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Sienna Senior Living Inc. Provides Operations Update and Reports 2020 First Quarter Financial Results

MARKHAM, Ontario, May 13, 2020 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (SIA.TO) today provided an update on its operations and announced its financial results for the three months ended March 31, 2020. The Unaudited Condensed Interim Consolidated Financial Statements and accompanying Management’s Discussion and Analysis are available on the Company’s website at www.siennaliving.ca and on SEDAR at www.sedar.com.

“I am incredibly grateful for our team who continues to demonstrate commitment, compassion and resilience amid the fight against COVID-19,” said Lois Cormack, President and Chief Executive Officer of Sienna Senior Living. “We are deeply saddened by the tragic loss of life of residents and two valued team members. I express my deepest condolences to their families and our team members, who are grieving while continuing to work and manage an extraordinarily difficult situation as a result of this pandemic. We are fully focused on navigating through this crisis to eliminate COVID-19 from every one of our affected residences.”

Sienna is singularly focused on the health and safety of residents and team members, and has been proactive and diligent in implementing extensive infection prevention and other precautionary measures to limit the spread of COVID-19 since early 2020.

  • COVID-19 cases – To date, there are no confirmed COVID-19 cases in any of Sienna’s residences in British Columbia. In Ontario, 13 long-term care and 4 retirement residences have active COVID-19 cases, and 3 residences have now cleared of outbreak status.
  • CAPES – Sienna is a founding member of the Canadian Alliance to Protect and Equip Seniors Living (“CAPES”), an initiative designed to ensure that seniors’ living providers have access to personal protective equipment (“PPE”) during the global supply chain disruption. 
  • CaRES Fund– Inspired by workers in the sector amid the COVID-19 crisis, Sienna participated in the launch of the Senior Living CaRES Fund (“CaRES Fund”) together with three sector peers, to provide emergency financial assistance to sector employees facing extraordinary circumstances and to invest in future education for sector employees and their families. The CaRES Fund is further supported by the contributions by the Company’s Board of Directors.
  • Accreditation renewal – Sienna’s long-term care (“LTC”) portfolio in Ontario received a three-year accreditation award, achieving exemplary status with a 99.5% conformance to Commission on Accreditation of Rehabilitation Facilities (“CARF”) quality of care standards.

First Quarter Financial Performance

  • Revenue increased by 1.7% to $166.4 million in Q1 2020, compared to Q1 2019;
  • Total same property NOI decreased by 6.4% to $36.4 million in Q1 2020, compared to Q1 2019;
  • Average occupancy in Sienna’s LTC portfolio remained high at 97.9%;
  • Average same property occupancy in Sienna’s retirement portfolio (“Retirement”) was 85.1%;
  • Operating Funds from Operations (“OFFO”) per share increased by 13.4% year-over-year to $0.365 per share;
  • Adjusted Funds from Operations (“AFFO”) per share increased by 8.2% year-over-year to $0.382 per share;
  • Payout ratio was 61.3% for the three months ended March 31, 2020.

Solid Financial Position

  • In March 2020, the Company entered into a credit agreement for a $200 million senior unsecured revolving credit facility for a five-year term;
  • Liquidity increased to $222.4 million as at March 31, 2020, from $144 million as at December 31, 2019, comprised of cash and cash equivalents and available credit facilities;
  • Fair value of unencumbered asset pool increased to approximately $540 million as at March 31, 2020, from approximately $300 million as at December 31, 2019;
  • Debt to gross book value reduced by 90 bps to 46.9% year-over-year;
  • Interest service coverage ratio improved to 4.2 times from 3.8 times year-over-year;
  • Debt to adjusted EBITDA decreased to 6.8 years from 7.1 years year-over-year.

Financial and Operating Results

$000s except occupancy, per share and ratio data Three months ended
March 31, 2020
Three months ended
March 31, 2019
Retirement – Average same property occupancy(1)(2)   85.1 %   90.4 %
Retirement – As at same property occupancy(1)(2)   84.5 %   89.4 %
LTC – Average total occupancy   97.9 %   98.2 %
LTC – Average private occupancy   97.3 %   98.4 %
Revenue $ 166,437   $ 163,669  
Operating expenses $ 129,926   $ 124,757  
NOI(3) $ 36,511   $ 38,912  
Net (loss) income $ (2,496 ) $ 442  
Operating Funds from Operations (OFFO)(4) $ 24,418   $ 21,322  
Adjusted Funds from Operations (AFFO)(4) $ 25,584   $ 23,383  
Net (loss) income per share $ (0.04 ) $ 0.01  
OFFO per share(4)(5) $ 0.365   $ 0.322  
AFFO per share(4)(5) $ 0.382   $ 0.353  
Dividends declared per share $ 0.234   $ 0.230  
Payout Ratio   61.3 %   65.2 %

Notes:

