Q1 2022 Sienna Senior Living Inc Earnings Call

May 13, 2022

Ladies and gentlemen, welcome to the sianna senior living incorporated Q1 2022 conference call. Today's call is hosted by nitt and Jane, President and Chief Executive Officer, and David hongg, Chief Financial Officer. The seni senior living incorporated. Please be aware that certain statements or information discussed today are forward-looking at actual results could differ materially. The company does not undertake to update any forward-looking statement or information. Please refer to the forward-looking information and risk factors sections and the company's public filings, including its most recent MD and a and aiif, for more information.

You will also find a more FUL discussion of the company's results in its MD and a and financial statements for the period, which are posted and the SEDAR and can be found on the company's website. ciana living, CA. Today's call is being recorded and a replay will be available. Instructions for accessing the call are posted on thecomp's website and the details are provided in the company's news release. The company has posted slides which accompany the host remarks on the company's website under events and presenters.

Presentations. With that, I will now turn the call over to MR Jane. Please go ahead, mrjanees.

Thank you, tanya. Good morning everyone and thank you for joining us on a call today.

At the end of. We posach to this as Canada published the results of the 2021 national stenses.

This showed that seniors over the age of 85 make up one of Canada's fastest-growing demographics.

The trenus also indicates that the number of people over 85 is expected to triple over the next fory-five years and that Canadian seniors are becoming wealthier and staying healthier, more active and involved longer.

Today we're. one in four seniors in the 85 plus age bracket already lives in a senior living, studting or a hospital, and this number is only going to increase as Canada's population is getting older.

This unprecedented demographic shift and changes in senior needs and desires has been at the core of many of our recent initiatives, including our transformations to our platform.

In April we launched a new website for a rement platform, a spira, and in recent weeks we started the rollout of the signature programs under the speir of brand.

We foundounded in the belief that I resident the desire and deserve choice, personalization and connections. The local community.

This was reflected in our programs: nourished by spira, acttied by a, spira and explore by spirit.

While N of less we are focused on collory experience and more choices. activas, we a offers an expanded range of fitness classes and explore best. We are aimed to help residents connect with others, pick up a new hobby or continued learning.

one of the initiatives under the signature program is master's Academy, an educational program that is taught by experts on a variety of topics, including history, reiligent health, finines and lifestyle interests.

Our new retirement brand aspa, is designed to differentiate our company and support resident satisfaction, lead generation and occupancy growth across the platform.

Average sameain property occupancy at retirement portfolio increased. A 90 is point to 86% in the first quarter compared to eight Q4 2021.

enapril. Average occument fined: 87%. Its highest, 11 over two years.

As mayil last year, monthly average same property occupancy has increased by 830 basis points.

Our time and portfolio benefited from numerous marketing and sales initiatives, including an intense focus on outreach to our community partners. In addition, dependive demand.

We also very focused on creating demand by attracting seniors who are currently living at home and we are not actively considering the time and living.

This it resulted in a 58% increase in resident movements year-over-year. In the first quarter, rent deposits also remained high to our Q1 and increased by 51% year-over-year, a lelater up 94%.

For the balance of 2022. We forecast continued occupancy improvements at a time in portfolio.

Moving to long-term care. In our long-term care communities, admissions and new residents slowed during the first week of 2022 as a result of renewed restrictions and the high transmission rate of ommirom.

However ocan started to improve towards the end of the quarter.

Safe property occupancy was 97% in Q1 2022, excluding approximately 500 bets that are unavailable largely to because third and fourth be in the room.

Starting in February 2022, occupancy targets have been reinstated Ontario. This means that homes acquired a 97% occupancy rate to receiable funding.

Given the long-waaring list for long-termcare BS in ontar, British Columbia, we anticipate to meet the required occupancy targets that the vast majority of our care communities for full funding in 2020 -two.

We have continued to develop new long-term care platform similar to the enhancements we are making at other time in operations.

Our aim is to elevate our resident experience with respect dining, recreation and community-foused interactions, in addition to ve improving the moving experience.

During Q1 we entered into intounan agreement D quired our 50% ownership interest in 11 property portfolio on cadence sketch on from extendended care.

We have received all necessary regulatory approvals and are set to finalize the acquisition of this $308 million portfolio in the coming days.

