Sienna Senior Living Inc. Reports Third Quarter 2021 Financial Results, Additional Development Momentum and Platform Transformation

Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today provided an update on its operations and announced its financial results for the three and nine months ended September 30, 2021. The Consolidated Financial Statements and accompanying Management’s Discussion and Analysis (“MD&A”) are available on the Company’s website at www.siennaliving.ca and on SEDAR at www.sedar.com.

“Our strong third quarter operating results and occupancy growth support our general optimism for Sienna’s path forward,” said Nitin Jain, President and CEO of Sienna. “All the initiatives we put into motion over the past year, from making transformational changes to our operating platforms to our ambitious development plans, are grounded in the belief that it is a privilege to care for and serve Canada’s seniors, ensuring they live with the utmost comfort, dignity and respect.”

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 until January 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 $600 million in capital investments to redevelop its Ontario Class C long-term care portfolio. During and subsequent to Q3 2021, we continued to progress at our various development and redevelopment sites:

  • Under Construction – Construction recently commenced at Sienna’s 160-bed Northern Heights Care Community in North 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.

In addition, construction at Sienna’s joint venture development of a 150-suite retirement residence in Niagara Falls is progressing well. Sienna’s share of this project is 70% and our total capital investment to date is $6.8 million. Construction financing in the amount of $40.7 million has been secured for this project at favourable terms.

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 October 7, 2021, DBRS confirmed Sienna’s issuer rating and senior unsecured debentures ratings of “BBB” with stable trends. These ratings underscore the resiliency and strength of our business and support Sienna’s $600 million redevelopment plan over the next five to seven years to modernize our older long-term care communities in Ontario, as well as our development and growth initiatives across our retirement portfolio.

Launch of Sienna Ownership and Reward (“SOAR”) Program

On August 19, 2021, the Company announced the launch of the SOAR program, which will award common shares of the Company to all permanent employees who have been with the Company for one year or longer and will involve an initial investment of approximately $3.0 million. Pursuant to the program, Sienna will provide every eligible employee with the opportunity to become a shareholder by awarding a one-time grant of approximately $500 of common shares to full-time employees and approximately $300 of common shares to part-time employees. In addition, Sienna is introducing an employer matching program for employees who wish to further invest in and grow the Company together.

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 at December 31, 2020, and increased its unencumbered asset pool to approximately $1.1 billion as at September 30, 2021, representing an increase of $261 million from $840 million as at December 31, 2020;
  • Decreased debt to gross book value by 260 basis points to 45.6% as at September 30, 2021, from 48.2% at December 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 ended September 30, 2020.

Financial and Operating Results

The following table represents key performance indicators for the periods ended September 30:

$000s except occupancy, per share and ratio data Three months ended
September 30, 2021
Three months ended
September 30, 2020
Nine months ended
September 30, 2021
Nine months ended
September 30, 2020
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 $166,850 $494,319 $495,399
Operating expenses, net $137,020 $137,895 $385,624 $398,042
Same property NOI(3) $32,991 $28,566 $107,562 $96,032
Total NOI(3) $33,403 $28,955 $108,695 $97,357
EBITDA(4) $26,121 $19,105 $85,016 $73,520
Net income (loss) $4,533 $(6,484) $15,994 $(15,758)
OFFO(5) 18,265 $13,624 $58,734 $54,741
AFFO(6) $15,671 $14,187 56,203 $56,394
Total assets(7) $1,606,834 $1,733,832 $1,594,834 $1,733,832
OFFO per share(5) $0.272 $0.203 $0.876 $0.817
AFFO per share(6) $0.234 $0.212 $0.838 $0.842
Dividends per share $0.234 $0.234 $0.702 $0.702
Payout ratio(8) 100.0 % 110.4% 83.8 % 83.4%

Notes:

  1. Retirement same property occupancy excludes the financial results of the 57-suite expansion at Island Park Retirement Residence, which
    opened in July 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 ended September 30, 2021 was 80.3% and 78.6%, respectively (2020 – 80.7% and
    82.3%, respectively).
  2. 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.
  3. 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).
  4. 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.
  5. 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 ended September 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).
  6. 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 ended September 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).
  7. Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization.
  8. 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 September 30:

