Chartwell Retirement reports ninth consecutive quarter of double-digit NOI growth, outlines strong future outlook with strategic acquisitions and operational enhancements.

Regina - Operator - (00:01:12)

Hello and welcome to the Chartwell third quarter 2025 results conference call. My name is Regina and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press Star one again. I'd now like to turn the conference over to Vlad Volodyrski, CEO. Please go ahead.

Vlad Volodyrski - CEO - (00:01:44)

Thank you. Regina Good morning and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website@chartwell.com under the Investor Relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer, Jeffrey Brown, Chief Financial Officer and Jonathan Bulakia, Chief Investment Officer and Chief Legal Officer. Before we begin, I direct you to the cautionary statements on Slide 2 because during this call we will make statements containing forward looking information and non GAAP and other financial measures. Our MDNA and other securities filings contain information about the assumptions, risks and uncertainties inherent in such forward looking statements and details of such non GAAP and other financial measures. More specifically, I direct you to the disclosures in our Q3 2025 MDA under the heading Risks and Uncertainties and Forward looking Information for a discussion of risks and uncertainties. These documents can be found on our website or on the SEDAR+ website. Turning to Slide 3 Q3 2025 marked our ninth consecutive quarter of double digit growth in same property adjusted NOI and FFO per unit. These outstanding results reflect our team's unwavering focus on delivering exceptional resident experiences, driving operational efficiencies and expanding our portfolio with high quality assets and strong markets. I am extremely proud of their accomplishments and confident in their continued successes. Looking ahead, we expect continued growth in occupancy and cash flows in 2026 and beyond, supported by robust demand and limited new supply in our markets. More importantly, this growth will be fueled by our innovative operational sales and marketing strategies. We remain committed to enhancing our portfolio through strategic acquisitions, building a future growth pipeline via development partnerships and divesting non core assets. We're also committed to continuous improvements in how we support our residents teams, regularly reviewing our processes, implementing new technologies and automation, including a responsible use of artificial intelligence tools. We are looking forward to sharing with you more details on our three year strategy. Charwell 2028 at the upcoming Investor Day next week. Today my partners will provide you with more color on various aspects of our business. Karen will do an operating update, Jeff will dive deeper in our Q3 financial results and Jonathan will discuss our portfolio optimization and growth activities. Karen, over to you.

Karen Sullivan - President and Chief Operating Officer - (00:04:31)

Thanks lad. Moving on to Slide four, we had another strong quarter of leasing activity with a positive net permanent move in to permanent move out of plus-104 units with an increase in both leases and permanent move ins compared to Q3 2024 and continued growth in occupancy in all four provinces. We held our fourth and final 2025 open house event in September with over 1400 new prospects visiting our homes, creating a strong pipeline to support continued growth in Q4. We continue to implement property specific marketing strategies, including focusing on each home's unique selling feature that makes them stand out in their local community. During the quarter, our marketing contact database grew by another 10,000 people with the total reaching over 175,000. We garnered a significant amount of earned media attention in Q3 based on positive local community stories and Chartwell's Wish of a Lifetime national fundraising event held this past summer. The collective efforts of our homes helped raise over $160,000 which will allow us to continue to grant wishes to seniors across the country with an increasing number of our homes reaching 100% occupancy. We also recently introduced a wait list strategy to keep prospects interested while they wait for a suite or a specific type of suite to become available. Turning to Slide 5, we reduced our staffing agency cost by 66% in Q3 2025 compared to Q3 2024 through our continued focus on recruitment and retention activities. I'm also very proud to say that we reached Our goal of 67% very satisfied residents according to our most recent survey results, which are conducted by Sensight, a US based company that specializes in seniors housing. This means that over two thirds of our residents have gave us a score of 5 out of 5 on their overall satisfaction with their home as well as the likelihood that they will recommend their Chartwell home to others. Our combined satisfied and very satisfied score is 88%. Sensight administers surveys annually to over 77,000 residents in 888. Sorry, 881 homes across 21 companies across 21 companies. The average score in 2025 of very satisfied residents in these residences was 51% compared to our score of 60. Finally, I want to share examples of our ongoing efforts to develop property specific strategies in two of our Toronto homes. First, Chartwell Grenadier, which is a large 257 unit residence in Toronto's High park neighborhood, is in the final stages of a renovation project to their 73 unit assisted living and memory care tower. The occupancy in these units has now reached 96%. We have plans to continue to renovate the rest of the building in 2026 and 2027 to increase overall occupancy and offer a variety of service levels to meet the evolving needs of residents in this busy urban community. Chartwell Lansing, a smaller 90 unit home in North York, started the year at 75% occupancy and in September reached 100%. We have also made investments in interior upgrades to the common areas in this property and the management team continues to focus on providing services for residents in this multicultural Toronto neighborhood. I will now turn it over to Jeff to take you through our financial results.