We are excited to welcome the residents and over 800 team members in ontagians, a sketedw on into a growing platform.

We are acting as the manager of the portfolio, which is deeping in an already well-established relationship with saba, as we are currently managing aid of the Sabra hollyown properties in Canada.

The acquisition has an approximate 6% unlevered yearield in the first year falling closing.

And is expected to be accretive to see an, an oilderle and airof for share.

In addition to this portfolio acquisition, we entered into an agreement to acquire a $72 million retirement residence in's catan in joint venture with Sabra, which is expected to close later this quarter.

We also entered into an agreement to acquire a $26 million campus appeared in Barry Ontario, which is expected to close in Q4 2020 -two.

With these acquisitions, we expect to capitalize on the growing demand for quarter to-senior living in each community. In Ontario, assets are strategically located around the greater Toronto area and then theneaggre to London corridor.

Now moving to our focus on the sattron.

Our acquisitions will also give us imageent scale in the satcheon market, one of the fastest-growing markets in Canada to schatulums, and GDP is expected to grow substially as it is the strenth of the energy and agricultase sectors.

In addition, the provincess job market is exceptionally robust and the housing market remains strong with respect to the retirement sectors. That catch on as a high capture rate and despite considerable new supply coming to market over the past decade, average rental rates have consistently increased by approximately 0% annually from 2009 to 2021.

Our development momentum is continuing with construction start scheduled for two of our long-term care development later this year. Early's works have started in brandford where Y will replace the current hundred and 22 long-term care bed with 150 new bedts and add 147 time residents to create an integrated campus of care.

We also expect to start construction and casastford later this year where we move, replace in the current 60 long term care bedts with one hundred and 60 bed home.

These projects are part of SI six $7 million redevelopment plan of a class BM longter care communities.

toue D: we have received bad license allocations for the Ministry of long term care for 12 of our longterm care communities for a total of 2600 bets.

Including approximately 800 bedts could renewal and over 800 new bedts.

These allocations cover substantially our entire pastive portfolio.

The license allocations bring certain two other redevelopment program. Once the redevelopments are completed, they will elevate the quality of wifo residents and the family members, provide additional capacity and a great workplace for our team members.

Our developments are also an opportunity to address climate change and significant dity with the environmental footprint of these homes through energy efficient heating, cooling lying and updated energy efficient windows and fixtures.

Our industry is at the cusp of exponential growth and we expect competition for talent to port them intensify the years ahead. As part of a icstrategic objective, we aim to offer a compelling team, member experience and nurture of purpose-driven culture.

We are the first canadiian in a living company to offer shares to every eligible full time and part timepe member to the ciena ownership and reward program sold.

This program is a pull-by shareholders. That add onzal meeting in April and we have started to issue shares to our team members.

two days ago we celebrated this milile that the? T attfected many of our long serving from line teenam members.

I was deeply honoured to ring the opening down with vernesia Wade at pw at a Harmony health care community in Toronto who has been with us for 47 years.

Our team members. Incredible dedication and passion inspired us to long store and I cannot think of a better group to be recognized as owners of our company.

Our talent initiatives also include numerous programs to support our key members' year growth and to bridge the existing Labour gap in our sector.

Programs include government sponsored education programs. Expedited placements of internationally educated nurses.

An increasing recruitment of College and University students.

During the first quarter of 2022, approximately 640 students were placed across our residences.

As we grow our company, we'll continue our focus on creating a positive experience for the key members and supporting the personal and professional growth.

With that, I'll turn it over to David for an update to our operating and financial results.

stak unitt and good afternoon everyone. I will start on Slide 15 for financial results.

Sector fundamentals continued to strengthen during the first quarter and demand for poally seniors living is increasing in many of our key markets. In our retirement portfolio, average same property occupancy continued to improve during Q1 and in our long-term care portfolio, admission started to accelerate during the second half of the quarter after a slow start in the early weeks of 2022 to renewed restrictions and the high transmission rate of omnron.

At the same time, intense competition for talent and cost pressures as a result of the ongoing pandemic and decades high inflation continues to impact our operations. All of these factors are reflected in our financial results.

In Q1 2022, revenuees increased by eight point 1% year-over-year to one hundred and forty-seven- one hundred and seventy four point three million dollars, largely due to increases in direct care hours, funding in long-term care and occupancy and rental rate increases in retirement.

