Q1 2024 Chartwell Retirement Residences Earnings Call
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Operator: This conference is being recorded. Cette conférence est enregistrée.
This conference is being recorded.
It's called for homes that don't go as you see.
Operator: All participants, please stand by. Your meeting is ready to begin. Good morning, ladies and gentlemen, and welcome to the Chartwell Retirement Residences Q1 2024 Financial Resource Conference Call. I would now like to turn the meeting over to the CEO, Vlad Volodarski, please go ahead.
Speaker Change: All participants please standby your meeting is ready to begin good morning, ladies and gentlemen, and welcome to the software retirement, which sensors Q1, 'twenty plentiful financial results conference call I would now like to telling me tingles out to the CEO of labs, although dusky just go ahead.
Vlad Volodarski: Thank you, Giselle. Good morning, and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website at chartwell.com under the Investor Relations tab. Joining me on the call are Karen Sullivan, President and Chief Operating Officer, Jeff Brown, Chief Financial Officer, and Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer. 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.
Dusky: Thank you Sal and good morning, and thank you for joining US today. There is a slide presentation to accompany this conference call are available on our website at Charles Dot Com.
Dusky: Under the Investor Relations tab.
Alma Dusky: Joining me are parents Sullivan, President and Chief operating Officer, Jeff Brown, Chief Financial Officer, and Jonathan Block, yet Chief investment Officer, and Chief Legal Officer.
Alma Dusky: Before we begin I direct you to the cautionary statements on slide two.
Alma Dusky: 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.
Vlad Volodarski: 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 Q1 2024 MD&A under the heading, 2024 Outlook and Risks and Uncertainties in Forward-Looking Information for a discussion of risks and uncertainties. These documents can be found on our website and on the CDER
Alma Dusky: Such forward looking statements and details of such non-GAAP and other financial matters more specifically I direct you to the disclosures in our Q1 'twenty 'twenty four MD&A under the heading 'twenty 'twenty four outlook and the risks and uncertainties and forward looking information for a discussion of risks and uncertainties.
Alma Dusky: These documents can be found on our website and on the SEDAR plus website.
Vlad Volodarski: Turning to slide three, our team successfully carried the strong momentum of occupancy and cash flow growth into Q1 2024, with occupancy increasing 610 basis points year over year, same property NOI growing 24.7%, and generating an FFO increase of 61.2%. We expect this occupancy growth momentum to continue and forecast June 2024 same property occupancy of 87.3%. Our teams continue to methodically execute our operational sales and marketing strategies, focusing, as always, on delivering personalized, memorable experiences to our residents, peace of mind to their loved ones, and supporting each other.
Alma Dusky: Turning to slide three our teams successfully carried the strong momentum of occupancy and cash flow growth.
Alma Dusky: Q1, 2024 with occupancy increasing 610 basis points year over year same property NOI grew by 24, 7% generating F. F will increase of 61, 2% we.
Alma Dusky: We expect this occupancy growth momentum to continue and forecast June 'twenty 'twenty four same property occupancy of 87, 3%.
Alma Dusky: Our teams continue to methodically execute our operational sales and marketing strategies, focusing as always on delivering personalized memorable experiences to our residents peace of mind to their loved ones and supporting each other.
Vlad Volodarski: As I meet with our residents and team members in our residences across the country, I feel firsthand the kindness, warmth, and dedication to the residents' well-being that are the key components of the Chartwell experience. It makes me proud to be part of this great team. I will now turn the call over to Karen to provide an operational update.
Alma Dusky: As I needed with our residents and team members in our restaurants across the country I feel firsthand the kindness warm and dedication to the residents who are being that are the key components of the terrible experience. It makes me proud to be part of this great team.
Alma Dusky: I will now turn the call to Karen to provide an operational update.
Karen: Thank God.
Karen Sullivan: Moving on to slide four, in Q1 2024, our marketing strategies led to an increase in personal tours from marketing sources of 33% compared to Q1 2023. Total personal tours from all sources increased by 13% quarter over quarter. In Q1, we had nine weeks of net positive activity, leases minus notices, eliminating our typical winter occupancy dip.
Karen: Moving on to slide four in Q1 2024, our marketing strategies led to an increase in personal tours from marketing sources of 33% compared to Q1 2023.
Karen: Total personal personal tours from all sources increased by 13% quarter over quarter.
Karen: In Q1, we had nine weeks of net positive activity leases minus notices eliminating our typical winter occupancy dip.
Karen Sullivan: We saw an increase in all sales KPIs in Q1 2024 compared to Q1 2023. Initial contacts were up 16%, personal tours up 13%, permanent move-ins up 16%, and signed leases up 13%. Since our website launched last year, we have consistently driven better quality conversions. Our new digital strategies, including continuous optimization of Google search and analytics, resulted in higher quality calls to our contact center. We've improved our website performance, particularly in content, speed, security, accessibility, and search engine optimization. Our open house in January was very successful in driving new leads. ICs generated from this event were 1,384, an increase of 400 prospects in comparison to January 2023.
Karen: We saw an increase in all sales Kpis in Q1 2024 compared to Q1 2023 initial contacts were up 16% personal tours at 13% permanent moving up 16% and find leases.
Karen: With that.
Karen: Since our website launched last year, we have consistently driven better quality conversions, our new digital strategies, including continuous optimization of Google search.
Karen: And animal care resulted in higher quality of calls to our contact center, we've improved our website performance, particularly in content speed security accessibility and search engine optimization. Our open house in January was very successful in driving new leads ice's generated from this event.
Karen: We're 1384, an increase of 400 prospects in comparison to January 2023.
Karen Sullivan: We already held our first open house of Q2 in April, with very strong traffic, further increasing our pool of qualified prospects. Plans are underway for another open house event in June. We continue to use a diverse range of digital and traditional media channels to support our open house campaign. In order to continue to enhance our prospect pool, our dedicated business development managers are working with hospital discharge planners and local senior groups.
