Q2 2024 Chartwell Retirement Residences Earnings Call

August 9, 2024

Speaker Change: All participants, please continue to stand by. The conference will begin momentarily. Once again, please continue to stand by. We thank you for your patience.

Unknown Executive: Unfortunately, once again, please continue to stand by. We thank you for your patience.

Speaker Change: Thank you for your patience, the conference will begin shortly. We kindly ask you to wait a few moments and thank you for your patience.

Speaker Change: October 31, 2010 .

Unknown Executive: This conference is being recorded.

Speaker Change: This conference is being recorded. Cette conférence est enregistrée. All participants, please stand by. Your meeting is ready to begin. Good morning, ladies and gentlemen, and welcome to the Chartwell Retirement Residences Q2.

Unknown Executive: All participants, please stand by.

Unknown Executive: Your meeting is ready to begin.

Vlad Volodarski: Good morning, ladies and gentlemen, and welcome to the Chartwell Retirement Residences Q2 2024 Financial Results Conference Council.

Vlad Volodarski: I would now like to turn a meeting over to the CEO, Vlad Volodarski. Please go ahead, sir.

Speaker Change: 2024 Financial Results Conference Call. I would now like to turn the meeting over to the CEO , Vlad Volodarski. Please go ahead, sir.

Vlad Volodarski: Thank you, Zizel. Good morning, and thank you for joining us today. There is a slight presentation to accompany this conference call available on our website at www.charvel.com under the Investor Relations tab.

Unknown Executive: Thank you for joining us today. Joining me are Karen Sullivan, President and Chief Operating Officer; Jeffrey Brown, Chief Financial Officer; Jonathan Boulakia, Chief Investment Officer; and Chief Legal Officer. Before I begin, I direct you to the cautionary statements on slide 2 because, during this call, we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MD&A and other security 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.

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.

Vlad Volodarski: Joining me are Karen Sullivan, President and Chief Operating Officer; Jeffrey Brown, Chief Financial Officer; Jonathan Boulakia, Chief Investment Officer; and Chief Legal Officer. Before I begin, I direct you to the cautionary statements on slide 2 because, during this call, we will make statements containing formal looking information and non-GAAP and other financial measures. Our MDNA and other security 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'd direct you to the disclosures in our Q2 2024 MDNA under the headings, 2024 outlooks, and risks, and uncertainties and forward-looking information for a discussion of risks and uncertainties.

Speaker Change: Joining me are Karen Sullivan, President and Chief Operating Officer, Jeffrey Brown, Chief Financial Officer, Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer.

Unknown Executive: More specifically, I direct you to the disclosures in our Q2 2024 MD&A under the headings 2024 Outlooks and Risks and Uncertainties in Forward-Looking Information for a discussion of risks and uncertainties. These documents can be found on our website or on the CDERplus website. Turning to slide three.

Speaker Change: Before I 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.

Speaker Change: Our MD&A and other security 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.

Speaker Change: More specifically, I direct you to the disclosures in our Q2 2024 MD&A under the headings 2024 Outlooks and Risks and Uncertainties and Forward-Looking Information for a discussion of risks and uncertainties.

Vlad Volodarski: These documents can be found on our website or on the Cedar Bluffs website.

Speaker Change: These documents can be found on our website or on the CDERplus website.

Unknown Executive: Our teams delivered another quarter of strong operating and financial results in Q2 2024, achieving year-over-year same property occupancy growth of 660 basis points, which drove operating margin expansion of 280 basis points, same property net operating income growth of 20.6 percent, and funds from operations increased of 45.3 percent. We expect this occupancy growth momentum to continue and forecast September 2024 same property occupancy of 88.7%. It is our conviction that to achieve long-term sustainable value creation in our business, we must focus on delivering exceptional services and quality care to our residents, which we believe will generate high resident satisfaction rates and resident referrals. This, in turn, will drive high occupancies and strong profitability.

Speaker Change: Turning to slide three.

Speaker Change: Our teams delivered another quarter of strong operating and financial results in Q2 2024, achieving year-over-year same property occupancy growth of 660 basis points.

Speaker Change: which drove operating margin expansion of 280 basis points, same property, net operating income growth of 20.6%, and funds from operations increase of 45.3%.

Vlad Volodarski: We expect this occupancy growth will momentum to continue and forecast September 2024, same-property occupancy of 88.7%. It is our conviction that to achieve long-term sustainable value creation in our business, we must focus on delivering exceptional services and quality care to our residents, which we believe will generate high resident satisfaction rates and resident referrals. This, in turn, will drive high occupancies and strong profitability. Such resident experiences can only be delivered by highly engaged employees, who are committed to our vision of making people's lives better.

Speaker Change: We expect this occupancy growth momentum to continue and forecast September 2024 same property occupancy of 88.7%.

Speaker Change: It is our conviction that to achieve long-term sustainable value creation in our business, we must focus on delivering exceptional services and quality care to our residents, which we believe will generate high resident satisfaction rates and resident referrals. This, in turn, will drive high occupancies and strong profitability.

Unknown Executive: Such resident experiences can only be delivered by highly engaged employees who are committed to our vision of making people's lives better. That is why I am grateful to the leaders in our residences for the great work they have done promoting a positive, inclusive, and rewarding work environment. Their success was evidenced this year by our employee engagement score reaching 57% highly engaged. Remember, in our survey, we only count top box responses on the five point scale, and the score comprises of the average responses to 25 core engagement statements.

Speaker Change: Such residence experiences can only be delivered by highly engaged employees who are committed to our vision of making people's lives better.

Vlad Volodarski: That is why I am grateful to the leaders in our residences for the great work they have done promoting a positive, inclusive, and rewarding work environment. Their success was evidenced this year by our employee engagement score reaching 57% highly engaged. Remember, in our survey, we only count tall box responses on a five-point scale, and the score comprises of the average responses to 25 core engagement states. The combined score of highly engaged and engaged employees, those who mark boxes 4 and 5 in our survey, was 86%. Our 2024 score of 57% represents a 3 percentage points increase from 2023, and remarkably, it is 2 percentage points higher than our 2025 aspirational target of 55%.

Speaker Change: That is why I am grateful to the leaders in our residences for the great work they have done promoting a positive, inclusive, and rewarding work environment. Their success was evidenced this year by our employee engagement score reaching 57% highly engaged.

Speaker Change: Remember, in our survey, we only count top-box responses on the 5-coin scale, and the score comprises of the average responses to 25 core engagement statements.

Speaker Change: The combined score of highly engaged and engaged employees, those who marked boxes 4 and 5 in our survey, was 86%.

Speaker Change: Our 2024 score of 57% represents a 3 percentage points increase from 2023 and remarkably it is 2 percentage points higher than our 2025 aspirational target of 55%.

Vlad Volodarski: It is wonderful to see the fruits of our team's labor in so many aspects of our operations.

Unknown Executive: The combined score of highly engaged and engaged employees, those who marked boxes 4 and 5 in our survey, was 86%. Our 2024 score of 57% represents a three percentage points increase from 2023, and remarkably, it is two percentage points higher than our 2025 aspirational target of 55%. It is wonderful to see the fruits of our team's labor in so many aspects of our operation. And I will now turn the call over to Karen to provide some more color on our ongoing initiatives.

Speaker Change: It is wonderful to see the fruits of our team's labor in so many aspects of our operations.

Karen Sullivan: And I will now turn the call to Karen to provide some more color on our ongoing initiatives. Thanks, Vlad. Moving on to slide 4 in Q2 2024, our marketing strategies led to an increase in personalized tours for marketing sources of 22%. Compared to Q2 2023 and an overall increase of 6% quarter over quarter. Leasing activity continued to be strong, with year-to-date ahead of 2023 and a steady increase in closing ratios. We hosted two open house events in Q2 on April. And for the first time ever, another in June, both of which helped us to drive new weeks.

Karen Sullivan: Thanks Vlad. Moving on to slide four. In Q2 2024, our marketing strategies led to an increase in personalized tours from marketing sources of 22% compared to Q2 2023, and an overall increase of 6% quarter over quarter. Leasing activity continued to be strong with year-to-date ahead of 2023 and a steady increase in closing ratios. We hosted two open house events in Q2, one in April and, for the first time ever, another in June, both of which helped us to drive new leaps.

Speaker Change: And I will now turn the call to Karen to provide some more color on our ongoing initiatives.

Karen: Thanks, Vlad. Moving on to slide four. In Q2 2024, our marketing strategies led to an increase in personalized tours for marketing sources of 22% compared to Q2 2023, and an overall increase of 6% quarter over quarter.

Speaker Change: Leasing activity continued to be strong with year-to-date ahead of 2023 and a steady increase in closing ratios.

Speaker Change: We hosted two open house events in Q2, one in April , and for the first time ever, another in June , both of which helped us to drive new leads.

Karen Sullivan: Our marketing strategies now include Facebook ads. And we have also improved the volume of Google ad conversions and continue keyword optimization, which resulted in an increase to the click-through rate and a decrease in the cost per click.

Karen Sullivan: Our marketing strategies now include Facebook ads and we have also improved the volume of Google ad conversions and continued keyword optimization which resulted in an increase to the click-through rate and a decrease in the cost per click. In Q2, we introduced a new, more comprehensive approach to sales training designed to set up our new retirement living consultants for success from their first day through month 12. We also held sales training for all of our RLCs in Q2 and redesigned and improved our competitive analysis process. We are also pilot testing an online post-tour survey for prospects to complete after they have visited our website.

Speaker Change: Our marketing strategies now include Facebook ads, and we have also improved the volume of Google ad conversions and continued keyword optimization, which resulted in an increase to the click-through rate and a decrease in the cost per click.

Karen Sullivan: In Q2, we introduced a new, more comprehensive approach to sales training designed to set up our new retirement living consultants for success from their first day through month 12. We also held sales training for all of our RLCs in Q2 and redesigned and improved our competitive analysis process. We are also pilot testing an online post tour survey for prospects to complete after they have visited our.

Speaker Change: In Q2, we introduced a new, more comprehensive approach to sales training designed to set up our new retirement living consultants for success from their first day through month 12.

Speaker Change: We also held sales training for all of our RLCs in Q2 and redesigned and improved our competitive analysis process. We are also pilot testing an online post-tour survey for prospects to complete after they have visited our site.

Karen Sullivan: As our community continues to cover year determining property specific pricing strategies, which include faster growing market rates and or eliminating recurring discount for communities with high occupancies targeting specific suite for incentives to accelerate lease up on select cases continuing with broader incentives. So it's depending on occupancy levels and competitors' rates.

Karen Sullivan: As occupancy continues to recover, we are determining property-specific pricing strategies, which include faster growing market rates and or eliminating recurring discounts for communities with high occupancies, targeting specific suites for incentives to accelerate lease up, or in select cases, continuing with broader incentives depending on occupancy levels and competitors' rates. Turning to slide five, we reduced our staffing agency cost by 60% in Q2 2024 compared to Q2 2023 through focused recruitment and retention activities. This agency's spending continues to be below pre-pandemic levels.

Speaker Change: As occupancy continues to recover, we are determining property-specific pricing strategies, which include faster-growing market rates and are eliminating recurring discounts.

Speaker Change: for Communities with High Occupancy, targeting specific suites for incentives to accelerate lease up, or in select cases, continuing with broader incentives depending on occupancy levels and competitors' rates.

Karen Sullivan: Turning to slide five, we reduced our staffing agency cost by 60% in Q2 2024 compared to Q2 2023 for a focus for improvement and retention activities. This agency spend continues to be below pre-pandemic levels.

Speaker Change: Turning to slide 5, we reduced our staffing agency cost by 60% in Q2 2024 compared to Q2 2023 through focused recruitment and retention activities. This agency spend continues to be below pre-pandemic levels.

Karen Sullivan: We've also fully redesigned our resident manager on wording program, which is designed to reduce turnover and improve performance of these key leaders in our residences.

Jeffrey Brown: We have also fully redesigned our resident manager onboarding program, which is designed to reduce turnover and improve performance of these key leaders in our residents. Although always a difficult decision to close the property, I'm pleased to say that we have found alternative accommodation for all 186 residents at Chartwell Heritage Glen, and we expect to have all residents relocated by mid-August. Finally, the operations team has been busy integrating the five new homes that we recently purchased in Cherbourg, Terrebonne, Saint-Jerome, Saint-Jean-sur-Richelieu, and the Oudouais region in Quebec.

Speaker Change: We have also fully redesigned our resident manager onboarding program, which is designed to reduce turnover and improve performance of these key leaders in our residences.

Karen Sullivan: Although always a difficult decision to close the property, I'm pleased to say that we have found alternative accommodation for all 186 residents at Charles Heritage. And we expect to have all residents located by mid August.

Speaker Change: Although always a difficult decision to close the property, I'm pleased to say that we have found alternative accommodation for all 186 residents at Chartwell Heritage Glen, and we expect to have all residents relocated by mid-August.

Karen Sullivan: Finally, the operations team has been busy integrating the five new homes that we recently purchased in Sherbrook, Terrebonne, Fancharon, Fancharon, Server Salud, and the food away region in Quebec. Being agile certainly mattered in this case, as we only have 30 days to close this transaction and transition these residences into our key systems. By all accounts, including feedback from the teams that these five at home. This transition was a success.

Speaker Change: Finally, the operations team has been busy integrating the five new homes that we recently purchased in Sherbrooke, Terrebonne, Saint-Jerome, Saint-Jean-sur-Richelieu, and La Hutaue region in Quebec.

Jeffrey Brown: Being agile certainly mattered in this case, as we only had 30 days to close this transaction and transition these residences into our key system. By all accounts, including feedback from the teams at these five homes, this transition was a success. We are also excited to be welcoming five more properties to the Chartwell family later this year with our new partners group. I will now turn it over to Jeff to take you through our financials. Thank you, Karen.

Speaker Change: Being agile certainly mattered in this case, as we only had 30 days to close this transaction and transition these residences into our key systems.

Speaker Change: By all accounts, including feedback from the teams at these five homes, this transition was a success. We are also excited to be welcoming five more properties to the Chartwell family later this year with our new partners, Group Champlain.

