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Sienna Senior Living Inc. Provides Operations Update and Reports First Quarter 2021 Financial Results

MARKHAM, Ontario, May 12, 2021 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today provided an update on its operations and announced its financial results for the three months ended March 31, 2021. 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.sedar.com.

“With the crucial decrease in active COVID-19 cases at Sienna’s residences and the Canadian seniors living sector overall, we have been returning to a more stable operating environment and expect further improvements as various restrictions begin to be lifted at both our long-term care and retirement residences,” said Nitin Jain, President and Chief Executive Officer of Sienna. “In addition to continuing to protect residents and team members, we are focused on working with stakeholders to support and improve our healthcare sector and advancing our development plans that will modernize seniors living over time.”

Operations Update

The early roll-out of vaccines among residents and team members was a significant factor in the 99% decline of active COVID-19 resident cases since the beginning of 2021.

  • Vaccinations – According to our most recent vaccination date, approximately
    • 95% of Sienna’s residents and
    • 74% of Sienna’s team members have been vaccinated with the first dose of vaccine.
  • COVID-19 Cases – As of May 11, 2021, 10 residences of Sienna’s 83 owned or managed residences have active cases of COVID-19, including one retirement and nine long-term care residences. From the beginning of 2021, active COVID-19 cases among Sienna’s residents declined by approximately 99% with currently three active resident cases across our portfolio.
  • Lifting of Restrictions – The Governments of Ontario and British Columbia eased self-isolation requirements in seniors living residences, and communal dining and social activities in residences with high immunization rates are starting to resume. The Government of Ontario has also removed single-site orders for fully immunized staff members, allowing them to work at more than one location.
    • Additional Government Funding
      • On March 24, 2021, the Government of Ontario’s 2021-22 budget included an additional $650 million to protect long-term care residents, amongst other funding programs, increasing total funding announced to date to approximately $2.1 billion.
      • The Government of Ontario also extended occupancy protection funding until August 2021 and a temporary wage increase of $3/hour for personal support workers until June 2021.
      • On April 19, 2021, the Federal Government announced $3 billion in funding over the next five years to support long-term care across Canada’s provinces and territories in its budget.
  • Addition to Leadership Team – On April 19, 2021, Jennifer Anderson joined Sienna’s leadership team as Executive Vice President of the Company’s long-term care operations. Jennifer is a highly experienced operator known for her focused approach to improving customer and team member experience and optimizing operational performance in her previous roles as Chief of Operations and Service Excellence Officer at one of the largest workplace insurance organizations in North America.

Development Update

  • Retirement – Sienna’s development of a retirement residence in Niagara Falls is progressing well with construction scheduled to start in Q2 2021. The estimated total capital investment is $49 million to $51 million, with an expected development yield of approximately 7.5%. Sienna’s share of this 150-suite greenfield joint venture development is 70%.
  • Long-term Care – Construction of two new development projects is scheduled to commence by the end of 2021, beginning with a new 160-bed development in North Bay to replace the existing 148 older beds. The Company’s estimated capital investment for this redevelopment is approximately $52 million to $55 million, with an expected development yield of approximately 8.0%. These projects are part of Sienna’s development plans to invest over $600 million in capital to redevelop its Ontario Class C long-term care portfolio through new and upgraded facilities over the next five to seven years.

Launch of Sienna for Seniors Foundation

On April 7, 2021, the Company finalized the formation of the Sienna for Seniors Foundation (“Foundation”). The Foundation allows Sienna to raise funds for a variety of important causes in both Ontario and British Columbia. In connection with an enhanced focus on mental health and wellness, Sienna made a $250,000 donation to Scarborough Health Network (“SHN”) in support of its new mental health hub, which will support quality care for seniors.

$0.7 Million Donated to CaRES Fund

On May 11, 2021, the Company made an additional $0.1 million contribution to the CaRES Fund, increasing its corporate and Board of Director’s contributions to approximately $0.7 million. The CaRES Fund, which provides one-time financial grants to eligible employees of long-term care and retirement operators in Canada who are facing extraordinary circumstances amid the COVID-19 crisis, was launched by Sienna and a number of sector peers. The Fund has helped nearly 800 frontline staff with over $2.4 million in emergency financial assistance to date.

