Sienna Senior Living Q4 2025 Earnings Report

Sienna Senior Living EPS Results

• Actual EPS: C$0.14
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Sienna Senior Living Revenue Results

• Actual Revenue: $278.45 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Sienna Senior Living Announcement Details

• Quarter: Q4 2025
• Date: 2/19/2026
• Time: After Market Closes
• Conference Call Date: Friday, February 20, 2026
• Conference Call Time: 10:00AM ET

Sienna Senior Living (TSE:SIA) (TSX:SIA) offers a full range of senior 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 15,000 employees are passionate about cultivating happiness in daily life.

Sienna Senior Living Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Operational outperformance: Q4 same-property NOI rose sharply with retirement +15.4% and long‑term care +5.6%, average retirement occupancy reached 94.7% (95.2% in January) and lead/tour activity meaningfully increased.
• Positive Sentiment: Accelerated growth by acquisition and development: Sienna added over CAD 800 million of assets (nearly 1,800 beds/suites), closed multiple Q4 deals and announced the 448‑bed Glen Rouge redevelopment (~CAD 250M, ~7.5%–8% yield).
• Positive Sentiment: Strong financial flexibility: management raised equity and debt (~CAD 700M issued in 2025), ended the year with >CAD 500M liquidity, CAD 1.5B unencumbered assets, renewed ATM capacity and no major maturities until 2027.
• Negative Sentiment: Execution and capital risks: large multi‑year developments (Glen Rouge completes ~2030) and continued acquisitions require significant capital and disciplined execution; rising maintenance capex and variability in cash taxes could pressure near‑term AFFO and payout metrics.
• Neutral Sentiment: Forward‑looking outlook is management‑driven: guidance assumes >10% same‑property NOI growth in retirement and low single digits in long‑term care for 2026, but management noted macro uncertainty and these projections reflect the company's view.

Presentation

[Operator]

Ladies and gentlemen, welcome to Sienna Senior Living Inc.'s Fourth Quarter 2025 Conference Call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and David Hung, Chief Financial Officer and Executive Vice President, Investments of Sienna Senior Living Inc. Please be aware that certain statements or information discussed today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statement or information. Please refer to the forward-looking information and risk factors section in the company's public filings, including its most recent MD&A and AIF, for more information. You will also find a more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted on SEDAR+ and can be found on the company's website, siennaliving.ca. Today's call is being recorded, and a replay will be available.

[Operator]

Instructions for accessing the call are posted on the company's website, and the details are provided in the company's news release. The company has posted slides which accompany the host's remarks on the company website under Events and Presentations. With that, I will turn the call to Mr. Jain. Please go ahead, Mr. Jain.

[Nitin Jain, CEO at Sienna Senior Living]

Thank you, Audra. Good morning, everyone, and thank you for joining us today. 2025 was a year of long-term value creation for Sienna. We added over CAD 800 million of assets to our platform, ended the year with strong organic growth for the 12th consecutive quarter, and enhanced Sienna's balance sheet with the continued support of the capital markets. We issued nearly CAD 700 million of equity and debt, with each issuance being met with strong investor demand. We also expanded our workforce by adding approximately 2,000 team members and further deepened our impact in the communities we serve. These achievements have increased the scale and quality of Sienna's diversified platform and positioned the company well for continued growth at a compelling time in Canadian senior living.

[Nitin Jain, CEO at Sienna Senior Living]

During the fourth quarter, both operating platforms delivered strong results and continued and contributed a successful finish to the year. Same-property NOI increased by 15.4% in the retirement segment and by 5.6% in long-term care. Key driver of the double-digit increase in the retirement segment were the continued occupancy increase and rental rate growth. Average same-property occupancy was up by 180 basis points year-over-year and has reached 94.7% in the fourth quarter. Following the quarter, monthly occupancy was 95.2% in January. The result of Sienna's retirement segment also reflect higher care revenue. We apply our expertise in clinical care at our retirement platform, which allows residents to stay with us longer as their care needs change.

[Nitin Jain, CEO at Sienna Senior Living]

Beyond the strong same-property performance in our retirement segment, we are pleased with the results of the company's optimization portfolio. This portfolio includes assets that are undergoing renovations, changes in service offerings, or the addition of new services. Occupancy increased by 790 basis points year-over-year in the optimization portfolio in fourth quarter, and NOI grew by 22.1%. Our focus on better positioning assets within their local markets is clearly delivering results. Additional key driver behind the strong performance of our retirement operations are a robust sales platform and focused marketing campaigns. Year-over-year, call center leads grew by over 50% in the fourth quarter, and the number of tours in our properties have increased each quarter in 2025.

