little weird.
Right now I'm, just wondering like what could bring them back into the Dom and homestead.
Yeah, I would think it's a matter of time and and also you know even in come back we've seen pretty strong lease up of our newer homes. The homes that are having recently developed and homes in our own portfolio that had been recently acquired so that is a very attractive I'm really.
Stayed on amenities and those homes have actually continued to lease up and going through the pandemic and during the omicron wave. The older properties that are you know maybe less.
Attractive from the physical standpoint will take a little longer to recover what it's going to bring people back I think Karen mentioned, our apes. This study that the sentiment has began to change.
And my expectation is that with time, when theres less restrictions and.
And we can fully run our social activities and a great meal programs that we have fought for our residents. Those are the things that will bring people back in larger numbers.
But tanker deal a.
And maybe the final question is on a full four unit, Oh, and always get Q, who was well actually it was about it by one month off only calling.
So when they just yourself in cost.
Do you think Q1 as a whole will look very similar or was that Q4, I mean, given that you will have more to get back to what we call.
Yeah in terms of the omicron expenses, I mean, certainly and I'm sure. We would expect those to have continued at that level in January and February the costs have really come down.
As we mentioned Theres, only 21 homes and I'll break now and they're very limited generally them. So I do see those costs coming down quite significantly in March but.
Q1 will be impacted by the omicron costs. We also typically have higher seasonal utilities in the first quarter and that we will also have the recovery of the long term care expenses. So there'll be a number of those issues are playing for Q1.
Yeah, Yeah, and then you know looking into Q2 I mean do you think this always calling limited $6 million to $9 million.
Fences will go away or you know.
What's the Michigan team in Q2, but I guess he agency staffing cost will continue to delineate for most of the big.
Is that children.
Yeah, that's that's a great way to frame that I mean coming into the month of December our costs were pretty neutral and we had very very limited residences in outbreak. So certainly once the properties are of hope right. They come back to their normal operating protocols.
And those expenses come down quickly.
<unk> costs and will take us a little bit longer and cheaper in town and we are very purposefully managing those costs down with new tools in place and new controls in place as we move to the other side of the on the chronically.
Awesome, Thank you and hold them back.
Thank you. Please press star one on your devices coupon when prompted by the system. Please on mute your line kidney sticky name to register in the Q&A.
Yeah.
One moment.
Yeah.
Next question is from Howard Weil.
Please go ahead.
Hi, good morning, everyone.
Hi, Good morning, I guess flipping back to the NOI Bridge that you included in the presentation, what do you sort of see.
Of our critical impediments to meeting about 2025 target apart from obviously COVID-19 being a bit of a wildcard hopefully lot through 'twenty five.
You know can you just talk a bit about what would be some of the obstacles, but you would expect to face it could possibly go away I mean, hitting those types of numbers.
So great question Tal Thank you for that we.
We've been talking about the labor challenges and this will continue to be a challenge for the sector I believe for a long period of time until we have more people that are ready to work in these sectors to deliver services to our residents. So we believe with the initial.
Lives that we put in place both on the employee engagement and recruitment side staffing optimization project that are Karen and Sheri spoke about they will be able to reduce the reliance on the agency stuff, but if you were asking to the risks to us achieving that those rates that would be probably one of the bigger ones.
There is very positive environmental backdrop to the sector as we've talked about for a while the girlfriend seniors population I do believe that there is pent up demand in our system.
Because people were not be able to move in retirement accommodation for a long period of time, and then supply. Although we do have some markets, where we have elevated supply overall is now still in terms of the construction start though the overall lower historical levels. So those things should help us.
Supply is always a wildcard that people can start development are relatively quickly and that could affect the competitiveness of all of their properties and some of the markets that certainly could affect our ability to get to these rates are but I think overall it is realistic to assume that we should be able to get there.
Okay.
And then you made reference in your earlier comments I think it was in Ottawa you were saying maybe some of the types of suites. You had available are probably not you know among the most desired.
It's probably been a long time since we talked about product market fit if you think about your portfolio kind of on three dimensions, whether it's.
The mix of the type of suites independent versus assisted living the age.
And you know the size of the suites like how.
How how well positioned do you feel you are and are there certain markets that we should be keeping an eye on.
Where do you think maybe you do have a little bit of a misfit.
I wouldn't call. It the misfit I think it's just a period of time that it's going to take for some of the properties to come back versus some of the other properties that are coming back I think they're all competitive in a normal market environment, but in the environment, but everybody I'm kind of trying to fill up those properties some of.
Those maybe less competitive or it will take longer to recover back we'd have been very active in managing our portfolio of homes. As you know we've been selling a incrementally the homes that we did not feel that fit our strategy and that work will continue and you will see us selling properties that are not the fit.
And to the long term vision and also repositioning other properties that we think could be very successful over time, but perhaps a generation or two behind us some of the newer product that is coming in so that's more of a continuous within chartwell and you'll see it both repositioning some properties and selling more of the older properties.
Okay, and then you know since we're sort of talking about competition and where are.
Or you know the use of incentives in the market can you just run through.
You know what are sort of the most traditional instead as you would expect to see in a market like this.
And how how you try to counter them.
So normally people would be doing something like one month free now it's up to 233 months plus three and what we're doing to counter them. Our retirement living consultants do have incentives in their toolkit, the difference and generally between us and competition.
This that we're not broadly advertising the incentives that we have to everybody. Because then you'll have to give them to everybody who shows up we want to understand what matters to the customers that come to us and make sure that we tailor the incentives if those required for.
For those specific customers, having said that I think Karen spoke about at the last call. We are doing experiment, where we're trying to advertise discounts in some markets and compare them to other markets, where we do not have discounts and understand whether that makes significant differences in terms of the traffic and move ins.
That that that is ongoing and well report back the results. Once we finish. This experiment generally this is not what we want our brand to stand for we do not want to now be known as a discounted brands, we want to be known as the brand that delivers value to the customers and I think I said this before if somebody chooses to live somewhere else.
For because if somebody offered you know one or two months free than perhaps they were not our customer to begin with and that that's okay too.
Okay, and then just lastly.
If we think about how you know is the largest player in the market it.
Should investors expect like is it reasonable to expect short would it be the look the leader in terms of our occupancy growth.
Over the next couple of years simply because like I have a largest part of the merger kind of being covered in your plan or maybe a little bit more defense than some of your smaller peers is that a reasonable assumption or do you think that you know come to the end of 2022.
And you will you know at the moment.
Strength of your business will sort of power you through.
Good day.
Well, our expectation and belief that are starting the back end of 2022 barring any additional pandemic waves, we should see a more robust recovery and growth in our occupancy driven by all the initiatives that we talked about today and the pent up demand that we have in the system and we expect that that growth will be sustained over time by the girl Center.
Seniors population and so and we will do that in a prudent manner with waiting very carefully occupancy gains versus significant discounting.
Again, preserving the value of Cherwell Brent.
This is really our strategy is to deliver 95% occupancy by 2025, and that's what we're focused on but we also want to deliver that NOI that we showed on slide five for you today and not just occupancy and so we'll be very careful how to balance the speed of recovery and growth of occupancy with.
Maintaining the margin and the value of the brand.
Okay got it thanks very much Bob.
Thank you.
Thank you there are no questions registered at this time so Mr. Hu the dark skills, we tried many back over to you.
Thank you very much everybody for joining us as always if you have any further questions. Please do not hesitate to give us a call goodbye.
Yeah.
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Yeah.