First Quarter Operating and Financial Performance

The Company’s financial performance continues to be impacted by extraordinary expenses incurred to manage the pandemic. In Q1 2021, $15.3 million in retroactive government assistance was received to cover a portion of Sienna’s pandemic expenses incurred in 2020 in excess of available funding, which was recognized in Q1 2021.

  • Revenue decreased by 2.7% to $161.2 million in Q1 2021, compared to Q1 2020;
  • Operating expenses, net were $117.0 million in Q1 2021, a decrease of 9.4% compared to Q1 2020, driven by timing of pandemic-related government assistance (“net pandemic recovery”);
  • Net Operating Income (“NOI”), excluding net pandemic recovery, decreased by 9.2% (or $3.4 million) to $33.2 million in Q1 2021, compared to Q1 2020, mainly due to lower occupancy in the retirement portfolio and lower preferred accommodation revenue in the long-term care portfolio;
  • Net income increased by $12.6 million year-over-year to $10.1 million, primarily related to timing of after-tax net pandemic recovery of $7.3 million;
  • Average occupancy in Sienna’s Long-Term Care (“LTC”) portfolio was 80.3%;
  • Average same property occupancy in Sienna’s Retirement portfolio was 78.1%;
  • Operating Funds from Operations (“OFFO”) per share increased by $0.013 year-over-year to $0.378 per share; excluding net pandemic recovery, OFFO per share decreased by 26.5% year-over-year to $0.269 per share;
  • Adjusted Funds from Operations (“AFFO”) per share increased by $0.012 year-over-year to $0.394 per share; excluding net pandemic recovery, AFFO per share decreased by 23.9% year-over-year to $0.292 per share;
  • Payout ratio was 59.4% for the three months ended March 31, 2021; excluding the net pandemic recovery, the payout ratio was 80.2%.

Solid Financial Position

The Company maintained a strong financial position during Q1 2021:

  • Maintained high liquidity of $213 million and a substantial unencumbered asset pool of $840 million as at March 31, 2021;
  • Decreased debt to gross book value by 90 basis points to 46.0% as at March 31, 2021, from 46.9% at March 31, 2020; and,
  • Lowered weighted average cost of debt by 30 basis points to 3.3% as at March 31, 2021, from 3.6% as at March 31, 2020.

Financial and Operating Results

The following table represents key performance indicators for the periods ended March 31:

$000s except occupancy, per share and ratio dataThree months ended
March 31, 2021
Three months ended
March 31, 2020
Retirement - Average same property occupancy(1)(2) 78.1%  85.1% 
Retirement - As at same property occupancy(1)(2) 78.6%  84.5% 
Retirement - As at total occupancy(1)(2) 78.2%  83.6% 
LTC - Average total occupancy(3) 80.3%  97.9% 
LTC - Average private occupancy 78.2%  97.3% 
Revenue $161,228  $165,627 
Operating expenses, net$116,961  $129,116 
Same property NOI(4)$44,101  $36,436 
Total NOI(4)$44,267  $36,511 
EBITDA(5)$35,948  $33,737 
Net (loss) income$10,143  $(2,496) 
OFFO(6)$25,343  $24,418 
AFFO(7)$26,430  $25,584 
Total assets(8)$1,616,357  $1,718,716 
OFFO per share(6)$0.378 $0.365 
AFFO per share(7)$0.394 $0.382 
Dividends per share$0.234 $0.234 
Payout ratio(9) 59.4%  61.3% 

Notes:

  1. Retirement same property occupancy excludes the results from the expansion at Island Park Retirement Residence, which opened in July 2019 and is in lease-up. Retirement total average occupancy is 77.7% for Q1 2021 (2020 - 84.2%).
  2. The year-over-year declines in Retirement occupancy are primarily related to a decline in new residents moving in due to the general impact of the COVID-19 pandemic, including access restrictions.
  3. Long-term care residences are receiving occupancy protection funding for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19, and for capacity limitations of two beds per room as residents cannot be placed in rooms with three or four beds.
  4. NOI for Q1 2021 includes net pandemic (recovery) expenses of $(11,027) (2020 - $104), respectively.
  5. EBITDA for Q1 2021 increased by $2,211 to $35,948 compared to Q1 2020 primarily due to the net pandemic recovery of $9,907, offset by lower Retirement revenues of $1,806 and lower LTC preferred accommodation revenues of $1,123 primarily due to occupancy.
  6. OFFO for Q1 2021 includes an after-tax net pandemic (recovery) expense of $(7,275) (2020 - $99) and mark-to-market recovery on share-based compensation of $(25) (2020 - $(2,541)). OFFO per share for the three months ended March 31, 2021 excluding after-tax net pandemic recovery and net mark-to-market recovery on share-based compensation will decrease by $0.109 to $0.269 (2020 - decrease by $0.037 to $0.328).
  7. AFFO for Q1 2021 includes net pandemic capital expenditures of $417 (2020 - $nil), after-tax net pandemic (recovery) expense of $(7,275) (2020 - $99) and mark-to-market recovery on share-based compensation of $(25) (2020 - $(2,541)). AFFO per share for the three months ended March 31, 2021 excluding net pandemic capital expenditures and after-tax net pandemic recovery and net mark-to-market recovery on share-based compensation will decrease by $0.102 to $0.292 (2020 - decrease by $0.037 to $0.345).
  8. Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization.
  9. Payout ratio for Q1 2021 excluding after-tax net pandemic recovery and net mark-to-market recovery on share-based compensation would be 80.1% (2020 - 61.3%).

Financial and Operating Results, excluding net pandemic expenses

The following table represents key performance indicators excluding net pandemic (recovery) expenses for the periods ended March 31:

$000s except occupancy, per share and ratio dataThree months ended
March 31, 2021
Three months ended
March 31, 2020
Operating expenses, excluding net pandemic (recovery) expenses(1)$127,988  $129,012 
Same property NOI, excluding net pandemic (recovery) expenses(1)$33,074  $36,540 
Total NOI, excluding net pandemic (recovery) expenses(1)$33,240  $36,615 
EBITDA, excluding net pandemic (recovery) expenses(2)$26,041  $33,872 
Net income (loss), excluding net pandemic (recovery) expenses(3)$2,868  $(2,397) 
OFFO, excluding net pandemic (recovery) expenses(3)(5)$18,068  $24,517 
AFFO, excluding net pandemic (recovery) expenses(4)(5)$19,572  $25,683 
OFFO per share, excluding net pandemic (recovery) expenses(3)(5)(6)$0.269 $0.366 
AFFO per share, excluding net pandemic (recovery) expenses and net pandemic capital expenditures(4)(5)(7)$0.292 $0.383 
Payout ratio, excluding net pandemic (recovery) expenses and net pandemic capital expenditures(8) 80.1%  61.1% 

Notes:

  1. Operating expenses, same property NOI and total NOI for the three months ended March 31, 2021 exclude net pandemic (recovery) expenses of $(11,027) (2020 - $104).
  2. EBITDA for the three months ended March 31, 2021 excludes net pandemic (recovery) expenses of $(9,907) (2020 - $135).
  3. Net income (loss) and OFFO for the three months ended March 31, 2021 exclude after-tax net pandemic (recovery) expenses of $(7,275) (2020 - $99).
  4. AFFO for the three months ended March 31, 2021 excludes after-tax net pandemic (recovery) expenses of $(7,275) and net pandemic capital expenditures of $417 (2020 - $99 and $nil, respectively).
  5. OFFO and AFFO for the three months ended March 31, 2021 include an after-tax mark-to-market recovery on share-based compensation of $(25) (2020 - $(2,541)).
  6. OFFO per share for the three months ended March 31, 2021 excluding after-tax net pandemic recovery and mark-to-market recovery on share-based compensation will increase by $0.109 to $0.269 (2020 - decrease by $0.037 to $0.328).
  7. AFFO per share for the three months ended March 31, 2021 excluding net pandemic capital expenditures and after-tax net pandemic recovery and mark-to-market recovery on share-based compensation will decrease by $0.102 to $0.292 (2020 - decrease by $0.037 to $0.345).
  8. Payout ratio for Q1 2021 excluding after-tax net pandemic impact and mark-to-market on share-based compensation after tax would be 80.1% (2020 - 61.3%).