Karen: We've already held our first open house with Q2 in April with very strong traffic further increasing our pool of qualified prospects plans.
Karen: Plans are underway for another open house event in June we continue to use a diverse range of digital and traditional media channels to support our open house campaigns.
Karen: In order to continue to enhance our prospect pool, our dedicated business development managers are working with hospital discharge planners and local seniors with others.
Karen Sullivan: Other strategies for the coming months include exclusive presentations at several key conferences, including the Economic Development of Alberta Conference, the Independent Financial Brokers of Canada Conference, the Elder Planning Issues Conference, and the Alberta Retired Teachers Association. Turning to slide 5.
Karen: Other strategies for the coming months include exclusive presentations at several key conferences, including the economic development of all vertical.
Independent financial brokers with Canada Conference.
Karen: Elder planning issues conference I mean, the Alberta retired teacher Association.
Karen: Turning to slide five.
Karen Sullivan: We reduced our staffing agency costs by 60% in Q1 2024 compared to Q1 2023 through focused recruitment and retention activities. We continue to concentrate on a targeted nursing strategy that incorporates a referral bonus program, agency staff conversions, reaching out to non-practicing nurses that have recently left the profession, exploring strategic partnerships with expert immigration organizations, and campus outreach activities for recent graduates. We have now fully implemented an electronic health record in our residences in Ontario and B.C.
Karen: We reduced our staffing agency costs by 60% in Q1 2024 compared to Q1 2023 through focused recruitment and retention activities. We continue to concentrate on a targeted nursing strategy that incorporates a referral bonus program agency staffing version, reaching out to Nonpractising nurses that we use.
Karen: Wait let the profession explore.
Karen: Exploring strategic partnerships with expert immigration organizations and campus outreach activities for recent graduates.
Karen: We've now fully implemented and electronic health record and our residences in Ontario in D. C and have begun to play festival. This out in our Quebec homes, which should be completed by the end of the year not only will this is just our frontline care staff with assessments and care plans.
Karen Sullivan: and have begun the process to roll this out in our Quebec homes, which should be completed by the end of the year. Not only will this assist our frontline care staff with assessments and care plans, but it is already having a positive impact on our care revenue, which increased by 23% in Q1 2024 compared to Q1 2023. We announced the closure of Heritage Blend Retirement Residence on March 19th, and to date, we have found alternative accommodation for 155 of the 187 residents.
Karen: As already having a positive impact on our care revenue, which increased by 23% in Q1 2024 compared to Q1 2023.
Karen: We announced the closure of heritage one retirement residents on March 19th and to date, we have found alternative accommodation for 155 of the 180000 residents.
Jeffrey S. Brown: We are continuing to work with our third-party placement consultants on plans for the remaining properties. We also continue to focus on locally driven, property-specific strategies to improve occupancy and drive overall performance at each of our residences. One example of this is the repositioning of Chartwell Rouge Valley in Markham, Ontario, to better serve the Chinese community. We have made changes to our programs and activities and dining services and have a number of staff and managers who are able to speak Cantonese and Mandarin. This strategy resulted in a 2,900 basis point occupancy growth in the last 12 months, with current occupancy at 96%. I'll now turn it over to Jeff to take you through our financial results. Thank you, Karen.
Karen: Continuing to continuing to work with our third party placement consultant.
Karen: On plans for the remaining residents.
Karen: We also continue to focus on locally driven property specific strategies to improve occupancy and drive overall performance of each of our residences. One example of this is the repositioning of Chartwell Rouge, Valeant market, Ontario to better serve the Chinese community.
Karen: We have made changes to our programs and activities and dining services and have a number of staff and managers, who are able to speak Cantonese and Orlando. This strategy resulted in a 2900 basis point occupancy growth in the last 12 months, most with current occupancy at 96%.
Karen: I'll now turn it over to Jeff to take you through our financials.
Jeffrey S. Brown: Thank you, Karen. As shown on slide 6, in Q1 2024, the net loss was $2 million compared to a $9.3 million loss in Q1 2023, primarily due to higher resident revenue, lower depreciation of property, plants, and equipment, higher net income from joint ventures, and lower G&A expenses, partially offset by deferred tax expense in Q1 2024 as compared to a deferred tax benefit in Q1 2023. Higher Direct Property Operating Expenses. The absence of income from discontinued operations due to the completed LTC transaction, lower gain on asset sales, and higher negative changes in fair value of financial instruments, primarily due to increases in trading prices of our Trusted, FFO from continuing operations increased 87.6%, and FFO from total operations increased 61.2% in Q1 2024 compared to Q1 2023, is offering results in our core property portfolio continues to show strong improvement.
Karen: Paul.
Jeffrey S. Brown: Thank you Karen as shown on slide six in Q1, 2024, net loss was $2 million compared to a $9 3 million dollar loss in Q1, 'twenty two 'twenty three primarily due to higher resident revenue.
Jeffrey S. Brown: Depreciation of property plant and equipment higher net income from joint ventures, and lower G&A expenses, partially offset by deferred tax expense in Q1, 2024 as compared to a deferred tax benefit in Q1 2023 higher direct property operating expenses.
Jeffrey S. Brown: Since of income from discontinued operations due to the completed LTC transactions lower gain on asset sales and higher negative changes in fair value of financial instruments, primarily due to increases in trading prices of our trust units.
<unk> from continuing operations increased to 87, 6%.
Jeffrey S. Brown: That's all from total operations increased 61, 2% in Q1 2024 compared to Q1 'twenty two 'twenty three as operating results in our core property portfolio continued to show strong improvement in Q1 2020 for our same property occupancy increased 610 basis points.
Jeffrey S. Brown: In Q1 2024, our same property occupancy increased 610 basis points to 86.1%, and our same property adjusted NOI increased by 11.3 million, or 24.7. FFO growth benefited from $1 million of lower DNA expense, primarily due to lower compensation costs as we continue to execute on our plan to achieve efficiency, and Q1 2024 GNA included 0.6 million of severance related to these efficiency initiatives. Slide 7 summarizes our same property operating
Jeffrey S. Brown: The 86, 1% and our same property adjusted NOI increased by $11 3 million or 24, 7%.