$000s except occupancy, per share and ratio data Three months ended
September 30, 2021
Three months ended
September 30, 2020
Nine months ended
September 30, 2021
Nine months ended
September 30, 2020
Operating expenses, excluding net pandemic expenses (recoveries)(1) $136,644 $130,375 $385,248 $383,100
Same property NOI, excluding net pandemic expenses (recoveries)(1) $33,369 $35,756 $100,322 $110,974
Total NOI, excluding net pandemic expenses (recoveries)(1) $33,781 $36,131 $101,455 $112,299
EBITDA, excluding net pandemic expenses (recoveries)(2) $27,108 $28,842 $79,907 $94,034
Net income (loss), excluding net pandemic expenses (recoveries)(3) $5,258 $666 $12,242 $(695)
OFFO, excluding net pandemic expenses (recoveries) (3)(5) $18,990 $20,774 $54,982 $69,804
AFFO, excluding net pandemic expenses (recoveries) (4)(5) $15,858 $20,926 $52,145 $71,901
OFFO per share, excluding net pandemic expenses (recoveries)(3)(5)(6) $0.283 $0.310 $0.820 $1.042
AFFO per share, excluding net pandemic expenses (recoveries) and net pandemic capital expenditures (recoveries)(4)(5)(7) $0.237 $0.313 $0.777 $1.073
Payout ratio, excluding net pandemic expenses (recoveries) and net pandemic capital expenditures (recoveries)(8) 98.7% 74.8% 90.3% 65.4%

Notes:

  1. 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).
  2. 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).
  3. 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).
  4. 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).
  5. 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).
  6. 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).
  7. 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).
  8. 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 June 2021:

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 Government of Ontario extended the occupancy protection funding until January 31, 2022, at which time occupancy targets of 97% for long-stay beds and 90% for interim short-stay beds, excluding unavailable beds mainly as a result of capacity limitations in multi-bed rooms, will be reinstated. We expect that our LTC communities will reach the average annual occupancy target required for full funding for 2022.

Net Pandemic Expenses decreased by $8.8 million to $1.0 million in Q3 2021, compared to Q3 2020. The decrease was mainly due to moderation of pandemic costs and timing of government assistance to support pandemic expenses.

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 September 30, 2021:

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2021
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 September 30, 2021, the Company recognized pandemic capital expenditures in its interim consolidated statements of financial position of $0.2 million and $9.9 million, respectively, offset by government assistance of $0.02 million and $9.4 million, respectively, which have not been included in the table above. There were no pandemic capital expenditures incurred or related government assistance recognized in the comparative prior year periods.

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 $4.4 million, to $33.4 million, compared to Q3 2020, mainly due to annual inflationary funding increases in the LTC segment, moderation of pandemic costs and timing of government assistance to support pandemic expenses, partially offset by higher staffing costs, utilities and insurance premiums.

LTC NOI increased by $5.1 million to $20.1 million, compared to Q3 2020, primarily due to annual inflationary funding increases, timing of government assistance of $1.9 million relating to Q1 2021 pandemic expenses, and decrease in pandemic expenses of $4.5 million, partially offset by lower preferred accommodation revenues from lower occupancy in private and semi-private rooms, annual inflationary labour cost increases, higher utilities costs and increased repairs and maintenance due to deferrals from prior year.

Retirement same property NOI for Q3 2021 decreased by $0.7 million to $12.9 million, compared to Q3 2020, primarily due to higher agency staffing costs, utilities and insurance premiums, partially offset by annual rental rate increases in line with market conditions and decrease in pandemic expenses of $0.4 million.

Revenue increased by 2.1% in Q3 2021, or $3.6 million, to $170.4 million, compared to Q3 2020. In the Retirement segment, revenues remained consistent to Q3 2020. LTC’s revenues for Q3 2021 increased by $3.6 million compared to Q3 2020, primarily due to annual inflationary funding increases, partially offset by lower preferred accommodation revenue from lower occupancy in private and semi-private rooms.

Operating Expenses, net decreased by 0.6% in Q3 2021, or $0.9 million, to $137.0 million, compared to Q3 2020. Retirement’s operating expenses increased by $0.7 million to $23.8 million, primarily due to higher agency staffing costs, utilities and insurance premiums, partially offset by decrease in pandemic expenses of $0.4 million. LTC’s operating expenses decreased by $1.6 million to $113.2 million, mainly due to timing of government assistance of $1.9 million relating to Q1 2021 pandemic expenses, decrease in pandemic expenses of $4.5 million, partially offset by annual inflationary labour cost increases, higher utilities costs, and increased repairs and maintenance due to deferrals from prior year.

Net income was $4.5 million for Q3 2021, representing an increase of $11.0 million compared to Q3 2020. The increase was primarily due to increase in NOI driven by lower net pandemic expenses, 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.