  1. Retirement same property occupancy excludes the results from the expansion at Island Park Retirement Residence, which is in a lease-up period since it opened in July 2019. Retirement total average occupancy is 84.2% for the three months ended March 31, 2020 (2019 - 90.4%).
  2. The year-over-year decline in Retirement occupancy is primarily related to a slowdown in tours and new residents moving in due to access restrictions during the COVID-19 pandemic, the continuing oversupply in the Ottawa market and new supply in the Kingston and South Surrey markets.
  3. NOI for Q1 2020 includes net expense of $104 related to COVID-19 mainly due to timing.
  4. OFFO and AFFO for the three months ended March 31, 2020 include a $2,541 after-tax recovery in respect of mark-to-market adjustment on share-based compensation of (2019 – after-tax expense of $1,029).
  5. OFFO and AFFO per share for the three months ended March 31, 2020 excluding the after-tax impact of the COVID-19 net expense and the mark-to-market adjustments on share-based compensation would have decreased by $0.037 to $0.328 and $0.345, respectively (2019 – increased by $0.016 to $0.338 and $0.369, respectively).

Operations Update

Managing COVID-19

The management of COVID-19 is currently the foremost priority of the Company and is operationally intensive. Every residence has extensive infection prevention and control measures and protocols in place to protect residents and team members against COVID-19 and to minimize the spread.  

COVID-19 Positive Cases

To date, there are no confirmed COVID-19 cases in any of Sienna’s residences in British Columbia. In Ontario, we have 3 residences that have now cleared of outbreak status, and a number of residents and team members who were previously COVID-19 positive have now resolved. 

Despite the many precautions and safeguards, we currently have 13 Ontario LTC homes and 4 Retirement residences of Sienna’s 70 owned residences, and 1 managed home of Sienna’s 13 managed residences, with active cases of COVID-19.

At some locations, there has been limited spread of the virus to a very few cases in either residents or staff. Unfortunately, some of our LTC residences in Ontario have been significantly affected, causing extraordinary work and stress on residents, their families and team members. We are very thankful for the support from the hospitals, the Canadian Armed Forces and local health networks who are providing assistance and expertise to these residences. Everyone is working extremely hard, all with the common goal of fighting COVID-19.

For more information on our response to COVID-19 and affected residences, please visit Sienna’s website.

Staffing Update

Staffing challenges in the seniors’ living sector have been exacerbated by COVID-19, particularly when a residence has a positive COVID-19 case. Sienna has worked extensively to recruit and deploy staff and to expedite the hiring process, while supporting single work sites. The temporary pandemic pay for front-line workers by the governments of British Columbia and Ontario is helpful in recognizing the essential and heroic work of those providing residents with the care and services they need at this very difficult time. 

Procurement of PPE and CAPES

Every Sienna residence has had an adequate supply of the required PPE to date for use in accordance with provincial directives. Sienna has sourced nearly 3.7 million pieces of PPE to date for use at our residences.

Sienna is a founding member of CAPES to ensure that all seniors’ living providers have access to PPE amid the global supply chain disruption. This initiative, together with help from various levels of government and regulatory authorities, has enabled us to procure an adequate supply of the required PPE to date for use in accordance with provincial directives.

As part of CAPES, Sienna commits to overfund its PPE requirement by 35% to allow for a reserve of supplies to be made available at cost to smaller and not-for-profit Canadian operators. To date, this collaboration of more than 25 sector operators has procured over 20 million pieces of PPE for distribution to seniors’ living providers across Canada.

CaRES Fund

Inspired by the dedication and extraordinary efforts of staff members in the seniors’ living sector, earlier this week the Company participated in the launch of the CaRES Fund, an initiative founded by the Company together with Chartwell Retirement Residences, Revera Inc. and Extendicare.

The CaRES Fund aims to provide one-time financial grants of up to $10,000 to eligible employees of LTC and retirement operators in Canada facing extraordinary circumstances amid the COVID-19 crisis. The founding members of the CaRES Fund have collectively committed an initial amount of $2 million to this initiative. The CaRES Fund intends to continue its legacy post-COVID-19 through continued emergency funding as well as support to employees or their family members to pursue higher education. The CaRES Fund is open to all operators, sector partners and the community to join in expanding the legacy and resources that will continue to recognize the dedication of employees in the sector for years to come

In appreciation of the commitment of sector workers to the extraordinary fight against COVID-19, in addition to Sienna’s $500,000 contribution, the Company’s Board of Directors has contributed approximately 20% of their annual cash compensation for the remainder of the year.

Government Support

We are grateful for the provincial governments’ support for assistance in funding the extraordinary costs associated with the extensive infection prevention and safeguard measures, and single work site for team members, all of which help to limit the spread of the virus.

Government funding for direct care and resident programs in Ontario is flow-through funding that is dedicated to servicing our residents and does not contribute to the Company’s NOI.