Jeffrey S. Brown: <unk> growth benefited from $1 million of lower G&A expenses, primarily due to lower compensation costs. As we continued to execute on our plan to achieve efficiency improvements Q1, 'twenty 'twenty four G&A included <unk> 6 million of severance related to these efficiency initiatives.
Jeffrey S. Brown: Slide seven summarizes our same property operating platform results.
Jeffrey S. Brown: All our platforms posted occupancy gains in Q1 2024 compared to Q1 2023, which positively impacted our results. For example, our Western Canada platform same property adjusted NOI increased 3.1 million, or 20.1%. Our Ontario platform, same property adjusted NOI, increased $6.5 million, or 25.8%. Our Quebec platform, same property adjusted NOI, increased $1.7 million, or 33.3%. Turning to slide eight, at May 9, 2024, our liquidity amounted to approximately $279.5 million, which included $37.5 million of cash and cash equivalents and $242 million of borrowing capacity on our credit facility.
Jeffrey S. Brown: All our platforms posted occupancy gains in Q1, 2024, compared to Q1, 2023 which positively impacted our results.
Jeffrey S. Brown: Our Western Canada platform same property, adjusted NOI increased $3 1 million or 21%.
Jeffrey S. Brown: Our interior platform same property adjusted NOI increased $6 5 million or 25, 8%, our Quebec platform same property adjusted NOI increased $1 7 million or 33, 3%.
Jeffrey S. Brown: Yeah.
Jeffrey S. Brown: Turning to slide eight.
Jeffrey S. Brown: May nine 2020 for liquidity amounted to approximately $279 5 million, which included $37 5 million of cash and cash equivalents and $242 million of borrowing capacity on our credit facilities.
Jeffrey S. Brown: For the remainder of 2024, we have $141.1 million of mortgage debt maturing at a weighted average interest rate of 3.32%. We expect to renew or refinance these loans during the year. We also have a $125 million term loan maturing in May 2024. We expect to refinance or repay this loan with proceeds from CMHC financing on our unencumbered property. At May 9, 2024, 10-year CMHC insured mortgage rates are estimated at approximately 4.57%, and five-year conventional mortgage financing is available at approximately 5.75%.
Jeffrey S. Brown: For the remainder of 2024, we have $141 1 million of mortgage debt maturing at a weighted average interest rate of 3.32%.
Jeffrey S. Brown: We expect to renew or refinance these loans during the year.
Jeffrey S. Brown: We also have $125 million term loan maturing in May 2024, we expect to refinance or repay this loan with proceeds from C. M. H C financings on her unencumbered properties.
Jeffrey S. Brown: In May 19, 2020 for 10 years. So you may see insured mortgage rates are estimated at approximately $4 five 7% and five year conventional mortgage financing is available at approximately $5 75 per cent.
Vlad Volodarski: Moving to slide nine, with the continuing strong prospect traffic and leasing activity, we expect occupancy to continue to grow in 2025. We now forecast to achieve 87.3% same-property occupancy by June of this year. We've been using targeted incentives in certain markets to support this rapid occupancy growth. As more residences achieve higher occupancy rates, we expect to gradually reduce the use of these incentives. We believe that improving occupancy rates combined with lower new supply coming to market will support higher than historical market rate increases over the next several years. We expect these dynamics will result in the growth of our adjusted operating margins above the current. I will now turn the call back to Vlad to wrap up. Thank you, Jeff.
Jeffrey S. Brown: Moving to slide nine.
Jeffrey S. Brown: With the continuing strong prospect traffic and leasing activity, we expect occupancy to continue to grow in 2024.
Jeffrey S. Brown: We now forecast to achieve 87, 3% same property occupancy by June of this year we.
Jeffrey S. Brown: We've been using targeted incentives in certain markets to support this rapid occupancy growth.
Jeffrey S. Brown: There's more residences achieve higher occupancy rates, we expect to gradually reduce the use of these incentives.
Jeffrey S. Brown: We believe that improving occupancies combined with lower new supply coming to market will support higher than historical market rate increases over the next several years.
Jeffrey S. Brown: We expect these dynamics will result in the growth of our adjusted operating margins above the current levels.
Jeffrey S. Brown: I will now turn the call back to glad to wrap up.
Vlad Volodarski: Thank you, Jeff. There has never been a better time to be in the senior living business in Canada. With strong demand for our services driven by the demographic growth of the senior population, a slower pace of construction activity, continuing shortages of long-term care beds, and the obsolescence of some of the existing inventory, our sector is poised for sustainable long-term growth. Our teams are hard at work to position Chartwell to be at the forefront of this growth.
Glad: Thank you Jeff.
Glad: Never been a better time to be in the senior living business in Canada.
Glad: With strong demand for our services driven by the demographic graph on the senior population slower pace of construction activity continuing shortages in long term care beds and the obsolescence of some of the existing inventory our sector is poised for sustainable long term growth. Our teams are hard at work with physician cherwell to be at the forefront of this growth.
Glad: Yes.
Vlad Volodarski: As illustrated on slide 10, our company continues to focus on three key areas to accelerate this growth. We are in the business of providing seniors with a great place to live. We strive to provide our residents with personalized, memorable experiences because we believe that these experiences will result in high resident satisfaction rates. Very satisfied residents are four times more likely to refer their friends to Chartwell.
Glad: As illustrated on Slide 10, our company continues to focus on three key areas to accelerate this growth.
Glad: We are in the business of providing seniors with a great place to live we strive to provide our residents with personalized memorable experiences because we believe that these experiences will result in high resident satisfaction rates very satisfied residents are four times more likely to refer their friends to Charles.