Karen Sullivan: We are all so excited to be welcoming five more properties to the Chartwell family later this year with our new partners, Group Champs-Lanes.

Jeffrey Brown: I will now turn it over to Jeff to take you through our financial results. Thank you, Karen. As shown on slide 6 in Q2 2024, net losses $2.8 million compared to a $7.5 million loss in Q2 2023, primarily due to higher resident revenue, lower GNA expenses, and higher net income from joint ventures.

Jeffrey Brown: Thank you, Karen. As shown on slide 6 in Q2 2024, net loss is $2.8 million compared to a $7.5 million loss in Q2 2023, primarily due to higher resident revenue, lower G&A expenses, and higher net income from joint ventures, partially offset by higher direct property operating expense, absence of income from discontinued operations due to the completed LTC transaction, deferred tax expense in Q2 2024 as compared to a deferred tax benefit in Q2 2023.

Speaker Change: I will now turn it over to Jeff to take you through our financial results.

Jeff: Thank you, Karen. As shown on slide 6 in Q2 2024, net loss is $2.8 million compared to a $7.5 million loss in Q2 2023, primarily due to higher resident revenue, lower G&A expenses, and higher net income from joint ventures.

Jeffrey Brown: Partially offset by higher direct property operating expense, absence of income from discontinued operations due to the completed health CC transactions, deferred tax expense in Q2 2024 as compared to a deferred tax benefit in Q2 2023, net loss on asset sales as compared to higher finance costs, and higher depreciation of property, plant, and equipment. FFO from continuing operations increased 72.6%, and total FFO increased 45.3% in Q2 2024 compared to Q2 2023 from strong operating results in our core property portfolio. FFO growth also benefited from 4.2 million of lower GNA expenses, primarily due to the FFO transition costs that were incurred in 2023, lower compensation costs as we continued to execute on our plan to achieve efficiency improvements, partially offset by higher unit-based compensation costs due to the increase in value of our trust units.

Speaker Change: partially offset by higher direct property operating expense, absence of income from discontinued operations due to the completed LTC transactions,

Jeff: Deferred tax expense in Q2 2024 as compared to a deferred tax benefit in Q2 2023. Net loss on asset sales as compared to net gain in Q2 2023. Higher finance costs and higher depreciation of property, plant and equipment.

Jeffrey Brown: Net loss on asset sales as compared to net gain in Q2 2023, higher finance costs, and higher depreciation of property, plants, and equipment. FFO from continuing operations increased 72.6%, and total FFO increased 45.3% in Q2 2024 compared to Q2 2023, due to strong operating results in our core property portfolio. FFL growth also benefited from $4.2 million of lower G&A expenses, primarily due to the CFO transition costs that were incurred in 2023, and lower compensation costs as we continue to execute on our plan to achieve efficiency improvements.

Jeff: FFO from continuing operations increased 72.6% and total FFO increased 45.3% in Q2 2024 compared to Q2 2023 from strong operating results in our core property portfolio.

Jeff: FFL growth also benefited from $4.2 million of lower G&A expenses.

Jeff: primarily due to the CFO transition costs that were incurred in 2023, lower compensation costs as we continue to execute on our plan to achieve efficiency improvements, partially offset by higher unit base compensation costs due to the increase in value of our trust units.

Unknown Executive: Partially offset by higher unit base compensation costs due to the increase in the value of our trust. In Q2 2024, our same property occupancy increased 660 basis points to 87.2% and our same property adjusted NOI increased by 10.4 million or 20.6%. Slide seven summarizes our same property operating results for each platform.

Jeffrey Brown: In Q2 2024, our same property occupancy increased 660 basis points to 87.2%, and our same property adjusted NOI increased by 10.4 million or 20.6%. Slide 7 summarizes our same property operating results for each platform. All of our platforms posted occupancy gains in Q2 2024 compared to Q2 2023, which positively impacted our results. Our Western Canada platform, same property adjusted NOI increased 1.9 million, or 11.4%. Our Ontario platform, same property adjusted NOI increased 6 million or 21.6%, and our Quebec platform, same property adjusted NOI increased 2.5 million or 43.3%.

Jeff: In Q2 2024, our same property occupancy increased 660 basis points to 87.2% and our same property adjusted NOI increased by 10.4 million or 20.6%.

Jeff: Slide 7 summarizes our same property operating results for each platform.

Unknown Executive: All of our platforms posted occupancy gains in Q2 2024 compared to Q2 2023, which positively impacted our results. Our Western Canada platform same property adjusted NOI increased 1.9 million, or 11.4%. Our Ontario platform, same property-adjusted NOI, increased 6 million, or 21.6 percent, and our next platform, same property-adjusted NOI, increased 2.5 million, or 43.3 percent. Early This Life 8.

Jeff: All of our platforms posted occupancy gains in Q2 2024 compared to Q2 2023, which positively impacted our results. Our Western Canada platform, Same Property Adjusted NOI, increased $1.9 million, or 11.4%.

Jeff: Our Ontario platform, Same Property Adjusted NOI, increased $6 million, or 21.6%, and our Quebec platform, Same Property Adjusted NOI, increased $2.5 million, or 43.3%.

Jeffrey Brown: Currently, this slide 8, at August 8, 2024, liquidity amounted to approximately $341.9 million, which included $41.9 million of cash and cash equivalent and $300 million of forwarding capacity on our credit facilities. For the remainder of 2024, we have 152.6 million of mortgage debaturing at the weighted average interest rate of 6.58%.

Jeffrey Brown: At August 8, 2024, liquidity amounted to approximately $341.9 million, which included $41.9 million of cash and cash equivalents and $300 million of forwarding capacity on our credit facility. For the remainder of 2024, we have $152.6 million of mortgage debt maturing at a weighted average interest rate of 6.58%. We expect to renew or refinance these loans during the year. On August 8, 2024, 10-year CMHC insured mortgage rates are estimated at approximately 4.1%, and five-year conventional mortgage financing is available at approximately 5.0%. Moving to slide 9.

Jeff: Earnings of Slide 8. At August 8, 2024, liquidity amounted to approximately $341.9 million, which included $41.9 million of cash and cash equivalents and $300 million of forwarding capacity on our credit facilities.

Jeff: For the remainder of 2024, we have $152.6 million of mortgage debt maturing at the weighted average interest rate of 6.58%.

Jeffrey Brown: We expect to renew or refinance these loans during the year. At August 8, 2024, 10-year CMEC-atured mortgage rates are estimated approximately 4.1%, and 5-year conventional mortgage financing is available at approximately 5.0%.

Jeff: We expect to renew or refinance these loans during the year. At August 8, 2024, 10-year CMHC insured mortgage rates are estimated at approximately 4.1%, and 5-year conventional mortgage financing is available at approximately 5.0%.

Jonathan Boulakia: With the continuing strong prospect traffic and leasing activity, we expect occupancy to continue to grow in 2024. We now forecast to achieve 88.7% same property occupancy by September of this year. We have 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 occupancies 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 for all results in the growth of our adjusted operating margins from the current levels. I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities.

Jeff: Moving to slide 9. With the continuing strong prospect traffic and leasing activity, we expect occupancy to continue to grow in 2024. We now forecast to achieve 88.7% same property occupancy by September of this year.

Jeff: We have been using targeted incentives in certain markets to support this rapid occupancy growth.

Jeffrey Brown: Has more residences achieved higher occupancy rates. We expect to gradually reduce the use of these incentives. We believe that improving occupancies combined with lower new supply come in a 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 from the current levels.

Jeff: As more residences achieve higher occupancy rates, we expect to gradually reduce the use of these incentives.

Jeff: 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. We expect these dynamics will result in the growth of our adjusted operating margins from the current levels.

Jonathan Boulakia: Turning to slide 10, over the past couple of months, we announced the acquisition of several newer, high-quality residences in the province of Quebec. On July 22, 2024, we closed on the acquisition of a portfolio of five modern residences totaling 1,428 suites in the Greater Montreal Area, Gatineau, and Sherbrooke for a purchase price of $297 million. We are working towards closing the acquisition of a 50% interest in a portfolio of another five beautiful residences, totaling 1,805 suites in Quebec City and Schwinnigan, and look forward to a successful relationship with our new partner on these assets.

Jonathan Boulakia: I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities. Thank you, Jeff. Turning to slide 10, over the past couple of months, we announced the acquisition of several newer high-quality residences in the province of Boulbeck. On July 22nd, 2024, we closed on the acquisition of a portfolio of five modern residences totaling 1,428 suites in the Greater Montreal area, Gatineau and Sherbrooke, for a purchase price of $297 million. We are working towards closing the acquisition of a 50% interest in a portfolio of another five beautiful residences totaling 1,805 suites in Boulbeck City and Sherbrook again, and look forward to a successful relationship with our new partner on these assets.

Bell: I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities.

Jonathan Boulakia: In addition, we acquired an 85% interest in three state-of-the-art residences, totaling a further 1,053 suites in Montreal and Quebec from our development partner, EMD Batching. On slide 11, you can see more pictures of these residences. All of these newer, high-quality assets are located in strong markets and are complementary to our existing portfolio, which allows for efficient management, lower incremental overhead costs, and smooth transitions into our management platform We acquired these high-quality assets at attractive prices, significantly below replacement prices. Occupancy at most of the acquired properties is at stabilized levels, averaging 95%, with three properties in lease-up supported by NOI guarantees as part of the structured acquisition.

Jonathan: Thank you, Jeff.

Jonathan: Turning to slide 10, over the past couple of months we announced the acquisition of several newer high-quality residences in the province of Quebec.

Jonathan: On July 22, 2024, we closed on the acquisition of a portfolio of five modern residences totaling 1,428 suites in the Greater Montreal Area, Gatineau, and Sherbrooke for a purchase price of $297 million.

Jonathan: We are working towards closing the acquisition of a 50% interest in a portfolio of another five beautiful residences, totaling 1,805 suites in Quebec City and Chewinigan, and look forward to a successful relationship with our new partner on these assets.

Jonathan Boulakia: Further, we required an 85% interest in three state-of-the-art residences totaling a further 1,053 suites in Montreal and Boulbeck, from our development partner, EMD Batchimo.

Jonathan: Further, we've acquired an 85% interest in three state-of-the-art residences totaling a further 1,053 suites in Montreal and Quebec from our development partner, EMD Bachimo.

Jonathan Boulakia: On slide 11, you can see more pictures of these residences. All of these newer high-quality assets are located in strong markets and are complementary to our existing portfolio, which allows for efficient management, lower incremental overhead costs, and smooth transitions into our management platform. We acquired these high-quality assets at a track of pricing significantly below replacement costs. Occupancy at most to be acquired at properties is at stabilized levels averaging 95 percent, with three properties and links out supported by NOI guarantees as part of the structured acquisitions. We expect higher market rate growth that will be assets than our same store portfolio over the medium term, which will generate strong investment returns.

Jonathan: On slide 11, you can see more pictures of these residences.

Jonathan: All of these newer, high-quality assets are located in strong markets and are complementary to our existing portfolio, which allows for efficient management, lower incremental overhead costs, and smooth transitions into our management platform.

Jonathan: We acquired these high-quality assets at attractive pricing, significantly below replacement costs.

Jonathan: Occupancy, at most of the acquired properties, is at stabilized levels averaging 95%, with three properties in lease-up supported by NOI guarantees as part of the structured acquisitions.

Vlad Volodarski: We expect higher market rate growth out of these assets than our same store portfolio over the medium term, which will generate strong investment returns. These acquisitions totaling over $750 million in share and over $1 billion of assets taken on under management represent Chartwell's strategic objective to grow in our markets with newer, quality assets. This is shaping out to be a record year of investments for Chartwell. We're not done with a number of exciting strategic acquisitions being evaluated and at various stages of negotiation.

Jonathan: We expect higher market rate growth out of these assets than our same store portfolio over the medium term, which will generate strong investment returns.

Jonathan Boulakia: These acquisitions totaling over $750 million at share and over $1 billion of assets taken on under management represent Chartwell's strategic objective to grow in our markets with newer quality assets. This is shaping out to be a record year of investments for Chartwell.

Speaker Change: These acquisitions, totaling over $750 million at share and over $1 billion of assets taken on under management, represent Chartwell's strategic objective to grow in our markets with newer quality assets.

Jonathan Boulakia: We're not done with a number of exciting strategic acquisitions being evaluated and at various stages of negotiation. We want to take this moment to express our gratitude to our investors and our investment banking syndicate members for their strong support in our recent equity offering of $345 million to finance these important transactions. We appreciate the strong investor demand for this offering and are glad to see our investors being rewarded with a meaningful appreciation in our trust year that trading prices post-transaction.

Speaker Change: This is shaping out to be a record year of investments for Chartwell. We're not done with a number of exciting strategic acquisitions being evaluated and at various stages of negotiation.

Vlad Volodarski: We want to take this moment to express our gratitude to our investors and our investment banking syndicate members for their strong support in our recent equity offering of $345 million to finance these important transactions. We appreciate the strong investor demand for this offering and are glad to see our investors being rewarded with a meaningful appreciation in our trust unit trading prices post-transaction. I'll turn the call back to Vlad to wrap up.

Speaker Change: We want to take this moment to express our gratitude to our investors and our investment banking syndicate members for their strong support in our recent equity offering of $345 million to finance these important transactions.

Vlad Volodarski: We appreciate the strong investor demand for this offering and are glad to see our investors being rewarded with the meaningful appreciation in our trust unit trading prices post-transaction. I'll turn the call back to Vlad to wrap up.

Jonathan Boulakia: I'll turn the call back to thank you, Jonathan. Moving to slide 12, we believe we are now at the front end of what is going to be a multi-year of growth in retirement living in Canada. The man for our services should continue to grow for decades, driven by the senior population growth and lack of long-term care accommodation. With persistently high cost, new construction has been virtually non-existent, which combines with the obsolescence of some of the existing inventory, creating shortages of new suites. These dynamics are likely to result in growing occupancies, market rates, and profitability of the existing operators.