Net operating income decreased by 2, 27% - $32.1 million- this quarter compared to last year. The significant decline was largely the result of a retroactive government funding in q1- two thousand and y-one for 2020 pandemic expenses.

Noi was also impacted by higher staffing, culinary and utility costs, increases in insurance premiums, and this was partially offset by occupancy growth and annual rents rate increases in the retirement segment and annual funding increases and increases in a perred accommodation revenue in the long-term care segment, in addition to a moderation of pandemic costs.

Retirement. Same property NOI, increased $5.9 million to $13.5 million compared to last year, primarily due to occupancy improvements and annual rental rate increases in line with market conditions.

This was partially offset by higher cost for agency staffing, culinary cost utilities and insurance premiums.

Rent flection levels remained higher at approximately 99%, consistent with prepandemic levels.

Sienna's long-term care. Same property NOI, decreased by $11.6 million to $18.1 million compared to last year, primarily due to $15.3 million in retroactive blending recorded in Q1 2021 for pandemic expenses incurred in 2020.

Excluding net pandemic expenses and recoveries. In both comparative periods, long-term care ain property NOI would have increased by Z one million to $19.2 million in Q1 022 compared to Q1 2021.

Over the past two years, we have seen significant cost pressures, including high agency costs due to staffing shortages, increased insurance premiums in the seniors living sector and rising utility costs, in addition to generally high inflation in line with the overall market.

We expect that continued occupancy gains, rental rate increases in our retirement portfolio and an improving operating environment will help mitigate these cost pressures and support our operating margins in 2022 and beyond.

We anticipate that pandemic expenses will further moderate as the pandemic subside, while related government funding fragually decreases.

For Q2, 2020 -two, we expect incremental net pandemic-related expenses could range from two to $3 million, with continued declines in the second half of the year.

Moving to Slide sixteen.

During Q1 2022, operating funds from operations decreased by 36% to sixteen point one million dollars compared to last year, primarily due to lower NOI as a result of pandemic recoveries in 2021 and higher current income tax expense.

This was partially offset by lower administrative expenses and lower interest expenses on long term debt.

Q1 ofo per share decreased by 37% to 23.9 cents.

Adjusted funds from operations decreased by 38% to $16.4 million compared to last year, primarily due to the same reasons as the decrease in ofo, as well as higher maintenance costs and lower construction funding.

Affo per share was 24.3 centence in Q1 2022, resulting in an AFFO ppayout ratio of 96%.

Looking at our debt metrics on Slide 17, our debt to growross post value decreased by 460 basis points to 42% at the end of Q1 2022, compared to 46% at the end of Q1 2021.

Mainly as a result of mortgage repayments and the issuance of five point eight million shares in late March 2022 to fund our acquisitions.

The proceeds from this issuance will be deployed to health fund acquisitions as they close.

That the adjusted EBITDA increased to eight point seven years in Q1 2022, compared to six point two years in Q1. Two and thousand and Twenty one and interest coverage ratio decreased as three point three times in Q1 2022 compared to four point seven times in Q1 2021 as a result of the retroactive payments received in 2020. one relating to 2020.

That the adjusted EBITDA increased to eight point seven years in Q1 2022, compared to six point two years in Q1. Two and thousand and twenty one and interest coverage ratio decreased as three point three times in Q1 2022 compared to four point seven times in Q1 2021 as a result of the retroactive payments received in 2020. one relating to 2020.

We have limited debt maturities over the next two years and our debt is well distributed between unsecured debentures, credit facilities, conventional mortgages and mortgag insured by the Canada mortgage and housing corporations.

To execute on our strategic growth planlaim. We have been active on a number of financing initiatives to raise capital to date. In 2022, at the end of March, we completed our first equity offering in four yearsapproximately five point eight million shares were issued at a price of $15 per share, for total $86.3 million, including the full exercise of the overallotment of 75 thousand shares.

The successful completion of this offering was a clear indication of the strong investor interest and confidence placed in our company and our spectctor.

On February . Third, we secured 15 million acquisition term loan at 145 basis points over the floating BA rate for a 12 -month term to finance our acquisitions.