Vlad Volodarski: With over 50% of our move-ins coming from referrals, increasing the volume of referrals will drive and sustain higher occupancy rates, which in turn will improve profitability. We believe that only highly engaged, caring, and dedicated employees can deliver these personalized, memorable experiences to their residents. That is why we focus most of our time and investments on employee engagement, resident satisfaction, and occupancy growth. We're also in the process of transitioning our management operations to a more agile and scalable platform. Over the last four challenging years, we learned that we could do things faster.
Glad: With over 50% of our move ins coming from referrals, increasing the volume of referrals will drive and sustain high occupancy rates, which in turn will improve profitability.
Glad: We believe that all like highly engaged carrying and dedicated employees can deliver these personalized number of experiences to their residents that is why we focus most of our time and investments unemployed engagement resident satisfaction and occupancy growth.
Glad: We're also in the process of transitioning our management operations to a more agile and scalable platform over the last four challenging years, we learned that we could do things faster.
Vlad Volodarski: We're doing more to empower those closest to the customer to make decisions, take action, and experiment. We're leveraging our platform to provide them with the necessary tools, including various technology solutions, training, and targeted support to help them outperform. We are reviewing all our corporate support processes and eliminating low-value at work, implementing technology solutions to enhance the efficiency of our support services, and reimagining our corporate support functions to align with this new way of working.
Glad: We're doing more to empower those closest to the customer to make decisions to take actions and experiment.
Glad: We are leveraging our platform to provide them with the necessary tools, including various technology solutions training and targeted support to help them outperform.
Glad: We are reviewing all our corporate support processes and eliminating low value at work implementing technology solutions.
Glad: The sufficiency of our support services and re imagining our corporate support functions to align with this new way of working.
Vlad Volodarski: We continue driving our portfolio optimization and growth initiative, investing in our existing properties to ensure their long-term competitiveness, pursuing acquisitions of newer, high-growth properties in strong markets, and divesting non-core residences. To date, in 2024, we completed the acquisition of one property, expect to close on the second acquisition from Batimo in the next few weeks, and announce an operational closure of another Canon Corp. property. We continue to investigate several other strategic growth opportunities in our market.
Glad: We continue driving our portfolio optimization and growth initiatives investing in our existing properties to ensure their long term competitiveness pursuing acquisitions of war high growth properties in strong markets and divesting non core residences did that in 2024, we completed the acquisition of one prop.
Glad: 30, and expect to close in the second acquisition from bottom up in the next few weeks and announced an operational closure of another noncore property. We continue to investigate several other strategic growth opportunities in our markets.
Vlad Volodarski: I will now close our prepared remarks with a story from one of our residences, as pictured on slide 11. I'm thrilled to share a recent media story about our incredible residence at Chartwell Allendale Station in Barrie. Resident Shirley Monger, Christine McSamenco, and Eleanor Ball put their baking skills to the test, turning out more than a dozen apple pies as a thank you to local first responders, with the assistance of General Manager Carla Karchuk and armed with their freshly baked goods.
Speaker Change: I will now close our prepared remarks with a story from one of our residences as pictured on slide 11.
Vlad Volodarski: The group set out to deliver these pies to the local fire hall, police station, hospital, and ambulance station. This act of kindness is part of Chartwell Allendale Station's HOPE initiative, helping others through purposeful engagement, allowing residents to utilize their skills and lifelong hobbies while giving back to their community. Kyla said it's best when our seniors give to their community; it allows them to experience fulfillment, autonomy, and connection to their community.
Speaker Change: I'm thrilled to share our recent media story about our incredible residents are terrible Allentown stations in dairy.
Speaker Change: Residents surely longer Christina salmon co and Telenor, our ball, but they are they can scale the test turning out more than a dozen apple pies as a thank you to local first responders with the assistance of general manager Carla cartoon.
Speaker Change: And armed with their freshly baked goods they set out to hand deliver these buys the Moroccan fire Hall police station hospitals and ambulance stations. This act of kindness as part of Cherwell Ellen de stations home initiatives, helping others purposeful engagement.
Speaker Change: Residents to utilize their skills and life long hobbies, while giving back to their communities.
It's at its best when our seniors give to our community. It allows them to experience fulfillment autonomy and connection to their community. This is just one example of the amazing contributions that our residents and employees are making it their communities across the country.
Vlad Volodarski: This is just one example of the amazing contributions that our residents and employees are making in their communities across the country. I invite you to visit our media center page on chartwell.com to read more stories about our residents making headlines across the country. Thank you for your attention this morning. We will now be pleased to answer your questions.
Speaker Change: I invite you to visit our media Center page I'm terrible dot com to eat more stories about our residents making headlines across the country.
Speaker Change: Thank you for your attention. This morning, we will now be pleased to answer your questions.
Yes.
Operator: Thank you. We will now take questions from the telephone lines. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time by pressing star 2. Please press star 1 at this time if you have a question. There will be a brief pause while the participants register their questions. Thank you for your patience. The first question is from Lorne Kelmar from Desjardins; please go ahead.
Speaker Change: Thank you.
Speaker Change: We will now take questions from the telephone lines. If she has a question. Please press star one on your devices to keep them you make answering your question on that anytime by pushing to talk to you.
Speaker Change: Press Star one at this time, if you have a question.
Speaker Change: It wouldn't be a brief pause while the participants richest thoughtful questions. Thank you for your patience.
Speaker Change: The first question is from a long term off from Vishal, Yes go ahead.
Lorne Kalmar: Thanks, good morning everybody. On the Heritage Glen Closure, and apologies if I might have missed it, what type of pricing do you expect, and I believe you're selling it, and what would the NOI impact be once it's closed?
Vishal: Thanks, Good morning, everybody.
Alrighty.
Vishal: On the heritage Glenn closure and apologies if I might've missed it what type of pricing do you expect and.
Vishal: I believe you're selling it.
Vishal: What would be the impact on once it's closed.
Jonathan M. Boulakia: Thanks for the question. It's Jonathan here.
