Sienna Senior Living Inc. (“
Sienna” or the
“
Company”) (TSX: SIA) today announced its
financial results for the three and nine months ended September 30,
2024. The Consolidated Financial Statements and accompanying
Management’s Discussion and Analysis (“
MD&A”)
are available on the Company’s website at www.siennaliving.ca and
on SEDAR+ at www.sedarplus.ca.
Sienna's third quarter results highlight the
Company's sustained growth path and mark its seventh consecutive
quarter of year over year adjusted same property NOI growth since
the beginning of 2023. In addition, the Company’s recent capital
markets initiatives are supporting Sienna's development
initiatives, platform expansion in Alberta and refinancing of its
Series A Unsecured Debentures, which matured on November 4,
2024.
“The third quarter has been one of considerable
progress and success for our company. Our operating results
continued to strengthen, our recent initiatives to raise capital
have been met with overwhelming investor demand, and our efforts to
expand into Alberta were successful,” said Nitin Jain, President
and Chief Executive Officer. “Backed by the sector tailwinds driven
by an aging population, our accomplishments highlight our effective
initiatives to improve our operating platforms, strengthen team
engagement, and execute our growth strategies.”
Operating Highlights
- Adjusted
Same-property NOI increased by 14.7% to $43.4 million,
compared to Q3 2023, including
- an 11.0% year
over year increase in the Retirement segment, and
- an 18.3% year
over year increase in the LTC segment
-
Retirement same property occupancy surpasses 90% in
September – Average same property occupancy increased by
250 bps to 89.6% in Q3 2024 compared to Q3 2023; average monthly
occupancy exceeded 90% for the first time in over five years in
September 2024, further improving to 90.6% in October 2024;
-
Team member engagement reaches new high –
Significant improvement in Sienna’s team member engagement across
all drivers of engagement with survey participation rate exceeding
80%.
Successful Financing
Initiatives
Sienna completed the following successful
financing initiatives during and subsequent to Q3 2024:
-
$144 Million Equity Raise – On August 28, 2024,
Sienna completed the issuance of 9,591,000 common shares at a price
of $15.00 per share for aggregate gross proceeds of $143.9 million,
including 1,251,000 shares issued in connection with the exercise
of the over-allotment option granted to the underwriters.
-
$150 Million Unsecured Debenture Issuance – On
October 17, 2024 Sienna completed its offering of $150 million of
Series D senior unsecured debentures, bearing an interest rate of
4.436% per annum and maturing on October 17, 2029.
Proceeds from these financing activities are
supporting Sienna's growth initiatives, including its platform
expansion in Alberta, developments as well as the refinancing of
the Company’s $150 million Series A senior unsecured debentures,
which matured on November 4, 2024.
Portfolio Expansion in Western
Canada
-
Acquisition of Continuing Care Portfolio in Alberta
- On October 16, 2024, the Company announced the
acquisition of a $181.6 million continuing care home portfolio in
Alberta, adding four new, high-quality properties to the Company’s
senior housing portfolio in Western Canada, and further
diversifying its portfolio.
- Immediate
scale in the highly attractive Alberta continuing care
segment and platform for further expansion opportunities;
- Government
funding for 100% of care services from the Alberta Health
Services (“AHS”);
- High
occupancy with three of the four properties exceeding 98%
and one property currently in lease-up;
- Immediately
accretive to Operating Funds From Operations ("OFFO") and
Adjusted Funds From Operations ("AFFO") per common share subsequent
to closing of the Acquisition;
- Acquisition at
a discount to replacement value;
- Investment
yield expected to be approximately 6.5% during the first
year of operations, with opportunity for additional growth.
The Acquisition is financed through the
assumption of approximately $150.0 million of CMHC debt with a
weighted average interest rate of approximately 4.6% and a
remaining average term of approximately 4.7 years. The balance is
financed with the proceeds from Sienna’s recent equity raise.
Completion of the Acquisition is subject to
customary closing conditions for transactions of this nature,
including the receipt of all necessary regulatory approvals,
including the approvals from the relevant health authorities in
Alberta. Sienna expects the completion of the Acquisition to occur
in early 2025.
