“Our strong third quarter operating results and occupancy growth support our general optimism for Sienna’s path forward,” said
Operations Update
- Transformational Changes to Operating Platforms – In addition to the Company’s previously announced retirement platform “Aspira”, Sienna will launch a new long-term care platform aimed at providing holistic and integrated care at its communities.
- Retirement – Development of the new retirement platform Aspira, which is based on a resident-centric model of choice for residents, is progressing well for its launch in Q1 2022. During the quarter, we have been focused on team member training on the new resident experience model and marketing initiatives, in addition to the final-stage development of our brand design and identity for a dedicated website.
- Long-term Care – Commenced development of a new resident experience platform for Sienna’s long-term care segment to significantly enhance the quality of life of residents, which is expected to be launched in Q2 2022. Based on best practices and extensive input from stakeholders, the platform’s focus is on improving residents’ dining experience, enhancing activities and programming, and finding ways to bring the local community into Sienna’s long-term care homes to create a better community experience for residents.
- Strong Occupancy Gains – With the focus on marketing and sales initiatives, resumptions of in-person tours at Sienna’s retirement residences and increased admissions to its long-term care communities, the Company’s operating environment continued to strengthen, resulting in strong occupancy gains:
- Retirement – Average same property occupancy up 280 basis points (“bps”) to 82.1% in Q3 2021 from 79.3% in Q2 2021;
- Long-term Care – Average occupancy based on licensed beds was 86.2% in Q3 2021 with quarter-end occupancy reaching 87.8%, or 92.4% excluding the unavailable beds due to capacity limitations. The
Government of Ontario extended occupancy protection funding untilJanuary 31, 2022 .
- Declining Pandemic Expenses – Improved operating environment resulted in reduction of pandemic expenses, including
$2.8 million quarter-over-quarter decline of net pandemic expenses to$1.0 million in Q3 2021 compared to Q2 2021, partially due to timing of pandemic-related funding; and$8.8 million year-over-year decline of net pandemic expenses in Q3 2021 compared to Q3 2020.
- Limited Number of COVID-19 Cases – As of
November 10, 2021 , one of Sienna’s 83 owned or managed residences had active cases of COVID-19.
Development Update
Sienna’s development plans include over
- Under Construction – Construction recently commenced at Sienna’s 160-bed
Northern Heights Care Community inNorth Bay , which will replace 148 older Class C beds. We are monitoring current cost escalations, which we expect will impact our original cost estimate of approximately$55 million .
- Advanced Stages of Planning and Approval – Sienna’s near-term redevelopment plans of the long-term care portfolio in
Ontario also include two additional projects, with construction expected to start during the first half of 2022:- replacement of the existing 60 long-term care beds with 160 new beds at Sienna’s campus of care in
Keswick ; and - replacement of the existing 122 long-term care beds with 160 new beds at Sienna’s long-term care community in
Brantford , and adding a new 147-suite retirement residence, creating an integrated campus of care onsite.
- replacement of the existing 60 long-term care beds with 160 new beds at Sienna’s campus of care in
In addition, construction at Sienna’s joint venture development of a 150-suite retirement residence in
Asset Dispositions
As a result of the Company’s strategic asset management review, Sienna has entered into the following agreements to sell two assets during and subsequent to Q3 2021, subject to regulatory approvals, financing and other customary closing conditions:
- 138-suite retirement residence in
British Columbia for a selling price of$33.3 million , with closing expected in Q1 2022; and
- 236-bed long-term care community in
Ontario for an estimated net selling price of$19.9 million , with closing expected at the end of Q1 2022.
The Company intends to invest the net proceeds from the dispositions to further grow Sienna’s business through its development program. These dispositions are part of the review of our assets base for opportunities to add value through capital recycling.
DBRS Rating Renewal
On
Launch of Sienna Ownership and Reward (“SOAR”) Program
On
Strong Resident, Family and Team Member Satisfaction Results
Results from Sienna’s recently completed long-term care resident and family satisfaction surveys indicate that over 80% of residents and nearly 90% of family members would recommend Sienna’s long-term care communities. The Company anticipates results from the annual retirement resident surveys to be available soon.
In addition, 84% of Sienna’s team members feel that they are able to do meaningful work.
