Q3 2024 Sienna Senior Living Inc Earnings Call

Speaker Change: Ladies and gentlemen, welcome to CNS Seniors Living, Inc.'s third quarter 2024 conference call.

Speaker Change: Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and David Hung, Chief Financial Officer of Ciena Senior Living, Inc. Please be aware that certain statements or information discussed today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statement or information.

Speaker Change: Please refer to the Forelooking Information and Risk Factors section in the company's public filings, including its most recent NDNA and AIF, for more information.

Speaker Change: You will also find a more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted on CDAR Plus.

Speaker Change: and can be found on the company's website cnliving.ca. Today's call is being recorded and a replay will be available. Instructions for accessing the call are posted on the company's website and the details are provided in the company's news release.

Speaker Change: The company has posted slides which accompany the host's remarks on the company website under Events and Presentations. With that, I will now turn the call to Mr. Jain. Please go ahead, Mr. Jain.

Mr. Jain: Thank you, John. Good morning, everyone, and thank you for joining us on a call today.

Our third quarter has been a great progress and success.

Mr. Jain: Our operating results continue to strengthen for the seventh consecutive quarter. Our recent initiatives to raise capital were met with overwhelming demand by investors and our efforts to expand into a new province were successful.

Mr. Jain: These achievements did not happen by chance. They are the direct results of our ongoing initiatives to improve our operating platforms, strengthen team engagement, and deliver on our growth strategies.

Mr. Jain: Our team members are the key drivers of our organizational strength, and as shareholders of the company, they are deeply aligned with CNS's success.

Mr. Jain: For the past seven quarters, we have consistently achieved year-over-year growth in our operating results across both lines of our businesses.

Speaker Change: Sienna's total adjusted same property NOI increased by 14.7% year-over-year including an 18.3% increase in a long-term care segment and an 11% increase in a retirement segment.

Speaker Change: Supporting our long-term care results, this quarter were fully occupied homes with higher revenues from preferred accommodation and increased government funding.

Speaker Change: On the retirement side, rising demand, limited new supply, and focused marketing and sales campaigns were the key drivers of improved occupancy.

Speaker Change: Further supporting our results for the ongoing improvements to our operating and our residence experience.

Speaker Change: Our continued focus on homes with lower occupancy levels was a key driver for this improvement.

Speaker Change: More than half of these homes have achieved notable occupancy improvements, with occupancy increasing an average of nearly 7% over the past two years in these homes.

Speaker Change: A combination of targeted on-site sales and marketing initiatives, strengthening operations and leadership teams, as well as investments in the home's infrastructure are key reasons for this significant improvement.

Speaker Change: As occupancy moves closer to stabilization, each percentage increase has a significant impact on our bottom line.

Speaker Change: Our consistently strong financial results for nearly two years contributed to a sector-leading stock performance and investor interest this year.

Speaker Change: As a result, we have been able to leverage the capital markets and have completed two key financings in recent months. In August, we raised $144 million of equity at $15 per share. And in October, we issued $150 million of unsecured debentures.

Speaker Change: Both the equity and debt financings were significantly oversubscribed, highlighting the increased interest of investors in the senior living sector and in Siena.

These financing initiatives further strengthen our position for growth.

Speaker Change: Last month we announced our expansion into Alberta with a 182 million dollar portfolio acquisition of four continuing care homes. We expect to complete the acquisition which is subject to regulatory approvals in early 2025.

Speaker Change: The portfolio is less than 3 years old and consists of 540 suites located in the Calgary metropolitan area, Edmonton, Fort Saskatchewan and Medicine Hat.

Speaker Change: Each of the four properties are located in vibrant and growing communities and offer contemporary senior living accommodations. The portfolio has an occupancy rate of approximately 96%, with three of the four properties essentially at full occupancy and one property in lease up.

Speaker Change: We have been considering expanding into Alberta for some time and this acquisition provides immediate scale in one of the fastest growing provinces in Canada.