Vlad Volodarski: Thank you, Jonathan. Moving on to slide 12. We believe we are now at the front end of what is going to be a multi-year period of growth and retirement living in Canada. Demand for our services should continue to grow for decades, driven by the senior population growth and lack of long-term care accommodation. With persistently high costs, new construction has been virtually non-existent, which, combined with the obsolescence of some of the existing inventory, is creating shortages of new suites.

Vlad Volodarski: Thank you, Jonathan. Moving to slide 12, we believe we are now at the front end of what is going to be a multi-year of growth and retirement living in Canada.

Vlad Volodarski: Demand for our services should continue to grow for decades, driven by the senior population growth and lack of long-term care accommodation.

Speaker Change: With persistently high costs, new construction has been virtually non-existent, which combined with the obsolescence of some of the existing inventory is creating shortages of new suites.

Vlad Volodarski: These dynamics are likely to result in growing occupancies, market rates, and profitability of the existing operators. As one of the largest participants in the senior living sector, Chartwell stands to benefit from them. Shown on slide 13, we're not just waiting for the rising tides to lift all boats.

Chartwell representative: These dynamics are likely to result in growing occupancies, market rates, and profitability of the existing operators. As one of the largest participants in the senior living sector, Chartwell stands to benefit from them.

Jonathan Boulakia: As one of the largest participants in the senior living sector, Charles stands to benefit from them. As shown on slide 13, we are not just waiting for the rising tides to lift all boats. In addition to delivering on our 2025 aspirational targets in residence satisfaction and gluing engagement in occupancy, we are focused on transitioning our management operations into an agile and scalable management platform. This will be achieved by further empowering the teams in our residences to take charge of developing and executing property-specific strategies and adopting the changing market conditions while delivering exceptional resident experiences. Such empowerment will be aided by enhanced training, coaching, and targeted support delivered by our corporate teams, as well as more robust performance-based monitoring centers.

Speaker Change: As shown on slide 13, we're not just waiting for the rising tides to lift all boats. In addition to delivering on our 2025 aspirational targets and resident satisfaction, employee engagement and occupancy.

Vlad Volodarski: In addition to delivering on our 2025 aspirational targets and residence satisfaction, employee engagement, and occupancy, we're focused on transitioning our management operations into an agile and scalable management platform. This will be achieved by further empowering the teams in our residences to take charge of developing and executing property-specific strategies and adopting changing market conditions while delivering exceptional resident experiences. Such empowerment will be aided by enhanced training, coaching, and targeted support delivered by our corporate teams, as well as more robust performance-based monetary incentives. We believe with such an agile and scalable platform, we will be better positioned to innovate, make decisions and take actions faster, generate management cost efficiencies, and ultimately outperform.

Vlad Volodarski: We are focused on transitioning our management operations into an agile and scalable management platform.

Speaker Change: This will be achieved by further empowering the teams in our residences to take charge of developing and executing property-specific strategies and adopting to changing market conditions while delivering exceptional resident experiences.

Speaker Change: Such empowerment will be aided by enhanced training, coaching, and targeted support delivered by our corporate teams, as well as more robust performance-based monetary incentives.

Jonathan Boulakia: We believe with such agile and scalable platform, we will be better positioned to innovate, make decisions, and take actions faster, generate management cost deficiencies, and ultimately outperform. We will also continue to focus on optimizing our property portfolio to make it more efficient and resilient to future competitions. We are doing this through acquiring newer properties and strong locations, which generate higher rental rates and operating margin growth, and require lower capital investments. We will also continue our program of discipline, dispositions of older, less efficient properties, which often require a disproportionate amount of management time and higher capital investments.

Vlad Volodarski: We believe with such agile and scalable platform we will be better positioned to innovate, make decisions and take actions faster, generate management cost efficiencies, and ultimately outperform.

Vlad Volodarski: We will also continue to focus on optimizing our property portfolio to make it more efficient and resilient to future competition. We're doing this through acquiring newer properties in strong locations, which generate higher rental rate and operating margin growth, and require lower capital investment. We will also continue our program of disciplined dispositions of older, less efficient properties, which often require a disproportionate amount of management time and higher capital investment.

Vlad Volodarski: We will also continue to focus on optimizing our property portfolio to make it more efficient and resilient to future competitions. We're doing this through acquiring new work properties and strong locations which generates higher rentals rate and operating margins growth and require lower capital investments.

Speaker Change: We will also continue our program of disciplined dispositions of older, less efficient properties, which often require a disproportionate amount of management time and higher capital investments.

Jonathan Boulakia: And we continue focusing on asset management, repositioning properties to be more successful in their markets. These repositioning projects so far have taken many forms, from changing service offering to cater to specific ethnic communities, to invest in capital, to upscale some of our residences, to offering additional care services, including government-funded care, or alternatively moving towards more independent living options. Older than by local market demand and positioning of each residence in their respective markets. These are exciting times to be in the retirement living sector in Canada, and even more so to be part of the dynamic, customer-focused, and evolving charcoal.

Vlad Volodarski: And we continue focusing on asset management, repositioning properties to be more successful in their markets. These repositioning projects so far have taken many forms, from changing service offerings to cater to specific ethnic communities, to investing capital to upscale some of our residences, to offering additional care services, including government-funded care, or alternatively moving towards more independent living options, all driven by local market demand and the positioning of each residence in its respective market.

Speaker Change: And we continue focusing on asset management, repositioning properties to be more successful in their markets.

Speaker Change: These repositioning projects so far have taken many forms, from changing service offerings to cater to specific ethnic communities, to investing capital to upscale some of our residences,

Speaker Change: to offering additional care services, including government-funded care, or alternatively, moving towards more independent living options.

Speaker Change: All driven by local market demand and positioning of each residence in their respective markets.

Vlad Volodarski: These are exciting times to be in the retirement living sector in Canada and even more so to be part of the dynamic, customer-focused, and evolving Chartwell. I will now close our prepared remarks with a story from one of our residences, as pictured on slide 14.

Speaker Change: These are exciting times to be in the retirement living sector in Canada and even more so to be the part of the dynamic customer focused and evolving chart well.

Jonathan Boulakia: I will now close our prepared remarks with a story from one of our residences as featured on slide 14. Recently, we celebrated Canadian Multicultural Day across our residences with Charles Gibson, hosting a particularly vibrant cultural appreciation day. The events featured captivating performances, traditional attire, and a diverse array of cuisine from around the world. Residents, staff, and local community members came together to dance, dine, and celebrate the many cultures that enrich their residence. Vita Gavia, general manager of Charles Gibson, along with her dedicated team, has been organizing similar events for several years, aiming to create an environment where everyone feels welcome and respected.

Speaker Change: I will now close our prepared remarks with a story from one of our residences as pictured on slide 14.

Vlad Volodarski: Recently, we celebrated Canadian Multicultural Day across our residences, with Chartwell Gibson hosting a particularly vibrant Cultural Appreciation Day. The event featured captivating performances, traditional attire, and a diverse array of cuisines from around the world. Residents, staff, and local community members came together to dance, dine, and celebrate the many cultures that enrich their residence. Vida Gavia, General Manager of Chartwell-Gibson, along with her dedicated team, has been organizing similar events for several years, aiming to create an environment where everyone feels welcome and respected.

Speaker Change: Recently, we celebrated Canadian Multicultural Day across our residences with Charwell Gibson hosting a particularly vibrant Cultural Appreciation Day.

Speaker Change: The event featured captivating performances, traditional attire, and a diverse array of cuisine from around the world. Residents, staff, and local community members came together to dance, dine, and celebrate the many cultures that enrich their residence.

Speaker Change: Vida Gavia, General Manager of Chartwell-Gibson, along with her dedicated team, has been organizing similar events for several years, aiming to create an environment where everyone feels welcome and respected.

Jonathan Boulakia: As Vita observed, understanding our differences and similarities helps unite us and educate us. and sentiment that resonates deeply within our communities. By organizing and participating in these events, we reinforce our ongoing commitment to diversity and inclusion values central to charitable culture and success. These efforts help foster a sense of belonging and connection among our residents, allowing them to engage with diverse cultures and perspectives. This enriches their daily experiences and strengthens the overall well-being, supporting our mission of making people's lives better.

Vlad Volodarski: As Vida observed, understanding our differences and similarities helps unite us and educate us, a sentiment that resonates deeply within our community. By organizing and participating in these events, we reinforce our ongoing commitment to diversity and inclusion values central to Chartwell's culture and success. These efforts help foster a sense of belonging and connection among our residents, allowing them to engage with diverse cultures and perspectives. This enriches their daily experiences and strengthens their overall well-being, supporting our mission of making people's lives better. Thank you for your attention this morning; we would be pleased to answer your questions.

Speaker Change: As Vida observed, understanding our differences and similarities helps unite us and educate us.

Speaker Change: and sentiment that resonates deeply within our communities.

Speaker Change: By organizing and participating in these events, we reinforce our ongoing commitment to diversity and inclusion values central to Chartwell's culture and success.

Speaker Change: These efforts help foster a sense of belonging and connection among our residents, allowing them to engage with diverse cultures and perspectives. This enriches their daily experiences and strengthens the overall well-being, supporting our mission of making people's lives better.

Unknown Executive: Thank you for your attention this morning.

Unknown Executive: We would be pleased to answer your questions. Thank you.

Speaker Change: Thank you for your attention this morning. We would be pleased to answer your questions.

Unknown Executive: We will now take questions from the telephone lines. If you have a question, please press star one on your devices. Keep that.

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 participants register their questions. Thank you for your patience. We will take the first question from Jonathan Kelcher, TD Collins. Please go ahead.

Speaker Change: Thank you.

Speaker Change: 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 participants register for questions.

Unknown Executive: You may can solve your question at any time by pressing stop two. Please press star one at this time if you have a question. It will be a brief pause; why participants register for questions. Thank you for your patience.

Jonathan Kelcher: We will take the first question from Jonathan Kelcher, TD Cohen.

Speaker Change: Thank you for your patience.

Jonathan Kelcher: Please come in. Thanks. Good morning. First question, just digging into the same property and alike, wrote by Regent a little bit. Quebec really stands out at 43%. Maybe give a little bit of color on what wrote that versus the other two regions.

Speaker Change: We will take the first question from Jonathan Kelcher, T.D. Cohen. Please go ahead.

Jonathan Kelcher: Thanks. Good morning.

Unknown Executive: Um, first question, just digging into the same property and a lot of growth by region a little bit. Quebec really stands out at 43%. Maybe give a little bit of color on what drove that versus the other two regions.

Jonathan Kelscher: Thanks, good morning. First question, just digging into the same property, NOI growth by region a little bit. Quebec really stands out at 43%.

Jonathan Kelscher: You maybe give a little bit of color on what drove that versus the other two regions.

Jonathan Boulakia: Good morning, Jonathan. We did see strong growth in all platforms. This quarter, one of the things that did lower the growth in the western panel platform was we did have a one-time staffing cost reversal in Q2 of 2023 at 1.7 million that would have impacted that year-over-year comparison. In Quebec in particular, they have very strong occupancy growth, and I think they've done a very good job of managing labor costs and reducing the reliance of agency costs.

Unknown Executive: Sure, good morning, Jonathan. Yeah, and we did see strong growth in all platforms this quarter. One of the things that did lower the growth in the Western Canada platform was we did have a one-time staffing cost reversal in Q2 of 2023 for 1.7 million that would have impacted that year over year comparison.

Speaker Change: Good morning, Jonathan. We did see strong growth in all platforms this quarter. One of the things that did lower the growth in the Western Canada platform was we did have a

Speaker Change: one-time staffing cost reversal in Q2 of 2023 at $1.7 million that would have impacted that year-over-year comparison.

Unknown Executive: In Quebec, in particular, they have very strong occupancy growth, and I think they've done a very good job of managing labor costs and reducing the reliance of agency costs. Where Quebec in particular has been, it will continue to be a problematic region, but they've done an amazing job reducing the reliance of these agency costs, and that has helped with this outsized NOI growth.

Speaker Change: In Quebec in particular, they have very strong occupancy growth, and I think they've done a very good job of managing labor costs and reducing the reliance of agency costs. Those were Quebec.

Jonathan Boulakia: Those were Quebec, in particular, has been. It will continue to be a problematic region, but they've done an amazing job reducing the reliance of these agency costs, and the labor costs helped with this outside the NOI growth.

Speaker Change: In particular, it will continue to be a problematic region, but they've done an amazing job reducing the reliance of these agency costs and labor costs, helped with this outsized NOI growth.

Unknown Executive: Okay, that's, that's helpful. And then, just on your margin overall, and I don't think, I don't think I heard it, but I think 38% is still sort of your target for 2024 on the same property base. But going forward, how should we think about that as occupancy gets closer to 95%?

Jonathan Boulakia: Okay, that's helpful. And then as just on your margin overall, I think I don't think I heard it, but I think 38% is still sort of your target for 2024 on the same property basis. But going forward, how should we think about that as occupancy gets closer to 95%? Sure, yeah, do we believe that we still will be able to hit that 38% over 37.9% in the quarter. And as you get into future years, we expect that to continue to grow as occupancy grows above current levels. And we also believe that there will be potential as the properties achieve higher occupancy rates.

Speaker Change: Okay, that's helpful. And then as just on your margin overall, and I don't think I heard it, but I think 38% is still sort of your target for 2024 on the same property basis.

Speaker Change: But going forward, how should we think about that as occupancy gets closer to 95%?

Unknown Executive: Sure, yeah, we do believe that we will still be able to hit that 38%. We delivered 37.9% in the quarter. And as we get into future years, we expect that to continue to grow as occupancy grows. I bought some pear luck.

Speaker Change: Sure, yeah, we do believe that we still will be able to hit that 38%, yeah, we delivered 37.9% in the quarter and as we get into future years we expect that continue to grow as occupancy grows.

Unknown Executive: And we also believe that there will be potential, as the properties achieve higher occupancy rates, there will be potential to increase market rates at a higher pace because the supply and demand dynamics are such, given low construction starts and continued growth in demand, that would allow all existing operators to do that, and so the margins should be positively impacted by that.

Speaker Change: about current levels.

Speaker Change: And we also believe that there will be potential as the properties achieve higher occupancy rates, there will be potential to increase market rates at a higher pace.