[Nitin Jain, CEO at Sienna Senior Living]

We also maintain a robust focus on hospital outreach and excellent relationships with healthcare partners in the local communities where we operate. All of these initiatives are expected to drive strong lead generation and future move-ins. With respect to Sienna's long-term care operations, fully occupied homes with growing waitlists, higher revenue from private accommodations, and annual inflationary government funding increases all added to the strength of the results. Sienna's government-funded long-term care operations add significant value to our business and provide stability, given that they are largely insulated from market volatility or economic uncertainty. Now moving to slide six. In Q4, we started to see the contributions from two recently completed development projects. We opened our redeveloped long-term care community in North Bay in September, followed by our campus of care in Brantford in October. Large-scale development projects require deep expertise and trusted partnerships.

[Nitin Jain, CEO at Sienna Senior Living]

With both in place, we're excited to move forward with our next project, which will be our first in the city of Toronto. Located at our existing Glen Rouge site in Scarborough, it will be Sienna's largest project to date, with 448 beds and an estimated development cost of about CAD 250 million. The development yield for this project is approximately 7.5%-8%. After several years of planning, the significant government funding improvements for projects in the GTA were a key driver for us to move forward. The Glen Rouge redevelopment, which is expected to be completed in 2030, will replace 363 existing beds and add 85 much-needed new beds in the Scarborough community. With this development, we will further modernize and strengthen Sienna's Ontario platform and support the continued growth of the company's long-term care business.

[Nitin Jain, CEO at Sienna Senior Living]

2025 has been a very active year on the acquisition front. With the acquisition of 10 properties across three provinces, we added nearly 1,800 beds and suites to our asset base. During the fourth quarter, we finalized three acquisitions in Ontario, including Kawartha Gardens, a 192-bed long-term care community in LaSalle Park, a 123-suite retirement residence, both located in the Greater Toronto Area. In addition, we acquired Highgate, a 213-suite retirement residence in Waterloo, Ontario. These acquisitions added CAD 193 million of assets during the final quarter of 2025, and we carried the growth momentum into 2026. Since the beginning of the year, we added another CAD 79 million through acquisitions.

[Nitin Jain, CEO at Sienna Senior Living]

We finalized the purchase of interest in two of our majority-owned properties in Ontario and British Columbia, and signed a purchase agreement for The Bartlett, a 129-suite retirement residence in the Greater Toronto Area, for approximately CAD 59.4 million, which will be financed with cash on hand. Sienna's acquisition pipeline remains strong, and we are confident to continue our significant acquisition pace in 2026. Moving to our team members. As we continue to grow, investing in Sienna's team members is fundamental to our success. With over 15,000 employees, we recognize the importance of programs that support the company's growing workforce. Sienna's strong culture of ownership and engagement played a key role in the continued reduction in turnover. Average company-wide turnover has reached record level, low of approximately 19% in 2025.

[Nitin Jain, CEO at Sienna Senior Living]

Along with programs focused on team member development, recognition, and rewards, our initiatives also resulted in the fifth consecutive year of increased team member engagement and further strengthened Sienna's operations. It puts us in a strong position to attract and retain the best in Canadian senior living. We are extremely proud of these achievements. They reinforce our belief that if we take good care of our team members, they will provide exceptional service to our residents and support the company's strong operating performance. Our focus on enhancing the work experience for Sienna's team members and improving resident quality of life is reflected in our most recent accreditation results from CARF, where we maintained the highest achievement status and exceeded every benchmark. This commitment is also evident in the continued improvement in the company's Net Promoter Score, which measures residents' likelihood to recommend our homes.

[Nitin Jain, CEO at Sienna Senior Living]