Third Quarter Operating and Financial Performance
- Revenue has increased to
$170.4 million in Q3 2021, compared to$166.9 million in Q3 2020; - Operating expenses, net were
$137.0 million in Q3 2021, compared to$137.9 million in Q3 2020; - Net Operating Income (“NOI”) of
$33.4 million in Q3 2021, including net pandemic expenses of$0.4 million , increased by 15.4% (or$4.4 million ) compared to Q3 2020, mainly due to annual
inflationary funding increases in the LTC segment, moderation of pandemic costs and additional government assistance to support pandemic expenses, partially offset by higher agency labour costs, utilities and insurance premiums; - Net income of
$4.5 million increased by$11 million year-over-year, due to the increase in NOI, lower amortization on intangible assets, lower administrative expenses, lower interest expense on long-term debt, partially offset by higher income tax expense and transaction costs; - Average occupancy in Sienna’s Long-Term Care (“LTC”) portfolio was 86.2%, based on total number of licensed beds, up from 81.6% in Q2 2021;
- Average same property occupancy in Sienna’s Retirement portfolio was 82.1%, up from 79.3% in Q2 2021;
- Operating Funds from Operations (“OFFO”) per share increased by
$0.069 year-over-year to$0.272 per share; - Adjusted Funds from Operations (“AFFO”) per share increased by
$0.022 year-over-year to$0.234 per share; and - Payout ratio was 100% for the Q3 2021.
Financial Position
The Company maintained a strong financial position during Q3 2021:
- Maintained high liquidity of
$222 million , representing an increase of$5 million from$217 million as atDecember 31, 2020 , and increased its unencumbered asset pool to approximately$1.1 billion as atSeptember 30, 2021 , representing an increase of$261 million from$840 million as atDecember 31, 2020 ; - Decreased debt to gross book value by 260 basis points to 45.6% as at
September 30, 2021 , from 48.2% atDecember 31, 2020 ; and - Debt service coverage ratio increased to 2.2 times for the three months ended
September 30, 2021 , from 1.3 times for the three months endedSeptember 30, 2020 .
Financial and Operating Results
The following table represents key performance indicators for the periods ended
$000s except occupancy, per share and ratio data | Three months ended | Three months ended | Nine months ended | Nine months ended |
Retirement - Average same property occupancy(1) | 82.1% | 81.8% | 80.2% | 83.5% |
Retirement - As at same property occupancy(1) | 85.4% | 84.0% | 85.4% | 84.0% |
Retirement - As at total occupancy(1) | 83.6% | 82.8% | 83.6% | 82.8% |
LTC - Average total occupancy(2) | 86.2% | 87.4% | 82.7% | 92.6% |
LTC - Average private occupancy | 82.9% | 86.3% | 80.2% | 91.7% |
Revenue | $170,423 | $494,319 | ||
Operating expenses, net | $137,020 | $385,624 | ||
Same property NOI(3) | $32,991 | $107,562 | ||
Total NOI(3) | $33,403 | $108,695 | ||
EBITDA(4) | $26,121 | $85,016 | ||
Net income (loss) | $4,533 | $15,994 | ||
OFFO(5) | 18,265 | $58,734 | ||
AFFO(6) | $15,671 | 56,203 | ||
Total assets(7) | $1,606,834 | $1,594,834 | ||
OFFO per share(5) | $0.272 | $0.876 | ||
AFFO per share(6) | $0.234 | $0.838 | ||
Dividends per share | $0.234 | $0.702 | ||
Payout ratio(8) | 100.0 % | 110.4% | 83.8 % | 83.4% |
Notes:
- Retirement same property occupancy excludes the financial results of the 57-suite expansion at Island Park Retirement Residence, which
opened inJuly 2019 and is in the lease-up period, and one non-core retirement residence classified as an asset held for sale. Retirement total average occupancy for the three and nine months endedSeptember 30, 2021 was 80.3% and 78.6%, respectively (2020 - 80.7% and
82.3%, respectively). - Long-term care residences are receiving occupancy protection funding for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19, and for capacity limitations of two beds per room as residents cannot be placed in rooms with three or four beds.
- NOI for the three and nine months ended
September 30, 2021 includes net pandemic expenses (recovery) of$378 and$(7,240) , respectively
(2020 -$7,177 and$14,942 , respectively) (as discussed in the "Our Operations Update" section of this MD&A). - EBITDA for the three and nine months increased by
$7,016 to$26,121 and$11,496 to$85,016 , respectively, over the comparative periods primarily due to increase in NOI and lower administrative expenses. - Net income (loss) and OFFO for the three and nine months ended
September 30, 2021 includes an after-tax net pandemic expense (recovery) of$725 and$(3,752) , respectively (2020 -$7,150 and$15,063 , respectively) and mark-to-market (recovery) expense on share based compensation of$(144) and$(80) , respectively (2020 -$647 and$(3,189) , respectively). OFFO per share for the three and nine months endedSeptember 30, 2021 excluding after-tax net pandemic expense (recovery) and mark-to-market adjustments on share-based compensation was$0.281 and$0.819 , respectively (2020 -$0.320 and$0.994 , respectively). - AFFO for the three and nine months ended
September 30, 2021 includes net pandemic capital (recoveries) expenditures of$538 and$306 ,
respectively (2020 -$411 and$(444) , respectively), after-tax net pandemic expenses (recoveries) of$725 and$(3,752) , respectively (2020 -$7,150 and$15,063 , respectively) and mark-to-market (recovery) expense on share-based compensation of$(144) and$(80) , respectively (2020 -$647 and$(3,189) , respectively). AFFO per share for the three and nine months endedSeptember 30, 2021 excluding net pandemic capital expenditures (recoveries) and after-tax net pandemic expense (recoveries) and mark-to-market adjustments on share-based compensation was$0.235 and$0.776 , respectively (2020 -$0.323 and$1.025 , respectively). - Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization.