Speaker Change: We're also in the process of finalizing the acquisition of remaining 30% interest in Nicola Lodge, a 256-bed long-term care community in the Greater Vancouver area.

Speaker Change: Nicola Lodge was built in 2016 and is a best-in-class long-term care community. The acquisition is expected to be closed in early 2025 and will increase our ownership interest to 100%.

Speaker Change: Moving to slide 9 on development. On the development side of our business, we started construction at our newest long-term care redevelopment project in Keswick in October. We are developing a 160 bed long-term care home which will replace the current 60 beds and add 100 new beds.

Speaker Change: We are also on track to complete the Ontario Long-Term Care Campus of Care Development projects in North Bay and Brantford next year.

Speaker Change: With respect to our campus of care in Brantford, we have recently opened our sales center with 147 suite retirement residents and have received strong interest from prospective residents and their families.

Speaker Change: The combined development costs for these three projects are exceeding $300 million. Once completed and operational, these projects will make a significant contribution to Ciena's operating results and lower our AFFO payout ratio.

Speaker Change: As we grow our operating platform, we will continue to make team member engagement and retention a core focus of our initiatives, as staffing will likely remain one of the biggest challenges in senior living.

Speaker Change: We are so very proud of our recent team member engagement results. 2024 was the fourth consecutive time of improvements across all drivers of engagement.

Speaker Change: One of Sienna's top drivers is a team member's ability to do meaningful work.

Speaker Change: Ciena's score for this driver was in the top 5% of the global healthcare industry benchmark among approximately 350 other organizations.

Speaker Change: The strong results also tell us that the investment we have made in our team members, from training and development, improving onboarding and shift scheduling, to our ownership program, are all having an impact.

Speaker Change: Equally important, these improvements directly correlate with resident satisfaction, which impacts our operating results.

Speaker Change: And with that, I will turn it over to David for an update on the results.

David Hung: Thank you, Nitin, and good morning, everyone. I will start on slide 12 for financial results. In Q3 2024, total adjusted revenues increased by 12.5 percent year-over-year to $224.8 million.

David Hung: This increase was largely due to occupancy and rental rate growth, as well as increased care revenue in our retirement segment, and a government funding increase and higher private accommodation revenue in our LTC segment.

David Hung: Total adjusted same property NOI increased by 14.7% to $43.4 million in Q3 2024 compared to $37.8 million in Q3 2023.

David Hung: NOI in our long-term care segment increased by $3.5 million, largely due to higher revenue offset by inflationary expense increases.

David Hung: In our retirement segment, adjusted same property NOI increased by $2.1 million in Q3 2024 compared to last year, primarily as a result of improved occupancy and rental rate growth.

David Hung: Moving to slide 13. During Q3 2024 operating funds from operations increased by 19% to $23.9 million compared to last year, primarily due to higher NOI, lower transaction costs, and lower interest, partly offset by higher income tax.

David Hung: OSFO per share increased by 13.5% to 31.2 cents in Q3 2024.

David Hung: Adjusted funds from operations increased by 3.8% to $20.4 million compared to last year. The increase was due to higher OFFO offset by a decrease in construction funding income and increased maintenance capital expenditures.

David Hung: Antifold per share decreased by 1.1% to $0.266 in Q3 2024 due to the temporary dilution resulting from our recent equity issuance of shares in connection with our $144 million equity raise.

David Hung: Throughout the third quarter, we have strengthened our financial position and balance sheet. We substantially increased Ciena's liquidity to $517 million at the end of Q3 2024, largely as a result of the proceeds from our recent equity offering.

David Hung: We also extended the weighted average term to maturity of our debt to 6.2 years from 5.7 years in Q3 2023.

David Hung: And we improved the debt to adjusted EBITDA to seven times at the end of Q3 2024 compared to 8.3 times at the end of Q3 2023.

David Hung: Subsequent to the end of Q3, we issued $150 million of unsecured debentures at an interest rate of 4.436%. These proceeds were used to refinance our $150 million Series A unsecured debentures, which matured on November 4, 2024.