Since introducing this measure at our retirement residences in 2023, scores have increased by well over 30% each and every year. With that, I'll turn it over to David for an update on our financial results.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Thank you, Nitin, and good morning, everyone. I will start on slide 10 for financial results. In my commentary, in accordance with our MD&A disclosure, I will make reference to our operating results excluding one-time items. In Q4 2025, revenue on a proportionate basis increased by 14.2% year-over-year to CAD 278.4 million. This increase was largely due to occupancy and rental rate growth, as well as increased care revenue in the retirement segment. Adding to the increase were the contributions from our long-term care platform, including higher flow-through funding for direct care, increased private accommodation revenue, and additional revenue from acquisitions and developments completed in 2025.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Same property NOI increased by 10.1% to CAD 47.4 million in Q4 2025, including by 15.4% in our retirement segment and by 5.6% in our long-term care segment. In the retirement segment, same property NOI increased by CAD 3 million in Q4 2025, compared to last year, largely as a result of improved occupancy and rate growth. In addition, higher care revenue and maintaining a strict focus on operating expenses supported the year-over-year 300 basis point improvement in our same property operating margin. We are also making good progress with respect to our asset optimization initiatives, which included five assets in the company's retirement portfolio. Q4 NOI in the optimization portfolio increased by over 22% year over year compared to the same period in 2024.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Effective January 1, 2026, we updated the composition of the optimization portfolio and included two additional assets while returning one asset to our same property portfolio after its successful renovation. Occupancy in this property increased from the low 80% range before its renovation to over 95% today. Based on the updated same property portfolio composition, average monthly occupancy reached or exceeded 95% since last September. In the long-term care segment, same property NOI increased by CAD 1.3 million. Continued improvements in private occupancy were the key driver behind the year-over-year growth. During Q4 2025, operating funds from operations increased by 24% to CAD 34.2 million compared to last year, primarily due to higher NOI as a result of organic growth, in addition to contributions from acquisitions and developments completed in 2025.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Adjusted funds from operations increased by 19.8% to CAD 27.9 million compared to last year. The increase was mainly due to higher OFFO, offset by an increase in maintenance capital expenditures. On a per-share basis, OFFO and AFFO increased by 7.5% and 3.9%, respectively, in Q4 2025. Sienna's Q4 2025 AFFO payout ratio was 80.7%, compared to 83.1 in Q4 2024. This improvement highlights Sienna's strong operating results and the disciplined use of capital the company raised to fund its growth. Sienna delivered consistently strong results throughout 2025. In line with Sienna's 2025 growth targets, same property NOI for the full year increased by 14.3% in the retirement segment and by 4.8% in long-term care.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

In addition, Sienna's strong results are reflected in the company's OFFO and AFFO in 2025, which increased by 27.1% and 25.7%, respectively, or by 5.8% and 4.7% on a per-share basis. Moving to slide 12. Throughout 2025, Sienna maintained a strong financial position and balance sheet. We ended the year with over CAD 500 million in liquidity and CAD 1.5 billion of unencumbered assets. We continue to have access to a broad range of capital, and demand for Sienna's equity and debt remains exceptionally strong. To support Sienna's growth momentum and refinance our debt, we issued CAD 250 million of unsecured debentures in December, and we repaid our CAD 175 million expiring debenture.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

With this repayment, the company has no major debt maturities until 2027. We also fully deployed our at-the-market distribution program, issuing shares for gross proceeds of approximately CAD 101 million in Q4, and just yesterday, we announced the renewal of the ATM program. This allows the company to issue another CAD 150 million of shares to finance its continued growth initiatives. We will carefully evaluate each opportunity and continue to finance Sienna's growth in a very disciplined manner. With that, I will turn the call back to Nitin for his closing remarks.

[Nitin Jain, CEO at Sienna Senior Living]

Thank you, David. While the broader economic and geopolitical environment remains uncertain, one long-term trend is very clear. Canada's senior population is set to grow significantly over the next two decades, with the oldest baby boomer turning 80 this year. At the same time, senior housing is already operating at high occupancy levels in most markets, and new supply is expected to remain limited for many several years. Against this backdrop, Sienna's assets increased by nearly 30%, with the addition of over CAD 800 million through acquisitions and developments. This has allowed us to add meaningful scale to Sienna's long-term care and retirement platforms, supporting both stability and attractive growth opportunities. With our operating depth, strong balance sheet, and organizational capability to execute, we believe Sienna is in the early stages of a multiyear growth phase.

[Nitin Jain, CEO at Sienna Senior Living]

In the near term, this is reflected in Sienna's growth targets for 2026. We expect same property NOI growth in excess of 10% in the retirement segment and in the low single digits in long-term care. We also expect to continue this company's significant growth through acquisitions and further strengthen Sienna's position in the sector. On behalf of our entire team and our board of directors, I want to thank all of you for this call and for your continued support.

[Operator]

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand to join the queue. If you would like to withdraw your question, simply press star one again. We'll take our first question from Lorne Kalmar at Desjardins.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Thanks. Good morning, everyone. Just quickly on the same property NOI growth expectations for retirement, can you maybe give some color in terms of the rent growth expectations that are underpinning that?