Jeffrey Brown - Chief Financial Officer - (00:08:25)

Thank you Karen as shown on slide 6 In Q3 2025 net loss was 5.2 million compared to net income of 23.6 million. In Q3 2024 FFO grew to 73.1 million in Q3 2025, an increase of 30.8% compared to Q3 2024. Our reported FFO does not include 1.7 million or 0.5 cents per unit of income guarantees related to recently acquired properties. Q3 2025 FFO growth benefited from higher adjusted NOI of 22.1 million, higher adjusted interest income of 1.5 million and higher other lease revenue 0.8 million, partially offset by higher adjusted finance costs of 3 million, lower management fees of 1.9 million, lower other income of 1.4 million and higher G&A expenses of 0.9 million. In Q3 2025, our same property occupancy increased 470 basis points to 93.1% and our same property adjusted NOI increased 10.2 million or 15.8%. Slide 7 summarizes our same property operating results for each platform. All of our platforms posted occupancy gains in Q3 2025 compared to Q3 2024, and all are now operating above 90% occupancy, which positively impacted our results. Our Western Canada platform same property adjusted NOI increased 2.7 million or 13% our Ontario platform same property adjusted NOI increased 5.3 million or 14.8% and our Quebec platform same property adjusted NOI increased 2.2 million or 28%. Turning to Slide 8 at As of November 6, 2025, liquidity amounted to approximately $508 million, which included 113 million of cash and cash equivalents and $395 million of borrowing capacity on our credit facilities. During the nine months ended September 30, 2020 25, we raised $480.5 million of equity through our ATM program at an average price of $17.86 which helped support our transaction activity and we continue to improve our leverage metrics with interest coverage rate ratio growing to 3.2 times and our net debt to adjusted EBITDA ratio declined at 6.9 times for the remainder of 2025. Our debt maturities include $151.1 million of mortgages with a weighted average interest rate of 4.39% as of November 6, 2025. We estimate the 10 year CMHC insured mortgage rate to be approximately 3.89% and the 5 year unsecured debenture rate to be approximately 3.87%. I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities.

Jonathan Bulakia - Chief Investment Officer and Chief Legal Officer - (00:11:38)

Thank you Jeff Turning to Slide 9, we continue to execute on our portfolio strategy of enhancing our asset base to Generate increased quality NOI On October 1, 2025 we acquired a 100% interest in the 449 suite Les Tours in Montreal, Quebec for $88.5 million. The three tower complex, rebranded Chartwell Les Tours d'Enghien, offers a mix of independent and assisted living accommodations. The purchase price was partially settled through the assumption of a CMHC insured mortgage of $68.7 million with the remainder of the purchase price subject to normal working capital and other adjustments paid in cash. On November 1, 2025, we acquired a 100% interest in the 376 suite residence L' Aubier in Levy, Quebec from Batimo for a total purchase price of $128.2 million. Located in proximity to numerous local amenities, the residence boasts state of the art indoor and outdoor amenities for its residents. It opened in June 2024, enjoyed a rapid lease up and is currently 82% occupied. Chartwell has managed operations at this residence since its opening. The purchase price was settled in cash and the repayment of a $10 million loan extended by Chartwell to Batimo. A portion of the purchase price is being held back to support vendor NOI guarantee obligations to Charwell. On November 3, 2025, we acquired a 100% interest in Residence Panorama in Laval, Quebec for a purchase price of $76 million. Résidence Panorama, now rebranded Chartwell Panorama, includes 206 IL and 32 AL suites as well as 49 individually owned condominium suites in a 31 story tower overlooking the Riviere des Prairie. Built in 2018, the residence offers exceptional views, state of the art amenities and well designed spacious suites. The residence is currently 98% occupied. We expect to acquire Residence Azales located in Repentigny, Quebec before year end. Residence Azales, to be renamed Chartwell Azales, includes 304 IL and 30 AL suites in a 30 story tower overlooking the St. Lawrence River. Built in 2021, the residence offers exceptional views, state of the art amenities and well designed spacious suites. The Residence is currently 97% occupied. The purchase price of $111 million before closing costs and working capital adjustments will be settled in cash. In addition, the previously announced acquisition of a portfolio of six seniors housing communities in Ontario is expected to close once third party approvals are in place, likely in Q1 2026. To date in 2025 we have completed over $1 billion of acquisitions with further committed investments of $700 million for completion in 2025 on the heels of approximately $1 billion of acquisitions in 2024. We are also actively engaged in discussions with local and national developers across the country to restart our development program and create a meaningful pipeline of state of the art assets to bring into our portfolio. We will pursue such developments in a prudent manner with a preference for off balance sheet development similar to our arrangement in Quebec. Further to this initiative, Chartwell announced the development of the 111 suite Chartwell Kingsview Retirement Residence in Calgary with an advance of $4.5 million of the total committed $6.5 million mezzanine financing to local developers. Chartwell will be the operations manager of the project and will have a call option to acquire the residence on stabilization. The project is in an affluent residential area of Calgary in proximity to various neighborhood amenities and will feature self contained IL apartments and an attractive amenity package. As I've noted, we have invested significant financial and management capital pursuing acquisitions in line with our strategy and have initiated new development projects to support a strong pipeline of future property growth. We have also identified properties within our portfolio that no longer fit our core strategic focus due to their location, size, age and or service offering. These non core properties represent approximately 5,700 suites. We intend to pursue dispositions of some or all of these properties as market conditions allow, with proceeds expected to be used to support future development and acquisition activity. That's in line with Chartwell's current strategy. I'll turn the call back to Vlad to wrap it up.