David Hung: Our strong financial position with no major debt maturity until Q1 2026, coupled with significant liquidity, provides flexibility and supports our growth initiatives with respect to both our acquisitions and our development program.

Speaker Change: Once they are completed, they will make a significant contribution to Ciena's operating results and as Nitin mentioned, we will have a notable impact in lowering our AFFO payout ratio in the high single digits.

Speaker Change: Going forward, we will continue to prudently manage our capital as we further expand our asset base through developments, look for intensification opportunities at existing sites, and grow through acquisitions. With that, I will turn the call back to Nitin for his closing remarks.

Mr. Jain: Thank you, David. I would like to conclude with a message that is familiar, but it is worth repeating. There is unprecedented growth potential in Canadian senior living.

Nitin Jain: With the oldest baby boomer turning 80 in just over a year and life expectancy on the rise, demand is set to soar.

Nitin Jain: This promising demographic trend coupled with limited new supply and a strong financial performance fuels our optimism as we look ahead.

Nitin Jain: We expect to round out the year with long-term care NOI to grow in the low double-digit percentage range in 2024. And with respect to retirement operations, we expect same-property NOI to benefit from continued occupancy and rental rate increases and grow in the high single-digit percentage range for the year.

Nitin Jain: We also expect a growth momentum through our development and acquisitions to continue.

Speaker Change: We are very pleased to reinstate our DRIP program, which allows eligible shareholders to invest their cash dividends in shares at a 3% discount from the market price. Starting with the November dividend, investors can benefit from this convenient and cost-effective way to increase their holdings and participate in Ciena's continued growth.

Speaker Change: As we expand our operating platform, we will stay focused on elevating the resident experience and deepening team member engagement.

Speaker Change: Our team members' commitment to our purpose and our residents remain a key driver of our organizational strength.

Speaker Change: As I said in my opening remarks, our achievements did not happen by chance.

Speaker Change: They are the direct results of our ongoing initiatives to improve our operating platform, strengthen team member engagement, and deliver on our growth strategy.

Speaker Change: The same focus will guide us as we build on our success and seize the favorable demographics in Canadian senior living. As we like to say at Ciena, we are just getting started.

Speaker Change: On behalf of our management team and our board of directors, I want to thank all of you for your continued support and commitment. We are now pleased to answer any questions you may have.

Speaker Change: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Speaker Change: If you are called upon to ask a question, and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Your first question comes from the line of Jonathan Kelcher of TD Kellyn. Your line is open.

Jonathan Kelcher: Thanks, good morning. First question is just, and I know you guys don't give guidance, but just sort of high level for next year.

Jonathan Kelcher: I guess as you get closer to 95% on the occupancy front in retirement, the growth is going to be more rate driven.

Speaker Change: I'm just curious as to what you're seeing in terms of rate growth on turnover in your homes that are currently full or close to being full.

Speaker Change: Thank you, Jonathan. And good morning. You're right. We don't have a guidance for 2025 just yet, and we also don't have the guidance for when we get to 95.

Speaker Change: I think the next year we definitely are in the ramp up of getting closer to the 95, so we will see that growth in our retirement NOI.

Speaker Change: I would say on an average, our rental growth is around 5%, which is a mix of both annual rent increases and market rent increases. And the market rent is really driven by supply and demand in that specific market, but on an average it's closer to 5%.

Thank you.

for our portfolios.

Speaker Change: When I say it's an average because, you know, our goal is to be at 95%.

Speaker Change: But there are going to be homes which are at 90 because it's market-driven, and there are homes which are at 100, which we have plenty today.

Speaker Change: The ones which are 100% occupancy, obviously the ability to adjust market rate is much higher there, versus a home which is at 90% with good supply in the market, where the rates might be a bit lower. But on average, it's around 5%.

Okay.

