Sienna Senior Living Inc. Provides Operations Update and Reports 2020 Third Quarter Financial Results
“Eight months into the pandemic, we are continuing with our tireless efforts to fight COVID-19 and to minimize the impact of new outbreaks,” said
Operations Update
Sienna has leveraged the knowledge and skills of Canada’s foremost health and long-term care experts and has invested in its frontline teams and processes to enhance the way it cares for its residents and to limit the spread of COVID-19.
- COVID-19 Cases – As of
November 11, 2020 , 14 residences of Sienna’s 83 owned or managed residences are in outbreak with active cases COVID-19, including 5 retirement and 9 long-term care residences. - Strengthened Resident Quality Platform
- Appointed Dr.
Andrea Moser as Chief Medical Officer to lead and implement all aspects of medical services, build up Sienna’s virtual care capacity, and enhance our resident quality platform; and
- Established Quality Committee to enhance oversight of key clinical quality and resident safety measures, including resident care, resident and team member satisfaction and safety;
- Joining the Seniors Quality Leap Initiative to benchmark quality indicators against international standards and to participate in the sharing of best practices to improve clinical quality and quality of life for seniors.
- Appointed Dr.
- Increased Staffing – From March to October, Sienna added approximately 1,400 full-time and 1,100 part-time team members increasing net new hires by 800 and growing its total pool of full-time team members by 20% to over two thirds of Sienna’s workforce.
- Launched Centralized Call Centre – New call centre strengthens communications with residents and their families and support marketing efforts in retirement (“Retirement”) operations.
- Improved Occupancy in Retirement Portfolio – Occupancy in Sienna’s Retirement portfolio increased to 83.4% at the end of Q3 2020, a 180 basis point increase from 81.6% at the end of Q2 2020, as a result of intensified marketing and sales initiatives.
- Pursuit of Long-Term Care Campus Redevelopment – Sienna is actively pursuing the development of a new 320-bed long-term care campus to provide integrated care in partnership with Scarborough Health Network.
Third Quarter Operating and Financial Performance
The Company’s financial performance has been significantly impacted by extraordinary expenses incurred to manage the pandemic in excess of government funding received. With the strength in overall fundamentals in the seniors living sector and the encouraging recent developments with respect to a potentially effective COVID-19 vaccine, coupled with Sienna’s solid balance sheet and liquidity, we are confident we will see significant improvements in the Company’s operational and financial performance once the pandemic subsides.
- Revenue decreased by 0.7% to
$166.9 million in Q3 2020, compared to Q3 2019; - Operating expenses, net were
$137.9 million in Q3 2020, an increase of 7.9% compared to Q3 2019; - Total same property NOI decreased by 28.3% (or
$11.4 million ) to$29.0 million in Q3 2020, compared to Q3 2019, mainly due to net pandemic expenses of$7.2 million ; - Net income decreased by
$10.2 million year-over-year to a net loss of$6.5 million ; - Average occupancy in Sienna’s
Long-Term Care (“LTC”) portfolio was 87.4%; - Average same property occupancy in Sienna’s Retirement portfolio was 81.4%;
- Operating Funds from Operations (“OFFO”) per share decreased by 44.2% year-over-year to
$0.203 per share; excluding net pandemic expenses, OFFO per share decreased by 14.8% year-over-year to$0.310 per share; - Adjusted Funds from Operations (“AFFO”) per share decreased by 42.4% year-over-year to
$0.212 per share; excluding net pandemic expenses, AFFO per share decreased by 14.9% year-over-year to$0.313 per share; - Payout ratio was 110.4% for the three months ended
September 30, 2020 ; excluding net pandemic expenses, payout ratio was 74.8%.
Solid Financial Position
The Company maintained a strong financial position and debt rating during Q3 2020:
- Confirmed the Company’s issuer rating of “BBB” with a “Stable” trend from DBRS, highlighting the Company’s high-quality balanced portfolio and sophisticated operating platform;
- Liquidity increased to
$210.3 million as atSeptember 30, 2020 , from$144.0 million as atDecember 31, 2019 , comprised of cash and cash equivalents and available credit facilities; subsequent to Q3 2020, the Company repaid$30.0 million of its credit facilities; and - Weighted average cost of debt lowered by 40 basis points to 3.3% as at
September 30, 2020 , from 3.7% compared toSeptember 30, 2019 .
