Q1 2022 Chartwell Retirement Residences Earnings Call

May 6, 2022

Vlad Volodarski: Before we begin, I direct you to the cautionary statements on slide 2, because during this call, we will 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 or at sedar.com. Turning to slide 3. Any company to be successful must make choices. At the end of March, we announced an agreement to transition our Ontario Long-Term Care business to Axium Infrastructure and AgeCare Health Services.

Vlad Volodarski: This was a difficult decision, given the long and successful history of Chartwell LTC operations. It was even more difficult after experiencing how our Ontario Long-Term Care teams stepped up during the hardest days of the pandemic to support our residents, their families, and each other. They did and continue doing everything possible for the comfort and well-being of our residents in most difficult conditions. We have full confidence in this team. They certainly have proven their dedication and that they can succeed in the most challenging circumstances. This decision is not a reflection of a lack of confidence in the Ontario Long-Term Care sector. The Ontario government has repeatedly demonstrated their commitment to the sector through the pandemic, including the announcement of the Improved Capital Redevelopment Program and commitment to achieve an average of four hours of care per resident day by 2025.

Vlad Volodarski: We expect their commitment to continue to grow over time. Our decision is purely strategic and is driven by our desire to fully focus and grow our retirement operations across the country. Once this decision was made, it was critical for us to find strong, quality partners for this transition who are aligned with our values and who are committed to continue the legacy of Chartwell Ontario LTC operations. I am confident that AgeCare as manager and Axium as an investor are exactly the right partners. They're fully dedicated to deliver complex acute care to their residents and are looking to expand their services to more seniors across the country. I know that our Ontario Long-Term Care team will be essential in helping them achieving these goals, and that our people will flourish and grow with them for many years to come.

Vlad Volodarski: We expect the transition to be completed within 12 months, subject to required regulatory and other approvals. We expect to reinvest proceeds from this transaction in growing our retirement operations. In early April, we announced the acquisition of 3 new retirement residences in Ontario. This acquisition brings to our portfolio newer residences in the markets where we already operate and are able to generate significant management synergies. Upon achieving stabilized occupancy of 95%, we expect to generate stabilized NOI yield of 6.4% on this acquisition. Turning to slide 4. Our financial results still reflect the challenges posed by the pandemic. The latest wave driven by Omicron subvariant, which began in April, continued to impact a large number of our residents across the country. Fortunately, most of the residents and employees who have contracted the virus have mild to moderate symptoms, if any, and generally recover quickly.

Vlad Volodarski: The restrictions imposed by public health authorities on residences with active cases of exposure are now more tailored to individual residences' circumstances, and in many cases, we are allowed to continue with modified resident activities, social visits, including personalized tours. Having said that, this wave has slowed down and further delayed the pace of recovery we expected to see this spring. On a positive note, our leading sales indicators, website traffic, initial contacts, and move-ins, continue to trend positively, with some reaching and exceeding pre-pandemic levels. We now forecast occupancy in our same property portfolio to increase slightly in May and continue to grow in June. Assuming no significant new restrictions and a wave of the pandemic, we expect robust occupancy growth in the fall.

Vlad Volodarski: Numerous marketing, sales, and operational initiatives have been put in place, both nationally at the individual residence level, to ensure that we're well positioned to accelerate this growth in the coming months. On that note, I will turn the call over to Karen to provide her operational update. Karen?

Karen Sullivan: Thanks, Vlad. Turning to slide 5, as Vlad said, our leading indicators are improving, including March lease signings reaching the highest number since the beginning of the pandemic. This will support higher permanent move-ins in Q2. Although our personalized tours and move-ins were impacted by Omicron in Q1, April same-property leasing activity and permanent move-ins exceeded April 2021 by 27% and 35% respectively. Due to these improvements, as Vlad said, we are projecting to increase occupancy slightly in May with a further increase of 20 basis points in June, with both Western Canada and Quebec beginning to see occupancy growth in May.

Karen Sullivan: With restrictions in the community and in our homes and residences relaxed, life in our homes has a more regular routine, with resident dining and activities back to normal, families and loved ones visiting residents, and prospects coming in for personalized tours. Even with higher numbers of outbreaks due to this sixth wave of the pandemic, we are clearly, as a society and as a sector, learning to live with COVID in its latest form rather than shutting down and implementing severe restrictions.

Karen Sullivan: This is in large part due to high vaccination rates of our residents, including booster shots, our mandatory vaccination policy for our staff, and as Vlad said, the reduced severity of this variant, with most people experiencing no symptoms or mild symptoms. Turning to slide 6, our marketing strategies in Q1 shifted towards an emphasis on the important connection and sense of community that exists in retirement residences, particularly after the isolation for seniors over the past 2 years. The campaign was in the voice of the adult daughter. Many of our marketing initiatives were in support of our time-limited promotion in specific regions, Quebec City, Ottawa, and Calgary. Later in Q1, we focused our efforts to support our 4-day open house in April, which was very successful, as evidenced by the number and quality of new contacts added to our database in the weeks following this event.

Karen Sullivan: We also recently completed spring sales training for our retirement living consultants across the country. Topics included working with our Click to Connect agents to drive consistent exceptional customer experience, strategies to help maximize selling time using our marketing toolkit in an open doors sales environment, and objection handling, including using business development partners such as physicians and healthcare providers, realtors, financial planners, downsizing professionals, et cetera, to counter common objections. Finally, turning to Slide 7, the operations and people teams work together to continue to deliver strategies to focus on recognizing our employees, reducing turnover, decreasing agency use, and improving recruitment outcomes. This includes continuing with our staffing optimization project to create more full-time positions in our residences and better aligning staffing levels to occupancy, care, and service levels.

Karen Sullivan: We're also piloting shift vacancy fulfillment software, which is already in place in our long-term care homes in select retirement residences. We have a number of strategies in place to work with educational institutions and have added additional support to help our homes with frontline recruitment efforts. This is a people business, and we have also focused on recognizing and developing our leadership teams and frontline staff members. Their contribution over the past two years, as well as their renewed focus on our recovery efforts, has been nothing short of outstanding. On 11 March, we celebrated Chartwell Strong Day to recognize our frontline staff. Also, we were recently able to spend time with our GMs and administrators, albeit virtually, for a very engaging residences first leadership conference.

Karen Sullivan: Next week, we will do the same with our residence managers from across the country to provide them with continuing education, encouragement, and recognition. Government funding continues in all provinces to assist us with our additional COVID costs, including new funding recently announced for retirement homes in Ontario, as well as an extension of funded employee premiums in Quebec. Our supply chain team has been effective in helping us to manage our increasing food costs by entering into a number of new contracts with suppliers that will result in approximately CAD 500,000 in annual savings related to dairy, bread, dry goods, et cetera, which will help to offset overall inflationary increases. We also entered into new contracts for our chemical supplies, which will improve quality and reduce costs.

Karen Sullivan: Finally, although the announcement of the sale of our long-term care homes in Ontario was difficult for our administrators, managers, and corporate office team members, we have already had a series of excellent meetings with AgeCare senior operations team. It continues to be very clear that there is a significant alignment with respect to our values and our collective commitment to provide quality care and services to our residents. The teams are now working together on our transition plan. Now I'd like to turn it over to Sheri to discuss our financial results.

Sheri Harris: Thank you, Karen. As shown on slide 8, in Q1 2022, our net loss was CAD 3.3 million, compared to a net loss of CAD 4.9 million in Q1 2021. For Q1 2022, FFO from continuing operations was CAD 20.3 million or CAD 0.09 per unit, compared to CAD 34.5 million or CAD 0.16 per unit in Q1 2021. Total FFO was CAD 31.3 million or CAD 0.13 per unit for Q1 2022, compared to CAD 35.1 million or CAD 0.16 per unit in Q1 2021. The pandemic and associated government restrictions have continued to be the primary driver in the decline in our financial performance.

Sheri Harris: To summarize, the decrease in total FFO per unit compared to Q1 2022 is primarily due to lower retirement operations adjusted NOI of CAD 13.6 million as a result of lower same-property adjusted NOI of CAD 13.2 million, and lower contributions from our acquisitions, development, and other portfolio due to the disposition of properties with acquisition and development growth not yet fully offsetting the disposals. Our G&A expenses were higher by CAD 1 million as a result of lower government subsidies and increased cloud-based information technology system implementation costs. Our management fee revenue was lower by CAD 0.4 million due to lower performance-based fees. Additional units outstanding from the August 2021 equity offering, net of interest savings, also resulted in dilution. These factors were offset by contributions from our long-term care operations.