OFFO increased by 34.1% in Q3 2021, or $4.6 million, to $18.3 million compared to Q3 2020. OFFO per share increased by 34.0% in Q3 2021, or $0.07, to $0.27. The increase was primarily due to higher NOI, lower administrative expenses, lower interest expense on long-term debt, partially offset by lower current income tax recovery.

AFFO increased by 10.5% in Q3 2021, or $1.5 million, to $15.7 million compared to Q3 2020. AFFO per share increased 10.4% in Q3 2021, or $0.02, to $0.23. The increase was primarily related to the increase in OFFO noted above, partially offset by higher maintenance capital expenditures.

Nine Months Summary for period ended September 30, 2021

NOI increased by 11.6%, or $11.3 million, to $108.7 million compared to the nine months ended September 30, 2020, driven by $15.3 million retroactive pandemic funding received in Q1 2021 related to pandemic expenses incurred in excess of available funding during the year ended December 31, 2020, decrease in pandemic expenses of $6.8 million, annual inflationary funding increases in the LTC segment and annual rental rate increases in the Retirement segment, partially offset by lower occupancy in the Retirement segment, lower LTC preferred accommodation revenue from lower occupancy in private and semi-private rooms, annual inflationary labour cost increases, agency staffing costs, higher utilities costs, higher insurance premiums and increased repairs and maintenance due to deferrals from prior year.

LTC NOI increased by 33.2%, or $17.3 million to $69.5 million, compared to the nine months ended September 30, 2020, primarily due to the $15.3 million retroactive pandemic funding received in Q1 2021, decrease in pandemic expenses of $6.7 million and annual inflationary funding increases, partially offset by lower preferred accommodation revenue, annual inflationary labour cost increases, higher utilities costs, higher insurance premiums and increased repairs and maintenance due to deferrals from prior year.

Retirement same property NOI decreased by 13%, or $5.7 million to $38.2 million, compared to the nine months ended September 30, 2020, primarily due to higher agency staffing costs, utilities and insurance premiums, partially offset by annual rental rate increases.

Revenue decreased by 0.2%, or $1.1 million, to $494.3 million compared to the nine months ended September 30, 2020. In the Retirement segment, the decrease of $2.7 million was due to lower occupancy, partially offset by annual rental rate increases in line with market conditions. LTC’s revenues increased by $2.2 million primarily due to annual inflationary funding increases, partially offset by lower preferred accommodation revenue.

Operating expenses, net decreased by 3.1%, or $12.4 million, to $385.6 million compared to the nine months ended September 30, 2020. Retirement’s operating expenses increased by $2.8 million to $70.2 million, mainly due to higher agency staffing costs, utilities costs and insurance premiums. LTC’s operating expenses decreased by $15.2 million to $315.4 million, mainly due to a decrease in pandemic expenses of $6.8 million and retroactive funding of $15.3 million received in Q1 2021, partially offset by annual inflationary labour cost increases, higher utilities costs, higher insurance premiums and increased repairs and maintenance due to deferrals from prior year.

OFFO increased by 7.3%, or $4.0 million, to $58.7 million compared to the nine months ended September 30, 2020. OFFO per share increased by 7.2%, or $0.06, to $0.88. The increase was primarily due to an increase in NOI, driven by $15.3 million of retroactive pandemic funding received in 2021 related to pandemic expenses incurred in excess of available funding during the year ended December 31, 2020, lower interest expense on long-term debt partially offset by higher current income taxes, one-time after-tax restructuring costs of $3.4 million incurred in 2020 and net settlement on interest rate swaps.

AFFO decreased by 0.3%, or $0.2 million, to $56.2 million compared to the nine months ended September 30, 2020, principally related to higher maintenance capital expenditures and decrease in construction funding, partially offset by the increase in OFFO noted above and timing of government assistance for pandemic capital expenditures. AFFO per share, at $0.84, remained consistent to the comparative period.

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 Ontario. The Government of Ontario announced the extension of the occupancy protection funding until January 31, 2022. With the continued admission of new residents, the Company expects to achieve the average annual occupancy target of 97%, excluding unavailable beds, required for full funding at our residences in 2022. Sienna anticipates to receive continued funding for unavailable beds resulting mainly from capacity limitations and the provision of isolation rooms.

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 Friday November 12, 2021 at 11:00 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 5954819. A webcast of the call will be accessible via Sienna’s website at: www.siennaliving.ca/investors/events-presentations. The webcast of the call will be available for replay until November 12, 2022 and archived on Sienna’s website.