In connection with the closing of the 11 property portfolio transaction in the coming days, as well as the closing of the Village at stone bridge later in Q2, we anticipate making a $9 million onetime drawdown on this term loan to finance our acquisitions.

We will assume CMHC insured mortgages for two of the acquisition properties for approximately $27 million at C's 50% ownership share had a weighted average interest rate of two point 2, four percent and.

In addition, we have built two noncore properties in Q1 as part of our capital recycling initiatives, including a retirement residents in British Columbia and a long-term community in Ontario. The net proceeds from these sales will be used to support our growth initiatives.

I will now turn the call back to nitton for his closing remarks. Thank you, David.

The most TREASURE relationships people have in life are often with de parents, and at siena we have the privilege to care and serve peak for people's parents.

As we go our company and transformer operations, we are constantly reminded of a company's important purpose and the role in play in the lives of thousands of Canadian seniors and their families.

In the coming months, we will unveil a new purpose and vision sament in forena.

Our vision statement underscores what we think it will take to be Canada's leading senior living provider: to a continu care, from an independent living to full care.

The experience and learnings over the past few years have given us new cleclarity on a purpose and guided us in our reimagined new vision for the company.

In everything we do, we consider the profound impact they have on our residence and key members' quality of life and well-being.

Helping to find joint happiness in the big events and small moments, and everything in bbetween is always top of our mind.

On behalf of our management team and our Board of Directors that will 10 all of you for your continued support and your participation on the call today. We are not pleased to answer any questions you may have.

Ladies and gentlemen, as a reminder, if you do have a question, please press arin one on your telephone to withdraw your question. Please press the pound key. hoper' question comes from Jonathan culture of TD Securities. Your lines open.

Thanks so good afternoon. I have our first CON.

First question, just on the occupancy. You guys had a nice little run here you're already at in April. You're already at the bottom end of your year-end target is: is it north of 89%, something that you think you can achieve?

First question, just on the occupancy. You guys had a nice little run here you're already at in April . You're already at the bottom end of your year-end target is: is it north of 89%, something that you think you can achieve?

For now Jonathan, we continue to believe that anyy 700 cent and 89% is the right place. We did. We have been.

Working on it over the last 10 months or so and we saw a significant increase in occupanis since made.

So we feel, going forward we either won't stay consistent or won't take growth at a smaller pace. So at this stage we're not comfortable changing that number.

Okay but that side if you have a good summer season and that's something we might see.

Yes it will be MT at that point. Yes, if it's higher, honestly So, but you're corackly. If the, the momentum does not slow down, than for sure, because you're corack. Here we have at 87%, which is the low end of per guidance.

Okay now a spira program that you're rolling out. If we were to look at that on an apples to apples spbasace precoitt and now, how would it looks? I like I'm guessing it cost a little bit more to run that. How would you? How could we think about margins between the before and not?

Yes I can, David can answer is the margin question. We do not see a speed up, making a significant change in our margins because the things we are doing, for example, put it more focus on how the food and what we find- is given purchasing power. You know how beer food doesn't mean more expensive, it just means we have to be careful what we choose. There's more choices for residents. The choices are carefully curated, So we do not anticipate a sphere in any way to drag down our margins in any significant way. And David can give a bit of guidance on our margin expectations. No sure. Thanks for the question. So our growth margins at the end of Q1 were approximately 36% and that's you fairly consistent with last year. I think that we would anticipate that our full year margins could be higher by about one hundred or 200 basis points. It's a little bit hard to predict at this point, you given cost pressures, but we do see it going up from the current Q1 margins.

Okay that's helpful. And then just lastly for me that the two illion to three million in net pandemic expenses would be more on the retirement side than LTC. I'm assuimming.

It's actually going to be on both jonathan- it was the on the BC long-term care side- as well as on retirement.

Okay but the Ontario LTC is likely going to get covered by government funding. That thereir, whether some of the most part, it wouldyes.

Okay thanks sola, I'll turn back.

Thank you N F X.

Thank you. Our next question comes from Scot fronsome.

Of C Ib C, your line open.

I would like you going to ask a question on inflation, but it sounds like you covered it in.

Jonathan's.

Question just maybe you could give a little bit of color on funding strategy for the development and redevelopment plans Please.