Sheri Harris: As Karen noted, effective 31 March 2022, we entered into definitive agreements to substantially exit our long-term care operations in Ontario. Fifteen Ontario LTC properties and one retirement residence adjacent to one of these LTCs have been reclassified as discontinued operations in our financial statements in MD&A. Our long-term care discontinued operations contributed CAD 0.04 per unit to total FFO for Q1 2022, compared to CAD 0.00 per unit in Q1 2021 due to government reimbursements for prior years' direct operating expenses and higher ancillary preferred and retirement accommodation revenues in Q1 2022. Slide 9 summarizes our same-property operating platforms results. Our same property adjusted NOI decreased CAD 13.2 million, or 22% in Q1 2022 compared to Q1 2021, primarily due to the following factors. In Q1 2022, net pandemic expenses in our same-property retirement operations were CAD 5.8 million.

Unknown Speaker: Before we begin, I direct you to the cautionary statements on slide 2, because during this call we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MDNA 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.

Unknown Speaker: More specifically, I direct you to the disclosures in our 2021 mdna under the heading COVID-19- business impact and related risks for a discussion of risks and uncertainties related to the pandemics. These documents can be found on our website or tter com.

Speaker 2: Turning to Slide 3, any company to be successful must make choices. At the end of March we announced an agreement to transition our Ontario long-term care business to acxve infrastructure and H care he services.

Sheri Harris: In Q1 2021, we had been in a recovery position and our net recoveries were CAD 3 million. The increase in net pandemic expense is primarily due to the Omicron wave and lower government reimbursements of pandemic expenses. Revenue growth in our same-property retirement operations was CAD 2.1 million or 1.3% higher due to revenue from both regular, annual, and market-based rental and service rate increases, partially offset by lower occupancy of CAD 3.2 million. Higher agency staffing costs in our same-property retirement residences as a result of staff shortages increased costs by approximately CAD 2.9 million. Historically, our reliance on agencies has been very limited. We always prefer to have our own Chartwell staff who are fully trained in our programs and dedicated to our vision.

Speaker 2: This was a difficult decision given the long and successful history of charcoal LTC operations. It was even more difficult after experiencing how our Ontario long-term care teams.

Speaker 2: Stepped up during the hardest days of the pandemic to support our residents, their families and each other. They did and continue doing everything possible for the comfort and well-being of our residents in most difficult conditions.

Speaker 2: We have full confidence in this team. They certainly have proven their dedication and that they can succeed in the most challenging circumstances. This decision is not a reflection of a lack of confidence in the Ontario long-term care sector. The Ontario government has repeated demonstrated their commitment to the sector through the dyemics, including the announcements of the improved capital redevelopment program and commitment to achieve an average of four hours of care resident day by 2025. we expect their commitment to continue to grow over time.

Sheri Harris: Our staffing optimization project, which is focused on maximizing full-time jobs, ensuring predictable scheduling for our staff, matching staffing levels to occupancy, care, and service levels, will result in reducing reliance on agency staff over time. In addition, we are implementing technology-assisted solutions to assist our residences to improve speed to hire and allow all our residence staff to be informed of availability of additional shifts to ensure faster shift fulfillment. We also have experienced higher utilities expenses due primarily to increases in natural gas prices. Overall, our trend on retirement operations net pandemic expenses had been improving significantly in H2 2021, even with the significantly reduced government supports. Net pandemic expenses in Q1 2022 primarily relate to temporary costs associated with restrictions and requirements with outbreaks, including additional staffing, primarily for screening.

Speaker 2: Our decision is purely strategic and is driven by our desire to fully focus and grow our retirement operations across the country.

Speaker 2: Was the decision was made. It was critical for us to find strong quality partners for this transition who are aligned with our values and who are committed to continue the legacy of CHRO Ontario LTC operations.

Speaker 2: I am confident that hcare's manager and acxom as an Investor are exactly the right partners. They are fully dedicated to deliver complex acute care of their residents and are looking to expand their services to more seniors across the country. I know that our Ontario lunm care team will be essential in helping them achieving these goals and that our people who flourish and grow with them for many years to come.

Speaker 2: We expect the transition to be completed within 12 months, subject to require regulatory and other approvalswe expect to reinvest proceeds from this transaction in growing our retirement operations. In early April , we announced the acquisition of three new retirement residences in Ontario. This acquisition brings to our portfolio newer residences in the market where we already operate and are able to generate significant management synergies.

Sheri Harris: In these Omicron-driven waves, agency premiums due to replacing staff who are required to self-isolate in order to ensure our safety and service levels are maintained. We are also incurring additional costs for PPE. Once restrictions are lifted and the wave recedes, we expect staffing levels to normalize and costs to decline. We expect that Q2 2022 net pandemic expenses will be in the range of CAD 4 to 6 million. The level of these costs will depend on how quickly the Omicron wave recedes, necessity to replace staff vacancies with agencies and overtime, and the extent of government restrictions, as well as government supports for the costs associated with the restrictions. Same property occupancy was 76.4% as compared to 78.7% in Q1 2021.

Speaker 2: Upon achieving stabilized occupancy of 95%, we expect to generate stabilized than NOI yield of 6% on this acquisitionturning to Slide four our financial results still reflect the challenges posed by the pandemic. The latest wave driven by the CON subvarians, which began in April , continue to impact a large number of our residentsces across the country. Fortunately, most of the residents and employees who have contracted the virus have moild to moderate symptoms, if fany, and generally to recover quickly. The restrictions imposed by public health authorities on residences with active cases of exposure are now more tailored to individual residents of circumstances and in many cases, are allowed. We are allowed to continue with modified residident activities, social visits, including personalized tours. Having said that, this wave has slow down and further delay the pace of recovery we expected to see this spring. On a positive note, our leading sales indicators, website traffic, initial conacts and moveins.

Sheri Harris: Same property retirement occupancy was 76.5% for Q1 2022 compared to 78.9% for Q1 2021, or a decline of 2.4 percentage points, due primarily to lower move-in activity as a result of the pandemic. Move-in activity improved significantly in Q1 2022, increasing 46% compared to Q1 2021. Our occupancies declined consistent with our historical seasonal trends despite the Omicron wave. Both our Ontario and Quebec retirement platforms experienced declines in occupancy of 170 and 600 basis points, respectively, and same property adjusted NOI declined by 28.5% and 35.7%, respectively. Western Canada achieved strong growth in occupancy in H2 2021, and in Q1 2022, occupancy increased 280 basis points compared to Q1 2021. Our long-term care same property portfolio includes the two homes we will retain.

Speaker 2: Continues to train positively, with some reaching and exceeding pre pandemic levels. When now forecast occupancy in our same property portfolio to increase lightly in May and continue to grow in June , assuming those significant new restrictions and wave of the pandemic, we expect robust occupants to growth in the fll. Numerous marketing, sales and operational initiatives have been put in place both nationally at the individual residents level to ensure that we're well positioned to accelerate this growth in the coming months. On that note, I will turn the call over to parents to provide their operational update. Parents thanks F. Turning to FL 5, 10 lab said are leading indicators are improving, including March least signings reaching the highest numbers sincestethe beginning of the pandemic. This will support higher permanent movements in Q2, although our personalized tours and movements were impacted by CR in Q1. April same property leasing activity and permanent moveents exceed April twentthousand and twenty one by 27% and Thirty 5% risk.

Sheri Harris: Our total long-term care home occupancy based on total capacity of licensed beds was 88.7% compared to 78.7% in Q1 2021, an increase of 10 percentage points due to higher admissions. For Q1 2022, weighted average occupancy excluding the beds that are not available due to reduced capacity in three and four-bed ward rooms and rooms designated for isolation and cohorting was 95%. For Q1 2022, total long-term care adjusted NOI, including our discontinued operations, increased CAD 10.2 million, primarily due to recoveries of prior year incremental pandemic expenses of CAD 6.2 million, rebates in respect of workers' compensation costs for previous periods, higher ancillary revenue, and higher preferred and retirement accommodation revenues. Turning to slide 10, you will see our monthly same property retirement occupancies.

Sheri Harris: Same property occupancy decreased to 76% or 0.2 percentage points in April 2022, and is forecasted to increase slightly in May, and increase a further 0.2 percentage points for June 2022, achieving growth in our Quebec and Western platforms and stabilizing in our Ontario platform. Our forecast is based on known leases and notices on hand as at 28 April 2022. In April 2022, same property retirement leasing activity and permanent move-ins exceeded April 2021 by 27% and 35% respectively. Our Western platform is forecast to deliver strong occupancy growth of 0.5 percentage points starting in June, consistent with the recovery experienced in 2021 in this platform.

