Siena Senior Living's Q2 performance shows 17.4% revenue growth, strong occupancy gains, and optimism for continued expansion in senior housing sector.

Operator - (00:00:30)

Ladies and Gentlemen, welcome to Sienna Senior Living Inc. S Q2 2025 conference call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer and David Hung, Chief Financial Officer and Executive Vice President Investor of Sienna Senior Living Inc. Please be aware that certain statements or information discussed in today's are forward looking statements and actual results could differ materially. The Company does not undertake to update any forward looking statement or information. Please refer to the Forward looking Information and Risk Factors section in the Company's public filings including its most recent MD&A for more information for more information. You will also find a more fulsome discussion of the Company's results in its MDNA and financial statements for the period, which are posted on the SEDAR plus and can be found on the Company's website. 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. 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.

Nitin Jain - President and Chief Executive Officer - (00:01:42)

Mr. Jain thank you and good morning everyone and thank you for joining us on our call today. During the second quarter we had strong results. We maintained our growth momentum which is reflected in our financial results and the closing of a number of significant transactions. We completed $315 million of acquisitions during the quarter and we remain on track to add close to $100 million by the end of this quarter with further potential for acquisitions during the remainder of this year. In addition, we are preparing to open our long term care community in North Bay in our campus of care in Brantford over the coming weeks. Together these two developments are valued at over 220 million. Our increasing scale comes at a time when demand for senior housing is accelerating and supply remains highly constrained. These dynamics are not only making our assets more valuable, but they're also making Canadian senior living an increasingly attractive sector for long term investments. From an operational perspective, our key performance indicators in both business segments continue to trend in a positive direction. In this quarter, same property NOI increased by 12.3% in the retirement segment and by 4.8% in the long term care segment. Key drivers of the double digit increase in the retirement segment were a year over year occupancy increase and rental rate growth. Average same Property occupancy was up 150 basis point year over year and has reached 92.1% in the second quarter Subsequent to the quarter, monthly occupancy increased to 93.1% in July and we remain confident to reach our stabilized occupancy target of 95% by Q1 of next year. A robust sales platform and focused marketing campaigns continue to generate strong interest in residences. Our call center leads remain high and tours have increased by over 30% year over year. In July, we hosted a two day national open house at our residences, the first time we extended our open house over a two day period and we are encouraged by the results. We saw a 58% increase in attendance and 66% increase in deposits compared to a previous open house last year. In addition, we maintain a robust focus on hospital outreach and excellent relationships with healthcare and business partners in the communities we operate in. All of these initiatives are expected to drive increasing lead generation and future movements. Beyond the strong same property performance, we are pleased to see the results of our repositioning efforts in our optimization portfolio. Second quarter NOI increased by approximately 32% year over year in this portfolio with an average margin increase of approximately 400 basis points compared to the same period last year. In long term care, our fully occupied homes with growing wait lists continue to add to the strength of our operating platform. Further supporting the long term care segment was an annual funding increase of 2.4% from the government of Ontario. This increase comes into effect as of April 1, 2025 and we expect similar announcements. Funding increases in line with inflation from governments in Alberta and British Columbia. In addition, our recently acquired portfolio in Alberta and the acquisition of the final 30% interest in Nikola Lodge in British Columbia have added to the increase in total NOI in the long term care segment. Moving to slide 6 our strategy of maintaining a diversified portfolio of private pay retirement residences and government funded long term care communities is reflected in our recent acquisitions. During the second quarter we added six properties to our platform in Ontario and Alberta. On April 1, we finalized the portfolio acquisition of four continuing care homes in key markets in Alberta and are excited about this expansion, adding 540 beds in a province where we expect to continue our growth as opportunities arise. We also closed the acquisition of two retirement residences in Ottawa, adding suites in a market that has seen a significant turnaround in the recent past. In addition, we are further strengthening the footprint in the Greater Toronto area with an acquisition of 133 suite high quality retirement residence and 192 bed long term care home. Both properties are located in Mississauga and are expected to close in this quarter. Our highly engaged team and a structured approach to onboarding and integration allows us to grow at this accelerated pace. As we expand further, we will continue to enhance our transition processes to ensure a smooth and fast integration of the new properties, team members and residents into the Ciena's operating platform. This not only supports a positive experience for all involved, but will also further strengthen our operating results. Moving to Development we completed Sienna's first Long Term care redevelopment project in North Bay and we expect to welcome residents to their new home in the coming weeks. We couldn't be prouder of this significant milestone which highlights our commitment to modernizing a long term care portfolio in Ontario. We are also finalizing our $140 million Campus of Care in Brantford, Ontario. The campus comprises of 160 redeveloped long term care beds and 147 retirement suites. We are looking forward to welcoming our first residents at our retirement residence at the end of this month and expect to open our long term care home by the end of the third quarter. Once fully operational, each of our redevelopment project is expected to grow Ciena's Adjusted Funds From Operations (AFFO) per share by about 3%. At the end of July, the Ontario government announced enhancements to its construction funding program for long Term care homes. The new program provides greater funding flexibility and addresses regional differences in construction costs, in particular with respect to higher building costs in the gta. While we continue to evaluate the revised funding and its implications on our development program, we feel optimistic about the significant improvement given that over 80% of our development pipeline is located in the Greater Toronto area. Moving to Slide 8 Investing in our team members and building a workforce that is fully aligned is fundamental to grow and scale our operations. An important aspect of a growth story is the ownership culture we are building at Ciena and we are particularly proud of our Share Ownership Program. Since launching the program in 2022, more than 10,000 team members have become shareholders. This year we made further enhancements by awarding additional shares to team members celebrating service milestones. Many of the impactful initiatives that have helped us build highly engaged teams are also highlighted in our 2025 impact report, which we released yesterday. The report highlights a meaningful difference our 14,500 team members make every single day in the lives of our residents, families and the communities we operate in. With that, I'll turn it over to David for an update on our financial results.