[Nitin Jain, CEO at Sienna Senior Living]

Thank you, Lorne, and good morning. Our rent, our 10% plus is made up of rental growth, care revenue increase, and potential further increase in our occupancy targets. Our rental growths have been quite consistent in the 4% range, and we expect them to stay there. We will continue to see more care revenue as residents are choosing to stay longer with us, given that we are not afraid of providing more care with our depth of expertise in long-term care.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Okay. And then maybe just turning to the growth and optimization portfolio. I think you guys are, what, about 13 homes now. How much NOI upside is there in that portfolio, and how long do you think it'll take to realize that?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Yeah, that's a great question, Lorne. So just to clarify, within our growth and optimization portfolio, we only have 6 properties within the optimization portfolio. The others are assets that we acquired in 2025. And in terms of the potential, our margins within the optimization portfolio were at around 24% in Q4, and we would expect over the medium term that would—they would get back towards our same property margins.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Okay. And then I guess the growth is kind of the ones in lease-up and the acquisitions. All right, and then maybe just quickly turning to the Glen Rouge announcement. If I read correctly, I think, is Glen Rouge only 159 beds? And if so, is this development replacing multiple Class C homes?

[Nitin Jain, CEO at Sienna Senior Living]

Correct, Lorne. So it replaces Glen Rouge, and it also replaces another home nearby and adds additional capacity. We have quite a bit of land on the site, which is difficult to find in GTA. So we have four acres of land at Glen Rouge, so it'll be combining two homes and adding additional beds.

[Lorne Kalmar, VP of Equity Research at Desjardins]

Okay, and then maybe just one last quick one. In terms of just how do you plan to fund that development? Will that be on the operating line?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Yeah, we would be looking at some form of debt, whether it's on the operating line, potentially a construction loan, or other form of debt. Okay, perfect. Thanks so much. I'll turn it back.

[Nitin Jain, CEO at Sienna Senior Living]

Thank you.

[Operator]

Next, we'll move to Jonathan Kelcher at TD Cowen.

[Jonathan Kelcher, Analyst at TD Cowen]

Thanks. Just continuing on the Glen Rouge development, fair size development. Do you envision starting any more developments this year, or is this gonna be sort of, given the size, it's just gonna sort of carry you through for the next few years?

[Nitin Jain, CEO at Sienna Senior Living]

Good morning, Jonathan. We have two other projects which are getting close to shell already, and so we will look at those. One of the commitments we have is not to have our balance sheet too much into development, so that is something we'll continue to manage. We're also now 30% bigger since where we were last year, so we might have a capacity to add another project. But those are some of the things we are assessing, you know, against the potential return of these new developments. So I think too early for us to commit. It's only February, but you know, we might have an opportunity to add another one later in the year.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. And assuming you continue growing, then next year, probably for sure, just given that you'll likely be that much bigger. Is that a way to think about it?

[Nitin Jain, CEO at Sienna Senior Living]

Correct. And then also, these projects take multiple years. So when we start Glen Rouge, this is, this is going to take two to three years, three years to complete. So if you have two or three projects, at the go, we have Keswick, which we expect to complete in the latter half of next year. So when that completes, it gives us more capacity to add something. So, for us, there's a bit of a rolling thing of as projects get completed, we'll, you know, we'll get started on the new ones.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. And I guess just switching gears on the, like, the cash taxes were a little bit lower than we had anticipated in Q4, and I guess part of that is due to the timing of acquisitions. How can you maybe give a little bit of color on that? And assuming you're going to be acquiring a similar amount of assets this year, how should we think about cash taxes in 2026?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Sure. That's a good question, Jonathan. You're, you're absolutely right. Our cash taxes got the benefit of the acquisitions of Highgate and LaSalle, which we did close in December of 2025. And so with the acquisition of those two properties, we were able to take a full year of capital cost allowance deduction, and able to, you know, get a benefit of around CAD 2 million to lower our, our cash taxes in Q4 of 2025.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

I think when as we're thinking about 2026, the way that I would think about it is, taking 2024, which had no acquisitions, and 2025, which had, you know, CAD 800 million of acquisitions and redevelopment, and using a cash tax rate that is somewhere in between those two years. And then, of course, you know, we don't have any kind of forecast in terms of acquisitions for 2026, so that, you know, any additional CCA would have to be layered on top of that for potential acquisitions in this upcoming year.

[Jonathan Kelcher, Analyst at TD Cowen]

Okay. That's helpful. I'll turn it back. Thanks.

[Operator]

We'll go next to Mark Rothschild at Canaccord Genuity.

