Sienna Senior Living Inc. Provides Operations Update and Reports First Quarter 2021 Financial Results
“With the crucial decrease in active COVID-19 cases at Sienna’s residences and the Canadian seniors living sector overall, we have been returning to a more stable operating environment and expect further improvements as various restrictions begin to be lifted at both our long-term care and retirement residences,” said
Operations Update
The early roll-out of vaccines among residents and team members was a significant factor in the 99% decline of active COVID-19 resident cases since the beginning of 2021.
- Vaccinations – According to our most recent vaccination date, approximately
- 95% of Sienna’s residents and
- 74% of Sienna’s team members have been vaccinated with the first dose of vaccine.
- COVID-19 Cases – As of
May 11, 2021 , 10 residences of Sienna’s 83 owned or managed residences have active cases of COVID-19, including one retirement and nine long-term care residences. From the beginning of 2021, active COVID-19 cases among Sienna’s residents declined by approximately 99% with currently three active resident cases across our portfolio.
- Lifting of Restrictions – The Governments of
Ontario andBritish Columbia eased self-isolation requirements in seniors living residences, and communal dining and social activities in residences with high immunization rates are starting to resume. TheGovernment of Ontario has also removed single-site orders for fully immunized staff members, allowing them to work at more than one location.- Additional Government Funding
- On
March 24, 2021 , the Government of Ontario’s 2021-22 budget included an additional$650 million to protect long-term care residents, amongst other funding programs, increasing total funding announced to date to approximately$2.1 billion . - The
Government of Ontario also extended occupancy protection funding untilAugust 2021 and a temporary wage increase of$3 /hour for personal support workers untilJune 2021 . - On
April 19, 2021 , the Federal Government announced$3 billion in funding over the next five years to support long-term care across Canada’s provinces and territories in its budget.
- On
- Additional Government Funding
- Addition to Leadership Team – On
April 19, 2021 ,Jennifer Anderson joined Sienna’s leadership team as Executive Vice President of the Company’s long-term care operations. Jennifer is a highly experienced operator known for her focused approach to improving customer and team member experience and optimizing operational performance in her previous roles as Chief of Operations and Service Excellence Officer at one of the largest workplace insurance organizations inNorth America .
Development Update
- Retirement – Sienna’s development of a retirement residence in
Niagara Falls is progressing well with construction scheduled to start in Q2 2021. The estimated total capital investment is$49 million to$51 million , with an expected development yield of approximately 7.5%. Sienna’s share of this 150-suite greenfield joint venture development is 70%.
- Long-term Care – Construction of two new development projects is scheduled to commence by the end of 2021, beginning with a new 160-bed development in
North Bay to replace the existing 148 older beds. The Company’s estimated capital investment for this redevelopment is approximately$52 million to$55 million , with an expected development yield of approximately 8.0%. These projects are part of Sienna’s development plans to invest over$600 million in capital to redevelop its Ontario Class C long-term care portfolio through new and upgraded facilities over the next five to seven years.
Launch of Sienna for
On
On
First Quarter Operating and Financial Performance
The Company’s financial performance continues to be impacted by extraordinary expenses incurred to manage the pandemic. In Q1 2021,
- Revenue decreased by 2.7% to
$161.2 million in Q1 2021, compared to Q1 2020; - Operating expenses, net were
$117.0 million in Q1 2021, a decrease of 9.4% compared to Q1 2020, driven by timing of pandemic-related government assistance (“net pandemic recovery”); - Net Operating Income (“NOI”), excluding net pandemic recovery, decreased by 9.2% (or
$3.4 million ) to$33.2 million in Q1 2021, compared to Q1 2020, mainly due to lower occupancy in the retirement portfolio and lower preferred accommodation revenue in the long-term care portfolio; - Net income increased by
$12.6 million year-over-year to$10.1 million , primarily related to timing of after-tax net pandemic recovery of$7.3 million ; - Average occupancy in Sienna’s Long-Term Care (“LTC”) portfolio was 80.3%;
- Average same property occupancy in Sienna’s Retirement portfolio was 78.1%;
- Operating Funds from Operations (“OFFO”) per share increased by
$0.013 year-over-year to$0.378 per share; excluding net pandemic recovery, OFFO per share decreased by 26.5% year-over-year to$0.269 per share; - Adjusted Funds from Operations (“AFFO”) per share increased by
$0.012 year-over-year to$0.394 per share; excluding net pandemic recovery, AFFO per share decreased by 23.9% year-over-year to$0.292 per share; - Payout ratio was 59.4% for the three months ended
March 31, 2021 ; excluding the net pandemic recovery, the payout ratio was 80.2%.