David Hung - Chief Financial Officer and Executive Vice President Investor - (00:08:45)

Thank you Nitin and good morning everyone. I will start on slide 10 for financial results in my commentary. In accordance with our MD&A disclosure, I will make reference to our operating results excluding one time items in Q2 2025 Revenue on a proportionate basis increased by 17.4% year over year to $253.6 million. This increase was largely due to occupancy and rental rate growth as well as increased care revenue in the retirement segment. Adding to the increase were the contributions from our long term care platform including higher flow through funding for direct care, higher private accommodation revenue and additional revenue from acquisitions completed in in 2025, same property NOI increased by 8.2% to $45.1 million in Q2 2025, including by 12.3% in our retirement segment and by 4.8% in the long term care segment. In the retirement segment, same property NOI increased by $2.3 million in Q2 2025 compared to last year largely as a result of improved occupancy and rate growth. These improvements, in addition to generating higher care revenue and maintaining a strict focus on operating expenses, supported the year over year 230 basis point improvement of our same property operating margin. We expect the margin expansion to continue as we get closer to our 95% occupancy target and achieve additional efficiencies through scale. In addition to strong same property growth, we are progressing well with respect to our asset optimization initiatives which includes five assets in the company's retirement portfolio. These assets will benefit from a range of initiatives that target a better market fit including renovations, the change in suite mix, additional services or the alternative use of a property. Occupancy in our optimization Portfolio increased by 740 basis points year over year in Q2, adding to the strength of our results in the retirement segment. In the long term care segment, same property NOI increased by $1.1 million. Fully occupied homes with growing waitlist and continued improvements in private occupancy supported the. Year over year growth. During Q2 2025, operating funds from operations increased by 24.3% to $29.3 million compared to last year, primarily due to higher same property NOI as well as contributions from acquisitions that were completed in the quarter. Adjusted funds from operations increased by 21% to $24.1 million compared to last year. The increase was mainly due to a higher Operating Funds From Operations (OFFO) offset by an increase in maintenance capital expenditures and lower construction funding. Income on a per share basis Operating Funds From Operations (OFFO) and AFFO per share decreased by 1.5% and by 4.0% respectively in Q2 2025. Our Q2 2025 AFFO payout ratio was 89.5%, a 380 basis point increase compared to Q2 2024. The decrease in Operating Funds From Operations (OFFO) and AFFO per share and the increase in the company's payout ratio are the result of the temporary dilution in connection with our equity issuances in August 2024 and February 2025, which made the significant expansion of our asset base policy possible. In total, we raised $288 million of equity by issuing 18.7 million shares to fund our acquisitions and developments. With a substantial amount of the capital invested in recent months and further capital being deployed during the remainder of Q3, we expect to realize the full benefit in the quarters ahead. Moving to slide 11 throughout the second quarter we maintained our strong financial position and balance sheet. We ended the quarter with $313 million in liquidity, $1.2 billion of unencumbered assets and no major debt maturities until Q1 2026. Further adding to this strong financial position was the confirmation of the company's Morningstar DBRS BBB rating with stable trends. This confirmation was announced by MorningStar DBRS on August 1st and was based on Sienna's robust operating performance. With that, I will turn the call back to Nitin for his closing remarks.