-
Acquisition of Ownership Interest Nicola Lodge, Port
Coquitlam, British Columbia – Sienna is in the process of
finalizing the acquisition of the remaining 30% interest in Nicola
Lodge, a 256-bed best in class long-term care community in Port
Coquitlam, British Columbia. The transaction, which is subject to
customary approvals and is expected to close in Q1 2025, will be
financed with proceeds from Sienna’s equity raise in August 2024
and will increase Sienna’s ownership interest to 100%.
Reinstatement of Dividend Reinvestment
Plan (“DRIP”)
Effective with Sienna’s November 2024 dividend
payable on December 15, 2024 to shareholders of record as of
November 29, 2024, Sienna is reinstating its DRIP. The DRIP allows
eligible shareholders of the Company to direct their cash dividends
to be reinvested in additional common shares of the Company at a 3%
discount from the market price. Participation in the DRIP is
optional and shareholders can enroll in the DRIP by contacting
their investment advisor or financial institution. Shareholders
that were previously enrolled in the DRIP at the time of its
suspension and remain enrolled at the time of its reinstatement
will automatically resume participation in the DRIP.
Financial performance - Q3
2024
- Total
Adjusted Revenue increased by 12.5% in Q3 2024, to $224.8
million, compared to Q3 2023. In the Retirement segment, the
increase was mainly driven by occupancy increases, annual rental
rate increases, and care and ancillary revenue. In the LTC segment,
the increase was primarily due to increased flow-through funding
for direct care, significant government funding increases
offsetting cost pressures in recent years, and higher private
accommodation revenue.
- Total
Adjusted NOI increased by 14.8%, to $43.4 million,
compared to Q3 2023. Adjusted NOI in the Retirement segment
increased by $2.1 million mainly due to occupancy increases, annual
rental rate increases, and higher care and ancillary revenue. NOI
in the LTC segment increased by $3.5 million largely due to a
significant annual government funding increase to support cost
increases in recent years, offset by inflationary increases in
expenses.
-
Adjusted Same Property NOI increased by 14.7% to
$43.4 million, compared to Q3 2023, including a $20.6 million
contribution from the Retirement segment, and a $22.8 million
contribution from the LTC segment.
-
OFFO per share
increased by 13.5% in Q3 2024, or $0.037, to $0.312. The increase
was primarily attributable to higher Adjusted NOI, lower
transaction costs, and lower interest, partially offset by higher
income tax.
-
AFFO per share decreased by 1.1%
in Q3 2024 to $0.266. The decrease was primarily related to the
temporary dilution due to the Company's recent equity issuance in
addition to a decrease in construction funding income and an
increase in maintenance capital expenditure.
- AFFO payout ratio
was 91.3% in Q3 2024, compared to 87.1% in Q3 2023.
Financial performance in the nine months
ended September 30, 2024
- Total
Adjusted Revenue increased by 14.4%, or $85.9 million, to
$683.6 million, compared to the nine months ended
September 30, 2023. In the Retirement segment, the increase is
mainly driven by occupancy growth, annual rental rate increases,
and higher care and ancillary revenue. In the LTC segment, the
increase is mainly driven by $23.7 million One-Time and Retroactive
Funding related to prior years recognized in Q1 2024, annual
inflationary funding increases, higher preferred accommodation
revenue and a one-time Workplace Safety and Insurance Board
(“WSIB”) refund of $3.4M relating to prior years.
- Total
Adjusted NOI increased by 35.3% to $152.9 million,
compared to the nine months ended September 30, 2023.
Retirement segment total NOI increased $3.9 million primarily
attributed to annual rental rate and occupancy increases, and
higher care and ancillary revenue. LTC segment total NOI increased
by $36.0 million mainly due to $23.7 million One-Time &
Retroactive Funding relating to prior years in Q1 2024, higher
annual inflationary funding increases and a one-time WSIB refund of
$3.0 million, offset by inflationary increases in expenses.