[Mark Rothschild, Managing Director and Real Estate Analyst at Canaccord Genuity]

Thanks, and good morning. Maybe starting just following up on your comments regards to Lorne, to the 10% growth. What is assumed as far as occupancy increase in that, and how much more improvement in occupancy do you think you can get? So I understand the breakdown in the 10% growth from rent growth versus occupancy.

[Nitin Jain, CEO at Sienna Senior Living]

Good morning, Mark, and welcome to Sienna's first call for you, and thank you for your coverage. The 10%, it is a combination of those three, and your question is very fair on ninety-- you know, where occupancy can go from here. We are, for lack of a better word, in uncharted territory because 95% occupancy has not happened in retirement before. We continue to believe there is some opportunity to add more, whether that number is 96 or 96.5. Frankly, it's a bit too early to tell. And part of it is that at 95% occupancy, we have many homes which are at 100%, 99%. They're running at full occupancy, and then we have a few which are 93, 94.

[Nitin Jain, CEO at Sienna Senior Living]

So, I would say at this stage, I think saying that we will be around 95% is probably a better answer than to say where it could go from here.

[Mark Rothschild, Managing Director and Real Estate Analyst at Canaccord Genuity]

Okay, great. Then maybe just one more for me. As far as the acquisitions, which clearly picked up over the past year, just talk a little bit about how the accretion would look, potential accretion would look, on acquisitions in the current environment at the cap rates that you're gonna have to pay. To what extent does the cost of equity, you know, a higher share price, that you have now helped or is needed for these acquisitions? And also, does the fact that you can use partners maybe earn additional fees would help push it into being more accretive?

[Nitin Jain, CEO at Sienna Senior Living]

I think your answer is in the, in the question you asked, Mark. It's a combination of quite a few of those things. We are very sensitive about partners. We have very few select partners that we continue to work with, including Sabra, which is our biggest partnership, and with Reichmann, where we have now two partnerships, where it's difficult to find people who think the same way are not aligned, but we fortunately have two partners such as those. So I wouldn't see us getting big into partnerships just to earn management fees. I think our goal would be to do partnership. It makes strategic sense. End of the day, we are owners and operators of senior living. And you know, cap rates reflect what is happening in the public market as well.

[Nitin Jain, CEO at Sienna Senior Living]

And whenever we underwrite something, we're underwriting it for the long term, so we're very focused on ensuring, each property is assessed at a, on a debt-neutral basis, because it is always easier to buy something just on debt. So I think it's, it's, for lack of a better word, business as usual. We see a decline in cap rates. So we just bought the senior apartment building at 5.75 cap rate, which, we would not have done four years back because, we were trading differently.

[Nitin Jain, CEO at Sienna Senior Living]

But, market is recognizing, that there is a cap rate differential, and we feel there is still a big gap into where long-term care cap rates are, for example, and where what we're seeing in the public space, where a lot of people will assess it in +7%, and, we haven't found a single long-term care home for sale, you know, above 7%. They're more in the 6.5%-6.75% range.

[Mark Rothschild, Managing Director and Real Estate Analyst at Canaccord Genuity]

Okay, that's very helpful. Thank you so much. I'll turn it back.

[Nitin Jain, CEO at Sienna Senior Living]

Thank you.

[Operator]

We'll move next to Tom Callaghan at BMO Capital Markets.

[Tom Callaghan, Analyst at BMO Capital Markets]

Thanks. Good morning, guys. Maybe just sticking with the acquisition side of things, can you just talk a little bit about the pipeline today and whether or not that's weighted towards one side of the business versus the other? And then maybe just geographically speaking, where are you seeing the most opportunity?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Yeah. No, thanks, Tom, for that question. You know, because we are a diversified company, we operate both in long-term care and retirement, we actually are seeing opportunities in both lines of businesses, and we continue to pursue acquisitions in both lines of businesses. You know, in terms of where we're finding opportunities, they actually are across all the provinces that we operate, Ontario, Alberta, BC. You know, and we are quite selective in terms of what we're looking for, but, you know, the pipeline remains robust, and we continue to be actively looking for opportunities.

[Tom Callaghan, Analyst at BMO Capital Markets]

Okay, got it. And then maybe just to build on that, like, do you have a preference, geographically speaking, like, when you evaluate these different opportunities? Obviously, you know, almost a year ago now, you entered into Alberta. So just how are you thinking about capital allocation from a geographic perspective as you work through these opportunities?