Vlad Volodyrski - CEO - (00:16:33)

Thank you Jonathan slide 10 highlights the strong fundamentals driving our industry. We believe we are at the front end of what is going to be a multi year period of growth in retirement. Living in Canada, demand for our services should continue to grow for decades driven by the senior population's growth. Forecasts show that to maintain supply, demand balance, the sector would need to build 200,000 suites in the next 10 years, which is almost three times the number of suites built in the previous 10 years. With high construction costs and aging, inventory supply shortages are likely to persist, supporting higher occupancies, rental and services rates and profitability of the existing operators. As one of the largest participants in the senior living sector, Chartwell stands to benefit from these Dynamics turning to slide 11 we are not just waiting for the rising tide to lift our boat with others. We are taking decisive steps to pursue operating excellence, future proof and grow our portfolio and prudently manage unitholders capital. Some of the examples you heard today from Karen, Jeff and Jonathan. There are many others that we hope to share with you over time. We are looking forward to sharing our Chartwell 2028 strategy, financial objectives and risk management guidelines as well as the details of our key operating, investment capital and risk management initiatives at our upcoming Investor day on Thursday, November 13, 2025 at 1:00pm which will take place at our beautiful Chartwell Hub. At this event you will have an opportunity to hear from several Chartwell leaders, participate in a Q and A session and interact with Chartwell executives and directors over a beverage of your choice. If you have not done so, please register for the event. Details are on our website@investors charwell.com under Press and Market Information tab. I will now close our prepared remarks with a story from one of our residences as Pictured on slide 12 at Chartwell Heritage Valley, one small act of kindness grew into something extraordinary. A resident visiting his wife in memory care asked if he could paint a few walls wanting to help and contribute. That simple gesture sparked a wave of engagement throughout the residents. Soon residents were volunteering across the community, helping with bingo, newsletters and events. The team created a Resident Volunteer of the Month program and from there two resident led clubs were created, a choir and a drama club. Their first original play, Old Macdonald Farm, written and performed by the residents, brought laughter, pride and connection. So much so that they took the event on the road to another Chartwell home. Moments like these remind us what Chartwell is truly about. People finding purpose, joy and belonging through community. Thank you for your attention this morning. We would now be pleased to answer your questions.

Regina - Operator - (00:19:53)

We will now begin the question and answer session. As a reminder to ask a question, simply press Star One on your telephone keypad. Our first question will come from the line of Lauren Calmar with Desjardins. Please go ahead.

Lauren Calmar - Equity Analyst - (00:20:06)

Thanks. Good morning. I'm just looking at the Drama club rehearsal picture here and it looks awesome. On just maybe on the rent growth side of things now, you know you're going to get to sleep to get to 95 and you're still kind of high threes. On the rent growth side, when do you see that starting to pick up and sort of, what do you see the cadence of the rent growth looking like over the next couple years?

Vlad Volodyrski - CEO - (00:20:30)

Thanks, Lauren. So the items that impacted the rental rate growth this quarter in particular was the annualization of the incentives that were put in place over the last couple of years or last year in particular and this year to help with the occupancy growth. As we continue to have more and more homes reaching that 95% occupancy, our expectation is that these incentives will be pulled out. In fact, when we look at the new incentives granted this year, they've actually already started coming down compared to last year. And we expect that trend to continue in terms of the kind of more longer term rental rate growth. Our expectation that is that in the environment where there's demand growing and supply is not, we will have an opportunity to increase market rents at a faster pace. We will certainly limit the increases to the existing residents at a more historical level, which is inflation, plus a little bit to compensate for the increase in the labor costs that we're experiencing across the sector. But market rate, we expect them to grow faster.