-
Adjusted Same Property NOI increased by 35.7% to
$153.4 million, compared to the nine months ended September 30,
2023, including a 61.6% increase to $94.6 million in the LTC
segment, and a 7.9% increase to $58.8 million in the Retirement
segment.
-
OFFO per share increased by
42.2%, or $0.347, to $1.169, compared to the nine months ended
September 30, 2023. The increase was primarily attributable to
higher Adjusted NOI, including $17.4 million of One-Time &
Retroactive Funding of $23.7 million less $6.3 million of taxes
relating to prior years in Q1 2024.
-
AFFO per share increased by
33.8%, or $0.266, to $1.053, compared to the nine months ended
September 30, 2023. The increase was primarily related to the
increase in OFFO, offset by higher maintenance capital
expenditures, and a decrease in construction funding income.
- AFFO
payout ratio was 67.5% for the nine months ended September
30, 2024, compared to 89.3% for the same period prior year.
Financial position
The Company maintained a strong financial
position during Q3 2024:
- Increased
liquidity to $516.5 million as at September 30, 2024, compared
to $324.4 million as at September 30, 2023, partially
resulting from Sienna’s equity raise in August 2024 as well as the
timing of debt refinancing;
- Improved
Interest Coverage Ratio to 3.4 for the three months ended
September 30, 2024, compared to 3.3 for the three months ended
September 30, 2023;
- Extended
Weighted Average Term to Maturity of its debt to 6.2 years as at
September 30, 2024, from 5.7 years as at September 30,
2023;
- Improved Debt
to Adjusted EBITDA for the trailing 12 months to 7.0 as at
September 30, 2024, from 8.3 as at September 30,
2023;
- Decreased Debt
to Adjusted Gross Book Value by 210 bps to 42.3% as at
September 30, 2024 from 44.4% as at September 30,
2023.
Financial and Operating
Results
|
Three months ended September 30, |
Nine months ended September 30, |
$000s except occupancy, per share and ratio data |
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Retirement - Average same property (1) |
89.6 |
% |
87.1 |
% |
88.8 |
% |
87.2 |
% |
Retirement - Acquisition, Development and Others - Average
occupancy (2) |
38.9 |
% |
- |
|
28.5 |
% |
- |
|
Retirement - Average total occupancy |
88.2 |
% |
87.1 |
% |
87.3 |
% |
87.2 |
% |
LTC - Average private occupancy |
96.5 |
% |
93.8 |
% |
96.9 |
% |
91.5 |
% |
LTC - Average total occupancy (3) |
98.4 |
% |
98.1 |
% |
98.1 |
% |
97.5 |
% |
Total Adjusted Revenue (4)(9) |
224,775 |
|
199,840 |
|
683,646 |
|
597,794 |
|
Total Adjusted Same property NOI (5)(9) |
43,412 |
|
37,837 |
|
153,401 |
|
113,051 |
|
Total Adjusted NOI (6)(9) |
43,449 |
|
37,837 |
|
152,948 |
|
113,051 |
|
OFFO per share (7)(9) |
0.312 |
|
0.275 |
|
1.169 |
|
0.822 |
|
AFFO per share (7)(9) |
0.266 |
|
0.269 |
|
1.053 |
|
0.787 |
|
AFFO Payout ratio(8)(9) |
91.3 |
% |
87.1 |
% |
67.5 |
% |
89.3 |
% |
- Effective January 1, 2024, the
results of Woods Park were reclassified from "acquisitions" to
"same property".
- Includes recently completed
retirement residence in Niagara Falls, effective January 24, 2024,
which is currently in the process of being leased-up.
- Excludes the 3rd and 4th beds in
multi-bed rooms in Ontario that will not be reopened.
- Effective January 1, 2024, the
Company began classifying all active funding that started during
the pandemic as revenue ("pandemic funding"), instead of presenting
them as net pandemic and incremental agency expenses. The
corresponding expenses are presented as part of operating
expenses.