Sure we are still in early stagesand we're seeing some delays with the global supply chain issue that everyone is experiencing. So operates. We thought we will be inching towards 52- $1 million range of develop and spend this year. We don't think we will get there, So we have a couple of years as, as we move towards thatwith increasing occupancy and retirement having a long and care stabilized, there was a time we payout ratio was was in the sixty's, So we do think as a payout ratio SP to inches a bit lower, we can start using some of a ree free cash do that. In the meantime, we have very good access to our reolver obviously, and to construction financingand it will take probably couple of years before we get to a place where we re spending hundred million dollars a year and we do think as we get closer to that, we would have free cash flow to fund our equity portion of the development.

Thank you, that's helpful. Then I' I'll turn it back then.

Thank you.

Thank you. Our next question comes from haandu houpta of scotishaibank. Your lines open.

Thank you and good afternoon.

Just to follow up there, I think they able to mention NOI margin will be 100 to 200 basis point higher. Were you talking about diamant from or LTC?

I was referring to retirement D at home, and how did that compared to your prepandemic?

How your occupan is almost pushing 89, eighty seven.

And what will be the spread between your prepandemic and today's margin?

Yes I mean our prepandemic margins. We're in the low 40% range. We're currently at 36%. We do anticipate that the margins will go up a couple of hundred basis points, between one or 200 basis points, and that's. We feel pretty comfortable about that at this point.

Okay SP up and then also done ID. In your prepared remarks you were talking about the rental rate increases in the retimment portfolio. What kind of rental rate increes are you doing? I don't a pressure on your operating expon the side, but have you increased the rental rate increases?

Yes So we have had rental rate increases throughout the last two years mostly in line with inflation and also for care because.

But we are using agency and other things to provide the care and determment as well and with the inflation environment that you see, we are looking, we are viewving our rates to see how we can manage some of the cost, because everyone does understand whether it's utility withther as insurance, whether this labor costs. They are going up but we are in early stages of picking it out how and when and how much ofefit to actually reflect in our rates.

okayyes, Thank you. And then on LTC side, you did not need the occupancy production for February and March.

So what was the NOI lippage because of that?

Yes we actually didn't have a lot of librage- has a result of the ending of the occupancy protection funding at the end of January. We anticipate that backast majority of our long long term pair home, you know, will achieve ninetyseven percent target by by the end of the year, and much should. The way it works is that it's really you re meaning that for the entire year. So it's not that if you don't need it for the first month that you take a clolaw back, not in time you would do. That is in. If you know you get your point here. Mathematically or operationally, you know you cannot get to 97%. That's when you will start, you know, building a thoughtlawback. But we continue to feel confident that we'will get to that 97%. You know, assuming some of the restrictions that are already on on the bed with those isolation or thir bedts and for bed drums.

Yes we actually didn't have a lot of librage- has a result of the ending of the occupancy protection funding at the end of January . We anticipate that backast majority of our long long term pair home, you know, will achieve ninetyseven percent target by by the end of the year, and much should. The way it works is that it's really you re meaning that for the entire year. So it's not that if you don't need it for the first month that you take a clolaw back, not in time you would do. That is in. If you know you get your point here. Mathematically or operationally, you know you cannot get to 97%. That's when you will start, you know, building a thoughtlawback. But we continue to feel confident that we'will get to that 97%. You know, assuming some of the restrictions that are already on on the bed with those isolation or thir bedts and for bed drums.

Okay So there is not going to be any slip year, just' a good to know and then keeping on LTC. Have you recovered everything from the last two years like any catch-up to? Still left to the tubability seat on the pandemic exp.enses?

Yes I mean we're not expecting anything at this point in time. As we've indicated, we we recorded $2.2 million of retroactive flighting in the first quarter relation to 2021, and that's all we are expecting at this point.

okayfair enough. And maybe just last questionush from my side on occupancy discussion, I will tell you have done a good job at any 7%. So just wondering: are you gaining market share here or are you simply capturing the bent of demand in the system?

Yes I mean for us. It's really about tent demand. We don't really look at market shain necessarily across constring that and it's very different than each market with with different operators. And I think we see overall.

As Omicron is subsiding, people are doingremo the tours. We are seeing more activity across our markets, not only just in our homes.