Jonathan Boulakia: They will be potential to increase market rates at a higher pace because the supply and demand dynamics are such, giving all construction starts and continuing growth and demand that would allow all existing operators to do that, and so the margins should be positively impacted by that. Okay, so would it be unreasonable to think low 40s if you're close to 95%? Yeah, that's reasonable.

Speaker Change: because the supply and demand dynamics are such given low construction starts and continued growth in demand that would allow all existing operators to do that and so the margins should be positively impacted by that.

Unknown Executive: Okay, so would it be unreasonable to think low 40s if you're close to 95%?

Speaker Change: Okay, so would it be unreasonable to think low 40s?

Unknown Executive: Yep, that's reasonable.

Speaker Change: if you're close to 95%.

Unknown Executive: Okay, thanks. I'll turn it back on.

Jonathan Kelcher: Okay, thanks. I'll turn it back.

Speaker Change: Yeah, that's reasonable.

Operator: Thank you. The next question is from Fred Blondo from Green Street. Please go ahead. Thank you and good night.

Unknown Executive: Thank you.

Speaker Change: Okay, thanks. I'll turn it back.

Fred Blando: The next question is from Fred Blando, from Green Street. Please go ahead. Thank you and good morning. Three questions from me. First, maybe for Jeff, in terms of the balance sheet, I was wondering where you see the bet. They did their ratio hitting at the end of 2024. It probably will move up a bit from current levels, who they did have the equity raise that brought it down ahead of closing on some of the acquisitions plan for the year. So we closed it in half times at the end of Q2, but that will increase a bit as we get to the end of the year.

Speaker Change: Thank you. The next question is from Fred Blondo from Green Street. Please go ahead.

Fred Blondo: Thank you and good morning. I have three questions. First, maybe for Jeff, in terms of the balance sheet, I was wondering where you see the debt-to-debt ratio hitting at the end of 2024.

Fred Blondo: Thank you and good morning. Three questions for me. First, maybe for Jeff, in terms of the balance sheet, I was wondering where do you see the debt-to-debt ratio hitting at the end of 2024?

Jeffrey Brown: It probably will move up a bit from current levels because we did have the equity raise that brought it down ahead of closing on some of the acquisitions planned for the year. So we closed at eight and a half times EPS at the end of Q2, but that will increase a bit as we get to the end of the year.

Speaker Change: It probably will move up a bit from current levels because we did have the equity raise that brought it down ahead of closing on some of the acquisitions planned for the year. So we closed at eight and a half.

Jeff: times at the end of Q2, but that will increase a bit as we get to the end of the year.

Jonathan Boulakia: And also, depending on the level of acquisition activity, as Jonathan pointed out, we're looking at several interesting opportunities. They're one-offs, and we feel that we have balance sheet room to do these acquisitions without any external financing at this point in time, and so if we're successful in negotiating and getting those deals, they will also move that EBITDA a little higher for a short period of time. This will obviously be offset by earnings growth, and our long-term goal is to run the company at about seven and a half times debt to EBITDA, and we are continuing to move down this path, and this will be achieved through primarily growth in our EBITDA. Mm-hmm.

Jeffrey Brown: And they're also depending on the level of acquisition activity. As Jonathan pointed out, we're looking at several interesting opportunities. They're one off, and we feel that we have balance sheet room to do these acquisitions without any external financing at this point of time. And so if we're successful negotiating and getting those deals, they will also move that to the EBITDA a little higher for a short period of time. This will obviously be offset by the earnings growth, and our role is to run the company at about seven and a half times that to EBITDA. And we are continuing to move down this path, and this will be achieved through primarily growth in our EBITDA.

Jeff: And also, depending on the level of acquisition activity, as Jonathan pointed out, we're looking at several interesting opportunities that are one-off, and we feel that we have balance sheets room to do these acquisitions without any external financing.

Speaker Change: At this point in time, and so if we're successful negotiating and getting those deals, they will also move that to EBITDA a little higher for a short period of time. This will obviously be offset by the earnings growth and our...

Speaker Change: The long-term goal is to run the company at about seven and a half times debt to EBITDA and we are continuing moving down this path and this will be achieved through primarily growth in our EBITDA.

Jonathan Boulakia: I was looking at one of your most recent acquisitions at Recari in Quebec City. I was wondering, I mean, I understand it's relatively recent, but how's the asset performing so far? And whether you're seeing supply in Quebec City becoming a risk or not really since demand is so strong?

Fred Blando: So fair enough.

Fred Blando: Thank you.

Fred Blando: And then just looking at one of the most recent acquisitions that occurred in Quebec City, I was wondering, now in this time, it's relatively recent, but I was asked for performing so far. And Mother, you're seeing a supply in Quebec City becoming at risk or not really since the matter is so strong. Trek array is performing extremely well. It's high 90s occupancy. And in terms of the supply in Quebec City, there is just like in the rest of the country, there's not a lot being built. So we do not see Quebec City supply being a riskier situation than anywhere else in the country.

Speaker Change: Oh, fair enough. Thank you.

Speaker Change: Just looking at one of your most recent acquisitions at Recari in Quebec City, I was wondering, I mean, I understand it's relatively recent, but how's the asset performing so far? And whether you're seeing...

Speaker Change: Supply in Quebec City becoming a risk or not really since demand is so strong?

Jonathan Boulakia: Trek Array is performing extremely well. It's a high 90s occupancy and In terms of the supply in Quebec City, there is just like in the rest of the country, there's not a lot being built, so we do not see Quebec City, supply being riskier situation than anywhere else in the country.

Speaker Change: Tracker A is performing extremely well. It's a high 90s occupancy and

Speaker Change: In terms of the supply in Quebec City, there is, just like in the rest of the country, there's not a lot being built, so we do not see Quebec City...

Speaker Change: supply being riskier situation than anywhere else in the country. Okay, thank you. And lastly, on the stencil agreement, which that's known the three property, maybe you could share your views on this for, I guess, for the second half of the year since coming due in January .

Fred Blando: Okay.

Jonathan Boulakia: Okay, thank you. And lastly, on the stencil agreement, which that's known the three properties, maybe you could share your views on this for, I guess, for the second half of the year since coming due in January.

Fred Blando: Thank you.

Fred Blando: And lastly, on the stencil agreement, which that's known the three properties. Maybe you could share your views on this, or I guess for the second half of the year since coming to January. Sure. So these properties are attractive properties to chart well. We currently manage them, and they're performing well. As part of these acquisitions, we did buy three properties from EMD-Badamo in the year. And so, as part of these acquisitions, Badamo agreed to stand down from any of its put rights on the balance of any of its properties for the balance of the year. And so everything would refer back on January 1, 2025.

Jonathan Boulakia: Sure, these properties are attractive properties to Chartwell. We currently manage them, and they're performing well. As part of these acquisitions, we did buy three properties from EMD Batamo this year, and so as part of these acquisitions, Batamo agreed to stand down from any of its put rights on the balance of any of its properties for the balance of the year. And so everything would revert back on January 1st, 2025.

Speaker Change: Sure, so these properties are attractive properties to Chartwell.

Speaker Change: Currently manage them and they're performing well as part of these acquisitions we did buy three properties from EMD Batamo in the year and so as part of these acquisitions Batamo agreed

Speaker Change: to stand down from any of its put rights on the balance of any of its properties for the balance of the year.

Jonathan Boulakia: But again, I would emphasize that these are all great properties that we want to bring into our portfolio. This was just a question of timing and part of the overall transactions that we had with BATMAC.

Speaker Change: And so everything would revert back on January 1st, 2025. But again, I would emphasize that these are all great properties that we want to bring into our portfolio. This was just a question of timing and part of the overall transactions that we had with Patamon.

Fred Blando: But again, I would emphasize that these are all the great properties that we want to bring into our portfolio. We just, uh... It was just a question of timing and part of the overall transactions that we had with Batman.

Jonathan Boulakia: Fair enough. Thank you. I'll leave it here.

Fred Blando: Thank you. I'll leave it here.

Operator: Thank you. The next question is from Lorne Kalmar from Desjardins. Please go ahead.

Lorne Kalmar: Thank you. Next question is from Lorne Kalmar from Desavais. Please go ahead. Thanks. Good morning.

Speaker Change: Fair enough. Thank you. I'll leave it here.

Speaker Change: Thank you. Next question is from Lorne Kalmar from Desjardins. Please go ahead.

Lorne Kalmar: Thanks, good morning. Maybe just following on from the Batamo line of questioning, with the three properties stabilized, and presumably you'll take those in in the not too distant future. And I guess I'll just be just the one left in the pipeline. Is there an expectation for that to sort of be the end of the relationship with Batamo? Or do you guys expect them to initiate additional projects that we'll then be able to take on?

Lorne Kalmar: Maybe just following on the bat and moonlight, questioning with the three properties stabilized. Presumably, I'll take those in the not too distant future. And I guess I'll just be just the one left in the pipeline. There are expectations for that to sort of be the end of the relationship with Batman, or do you guys expect them to initiate additional projects because we'll be able to take in. We don't expect that to be the end of our relationship with Batman. We have a very strong and collaborative relationship with them, and we have a number of different projects that we are in discussions with them on.

Long Calma: Thanks, good morning. Maybe just following on the Batamo line of questioning with

Speaker Change: The three properties stabilize and presumably I'll take those in in the not too distant future.

Speaker Change: And I guess I'll just be just the one left in the pipeline. Is there an expectation for that to sort of be the end of the relationship with Atomel, or do you guys expect them to initiate additional projects that then we'll be able to take in?

Jonathan Boulakia: We don't expect that to be the end of our relationship with Vatomo. We have a very strong and collaborative relationship with them, and we have a number of different projects that we are in discussions with them about. So we would expect the pipeline to continue.

Jonathan Boulakia: Are those projects, would they still be in pre-development? Or would they be ones that they have now, and they're just not part of this pipeline?

Speaker Change: We don't expect that to be the end of our relationship with VATIMO. We have a very strong and collaborative relationship with them, and we have a number of different relationships.

Lorne Kalmar: So we would expect the pipeline to continue. Are those projects the baby still pre-development or would they be one there they have now they're just not part of this pipeline? There are pre-development projects that we are talking about, and redevelopment projects.

Speaker Change: projects that we are in discussions with them on. So we would expect the pipeline to continue.

Speaker Change: Are those projects, would they be still pre-development, or would they be ones they have now and they're just not part of this pipeline?

Jonathan Boulakia: There are pre-development projects that we are talking about, and there are redevelopment projects.

Speaker Change: There are pre-development projects that we are talking about and redevelopment projects.

Jonathan Boulakia: Okay, perfect, thank you. And then maybe moving off of the acquisition side of things, you've done a couple of one-off dispositions. Could you maybe give us an idea of the quantum of dispositions you expect to do over the course of the year and into 2025?

Lorne Kalmar: Okay. So thank you.

Lorne Kalmar: And then maybe move it off of the acquisition side of things. You've done a couple of one-off distributions. Could you maybe give us an idea of the quantum of disposition you expect could you move about for the year into 2025? We continue to work to evaluate all our properties, and there's certainly going to be some, but we are not prepared at this point to give you the quantum of it all, dependent on the timing of the disposition. We want to make sure that we generate value that is appropriate to us. We are selling these properties, so we continue going through the process of evaluation of our portfolio and determining what will be the appropriate time to sell properties that we decided to sell.

Speaker Change: Okay, perfect. Thank you. And then maybe moving off of the acquisition side of things, you've done a couple of one-off dispositions. Could you maybe give us an idea of the quantum of dispositions you expect to do over the course of the year and into 2025?

Jonathan Boulakia: We continue to work to evaluate all our properties, and there's certainly going to be some, but we are not prepared at this point to give you the quantum of this. Dependent on the timing of the disposition, we want to make sure that we generate value that is appropriate to us when we're selling these properties, so we continue going through the process of evaluating our portfolio and determining what would be the appropriate time to sell properties that we have decided to sell. But you should expect us to continue to sell non-core assets in 2025.

Speaker Change: We continue to work to evaluate all our properties and there's certainly going to be some, but we are not prepared at this point to give you the quantum of this, all dependent on the timing of the disposition. We want to make sure that we generate value that is appropriate to us.

Speaker Change: We're selling these properties, so we continue going through the process of evaluation our portfolio and determining what would be the appropriate time to sell properties that we decided to sell. But you should expect us to continue to dispose non-core assets in 2025.

Lorne Kalmar: But you should expect us to continue to dispose of non-core assets in 2025. Could you maybe give us an idea of how big of a bucket is non-core asset pool would be? Well, it depends what you use as a measurement in terms of the value to overall company. It's not going to be material. It may be quite a few sweets, but in terms of value, these are, as we said, non-core properties older; their valuations are not as high as on the rest of our portfolio.

Jonathan Boulakia: Could you maybe give us an idea then of how big of a bucket this non-core asset pool would be?

Speaker Change: Could you maybe give us an idea then of how big of a bucket this non-core asset pool would be?

Jonathan Boulakia: Well, it depends what you use as the measurement. In terms of the value to overall company, it's not going to be material. It may be quite a few suites, but in terms of value, these are, as we said, non-core properties, older, their valuations are not as high as on the rest of our portfolio.

Speaker Change: Well, it depends what you use as the measurement in terms of the value to overall company. It's not going to be material. It may be quite a few suites, but in terms of value, these are, as we said, non-core properties, older, the valuations are not as high as on the rest of our portfolio.

Lorne Kalmar: Okay, fair enough.

Unknown Executive: Okay, fair enough. And then maybe just the last one.

Lorne Kalmar: And then maybe just last one. We've obviously had lines around slow down in the housing market, and I know, you know, obviously retirement is the needs-based business. I just wonder, do you think? Because the slow down has been so material and that you know it's creating some pent up demand that could continue to drive even higher occupancy growth as it's going to start to heat up or not so much. I think we're seeing pretty strong demand right now and the housing market slow down. Remember, we talk about this slow down from the record levels of sales and pricing, and so it's not really slow in any kind of historical comparison, just slow compared to the peaks that the market was at.