Lauren Calmar - Equity Analyst - (00:21:44)

Okay, can you maybe just give us a little more color in terms of what the incentives are that are kind of rolling off and where you see them going, I guess next year.

Vlad Volodyrski - CEO - (00:21:53)

So today the overall incentives are about 5% of revenue. And so as we continue to remove those incentives in the homes that are achieving higher occupancy levels, that overall number will start coming down and that will contribute to the overall rental rate growth over time.

Lauren Calmar - Equity Analyst - (00:22:11)

Okay, perfect. That's very helpful. And then maybe just one last one for me. Obviously, you guys had some pretty meteoric earnings growth. Has the board talked about a potential distribution bump here?

Vlad Volodyrski - CEO - (00:22:27)

Our intent is to begin distribution increases and then maintain those increases over the year, similar to what we've been doing pre pandemic, if you recall, I think we started our distribution increases back in 2014, and we continued growing them every year all the way up to 2020. And then during the pandemic, we choose to maintain the level of distributions. We feel like we are getting to a point where our cash flow fully covers distributions and capital investments that we need to make in our properties and our expectation that we will start growing distribution increases. I can't tell you exactly the timing of it just yet, but that's certainly the intent.

Lauren Calmar - Equity Analyst - (00:23:08)

Fair enough. Okay, thank you very much.

Regina - Operator - (00:23:09)

I'll turn it back.

Jonathan Kelcher - Equity Analyst - (00:23:12)

Our next question will come from the line of Jonathan Kelcher with TD Cowan. Please go ahead. Thanks. Good morning. First question, just on the acquisition. You guys obviously very active this year, and you're just recharging the ATM Now. How would you say the pipeline looks over the next few quarters?

Vlad Volodyrski - CEO - (00:23:36)

We're actively working on that pipeline. As I mentioned, we have two kind of pipelines going. One is on the development side, where across the country, we're active in active discussions with local and national developers so that we can address that pipeline for maybe when the real estate cycle isn't as robust on the acquisition side. And on the acquisition side, we are seeing a number of deals, and we think we have a decent pipeline going both on the ones and twos types deals and also on the. On the portfolio side.

Jonathan Kelcher - Equity Analyst - (00:24:11)

Okay, and by across the country, you mean in your existing geographies, correct?

Vlad Volodyrski - CEO - (00:24:17)

Correct.

Jonathan Kelcher - Equity Analyst - (00:24:17)

Are you looking at new stuff?

Vlad Volodyrski - CEO - (00:24:19)

Correct.

Jonathan Kelcher - Equity Analyst - (00:24:21)

Okay. And then secondly, you talked a little bit about renovations. Given the Grenadier as an example, how do you pick homes for that, and what type of returns do you target on those investments?

Vlad Volodyrski - CEO - (00:24:39)

I'll take that one. So there's different levels of renovations and the ways we look at them. In some cases, we renovate properties that have been operating for a period of time and now due for renovations. And our approach to that is instead of doing sort of a little bit here, a little bit there, to renovate the whole property at the same time, sometimes it can take more than one year just because of the size of the. The undertaking. And we are trying to do it in a way that minimizes as much as possible the disruption to the existing operations and the residents. So that would be one approach. The other approach would be when we holistically look at the properties that may not need to be fully renovated just yet and looking at the potential of repositioning those properties in the marketplace. So Grenadier would be a good example of that. Over the years, we've been investing in this property. It looks wonderful already. We just feel that given its location and the potential, that property is being now under significant review for significant renovation and repositioning. Renovation of the assisted living neighborhood that Karen talked about is completed, and there'll be potentially or likely other phases of renovations for these properties which will take quite a few years. And we, we will be targeting pretty good returns on these through the increase in market rates over time. And those renovations also will make the operations of the buildings more efficient. So there may be some opportunities on the expense savings over time as well.

Jonathan Kelcher - Equity Analyst - (00:26:16)

Okay, so do you sort of sounds like the first bucket is sort of almost a maintenance capex just given that the properties age and the second one is more of a push noi on an existing basis. Is that a good way to think about it?