On
- Fair value of unencumbered asset pool increased to
$840 million from$540 million as atSeptember 30, 2020 ; and - Extending the Company’s weighted average term to maturity to 4.9 years on a pro forma basis from 4.0 years as at
September 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 September 30, 2020 |
Three months ended |
Nine months ended September 30, 2020 |
Nine months ended |
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Retirement – Average same property occupancy(1)(2) | 81.4 | % | 86.9 | % | 83.2 | % | 88.6 | % | ||||
Retirement – As at same property occupancy(1)(2) | 83.4 | % | 86.3 | % | 83.4 | % | 86.3 | % | ||||
LTC – Average total occupancy(3) | 87.4 | % | 98.2 | % | 92.6 | % | 98.3 | % | ||||
LTC – Average private occupancy | 86.3 | % | 98.0 | % | 91.7 | % | 98.1 | % | ||||
Revenue | $ | 166,850 | $ | 167,947 | $ | 495,399 | $ | 497,573 | ||||
Operating expenses, net | $ | 137,895 | $ | 127,785 | $ | 398,042 | $ | 378,570 | ||||
NOI(4) | $ | 28,955 | $ | 40,162 | $ | 97,357 | $ | 119,003 | ||||
Net (loss) income | $ | (6,484 | ) | $ | 3,763 | $ | (15,758 | ) | $ | 6,435 | ||
Operating Funds from Operations (OFFO)(5) | $ | 13,624 | $ | 24,208 | $ | 54,741 | $ | 69,132 | ||||
Adjusted Funds from Operations (AFFO)(5) | $ | 14,187 | $ | 24,492 | $ | 56,394 | $ | 72,303 | ||||
Net (loss) income per share | $ | (0.097 | ) | $ | 0.057 | $ | (0.235 | ) | $ | 0.097 | ||
OFFO per share(5)(6) | $ | 0.203 | $ | 0.364 | $ | 0.817 | 1.042 | |||||
AFFO per share(5)(6) | $ | 0.212 | $ | 0.368 | $ | 0.842 | 1.089 | |||||
Dividends declared per share | $ | 0.234 | $ | 0.233 | $ | 0.702 | $ | 0.692 | ||||
Payout Ratio | 110.4 | % | 63.3 | % | 83.4 | % | 63.5 | % |
Notes:
(1) Retirement same property occupancy excludes the results from the expansion at Island Park Retirement Residence, which opened in
(2) The quarter-over-quarter and year-over-year declines in Retirement occupancy are primarily related to a decline in new residents moving in as a result of access restrictions and the general impact from the COVID-19 pandemic.
(3) 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.