Solid Financial Position
The Company maintained a strong financial position during Q1 2021:
- Maintained high liquidity of
$213 million and a substantial unencumbered asset pool of$840 million as atMarch 31, 2021 ; - Decreased debt to gross book value by 90 basis points to 46.0% as at
March 31, 2021 , from 46.9% atMarch 31, 2020 ; and, - Lowered weighted average cost of debt by 30 basis points to 3.3% as at
March 31, 2021 , from 3.6% as atMarch 31, 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 |
||||
Retirement - Average same property occupancy(1)(2) | 78.1% | 85.1% | ||||
Retirement - As at same property occupancy(1)(2) | 78.6% | 84.5% | ||||
Retirement - As at total occupancy(1)(2) | 78.2% | 83.6% | ||||
LTC - Average total occupancy(3) | 80.3% | 97.9% | ||||
LTC - Average private occupancy | 78.2% | 97.3% | ||||
Revenue | $161,228 | |||||
Operating expenses, net | $116,961 | |||||
Same property NOI(4) | $44,101 | |||||
Total NOI(4) | $44,267 | |||||
EBITDA(5) | $35,948 | |||||
Net (loss) income | $10,143 | |||||
OFFO(6) | $25,343 | |||||
AFFO(7) | $26,430 | |||||
Total assets(8) | $1,616,357 | |||||
OFFO per share(6) | $0.378 | |||||
AFFO per share(7) | $0.394 | |||||
Dividends per share | $0.234 | |||||
Payout ratio(9) | 59.4% | 61.3% |
Notes:
- Retirement same property occupancy excludes the results from the expansion at Island Park Retirement Residence, which opened in
July 2019 and is in lease-up. Retirement total average occupancy is 77.7% for Q1 2021 (2020 - 84.2%). - The year-over-year declines in Retirement occupancy are primarily related to a decline in new residents moving in due to the general impact of the COVID-19 pandemic, including access restrictions.
- 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 Q1 2021 includes net pandemic (recovery) expenses of
$(11,027) (2020 -$104 ), respectively. - EBITDA for Q1 2021 increased by
$2,211 to$35,948 compared to Q1 2020 primarily due to the net pandemic recovery of$9,907 , offset by lower Retirement revenues of$1,806 and lower LTC preferred accommodation revenues of$1,123 primarily due to occupancy. - OFFO for Q1 2021 includes an after-tax net pandemic (recovery) expense of
$(7,275) (2020 -$99 ) and mark-to-market recovery on share-based compensation of$(25) (2020 -$(2,541) ). OFFO per share for the three months endedMarch 31, 2021 excluding after-tax net pandemic recovery and net mark-to-market recovery on share-based compensation will decrease by$0.109 to$0.269 (2020 - decrease by$0.037 to$0.328 ). - AFFO for Q1 2021 includes net pandemic capital expenditures of
$417 (2020 - $nil), after-tax net pandemic (recovery) expense of$(7,275) (2020 -$99 ) and mark-to-market recovery on share-based compensation of$(25) (2020 -$(2,541) ). AFFO per share for the three months endedMarch 31, 2021 excluding net pandemic capital expenditures and after-tax net pandemic recovery and net mark-to-market recovery on share-based compensation will decrease by$0.102 to$0.292 (2020 - decrease by$0.037 to$0.345 ). - Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization.
- Payout ratio for Q1 2021 excluding after-tax net pandemic recovery and net mark-to-market recovery on share-based compensation would be 80.1% (2020 - 61.3%).
Financial and Operating Results, excluding net pandemic expenses
The following table represents key performance indicators excluding net pandemic (recovery) expenses for the periods ended
$000s except occupancy, per share and ratio data | Three months ended |
Three months ended |
||||
Operating expenses, excluding net pandemic (recovery) expenses(1) | $127,988 | |||||
Same property NOI, excluding net pandemic (recovery) expenses(1) | $33,074 | |||||
Total NOI, excluding net pandemic (recovery) expenses(1) | $33,240 | |||||
EBITDA, excluding net pandemic (recovery) expenses(2) | $26,041 | |||||
Net income (loss), excluding net pandemic (recovery) expenses(3) | $2,868 | |||||
OFFO, excluding net pandemic (recovery) expenses(3)(5) | $18,068 | |||||
AFFO, excluding net pandemic (recovery) expenses(4)(5) | $19,572 | |||||
OFFO per share, excluding net pandemic (recovery) expenses(3)(5)(6) | $0.269 | |||||
AFFO per share, excluding net pandemic (recovery) expenses and net pandemic capital expenditures(4)(5)(7) | $0.292 | |||||
Payout ratio, excluding net pandemic (recovery) expenses and net pandemic capital expenditures(8) | 80.1% | 61.1% |
Notes:
- Operating expenses, same property NOI and total NOI for the three months ended
March 31, 2021 exclude net pandemic (recovery) expenses of$(11,027) (2020 -$104 ). - EBITDA for the three months ended
March 31, 2021 excludes net pandemic (recovery) expenses of$(9,907) (2020 -$135 ). - Net income (loss) and OFFO for the three months ended
March 31, 2021 exclude after-tax net pandemic (recovery) expenses of$(7,275) (2020 -$99 ). - AFFO for the three months ended
March 31, 2021 excludes after-tax net pandemic (recovery) expenses of$(7,275) and net pandemic capital expenditures of$417 (2020 -$99 and $nil, respectively). - OFFO and AFFO for the three months ended
March 31, 2021 include an after-tax mark-to-market recovery on share-based compensation of$(25) (2020 -$(2,541) ). - OFFO per share for the three months ended
March 31, 2021 excluding after-tax net pandemic recovery and mark-to-market recovery on share-based compensation will increase by$0.109 to$0.269 (2020 - decrease by$0.037 to$0.328 ). - AFFO per share for the three months ended
March 31, 2021 excluding net pandemic capital expenditures and after-tax net pandemic recovery and mark-to-market recovery on share-based compensation will decrease by$0.102 to$0.292 (2020 - decrease by$0.037 to$0.345 ). - Payout ratio for Q1 2021 excluding after-tax net pandemic impact and mark-to-market on share-based compensation after tax would be 80.1% (2020 - 61.3%).