Vlad Volodyrski - CEO - (00:26:34)

Not necessarily. Because when the property is completely renovated, even just because it was due to be renovated, there are still opportunities to drive higher market rate increases over time because it becomes just so much more attractive to the potential customers. It's just the timing of the execution of these projects coincided with the timing, effectively the existing sort of aesthetics getting to the end of their useful life. In some cases we would renovate buildings even before that is the case.

Jonathan Kelcher - Equity Analyst - (00:27:06)

Okay, that's, that's helpful. I'll turn it back, thanks.

Regina - Operator - (00:27:11)

Our next question will come from the line of Himanshu Gupta with Scotiabank. Please go ahead.

Himanshu Gupta - Equity Analyst - (00:27:17)

Thank you and good morning. On your same property occupancy, I mean, looks like you have reached that 95% target for December. What is the next goal post from here? I mean how do you keep the sales team hungry or motivated from there?

Vlad Volodyrski - CEO - (00:27:37)

Yeah, it's a great question. So just to remind you, our turnover is about 30% across portfolio. So you know, they have their work cut out for them. Even without the occupancy growth, there is quite a bit of units to be leased every year anyway, you know, the conversations that we're having with our teams in the field and our sales teams corporately that supports them is that the target for each individual Property should be 100% occupancy with a healthy wait list. Now we're under no illusion that this possible to be achieved across 160, 170 residences across the country. So I wouldn't want you to start putting that in your models. But certainly everybody's motivated to drive to that number. And so we've, and again we'll talk about it at the investor day even more. But we're putting changes in place both in the compensation side of things and the training side of things. Karen mentioned about wait list management strategies. So there are a number of strategies that are being put in place to help people to continue to focus on replacing units that are turning over every year and continue to grow Occupancy as much as possible.

Himanshu Gupta - Equity Analyst - (00:28:50)

Got it, thank you. And just to follow up there, do you have a sense what is the occupancy for your immediate competition in your same property portfolio? I mean, what I'm getting at is that is there still opportunity to take the market share from your competitor from here or do you think they are also at very similar levels or kind of?

Vlad Volodyrski - CEO - (00:29:14)

It's very hard to answer that question, Himansha, because it's so local and case specific. You know, with the current environment where there's demand is growing and supply has not been, I think there's enough for everybody to run high occupancy. What we're trying to do with our portfolio through all these portfolio optimization and growth initiatives is to position it in such a way that we can continue to maintain market leading occupancies in everywhere where we operate. And so that would be our target.

Himanshu Gupta - Equity Analyst - (00:29:48)

Okay, fair enough. Switching gears to same property expenses here. I think it was kind of up like 4% on year over year basis in Q3 agency staffing is obviously down. I mean good progress there. How should we think about, you know, same property expenses into next year? Like similar focus and range or like more like 3 to 4%?

Vlad Volodyrski - CEO - (00:30:13)

Hey Manju, we think we do have still some occupancy related increases in our DOE this year. So we'll have some of that next year as we have the sort of annualization growth of 95% but less so. So we think we should be able to have a lower growth level in DOE next year.

Himanshu Gupta - Equity Analyst - (00:30:37)

I would mention that Himash, there continues to be some pressure on compensation costs for our employees pretty much in all of our markets. The intervention by the government during the pandemic years continues to impact or sort of lagging effect of that continues to impact wage rates across the country. So our expectation is the 2026 compensation cost will be higher than what we've got used to historically, where historically these costs increased by 2 to 3% a year. Now we've seen several years of 4 or 5% increases and we're probably going to see at least another year of that given the dynamics in the labor market. Got it. Fair enough. Thank you. Last question is on the recent acquisitions. I look at Panorama and Azales, I think both in Quebec, fully stabilized occupancy. So you know, what kind of NOI growth do you expect on these acquisitions or like what kind of IRRs did you underwrite for like these stabilized acquisitions here?

Vlad Volodyrski - CEO - (00:31:46)

We think that these properties improve the overall quality of our portfolio and Even though they do not have a lot of room to run on occupancy growth, Our ability to increase market rates over time, we think is going to be better in these homes than in some of the existing homes that we operate that are older in the similar markets. And we certainly feel and see some accretion to our cost of capital from the IRR perspective on a 10 year basis from these acquisitions. Otherwise we would not be doing them.

Himanshu Gupta - Equity Analyst - (00:32:18)

Yeah, no, fair enough. And is it like more of a value angle here? Like I see, you know, all these three, two, three acquisitions are around $300,000 per suite or per unit. I mean, what's your estimated of replacement cost for these units? Is that the biggest rationale to go for these acquisitions?