Speaker Change: Okay, and then on the long-term care, similar sort of question, you've got the good growth from the Ontario bump this year, and that goes through Q1 next year, and would it be fair to say you'd expect, say, property growth to sort of...

Head back in and around the 2% historical levels.

Speaker Change: Thanks for that question, Jonathan. So I mean, going forward, we would expect that long-term care would grow somewhere in the range of 0 to 2%, similar to how it grew historically before the pandemic.

Speaker Change: Okay, that's a good quarter. That's it for me. I'll put it back. Thanks. Thank you.

Speaker Change: Your next question comes from the line of Lauren Kalmar of Desjardins. Your line is open.

Speaker Change: I'm happy to give a general view because we don't really get into how long the pipeline is and there are all different stages.

Speaker Change: I would say, on an average, you look at around five or six acquisitions before we go on one. I think the number actually might be even higher, close to ten to one.

I think our focus is...

Speaker Change: The right markets for us, you know, a suite size over 100 minimum for retirement, close to 150 for long-term care.

Speaker Change: So I would say there continue to be good opportunities in the market. It is an active space and it's great to see investor interest in our sector as we continue to move forward.

Speaker Change: Okay and are you guys seeing a lot of competition for assets or is there there not many institutional buyers out there at the moment?

Speaker Change: I would also say the published cap rates are a bit backward looking because those trades have not happened and there's been a significant change in interest rates, which again has not been reflected in cap rates.

Speaker Change: What we have not seen, and we never even saw that during the last four years, there's really no distressed assets that come to market.

Speaker Change: Even the retirement homes, which are not doing the best, I mean, and by the definition of that is, instead of being 95% occupied, they might be 80% occupied, so there are no really desperate sellers.

Speaker Change: which is, again, a good thing for the market because it's been stable. You know, when a deal would happen, in all cases, there would be a fair market value. I have not seen a deal, at least from the things that have been published publicly.

Speaker Change: and David Hung, CFO Alphabet and Google Page 1 of 2

Speaker Change: Okay, and just last one for me. Are there, like, would you look to dispose of any less productive assets or are you guys pretty happy on that front?

Speaker Change: to find a path for GTA homes. We have some incredible sites.

Speaker Change: and when those homes redevelop, which I do think they will redevelop, we will have an opportunity to...

and they continue their work.

Speaker Change: So, you know, other than maybe one or two properties from time to time that you might think about as not a fit, we don't really have a portfolio which really needs any reduction in it. So we are very happy with the portfolio and we do think it's an enviable position not to be selling our assets in any way, shape or form.

Speaker Change: Okay, thank you very much for all the calling in. Thank you.

Speaker Change: Your next question comes from line of Pammi Beer of RBC Capital Markets. Your line is open.

Pammi Beer: Coming back to the retirement portfolio, occupancy was up both sequentially and from last year.

margins were, I think, kind of flat.

Speaker Change: Can you maybe just expand on, sorry, I was just stripping out the, I guess, the equity component, but can you maybe just expand on the dynamic there and maybe how you see the margins trending, you know, as you kind of get north of 90%?

Speaker Change: Should we start to see that margins start to accelerate even further over the next few quarters?

Speaker Change: That being said, we do view our growth in occupancy to contribute towards margin percentage growth. So as we move from 90% towards our 95% target, our margin percentage will increase.

Speaker Change: What does impact margins now is really our work around care.

Got it, okay

Speaker Change: Just, you know, coming back to, you know, the, I guess, from a capital deployment standpoint, you've got the Alberta portfolio closing in Q1, Nicola Lodge, I think, as well, you know, as you think about maybe putting the rest of that equity that was raised back, you know, putting it to work, can you maybe just talk about how you kind of see that splitting up or how you're thinking about that splitting up in terms of, you know, additional acquisitions and maybe preserving some for the long-term care redevelopments?

Pammi Beer: I think you basically have answered the question there, Pam. I think for us the intent is to do both.

Speaker Change: Acquisition Development. So, you know, some of it is going to be towards, we just started a development in Keswick, so that's around an $80 million project.