[Nitin Jain, CEO at Sienna Senior Living]

Tom, we don't really have an allocation at this stage, you know, but I guess broadly speaking, we don't. We have one retirement home in Alberta, which we manage for Sabra. We don't own any, so I think if you buy two, we'll suddenly grow up by 200% there. So, we find Alberta do have a lot of opportunity because we're not there yet. We only have four long-term care homes. In Ontario, we have quite a bit of long-term care and retirement homes, but there are also a lot more opportunities in Ontario. So I think it's a bit hard to tell you.

[Nitin Jain, CEO at Sienna Senior Living]

For us, the bigger focus is making sure it's a big enough building, the age of the building, the location of the building, the size of the population that is in the market area. So for us, that is more important versus with geography we might be in. And as David mentioned, the fact we can drive on both lanes on the highway of long-term care and retirement, that has been very effective for us.

[Tom Callaghan, Analyst at BMO Capital Markets]

Got it. Makes sense. Thanks. Maybe just last one for me on the expense side of things. Like, the growth is clearly moderated there, you know, agency staffing down materially, and I think you mentioned turnover at record lows in Q4 there. So just how are you thinking about overall expense growth into 2026, and are there areas where you see opportunity for further efficiency gains?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Yeah, I mean, the way we're looking at 2026 is that our, our operating expenses would be relatively in line with inflation. We think we've done a really good job at, you know, being efficient with respect to our expenses. So I wouldn't say that there'd be a lot more, you know, areas of opportunity, let's say, in agency or, or whatnot. But, you know, we would, we would continue to be very disciplined with our costs, and, and it would grow in line with, with inflation.

[Tom Callaghan, Analyst at BMO Capital Markets]

Got it. Thanks, David. I'll, I'll turn it back.

[Operator]

We'll go next to Himanshu Gupta at Scotiabank.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Thank you, and good morning. So first on retirement home occupancy, anything on the flu season, how did that impact, how did you handle? And then how is the February or March occupancy looking like?

[Nitin Jain, CEO at Sienna Senior Living]

Hi, good morning, Himanshu. So, we are not seeing a huge impact of the flu season, seasonality. We haven't disclosed February and March, results yet. You know, we might see some softness here or there, and I think I would say this would be across the whole year, you know, in question, which was asked earlier, where do we go from here? In our mind, when you're at 95% occupancy, you're running pretty close to perfection.

[Nitin Jain, CEO at Sienna Senior Living]

So if we have a month, which is 94.5, and I'm not foreshadowing what February, March would be, I'm using it as an example, I would think more of it is that this is just, you know, in our mind, you're at 94.5 or 95.5, it's pretty close to what 95% occupancy looks like. And the goal is to inch towards an average of 96 throughout the year as you progress, because that's, you know, would be the next milestone, I guess. So, we don't, but we don't think that's more seasonality. I would say that's just more an idea of you have many homes which are running at 100%.

[Nitin Jain, CEO at Sienna Senior Living]

If they run at 98, they're still excellent operations, but it might reduce your occupancy by a few, you know, 10, 20 basis point.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Okay, fair enough. So nothing meaningful as such impact from flu season?

[Nitin Jain, CEO at Sienna Senior Living]

Yeah, correct.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Okay, fair enough. And then moving from, you know, stabilized to kind of growth portfolio, how's the leaseup coming on the Highgate property in Waterloo? Like, what kind of expectation do you have for stabilization there?

[Nitin Jain, CEO at Sienna Senior Living]

We don't really get into individual property, but we had a certain expectation from underwriting. You know, let's say it's 18 months or so to stabilize from 60%-95% plus. We are well on our way. We had some good early wins on that property. So it's tracking where we thought it would be, if not a little bit better.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Got it. I mean, the reason I ask, is that, like a template for your kind of growth portfolio? Like, you know, like, the timeframe to stabilize this property from, like, 65% or 70% to, like, 95%, like 18 months or so? Like, fair to say that?

[Nitin Jain, CEO at Sienna Senior Living]

I guess it is fair to say that, but the reality is this is a one-off, and what I mean by that is rest of the properties we bought were way ahead in occupancy. The Bartlett is close to 97%. So, you know, if you find something in lower occupancy, yeah, I think that's a reasonable thing that we can potentially get at least a faster, you know, given our scale, if you're buying from an individual owner-operator. But, you know, it really is a mix of things.