(4) NOI for the three and nine months ended
(5) OFFO and AFFO for the three and nine months ended
(6) OFFO and AFFO per share for the three months ended
Financial and Operating Results, excluding net pandemic expenses
The following table represents key performance indicators excluding net pandemic expenses for the periods ended
$000s except occupancy, per share and ratio data | Three months ended |
Three months ended |
Nine months ended |
Nine months ended |
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Operating expenses, excluding net pandemic expenses (1) | $ | 130,718 | $ | 127,785 | $ | 383,100 | $ | 378,570 | ||||
NOI, excluding net pandemic expenses (1) | $ | 36,132 | $ | 40,162 | $ | 112,299 | $ | 119,003 | ||||
Net income (loss), excluding net pandemic expenses (2) | $ | 666 | $ | 3,763 | $ | (695 | ) | $ | 6,435 | |||
Operating Funds from Operations (OFFO), excluding net pandemic expenses (2)(4) | $ | 20,774 | $ | 24,208 | $ | 69,804 | $ | 69,132 | ||||
Adjusted Funds from Operations (AFFO), excluding net pandemic expenses and pandemic capital expenditures (3)(4) | $ | 20,926 | $ | 24,492 | $ | 71,901 | $ | 72,303 | ||||
Net income (loss) per share, excluding net pandemic expenses (2) | $ | 0.010 | $ | 0.057 | $ | (0.010 | ) | $ | 0.097 | |||
OFFO per share, excluding net pandemic expenses (2)(4)(5) | $ | 0.310 | $ | 0.364 | $ | 1.042 | 1.042 | |||||
AFFO per share, excluding net pandemic expenses and pandemic capital expenditures (3)(4)(5) | $ | 0.313 | $ | 0.368 | $ | 1.073 | 1.089 | |||||
Payout Ratio, excluding net pandemic expenses (6) | 74.8 | % | 63.3 | % | 65.4 | % | 63.6 | % |
Notes:
(1) Operating expenses, same property NOI and total NOI for the three and nine months ended
(2) Net income (loss) and OFFO for the three and nine months ended
(3) AFFO for the three months ended
(4) OFFO and AFFO for the three and nine months ended
(5) OFFO and AFFO per share, excluding net pandemic expenses and pandemic capital expenditures for the three months ended
(6) Payout ratio, excluding net pandemic expenses for the three and nine months ended
2020 Third Quarter Summary
Average occupancy in LTC was 87.4% in Q3 2020, a decrease from 98.2% in Q3 2019. Long-term care residences are fully funded 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. The Governments of
Average same property occupancy in Retirement was 81.4% in Q3 2020, a decrease from 86.9% in Q3 2019, primarily related to a decline in new residents moving in due to the impact of the COVID-19 pandemic, including access restrictions.
The following table provides an update on the monthly average same property occupancy and rent collections in Sienna’s Retirement portfolio during and subsequent to the end of Q3 2020:
2020 | ||||||||
July | Aug | Sep | Oct | |||||
Retirement same property occupancy (average) | 81.2 | % | 81.1 | % | 81.7 | % | 82.7 | % |
Retirement rent collection (%) | 99.8 | % | 99.6 | % | 99.4 | % | 99.5 | % |
Improvements in the average monthly occupancy rates in September and October were the result of a successful marketing and sales campaign ahead of the second wave. As at
NOI decreased by 27.9% (or
The following table summarizes the government assistance and pandemic expenses recognized for the three and nine months ended
Three months ended |
Nine months ended | |||||||
September 30, 2020 |
September 30, 2020 | |||||||
Retirement | LTC | Administrative | Total | Retirement | LTC | Administrative | Total | |
Total government assistance | 2,594 | 24,905 | — | 27,499 | 4,735 | 48,492 | — | 53,227 |
Total pandemic expenses | 3,382 | 31,294 | 2,560 | 37,236 | 6,909 | 61,260 | 5,572 | 73,741 |
Total net pandemic expenses | 788 | 6,389 | 2,560 | 9,737 | 2,174 | 12,768 | 5,572 | 20,514 |
Included in total government assistance and total pandemic expenses in the table above is government-funded flow-through pandemic pay for frontline team members. In the Retirement segment, a total of
LTC same property NOI decreased by 35.9% (or
Retirement same property NOI decreased by 17.7% (or
Revenue decreased by 0.7% (or
Operating expenses, net increased by 7.9% (or
The Company generated a net loss of
OFFO decreased by 43.7% (or
AFFO decreased by 42.1% (or
2020 Nine Months Summary
NOI decreased by 18.2% (or
LTC same property NOI decreased by 22.0% (or
Retirement same property NOI decreased 14.0% (or
Revenue decreased by 0.4% (or
Operating expenses, net increased by 5.1% (or
The Company generated a net loss of
OFFO decreased by 20.8% (or
AFFO decreased by 22.0% (or
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Risk Factors
Refer to the risk factors on “General Business Risks” and “COVID-19 and Other Outbreaks” 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 business strategy and financial condition, and in particular in respect of the impact of COVID-19 and measures taken to mitigate the impact, supply-chain integrity and availability of PPE, 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) 415-7623
nancy.webb@siennaliving.ca
Source: Sienna Senior Living