Speaker Change: So that will use some of our equity in that we own the land on it today.

do both in the development side and acquisition side.

Speaker Change: And the acquisition for us, where we have a competitive advantage is areas, you know, especially in the Western Canada.

Speaker Change: There are a lot more assets which are campuses, they have both government funding.

Speaker Change: Three other people for those assets, or sorry, five other people for those assets, we might be competing with three.

Speaker Change: and that obviously tips a bit of a balance in our favor.

Speaker Change: I think you should expect us to do acquisitions in both retirement and long-term care in all the four provinces we are in, Ontario, BC, Saskatchewan, and now Alberta.

Speaker Change: Thanks, Nitin. That's helpful. Maybe just last one for me, just on the long-term care construction funding subsidy top up. Is that expected to be extended, I think, beyond November? And does that maybe, how does that sort of influence the redevelopment plans going forward?

Speaker Change: You know this is again my personal view, not a policy view. There is a huge shortage of long-term care beds in Ontario. So I think any way they can be built would be great. Government will continue to provide that incentive to build those beds.

Speaker Change: If you have a project which is ready to go, it's not a pipe dream, then I would say the construction funding would be there, and I do expect that program to continue, but that again, that's a personal opinion, not a policy out just yet.

Got it. Thanks very much. I'll turn it back.

Speaker Change: Your next question comes from the line of Himanshu Gupta of Scotiabank. Your line is open.

Thank you and good morning.

Speaker Change: So, just on retirement home NOI margins, I mean, it looks like the care mix is more now in the portfolio, and perhaps, you know, compressing the margins.

Speaker Change: So, maybe, you know, what percentage of NOI today is assisted living or heavy care? And you know, how does that compare to, say, pre-COVID level?

Speaker Change: I would say that percentage has not changed significantly. What has changed is because the view is that some of our homes have assisted living floors and there is a care component built into the annual rent rate increases.

Speaker Change: So that mix has not changed considerably. What has changed is the a la carte services of care. So someone might actually be living on an independent living floor but are now getting more services. That mix has gone up significantly.

Speaker Change: I would say that we don't disclose our care revenue numbers separately, but just year over year, they're up close to a double-digit percentage. I would say over the four years, that number would be very meaningfully different, more than 50% change in care revenue.

So that mix has been changing and that is...

Speaker Change: That is high expense because most of it is labor. There has been a lot of labor inflation, especially that because it's mostly nurses when it comes to that kind of care and services.

Speaker Change: and the rates have not kept up with that. We are in the process of...

Speaker Change: Catching up with some of those things. So that's why the mix will continue.

Speaker Change: As occupancy goes up, as David mentioned, we will see our NOI margin go up for the rental portion because inside we do have that look.

Speaker Change: But the care is going to come at a very low margin. You know, I would say even when things get stabilized, I would say more than 15-20% would be quite difficult to get to.

Got it.

Speaker Change: So if I look at pre-COVID you were like 44%, slightly higher than 44%.

And if you're just for the product mix.

Speaker Change: Yeah, no, so again, we haven't given the margin percentage outlook, only, you know, our occupancy outlook. It's going to be, you know, somewhere between, you know, 37% and the 44%. We don't think, we think that we still have runway, for sure, especially as we, you know, you know, get, get, you know, those additional 5%.

percentage points in occupancy.

Speaker Change: So it's going to be somewhere in the middle of that range, but we feel that we've got runway still to go.

Speaker Change: David, we've shared previously in the past that, you know, each percentage, what does it do to retirement and why maybe, if you can speak to that, that might help. Sure, yeah, no, so every percentage in occupancy growth that we achieve generates about $2 million of revenue, and that is at a very high margin of around 75%, so we might be generating, let's say, $1.5 million of NOI.

for every percentage occupancy growth between now and 95%.

Speaker Change: And then shifting to occupancy, obviously you have breached 90% mark this time. What are you seeing in your broader markets?

I mean, uh...