Speaker Change: Okay, fair enough. And then maybe just last one. We've obviously seen the headlines around slowdown in the housing market, and I know, you know, obviously retirement is a needs-based business, but I'm just wondering, do you think

Unknown Executive: We've obviously seen the headlines around slowdown in the housing market. And I know, you know, obviously, retirement is a needs based business. I was just wondering, do you think that because the slowdown has been so material that, you know, it's creating some pent up demand that could continue to drive even higher occupancy growth as things start to heat up or not so much?

Speaker Change: Because the slowdown has been so material, it's creating some pent-up demand that could continue to drive even higher occupancy growth as things start to heat up, or not so much.

Unknown Executive: I think we're seeing pretty strong demand right now, and the housing market slowdown, remember we talked about this, this slowdown from the record levels of sales and pricing. And so it's not really slow in any kind of historical comparison, just slow compared to the peaks that the market was at. And so we do not, at this time, see any kind of.., pressure from the slowdown on the demand. And remember, our business also predominantly needs driven people come to us because they need some sort of assistance or foresee that need. And yeah, maybe inability to sell their house may delay their decision, but it's not going to be a long delay. So from that perspective, we're not seeing much pressure at this time.

Speaker Change: I think we're seeing pretty strong demand right now and the housing market slowdown, remember we talked about this, this slowdown from the record levels of sales and pricing and so it's not really slow in any kind of historical comparison, just slow compared to the peaks that the market was at.

Lorne Kalmar: And so we do not at this time see any kind of. Pressure from this low down on the demand, and remember our business also predominantly driven people come to us because they need some sort of assistance or foresee that need. And yeah, maybe an ability to sell their house may delay their decision, but it's not going to be a long delay. So from that perspective, we're not seeing much pressure at this time.

Speaker Change: And so, we do not, at this time, see any kind of...

Speaker Change: pressure from the slowdown on the demand. And remember, our business also predominantly needs driven people come to us because they need some sort of assistance or foresee that need. And yeah, maybe inability to sell their house may delay their decision, but it's not going to be a long delay.

Unknown Executive: Unfortunately, once again, please continue to stand by. We thank you for your patience.

Unknown Executive: Okay, perfect. Thank you very much. That's all for me.

Lorne Kalmar: Okay, perfect. Thank you very much.

Speaker Change: So from that perspective, we're not seeing much pressure at this time.

Himanshu Gupta: Thank you. Next question is from Himanshu. Gupta from Scotia Bank. Please go ahead. Thank you and good morning. So let's just start with the GNA for entertainment law in Q2. Is this the new one late? Yeah, this is a good run rate for us. We didn't have any efficiency-related seconds costs this quarter, but do expect those to come in future quarters this year as we move to exit the well tower of JV. So that would increase above the current one rate when this does occur.

Operator: Thank you. The next question is from Himanshu Gupta from Scotiabank. Please go ahead.

Speaker Change: Okay, perfect. Thank you very much. That's all for me.

Speaker Change: Thank you. Next question is from Himanshu Gupta from Scotiabank. Please go ahead.

Himanshu Gupta: Thank you and good morning. So, let's just start with the DNA containment lower in Q2. Is this the new run rate?

Speaker Change: Thank you and good morning.

Imanshu Gupta: So, let's just start with GNA, containment lower in Q2, is this the new run rate?

Unknown Executive: Good morning, Himanshu. Yeah, this is a good run rate for us. We didn't have any Efficiency-related severance costs this quarter but do expect those to come in future quarters this year as we move to exit the well tower JV. So that would increase above the current run rate when those do occur. Okay.

Speaker Change: Good morning Himanshu. This is a good run rate for us. We didn't have any

Unknown Executive: This conference is being recorded. All participants, please stand by. Your meeting is ready to begin.

Speaker Change: efficiency related severance costs this quarter but do expect those to come in future quarters this year as we move to exit the well tower of JV so that would increase above the current run rate when those do occur.

Vlad Volodarski: Good morning, ladies and gentlemen and welcome to the Chartwell Retirement Residences Q2 2024, Financial Results Conference Council.

Himanshu Gupta: Okay. And does this incorporate any savings from like, you know, everything the ATC platform? Yes, all costs that related to LTC platform or transition to the new manager. It was actually the platform itself that was transitioned to the new manager. There were some incremental savings on the kind of back office staff perspective, but those costs are out of travel. Okay. And thanks for that. And then this QVAC acquisition, which should be closed, you know, Q3, that will not lead to any DNA increase as such. Is that nothing significant? Okay. Thank you.

Unknown Executive: Okay. And does this incorporate any savings from, you know, everything, the LTC platform?

Vlad Volodarski: I would now like to turn a meeting over to the CEO, Vlad Volodarski. Please go ahead, sir. Thank you, Zizel.

Speaker Change: Okay, and does this incorporate any savings from like, you know, everything, the LTC platform?

Vlad Volodarski: Good morning and thank you for joining us today. There is a slight presentation to accompany this conference call available on our website at www.charvel.com under the Investor Relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer, Jeffrey Brown, Chief Financial Officer, Jonathan Boulakia, Chief Investment Officer, and Chief Legal Officer. Before I begin, I direct you to the cautionary statements on slide 2 because during this call we will make statements containing formal looking information and non-gap and other financial measures.

Unknown Executive: Yes, all costs that are related to the LTC platform were transitioned to the new manager cost. It was actually the platform itself that was transitioned to the new manager. There were some incremental savings on the kind of back office staff perspective, but those costs are out of Chartwell.

Speaker Change: Yes, all costs that are related to LTC platform or transitions to the new management costs.

Speaker Change: it was actually the platform itself was transitioned.

Speaker Change: To the new manager, there were some incremental savings on the kind of back office staff perspective, but those costs are out of Chartwell's system.

Unknown Executive: Okay, and thanks for that. And then this QBAC acquisition, which would be closed, you know, in Q3, that will not lead to any DNA increase at all.

Vlad Volodarski: Our MDNA and other security filings contain information about the assumptions, risks, and uncertainties inherent in such forward-looking statements, and details of such non-gap and other financial measures. More specifically, I'd direct you to the Disclosures in our Q2 2024 MDNA under the headings, 2024 Outlooks, and risks, and uncertainties and forward-looking information for a discussion of risks and uncertainties. These documents can be found on our website or on the Cedar Bluffs website.

Speaker Change: Okay and no thanks for that and then this QBAC acquisition which would be closed you know Q3 that will not lead to any DNA increase as such.

Unknown Executive: Nothing significant. Okay, awesome, okay.

Unknown Executive: Okay, now let's talk about NOI margins. Same property NOI margin, good to see expansion in Q2. Like, what led to margin expansion in Q2? I mean, you were already seeing staffing, you know, agency staffing reductions and rental rate increases, but what happened in Q2?

Unknown Executive: Okay, awesome. Okay, thank you.

Himanshu Gupta: Okay. Now, let's talk about NOI margins, same property NOI margin, good to see expansion in Q2. Like what led to margin expansion in Q2? I mean, you were already seeing staffing, you know, agency staffing reductions and interlude increases, but what happened in Q2? Just that I can see growth, rent increases, and with control of other expenses. We also have been beneficiary of low utility costs all year. And that, that helped a bit for the margins as well. Okay. And what about incentives? Having incentives, whether worth using the market remarks, you know, quite a bit. Is it like the incentives for lowering Q2 versus Q1?

Speaker Change: Nothing significant.

Speaker Change: Okay, awesome. Okay, thank you. Okay, now let's talk about NOI margins. Same property NOI margin, good to see expansion in Q2. Like, what led to margin expansion in Q2? I mean, you were already seeing staffing, you know, agency staffing reductions and rental rate increases, but what happened in Q2?

Unknown Executive: Just that, occupancy growth, rent increases, and good control of other expenses. We also have been beneficiaries of lower utility costs all year, so that helped a bit for the margins as well.

Vlad Volodarski: Turning to slide 3. Our team delivered another quarter of strong operating financial results in Q2 2024, achieving year-over-year, same-property occupancy growth of 660 basis forms, which drove operating margin, expansion of 280 basis forms, same-property net operating income growth of 20.6%. And forms from operations increase of 45.3%. We expect this occupancy growth will momentum to continue and forecast September 2024, same-property occupancy of 88.7%. It is our conviction that to achieve long-term sustainable value creation in our business, we must focus on delivering exceptional services and quality care to our residents, which we believe will generate high resident satisfaction rates and resident referrals.

Speaker Change: Just that occupancy growth, rent increases, and good control of other expenses. We also have been beneficiary of lower utility costs all year. That helped a bit for the margins as well.

Unknown Executive: Okay, and what about incentives? I think incentives was a word used in your prepared remarks quite a bit. Is it like incentives were lower in Q2 versus Q1? Or do you think that is something in the future where incentives could be lower than what they are at current levels?

Speaker Change: Okay, and what about incentives? I think incentives was the word used in your prepared remarks, you know, quite a bit. Is it like the incentives...

Himanshu Gupta: Or do you think that is something in the future that incentives can be lower than what they are at complex? That's more applicable to the future. Once properties achieving occupancies in 90s, then we're pulling back discounts, and at that point of time, as I mentioned, we think that the ability to grow market rights, not the rights for existing residents, but market rights for new residents will be much better. Okay. And, you know, on the incentive, is it like focusing, like off water, how much kind of market, you know, a market or very properly specific across?

Speaker Change: were lower in Q2 versus Q1, or do you think that is something in the future where incentives can be lower than what they are at current levels?

Unknown Executive: That's more applicable to the future. Once property is achieving occupancies in the 90s, then we're pulling back discounts, and at that point of time, as I mentioned, we think that the ability to grow market rates, not the rates for existing residents, but market rates for new residents will be much better.

Speaker Change: That's more applicable to the future, once property is achieving occupancy in 90s, then we're pulling back discounts and at that point in time, as I mentioned, we think that the ability to grow market rates, not the rates for existing residents, but market rates for new residents will be much better.

Vlad Volodarski: This in turn will drive high occupancies and strong profitability. Such resident experiences can only be delivered by highly engaged employees, who are committed to our vision of making people's lives better. That is why I am grateful to the leaders in our residences for the great work they have done promoting a positive, inclusive, and rewarding work environment. Their success was evidenced this year by our employee engagement score reaching 57% highly engaged. Remember, in our survey, we only count tall box responses on a five-point scale, and the score comprises of the average responses to 25 core engagement states.

Unknown Executive: Okay. And, you know, on the incentives, is it like focusing on Oxford or some kind of market, you know, of markets, or very property specific across?

Speaker Change: Okay. And, you know, on the incentives, is it, like, focusing, like, Oxford or some kind of markets, you know, of markets, or very property-specific across the board?

Himanshu Gupta: The incentives that we use are property-specific, and different properties have different programs that they use. And it all depends on the local market conditions. That's why we talk a lot about this empowerment and local approach to sales and marketing. There is no one recipe that could be applicable to everyone's property, to every home in our portfolio. And so there's a lot of detailed work that goes behind to figure out the appropriate pricing and appropriate level of incentives for each individual property.

Unknown Executive: The incentives that we use are property specific, and different properties have different programs that they use, and it all depends on the local market conditions. That's why we talk a lot about this empowerment and local approach to sales and marketing. There is no one recipe that could be applicable to every home in our portfolio, and so there's a lot of detailed work that goes into figuring out the appropriate pricing and appropriate level of incentives for each individual property. So it's really tough for me and Himanshu to tell you the kind of broad strokes and averages they are receiving in this case.

Speaker Change: The incentives that we use are property specific and different properties have different programs that they use.

Speaker Change: and it all depends on the local market conditions. That's why we talk a lot about this empowerment and local approach to sales and marketing.

Vlad Volodarski: The combined score of highly engaged and engaged employees, those who mark boxes 4 and 5 in our survey was 86%. Our 2024 score of 57% represents the 3 percentage points increased from 2023 and remarkably, it is 2 percentage points higher than our 2025 aspirational target of 55%. It is wonderful to see the fruits of our team's labor in so many aspects of our operations.

Speaker Change: There is no one recipe that could be applicable to everyone.

Speaker Change: property to every home in our portfolio. And so there's a lot of detailed work that goes behind to figure out the appropriate pricing and appropriate level of incentives for each individual property. So it's really tough for me, Himanshu, to tell you kind of broad strokes and averages they are receiving in this case.

Himanshu Gupta: So it's really tough for me to mention to tell you kind of broad strokes and averages. They are deceiving in this case.

Himanshu Gupta: Okay, so maybe the last question is around the growth bucket and margins in particular, right? I mean, thanks for clarifying, seeing property NOI margin at 38% for the year. If you're using margin expansion and growth bucket a little bit different compared to seeing property cook for you. It's also difficult to answer that question. Himanshu's growth bucket contains properties that are recently acquired or have recently been developed. Often, they are not yet at stabilized occupancy levels. And that bucket changes constantly during the year as we buy new properties that are being put in these buckets. So it's really a mesh mesh of many different properties with many different specific features that also depending on the timing of where the properties are and lease up will affect the margins.

Unknown Executive: Okay, so maybe the last question is around the growth bucket and margins in particular, right? I mean, thanks for clarifying that property NOI margin was 38% for the year. Is there a reason that, you know, margin expansion in growth markets will be different compared to the same property portfolio?

Speaker Change: Okay, fair enough. Okay, so maybe the last question is around the growth bucket.

Karen Sullivan: And I will now turn the call to Karen to provide some more color on our on-going initiatives. Thanks, Vlad. Moving on to slide 4 in Q2 2024, our marketing strategies led to an increase in personalized tours for marketing sources of 22%. Compared to Q2 2023 and an overall increase of 6% quarter over quarter. Leasing activity continued to be strong with year-to-date ahead of 2023 and a steady increase in closing ratios. We hosted two open house events in Q2 on April.

Speaker Change #100: and margins in particular, right? I mean, thanks for, you know, clarifying, seeing property NOI margin at 38% for the year.

Speaker Change #101: Is there a reason that, you know, margin expansion in growth market will be different compared to same property portfolio?