Nitin Jain - President and Chief Executive Officer - (00:13:11)

Thank you, David we are at the beginning of a major demographic shift. The leading edge of the baby boomer Generation is turning 80 and entering a stage of life where retirement living becomes a real consideration. This powerful tailwind combined with a strong balance sheet and a healthy pipeline of growth opportunities puts us in a great position to take advantage of the positive momentum in Canadian senior living. With respect to our growth targets. We expect same property NOI in our retirement segment to benefit from continued occupancy and rental rate increases and we remain confident to reach a stabilized occupancy target of 95% by Q1 of 2026. Based on our strong results during the first six months of 2025 and our outlook for the balance of the year, we maintain our guidance for Sienna's 2025 same property retirement NOI growth to exceed 10%. Sienna's long term care portfolio is expected to benefit from the continued stability of this segment. The 2025 target for same property NOI growth excluding one time items is expected to be in low single digits. In addition, we expect Sienna's growth through acquisitions and development to continue. So far, we are on track to add nearly $660 million of assets by Q3 of this year and we see potential for additional growth during the balance of the year. In June of this year, we celebrated the 15th anniversary of Sienna being listed on the Toronto Stock Exchange. Our recent growth initiatives are built on the same diversified strategy that has driven our success over the past 15 years. Since our IPO, we added $2.3 billion of assets and grew from a long term care operator in Ontario to one of the largest and most diversified senior living companies in Canada. During this time, Sienna has delivered a total shareholder return of over 400% and has significantly outperformed the TSX, which increased by approximately 140% over the same period last month. Sienna was named one of Canada's best companies in 2025 by Time magazine, a ranking based on continuous growth, high employee satisfaction and a purpose driven culture. We are particularly proud of this recognition which highlights our achievements and was made possible by our 14 and a half thousand team members who are also shareholders in our company. On behalf of our entire team and our board of Directors, I want to thank you for your support and we are now ready to take your questions.

Operator - (00:15:35)

Thank you. If you have a question, please press Star one on your telephone keypad. If you wish to remove yourself from the queue, simply press Star one again. One moment for your first question. Your first question comes from the line of Lauren Calmar of Desjardins. Your line is open. Thanks.

Lauren Calmar - (00:15:55)

Good morning. Maybe just focusing in on the developments to start off a little bit. You guys got the two that are going to be completed this quarter. You'll have just one ongoing. Obviously you've called out the fact that you're still evaluating the implications from the updated development scheme, but I was just wondering if you'd give us a little bit of insight into how you're thinking about new initiations and how many projects do you think you guys can get underway in Maybe the next 12 to 18 months?

Nitin Jain - President and Chief Executive Officer - (00:16:28)

Hi Lorne. Good morning. On development, the new funding change in GTA we are very optimistic about. The funding is nearly increasing by close to 100%. Many of the projects which were not viable before could potentially be made viable. You always have to go through the details because the program was just recently launched. We have close to 1,000 beds in pipeline in GTA markets, so we do expect us to continue on with some projects. It's a bit too early to comment on which one will go first, but I would expect at least one project in the next two 12 or 18 months, considering that some of the next projects would be bigger than 160 beds that we have done in the past.