First Quarter 2021 Summary
Average same property occupancy in Retirement was 78.1% in Q1 2021. The decrease in occupancy was primarily related to a decline in new residents moving in due to the impact of the COVID-19 pandemic, including access restrictions. Subsequent to Q1 2021, monthly average same property occupancy improved modestly from 77.7% in March to 77.9% in April, reflecting numerous marketing and sales initiatives, offset by the impact of the third wave of COVID-19. 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 during and subsequent to the end of Q1 2021:
2021 |
||||||||
Jan | Feb | Mar | Apr | |||||
Retirement same property occupancy (average) | 78.6 | % | 78.1 | % | 77.7 | % | 77.9 | % |
Retirement rent collection (%) | 99.3 | % | 99.1 | % | 99.0 | % | 98.8 | % |
Average occupancy in LTC was 80.3% in Q1 2021. 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
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 to Sienna and expenses recognized related to COVID-19 included in operating expenses in the Company's consolidated statements of operations for the three months ended
Three months ended | Three months ended | |||||||||
Thousands of Canadian dollars | ||||||||||
Retirement | LTC | Administrative | Total | Total | ||||||
Government assistance - temporary pandemic pay | 521 | 4,824 | — | 5,345 | — | |||||
Government assistance | 1,438 | 35,285 | — | 36,723 | 810 | |||||
Total government assistance | 1,959 | 40,109 | — | 42,068 | 810 | |||||
Pandemic labour - temporary pandemic pay | 521 | 4,824 | — | 5,345 | — | |||||
Pandemic labour | 1,592 | 19,260 | — | 20,852 | 547 | |||||
Personal protective equipment | 377 | 1,704 | — | 2,081 | 280 | |||||
Other | 201 | 2,562 | 1,120 | 3,883 | 118 | |||||
Total pandemic expense | 2,691 | 28,350 | 1,120 | 32,161 | 945 | |||||
Total net pandemic (recovery) expenses(1) | 732 | (11,759 | ) | 1,120 | (9,907 | ) | 135 |
Note:
$15.3 million in retroactive government assistance was received to support a portion of Sienna’s 2020 pandemic expenses spent in excess of available funding in the LTC segment, which was recognized in Q1 2021.
In addition, for the three months ended
Pandemic expenses are mainly related to additional staffing, temporary pandemic pay programs for team members and PPE. Other pandemic expenses for the Retirement and LTC residences 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 21.2% in Q1 2021, or
LTC same property NOI increased by
Retirement same property NOI decreased by
Revenue decreased by 2.7% in Q1 2021, or
Operating expenses, net decreased by 9.4% in Q1 2021, or
Net income was
OFFO increased by 3.8% in Q1 2021, or
AFFO increased by 3.3% in Q1 2021, or
Outlook
Sienna forecasts that occupancy in its Retirement portfolio will remain below historic levels in the first half of 2021 as COVID-19 access restrictions continue to impact occupancy, in particular with respect to residences located in COVID-19 hotspots. Based on the assumption that restrictions at its residences will ease, Sienna forecasts gradual occupancy improvements during the second half of the year, supported by anticipated pent-up demand and its continued investment in sales and marketing initiatives.
Occupancy in Sienna's LTC portfolio is expected to gradually improve in the coming months as admissions resume and occupancy protection funding expires. Excluding the impact of net pandemic expenses or recoveries, the Company expects the financial performance of Sienna’s LTC portfolio in 2021 to be slightly below 2020. Management’s internal forecasts are based on the impact of new and prolonged access restrictions during the third wave of the pandemic on preferred accommodation revenues and additional investments in Sienna’s properties to elevate resident experience.
Although it is impossible to ascertain the ultimate impacts of COVID-19 on the Company’s operating results at this time, with an anticipated economic recovery, the positive impact of early vaccinations in the seniors living sector and the return to a more stable operating environment, Sienna remains optimistic in its post-pandemic outlook.
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 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: Sienna Senior Living