Unknown Executive: Um, it's also difficult to answer that question, Himanshu, is the growth bucket contains properties that are recently acquired or have recently been developed? Often, they are not yet at stabilized occupancy levels, and that bucket changes. During the year, as we buy new properties, they are put in these buckets, so it's really a mishmash of many different properties with many different features. This is just a list of some of the specific features that, also depending on the timing of where the properties are in lease up, will affect the margin.

Speaker Change #101: It's

Speaker Change #102: Also difficult to answer that question, Himanshu, is the growth bucket contains properties that are recently acquired or have recently been developed, often they are not yet at stabilized occupancy levels, and that bucket changes constantly.

Karen Sullivan: And for the first time ever, another in June, both of which helped us to drive new weeks. Our marketing strategies now include Facebook ads. And we have also improved the volume of Google ad conversions and continue key word optimization, which resulted in an increase to the click through rate and a decrease in the cost per click. In Q2, we introduced a new more comprehensive approach to sales training designed to set up our new retirement living consultants for success from their first day through month 12.

Speaker Change #102: constantly during the year as we buy new properties that are being put in these buckets. So it's really a mishmash of many different properties with many different

Speaker Change #103: Specific features that also depending on the timing of where the properties are in lease up will affect the margins. So generally they should be increasing just like the rest of our portfolio.

Himanshu Gupta: So generally, they should be increasing, just like the rest of our portfolio. Generally, probably they should be increasing faster because many properties in that bucket are in lease-up stage more so than our existing property portfolio. But those are very broad generalizations of the very eclectic mix of properties. Okay, now, and is it fair to say that you know the ultimate good bucket margin should be much higher than your same property NOI margin? I mean, given the average age of your, you know, wood bucket is like significant and lower than your same property. That would be correct.

Unknown Executive: So generally, they should be increasing, just like the rest of our portfolio. Generally, probably, they should be increasing faster because many properties in that bucket are in the lease-up stage more so than our, you know, existing property portfolio. But those are very broad generalizations about a very eclectic mix of properties.

Karen Sullivan: We also held sales training for all of our RLCs in Q2 and redesigned and improved our competitive analysis process. We are also pilot testing an online post tour survey for prospects to complete after they have visited our. As our community continues to cover year determining property specific pricing strategies, which include faster growing market rates and or eliminating recurring discount for communities with high occupancies targeting specific suite for incentives to accelerate lease up on select cases continuing with broader incentives.

Speaker Change #103: generally probably they should be increasing faster because many properties in that bucket are in lease up stage more so than our you know existing property portfolio but those are very broad generalization of a very eclectic mix of properties.

Unknown Executive: Fair enough. And is it fair to say that, you know, the ultimate road bucket margin should be much higher than your same property margin? I mean, given the average age of your, you know, road bucket is like significantly lower than your

Speaker Change #104: Fair enough. And is it fair to say that, you know, the ultimate road bucket margin should be much higher than your same property margin? I mean, given the average age of your road bucket is like significantly lower than your same property.

Unknown Executive: That would be correct. On a stabilized basis, these properties should deliver a higher margin than our same property portfolio.

Himanshu Gupta: On stabilized basis, these properties should deliver higher margin than our same property portfolio. Okay, thank you so much, and I'll jump back.

Speaker Change #105: That would be correct. On a stabilized basis, these properties should deliver higher margin than our same property portfolio.

Karen Sullivan: So it's depending on occupancy levels and competitors rates. Turning to slide five, we reduced our staffing agency cost by 60% in Q2 2024 compared to Q2 2023 for a focus for improvement and retention activities. This agency spend continues to be below pre pandemic levels. We've also fully redesigned our resident manager on wording program, which is designed to reduce turnover and improve performance of these key leaders in our residences. Although always a difficult decision to close the property, I'm pleased to say that we have found alternatives accommodation for all 186 residents at Charles heritage.

Unknown Executive: Okay. Fantastic. Okay.

Tommy Beer: Thank you. Once again, please press down on your device keypad. If you have a question, the next question is from Tommy Beer. I'll be seek capital markets. Please go ahead. Thanks, good morning. You know, you're clearly making some good occupancy traction, and you're on pace to pick up maybe another hundred basis points in Q3.

Operator: Thank you. Once again, please press star 1 on your device keypad if you have a question. The next question is from Pammi Bir, RBC Capital Markets. Please go ahead.

Speaker Change #106: Okay, fantastic. Okay, thank you so much and I'll turn back.

Speaker Change #107: Thank you. Once again, please press star 1 on your device keypad if you have a question. The next question is from Pammi Bir, RBC Capital Markets. Please go ahead.

Pammi Bir: Thanks. Good morning.

Unknown Executive: You know, you're clearly making some good occupancy traction, and then you're on pace to pick up maybe another 100 basis points in Q3. But as you tackle maybe some of the more challenged properties, how do you see that maybe that cadence trending over the next few quarters? And maybe just the second part of that question is really, you know, what gives you the confidence that you'll get to 95% by the end of next year?

Pami Beer: Thanks, good morning. You know, you're clearly making some good occupancy traction. I think you're on pace to pick up maybe another hundred basis points in Q3.

Tommy Beer: But as you tackle maybe some of the more challenged properties, how do you see the maybe that cadence training over the next few quarters? And maybe just a second part of that question is really, you know, what gives you the confidence that, you know, you'll get to 95% by the end of next year? So the challenging properties, again, every property has a different story. There is no one answer. How do we see driving these occupancy faster with ongoing focus on every property that we have in our portfolio? And in some cases, the work goes into optimize the pricing because we're stabilized occupancy, and those market rate increases or pulling back discounts that I talked to you about is the focus of the teams. In most other cases, the focus continues to be occupancy growth.

Pami Beer: But as you tackle maybe some of the more challenged properties, how do you see that maybe that cadence trending over the next few quarters? And maybe just the second part of that question is really, you know, what gives you the confidence that, you know, you'll get to 95% by the end of next year?

Karen Sullivan: And we expect to have all residents located by mid August. Finally, the operations team has been busy integrating the five new home that we recently purchased in Sherbrook, Terrebonne, Fancharon, Fancharon, Server Salud, and the food away region in Quebec. Being agile, certainly mattered in this case, as we only have 30 days to close this transaction and transition these residences into our key systems. By all accounts, including feedback from the teams that these five at home. This transition was a success.

Unknown Executive: So, the challenging properties: again, every property has a different story. There is no one answer.

Pami Beer: So, the challenging properties, again, every property has a different story. There is no one answer. How do we see driving these occupancy faster with ongoing focus?

Unknown Executive: How do we see driving these occupancy rates faster with ongoing focus on every property that we have in our portfolio? And in some cases, the work goes into optimizing the pricing because we're a stabilized occupancy, and those market rate increases or pulling back discounts that I talked to you about are the focus of the team. In most other cases, the focus continues to be occupancy growth. And so, how are we going to do this?

Speaker Change #109: on every property that we have in our portfolio. And in some cases, the work goes into optimize the pricing because we're a stabilized occupancy.

Speaker Change #109: Andrew.

Speaker Change #109: is

Karen Sullivan: We are all so excited to be welcoming five more properties to the Chartwell family later this year with our new partners, Group Champs-Lanes.

Tommy Beer: And so how are we going to do this through doubling down on the strategies that we saw working in other properties, local marketing, focus on sales, making sure the pricing is right and competitive in the environment, and making sure that we deliver great services to our residents so they continue to refer their friends to us.

Unknown Executive: Through doubling down on the strategies that we saw working in other properties, local marketing, focus on sales, making sure the pricing is right and competitive in the environment, and making sure that we deliver great services to our residents so they continue to refer their friends to us. So, that's the challenge, kind of another, pretty generic answer, but every property has its own story, and we're focusing on each one of them separately.

Speaker Change #110: doubling down on the strategies that we saw working in other properties, local marketing, focus on sales, making sure the pricing is right and competitive in the environment, and making sure that we deliver great services to our residents and they continue to refer their friends to us. So that's

Tommy Beer: So that's- kind of, again, pretty generic answer, but every property has their own story, and we're focusing on each one separately. We'll give this confidence to get 95% occupancy, while the sort of the traction that we have for the last two years has been pretty strong, and we expect it to continue. The leading sales indicators continue to be strong, so we continue to see, with demand out there and the overall backdrop of growing demand, no construction starts, a continued shortage of low-term care beds, and continuing closure of some of the existing obsolete properties that we expect to see over the next couple of years.

Speaker Change #110: Kanaganji.

Speaker Change #111: Pretty generic answer, but every property has their own.

Unknown Executive: What gives us confidence to get to 95% occupancy? Well, the sort of traction that we have had for the last two years has been pretty strong, and we expect it to continue. The leading sales indicators continue to be strong, so we continue to see good demand out there. And the overall backdrop for On Demand. No Construction Starts, Continued Shortage of Long-Term Care Beds, and continuing closure of some of the existing obsolete properties that we expect to see over the next couple of years.

Speaker Change #111: story and we're focusing on each one of them separately.

Speaker Change #112: What gives us confidence to get to 95% occupancy? Well, the sort of the traction that we have for the last two years has been pretty strong and we expect it to continue. The leading sales indicators continue to be strong, so we continue to see good demand out there.

Speaker Change #112: and the overall backdrop of

Speaker Change #112: growing demand, no construction starts, continuous shortage of long-term care beds, and continuing

Tommy Beer: All of that is positive for all operators in the senior housing space and Canada, including Charwell.

Speaker Change #112: closure of some of the existing obsolete properties that we expect to see over the next couple of years. All of that is positive for all operators in senior housing space in Canada, including Charwell. The other part that we continue to do, that we talked about, is optimizing our property portfolio.

Unknown Executive: All of that is positive for all operators in the senior housing space in Canada, including Chartwell. The other part that we continue to do, that we talked about, is optimizing our property portfolio. Properties that cannot achieve 95% occupancy or really 100% occupancy in this kind of environment are probably not the right properties to be in Chartwell's portfolio. And so that's to the question of dispositions of non-core properties that will continue.

Tommy Beer: The other part that we continue to do that we talked about is optimizing our property portfolio. Properties that can want to achieve 95% occupancy or really 100% occupancy in this kind of environment probably not the right properties to be in Charwell portfolio, and so that's to the question of dispositions of one core properties that will continue. Thanks for the colored red.

Jeffrey Brown: FFO growth also benefited from 4.2 million of lower GNA expenses, primarily due to the FFO transition costs that were incurred in 2023, lower compensation costs as we continued to execute on our plan to achieve efficiency improvements, partially offset by higher unit based compensation costs due to the increase in value of our trust units. In Q2 2024, our same property occupancy increased 660 basis points to 87.2% and our same property adjusted NOI increased by 10.4 million or 20.6%.

Speaker Change #113: properties that cannot achieve 95% occupancy or really 100% occupancy in this kind of environment, probably not the right properties to be in Chartwell portfolio and so that's to the question of dispositions of non-core properties that will continue.

Unknown Executive: Thanks for the call, Vlad. That's helpful.

Tommy Beer: Just last one for me, just on the strategic acquisitions that Jonathan mentioned that you're contemplating. Can you just expand on that? What sort of quantum are you thinking? Maybe the geography and any sort of comments on what pricing seems to be at this stage? I mean you've just done a bunch, but just curious if there's any real changes as the competitive landscape may be picked up a little bit. And I just want to clarify that you're not referring to the back to more properties. That's correct. We're not referring to the back to more properties.

Unknown Executive: Just last one for me, just on the strategic acquisitions that Jonathan mentioned that you're contemplating, can you just expand on that? You know, what sort of quantum are you thinking, maybe the geographies and any sort of comments on where pricing seems to be at this stage? I mean, you've just done a bunch, but I'm just curious if there's any real changes as the competitive landscape maybe picks up a little bit. And then I just want to clarify that, you know, you're not referring to the back to more property.

Vlad Volodarski: Thanks for the call, Vlad. That's helpful. Just last one for me, just on the strategic acquisitions that Jonathan mentioned that you're contemplating. Can you just expand on that? You know, what sort of quantum are you thinking? Maybe the geographies?

Jeffrey Brown: Slide 7 summarizes our same property operating results for each platform. All of our platforms posted occupancy gains in Q2 2024 compared to Q2 2023, which positively impacted our results. Our Western Canada platform, same property adjusted NOI increased 1.9 million or 11.4%. Our Ontario platform, same property adjusted NOI increased 6 million or 21.6% and our Quebec platform, same property adjusted NOI increased 2.5 million or 43.3%. Currently, this slide 8, at August 8, 2024, liquidity amounted to approximately $341.9 million, which included 41.9 million of cash and cash equivalent and 300 million of forwarding capacity on our credit facilities.

Speaker Change #114: Any sort of comments on where pricing seems to be at this stage? I mean, you've just done a bunch, but I'm just curious if there's any real changes as the competitive landscape maybe picks up a little bit. And then I just want to clarify that, you know, you're not referring to the back-to-mall properties.

Unknown Executive: That's correct. We're not referring to a vacuum of properties.

Tommy Beer: We are looking at a number of different opportunities across the country, and again it's too early to talk about because we don't have firm deals. As soon as we do. We know all the details about them. The pricing seems to be in line with what the market is today, kind of on stabilized basis, low to mid six cap rates. It's what we're looking to achieve on these acquisitions. Some of them may not be at stabilized levels, and we are prepared to take some short-term dilutions for a long-term gain. All of them that we're looking at would be a great fit for our portfolio and a certain level of upgrade to what our current portfolio is.

Unknown Executive: We are looking at a number of different opportunities across the country, but again, it's too early to talk about them because we don't have firm deals. As soon as we do, you'll know all the details about them.

Speaker Change #115: That's correct. We're not referring to Baltimore properties. We are looking at a number of different opportunities across the country.

Speaker Change #116: And again, it's too early to talk about because we don't have firm deals. As soon as we do, you'll know all the details about them. The pricing seems to be in line with what the market is today, kind of on stabilized basis, low to mid six cap rates.

Unknown Executive: The pricing seems to be in line with what the market is today, kind of on a stabilized basis, low to mid-six cap rates. It's what we're looking to achieve on these acquisitions. Some of them may not be at stabilized levels, and we are prepared to take some short-term dilution for a long-term gain. All of them that we're looking at will be a great fit for our portfolio and a certain level of upgrade to our current portfolio.