Thanks for the question, it's Jonathan here. So you would know that we were operating at a good retirement residence at less than 60% occupancy for for many years and so it's being repurposed in renovator, there's a multi residential building.
Jonathan M. Boulakia: So you would know that we were operating it as a retirement residence at less than 60% occupancy for many years. And so it's being repurposed and renovated as a mixed-use residential building. The property wasn't well-suited to continue as a retirement home, and when you look at the vacancy rate in the region of retirement homes versus multi-res, it made a lot of sense for everyone for it to be repurposed as multi-residential. But the sale is still conditional, and as such, we're not giving details just yet on price and impact.
Jonathan Block: The property wasn't well suited to continue as a retirement home and when you look at the vacancy rates in the region of retirement homes versus multi res. It made a lot of sense for everyone for it to be repurposed to smoky residential, but the sale of a state conditional and as such.
Speaker Change: We're not giving details just yet on price and impact.
Jonathan M. Boulakia: fair enough. And then I think there was a mention of another operational closure. Could you maybe give us a little bit of detail on that? And maybe also just some, an outlook in terms of how many of these are kind of left in the portfolio and the pace at which you expect to close them, maybe on an annual basis, if you can.
Speaker Change: Fair enough and then I think there was mention of another operational closure.
Speaker Change: Could you maybe give us a little bit of detail around that and maybe also just some outlook in terms of how many of these are kind of left in the portfolio and the pace at which you expect to close that maybe on an annual basis. If you can.
Jonathan M. Boulakia: There were no other operational closures that we mentioned. We meant Heritage Land; that's the only one that is in progress now. And in terms of the future, there are no immediate plans of doing any other closures of the homes. We continue to look at our portfolio and performance and continue to evaluate each asset on its merits. At this time, there are no other plans.
Speaker Change: There was no other operational closures that we mentioned as we meant heritage Glenn that's the only one that is in progress now and in terms of the future. There are no immediate plans of doing any other closures of the homes. We continue to look at our portfolio performance and continue to evaluate the chances on its merit.
Speaker Change: At this time there are no other funds.
Jonathan M. Boulakia: Okay, fair enough. And then lastly, just on the announcement around the Ballycliff sale, I think the original disposition proceeds were $64.5 million. Can you give us an idea of what you think you can get now with the revisions to the LTC funding model?
Speaker Change: Okay Fair enough and then lastly, just on the announcement around the Bally cliffs.
Speaker Change: Sale I think the original destination policies were $64 5 million.
Speaker Change: Give us an idea of you know what you think you can get now with new additions to the LTC funding model.
Jonathan M. Boulakia: Yeah, so the building is still not fully constructed or handed over to operations. We will relaunch the sale process, as we said, once it is. And we are in discussions with the original buyer in terms of their interest in buying it. And like you said, we think it's going to be worth more than the $64 million that was in the forward purchase agreement. I don't have a number for you now, but the new funding model is going to... is going to positively affect its value. Other considerations also come into play for a buyer, including financing costs and what other considerations they might have, but certainly, the funding model is going to help its value.
Speaker Change: Yeah. So it's.
Speaker Change: Still not fully constructed are handed over to operations.
Speaker Change: We will relaunch the sale process as we thought once it is.
Speaker Change: And.
Speaker Change: We are in discussions with the original buyer in terms of their interest to buy it.
Speaker Change: Like you said you think it's gonna be worth more than the $64 million that was in the forward purchase agreement.
Speaker Change: A number for you now, but the new funding model was going to.
Speaker Change: It's going to positively affect others.
Speaker Change: Other considerations also come into play for a buyer including financing costs.
Speaker Change: And what other considerations that you might have but but certainly the funding model is going to help the Boeing.
Lorne Kalmar: Okay, great, thank you so much for taking my questions. I'll turn it back.
Speaker Change: Okay, great. Thank you so much for taking my questions I'll turn it back.
Jonathan Kelcher: Thank you. The next question is from Jonathan Kelcher from TD Cohen. Please go ahead.
Speaker Change: Thank you.
Speaker Change: The next question is from Jonathan Ketchup from T. D. Cohen. Please go ahead.
Jonathan Kelcher: Thanks. Good morning.
Jonathan Ketchup: Thanks, Good morning.
Jonathan Ketchup: Just to close out on on Heritage, Glenn I guess, 60% occupancy it wouldn't have been contributing much of any kind of like is that fair to say that's correct.
Unknown Executive: Just to close out on Heritage Fund, I guess at 60% occupancy, it wouldn't have been contributing much, if any, and alike. Is that fair to say? That's correct. Okay, on BATIMO, you're acquiring two properties this quarter. There are two more where they have the right to put the assets to you. Do you expect to be acquiring those later this year?
Jonathan Ketchup: Okay.
Jonathan Ketchup: On the bottom all your acquired the two properties this quarter.
Jonathan Ketchup: There's two more where they have the right to put that could be assets to you do you expect to be acquiring those later this year.
Unknown Executive: We're working with Batamo, and we have continuously been finding the right strategy and the right timing to acquire these properties. Right now, we're focused on the one that we just closed last week and the one that we expect to close in the next month or few days. There might be one more down the pipe, but we're not actively working on anything the same amount.
Jonathan Ketchup: We're working with them or we have been continuously on finding the right strategy and the right timing to acquire.
Jonathan Ketchup: These properties right now we're focused on the ones that we just closed last week and the one that we expected to close in the next two.
Jonathan Ketchup: Few days there there might be one more down the pipe, but we're not actively.
Jonathan Ketchup: Working on anything, but a few minutes.
Unknown Executive: Okay, and then the, I think, if I recall correctly in the MD&A, both those ones you're acquiring have north of 8% debt. I think on the one you acquired, you said the debt is due December 1st, and you can refinance it, but what about the other asset? Should we think about that as a similar timeframe in terms of refinancing? We're going to be pursuing, hey Jonathan, financing with CMHC on both of those, kickstarting that as soon as the second closes.