Speaker 3: Re C: no symptoms or mild symptoms. Turning to Slide 6, our marketing strategies and Q1 shifted towards an emphasis on the important connection and insenseive community that exists in retirement residences, particularly after the isolation for seniors. Over the past two years- the campaign within the voice of the adult daughter- many of our marketing initiatives for in support of our time limited promotion and specific regions connect City off and calbreate. Later in Q1 we focused our efforts to support our four day open house in April , which was very successful as evidence by the number and quality of new onactx added to our database in the weeks following this event. We also recently completed spring sales training for our retirement living consultants across the country. Topics included: working with our click to connect agents to drive consistent, exceptional customer experience strategies to help maximize sell ING time using our marketing tool kit in open doors sales environment.

Sheri Harris: Our Ontario platform is forecast to stabilize in June, and our Quebec platform is forecast to deliver occupancy growth of 0.5 percentage points in May, and occupancy is expected to continue to grow into June. We believe that there is pent-up demand for retirement accommodation and services driven by the increased aging population, disruptions of community-based support services for seniors during the pandemic, and a persistent shortage of long-term care beds. Accelerated growth in the population of seniors over the age of 70 over the next 20+ years, as well as the slowdown in construction activity in the last 2 years should support occupancy recovery in the short term and growth from pre-pandemic levels over the longer term. Our leading sales indicators are trending positively. Our acquisition and development portfolio has continued to show lease-up progress.

Speaker 3: And objection handling, including using business development partners such as physicians and health care providers, real TOR, financial planners, galizing professionals, ETC. To counter common objections. Finally, Turning to Slide 7, the operations and people teams work together to continue to deliver, to deliver strategies to focus on recognizing our employees, reducing turnover, decreasing agency use and improving improving recruitment outcomes. This includes continuing with our staffing optimization project to create more full time physicians in our residences and better aligning staffing levels to occupancy care and service levels. We're also piloting shift vacancy fulfillment software, which is already in place in our long term care homes in select retirement residences. We have a number of strategies and place to work with educational institutions and have added additional support to help our homes with frontline recruitment efforts.

Sheri Harris: Pandemic related restrictions have significantly eased, and assuming this continues, we expect our occupancy to continue to recover in 2022 across all platforms. Turning to slide 11. At 31 March 2022, liquidity amounted to CAD 374.8 million, which included CAD 159.9 million of cash and cash equivalents, and CAD 214.9 million of borrowing capacity on our credit facilities. In addition, our share of cash and cash equivalents held in our equity accounted JVs was CAD 3.8 million. At 31 March 2022, we have CAD 193.2 million of mortgage maturities remaining in 2022, of which CAD 44.9 million are CMHC insured. Scheduled refinancings of our mortgage maturities in 2022 are proceeding in the normal course.

Speaker 3: This is a people business and we have also focus on recognizing and developing our leadership teams and frontline staff members. Their contribution over the past two years, as well as their renewed focus on our recovery efforts, has been nothing short outstanding. On March eleventh we celebrated your all strong day to recogniz our frontline staff. Also, we were recently able to spend time with our G? M and administrators, albeit virtually for very engaging residences. First leadership conference next week. We will do the same with our residents managers from costs across the country to provide them with continuing education, encouragements and recognition. Government funding continues in all provinces to assist us with our additional COVID-19 costs, including new funding recently announced for retirement homes in Ontario, as well as an extension of funded employee premiums in quebecour supply chain team. Our supply chain team has been effective in helping us to manage our increasing food costs by entering into a number of new contracts with suppliers. That will result in approximately five thousand in annual savings related to dairy bread, dry goods ETC. Which will help to offset overall flationary increases.

Sheri Harris: Our mortgage maturities remain well staggered, with an average term to maturity of 6 years at 31 March 2022. At 5 May 2022, liquidity amounted to CAD 264.1 million, which included CAD 68.2 million of cash and cash equivalents, and CAD 195.9 million of borrowing capacity on our credit facilities. In addition, our share of cash and cash equivalents held in our equity accounted JVs was CAD 13.1 million. At 5 May 2022, our unencumbered assets had a value of approximately CAD 1 billion. Our ratio of unencumbered assets to unsecured indebtedness increased to 2.2 times at 5 May 2022. I will now turn the call back to Vlad to wrap up.

Vlad Volodarski: Thank you, Sheri. The potential growth embedded in our portfolio is significant, and we're committed to realizing it. As shown on slide 12, getting back to the pre-pandemic occupancy of 88.6% in our same property retirement portfolio is estimated to generate approximately CAD 84 million of additional NOI, with an additional CAD 76 million estimated to be generated over time from achieving our target at 95% occupancy in retirement portfolio. While we expect that we will be able to complement this embedded growth with the new investments in acquisitions and development opportunities, our focus has been and will continue to be operating our existing portfolio to its full potential. We believe we will realize this significant value creation potential embedded in our portfolio through disciplined execution of our recovery and growth strategies, some of which Karen covered today.

Speaker 2: Was 31 points three million, or 13 cents per unit for Q1 20 20- two, compared to Thirty five point one million or 16 cents per unit in Q1 20 20- one

Vlad Volodarski: This recovery and growth will be supported by the strong demographic growth of senior population, continuing shortage of long-term care beds, and in the short term, slower pace of new developments. The rapid escalation of construction costs over the last several years means that new developments, to be economically viable, need to achieve accommodation and service rates significantly higher than current market rates. That means that as occupancies recover, there is likely to be an opportunity for higher than historical growth in market rates for existing residences. 1 percentage point growth in our rent and services rate is estimated to generate nearly CAD 9 million of additional revenue. 2022 is going to be a transition year, transition from the pandemic to recovery and growth. Chartwell is a company with great culture, clear strategic direction, and exceptional execution capabilities.

Speaker 2: The pandemic and associated government restrictions have continued to be the primary driver in the depcline in our financial performance.

Speaker 2: To summarize the decrease in total FFO per unit compared to Q1: two twentthousand and twenty two is primarily due to lower retirement operations- adjusted NOI of 13.6 million as a result of lower same property adjusted NOI of thirteen point two million, and lower contributions from our acquisitions, development and other portfolio due to the disposition of properties with acquisition and development growth not yet fullyo offsetting the disposals. Our GNA expenses were higher by one million as a result of lower government subsidies and increased cloud based information technology system implementation costsour management fee revenue was lower by zero, four thousand due to lower performance based feesadditional units have standing from the August 2021 equity offering net interest savings also resulted in dilution. These factors were offset by contributions from our long term care operationsas- Latin care noted.

Vlad Volodarski: We demonstrated this during the pandemic and will keep building on this foundation through transition and beyond. The ingenuity, drive, and commitment of our people have proven to be incredible, and it is them who give me confidence in our ability to realize this embedded growth in our portfolio and to deliver sustainable long-term value to our unit holders. To all nearly 16,000 Chartwell employees across the country, thank you for everything. Turning to slide 13. We are privileged to work in a sector that generates tremendous positive societal impact by serving and caring for the most respected segment of our population, our seniors. As a leader in the retirement living sector in Canada, at Chartwell, we see it as our duty to continuously evolve, improve, and grow our contribution to society. Our culture manifests itself in our results and lives in our stories.

Speaker 2: Effective March 31 2022, we entered into definitive agreements to substantially exit our long-term care operations in Ontario. 15 Ontario LTC propertiess and one retirement residents adjacent to one of these LTC's have been reclassified as discontinued operations in our financial statements. In mdnaour long-term care discontinued operations contributed four sinceence per unit to total FFO for Q1 2022, compared to zero sense per unit in Q1 2021 due to government reimbursements for prior year's direct operating expenses and higher and cillary preferred and retirement accommodation revenues in Q1 2000. and twenty-twoslide nine summarizes our same property operating platform's results.

Vlad Volodarski: Stories about our residents, employees, and communities in which we operate are heartwarming and inspirational. They deserve to be told. I invite you to read our recently released 2022 Environmental, Social, and Governance report, where you will find, in addition to statistics and key performance indicators, many of these great stories. We would now be pleased to answer your questions.

Operator: Thank you. We will now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. When prompted by the system, please unmute your line and clearly state your name to register in the Q&A. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while participants register, and we thank you for your patience. First question is from-

Speaker 2: Our same property adjusted NOI decreased 13.2 million for two twentthousandy, 2% in Q1 2, Y and twenty two compared to Q1, two thousand and twent 1, primarily due to the following factorsin q-1, twotwentthousand and twenty 2, net pandemic expenses in our same property, retirement operations were five point eight million.