- Adjusted same property NOI for the
nine months ended September 30, 2024 includes a $27,010 of
government funding ("One-Time & Retroactive Funding")
comprising one-time funding in Ontario of $13,419 ($10,064 relates
to 2023 and $3,355 relates to 2024) and retroactive funding from
British Columbia of $13,591. Excluding One-Time & Retroactive
Funding of $23,655 related to prior years, Adjusted same property
NOI for the nine months ended September 30, 2024 would be
$129,746.
- Total Adjusted NOI for the nine
months ended September 30, 2024 includes a $27,010 of One-Time
& Retroactive Funding. Excluding One-Time & Retroactive
Funding of $23,655 related to prior years, Total Adjusted NOI for
the nine months ended September 30, 2024 would be $129,293.
- OFFO and AFFO for the nine months
ended September 30, 2024 include a $17,365 One-Time &
Retroactive Funding relating to prior years ($23,655 net of taxes
of $6,290). Excluding the One-Time & Retroactive Funding
relating to prior years, OFFO and AFFO would be $69,322 and
$60,772, respectively. OFFO and AFFO per share would be 0.935 and
0.819, respectively.
- AFFO payout ratio for the nine
months ended September 30, 2024 includes a $17,365 One-Time &
Retroactive Funding relating to prior years ($23,655 net of taxes
of $6,290). Excluding the One-Time & Retroactive Funding
relating to prior years, the AFFO payout ratio would be 86.8%
- Total Adjusted Revenue, Total
Adjusted same property NOI, Total Adjusted NOI, OFFO per share,
AFFO per share, AFFO payout ratio are non-IFRS measures. These
measures do not have standardized meanings prescribed by IFRS and,
therefore, may not be comparable to similar measures used by other
issuers. These measures are used by management in evaluating
operating and financial performance. Please refer to the heading
"Non-IFRS Performance Measures” in the MD&A.
Outlook
Long-term fundamentals in Canadian senior living
continue to strengthen, driven by the rising needs of seniors, who
make up the fastest-growing demographic in Canada, and limited new
supply of senior living accommodations.
Looking ahead, we expect that the funding
improvements to offset inflation in recent years, coupled with our
successful cost management strategies, will support our long-term
care operations. The improvements are also expected to help advance
Sienna's redevelopment initiatives in Ontario, and provide capital
to continually make improvements to our homes in order to elevate
our residents' experience, comfort and safety.
These positive factors, coupled with our
continued initiatives to support occupancy growth in our retirement
segment, our successful equity and debt issuances, and our recent
acquisition in Alberta, all give us reason for an optimistic
outlook for the balance of 2024 and beyond.
Retirement Operations – Average
occupancy in the Company's same property portfolio was 89.6% in Q3
2024, a 250 bps increase year over year and a 100 bps increase
since Q2 2024. Our robust sales platform and intensified focus on
homes with below average occupancy levels, in addition to strong
supply/demand fundamentals, continued to support occupancy.
In September, monthly same property occupancy
exceeded 90% for the first time in over five years, marking a
critical milestone in the Company's path towards stabilized
occupancy of 95%. Occupancy improved further to 90.6% in October
2024, and lead indicators, including qualified leads and tours,
remain strong.
Going forward, we will continue to focus on
expanding the Company's Adjusted NOI with our concentrated
marketing and sales initiatives. We expect year over year adjusted
same property NOI growth in our retirement portfolio in the high
single-digit percentage range as a result of occupancy growth and
rate increases.
Long-Term Care Operations – The
Government of Ontario's increase to Other Accommodations funding to
offset inflation in recent years, which covers the costs of
resident accommodation, comfort and safety, became effective as of
Q2 2024 and has helped to support the year over year increase in
Sienna's LTC NOI. Further contributing to our strong results were
high occupancy levels and higher preferred accommodation
revenues.
For the balance of 2024, we expect to benefit
from the funding improvements announced to date. The catch-up
funding from the Ontario government is of particular importance, as
it addresses the funding shortfalls as a result of inflationary
pressures over the past four years. We also expect to benefit from
a stable operating environment, as well as continued improvements
with respect to staffing and cost management.