Ok and can I say you are like britdish Colombia. You would have these slike almost 90% of plus and onil would be luggy, or both are going hand in.

Like British Colombia on to.

Yeah I mean we only have four homes of British Columbia, So it's not to provide that level of detail, but we see consistent increases in both the provinces.

Well be OK, Don' just case you with an anotherum back.

Thank you.

Thank you, and our next question will come from Tao wo'leave national Bank, your lines open.

Hi good afternoon.

cafean.

I just wanted to start by looking at like some of the preCOVID performance in the retirement portfolio until now. If I look at like Q4' nineteen?

You were sort of running similar occupancy, similar revenue, you know like overall versus today and I understand the cost portion impacting the margin. But I guess I am a little surprised with the runup in occupancy and given you know there's been a couple of years in there that the revenue line isn't moving, maybe a little bit more than I thought it would, it feels like.

Maybe there's eitherlike a mix shift in terms of the where theeither a mix both independent versus assisted living or between services and rent, orthat maybe.

Rents have been constrained somewhat by the challenges in my market right now. You, you just give me a little bit of color around the top line and the retirement of iness.

Sure and I think that the context of it is so important. That's a great question because when in at the time FR you were talking about, you were coming down in occupancy, that we used to be ninety's and were coming downwards. So when, when you are at high occupancy and that get a flexiin rates, when you only have two rooms have to sell you can. You can build little bit more closer to market than you would be otherwise now in a place where you have driving up occupancy. So it is hard to drive a occupancy and rate at the same time. However, now we getting to the point where we do have some homes which are 90 plus, where we would have an opportunity where you only have two rooms left with the the due to the pond, and then we can make a change in those we. So you're right, both are similar occupancy and the revenue numberbers is a bit different because of that, one is coming down where you kind of had already built up that, and now this one is coming up. So, as David mentioned, it wasn't for the inflation environment, you were and would be actually be more confident in our margin expansion. But given the uncertainty of utility cost and issues, your around labor and agency staff, we are going to be a bit more.

Conservative in our view, and how? Margin when, and that when that margin will expand- we know it will- our top line would start growing as we fill it closer to stabilization.

Okay and then like you you were sort of running margins like said earlier in the low Forty's at that point. So if you're sitting from the outside looking in.

At gci that you know like you, can you consid 100 to a couple of hundred basis pointsbefore the end of the year? How long, like a, do you think getting back to sort of those low amid 40 nnoi margins is going to be possible, and then what kind of time frame?

Do you think it takes to get there, if it is possible?

yesso. The first question: we do think there is a path to get back to those margins because the business has not fundamentally changed the again the hesitation on giving you a bit of a time frame for that. So we find a little bit more certainty here around getting to stab ary occupancy over the next 24 months or so. But the margin, what is going to be challenging? Because its hard to predict what will happen, our biggest expenses really labor and utility cost, and since there is minimum visibility into it as to what might happen, it is hard to predict when we would get there. But we do see a path to it because again, most of the pandemic rel cost for the homes which are not an outbreak, we do see that cost come down significantly. So we do not see we're not seeing lot of stickiness to that pandemic cost of the home is not an outbreak.

Ok and then?

On the LTC side- I apologiz- and a few monthes of the prereeamble. I don't think you might have already answered this, but your average total o around 87% for the quarter. You want to be obviously of a 90 to achieve a achieve whole funding. Can you give us an idea of like?

Where the challenges are like. Is it sort of across the board in the remaining network where you need to work to good occancy, to the level to achieve whole funding, or is it you know a handful of sites where there are real issues and can you speak to sort of like what may be constraining, that showonging be right now given the demand, but there is inherently in the system?

Right So the occupenscy number for long care, ninety three point day, and we do, and it's the constraint- is really you doing arm harm? Obviously things were shut down and people going and move in the weight list has not gone away and we would think it's only drawning because this is need driven work with. You know people who need long ter care need long term care, So it is more an aspect of that. Our home is in a significant outbreak, cannot move people in and so it's really. There is not really any much more than that than you just ensure. As homes are not an outbreaks, they can start moving people and the difference we are finding and why outbreaks and not making a lot of conversation is because we still have homes and outbreak. It is becoming more an IP pack issue: making sure you have the right, you know you have the right staff, because how, from a health perspective, being all our residents mostly vaccinated, we are not seeing this becoming in a health Cris. We are seeing more it. It's either a human resource Cris.