Speaker Change: I would say the average would be closer to 95. We have multiple homes which are 95% plus. There are many homes which are close to 100% occupancy and they have been there for quite some time, so that's not a short phenomenon. But there are also markets which will be closer to 90%.

Speaker Change: One of the things we are seeing, because the view was, well, if there's not enough senior homes in Canada, why is occupancy not high? And we are now finally seeing that even some of the markets in the past which have been oversupplied, we are seeing occupancy inching up in some of those markets, so that supply thing is now coming true.

Speaker Change: And the other portion is where residents have choices, especially in the markets which have a bit of an oversupply.

Speaker Change: You know, having the right product mix is going to be important. We recently took investors to one of our homes.

Speaker Change: in North York, Kensington Place, where we are undergoing a massive renovation.

Speaker Change: We saw similarly in our home in the Oshawa area where occupancy was not doing well. We finished a significant renovation there and we have seen a massive increase in occupancy there and I would say closer to 15 to 20 percent range to just give you an idea. So I do think there would continue to be an opportunity to get to that 95 as an average. It's not an unreasonable expectation.

Awesome, thank you.

Speaker Change: Now shifting to acquisitions, the Alberta acquisition 6.5 going in cap rate. I think you mentioned there's a room for upside or growth on this. Can you elaborate? Are you looking for something here which can expand the going in cap rate?

Speaker Change: We are building our scale, we are hiring a lot of local senior resources there because we are very bullish on

Speaker Change: on the province, given their government funding program and also the view on staffing.

Speaker Change: So the first part would be, we're going in, we're building a bigger platform, we can easily absorb nearly double the size of the platform with the resources we're putting. So I think that does.

Speaker Change: do that. That's the first one. Second, the catch-up that we've seen in Ontario has not happened in Alberta, so their funding is in fact behind. I mean, we paid, you know, less than around $350 a door for these homes. The construction costs close to $450, and these are just three years old, so it's not that there's a lot of depreciation built into it.

Speaker Change: and that ties into that as government looks to build more, create more long-term care beds.

Speaker Change: of Funded Beds in Alberta, the funding, something has to change in it, we don't know what that would be. And again, our approach would be the same as we have done in other provinces, be a good stakeholder for government, give good data, and really...

Speaker Change: advocate and to ensure that the funding is appropriate if you want to build more construction. So that's also, again, that's not a given. That province is very new to us, but we do expect over time that funding to change.

Thank you. Last question from me on the staffing.

Speaker Change: I mean, obviously, you know, these immigration changes were announced recently, and it impacts non-permanent residents, impacts permanent residents as well, I mean, how does that impact the staffing availability for healthcare sector, for your sector?

Speaker Change: So I would say overall it would have an impact on staffing. One of the things in the new immigration rules is healthcare is exempt.

Speaker Change: a significant change in that, but, you know, overall, even when immigration was fully open, there were staffing challenges, and that's why, as

Uh...

Sometimes it might not be as appropriate to talk about.

Thank you for your time.

that with 70% of our expense tied to labor.

Speaker Change: and companies which have the right culture are going to be more successful than others. And we see that in our...

Speaker Change: Our turnover, I mean these things are not only the right thing to do, our turnover is down 30% year over year, and our agency cost, which was close to $50 million, is now touching close to $1.5 million, which is $15 million, with a path to zero, which we know will never get to zero, but we'll get as close to it as possible.

Awesome. Thank you, guys. I'll turn it back. Thank you.

Speaker Change: Your next question comes from the line of Juliano Thornhill of National Bank Financial, your line is open.

Juliano Thornhill: Hey guys, just the first one is on your LTC outlook and just assume that Q3 LTC NOI is a good running for Q4 that implies about a 19% SNRI growth, but you're guiding for low double digits. So I'm just curious, what's the delta between the two?

Juliano Thornhill: Tristan Kholay, Ph.D. The way that I would look at it is I would take our LTC-NOI from Q3, which is quite stable at this point, and I would use that as a run rate for Q4.