Speaker Change: Okay, and then the I think if I recall correctly they want like both of those once you acquired north of 8% debt I think on the one you've acquired you said the deaths due December 1st and you could refinance it but what about the other so we should be thinking about that as a similar timeframe.
Gotcha.
Speaker Change: We're going to be pursuing a hey, Jonathan we're gonna be pursuing a financing with siem HCM on both of those.
Jonathan: And so we'll kick start that as soon as the second closes.
Unknown Executive: So the timing may even be, the maturing. Okay, but both will get done this year. It's fair. We anticipate both. Okay, and then last, last for me, just on the electronic health records and Karen, can you maybe walk us through how you sort of translate more use of that to increased care revenue? And then what's the potential going forward there? And lastly, like, how material is it? What is the sort of dollar amount we're talking about?
Speaker Change: So the timing may even be earlier than December that's just the maturing of the existing facility, okay, but both Paul it'll get done this year, we anticipate.
Speaker Change: It's being done this year.
Speaker Change: And then lastly last for me just on me.
Speaker Change: Karen on the electronic Health Records.
Could you maybe walk us through how it how you sort of translate to more use of Dod is increasing the care revenue and then.
Speaker Change: What's the potential going forward, there and lastly, like how material is that what was sort of a dollar amount we're talking about.
Karen Sullivan: So, because we're capturing it electronically, we can track it so much better, and we do assessments on a regular basis, and that's when we can determine whether people need additional care services and then add those to the assessment, which hooks directly to the billing. So that's what I think is helping us, rather than it all being paper-based and more disjointed from the..., from the billing portion.
Karen: So because where we're capturing electronically we can we can track it so much better and we do assessments on a regular basis and that's when we can determine whether people need additional care services.
Karen: And then add those to the assessment, which talks directly to the billing. So that's what I think is it's helping us rather than at all being paper based and more disjointed from the AR from.
Karen: The the billing portion so that's that's sort of a practical application of that and Jonathan It's a combination of electronic Health Records Center care assist program Karen steam rolled out over the last couple of years with our homes that makes access to this additional care a lot easier for the consumer it's much more clearer than what.
Unknown Executive: That's sort of the practical application of that. And Jonathan, it's a combination of electronic health records and the care assist program, care and steam, which has been rolled out over the last couple of years. There are homes that make access to this additional care a lot easier for the consumer. It's much more clear than what ourselves and other competitors had in place in the past. And so I think the pickup in care revenue, the combination of those two things, not just electronic health records, and in terms of materiality, it is not a significant portion of our overall revenue, but it is significant for improving the lives of our residents and helping them to stay longer with us, which is very important.
Karen: Ourselves and other competitors had in place in the past and so I think that pick up into care revenue is a combination of those two things not just us aren't as health records and in terms of materiality. It is not a significant portion of our overall revenue, but it is significant for improving the lives of our residents and helping them to stay longer.
Karen: With us which is very important.
Jonathan Kelcher: Okay, that's a great color. I'll turn it back.
Speaker Change: Okay, that's great color I'll turn it back thanks.
Speaker Change: Thank you.
Operator: Once again, please press star 1 on your device keypad if you have a question. The next question is from Himanshu Gupta from Scotiabank; please go ahead.
Speaker Change: Once again, just press star one on your old device to keep that if your other question.
Speaker Change: The next question is from human show Gupta from Scotiabank. Please go.
Himanshu Gupta: Thank you and good morning. On the sales KPI, I think you mentioned permanent move-ins were up 13% in Q1. Can you tell me how many actual move-ins there were in the quarter and then how they are trending in Q2 so far?
Speaker Change: Yeah.
Speaker Change: Thank you and good morning, good morning, so much.
Gupta: So on the same SKU P. I E. I think you've mentioned bumble and move ins were up 13%.
Speaker Change: In Q1.
Gupta: Can you tell us how many moving parts here in the quarter.
Gupta: And then how do you train them to do so far.
Unknown Executive: We don't have the absolute numbers at our fingertips, but in terms of the trends, they continue to be very positive, and we continue to see pretty strong traffic. Karen mentioned the open houses. Both January and April saw the highest number of initial contacts and people coming in and checking us out that we've ever seen, and that gives us a lot of encouragement that the positive trends will continue for the remainder of the year and beyond.
Speaker Change: We don't have the absolute numbers at our fingertips in terms of the trends. They continue to be very positive and we continue to see pretty strong traffic Karen mentioned the open houses both January and April saw the highest number of initial contacts and people coming in and checking us out that we've ever seen and that gives us a lot of encouragement.
Speaker Change: That that positive trends will continue for the remainder of the year and beyond.
Himanshu Gupta: Okay, so I think in Q4, you disclosed something like 2,200. Would that be in the ballpark or maybe even higher than that? Or you can come back to me on that. Yeah, we'll have to come back to you. Okay, fair enough, fair enough, okay. And then on the, you know, sticking to occupancy, good occupancy momentum on the same property portfolio, but is there a reason why there was, you know, no occupancy growth in the growth portfolio?
Speaker Change: Okay. Okay.
Speaker Change: I think in Q4, you would disclose something like that in 'twenty two.
Speaker Change: Well, Doug you're in the ballpark or maybe even higher than that.
Speaker Change: Well all you can come back to me on that yeah, well have to come back to him.
Speaker Change: Okay.
Speaker Change: And then on the.
Speaker Change: Speaking to occupancy good occupancy momentum on the same property portfolio.
Speaker Change: Is there a reason why there was.
No occupancy growth.
Speaker Change: Good for you.
Unknown Executive: Now we'll have to take a look at it and get back to you on that as well. There may be some specific properties that are being... Repositions or the Composition of the Portfolio. There are some properties moved out of the growth portfolio into the same property portfolio as well, but we can follow up with you on that. Yeah, these ones are harder to compare, right, because their properties get added to and taken out of the growth portfolio over the years, so it's not the same subset of properties there. That's why the focus is always on the same property, which are properties that we have owned for a continuous period of time, so the comparison is apples to apples in the growth portfolio.
