Le Lézard
Classified in: Health, Business
Subject: EARNINGS

Sienna Senior Living Inc. Reports Strong Third Quarter 2024 Financial Results and Continues on its Growth Path


MARKHAM, Ontario, Nov. 11, 2024 (GLOBE NEWSWIRE) -- 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

Successful Financing Initiatives

Sienna completed the following successful financing initiatives during and subsequent to Q3 2024:

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

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.

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

Financial performance in the nine months ended September 30, 2024

Financial position

The Company maintained a strong financial position during Q3 2024:

Financial and Operating Results

 Three months ended September 30,Nine months ended September 30,
$000s except occupancy, per share and ratio data2024 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 occupancy88.2%87.1%87.3%87.2%
LTC - Average private occupancy96.5%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%
  1. Effective January 1, 2024, the results of Woods Park were reclassified from "acquisitions" to "same property".
  2. Includes recently completed retirement residence in Niagara Falls, effective January 24, 2024, which is currently in the process of being leased-up.
  3. Excludes the 3rd and 4th beds in multi-bed rooms in Ontario that will not be reopened.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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%
  9. 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:

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 Hung
Chief Financial Officer and Executive Vice President
(905) 489-0258
[email protected]

Nancy Webb
Senior Vice President, Public Affairs and Marketing
(905) 489-0788
[email protected]



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