[Nitin Jain, CEO at Sienna Senior Living]

In Highgate, we think that opportunity exists, but for many others, we bought them at near stabilization, and I think that's a good diverse mix where you have some which are accretive right away, and there's some which will have accretion in 18 months or 24 months, but you will have an opportunity to have a bit extra, would be the case in Highgate.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Got it. Okay, thank you. And then on the optimization, I think, David, you mentioned 24% margins in Q4.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

That's correct.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Did you give any timeframe of, you know, getting to that, like, similar to same property margin?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

No, we haven't given any timeframes. But what I would say is that we are continually working on our optimization portfolio. You know, case in point, we had one property that we did, you know, significant renovations to. And we were able to get the occupancy from 80%-95%, and so we've moved that out of the portfolio. Now, that being said, we also moved two in. So we're gonna, you know, on an ongoing basis, have, you know, maybe one or two movements within the optimization portfolio. But, you know, our intention is to get them out of the optimization portfolio as soon as possible.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Got it. Okay, fantastic. Maybe just the last question now, I mean, the popular Toronto Glen Rouge project you announced. I mean, if I look at the development yield, it's very similar to North Bay or maybe slightly lower than North Bay. While, you know, the government funding has increased significantly in that project in GTA now, I mean, I would have thought, you know, like, yield would have been even higher than North Bay. Just can you elaborate, is there a reason it's 7.5%-8% here?

[Nitin Jain, CEO at Sienna Senior Living]

Sure, Himanshu. The whole idea is, I think we should expect similar yields, what we saw in North Bay, which was close to 8%. We would see similar for GTA projects. When the funding went up significantly, it wasn't that projects had a 7% yield, and the idea was to get them to 10%. The reason government increased this construction funding significantly is that prior to that increase, projects were not viable, like, your yields were 4%. So doubling it will get it to 7.5, 8%, and some of it, it just, you know, this will take a bit longer. You know, this, you know, the number of beds, you're adding new versus old.

[Nitin Jain, CEO at Sienna Senior Living]

So that all goes into the math, but the, you know, in our mind, if you are around in that 8% range, that's probably a good expectation, what you should expect from long-term care projects, development, regardless of where they are in the province, and the, the funding reflects that.

[Himanshu Gupta, Director and Equity Research Analyst at Scotiabank]

Got it. Thank you. I have a couple more, but I'll, I'll go back in the line now. Okay.

[Nitin Jain, CEO at Sienna Senior Living]

Okay. Thank you, Himanshu.

[Operator]

We'll go next to Giuliano Thornhill at National Bank.

[Giuliano Thornhill, Equity Research Associate Analyst at National Bank]

Hey, guys. Good morning, everyone. I just had a question on the guidance. Why not provide something more, like, tightened? And is this you being cautious, or are you kind of more unsure of the improvements in the remainder of the same property portfolio that's unoccupied?

[Nitin Jain, CEO at Sienna Senior Living]

Hi, Giuliano. I wouldn't call it cautious. I mean, this is beginning of the year, where we expect +10% retirement, I think, which in our mind is realistic, and low single digits for long-term care. And, and without, you know, getting into is it exactly CAD 600 million and CAD 200 million of development, our idea is that last year was not an anomaly, and we should expect a year of growth. So I wouldn't call it conservative or optimistic. I would call it realistic at this stage. If numbers get better, we will, we will, we'll update our outlook at that point.

[Giuliano Thornhill, Equity Research Associate Analyst at National Bank]

Would you describe the kind of unoccupied portfolio as similar quality as the already occupied kind of stuff like, is the pace of leasing going to be similar to what we've seen historically?

[Nitin Jain, CEO at Sienna Senior Living]

Yeah, yeah, the pace of leasing would be similar, and case in point would be we had one property which we removed from optimization because it got fully optimized, and we put two new in. And there's a chance that something which is running at 95% plus in four years from now might go back into optimization portfolio. Case in point, we have property in Ottawa, sorry, in Kingston, which is doing well, but we realized there's a good amount of competition. We need to add more care. It needs a much intense renovation, which is hard to do without closing down the suite. So we put it back into optimization, and when it come back, you know, our goal is it'll get to 95% plus. So some of it is continued occupancy gains in the homes, which are not 90%.

[Nitin Jain, CEO at Sienna Senior Living]

Some of it might be of homes which are delivering at 95% plus, but we know, all of them have a life cycle in terms, especially retirement homes. Similar to hotels, you need to go through you know, renovations at certain period of time, and we will continue to see that in our retirement portfolio.

[Giuliano Thornhill, Equity Research Associate Analyst at National Bank]

Yeah, just going to the optimization portfolio, I'm just wondering, is that win that you had during the year, that 10% kind of occupancy uptick, is that like out of the normal? Can you expect that for the remainder that are in there, or like over 12 months, that's a pretty big increase. So I'm just wondering if that's what we should expect or what's being moved into there.