Speaker Change: Yeah, we'll have to take a look at that and get back to him that as well.
Speaker Change: Maybe some specific properties that are being.
Speaker Change: Repossessions or the composition of portfolio. There's some properties moved out of the growth portfolio into the same property portfolio as well, but we can follow up with you on that yes, These where it's harder to compare right because they're properties get edits and taken out off the growth portfolio over the year. So it's not the same subset of properties. There that's why the sort.
Speaker Change: All of this is on the same property, which are properties that we own for a continuous period of time. So the comparison is apples to apples in the girls portfolio is not the case.
Unknown Executive: Okay, so maybe let's clarify here. The repossession portfolio is the one that you are going to sell to WealthTravel? So that category kind of goes away from Q2? Not all of it. Most of it. The majority of it is that, but there are also properties that we are either changing the capacity or investing significant capital in or that are seeing some other activities on the side. Okay, okay, so that's your position. And now the growth portfolio is the one that you are retaining from the Java and the JV.
Speaker Change: Okay. So maybe that's kind of play here because people just don't portfolio is the one which you are going to send to other topics. So bad category goes away kind of goes it goes away from Q2.
Speaker Change: No not all of them.
Speaker Change: And the majority of it is it's that but they're also properties that we either changing the capacity or investing significant capital or that are seeing some other activities on the side.
Speaker Change: Okay. Okay. So that's the biggest thing and now the growth portfolio is the one that you are retaining combat childhood images.
Unknown Executive: and also properties that were recently acquired that were not stabilized or that were recently developed that are still in lease up. Okay.
And also properties that were recently acquired that were not stabilized or that are in our recently developed that that are in lease up still.
Himanshu Gupta: Okay. And do you think, you know, the growth portfolio should ideally outperform the same property portfolio in the next one year in terms of upside, and so on?
Speaker Change: Okay.
Speaker Change: Due to the growth portfolio.
Speaker Change: Didn't outperform the same property portfolio in the next one year in terms of the upside he doesn't at all.
Unknown Executive: Yeah, probably these will be newer properties in that portfolio, and that higher growth, and we should see higher growth on that. Having said that, as I just mentioned in my remarks, the environment out there is very positive for everybody who is in the sector, and we still have quite a bit of room to grow in our same property portfolio. So our intent is to realize both these opportunities in both portfolios. Okay.
Speaker Change: Yeah, probably this will be newer properties in that portfolio that higher growth and we should see higher growth of that having said that the as I just mentioned in my remarks, the environment out there is very positive for everybody who is in the sector and we still have quite a bit of room to grow in our.
Same property portfolio, so our intent to realize on both of these opportunities in both portfolios.
Himanshu Gupta: Okay, I hope you have fun now. And then, you know, just turning to the margins, same property, you know, our margins, I think, if I recall last time, you mentioned last time that same property margins could go to 38% this year. Is that still the view?
Speaker Change: Okay. Okay.
Speaker Change: Oh, and then maybe just turning to the margins.
Speaker Change: Same property NOI margins I think if I recall last time debenture.
Speaker Change: Same property margins could go to 28% this year.
Speaker Change: Is that still the view.
Unknown Executive: We did have strong margin growth in Q1 2023 over Q1 2022 at 35% percent versus 32%. So we are tracking towards growth. I believe we can attain the 38% by year, which is basically.
Speaker Change: We did have strong margin growth in Q1, and Tony twenty-three over Q1, 'twenty or 'twenty three at 35 mm per se.
Speaker Change: <unk> versus 32%.
Speaker Change: So we are tracking towards growth.
Speaker Change: We still believe.
Speaker Change: We can attain to 38% by year end.
Unknown Executive: which is basically the full year 2024 at Kareem. That's our expectation. That's okay. So that is on cue. So just go ahead and set that. Okay, fantastic. Last question is on the balance sheet. I think $125 million term loan.
Speaker Change: Which is basically fully at home 24, I'd put them in person.
Speaker Change: That's our expectation.
Speaker Change: Okay. So that that that is unchanged. So just go ahead okay.
Sebastian: Okay Sebastian.
Last question is on the balance sheet I Didnt want $25 million term loan I think that that is you and me right. This month itself.
Himanshu Gupta: I think that that is due in May, right from this month itself. And so do you have CMSE debt financing room available? I think you mentioned you wanted to access CMSE for that. Yeah.
Speaker Change: So do you have seen whats your best friends, who are global.
Speaker Change: You mentioned you want to exercise that.
Unknown Executive: Yeah, we have a number of financings in the pipeline with CMHC that they're just working through the process. So depending on timing, we will either use those to repay the $125 million loan that's due at the end of this month or may extend that loan for a short duration while those financings get completed.
Sebastian: Yeah, we have a number of financings in the pipeline you see MHC that they're just working through the process so depending on timing.
Sebastian: We believe their use those to repeat.
Sebastian: 125 million dollar loan that's due at the end of this month or May.
Sebastian: I extend that.
Sebastian: That loan for a short duration, while those financings get completed.
Himanshu Gupta: Okay. Okay. Fantastic. Thank you. And I'll
Speaker Change: Okay. Okay. That's it thank.
Speaker Change: Thank you and I'll jump back.
Pammi Bir: Thank you. The next question is from Pammi Bir, RBC Capital Markets. Please go ahead.
Speaker Change: Thank you next.
Semi Beth: Next question is from semi Beth I'll be she kept some markets. Please go ahead.
Pammi Bir: Thanks. Good morning.
Semi Beth: Thanks, Good morning.
Semi Beth: You had said specifically cited I guess, the 15 million of investments in our portfolio in the same property portfolio to modernize it.
Semi Beth: I'm curious you know do you see that as sort of the.
Beth: Is that maintenance related just curious how you see that spending trending over the next year or so.