Quality of Care

Subsequent to the end of Q1 2020, our Ontario LTC portfolio received a three-year accreditation through CARF and achieved an exemplary quality performance of 99.5% conformance to CARF standards. This highest level of accreditation is a testament to the incredible work Sienna’s team is doing each and every day, and recognizes the Company’s culture, resident centred focus, best practice programs and protocols in the sector and resident satisfaction.

In addition, in comparison to Ontario’s provincial average for the publicly reported long-term care quality indicators, Sienna has performed better than or in line with the provincial average on the quality indicators.  Our LTC residences meet or exceed compliance with thousands of requirements set by regulatory authorities.

2020 First Quarter Summary

Average occupancy in LTC remained high at 97.9%. For LTC residences in both Ontario and British Columbia, the Company will continue to receive full funding for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19. The Company’s LTC portfolio generated over 56% of total Company NOI in Q1 2020.

Average same property occupancy in Retirement was 85.1%. Contributing factors to the occupancy softness are related to access restrictions during the COVID-19 pandemic, the continuing oversupply in the Ottawa market and new supply in the Kingston and South Surrey markets.

NOI decreased by 6.2% (or $2.4 million) to $36.5 million in Q1 2020, compared to Q1 2019, mainly related to softness in Retirement occupancy. During the quarter, pandemic related funding revenues of $0.8 million were recorded to support the extraordinary costs of $0.9 million for managing COVID-19, resulting in a net expense of $0.1 million. Funding related to COVID-19 is recognized only to the extent that eligible expenses have been incurred and funding allocations are determined.

LTC same property NOI decreased by 2.0% to $20.6 million in Q1 2020, compared to Q1 2019, mainly due to timing of expenses.

Retirement same property NOI decreased by 11.4% to $15.9 million in Q1 2020, compared to Q1 2019, largely due to lower occupancy and higher labour costs mainly from annual inflationary increases.

Revenue increased by 1.7% (or $2.8 million) to $166.4 million in Q1 2020, compared to Q1 2019. The increase was mainly a result of inflationary increases in flow-through funding in LTC and funding revenues to support COVID-19 related costs, partially offset by occupancy softness in Retirement.

Operating expenses increased by 4.1% (or $5.2 million) to $129.9 million in Q1 2020, compared to Q1 2019. The increase was mainly a result of inflationary increases associated with flow-through funding in LTC, additional expenses related to COVID-19, and higher labour and other costs from annual inflationary increases in Retirement.

The Company generated a net loss of $2.5 million in Q1 2020, representing a decrease of $2.9 million compared to Q1 2019. The decrease was primarily related to fair value adjustments on interest rate swap contracts in Q1 2020, partially offset by mark-to-market adjustments on share based compensation and lower income taxes.

OFFO increased by 14.5% (or $3.1 million) to $24.4 million in Q1 2020, compared to Q1 2019. The increase was primarily due to mark-to-market adjustments on share based compensation, lower income taxes and lower net interest expense, partially offset by lower NOI.

AFFO increased by 9.4% (or $2.2 million) to $25.6 million in Q1 2020, compared to Q1 2019. The increase was primarily related to the increase in OFFO noted above, partially offset by timing of maintenance capital expenditures.

April 2020 Retirement Occupancy and Rent Collection

The Company’s average same property occupancy in the Retirement portfolio was 83.7% for the month ended April 30, 2020, compared to 85.1% for the three months ended March 31, 2020. Occupancy is temporarily affected by reduced move-in activity during the pandemic, partially offset by lower move-out activity and conversion of short-term stays to permanent.

Rent collections from residents for the month ended April 30, 2020 remained similar to previous collection levels.

Conference Call

The conference call will be on Thursday May 14, 2020 at 11:00 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 7028318. A webcast of the call will be accessible via Sienna's website at: www.siennaliving.ca/investors/events-presentations. The webcast of the call will be available for replay until May 14, 2021 and archived on Sienna's website.

About Sienna Senior Living

Sienna Senior Living Inc. (SIA.TO) offers a full range of seniors' living options, including independent living, assisted living, long-term care, and specialized programs and services. Sienna's approximately 12,000 employees are passionate about helping residents live fully every day, and were the driving force behind Sienna being named one of Canada's Most Admired Corporate Cultures. For more information, please visit www.siennaliving.ca.

Risk Factors

Refer to the risk factors on “General Business Risks” and “COVID-19 and Other Outbreaks” disclosed in the Company’s MD&A for the three months ended March 31, 2020, and other risk factors disclosed in its most recent annual MD&A and 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 include, without limitation, statements with respect to business strategy and financial condition, and in particular in respect of the impact of COVID-19 and measures taken to mitigate the impact, supply-chain integrity and availability of PPE, the availability of various government programs, government funding and financial assistance. 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:

Nitin Jain
Chief Financial Officer & Chief Investment Officer
(905) 489-0787
Nitin.Jain@siennaliving.ca