Lauren Calmar - (00:17:12)

Okay, that's very helpful. And then just a bit more of a technical one. I Guess on the construction funding subsidy for North Bay and Brantford, when do you guys expect that to come on? Would that come on? Sort of right when they're completed and.

David Hung - Chief Financial Officer and Executive Vice President Investor - (00:17:27)

You get the full benefit in 4Q. Thanks for that question, Lauren. We would start getting the construction funding when the first resident moves in. So that would be in several weeks from now when we start moving residents to the new building. We've already completed the building in July and we've gotten $4 million of development grant from them already. We're currently just undergoing final ministry inspection. And so within the next few weeks when the first resident moves in, that's when we would get the construction funding subsidies.

Lauren Calmar - (00:17:59)

Okay, and just to confirm that $4.

David Hung - Chief Financial Officer and Executive Vice President Investor - (00:18:00)

Million development grant, that doesn't hit FFO.

Lauren Calmar - (00:18:04)

No, it does not. It would go against the cost of construction. Perfect. Okay, thank you so much. I'll turn it back.

Operator - (00:18:14)

Your next question comes from the line of Jonathan Kelcher of TD Cowan. Your line is open.

Jonathan Kelcher - (00:18:19)

Thanks. Good morning. Just sticking on the development front for Brantford, for the retirement home, how should we think about the cadence of lease up for the property? Have you guys started leasing that yet?

Nitin Jain - President and Chief Executive Officer - (00:18:37)

Hi, Jonathan. Good morning. We have started leasing up. We have deposits already and residents are ready to move in when the homes open, which probably is end of this month or first week of September.

Jonathan Kelcher - (00:18:49)

Usually for a property that size, a.

Nitin Jain - President and Chief Executive Officer - (00:18:52)

Regular lease up is around two and a half to three years. Our goal would be to do it faster, but again we'll provide more detail on it as it opens up and we'll start to see more and more visibility. And again for some of the services such as assisted living and memory care, they're more in time where you people don't really put deposits. It's a need driven service. And the retirement home that we're building in Brantford has assisted living, has memory care. So we do expect that once it opens it'll get filled out pretty fast. At least those wings.

Jonathan Kelcher - (00:19:25)

Okay, and how many deposits would you have? Is it a lot?

Nitin Jain - President and Chief Executive Officer - (00:19:29)

A little. I would say it's in line with what you would expect when a building opens.

Jonathan Kelcher - (00:19:36)

Okay, fair enough. On your same property, NOI outlook for retirement, you guys kept it at 10% plus, but you did do 14%, give or take in the first half. Should we maybe think about this as kind of 10% plus for the back half of the year?

Nitin Jain - President and Chief Executive Officer - (00:19:59)

Yeah, I would say that's not an assumption like that would make sense. We see margin growth, we see occupancy change, we saw a little bit of dip in Occupancy in the second quarter, which is more driven by where we ended the first quarter. And as you know, it's an average. When you start low, it takes a bit of time to build it up. And the numbers we're seeing in July where occupancy is trending up, we do expect to deliver on the 10% plus target we have for this year. Okay.

Jonathan Kelcher - (00:20:29)

And then just lastly on the 95% that you expect to, they hit in Q1. Is there any reason to think that you can't get to 96 or maybe even a little bit more as the year progresses next year? 95 is not just a magic stop number, is it?

Nitin Jain - President and Chief Executive Officer - (00:20:49)

I agree with you 100%. I think there was a time when 95% was really the end mark for retirement. We see many of our homes delivering much above 95%. You always have in a portfolio a few properties in a market which is a bit oversupplied for a year or two. I would say the reality is the majority of the homes on an average of 95 would be much above 95. And you might have a few homes which are at 90% or in the high 80s, just depending on market conditions or if it is going through some optimization or renovation. But your question around that 95% is not really the high water mark. We agree with it completely. I think there's a lot more potential after 95.