Pammi Bir: You have specifically cited the $15 million investments in the portfolio, in the same property portfolio, I guess, to modernize it. I'm curious, you know, do you see that as sort of the, you know, maintenance? And just curious how you see that spending trending over the next year or so.
Speaker Change: And I think you should assume that we will continue to invest in our property portfolio at about similar levels that we have been doing in the past so.
Unknown Executive: I think, Pammi, you should assume that we will continue to invest in our property portfolio at about the same levels that we have been doing in the past, so anywhere between $70 and $90 million a year, depending on the year. These investments are in upgrades of common areas and residence suites. In some cases, you have to do them because suites are not rentable in any other condition. In other cases, we're accelerating these upgrades because we think we can generate higher rate increases from new residents moving in and the upgraded suites. And so, it's really difficult to differentiate which is which, so we're just showing you the total amount that we're investing back in our properties in these particular areas.
Speaker Change: It's out of anywhere between $70 million to $90 million a year, depending on the year.
Speaker Change: These investments are in upgrades of common areas and residence suites.
Speaker Change: In some cases, you have to do them, because we turned off rental and any other condition. In other cases, we are accelerating these upgrades because we think we can generate higher right.
Speaker Change: Rate increases from new residents moving in an operated suites and so.
Speaker Change: It's really difficult to differentiate witches, which therefore, we're just showing you the total amount that we're investing back in our properties in these particular areas.
Jonathan M. Boulakia: Okay, so yeah, sounds like a mix of both in terms of that bucket. I'm not sure if you can answer this one, but, you know, with respect to the, you know, the consolidated sort of class action claim, now that it's been certified, like, what can you share in terms of what was happening there and next steps, if any, and, you know, with all this, ultimately, do you expect this to really get covered by the Recovery Act? And I'm just curious if you can shed some light on that.
Speaker Change: Okay. So yeah, it sounds like that that makes it both in terms of that bucket.
Speaker Change: I'm not sure if you can answer this one but you know with respect to the.
Speaker Change: Consolidated its sort of a class action claim.
Speaker Change: Certified.
Speaker Change: What can you share in terms of.
Speaker Change: What's happening there and next steps.
Speaker Change: It's all been solved immediately.
Speaker Change: Do you expect this to really get covered by that.
Speaker Change: The recovery Act and just curious if you can shed some light on that.
Jonathan M. Boulakia: Sure, I can take that. It's Jonathan. So I guess at the outset, what I would say is we're still very confident that our handling of the pandemic, both on the corporate side and in our residences, was appropriate, and we always had the health and safety of our residents as our number one consideration. And that gives us a lot of confidence in this class action. You noted, and it's correct, that the class action was certified.
Speaker Change: Sure I can take that it's Jonathan.
Jonathan: So I guess the at the outset, what I would say is we're still very confident but.
Jonathan: Our handling of the pandemic both on the corporate side and in our resident foods was.
Jonathan: Appropriate and we always had the health and safety of our residents is our number one.
Consideration.
Jonathan: And that gives us a lot of confidence on this class action.
Jonathan: You noted and it's correct the B class action was certified.
Jonathan M. Boulakia: There were some issues that were resolved in the certification process, including the fact that the standard is a gross negligence standard, which is a higher bar to cross, obviously, than just a negligence standard, which was sought by the plaintiffs. And there are some, you know, specifics that I'm not going to get into because they're quite technical related to that certification that we object to. So we filed for leave to appeal, but we haven't heard back on that yet.
Jonathan: There were some issues that were resolved in the certification process, including.
Jonathan: The fact that the standard is a gross negligence standard a which is a.
Jonathan: A higher bar to cross obviously than just the Mexican standard which was sought by the plaintiffs.
Jonathan: And there are some specifics, but I'm not going to get into because they are quite technical related to that certification, but we object to so we filed for leave to appeal we.
Jonathan: I haven't heard back on that yet.
Jonathan M. Boulakia: The next step in the process, assuming we get that leave to appeal, would be to hear our appeal on those technical issues. Otherwise, we will go forward with the class action trial for which we are insured.
Jonathan: The next step in the process are assuming.
Jonathan: We get that leave to appeal would be to hear or feel on those technical issues. Otherwise. We will go forward with the class action trial for which we are insured.
Jonathan: Yeah.
Pammi Bir: Okay, so yeah, I guess if this were to result in any sort of damage award, sorry, awards, your insurance proceeds would cover that type of outcome.
Speaker Change: Okay. So yeah it gets it.
Speaker Change: This word too.
Speaker Change: Resulting or any sort of damage award means sorry rewards.
Speaker Change:
Speaker Change: Your insurance proceeds will cover that type of outcome. We believe were adequately covered yes, yes, okay, alright, thanks, very much I'll turn it back.
Jonathan M. Boulakia: We believe we're adequately covered, yes.
Pammi Bir: Okay. All right. Thanks very much. I'll turn it back.
Vlad Volodarski: Thank you. There are no further questions at this time. I would now like to turn the meeting back over to you, Mr. Volodarski.
Speaker Change: Thank you Yeah. No. Further question just thought at this time I would now like to turn the meeting back over to you on this stuff a little Bhaskar.
Operator: Thank you. That wraps up our conference call today. Thank you for joining us. As a reminder, our AGM will be held virtually and in person on Tuesday, June 4th at 5 p.m. Further details will be posted on our website later today. We're looking forward to you joining us then. As always, if you have any further questions, please do not hesitate to give any one of us a call. Goodbye.
Bhaskar: Thank you that wraps up our today's conference call. Thank you for joining us as a reminder, our AGM will be held virtually and in person on Tuesday June 4th at five P. M. Further details will be posted on our website. Later today, we're looking forward to you joining us.
Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.
Bhaskar: And then as always if you have any further questions. Please do not hesitate to give any one of us a call goodbye.
Bhaskar: Thank you to conclude stars Melinda is disconnect your lines at this time and we thank you for your participation.