However it's more inflection prevention to ensure we're trying to limit that increase. So we do again see that for most of the homes we'll get to the 97% number.

Okay and then just going forward, you guys have- obviously it was a busy quarter last quarter- you kind of stand alone in the market now as, being the one publicly traded player, he's committed to engaging in the full redevelopment of your class B beds. You also want to grow your retirement, your retirement business as well, and that'll likely largely be done through acquisition to. Can you just talk about how you're thinking about?

Balancing that and what should investors expect in terms of the mix of where the spending is going to go over the next two years and on the retirement side like, do you have a- would you call it like that pipeline of acquisition targets or is it so kind of a more opportunistic, as you, as you know, sort of come to market? You sort of participate in the process, in the process, or process per me.

Sure let me ask as a second question, first because I think straightforward. So we don't really have a specific pilinei mean. one of our piline wasthe home that used to age and now we, I think we basically about all the ones that we could buy out of that. So I think that pipeline has not stopped and it was not material. Most of the other homes that we buy, even though their relationship focusused, most people do decide nowad ays to go to market. So we part isipspeed ated would make sense for us. We are not shy from walking away in the sense. You know, when we look at initial due diligence, you know we do not, we not trying to do this as a sports. So where we start five different deal, just for the St of, because take the this, it takes significant resources from operations, from finance, from investments and the company or all. So a pretty picky in know which one we proceed within the ones you proceed with. You know we had a lot of infliction towards closing and we saw that with the last three deals that we announ. So we really it's market dependent is really what our focus. But it has to PIT our criteria of reti, of tirement, what we're looking for, all long term care and other provinces from a mix first back. You know your correct, you know we have the only one left with. You know, in a publicly traded or which has both longterm care retirement, and for us that's the not only unique, we also taing. It's a significant strength for us and before we even covidit four years fact when there were huge supply issues and retirement, where everyone building retirement homes, long term care, provided that's consistent, stable dividend, our- and sorry, consistent- cash flow. And when we to AR my crron, having that DI se portfolio, having the leadership and resources and retirement helped us you, as we were short staff that many of leadvis positions are trying to find resources, that was a significant resources for us to move to find in the retirement and also helps us drave because there's there's lot for retirement opportunities for acquisition wor, longterm care.

The combination of it also shows up in our balance sheet strength. We we have a strong rating at triple B with a stable trend and we do and we do feel it is driven by both the stability in the predictability of long term care. Even though it's lower margin and it's it doesn't grow much and that and offset with growth some retirement but also has a bit more risk and as we move forward again. We talked about the need of canneeded, went for the growth in 85 plus population and both of our business that need driven. Even retirement space. We don't really have pure senior apartments where people are making a choice. Most of that people coming to us in retirement space have some form of needed. It might be that they just don't want to Cook three times, three times a day. So we do feel having that right mikes of long term care, retire and at times one gets weaker and one gets stronger- is a very important thing and we are committed to that strategy.

Ok and one of the challenges of having both is obviously, like you know, there is a perceived cost of capital difference between retirement assets versus long term care and carrying both in one entity. If you're trying to buy stabilized know retirement assets.

It can be a little bit more challenging to make the make the deals thataccreative, because the market going to price your entire portfolio, not just the, not just the retirement piece. Does that maybe lead you down the path- is doing more development of retirement homes then, as we go forward, particularly since you're going to be picking up some more increasingly more experienced with with the long-term care side.

Yes I mean for us our big focus and development- and we have a lot of it over the next five to seven years- is really long term care and can we would add retirement sueds to it. For examplethe one we're going to build in branford to a retirementand homes- the C do world project, even though talks about a long term care- the current long term care bed, that attached to a rementand home, and once that home moves over we will be adding potentially more rements we on that site. So we have a path of the retirementand development to that. We re also doing retire development with the partner. So if you find right partnership opportunityand develop, we wouldto do that. But we haven't found that constrained of the cost of capital issue for us because again, our leverage, our balance sheet, ISN in a very strong point and it was recently proven to us last when recently we a big acquisition and equity market wasn't really that strong So we decided not to do to raise capital at that point from equity perspective and we had in a room in a balance sheet to be able to do that and we continue to have the room in a balance sheet going forward as well. So we do not think having that makes in anyway hinders the cost of capital. I in fact because the scope that provides the ability to drive synergies. We have a much bigger procurement process because of a long M care business as well. So we do think there's is one of those where it's one plus one doesn't really equal to. It's really two and a half or three and we are committed to that mix.