- Payout ratio for the three and nine months ended
September 30, 2021 , excluding after-tax net pandemic impact and mark-to-market adjustments on share-based compensation, would be 99.7% and 90.4%, respectively (2020 - 72.6% and 68.5%, respectively).
Financial and Operating Results, excluding net pandemic expenses
The following table represents key performance indicators excluding net pandemic expenses (recoveries) for the periods ended
$000s except occupancy, per share and ratio data | Three months ended | Three months ended | Nine months ended | Nine months ended |
Operating expenses, excluding net pandemic expenses (recoveries)(1) | $136,644 | $385,248 | ||
Same property NOI, excluding net pandemic expenses (recoveries)(1) | $33,369 | $100,322 | ||
Total NOI, excluding net pandemic expenses (recoveries)(1) | $33,781 | $101,455 | ||
EBITDA, excluding net pandemic expenses (recoveries)(2) | $27,108 | $79,907 | ||
Net income (loss), excluding net pandemic expenses (recoveries)(3) | $5,258 | $12,242 | ||
OFFO, excluding net pandemic expenses (recoveries) (3)(5) | $18,990 | $54,982 | ||
AFFO, excluding net pandemic expenses (recoveries) (4)(5) | $15,858 | $52,145 | ||
OFFO per share, excluding net pandemic expenses (recoveries)(3)(5)(6) | $0.283 | $0.820 | ||
AFFO per share, excluding net pandemic expenses (recoveries) and net pandemic capital expenditures (recoveries)(4)(5)(7) | $0.237 | $0.777 | ||
Payout ratio, excluding net pandemic expenses (recoveries) and net pandemic capital expenditures (recoveries)(8) | 98.7% | 74.8% | 90.3% | 65.4% |
Notes:
- Operating expenses, same property NOI and total NOI for the three and nine months ended
September 30, 2021 exclude net pandemic
(recoveries) expenses of$378 and$(7,240) , respectively (2020 -$7,177 and$14,942 respectively). - EBITDA for the three and nine months ended
September 30, 2021 excludes net pandemic expenses (recoveries) of$986 and$(5,109) ,
respectively, (2020 -$9,737 and$20,514 , respectively). - Net income (loss) and OFFO for the three and nine months ended
September 30, 2021 exclude after-tax net pandemic expenses (recoveries) of$725 and$(3,752) , respectively (2020 -$7,150 and$15,063 , respectively). - AFFO for the three and nine months ended
September 30, 2021 excludes net pandemic capital (recoveries) expenditures of$538 and$306 ,
respectively (2020 -$411 and$(444) , respectively) and after-tax net pandemic expenses (recoveries) of$725 and$(3,752) , respectively (2020 -$7,150 and$15,063 , respectively). - OFFO and AFFO for the three and nine months ended
September 30, 2021 include an after-tax mark-to-market (recovery) expense on share-based compensation of$(144) and$(80) , respectively (2020 -$647 and$(3,189) , respectively). - OFFO per share for the three and nine months ended
September 30, 2021 excluding after-tax net pandemic expenses (recoveries) and mark-to market adjustments on share-based compensation was$0.281 and$0.819 , respectively (2020 -$0.320 and$0.994 , respectively). - AFFO per share for the three and nine months ended
September 30, 2021 excluding net pandemic capital expenditures (recoveries) and after-tax net pandemic expenses (recoveries) and net mark-to-market adjustments on share-based compensation was$0.235 and$0.776 , respectively (2020 -$0.323 and$1.025 , respectively). - Payout ratio for the three and nine months ended
September 30, 2021 , excluding after-tax net pandemic impact and mark-to-market adjustments on share-based compensation, would be 99.7% and 90.4%, respectively (2020 - 72.6% and 68.5%, respectively).
Third Quarter 2021 Summary
Average same property occupancy in Retirement was 82.1% in Q3 2021, an increase of 280 bps from 79.3% in Q2 2021. Rent collections remained high and consistent with pre-pandemic levels.