As a result, we expect our 2024 LTC NOI for the
full year, excluding one-time and retroactive funding amounts of
$23.7 million related to prior years which the Company recognized
year to date in 2024, to grow in the low double-digit percentage
range compared to 2023.
Developments – The Government
of Ontario's commitment in its 2024 budget to significant new
investments in the long-term care sector affirmed our strategy to
enhance and expand our long-term care platform and maintain a
diversified portfolio of long-term care communities and retirement
residences.
As a result of these funding improvements,
Sienna decided to move forward with the redevelopment of its
long-term care home in Keswick, Ontario, and started construction
in October 2024. Located on a campus comprising a 130-suite
retirement residence and an older 60-bed Class B long-term care
home, Sienna will redevelop the current long-term care home into a
160-bed home, redeveloping the current beds and adding 100 new
beds. The Expected Development Yield for this project is
approximately 8.5%.
Combined, the development cost for Sienna’s
three projects currently under construction in North Bay, Brantford
and Keswick is expected to exceed $300 million.
As for Elgin Falls, construction costs for the
150 suite retirement residence in Niagara Falls, which was
completed in Q4 2023 and is currently in lease-up, were in line
with our estimates. To date, leasing progress is aligned with
expectations, with 45% of the suites occupied and deposits for
another 7% of the suites received from residents who will be moving
in over the coming months.
Significant Potential for Growth in
Adjusted NOI - We see significant growth potential in our
business over the next several years and are actively working on a
number of initiatives which may contribute to the Company’s
Adjusted NOI expansion including:
-
Occupancy growth in the Company’s retirement
segment, including incremental Adjusted NOI should we
reach our target for stabilized average occupancy of 95.0% in our
same-property portfolio, which would represent a 540 bps increase
from our average occupancy of 89.6% in Q3 2024;
-
Contributions from acquisitions and new
developments, including incremental Adjusted NOI from:
- The recently
completed development of Elgin Falls Retirement Residence for $38.5
million with respect to the Company's 70% joint venture interest,
which has an Expected Development Yield of approximately 7.5%; in
addition, the Company has the ability to acquire the remaining 30%
ownership interest, once the property is fully stabilized;
- The Company’s
acquisition of its remaining interest in Nicola Lodge, expected to
generate an unlevered yield of 6.75%;
- The Company's
development projects in North Bay, Brantford, and Keswick, once
completed and operational; and
- The
contributions from the Company's Acquisition in Alberta, expected
to generate an approximate 6.5% investment yield in the first
twelve months of operations following the closing of the
transaction in early 2025, with potential additional upside.
These initiatives, individually and
collectively, could have a significant positive impact on the value
of Sienna’s business, enhancing its financial performance with
growth in Adjusted NOI and OFFO, and supporting the Company’s AFFO
payout ratio.
Conference Call
Sienna will host a conference call on November
12, 2024 at 9:00 a.m. (ET). The toll-free dial-in number for
participants is 1-800-715-9871, conference ID: 1503863. A webcast
of the call will be accessible via Sienna's website at
www.siennaliving.ca/investors/events-presentations. It will be
available for replay until November 12, 2025 and archived on
Sienna’s website.
About Sienna Senior Living
Sienna Senior Living Inc. (TSX:SIA) offers a
full range of seniors' living options, including independent
living, assisted living and memory care under its Aspira retirement
brand, long-term care, and specialized programs and services.
Sienna's approximately 12,500 employees are passionate about
cultivating happiness in daily life. For more information, please
visit www.siennaliving.ca.
Risk Factors
Refer to the risk factors disclosed in the
Company’s MD&A for the year ended December 31, 2023, and its
most recent Annual Information Form for more information.
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 are based
on the Company’s expectations, estimates, forecasts and
projections. 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:
David HungChief Financial Officer and Executive
Vice President(905) 489-0258david.hung@siennaliving.ca
Nancy WebbSenior Vice President, Public Affairs and
Marketing (905) 489-0788nancy.webb@siennaliving.ca
Sienna Senior Living (TSX:SIA)
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