Speaker Change: Okay, and then just on the occupancy gains and retirement, is there any like geographic areas that you've seen it outperforming more recently that you could point to?

Not having the right infrastructure, not being competitive from...

Speaker Change: how it shows. And that number is now, you know, let's call those, if the number of homes were X, we are now down to 50% of that in this year, and we saw a significant uptick in that occupancy. So that's what's really driving our occupancy, but overall we are seeing better market conditions for occupancy.

Speaker Change: And then just coming back to the prior comment about move-ins coming in older, is that, do you think that's changed like for the long term or do you see that trending back towards where it was pre-COVID? Like is that still burning off some of the move-ins which were delayed from COVID and will that eventually come down to, you know, a younger move-in age going forward?

Speaker Change: So, we don't really see any, you know, kind of a pent-up demand. I think we saw that in 2021, but I think those things have been well taken care of between now and then.

Speaker Change: So I do think that trend will continue. There is a, for most residents, the view is they want to be in their home as they should.

Speaker Change: The idea of retirement home, especially our portfolio, is driven by a need, either it's social isolation.

Speaker Change: It's some care, whether it's minor housekeeping, whether it's food services. So our retirement portfolio, why we're bullish on our occupancy is because it's driven by need rather than just a choice.

Speaker Change: And I just think that that demographic will only increase more and more as baby boomers come Into retirement space from all the data we see we don't see that trend reversing

Speaker Change: And then just on the last one for David, you have had a pretty large cash balance at quarter end and there should be around $150 billion in CMHC coming due, I think, in Q4. How do you anticipate that cash balance and equity being invested over the coming 12 months?

https://TheBusinessProfessor.com

whatever instrument will yield the largest…

Speaker Change: Return, that would also include repaying conventional mortgages that we have coming due. So we'll definitely make sure that we are prudent around, you know, maximizing our return on any cash balances.

Okay, thanks.

Speaker Change: Your next question comes from Lionel Seram Srinivas of Cormac Securities. Your line is open.

Speaker Change: Thank you, Avrita. Good morning, guys. Congratulations on a good quarter, but all the questions have been answered, so we'll turn it back. Thank you.

Perfect, thank you.

Speaker Change: Your last question comes from the line of Dean Wilkinson of CIBC. Your line is open.

Speaker Change: Sorry if I missed this, Nitin. On the move out into Alberta,

Speaker Change: Do you guys have a target of how much of the portfolio you would want to see there long term and would that be a mix of both kinds of assets or do you have a preference either way?

Speaker Change: Hi, good morning Dean. I would say that we see opportunities both in retirement long-term care in Alberta and similar to BC, there is a tendency in both those provinces which we like is to have a bit of a campus which has both really retirement and funded care.

Speaker Change: in some form. So I do think there will be opportunities for both. We don't really have a target of how much of the portfolio we see, other than to say that we like the province, we like the demographic trends there, we like the staffing there, so we do expect to increase our portfolio when we find the right opportunities.

Speaker Change: Would it be fair to say you can't get the same kind of acquisition yields, say, in Ontario where you're able to buy stuff at, you know...

Speaker Change: 25% discount to replacement cost and and it's just it's it's harder to do say or

in our own backyard.

Speaker Change: Actually, you know, we see similar yields. You know, I would say if you were not in Alberta, sorry, if you were in Alberta, the yield would have been higher on the six and a half. It would be closer to 6.75.

Speaker Change: because we would already have the management platform. In this case, we're building, so there's some cost of that. And these assets are really brand new. So I think if they were even 5 or 10 years out, we would have seen a different deal. We see yields similarly in Ontario, call it 6.6 in a quarter, so not really a big difference.

Speaker Change: and that's so the yields are quite similar in both these provinces.

Speaker Change: Okay, that's great. That's all I had. Thanks, guys. Thank you.

Speaker Change: That concludes our Q&A session. And with no further questions, that concludes today's conference call. You may now disconnect.