Speaker 2: In Q1 2021, we had been in a recovery position and our net recoveries wor three million. The increase in net pandemic expense is primarily due to the omacrome wave and lower government reimbursements of pandemic expenses.

Jonathan Kelcher: Jonathan Kelcher.

Operator: Please go ahead. Your line is open.

Jonathan Kelcher: Thanks. Good morning.

Speaker 2: Revenue growth in our same property return operations was two point one million or 1% higher, due to revenue from both regular annual and market-based rental and service rate increasespartially offset by lower occupancy of three point two million.

Vlad Volodarski: Morning, Jonathan.

Jonathan Kelcher: First question, just on sort of the Q1 pandemic costs of CAD 5.8 million, and you talked about agency costs of CAD 2.9 million. Is the 2.9 in that 5.8, or is that over and above?

Speaker 2: Higher agency staffing costs and our same property retirement residences as a result of staff shortages increased costs by approximately two point nine million. Historically, our reliance on agencycies has been very limited. We always prefer to have our own chal staff were fully trained in our programs and dedicated to our visionour staffing optimization projects, which is focused on maximizing full-time jobs, ensuring predictable schedu one for our staff, matching staffing levels to occupancy, care and service levels will result in reducing reliance on agency staff over time.

Sheri Harris: It's over and above, Jonathan. The CAD 2.9 relates to existing positions, sort of the run rate that we were experiencing towards the H2 of 2021 that came into our system then.

Jonathan Kelcher: Does the extra pandemic costs include any agency costs?

Sheri Harris: Yes. The majority would be.

Jonathan Kelcher: Is it all just sort of?

Sheri Harris: Yeah. The majority would be additional staffing and agency costs, along with some costs for PPE.

Jonathan Kelcher: Okay. The CAD 4 to 6 million you're expecting for Q2 would be largely agency. What about that 2.9 run rate? Is that something that can come down?

Speaker 2: In addition, we are implementing technology assist solutions to assist our residenes to improve speed to hire and allow all our residence staff to be informed. The availability of additional shifts to ensure faster shif fulfillment. We also experienced higher utilities expenses do primarily to increases and natural gas pricesoverall, our trend on retirement operations, net pandemic expenses have been improving significantly in the latter half of 2021, even with the significantly reduced government supports. Net pandemic expenses in Q1 2022 primarily relate to temporary costs associated with restrictions and requirements. Outbreaks, including additional staffing, primarily for screening, and in these Om Ron driven waves, agency premiums. Data replacing staff who are required to sell out isolate in order to ensure our safety and service levels are maintained. We are also incuring additional costs for P.

Sheri Harris: We are expecting to bring that down. I think Karen's highlighted many of the initiatives that are in place in our operations team that will assist in bringing those down. I think that we'll see that decline starting in H2 2022.

Sheri Harris: Specifically, our staffing optimization project, I think, is.

Jonathan Kelcher: Mm-hmm

Sheri Harris: Going to yield some good results.

Jonathan Kelcher: Okay. That is helpful. Glad you talked about the embedded NOI gain that you can get. Like, you've got good leading indicators. Like, how long do you think until occupancy gets back to pre-pandemic levels?

Vlad Volodarski: Yeah, that's, I guess, 160 million-dollar question, or this particular one is 85 million-dollar question, Jonathan.

Jonathan Kelcher: Yeah.

Vlad Volodarski: It's really hard to estimate the specific timings. We do expect a more robust recovery beginning in H2 2022, driven by all the factors that we discussed on this call, including these very encouraging leading indicators. I mean, we've seen them trending positively for a while now. Now the trend is significantly positive. That has to translate into higher occupancy in H2 2022, assuming we're not gonna be hit with more of these waves of the pandemic and related restrictions. As Karen mentioned, even though many homes today are impacted by outbreaks, we still are able to conduct resident activities in some modified way, but still conducting those activities and including personalized tours. That's certainly helpful.

Speaker 2: Once restrictions are lifted and the wave receeds, we expect staffing levels to normalize and cost to decline. We expect that Q2 20- 20 net pandemic expenses will be in the range of four to $6 million. The level of these costs will depend on how quickly the omron wave receeds, necessity to replace staff vacancies with agencies and over time, and the extent of government restrictions, as well as government supports for the costs associated with the restrictionssame property occupancy was seventy six point 4% as compared to 79% in Q1 20 20- one same property retirement occupancy was 76% for Q1 20 20- two compared to 79% for Q1 two 20 20- 1, where a decline of two point four percentage points to primarily to lower move in activity as a result of the pandonemic move in activity improved significantly in Q1 20 20- 2, increasing 46% compared to Q1 20 20- one

Vlad Volodarski: Assuming all of that stays the same, we should see better recovery in the H2 of 2022 and certainly into 2023. Then, kind of macro factors of demographic growth of the senior population, the slower construction starts that we've experienced in the last couple of years, shortage of long-term care beds, all of these should support the growth in the occupancy in 2023.

Speaker 2: Our occupancies declined, consistent with our historical seasonal trends. Despite the maccrron wave, both our Ontario and toac retirement platforms ex experience declines in occupancy of 17.6 thousand basis points respectively, and same property adjusted Al lie declined by 28% and 36% respectivelywestern Canada achieved stone growth in occupancy in the latter half of 20 20- one and in Q1 20 20- two occupancy increased 280 basis points compared to Q1 20 20- one

Jonathan Kelcher: Okay. That's helpful. Just on the restrictions and how it's working now, would it be, I guess, less restrictive than pre-pandemic if you had an influenza outbreak at a home? Like, how would it compare to that?

Karen Sullivan: Yeah. It's sort of similar. Our dining rooms are necessarily closed. It can be different in different public health units. That's what it was like in a pre-pandemic world. People who, you know, had the flu were in their rooms eating, but everybody else was able to go to the dining room and participate in activities and more, you know, cautionary approach to people being together.

Speaker 2: Our long-term care same property portfolio includes the two homes we will retainour total long-term care home occupancy based on total capacity of license beds was 89%, compared to 79% in Q1. 20 and twenty-onean increase of 10 percentage points due to higher admissions.

Karen Sullivan: It looks a lot like that in this sixth wave, which means it just feels so much more normal, and people are still visiting and interacting, which I think is, you know, a huge part of this and a huge part of the change as these waves go on is we are, based on the outcomes, we truly are learning to live with this.

Speaker 2: For q1- twotwentthousand and 22. weighted average occupancy, excluding the beds that are not available due to reduced capacity in three and four bed ward rooms and rooms designated for isolation and cohboorting, was nintwenty five percentfor q1- twotwentthousand and 22. total long term care adjusted NOI, including our discontinued operations, increased 10.2 million, primarily due to recoveries of prior year incremental pandemic expenses of six point two million, rebates in respective workers compensation costs for previous periodshigher ancillary revenue and higher preferred and retirement accommodation revenues.

Jonathan Kelcher: Okay. That's good. Just lastly for me, the word normal there kind of sparked it, but how was the flu season in Q1 this year?

Karen Sullivan: It was much, you know, better than a typical flu season, for sure. You know, with all the, you know, additional IPAC procedures that we're using, it was quite good compared to previous seasons.

Vlad Volodarski: Okay, thanks all. I'll turn it back.

Speaker 4: Turning to Slide 10, you will see a monthary same property retirement occupancies. Same property occupancy decrease to 76% or zero, zero point two percentage points in April 2022 and is forecasted to increase slightly in May and increase a further zero zero point two percentage points for Jun 2022, achieving growth in our Quebec and Western platforms and stabilizing in our Ontario platform. Our forecast is based on known leases and notices on hand. As at April two yegh 2022, April 2022, same property retirement leasing activity and permanit moveving exceed apil 2021 at 27% and 35% respectively. Our Western platform is forecast to deliver strong occupancy growth of zero, zero point five percentage points starting in June , consistent with the recovery experienced in 2021 in this platform. Our Ontario platform is forecast to stabilize in June and our Quebec platform is forecast to deliver occupancy growth.

Operator: Thank you. Our next question is from

Himanshu Gupta: Himanshu Gupta.

Operator: Please go ahead.

Himanshu Gupta: Thank you and good morning.

Vlad Volodarski: Morning, Himanshu.

