Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sienna Senior Living Inc (LWSCF, Financial) reported a 14.7% year-over-year increase in total adjusted same property NOI, with significant growth in both long-term care and retirement segments.
- The company successfully raised $144 million in equity and issued $150 million in unsecured debentures, both of which were significantly oversubscribed, indicating strong investor interest.
- Occupancy in the retirement segment increased by 250 basis points year-over-year, reaching over 90% for the first time in over five years.
- Sienna Senior Living Inc (LWSCF) announced a strategic expansion into Alberta with the acquisition of a $182 million portfolio of four continuing care homes, enhancing its growth potential.
- The company has a strong financial position with substantial liquidity of $517 million and no major debt maturities until Q1 2026, providing flexibility for future growth initiatives.
Negative Points
- AFFO per share decreased by 1.1% due to temporary dilution from the recent equity issuance.
- The company faces ongoing challenges with staffing, which remains a significant issue in the senior living sector.
- Despite improvements, some retirement homes still have lower occupancy levels, impacting overall performance.
- The care component in retirement homes is compressing margins due to increased demand for services and labor costs.
- There is strong competition for acquisition assets, which could impact the company's ability to secure favorable deals.
Q & A Highlights
Q: As you approach 95% occupancy in retirement, will growth be more rate-driven? What are you seeing in terms of rate growth on turnover in your homes?
A: Nitin Jain, President and CEO: We don't have guidance for 2025 yet, but we are ramping up towards 95% occupancy. Our rental growth is around 5%, a mix of annual rent increases and market rent increases, driven by supply and demand in specific markets.
Q: Can you provide an update on the acquisition pipeline and whether there's a lot of competition for assets?
A: Nitin Jain, President and CEO: We look at about 10 acquisitions for every one we pursue. There is competition for nearly every property, which is positive as it shows strong valuation. We focus on the right markets and properties with potential for significant capital investment.
Q: How do you see the margins trending in the retirement portfolio as occupancy increases?
A: David Hung, CFO: We focus on margin dollars rather than percentage. As occupancy increases towards 95%, margin percentage will grow. However, increased care needs of residents compress margins, so we prioritize dollar growth.
Q: How do you plan to deploy the remaining equity raised, considering upcoming acquisitions and long-term care redevelopments?
A: Nitin Jain, President and CEO: We intend to use the equity for both acquisitions and developments. We are starting a development in Keswick and have acquisitions in Alberta and Nicola Lodge. We aim to expand in Western Canada, leveraging our competitive advantage in mixed-use campuses.
Q: What impact do recent immigration changes have on staffing availability in the healthcare sector?
A: Nitin Jain, President and CEO: Healthcare is exempt from many new immigration restrictions, so we don't foresee significant changes. However, staffing challenges persist, emphasizing the importance of team member engagement and retention.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