Speaker Change #116: It's what we're looking to achieve on these acquisitions, some of them may not be at stabilized levels.

Jeffrey Brown: For the remainder of 2024, we have 152.6 million of mortgage debaturing at the weighted average interest rate of 6.58%. We expect to renew or refinance these loans during the year. At August 8, 2024, 10-year CMEC-atured mortgage rates are estimated approximately 4.1%, and 5-year conventional mortgage financing is available at approximately 5.0%.

Speaker Change #116: We are prepared to take some short-term dilutions for a long-term gain. All of them that we're looking at will be a great fit for our portfolio and a certain level of upgrade to what our current portfolio is.

Unknown Executive: And are any of these vendors or deals that you're working on, would these be any sort of, not distress, but maybe capital structures that aren't working? Or is it just maybe recycling capital out of some other funds?

Tommy Beer: Are there any of these vendors or deals that you're working on? Would these be any sort of stress to maybe capital structures that aren't working, or is it just maybe recycling capital on some other funds? Thank same answer as I gave on that property. Every story is different, so the answer is yes to all of it. It depends on the situation. But yes, some of them are restructuring, financing; some of them are looking to recycle capital to continue developing. All of the above is applicable. Thank you very much. On tourniquet.

Speaker Change #117: And are any of these vendors or deals that you're working on, would these be any sort of, not distress, but maybe capital structures that aren't working, or is it just maybe recycling capital out of some other funds?

Jeffrey Brown: Moving to slide 9, with the continuing strong prospect traffic and leasing activity, we expect our agency to continue to grow in 2022. 24. We now forecast to achieve 88.7% same property occupancy by September of this year. We have been using target incentives in certain markets to support this rapid occupancy growth. Has more residences achieved higher occupancy rates. We expect to gradually reduce the use of these incentives. We believe that improving occupancies combined with lower new supply come in a 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 from the current levels.

Unknown Executive: I mean, the same answer as I gave on that property. Every story is different. So the answer is yes to all of it. It depends on the situation. But yes, some of them are restructuring financing, some of them are looking to recycle capital to continue developing. All of the above is applicable.

Speaker Change #117: Pammi, same answer as I gave on that property, every story is different, so the answer is yes to all of it. It depends on the situation, but yes, some of them are restructuring financing, some of them are looking to recycle capital to continue developing.

Unknown Executive: Thanks very much. I'll turn it back.

Speaker Change #117: All of the above is applicable.

Operator: Thank you. The next question is from Giuliano Tormiel from National Bank Financial. Please go ahead.

Tommy Beer: Thank you.

Juliano Tormel: Next question is from Juliano Tormel from National Banks and Enchants. Please go ahead. Hey, good morning, guys. Just on the obsolete supply that you guys commented on, is when this be, you know, potentially be used for as a cheaper alternative for somebody looking for retirement housing and what kind of percent of the inventory do you consider to be this obsolete supply? Well, if you look at the question and rate of report that Sean and Heather and their team did recently this year, or maybe a little earlier this year, I think they used something like 10% of inventory being obsolete over the next 10 years, and probably they're right.

Speaker Change #118: Thanks very much. I'll turn it back.

Speaker Change #118: Thank you. Next question is from Giuliano Tormiel from National Bank Financial. Please go ahead.

Giuliano Tormiel: Hey, good morning, guys. Just on the obsolete supply that you guys comment on, is when this be, you know, potentially be used for as a cheaper alternative for somebody, somebody looking for retirement housing, and what kind of percent of inventory do you consider to be this obsolete supply?

Giuliano Tormiel: Hey, good morning guys. Just on the obsolete supply that you guys commented on, wouldn't this potentially be used as a cheaper alternative for somebody looking for retirement housing? And what kind of percent of the inventory do you consider to be this obsolete supply?

Unknown Executive: Well, if you look at the Cushman and Graco report that Sean and Heather and their team did recently this year, or maybe a little earlier this year, I think they used something like 10% of inventory being obsolete over the next 10 years, and probably they're right. I mean, they know better than I would know. So about that, can they be used for a cheaper alternative? I don't think so.

Speaker Change #120: Well, if you look at Cushman and Wakefield's report that Sean and Heather and their team did recently this year, or maybe a little earlier this year, I think they used something like 10% of inventory being obsolete over the next 10 years, and probably they are right. I mean, they know better than...

Juliano Tormel: I mean, they know better than I would know. So, about that, can they be used for a cheaper alternative? I don't think so. The cost of operating smaller buildings is high. You have inefficiencies in terms of the staffing. You have significant capital requirements and maintenance costs for older buildings, and so it's difficult to make them affordable enough to attract people to those kind of within the Regents, because they're not as good as the new ones. So my view would be that not many of them can be used for that more affordable segment of the market.

Jonathan Boulakia: We are working towards closing the acquisition of a 50% interest in a portfolio of another five beautiful residences totaling 1,805 suites in Boulbeck City and Sherbrook again, and look forward to a successful relationship with our new partner on these assets. Further, we required an 85% interest in three state-of-the-art residences totaling a further 1,053 suites in Montreal and Boulbeck, from our development partner EMD Batchimo. On slide 11, you can see more pictures of these residences.

Speaker Change #120: I would know. So about that, can they be used for cheaper alternative? I don't think so. The cost of operating smaller buildings.

Speaker Change #121: are high. You have inefficiencies in terms of the staffing. You have significant capital requirements and maintenance costs for older buildings. And so it's difficult to make them

Unknown Executive: The cost of operating smaller buildings are high. You have inefficiencies in terms of the staffing. You have significant capital requirements and maintenance costs for older buildings. Um, and so it's difficult to make them, um, Affordable enough to attract people to those kind of living arrangements because they're not you know Not as good as the new ones so my view would be that not many of them can be used for that more affordable segment of the market That'd be my view at the present time. Okay, um, and

Speaker Change #122: affordable enough to attract people to those kind of living arrangements because they're not you know not as good as the new ones. So my view would be that not many of them can be used for that more affordable segment of the market.

Jonathan Boulakia: All of these newer high-quality assets are located in strong markets and are complementary to our existing portfolio, which allows for efficient management, lower incremental overhead costs, and smooth transitions into our management platform. We acquired these high-quality assets at a track of pricing significantly below replacement costs. Occupancy at most to be acquired at properties is at stabilized levels averaging 95 percent, with three properties and links out supported by NOI guarantees as part of the structured acquisitions.

Juliano Tormel: That'd be my view at the present time.

Unknown Executive: Okay, and then M&A has been pretty heavily featured on this call, but looking toward the next year, would your preference be toward returning capital or future M&A?

Juliano Tormel: Okay, and then Emma is then pretty featured on this call that's looking towards the next year. Would your preference be towards returning capital or a future M&A? It will all depend on the market conditions and opportunities that we have in front of us. So we want to make sure that we have all options open for us when it comes to capital allocation. In the environment where we see multi-year growth in our sector, given the overall factors that I just talked about, adding high-quality new properties to our portfolio that can generate significant long-term returns and make our overall portfolio better positioned to do that.

Speaker Change #122: That'd be my view at the present time.

Speaker Change #123: Okay, and then M&A has been pretty featured on this call, but looking towards the next year, would your preference be towards returning capital or a future M&A?

Unknown Executive: It will all depend on the market conditions and opportunities that we have in front of us. So we want to make sure that we have all options open for us when it comes to capital allocation. In an environment where we see multi-year growth in our sector, given the overall factors that I just talked about, adding high-quality new properties to our portfolio that can generate significant long-term returns and make our overall portfolio better positioned to meet the needs of the market would be our preference, but who knows what the future holds? We'll evaluate these opportunities when the time is right and when they are in front of us.

Speaker Change #124: It will all depend on the market conditions and opportunities that we have in front of us. So we want to make sure that we have all options open for us when it comes to capital allocation.

Jonathan Boulakia: We expect higher market rate growth that will be assets than our same store portfolio over the medium term, which will generate strong investment returns. These acquisitions totaling over $750 million at share and over $1 billion of assets taken on under management represent Chartwell's strategic objective to grow in our markets with newer quality assets. This is shaping out to be a record year of investments for Chartwell. We're not done with a number of exciting strategic acquisitions being evaluated and at various stages of negotiation.

Speaker Change #124: in the environment where we see multi-year growth in our sector, given the overall factors that I just talked about, adding high quality new properties to our portfolio that can generate significant long-term returns.

Speaker Change #124: and to make our overall portfolio better positioned to...

Juliano Tormel: That would be our preference, but who knows what the future holds? We will evaluate these opportunities when the time's right or when they are in front of us.

Speaker Change #124: To do that would be our preference, but who knows what future holds. We'll evaluate these opportunities when the time's right and when they are in front of us.

Unknown Executive: Okay. All right. Thanks, guys.

Juliano Tormel: Okay, all right, thanks, guys.

Jonathan Boulakia: We want to take this moment to express our gratitude to our investors and our investment banking syndicate members for their strong support in our recent equity offering of $345 million to finance these important transactions. We appreciate the strong investor demand for this offering and are glad to see our investors being rewarded with a meaningful appreciation in our trust year that trading prices post-transaction.

Unknown Executive: Thank you. There are no further questions, but just at this time.

Operator: Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to you, Mr. Valodarski.

Speaker Change #125: Okay. All right. Thanks guys.

Vlad Volodarski: I would now like to turn the meeting back over to you, Mr. Avlovsky. Thank you, and thank you everybody for joining us. This is always. If you have any further questions, please do not hesitate to give us a call.

Speaker Change #125: Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to you, Mr. Van Vlodarski.

Vlad Volodarski: Thank you and thank you everybody for joining us. As always, if you have any further questions, please do not hesitate to give us a call. Goodbye.

Speaker Change #126: Thank you and thank you everybody for joining us. As always, if you have any further questions, please do not hesitate to give us a call. Goodbye.

Unknown Executive: Goodbye.

Unknown Executive: Thank you.

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.

The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.

Speaker Change #127: Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.

Jonathan Boulakia: I'll turn the call back to Thank you, Jonathan. Moving to slide 12, we believe we are now at the front end of what is going to be a multi-year of growth in retirement living in Canada. The man for our services should continue to grow for decades, driven by the senior population growth and lack of long-term care accommodation. With persistently high cost, new construction has been virtually non-existent, which combines with the obsolescence of some of the existing inventory, creating shortages of new suites.

Speaker Change #127: [inaudible]

Jonathan Boulakia: These dynamics are likely to result in growing occupancies, market rates, and profitability of the existing operators. As one of the largest participants in the senior living sector, Charles stands to benefit from them. As shown on slide 13, we are not just waiting for the rising tides to lift all boats. In addition to delivering on our 2025 aspirational targets in residence satisfaction and gluing engagement in occupancy, we are focused on transitioning our management operations into an agile and scalable management platform.

Jonathan Boulakia: This will be achieved by further empowering the teams in our residences to take charge of developing and executing property specific strategies and adopting the changing market conditions while delivering exceptional resident experiences. Such empowerment will be aided by enhanced training, coaching, and targeted support delivered by our corporate teams, as well as more robust performance-based monitoring centers. We believe with such agile and scalable platform, we will be better positioned to innovate, make decisions, and take actions faster, generate management cost deficiencies, and ultimately outperform.

Jonathan Boulakia: We will also continue to focus on optimizing our property portfolio to make it more efficient and resilient to future competitions. We are doing this through acquiring newer properties and strong locations, which generate higher rentals rate and operating margin growth, and require lower capital investments. We will also continue our program of discipline, dispositions of older, less efficient properties, which often require disproportionate amount of management time and higher capital investments. And we continue focusing on asset management, repositioning properties to be more successful in their markets.

Jonathan Boulakia: These repositioning projects so far have taken many forms, from changing service offering to cater to specific ethnic communities, to invest in capital, to upscale some of our residences, to offering additional care services, including government funded care, or alternatively moving towards more independent living options. Older than by local market demand and positioning of each residence in their respective markets.

Jonathan Boulakia: These are exciting times to be in retirement living sector in Canada, and even more so to be the part of the dynamic customer focused and evolving charcoal.

Vlad Volodarski: I will now close our prepared remarks with a story from one of our residences as featured on slide 14. Recently, we celebrated Canadian multicultural day across our residences with Charles Gibson, hosting a particularly vibrant cultural appreciation day. The events featured captivating performances, traditional attire, and a diverse array of cuisine from around the world. Residents, staff, and local community members came together to dance, dine, and celebrate the many cultures that enrich their residence.

Vlad Volodarski: Vita Gavia, general manager of Charles Gibson, along with her dedicated team, has been organizing similar events for several years, aiming to create an environment where everyone feels welcome and respected. As Vita observed, understanding our differences and similarities helps unite us and educate us, and sentiment that resonates deeply within our communities. By organizing and participating in these events, we reinforce our ongoing commitment to diversity and inclusion values central to charitable culture and success.

Vlad Volodarski: These efforts help foster a sense of belonging and connection among our residents, allowing them to engage with diverse cultures and perspectives. This enriches their daily experiences and strengthen the overall well-being, supporting our mission of making people's lives better.

Unknown Executive: Thank you for your attention this morning. We would be pleased to answer your questions. Thank you. We will now take questions from the telephone lines. If you have a question, please press star one on your devices. Keep that. You may can solve your question at any time by pressing stop two. Please press star one at this time, if you have a question. It will be a brief pause, why participants register for questions. Thank you for your patience.

Jonathan Kelcher: We will take the first question from Jonathan Kelcher, TD Cohen. Please come in. Thanks.

Jonathan Boulakia: Good morning. First question, just digging into the same property and alike, wrote by Regent a little bit. Quebec really stands out at 43%. Maybe give a little bit of color on what wrote that versus the other two regions.

Jonathan Boulakia: Good morning, Jonathan. We did see strong growth in all platforms. This quarter, one of the things that did lower the growth in the western panel platform was we did have a one time staffing cost reversal in Q2 of 2023 at 1.7 million that would have impacted that year over your comparison. In Quebec in particular, they have very strong occupancy growth and I think they've done a very good job of managing labor costs and reducing the reliance of agency costs.