Himanshu Gupta: Just on long-term care, I mean, obviously large expense recovery in Q1. Have you recovered everything for the last year from the last year? Or do we expect another catch-up in Q2 as well?

Sheri Harris: No, we've recovered all of our investments from the previous year, Himanshu. Thank you.

Himanshu Gupta: All right. Okay. You know, just turning to pandemic expenses, a follow-up to Jonathan's question. Just to clarify, CAD 4 to 6 million guidance in Q2, that includes agency staffing as well. Is that correct?

Sheri Harris: No, it does not include agency staffing. The CAD 4.6 million includes agency staffing to the extent it is net pandemic related. The run rate elevation that we experienced that increased through 2021 for Q2 was CAD 2.9 million. I expect that that will continue to decline through Q2, Q3, and Q4, but probably be a consistent level for Q2.

Speaker 2: Of zero- zero point five percentage points in May and occupancy is expected to continue to grow into June . We believe that there is pent up demand for return and accommodation and services driven by the increased aging population, disruptions of community based support services for seniors during the pandemic and a persistent shortage of long term care events. Accelerated growth in the population of seniors over the age of 75 over the next two Y plus years, as well as the slowdown in construction activity in the last two years, should support occupancy recovery in the short term and growth from prepandemic levels over the longer term. Our leading sales indicators are trending positively. Our acquisition and development port folio has continue to show lease up progress. Pandemic related restrictions have significantly ease and, assuming this continues, we expect our occupancy to continue to recover in 2020 two across all platforms.

Himanshu Gupta: Got it. Basically, your CAD 4 to 6 million is very similar to CAD 5.8 million in Q1. Are you being conservative here, or do you see actually, you're spending that much money in Q2 as well? Just trying to assess that.

Vlad Volodarski: Well, we're trying to kind of give the best estimate we can in the circumstances that are very uncertain. It really depends on how many residences are going to be impacted by the outbreaks, how long this is going to continue. I mean, it felt actually that it was slowing down for a period of time, and then we had, you know, more residences going in. The community spread of this particular variant is so wide that more residences are being affected. You know, assuming the number starts slowing down, hopefully we'll be at the lower end of the range. If it doesn't, we'd probably be at the higher end of the range. It's really hard for us right now to tell you exact number, but the range should be correct.

Speaker 2: Turning to Slide 11 at March 30. first twotwentthousand 22, liquidity amounted to 374.8 million, which included 159.9 million of cash and cash equivalents and 214.9 million of borrowing capacity on our credit facilities.

Himanshu Gupta: Okay, thank you. Just turning to the occupancy side of things. I'm looking at Ontario occupancy, still no recovery. Is Ontario market, is that a market of have and have-nots? I mean, I know you have a very large portfolio. Are there markets which are 85% or plus, and then there are markets which are struggling, like, say, 60% or below? I mean, is that how it's panning out?

Speaker 2: In addition, our share cash and cash equivalence held in our equity account JVs, which thrives three point eight million and March 30 first 2022, we have 193.2 million of mortgage maturities remaining in 2022, of which 44.9 million or cn HC insured. Scheduled refinancings of our mortgage maturities in 2022 are proceeding in the normal course. Our mortgage maturities remain while staggered, with an average term maturity of six years at March 30 first 2022.

Karen Sullivan: Yeah. Yes. It's a big province, and it's definitely there are areas that have higher occupancy than others. The other thing I would say in Ontario, with outbreaks, we often have needs-driven short stay people who come to live with us, so during outbreaks that has gone down. I'd also say that recovers pretty quickly. It's just a more needs-based province.

Speaker 2: At may fifth 2022, liquidity amounted to 264: one million, which included 68.2 million of cash and cash equivalents and 195.9 million of borrowing capacity on our credct facilities. In addition, our share of cash and cash equivalents held in our equity accounted JVs was thirteen point one million. At may fifth 2022, our unencumbered assets had a value of approximately $1 million. Our ratio of unencumbered assets to unsecured indebtedness increased to two point two times at may fifth two twentthousand twenty two

Himanshu Gupta: Got it. You know, if I look at within Ontario, so are there certain markets which are struggling, or are there certain residences which are struggling? I mean, can you like oversimplify saying that maybe one or two markets are struggling, or is it like few residences which could be across many markets which are struggling?

Vlad Volodarski: It's certainly more sort of struggles are more widespread than in the normal circumstances. Generalizing, it's still the Ottawa markets that continues to experience oversupply. In fact, there's some more construction going on in the Ottawa markets. Given sort of the composition of our portfolio there, where we have a lot of studios, we have lower occupancy in that market at the present time. It will take a little longer to recover than the rest. Durham Region remains to be competitive, so our occupancies are depressed there. You know, Northern Ontario, for example, would be a better market where occupancy would be higher.

Speaker 2: I will now turn the call back to flat to wrap up. Thank you, sharry. The potential growth embedded in our portfolio is significant and we're committed to realizing it. As shown on Slide 12, getting back to the prepandemic occupancy of 89% in our same property, retirement portfolio is estimated to generate approximately 84 million of additional NOI, with an additional 76 million estimated to be generate over time from achieving our targetedat 95% occupancy and retirement portfolio.

Speaker 5: While we expect that we will be able to complement this embedded growth with the new investments in acquisitions and development opportunities, our focus has been, and will continue to be, operating our existing portfolio to its full potential.

Karen Sullivan: Southwestern Ontario is doing quite well.

Vlad Volodarski: Yes.

Himanshu Gupta: Got it. The markets which are, you know, taking a bit of time to recover, so is that now a bigger push in terms of incentives in those markets? Like, are you changing any strategy from a sales and marketing perspective, in those cases?

Speaker 5: We believe we will realize the significant value creation potential embedded in our portfolio through disciplined execution of our recovery and growth strategies, some of which carearen covered today. This recovery and growth will be supported by the strong demographic growth of senior population, continuing shortage of long-term care bets and, in short-term, lower pace of new developments.

Karen Sullivan: Yeah. We are. We're being much more targeted in our promotions, so they see more home by home. Even within the home, it might be a certain type of unit or a location in the building. I would also say our marketing efforts are much more targeted to either groups of home in a region that are struggling or individual homes as well.

Speaker 5: The rapid escalation of construction costs over the last several years means that new developments, to be economically viable, need to achieve accommodation and service rates significantly higher than current market rates. That means that as occupancies recover, there is likely to be an opportunity for higher than historical growth in market rates for existing residences.

Himanshu Gupta: Got it. Okay. Thank you. Thank you, everyone, and I'll turn it back.

Operator: Thank you. Please press star one at this time if you have a question, and when prompted by the system, please unmute your line and clearly state your name to register in the Q&A. Next question is from

Speaker 5: one percentage borign. Growth in our rent and services rate is estimated to generate nearly nine million of additional revenue.

Speaker 5: Point pointy-two is going to be a transition year: transition from the pandemic to recovery and growth. charwo is a company with great culture, clear strategic direction and exceptional execution capabilities. We demonstrated this during the pandemic and will keep building on this foundation through a transition and beyond. The ingenuity, drive and commitment of our people have proven to be incredible and it is them who giveave me confidence in our ability to realize this embedded growth in our portfolio and to deliver sustainable long-term valuuees to our unitholders. To all nearly 16 thousand charl employees across the country, Thank you for everything.

Lorne Kalmar: Lorne Kalmar.

Operator: Please go ahead.

Lorne Kalmar: Thanks, and good morning. Just again

Vlad Volodarski: Good morning.

Lorne Kalmar: Morning. Just nice to see the occupancy start to turn again. Just, you know, maybe with respect to your comments on a more robust pickup in the fall, can you maybe just elaborate what you consider to be robust? If you know, some of your peers have provided guidance for the year. I'm just curious if that's something that you would consider or, what might be a reasonable expectation for occupancy by year-end.

Vlad Volodarski: No, we will not be providing guidance because in this uncertain environment, it's, I would say, pegging a specific number would probably be not the right thing to do.

Speaker 5: Turning to Slide 13, we are privileged to work in a sector that generates tremendous positive societal impact by serving and caring for the most respected segment of our population: our seniors.

Jonathan Boulakia: You know, the experience I can tell you that we had, for example, in the US where we were operating there, which, you know, situation was very different, but it was a housing market impact on the occupancy. When things turned around, we saw occupancy growing by about 200 to 300 basis points in a quarter, and that I would consider to be a very robust recovery. If we can get to those kind of numbers, I think we'll all be pleased.

Speaker 5: As a leader in the retirement living sector in Canada, at charar will, we see it as our duty to continuously evolve, improve and grow our contribution to society?