Vlad Volodyrski - CEO - (00:32:38)

Yeah, they're still done at significant discount to replacement costs. Jonathan mentioned that we started two development projects in Montreal, in Quebec. Well, yes, both of them are in Montreal, greater Montreal area where we're building additions to the existing residences. And even though you're not building a lot of common areas, these are just unit additions. So the construction is a bit more efficient than on the greenfield development. The cost of these additions are significantly higher than $300,000 a door.

Himanshu Gupta - Equity Analyst - (00:33:10)

Okay, fair enough. I'll join the queue. Thank you.

Regina - Operator - (00:33:15)

Our next question will come from the line of Juliano Thornhill with National Bank Capital Markets. Please go ahead.

Juliano Thornhill - Equity Analyst - (00:33:22)

Hey guys. Good morning everyone. I'm just wondering on the waitlist that you mentioned at the beginning, kind of like how long is the waitlist there and what markets that's in and what's kind of the gap to in place to market rent that you're seeing for those properties?

Vlad Volodyrski - CEO - (00:33:41)

So again, it varies location by location. There may be more properties that have wait list for certain number for certain type of units. They may not be having 100% occupancy everywhere, but people waiting for specific types of units. And there are some properties that have wait list for all kinds of units. A lot of these properties located in for example in British Columbia, that market's been under built for a period of time. And so many of our homes in that market have robust wait lists. And in those homes, market rates go up by at least high single digits, more often than not in low double digits. So that should give you a sense of the gap between the in place rents and market rents.

Juliano Thornhill - Equity Analyst - (00:34:31)

Okay, and is there any like cadence for the number of homes that you. Could provide or that are kind of. In that, you know, I guess fully occupied waitlist area?

Vlad Volodyrski - CEO - (00:34:44)

Well, in the same property portfolio it's close to 10 homes that are now at 100% occupancy and there's probably another 30 homes that are between 95 and 100% occupancy.

Juliano Thornhill - Equity Analyst - (00:34:55)

Okay, thank you. And then just turning to the disposition candidates, I think last call you kind of provided a rough estimate of three and a half thousand. Now it's gone up to five or 3.5 thousand to now 5.7. I'm just wondering what's like the, what's the delta attributed to there?

Vlad Volodyrski - CEO - (00:35:18)

We continue to review our portfolio and sort of the types and the qualities of properties that we own and re evaluate. Our approach to determine what we consider to be non core is also driven by the acquisition opportunity both completed and what we're seeing out there that are potential. And so as result of these ongoing exercises we've increased the size of this non core portfolio. Now it will take some time to sell these properties. It's not going to be unlikely to be sold all at one time. And so also I would mention that these properties are performing properties. They're not struggling in any sense of the word. The reason that they ended up being as part of noncore portfolio is just they do not fit necessarily in our view and aspirations of what we want Charwell portfolio to look like in say a couple of years time from now.

Juliano Thornhill - Equity Analyst - (00:36:17)

Okay. So it's kind of a mix of the repositioning and whichever one do you want to I guess optimize your same property portfolio.

Vlad Volodyrski - CEO - (00:36:25)

The 5700 suite that Jonathan mentioned would be eventually sold. That's non core portfolio that we identified that we unlikely to reposition and remain in the, the Charwell portfolio over a long period of time.

Juliano Thornhill - Equity Analyst - (00:36:42)

Is there, is there a lot of properties in that bucket which you know have some conversion potential into like apartments or something else?

Vlad Volodyrski - CEO - (00:36:51)

No, I think the hard work that we had to do when we repositioned some properties for alternative used or sold them for you know, maybe a little lower valuations, all that work had been done by now we do not have even. I cannot think of one property that's left that would be in that kind of bucket. This non core property portfolio are well performing properties. They just don't fit our view of charitable portfolio going forward because maybe of their size, their location, their vintage, their capital requirements, things like that.

Juliano Thornhill - Equity Analyst - (00:37:24)

Okay, and then just kind of last question on that is just is there any kind of timeline you can provide on a Ballycliffe quite yet?

Vlad Volodyrski - CEO - (00:37:34)

There's no update on Bellecliffe at this point of time. The building's open, the residents are moved in into Their new environment and it's operating and we continue to evaluate our options. It's certainly not something that we intend to hold for a long period of time, but right now there's no impact on that.

Juliano Thornhill - Equity Analyst - (00:37:52)

Thanks, guys.

Regina - Operator - (00:37:56)

Our next question will come from the line of Pammy Beer with RBC Capital Markets. Please go ahead.

Pammy Beer - (00:38:03)

Thanks. Good morning. Just on the development side, you are pursuing some new projects, but are you starting to see perhaps more developers, kickstart some new developments, maybe. Which markets are more active than others? Excellent. Sorry, you're asking whether we're seeing more. Yes. Yeah. Are you seeing more development?