Okay great, Thanks very much and I appreciate.

Thank you.

As a reminder, if you'd like to ask a question, please press star than one our next question comes from Tammy burr of RBC Capital markets. Your lines open.

Thank that was pretty close, but just that, really one question for me. You know you're clearly getting good traction in the reti ment occupancy. You know particularly considering Q1 is, you know, obviously typically a weaker quarter to begin with your marketing initiatives to be working well. But what do you think are you may change, maybe going forward to get the next length up beyond, let's say, 89% occupcy that you you've guided to. And then then secondly, what do you see is the new normal for stabilized occupcy, a post pandemic world, maybe before new supply starts to accelerate?

Sure I up from paing. I think that we do think stabilization, to be in the low ninety's, continues to be a goal and what the next 24 months? We think we can, can we can get there. So we do not. So that in our mind, hasn't really change. On a retirement side, we continue to see very small strong leaves. We continuue strong tours, we continuue strong movements. So I wouldn't really qu it as a change in strategy because we don't have one national approach. We are quite specific F about local community. So home eft, hods, that 80% occupancy in one community is going to do with something, something different than a same, than another home with 80% occupancy in a completely different region. So In't call is that a change in strategy versus just Hu would focus on it. And we have yourure point. We have seen good results of it. We significant increase in occupancy since May of last year. So we're not really looking to change approach. Our approach has always been different for each market where we have been.

Got it. Just when you do get into the higher sort of 80% range at a particular propertywhat is like? What do you do to? What makes the difference then? Is that for that there's pent-up demand and maybe incentives might help initially when a property might be struggling a bit, but once you get to that upper level, incentives taper off. Didn't ultimately come down to then just the service, maybe the relationships in the community, or is it kind of the same answer that really just depends.

Yes I think it's a combination of all of that. You know it also is bit of an attitude. You know I used to work in hospital, be many, many years back- and many of a great product to solid is doing while everyone wants to be a part of it. So you know, as you drive this occupancy, know and people come, come to home. It is for the lobby areas for everyone. You know the dining are full and that's where people are coming to long to care for social interaction. I mean that's a key comppeent because they all always had a place to live. So you know placeates gets busier. It's frankly, a bit of you know that that only helps more. So it's very strong tailwinds when you start than you having a home how staff reacts. You know, suddenly you have more service because you have more people Al with the dining room. So it really becomes a bit of South billink processing in a good way. So when your occupancy starts increasing- and we did- we are seeing that across our portfolio as we see increase in their occupancy.

Thanks so that maybe one last one what do you think?

Perhaps most common differentiation or differentiating factor that maybe helped Sienna.

Treatment competing properties in your markets. So what is it you guys are particularly good at?

Yes you know, I'm not sure if it's something particularly good. I would say it's more. We have a brand new team and we are focused on transforming both on retirement platform and long ter care of platform. We get a lot of questions on the spira on the new- not name and website, but I would say that was the last thing we wored about. What should we change the name? We were focused on differentiating a product. And what do we stand for? Again personalization, choice by the local community, because the seniors is coming in and we see some of it already because average AG eight or, but it does have a mix all across. I mean so far, retirement space. We have taken care of parents of baby boomers who gregrowve through the great depression and their the life was quite different, and now we are taking care of baby boomers who are vie life is different inand AD the great depression. They live through 200 T V channels with 15 different credit cards and way to enjoy different things and that their expectations and choices are going to be different and we are started to make those changes and we saw some early results of that- some of our occupan. I would say that would be part of that then, rather than something very specific other than that.

Thanks very much. I'll turn it back.

Thank you.

And I'm showing no further questions at this time. I would now like to turn the conference back to MR Jane for a closing remarks.

Thank you once again on behalf of all of her T Sienna. Thank you for your continued support and I hope you have a great summer ahead of you. Thank you.

Ladies and gentlemen, this concludes today's conference. You may now disconnect.

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