[David Hung, CFO and EVP Investments at Sienna Senior Living]

Yeah, I think that, I mean, it was a significant increase, you know, over the last year. But that being said, I mean, we were working off of a relatively, you know, low base. So the fact that we increased our NOI by 22% year-over-year was off of a low base. We would expect that going forward, we would continue to have, you know, outsized growth relative to our same property portfolio, just because there's so much more opportunity in those properties.

[Giuliano Thornhill, Equity Research Associate Analyst at National Bank]

Okay. Just, the last one that I had is: I'm just wondering for the GTA project that was announced, are any of the costs recognized for the land, recognized on your balance sheet? And also, where did the incremental beds come from?

[David Hung, CFO and EVP Investments at Sienna Senior Living]

I can, I can comment on the land, which, the land is on existing land for the property that we own. So there is no, you know, incremental cost for that. We already own it, so that's, that's just part of our inherent cost.

[Nitin Jain, CEO at Sienna Senior Living]

This project, we put in an application. We have been working on this project for the last four years, so we put an application for 448 beds four years ago with the intention one day that things will work out, and we will build, and that has happened now. We had the additional licenses that were given to us to build this.

[Giuliano Thornhill, Equity Research Associate Analyst at National Bank]

Okay. So not from, not from a nearby operator. That's where it's going. Okay. Thank you, guys.

[Nitin Jain, CEO at Sienna Senior Living]

Thank you.

[Operator]

Next, we'll move to Sairam Srinivas at ATB Capital Markets.

[Sairam Srinivas, Analyst at ATB Capital Markets]

Thank you, operator. Good morning, guys, and congrats on a good quarter. You know, most of my questions have already been answered over here, but I just want to ask a quick question on supply. There's a bit of a narrative that, you know, we are starting to see some starts this year with hope that they'll probably see some build-up in supply towards 2029, 2030. Going with your experience on development and retirement, are you seeing economic conditions finally pick up to a point where we could see supply take off? And are you seeing supply kind of build up in some of your markets there?

[Nitin Jain, CEO at Sienna Senior Living]

Hi, good morning. On the question of supply, there was, you know, quite a bit that is coming on supply. I would just maybe talk about four or five different things. One is, as numbers get better, there would be an opportunity to develop, and we just did one in Brantford, which is open, which is a campus of care. But given our demographics, knowing that retirement homes are 95% occupancy, and there are quite a few retirement homes which will get obsolete, we don't own any one of them, the reality is we do need more retirement homes. So I think new supply is not a bad thing, just from a community perspective, because we need more retirement space. We are not seeing massive builds or retirement build.

[Nitin Jain, CEO at Sienna Senior Living]

These projects do take a long period of time, so if you and I put our money together and we buy land, I think it's probably 18 months from today to start construction and then 24 months after that for it to open. So even if there was a lot of supply, which we're not seeing at that moment, you're 3 years away from it impacting any part of the market. And again, we have to factor in the demographic change because we are now in a place where baby boomers are coming into senior living, and we also have to factor in the, you know, the obsolete retirement homes, which would no longer be needed. So I think getting new supply is a good thing. It is not coming in fast.

[Nitin Jain, CEO at Sienna Senior Living]

The other thing which has changed is, we remember buying a 80-bed retirement home for CAD 16 million. So it was a very different cost to build. It was a very different cost to buy. We are now buying properties, you know, close to CAD 100 million a home. So it is not a development business for someone who sold something and now wants to get into retirement business. These projects have become complex. They have become bigger, they have become a lot more expensive. So you'll see a lot more sophisticated senior living providers started to build, and for them, they want to make sure the numbers pan out. So I think there'll be a lot more discipline than you might have seen in the past.

[Sairam Srinivas, Analyst at ATB Capital Markets]

That makes sense. Thanks, and I'll turn back.

[Nitin Jain, CEO at Sienna Senior Living]

Thank you.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• David Hung, CFO and EVP Investments
• Nitin Jain, CEO

Analysts

• Giuliano Thornhill, Equity Research Associate Analyst at National Bank
• Himanshu Gupta, Director and Equity Research Analyst at Scotiabank
• Jonathan Kelcher, Analyst at TD Cowen
• Lorne Kalmar, VP of Equity Research at Desjardins
• Mark Rothschild, Managing Director and Real Estate Analyst at Canaccord Genuity
• Sairam Srinivas, Analyst at ATB Capital Markets
• Tom Callaghan, Analyst at BMO Capital Markets