Jonathan Boulakia: Those were Quebec in particular has been. It will continue to be a problematic region, but they've done amazing job reducing the reliance of these agency costs and the labor costs helped with this outside the NOI growth.

Jonathan Boulakia: Okay, that's helpful. And then as just on your margin overall, I think I don't think I heard it, but I think 38% is still sort of your target for 2024 on the same property basis. But going forward, how should we think about that as occupancy gets closer to 95%. Sure, yeah, do we do believe that we still will be able to hit that 38% over 37.9% in the quarter. And as you get into future years, we expect that continue to grow as occupancy grows above current levels.

Jonathan Boulakia: And we also believe that there will be potential as the properties achieve higher occupancy rates. They will be potential to increase market rates at a higher pace because the supply and demand dynamics are such giving all construction starts and continuing growth and demand that would allow all existing operators to do that and so the margins should be positively impacted by that. Okay, so would it be unreasonable to think low 40s if you're close to 95%? Yeah, that's reasonable.

Jonathan Kelcher: Okay, thanks, I'll turn it back.

Unknown Executive: Thank you.

Fred Blando: The next question is from Fred Blando, from Green Street, please go ahead. Thank you and good morning, three questions from me. First, maybe for Jeff, in terms of the balance sheet, I was wondering where you see the bet. They did their ratio hitting at the end of 2024. It probably will move up a bit from current levels, who they did have the equity raise that brought it down ahead of closing on some of the acquisitions plan for the year.

Fred Blando: So we closed it in half times at the end of Q2, but that will increase a bit as we get to the end of the year. And they're also depending on the level of acquisition activity. As Jonathan pointed out, we're looking at several interesting opportunities. They're one off and we feel that we have balance sheet room to do these acquisitions without any external financing at this point of time. And so if we're successful negotiating and getting those deals, they will also move that to the EBITDA a little higher for a short period of time.

Fred Blando: This will obviously be offset by the earnings growth and our role is to run the company at about seven and a half times that to EBITDA. And we are continuing moving down this path, and this will be achieved through primarily growth in our EBITDA. So fair enough. Thank you. And then just looking at one of the most recent acquisitions that occurred in Quebec City, I was wondering now in this time, it's relatively recent, but I was asked for performing so far.

Fred Blando: And Mother, you're seeing a supply in Quebec City becoming at risk or not really since the matter is so strong. Trek array is performing extremely well. It's high 90s occupancy. And in terms of the supply in Quebec City, there is just like in the rest of the country, there's not a lot being built. So we do not see Quebec City supply being riskier situation than anywhere else in the country. Okay. Thank you.

Jeffrey Brown: And lastly, on the stencil agreement, which that's known the three properties. Maybe you could share your views on this, or I guess for the second half of the year since coming to January. Sure. So these properties are attractive properties to chart well. We currently manage them, and they're performing well. As part of these acquisitions, we did buy three properties from EMD-Badamo in the year. And so as part of these acquisitions, Badamo agreed to stand down from any of its put rights on the balance of any of its properties for the balance of the year.

Jeffrey Brown: And so everything would refer back on January 1, 2025. But again, I would emphasize that these are all the great properties that we want to bring into our portfolio. We just, uh... It was just a question of timing and part of the overall transactions that we had with Batman. Thank you. I'll leave it here. Thank you.

Lorne Kalmar: Next question is from Lorne Kalmar from Desavais. Please go ahead. Thanks.

Lorne Kalmar: Good morning. Maybe just following on the bat and moonlight, questioning with the three properties stabilized, presumably I'll take those in the not too distant future. And I guess I'll just be just the one left in the pipeline. There are expectations for that to sort of be the end of the relationship with Batman or do you guys expect them to initiate additional projects because we'll be able to take in. We don't expect that to be the end of our relationship with Batman.

Lorne Kalmar: We have a very strong and collaborative relationship with them and we have a number of different projects that we are in discussions with them on. So we would expect the pipeline to continue. Are those projects the baby still pre-development or would they be one there they have now they're just not part of this pipeline? There are pre-development projects that we are talking about and redevelopment projects.

Lorne Kalmar: Okay. So thank you.

Lorne Kalmar: And then maybe move it off of the acquisition side of things. You've done a couple of one off distributions. Could you maybe give us an idea of the quantum of disposition you expect could you move about for the year into 2025? We continue to work to evaluate all our properties and there's certainly going to be some but we are not prepared at this point to give you the quantum of it all dependent on the timing of the disposition.

Lorne Kalmar: We want to make sure that we generate value that is appropriate to us. We are selling these properties so we continue going through the process of evaluation our portfolio and determining what will be the appropriate time to sell properties that we decided to sell. But you should expect us to continue to dispose non core assets in 2025. Could you maybe give us an idea of how big of a bucket is non core asset pool would be?

Lorne Kalmar: Well, it depends what you use as a measurement in terms of the value to overall company. It's not going to be material. It may be quite a few sweets, but in terms of value, these are as we said, non core properties older, their valuations are not as high as on the rest of our portfolio.

Lorne Kalmar: Okay, fair enough.

Lorne Kalmar: And then maybe just last one. We've obviously had lines around slow down in the housing market and I know, you know, obviously retirement is the needs based business. I just wonder, do you think? Because the slow down has been so material and that you know it's creating some pent up demand that could continue to drive even higher occupancy growth as it's going to start to heat up or not so much. I think we're seeing pretty strong demand right now and the housing market slow down.

Lorne Kalmar: Remember, we talk about this slow down from the record levels of sales and pricing and so it's not really slow in any kind of historical comparison, just slow compared to the peaks that the market was at. And so we do not at this time see any kind of. Pressure from this low down on the demand and remember our business also predominantly driven people come to us because they need some sort of assistance or foresee that need and yeah, maybe an ability to sell their house, may delay their decision, but it's not going to be a long delay. So from that perspective, we're not seeing much pressure at this time.

Lorne Kalmar: Okay, perfect. Thank you very much.

Unknown Executive: Thank you.

Himanshu Gupta: Next question is from Himanshu. Gupta from Scotia Bank. Please go ahead. Thank you and good morning. So let's just start with the GNA for entertainment law in Q2. Is this the new one late? Yeah, this is a good run rate for us. We didn't have any efficiency related seconds costs this quarter, but do expect those to come in future quarters this year as we move to exit the well tower of JV.

Himanshu Gupta: So that would increase above the current one rate when this do occur. Okay. And does this incorporate any savings from like, you know, everything the ATC platform? Yes, all cost that related to LTC platform or transition to the new man it was actually the platform itself was transitioned to the new manager. There were some incremental savings on the kind of back office staff perspective, but those costs are out of travel. Okay. And thanks for that. And then this QVAC acquisition, which should be closed, you know, Q3 that will not lead to any DNA increase as such. Is that nothing significant? Okay. Thank you. Okay.

Himanshu Gupta: Now, let's talk about NOI margins, same property NOI margin, good to see expansion in Q2. Like what led to margin expansion in Q2? I mean, you were already seeing staffing, you know, agency staffing reductions and interlude increases, but what happened in Q2? Just that I can see growth rent increases and with control of other expenses. We also have been beneficiary of low utility costs all year. And that that helped a bit for the margins as well.

Himanshu Gupta: Okay. And what about incentives? Having incentives, whether worth using the market remarks, you know, quite a bit. Is it like the incentives for lowering Q2 versus Q1? Or do you think that is something in the future that incentives can be lower than what they are at complex? That's more applicable to the future. Once properties achieving occupancies in 90s, then we're pulling back discounts and at that point of time, as I mentioned, we think that the ability to grow market rights, not the rights for existing residents, but market rights for new residents will be much better.

Himanshu Gupta: Okay. And, you know, on the incentive, is it like focusing, like off water, how much kind of market, you know, a market or very properly specific across? The incentives that we use are property-specific and different properties have different programs that they use. And it all depends on the local market conditions. That's why we talk a lot about this empowerment and local approach to sales and marketing. There is no one recipe that could be applicable to everyone's property, to every home in our portfolio.

Himanshu Gupta: And so there's a lot of detailed work that goes behind to figure out the appropriate pricing and appropriate level of incentives for each individual property. So it's really tough for me to mention to tell you kind of broad strokes and averages they are deceiving in this case.

Himanshu Gupta: Okay, so maybe the last question is around the growth bucket and margins in particular, right? I mean, thanks for clarifying seeing property NOI margin at 38% for the year. If you're using margin expansion and growth bucket a little bit different compared to seeing property cook for you. It's also difficult to answer that question. Himanshu's growth bucket contains properties that are recently acquired or have recently been developed. Often they are not yet at stabilized occupancy levels.

Himanshu Gupta: And that bucket changes constantly during the year as we buy new properties that are being put in these buckets. So it's really a mesh mesh of many different properties with many different specific features that also depending on the timing of where the properties are and lease up will affect the margins. So generally they should be increasing, just like the rest of our portfolio. Generally probably they should be increasing faster because many properties in that bucket are in lease up stage more so than our existing property portfolio.

Himanshu Gupta: But those are very broad generalization of the very eclectic mix of properties. Okay, now, and is it fair to say that you know the ultimate good bucket margin should be much higher than your same property NOI margin? I mean, given the average age of your, you know, wood bucket is like significant and lower than your same property. That would be correct. On stabilized basis, these properties should deliver higher margin than our same property portfolio. Okay, thank you so much, and I'll jump back. Thank you. Once again, please press down on your device keypad.

Tommy Beer: If you have a question, the next question is from Tommy Beer. I'll be seek capital markets. Please go ahead.

Tommy Beer: Thanks, good morning. You know, you're clearly making some good occupancy traction and you're on pace to pick up maybe another hundred basis points in Q3. But as you tackle maybe some of the more challenged properties, how do you see the maybe that cadence training over the next few quarters? And maybe just a second part of that question is really, you know, what gives you the confidence that, you know, you'll get to 95% by the end of next year?

Tommy Beer: So the challenging properties, again, every property has different story. There is no one answer. How do we see driving these occupancy faster with ongoing focus on every property that we have in our portfolio? And in some cases, the work goes into optimize the pricing because we're stabilized occupancy and those market rate increases or pulling back discounts that I talked to you about is the focus of the teams. In most other cases, the focus continues to be occupancy growth.

Tommy Beer: And so how are we going to do this through doubling down on the strategies that we saw working in other properties, local marketing, focus on sales, making sure the pricing is right and competitive in the environment and making sure that we deliver great services to our residents so they continue to refer their friends to us. So that's- kind of, again, pretty generic answer but every property has their own story and we're focusing on each one separately.

Tommy Beer: We'll give this confidence to get 95% occupancy while the sort of the traction that we have for the last two years has been pretty strong and we expect it to continue. The leading sales indicators continue to be strong so we continue to see with demand out there and the overall backdrop of growing demand, no construction starts, continue shortage of low-term care beds and continuing closure of some of the existing obsolete properties that we expect to see over the next couple of years.

Tommy Beer: All of that is positive for all operators in senior housing space and Canada including Charwell. The other part that we continue to do that we talked about is optimizing our property portfolio. Properties that can want to achieve 95% occupancy or really 100% occupancy in this kind of environment probably not the right properties to be in Charwell portfolio and so that's to the question of dispositions of one core properties that will continue.

Jonathan Boulakia: Thanks for the colored red. Just last one for me, just on the strategic acquisitions that Jonathan mentioned that you're contemplating. Can you just expand on that? What sort of quantum are you thinking? Maybe the geography and any sort of comments on what pricing seems to be at this stage? I mean you've just done a bunch but just curious if there's any real changes as the competitive landscape may be picked up a little bit.

Jonathan Boulakia: And I just want to clarify that you're not referring to the back to more properties. That's correct. We're not referring to the back to more properties. We are looking at a number of different opportunities across the country and again it's too early to talk about because we don't have firm deals as soon as we do. We know all the details about them. The pricing seems to be in line with what the market is today kind of on stabilized basis, low to mid six cap rates.

Jonathan Boulakia: It's what we're looking to achieve on these acquisitions. Some of them may not be at stabilized levels and we are prepared to take some short-term dilutions for a long-term gain. All of them that we're looking at would be a great fit for our portfolio and a certain level of upgrade to what our current portfolio is. Are there any of these vendors or deals that you're working on? Would these be any sort of stress to maybe capital structures that aren't working or is it just maybe recycling capital on some other funds?

Jonathan Boulakia: Thank same answer as I gave on that property. Every story is different so the answer is yes to all of it. It depends on the situation. But yes, some of them are restructuring, financing, some of them are looking to recycle capital to continue developing all of the above is applicable.

Tommy Beer: Thank you very much.

Unknown Executive: On tourniquet. Thank you.

Juliano Tormel: Next question is from Juliano Tormel from National Banks and Enchants. Please go ahead.

Juliano Tormel: Hey, good morning, guys. Just on the obsolete supply that you guys commented on, is when this be, you know, potentially be used for as a cheaper alternative for somebody looking for retirement housing and what kind of percent of the inventory do you consider to be this obsolete supply? Well, if you look at the question and rate of report that Sean and Heather and their team did recently this year, or maybe a little earlier this year, I think they used something like 10% of inventory being obsolete over the next 10 years, and probably they're right.

Juliano Tormel: I mean, they know better than I would know. So about that, can they be used for cheaper alternative? I don't think so. The cost of operating smaller buildings are high. You have inefficiencies in terms of the staffing. You have significant capital requirements and maintenance costs for older buildings, and so it's difficult to make them affordable enough to attract people to those kind of within the Regents, because they're not as good as the new ones. So my view would be that not many of them can be used for that more affordable segment of the market. That'd be my view at the present time.

Juliano Tormel: Okay, all right, thanks guys. Thank you.

Unknown Executive: There are no further questions, but just at this time.

Unknown Executive: I would now like to turn the meeting back over to you, Mr. Avlovsky. Thank you, and thank you everybody for joining us. This is always if you have any further questions, please do not hesitate to give us a call.

Unknown Executive: Goodbye. Thank you.

Unknown Executive: The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.

Q2 2024 Chartwell Retirement Residences Earnings Call

Request a DemoDemo

CSH

Chartwell Retirement Residences

Earnings