Speaker 5: Our culture manifests itself in our results and liists in our stories. Stories about our residents, employees and communities in which we operate are heartwarming and inspirational. They deserve to be told. I invite you to read our recently released 2022 environmental, social and governance report, where you will find, in addition to statistics and key performance indicators, many of these great stories.

Lorne Kalmar: All right. Yeah, I know that would be great to see. Maybe for Karen, just on the marketing initiatives. I'm just curious, you know, it might be a tough comparison to last year, but what can you say in terms of some of the changes that have been made, what are you finding that's working now, you know, or changes that have, you know, actually started to make a bit of an impact?

Speaker 5: We will now please answer your questthank you. We will now take questions from the telephone lines. If you have a question and you're using a speaker phone, Please lift your hansset before making your selection. If you have a question, please press star one on your devices. Keep AD when prompted by the system, Please on you, your line and clearly state your name to register in the Q any. You may anscewer your question at any time by pressing St two Please press star and at the sum, if you have a question, there will be a brief B while participants register and we thank you for your patients.

Karen Sullivan: Yeah. Well, certainly having an open house was a big deal for us because we haven't been able to do that. We did it a little differently. We had it shorter hours over four days so that we didn't have too many people in at the same time. We had a good response to that. I'd also say those were quality contacts because you weren't just coming out. I just think people aren't willing to come out if they're as much tire kicking. I'd say the quality of our initial contacts from that were very good. As I said, the other thing we're doing differently. It's still important to do brand marketing, and we'll continue to do that.

Speaker 6: The first question is from Jonathan culture. Please go ahead of my misistle thanks, good morning.

Speaker 7: Marin jona, first question, just on sort of the Q1 pandemic costs of five point eight million and- and you talked about agency cost of two point nine is: is the two point nine in, not 5.8, or is that over above? It's over? And OB Jonathan. The two point nine relates to existing positions, sort of the run rate that we were experiencing towards the latter half of 2020. one that came into our system then.

Karen Sullivan: We are taking some of those funds and diverting them to be more specific for homes where, let's say, we do have a promotion and we have a call to action, and we're trying to get information directly out to people within that, you know, radius around that home. That's another piece that would be different this year.

Speaker 8: Okay So does the? Do extra pandemic costs include any agency costs?

Lorne Kalmar: some of the initiatives I think I recall, you know, maybe some changes to how staff or salespeople are compensated.

Speaker 2: Yes the maiddor ity would be yes, the majority would be additional staffing in agency costs, along with some costs for PPE.

Karen Sullivan: Yeah. Mm-hmm.

Lorne Kalmar: Is it having an impact yet or?

Karen Sullivan: It is. We're just about to pay out our first quarterly bonus program, and that goes not just to our sales force, but also to the GMs and the management team so that there's focus around sales in the home. I do think, you know, we haven't had this before. We've certainly always compensated our sales force based on occupancy, but now the entire team and there's more compensation for our LCs. Yeah, we're starting to see that help.

Speaker 8: Okay So the four ID, four to six million you're expecting for Q2 would be largely agency. And what about that two point nine run rate? It's that something that can come down?

Speaker 2: We are expecting to bring that down. I think cararen highlighted many of the initiatives that are in place in our operations team.

Speaker 2: That will assist in bring those down. I think that we'll see that decline starting in the latter half of 2022. specifically, our stepping optimization project I think is going to yield some good results.

Lorne Kalmar: Got it. Just not to hammer the point home here, but on the CAD 4 to 6 million of pandemic costs in Q2, I just wanted to clarify the language around that. I think, you know, the way you described it in the disclosure was net incremental CAD 4 to 6 million pandemic costs in the quarter. But to clarify, that CAD 4 to 6 million is basically in line with that CAD 5 to 8 million in last quarter. It's not incremental, it's just kind of consistent with what you incurred in Q1.

Speaker 9: okaythat is helpful, and then we'm glad you talked about the embedded NOI.

Speaker 10: Me that you can get what, like you guys, are good leading indicators. How long do you think until arcupancy's back to creep deic levels? That's, I guess, 16 million or question? Are this particular? It's positive or questions the? It's really hard to estimate the specific timings. We do expect a more robust recovery beginning in the second half of 2022, driven by all the factors that we discussed on this call, including the. They're encouraging, these leading indicators. I mean, we've seen them taining positively for a while now. Now the trend is significantly positive and so that has to translate into higher occupancy in the second half of 2022, assuming we're not going to be hit with more of these wayste of the pandemic and related restrictions. <expletive> Karen mentioned, even though many homes today are impacted by outbreaks, we still are able to conduct resident activities in some modified way, but still.

Sheri Harris: Yes. Yeah. Year-over-year incremental. Yeah.

Lorne Kalmar: Yeah.

Sheri Harris: That's an important clarification. It's, you know, how we're distinguishing between those two cost classifications is the additional work and hours that need to be added when they're related to restrictions or outbreak versus existing staff complement hours where we're filling with agency.

Lorne Kalmar: Okay. Just a couple of quick ones left. In terms of maybe just redeploying the proceeds from long-term care, I mean, obviously, that transaction itself hasn't closed yet. You made the first move with the recent acquisitions. Can you just comment on maybe what's in the pipes at this stage? Just secondly, any changes in terms of how, you know, maybe some of the buyers at the table or how deals are being underwritten, just given how much volume that's out there?

Jonathan Boulakia: Sure. It's Jonathan. I'll answer that. We do continue and have been looking at opportunistic acquisitions. As you've alluded to, our cost of capital is higher than some of our competitors for assets. We will win some of these assets and have, including the three we just bought in Ontario, where we have a competitive advantage. An example would be, you know, these three properties suited us very well because they folded so nicely into our existing platform and our geographic footprint. We are in the market, we are looking, but we remain cautious on these acquisitions, and look for a competitive advantage where there is one.

Lorne Kalmar: Have you seen any maybe strategic or new entrants maybe looking for platforms? Has that become visible at all in terms of what you're seeing out there?

Jonathan Boulakia: Well, we've seen new entrants, new capital, maybe not so much looking for platforms, but we've seen capital investing. Yeah. Paul, I mean, there's quite a bit of activity in the market where with larger institutional investors like US REITs and private equity funds investing in Canada now and partnering with various operators. There's also quite a few smaller firms now that are building their own management platforms and investing in what for us might be non-core assets. We're seeing quite a bit, a few groups like that that are establishing in Canada to potentially for future growth. That does happen.

Jonathan Boulakia: Well, we've seen new entrants, new capital, maybe not so much looking for platforms, but we've seen capital investing.

Speaker 3: Flu were in their room eating, but everybody else was able to go to the dining room and participate in activities and more. You know cautionary approach to people being together. But it looks a lot like that in this sixth W, which means it just feels so much more normal and people are still visiting and interacting, which I think is, you know, a huge part of this' in a huge part of the change as these ways go on, is we are based on the outcomes were we truly are living to live with this. Ok, let's good. And just, lastly for me, the word normal: herir credous, SPK that. But how was the flu season, que of? For sure it was much you know better than a typical flu season. For sure you know, with all the you know additional Pac procedures that were using it.

Vlad Volodarski: Yeah. Paul, I mean, there's quite a bit of activity in the market where with larger institutional investors like US REITs and private equity funds investing in Canada now and partnering with various operators. There's also quite a few smaller firms now that are building their own management platforms and investing in what for us might be non-core assets. We're seeing quite a bit, a few groups like that that are establishing in Canada to potentially for future growth. That does happen.

Lorne Kalmar: Thanks very much. Yeah. I will turn it back. Thanks.

Operator: Thank you. Next question is from

Himanshu Gupta: Tom Callaghan.

Operator: Please go ahead.

Tal Woolley: Hi, good morning, everyone.

Speaker 3: Quite good compared to previous seasonsokay, thank all, I'll turn a pack. Thank you. Our next question is: from's on U book up. Please go ahead.

Vlad Volodarski: Morning, Tal.

Tal Woolley: Vlad, I'm just wondering, you know, with everything going on in the market right now and, you know, in terms of just like the investment market for seniors housing and then changes to interest rates, things like that, what do you think is more preferable right now, in terms of deploying growth capital? Is it against acquiring assets or is it focusing on your existing development pipeline?

Speaker 11: Thank you and good morning. Just on long term care, I mean obviously large expense recovevery in Q1. So have you recovered everything for the last year from the last year or do we expect another catch-up in Q2 as well? I know we've recovered all of our investments from the previous year and sure. Thank you.