First Quarter 2021 Summary

Average same property occupancy in Retirement was 78.1% in Q1 2021. The decrease in occupancy was primarily related to a decline in new residents moving in due to the impact of the COVID-19 pandemic, including access restrictions. Subsequent to Q1 2021, monthly average same property occupancy improved modestly from 77.7% in March to 77.9% in April, reflecting numerous marketing and sales initiatives, offset by the impact of the third wave of COVID-19. Rent collections remained high and consistent with pre-pandemic levels.

The following table provides an update on the monthly average same property occupancy and rent collections in Sienna’s Retirement portfolio during and subsequent to the end of Q1 2021:

 2021
 JanFebMarApr
Retirement same property occupancy (average)78.6%78.1%77.7%77.9%
Retirement rent collection (%)99.3%99.1%99.0%98.8%

Average occupancy in LTC was 80.3% in Q1 2021. Long-term care residences are fully funded for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19, and for capacity limitations of two beds per room as residents cannot be placed in rooms with three or four beds. The Government of Ontario has announced that the occupancy protection funding will be in place for long-term care residences until August 31, 2021. Effective September 1, 2021, as new admissions gradually resume, occupancy targets of 97% for long-stay beds and 90% for interim short-stay beds, excluding unavailable beds as a result of capacity limitations in multi-bed rooms and the provision of isolation rooms, will be reinstated.

Net Pandemic Expenses decreased by $10.0 million to a net recovery of $9.9 million in Q1 2021, compared to Q1 2020. The net pandemic recovery for Q1 2021 was mainly due to timing of government assistance of $15.3 million in the LTC segment received in Q1 2021 related to pandemic expenses incurred in excess of available funding during the year ended December 31, 2020, partially offset by investments in higher levels of staffing, personal protective equipment (“PPE”), infection prevention and control (“IPAC”) supplies and advisory fees to support the management of the pandemic.

There are various programs and financial assistance provided by the governments to support pandemic expenses. The following table summarizes the government assistance to Sienna and expenses recognized related to COVID-19 included in operating expenses in the Company's consolidated statements of operations for the three months ended March 31, 2021:

 Three months endedThree months ended
Thousands of Canadian dollarsMarch 31, 2021March 31, 2020
 RetirementLTCAdministrativeTotalTotal
Government assistance - temporary pandemic pay521 4,824  5,345  
Government assistance1,438 35,285  36,723 810 
Total government assistance1,959 40,109  42,068 810 
      
Pandemic labour - temporary pandemic pay521 4,824  5,345  
Pandemic labour1,592 19,260  20,852 547 
Personal protective equipment377 1,704  2,081 280 
Other201 2,562 1,120 3,883 118 
Total pandemic expense2,691 28,350 1,120 32,161 945 
      
Total net pandemic (recovery) expenses(1)732 (11,759)1,120 (9,907)135 

Note:

  1. $15.3 million in retroactive government assistance was received to support a portion of Sienna’s 2020 pandemic expenses spent in excess of available funding in the LTC segment, which was recognized in Q1 2021.

In addition, for the three months ended March 31, 2021, the Company has recognized pandemic capital expenditures in its interim consolidated statements of financial position of $9.4 million, reduced by related government assistance which have not been included in the table above of $9.0 million.

Pandemic expenses are mainly related to additional staffing, temporary pandemic pay programs for team members and PPE. Other pandemic expenses for the Retirement and LTC residences include investments in cleaning supplies for IPAC, meals and accommodations to support team members. Furthermore, other pandemic expenses recorded in administrative costs include advisory fees to support the management of the pandemic.

NOI increased by 21.2% in Q1 2021, or $7.8 million, to $44.3 million, compared to Q1 2020, mainly due to net recovery of pandemic expenses of $11.0 million, as a result of $15.3 million retroactive pandemic funding received in Q1 2021 related to pandemic expenses incurred in excess of available funding during the year ended December 31, 2020. Excluding net pandemic recovery, NOI decreased by 9.2% in Q1 2021, or $3.4 million, to $33.2 million, mainly due to lower Retirement occupancy levels, lower LTC preferred accommodation revenue from lower occupancy in private

By: GlobenewsWire - 12 May 2021
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