The following table provides an update on the monthly average same property occupancy and rent collections in Sienna’s Retirement portfolio since
For the one month ended | |||||
June 2021 | July 2021 | August 2021 | September 2021 | October 2021 | |
Retirement same property occupancy (average) | 80.2% | 81.0% | 82.1% | 83.1% | 84.0% |
Retirement rent collection (%) | 98.9% | 98.9% | 99.3% | 99.0% | 99.2% |
Average occupancy in LTC, based on total number of licensed beds was 86.2% in Q3 2021, and ended the quarter at 87.8%, or 92.4%, if the unavailable 3rd and 4th beds in multi-bed room were excluded, while LTC continued to be fully funded for vacancies. The
Net Pandemic Expenses decreased by
There are various programs and financial assistance provided by the governments to support pandemic expenses. The following table summarizes the government assistance provided to Sienna and expenses recognized related to COVID-19 included in operating expenses in the Company's consolidated statements of operations for the three and nine months ended
Three Months Ended | Nine Months Ended | ||||||||||||||||
Thousands of Canadian dollars | RET | LTC | Admin | Total | RET | LTC | Admin | Total | |||||||||
Government assistance - temporary pandemic pay | 139 | 5,659 | — | 5,798 | 895 | 16,271 | — | 17,166 | |||||||||
Government assistance | 459 | 13,865 | — | 14,324 | 2,415 | 64,633 | — | 67,048 | |||||||||
Total government assistance | 598 | 19,524 | — | 20,122 | 3,310 | 80,904 | — | 84,214 | |||||||||
Pandemic labour - temporary pandemic pay | 139 | 5,659 | — | 5,798 | 895 | 16,271 | — | 17,166 | |||||||||
Pandemic labour | 524 | 10,570 | — | 11,094 | 3,354 | 44,871 | — | 48,225 | |||||||||
Personal protective equipment | 106 | 1,516 | — | 1,622 | 640 | 4,398 | — | 5,038 | |||||||||
Other | 220 | 1,766 | 608 | 2,594 | 500 | 6,045 | 2,131 | 8,676 | |||||||||
Total pandemic expense | 989 | 19,511 | 608 | 21,108 | 5,389 | 71,585 | 2,131 | 79,105 | |||||||||
Total net pandemic expenses (recoveries) | 391 | (13) | 608 | 986 | 2,079 | (9,319) | 2,131 | (5,109) | |||||||||
In addition to the government assistance and pandemic expenses listed in the table above, for the three and nine months ended
Pandemic expenses are mainly related to additional staffing and personal protective equipment. Other pandemic expenses for the Retirement and LTC communities include investments in cleaning supplies for IPAC, meals and accommodations to support team members. Furthermore, other pandemic expenses recorded in administrative costs include advisory fees to support the management of the pandemic.
NOI increased by 15.4% in Q3 2021, or
LTC NOI increased by
Retirement same property NOI for Q3 2021 decreased by
Revenue increased by 2.1% in Q3 2021, or
Operating Expenses, net decreased by 0.6% in Q3 2021, or
Net income was
OFFO increased by 34.1% in Q3 2021, or
AFFO increased by 10.5% in Q3 2021, or
Nine Months Summary for period ended
NOI increased by 11.6%, or
LTC NOI increased by 33.2%, or
Retirement same property NOI decreased by 13%, or
Revenue decreased by 0.2%, or
Operating expenses, net decreased by 3.1%, or
OFFO increased by 7.3%, or
AFFO decreased by 0.3%, or
Outlook
In Sienna's Retirement portfolio, the Company forecasts continued gradual occupancy improvements, based on the assumption that residences will remain open for in-person tours, supported by pent-up demand and our continued investment in sales, marketing and rebranding initiatives. The return to historical seasonality in residents moving in is yet to be determined. Based on current projections, Sienna anticipates to return to occupancy levels reaching between approximately 87% to 89% by the end of 2022, assuming the operating environment continues to remain stable.
In Sienna's LTC portfolio, admissions of new residents accelerated and supported strong occupancy gains during the third quarter. The Company anticipates continued improvements in the coming quarters, given the long waiting list of approximately 40,000 long-term care beds in
In addition, we expect pandemic expenses to continue to moderate as the pandemic subsides, while related government funding declines gradually. We also expect continued timing differences between the incurrence of pandemic expenses and recognition of related government funding. We do, however, anticipate a certain level of unfunded pandemic expenses to remain for some time.
Conference Call
The conference call will be on
About
Risk Factors
Refer to the risk factors disclosed in the Company’s MD&A for the three and nine months ended
Forward-Looking Statements
Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management’s current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as “anticipate,” “continue,” “could,” “expect,” “may,” “will,” “estimate,” “believe,” “goals” or other similar words and include, without limitation, statements with respect to the impact of COVID-19 and measures taken to mitigate the impact including the effectiveness of the vaccine, availability of government funding, the availability of various government programs, government funding, and financial assistance. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Chief Financial Officer and Senior Vice President
(905) 489-0254
karen.hon@siennaliving.ca
Senior Vice President, Public Affairs and Marketing
(905) 489-0788
nancy.webb@siennaliving.ca
Source:
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