Vlad Volodarski: That's an excellent question, Tal. We've always looked at sort of what's number one, number two, and number three in terms of the deploying capital. Frankly, the overall market conditions play maybe even a smaller role in those decisions than sort of our views on the returns, the potential returns. The first dollar always would go towards investment in the existing property portfolio. If we had opportunities to reposition a home where we believe we can generate better returns, that's where we are looking to invest first because that carries lower risk and generally provides better returns than anything sort of external. Development's always been core external growth strategy for us.

Speaker 11: itokay and then you may just, Turning to P emic expenses, follow up to joinson's question. So just to clarify: four $6 million guidance in Q2. That includes agency stoaffing as what is that correct? No, it does not include agency stoaffing. That four point six million includes agency St stoaffing to the extent it is net pandemic related. The run rate elevation that we experienced that increased through 2020 1, four Q2 with two point nine million. I expect that that will continue to decline through Q2, Q3 and Q4 but probably be a consistent level for Q2. But it it also. Basically your 4, six million is very similar to five point 18 Q1. So are you being conservative here or do you see actually your spending that much moneyy in Q2 as well? Just just trying to such a.

Vlad Volodarski: Unfortunately, from what I'm seeing in the market now, underwriting needs to be done very aggressively in terms of the rate growth to justify most of the developments at the present time, given where the construction costs are. While we are set up ready with a number of projects and wanna build quite a few of them, we're all being cautious about kinda underwriting, I don't know, 6, 7, 8% rent growth over the next couple of years that you need to underwrite for these projects to happen.

Speaker 12: Well we're trying to kind of give the best EST ITE we can and the circumstances that are very uncertain. So it really depends on how many residences that are going to be impacted by the outbreaks, how long this is going to continue. I mean feel it felt actually that it was flowing down for a period timelim and that we had, you know, more residcesis going in. So the community spread of this particular very is so why that more residences are being affected. You know, assuming the number starts flowing down, flu will be at the lower end of the range. If it doesn't, which should we probably be at the higher endof the range. So it'sreally hard for the us right now to tell you exact number. The range should be correctok, Thank you is. And then just turning to the occupancy side of things. So I'm looking at onto your occupancy, still recovery onto your market. Is that a bucket of haven't had loss? I mean, and I know you have a very large ortfolio audio walckets which are 85% or plus.

Vlad Volodarski: You know, part of our remarks today was about the fact that there's this big gap between what these projects need to generate in terms of the rate compared to the construction cost to be economically viable and the rates that we have in place today in the marketplace. I think that creates quite a bit of opportunity over time once we recover the occupancy to grow the rates in the existing property portfolio. Development, unfortunately, right now, cannot be a big user of our capital, given those constraints, but everything changes over time. Acquisitions is then the next bucket where we're looking for opportunities that fit our portfolio, as Jonathan pointed out, where we can actually have some competitive advantage and could win the deal in very competitive environments.

Tal Woolley: Okay. Just on the labor side, you know, you're talking about, you know, the money you're spending on agency and how you think you've got, you know, a strategy in place to kinda wind down your agency usage. Is that because you think, like, the labor market is going to get better, or is that more like an internal reorg on your part that will help reduce labor expenses?

Vlad Volodarski: The answer is both. The first one is a hope that the labor market will get better, and hope is not a strategy. The internal things that we're trying to do, the initiatives that we're trying to put in place, that is the strategy that we're trying to deploy to alleviate this situation with agencies, and Karen spoke about what they are. I do think that there is a possibility the labor market will improve a little bit post-pandemic. I think I spoke about this before at many calls that structurally, this same demographic that makes us very optimistic about our ability to grow occupancy over time, where the number of senior citizens in this country will continue to grow rapidly.

Speaker 5: strues are more widespread than in the normal circumstances. Generalizing, it's still the automo market that continues to experience over supply. In fact there are some more construction going on in the auto markets and given sort of the composition of our portfolio there where we have a lot of studios, we have lower occupancy in that market at the present time. It will take a little longer to recover than the rest. durour region remains to be competitive. Our occupancies are depressed there and in our norther ontarea, for example, would be a better markets where occupancy would be higher.

Vlad Volodarski: The same demographic will point out that there are fewer younger people for each retired person going to be in the next 20 years. There needs to be additional considerations over and above what any company can do from the government and society to bring more people who will work in hospitality, in our sector, in healthcare, in entertainment into the country. That's probably the only solution that will systemically solve this problem.

Speaker 3: And Southwestern ontarios certain, quite yes. And then the markets, which are you're taking a big of Ti to the go. So is that now if, because bushing does of incentives, those markets, like if you genity ity side, is you call to see as a marketing perspective in those buses? Yeah, we are. We're we being much more targeted in our, our promotions So they be more home by home, and even within the home it might be a certain type of unit or a location in the building and I would also faare marketing efforts are much more targeted to either groups of home in a region- they're struggling- or individual homes as well.

Tal Woolley: I know, like, over the course of the pandemic, you were trying to draw other people in from those sectors, effectively trying to expand the labor, you know, the eligible labor pool. Like, do you have some sort of sense of how successful that was through COVID? Like, do you think, you know, you've actually sort of been able to draw, you know, draw from a larger pool, or was it more, you know, kind of like piece by piece and there was no real trend there? Just wondering if you got a sense of that.

Speaker 11: Cor okay, Thank you. So he everyoneondon. Thank you, Please first St one at this time. If you have a question and when prompted by the system, Please on mutual I and clearly stateitch your name to register in the qany.

Vlad Volodarski: Yeah. I don't think we have seen any kinda trend in that. It's more piece by piece.

Tal Woolley: Okay. I'm just wondering how we should think about, you know, if occupancy, you know, across, you know, the industry starts to, you know, improve. I mean, I think probably the industry would still be what we would call, quote-unquote, under-occupied. How should we be thinking about rent growth then in the context of that?

Speaker 2: Next question is my ber, Please go ahead. Thank already, just again morning just to see the occupants you start to turn again. But just you know, maybe with respect to your comments on a more robust pick up in the fall, can you maybe just a library, what you consider to be robust? If some of your peers have provided guidance for the years, I'm just curious if that's something that you would consider or what, what might be a reasonable expectation. cckc, is you by your end? No, we will not be providing guidance because in this uncertain environment is, I would say, hgging a specific number would probably be not the right thing to do. You know the experience I can tell you that we had, for example, in the us, or we were operating there, which you situation was very different, but it was a housing marke impact on the occupancy.

Vlad Volodarski: There's two competing forces that are working when it comes to rents. One is, there's inflationary pressures that are undeniable on many cost categories, including labor, that we just talked about. On the other hand, you have the desire to drive occupancy from most players. I know that in the US, people got over that and started growing rates at significantly higher clip even before they recovered the occupancy. I think the Canadian experience is different. There may be incremental increases in rental rates that people will put through, including ourselves. We might consider that. I doubt that they will get to, you know, high and single digit level at least in the short term, to these high and single digit level that we're seeing in the US.

Speaker 5: When things turned around, we saw occupancy runing by but two 300 basis points in the quarter and that I would consider to be a very robust recovery. If we can get to those kind of numbers, I think we all be being pleased. That would be aggreat to see, maybe for for care and just don't be the marketing initation. I'm just curious. You know it might be a tough comparison for last year, but what can you say in terms of some of the changes that have been made, what you finding that's working now? You, or changes that you know actually started to make a big of an impact? Well certainly, having an open house was a big deal for us because we haven't been able to do that. So we did it a little differently. We had it shorter hours over four days, So that we didn't have too many people and at the same time and we had a good response to that. I'd also say those were quality contactxt, because you mar.

Vlad Volodarski: as I pointed out, once occupancy recover, this gap between what you need to achieve to build a new product and what's in place today, will have to narrow, and there will be opportunity to increase at least market rates for new residents, once occupancies are at more stabilized levels.

Tal Woolley: Okay. Just lastly, you know, like it's sort of a similar question, but for the service revenue piece. I know, you know, a lot of players in the industry have been looking at sort of reworking how they price these services, and, you know, like how they price, pitch the service packages to the customers. Do you think, you know, you'll be able to sort of see, better pricing on this going forward or, better take up, post-COVID?

Karen Sullivan: Yeah. In the midst of all of this, somehow my team was able to do exactly what you're talking about. We've rationalized, and this is in Ontario. We're gonna take this out more to the West and Quebec shortly. We looked at our care programs, and how we're pricing them, how we're bundling them, and how we're selling them to our residents, and we call that Care Assist. We've clarified everything from, you know, the nomenclature that we use to, you know, what are the packages that sort of naturally go together. I think that's helping a lot for both our health and wellness managers to speak to our current residents and our sales force to talk to prospects about care.