Vlad Volodyrski - CEO - (00:38:24)

Yeah. And I think as our asset class is becoming more and more attractive to people and people are looking for alternative uses for the land that they are looking to develop, that is becoming more of a trend. So we are getting approached frequently by local developers and more national institutional developers who are figuring out master plans in communities. And so we have a number of those that we're looking at and it's becoming more and more active.

Pammy Beer - (00:38:56)

I guess if you, if you step back and just think about the broader, you know, market and new projects starting by others as well, you know, in terms of deliveries, how do you know? At what point do you start to expect them to pick up? Is that, you know, perhaps more 20, 28, 27 or just kind of, kind of get a sense of the, you know, the cadence.

Vlad Volodyrski - CEO - (00:39:20)

We expect to see a pickup in starts in 2026, so probably a pickup in deliveries. Yeah, you're probably right. 28, 29. Some of these master plan communities might take a bit longer, but 28 and thereafter.

Pammy Beer - (00:39:36)

Okay. And I just want to reconcile some of the comments around rent growth. You know, I think if you're putting up, let's say overall an average of roughly 4%, I think this year, just given the momentum that we've all seen across occupancy and the broader market, does that look something more like 5% on a blended overall average for the portfolio in 26 or is it still kind of hovering in that, call it 3 to 4 range?

Vlad Volodyrski - CEO - (00:40:06)

Yeah. For 26, we'll target something higher than 4%, somewhere probably between 4 and 5% on a blended basis, depending on turnover. Depends on a lot of other things. Also remember, part of what's included in these numbers is some government funded beds that we have in Alberta, for example, and they would drive down overall rent increases because the government increases are not as high as what we're passing on a private basis.

Pammy Beer - (00:40:38)

Got it. Okay. And then just last one, for me, the leverage has obviously Come down pretty nicely. VATM has been quite effective, but as you think about the next year or two, I think you've previously cited seven and a half times debt dividends or your target. Is that the right figure? I mean, is there perhaps any consideration of taking that lower just to really solidify the balance sheet and insulated from any sort of future shocks even more? Or is that the level that you're comfortable with?

Vlad Volodyrski - CEO - (00:41:09)

Yeah, Tommy, you know we did end the quarter 6.9 times. That was more timing based on some of the acquisitions closing in October and November. So we are still targeting seven and a half times and it's a number we do review, but still think it's the right leverage level for the company. It does provide some good balance sheet flexibility for us for the future.

Pammy Beer - (00:41:38)

Okay, thanks very much. I'll turn it back.

Regina - Operator - (00:41:42)

Our next question will come from the line of Tal Wooley with cibc. Please go ahead.

Tal Wooley - Equity Analyst - (00:41:48)

Hi, good morning everybody. Just wanted to start on talking a. Little bit about turnover. I think Vlad, you mentioned earlier on the call that you know, three years is still typically around the average stay. I'm just wondering if you expect that to shift at all going forward just now that, you know, the LTC system is sort of full again, there's maybe not quite as many options and so do you expect to see turnover increase and then also wondering if you can sort of provide a. What is an average rent lift you would typically see on turnover?

Vlad Volodyrski - CEO - (00:42:26)

On the first question, Tao, I think turnover changes will be a function of renewal of our portfolio if we focus more on more independent type of residents. So for example, the turnover in Quebec portfolio for US is about 25% and turnover in the rest of the country is between 35 and 40%. And so as we focus more on independent residents, some of the acquisitions that you saw us announcing in Ontario and B.C. are in that independent space. Then turnover will probably come down a little bit. But again, the portfolio size is such that some additions of these homes may not necessarily change that dynamic significantly. In terms of the rent gap between in place and market, it is very building specific. So I can't tell you what the gap is. Other than that our expectation is that with the declining incentives that we're required to provide to continue to maintain and drive occupancy and the properties achieving high occupancy levels more broadly, our expectation that we will be able to increase market rates significantly higher than what we would do in terms of increases to our existing residents.

Tal Wooley - Equity Analyst - (00:43:51)

Okay, and then your non core portfolio sales, who are, who are the typical buyers you expect to see at the table when you put these on the.

Vlad Volodyrski - CEO - (00:43:59)

Market, I guess we'll have to see. We haven't had things on the market recently, but there are a number of private equity groups that are focused on this asset class now interested in a more value add play. And to the extent that they come to the table, I think those will be the more natural purchasers of these assets.