Jonathan Kelcher - (00:21:33)

What do you think the high water mark would be for a portfolio like yours?

Nitin Jain - President and Chief Executive Officer - (00:21:38)

Yeah, it's just very difficult to predict. I mean, we have homes which are running at 100% quarter after quarter for multiple quarters. So one could argue, can everything become like that? I think that would be very optimistic. But getting to 96, 97 is not unreasonable. I just think we have to first get to 95 before we start talking about some of those other numbers. Okay, that's helpful.

Jonathan Kelcher - (00:22:03)

That's it for me. I'll turn it back. Thank you.

Operator - (00:22:05)

Thank you again. If you have a question, please press Star one on your telephone keypad. Your next question comes from the line of Himanshu Gupta of Scotiabank. Your line is open.

Himanshu Gupta - (00:22:17)

Thank you and good morning. So just sticking to retirement home occupancy, how was your occupancy performance in Q2 and does that make you on track to reach your 95% target?

Nitin Jain - President and Chief Executive Officer - (00:22:33)

Yeah, I mean, our occupancy for we started the quarter in Q2 was a bit late and so we had to do a bit of catch up. We had significant more move outs in Q1 than we saw in the past. So it takes a bit of time to catch that up. We are happy with our July results where we are tracking around 93% or so. So I would say we, and we don't see much change in the trend. We had very successful open house. Our leads are up, our deposits are up, our tours are up. So again, that's what gives us the confidence of getting to that 95% in Q1.

Himanshu Gupta - (00:23:08)

Got it. And then you know, assuming like a seasonal dip in February, March, I mean, so technically you have to get to that 95% by December or January. So it's like four or five months ahead of us and 200 basis points to cover. Fair to say that?

Nitin Jain - President and Chief Executive Officer - (00:23:24)

Yeah, that's correct. You know, there is seasonality. There is also a combination of, you might have markets where there's lot of, you know, as long term care homes are opening up, you might have a dip when the new homes open up. But that, you know, it'll get absorbed quickly. It might take a month or so. We are not seeing the level of seasonality we used to see in the past. The move outs in Q1 were more driven by additional long term care homes opening so that people on the wait list go up and it takes a month or so to backfill the retirement home. So it's hard to say, Himanshu, at this time that would be redone by December. I would say we would stick to the target of by Q1 we'll get to 95% and again all things are trending towards that.

Himanshu Gupta - (00:24:09)

Fair enough. Thank you for that. Turning attention to retirement home NOI margins. Good to see some expansion in Q2, you know, on a year over year basis. I mean in the past you guys have said like 70 to 75% of revenue from, you know, incremental occupancy should go to noi. Is that match still working and that's how you see it going forward as well?

David Hung - Chief Financial Officer and Executive Vice President Investor - (00:24:37)

Yeah, that's right, Himanshu. We have said before that, you know, between 75 to 80% of, you know, any occupancy increase would fall to the bottom line. We still continue to believe that, you know, particularly now that, you know, we're above 92% occupancy. That would be more true than ever.

Himanshu Gupta - (00:24:58)

Awesome. Okay, thank you. Maybe the last question is on north bay so that 3% effo accretion, would you say that most of it or the bulk of it is coming from that annual construction subsidy and not much of incremental? Fair to say that, yeah.

David Hung - Chief Financial Officer and Executive Vice President Investor - (00:25:20)

No, I mean it's going to come from a combination of incremental noi. Remember that North Bay, it is a bigger building than the older building that we have currently. We're also going to get more NOI from higher preferred revenues. But there will also be, of course, you know, the lift from the construction funding subsidy as well, of which it would be $3.3 million on an annual basis. So it's really the combination of the two.

Himanshu Gupta - (00:25:50)

Thank you, guys. And I'll turn them back. Thank you.

Operator - (00:25:55)

With no further questions, that concludes our Q and A session, and it also concludes today's conference call. You may now disconnect. Thank you.