Speaker 3: Yet or it is. We're just about to pay out our first quarterly bonus program, and that goes not just to our sales force but also to the G? M and the management team, So that there's focus around sales in the home. So I do think you know we haven't had this before. We haven't. We certainly always compensated our sales force based on occupancy, but now the entire team and there's there's, there is more compensate, compensation for our L CS. So Yeah, we're starting to see that help.

Karen Sullivan: It's definitely a strategy for us, and we're kind of well underway with that here in Ontario, which is the most needs-based province.

Tal Woolley: Okay. That's great. Thanks very much.

Vlad Volodarski: Thanks, Alan.

Operator: Thank you. We have no further questions at this time. I'll return the meeting back over to you, Mr. Volodarski.

Vlad Volodarski: Thank you, Louise. This wraps up today's conference call. Thanks again to everybody for joining us. A reminder that our virtual annual general meeting will be held on Thursday, 19 May at 4:30PM. Further details will be posted on our website later today. We are looking forward to you joining us on the call then. As always, if you have any further questions, please do not hesitate to give us a call. Goodbye.

Speaker 13: 've got it just not to ENT the point home here, but on the on the four to six million of pandemic cost in Q Q2. I just wanted to clar, clarify the language around that I think you know. The way you described it in the disclosure was net incremental four to six million pand cost in the quarter. But to clarify that, that four to six million is basically in line with that. I guess five a million in lastsp. So it's not incremental, it's just kind of consistent. Before you incurred in Q1.

Operator: Thank you. Your conference has now ended. Please disconnect your lines at this time. We thank you for your participation.

Speaker 14: Yes Yeah, year-over-year incremental. So that's important clarification and it's you know how we're distinguishing between those two cost classifications. Is is the additional work and hours that need to be added when they're related to restrictions or outbreak, versus existing staff complement hours where we're filling with agency.

Speaker 8: Okay just a couple of quok ones left in terms maybe this redeploy the proceeds from long term care. I mean I'll see that turns back itself having imposed yet. But in the first, with the recent acquisitions, can you just comment on maybe what's in the pipes at this page? And then just second, can the any changes in terms of how maybe some of the buyers at the table or how deals are being underwritten, just given how much vol your that back?

Speaker 15: Sure it's Jonathan, I'll answer that. So we do continue and have been looking at opportunistic acquisitions and, as you've alluded to, our cost capital is higher than some of our competition for assets. So we will win some of these assets and have, including the three we just bought in Ontario where we have a competitive advantage. So an example would be: these three properties suited us very well because they foed it so nicely into our existing platform and our geographic footprint. So we are in the market, we are looking, but we are remain. We remain cautious on these acquisitions and look for a competitive advantage where there is one.

Speaker 2: Have you seen any? Maybe strategic or new entrants, maybe looking for plat ones? Is thathave that become minimble at all in terms of what you're seeing up there?

Speaker 16: We've seen new entrants, new capital- maybe not so much looking for platforms. We've seen capital INV me there's. There's quite a bit of activity in the market where, with larger institutional investors like U's, reitss and private equity funds investing in Canada now and partnering with various operators, there's also quite a few smaller firms now that are building their own management platforms and investing in what for us might be non core assets. So we're seeing quite a bit a few groups like that that are establishing in Canada to potentially for future growth. So that does happeningma. So much I will turn back.

Speaker 17: Thank you. Next question is from howbablyple go aheadhigood morning everyone. Morning now a lot. I'm just wondering, you know, with everything going on in the market right now and you know in terms of just like the investment market for senior housing and then changes in interest rate, thingsms like that- what's, what kind of what do you think is' more preferable right now in terms deploying growth capital? Is it against acquiring assets or is it focusing on your existing development pipelinethat's an exllent question how we always looked at sort of what's number 1, number two and number three in terms of the deploying capital and frankly, the overall market conditions.

Speaker 5: Play maybe even a smaller role in those decisions than sort of our views on the returns. The potential returns the first dollar always would go towards investment in the existing property portfolio. We had opportunities to reposition a home where we can we believe we can generate. Better returns that's where we are looking to invest first because that carried lower risk can generally provide better returns than anything sort of external development always been core external growth strategy for us unfortunately from what I'm seeing in the market. Now underwriting needs to be done very aggressively in terms of the rate growth to justify most of the developments at the present time given where the construction costs are and so while we are set up ready with the number of projects and want to build quite a few of them. I am we're all being cautious about kind of underwriting I Don T six seven 8% rent growth over the next couple of years that you.

Speaker 18: Is that because you think like the labor market is going to get better, or is that more like an internal reorg on your part that will help reduce?

Speaker 19: expionsso the answer is both. The first, one is a hope that the labor market will get better, and cope is not a strategy. sothe internal things that we're try do the initiatives that're trying to put in place, that is the strategy that we're try trying to deploy to alleviate the situation with agencies and care and spoke about what they are. But I do thinkthat there is possibility labor market will improve a little bit post pandemic- But I think I spoke about this before. Many calls that structurally. The same demographic that makes us very optimistic about our ability to grow occupancy over time, where the number of senior citizens in this country will continue to grow rapidly. The same demographical will point out to that there is fewer younger, more people through each retired person going to be in the next 20 years, and so there needs to be additional considerations, over and above what any company can do, from the government and society to bring more people who will work in hospitality, in our sector, in health care and entertainment, into the country. That's probably the only solution that will.

Speaker 5: Systemically solve this problem. I know like over the course, the pandemic, you were trying to draw, draw other people in from the sectors, effectively trying to expand the labor. You know the eligible labor pool, like do you have some sort of sense of how successful that was to a COVID-19. Like do you think you know you've actually sort of been able to draw? You know, draw from a larger pool or was it more? You know kind of like piece by piece and in no real trend there, just wanted to get a sense of of that.

Speaker 5: Yeah I don't think we have seen any kind of trend and that it's more these by piece. Ok, and then I'm just wondering how we should think about you know, if occupancy, you know across you know the industry, starts to, you know improve, I mean, I think probably the industry would still be what we would call quote unquote, under occupied. How should we be in about rent growth and in the context of that, So there'are two competing forces that are working when it does renants? one is there's inflationary pressures that are undeniable on many cost categories, including labor- they we just talked about. On the other hand, you have the desire to drive occupancy from most players and I know that in the? U', S people got over that and started going rights. That's significantly higher.

Speaker 5: T even before they recover the occupancy. I think Canadian experience is different. There may be incremental increases in rental rates that people will put through, including ourselves, and might consider that I doubt that they will get to, at least in the short term, to these high and single digit level that we are seeing in the? U's. But, as I pointed out, once occupancy recover, this gap between what you need to achieve to build a new product and what's in place today will have to narrow and there will be opportunity to increase these market rates or new residents once occupancies are at more stabilized levels.

Speaker 18: Okay and then just lastly you know it's sort of a similar question but for the service revenue piece. I know you know a lot of players in the industry and looking at sort of reworking how they price these services and know the you know like how they price a pitch pitch service packages to the customers. Do you think you know you'll be able to sort of see better pricing on this going forward or better take up postcovenyes. So.

Speaker 20: In the midst of all this, somehow my team was able to do exactly what you're talking about. We've rationalized and this is: this is in Ontario. We're going to take this out more to the West and to that shortly, but we looked at our care programs and how we', re how we're pricing them, how we're bundling them and how we're selling them to our residents and we call that care assist, and so we've with clarified everything from you know the nomenclaturesure that we use to you know what are, what are the packages, that sort of. Naturally, we go together and I think that's helping a lot for both our helping wellness managers to speak to our current residents and our sales force to talk to prospects about care. So it's definitely a strategy, a strategy for us, and we're kind of well underway with that here in Ontario, which is the most needs based praptok, but very much like so.

Speaker 17: Thank you so we have no further questions at this time. Return a meeting back over to you, M ladoithank. You, Louis. This wraps up today's conference call. Thanks again to everybody for joining us. A reminder that our virtual annual general meeting will be held on Thursday, may nineteenth, at 4: 30. further details will be posted on our website later today. We are looking forward to you joining us on the call then, as always. If you have any further questions, we do not hesitate to give us a call goodbye.

Speaker 17: Thank you. Your conference has now ended. Please disconnect your lines at this time. Me Thank you for your participation.

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