Tal Wooley - Equity Analyst - (00:44:25)

Okay. And you know, when you segment your portfolio, the repositioning portfolio, you know, when I look forward, I appreciate it's sort of like the, it's the least same property like of the group or of the, you know, the segments. But. Should we be expecting that occupancy to materially improve or is that going to be a change, you know, a bucket that's sort of constantly changing going forward?

Vlad Volodyrski - CEO - (00:44:52)

Well, our expectation that the occupancy will continue to improve in all properties in our portfolio, whether they're non core or core. There is no reason why it shouldn't be the case. Dynamics are similar across the board in pretty much every market where the demand is growing and supply is not. So every home should operate at high occupancy levels. The bucket itself or that portfolio composition will change. I mean we will Change that on January 1, 2026 like we always do where some of the properties that were acquired in the last couple of years will move into the same property portfolio when they have full 12 months complete imperative and some of the properties will move to a different bucket. So hold on for that on January 1st or before we will let you know what the composition of same property portfolio, growth portfolio and repositioning portfolio would look like going forward.

Tal Wooley - Equity Analyst - (00:45:49)

Okay. And then just lastly, you know, I think in your MDA sort of reference that you know, effectively like your 10 year CMHC insured borrowing costs are pretty much the same as five year unsecured right now. Are you tempted to use the unsecured market more going forward? I know it's administratively it's a lot easier to work with. I'm just curious about financing options on the debt side.

Jeffrey Brown - Chief Financial Officer - (00:46:17)

Yeah, I mean there are different tenors so they're not exactly apples to apples. But we have been more active in the debenture market over the last 18 months. And so as we look and have a need for debt financing, we do look at both of those options and are picking the lower cost of the two.

Tal Wooley - Equity Analyst - (00:46:40)

Got it. Okay, thanks very much Shawn.

Regina - Operator - (00:46:45)

Once again for any questions, press star one. And our next question will come from the line of Tom Callahan with bmo Capital markets. Please go ahead.

Tom Callahan - Equity Analyst - (00:46:54)

Thanks. Good morning, guys. Maybe just going back to his line of questioning on the development side. Obviously you guys have had lots of ongoing discussion with different developers and looking at these yourselves. But just curious, looking to get a sense cost wise, what are you seeing? Are you starting to see some deflation trickle in on the cost side of things? And if so, is there a way to think about that? Deflation, say if you were looking at that same project 12 months ago?

Vlad Volodyrski - CEO - (00:47:25)

We are seeing some deflation on costs. It really depends on where, like in which jurisdiction and what buckets. But certainly on some materials and some trades, we see more availability on the trade side and that results in some deflation on costs. And these developments, frankly also become more feasible as rate catches up, which it has done in the last couple years. And that's helping also with the equation.

Tom Callahan - Equity Analyst - (00:47:57)

Okay, okay. And then on the project there that you announced with a partner in Calgary, Kingsview, I think, is there, you know, a cost per suite that we could kind of think of for that type of development?

Vlad Volodyrski - CEO - (00:48:10)

Well, this development is off balance sheet for us, so we would be buying it at fair market value at the back end. Cost per suite. I'd have to get back to you on.

Tom Callahan - Equity Analyst - (00:48:22)

Okay, no, no, yeah, I understand it's off balance sheet. Just more, you know, trying to get a broader sense or picture of costs for new development. Maybe switching gears, you know, just housekeeping one for me. I think earlier in the year you'd mentioned some potential for CMHC UP financing proceeds. Is that still too common? And if so, how much should we be thinking about there? You're asking about. What'S left to do this year in terms of cmhc. Yeah, I think, Jeff, you'd mentioned maybe potentially some UP financing opportunity on cmhc, like incremental.

Jeffrey Brown - Chief Financial Officer - (00:48:59)

We still have some financings to close for the balance of the year and sort of as we look out over the next 12 months, just close to 300 million of total CMAC financings. But the bulk of that would be refinancings of conventional mortgages. On some properties, it's probably less than half of that is incremental new financing.

Tom Callahan - Equity Analyst - (00:49:26)

Okay, okay. So less than half of 300. Okay, got it. That's, that's helpful. Thanks, guys.

Regina - Operator - (00:49:33)

And that will conclude our question and answer session. And I will now turn the call back over to Vlad for any closing comments.

Vlad Volodyrski - CEO - (00:49:40)

Thanks everybody for joining us today. Just another reminder, if you have not already done so, to register for our Investor Day event taking place at charvel hub on November 13th at 1pm we're looking forward to seeing you then. In the meantime, if you have any further questions, please do not hesitate to give any one of us a call. Goodbye.

Regina - Operator - (00:50:01)

This will conclude our call today. Thank you all for joining. You may now disconnect.