Sienna Senior Living Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: Sienna reported a strong Q1, with same-property NOI up 7.9% overall and adjusted FFO and operating FFO up 45.1% and 42.5%, respectively, supported by higher occupancy, rent growth, and care revenue.
  • Positive Sentiment: The Retirement segment was a standout, with same-property NOI rising 15.8% and average occupancy increasing to 94.7%. Management said it expects occupancy to return to 95%+ for the year while maintaining disciplined pricing.
  • Positive Sentiment: Sienna continues to expand through acquisitions, with about CAD 188 million closed or under contract so far in 2026, including Rockland Manor and Ballycliffe. Management said the pipeline remains strong and that it is being selective to avoid overpaying.
  • Positive Sentiment: The company is advancing its Long-Term Care redevelopment pipeline, including plans to start construction on its first Toronto project later this year and progress toward securing land for all C-home redevelopments. Management said it believes it can redevelop roughly half of the beds affected by the third- and fourth-bed funding changes by 2030.
  • Neutral Sentiment: Sienna ended the quarter with a strong balance sheet, including about CAD 557 million in liquidity, nearly CAD 1.5 billion of unencumbered assets, and net debt to adjusted gross book value of about 37%. The company also said its ATM program was fully deployed in Q1 and renewed for another CAD 150 million of equity capacity.
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Earnings Conference Call
Sienna Senior Living Q1 2026
00:00 / 00:00

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Operator

Ladies and gentlemen, welcome to Sienna Senior Living Inc's first quarter 2026 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, actual results could differ materially. The company does not undertake to update any forward-looking statement or information. Please refer to forward-looking information and risk factors sections in the company's public filings, including its most recent MD&A and IIF for more information. You may also find more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted in the SEDAR+ and can be found in 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. The details are provided in the company's news release. The company has posted slides which accompany the host's remarks on the company's website under Events and Presentations. With that, I will now turn the call over to Mr. Jain. Please go ahead, Mr. Jain.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Thank you, Tina. Good morning, everyone, and thank you for joining us today. Sienna's growth momentum continued in the first quarter of 2026. We started the year with strong organic growth for the 13th consecutive quarter and continued to expand through acquisitions, including our most recent announcements of the purchase of a recently opened Long-Term Care home in the Greater Toronto Area and a retirement residence in the Ottawa region. We're also progressing well with our Long-Term Care redevelopments and have been successful in sourcing land for future developments in the GTA. Each of these achievements is supporting Sienna at a compelling time in senior living. The sector remains exceptionally strong, driven by the fast-growing demand from an aging population, constrained near-term supply, and minimal exposure to the current geopolitical volatility. During the first quarter, both operating platforms delivered strong results.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Same-property NOI increased by 15.8% in the Retirement segment and 1.7% in Long-Term Care. Excluding one-time items in both years, our Long-Term Care segment delivered 6.7% same-property NOI growth. Key drivers of the double-digit increase in the Retirement segment were the year-over-year occupancy increase, continued rental rate growth, and additional care revenue. Average same-property occupancy was up 180 basis points year-over-year and had reached 94.7% in the first quarter. This was supported by a 280 basis point margin growth. Quarter-over-quarter, occupancy remains flat compared to Q4 of 2025, largely as a result of typical seasonal trends and a harsher than usual winter conditions in many of our key markets. Our robust sales platform and focused marketing campaigns were supporting our year-over-year growth.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

The significant increase in tours at a recent national open house in February generated nearly 500 new leads and reflects the broad reach of our marketing and sales campaign. We also maintain a robust focus on hospital outreach and excellent relationships with the healthcare partners in the local communities where we operate. All of these initiatives are expected to drive strong lead generation and future move-ins. An additional key driver behind the strong performance of our retirement operations is higher care revenue. This is a result of a new Aspira wellness program with more efficient processes, improved staffing models, and consistent care offerings. The program was launched in 2025 and has led to an approximate 25% increase in care revenue.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

With respect to Sienna's Long-Term Care operations, fully occupied homes with growing waitlists, higher revenue from private accommodations, and government funding increases all added to the strength of these results. Sienna's government-funded Long-Term Care operations add significant value to our business and provide stability, given that they're largely insulated from market volatility or economic uncertainty. We continue to be active on acquisition front with CAD 188 million of transactions closed or under contract to date in 2026. We increased the ownership interest in two of Sienna's majority-owned properties in the Greater Toronto Area and in Kelowna and finalized the purchase of The Bartlett, a 129-suite retirement residence in the Greater Toronto Area.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

In addition, we entered into two purchase agreements at the end of last week, including Rockland Manor, a 160-suite retirement residence in the Ottawa region, and Ballycliffe, a newly developed 224-bed Long-Term Care community in the Greater Toronto Area. Rockland Manor will be acquired for approximately CAD 41 million with an initial investment yield of 6%. The gross purchase price for Ballycliffe, which includes the rights to a 25-year construction funding subsidy, is approximately CAD 68.3 million, and the investment yield is approximately 6.75%. Both properties will be acquired below their replacement cost and financed with cash on hand. They're great examples of the broad range of opportunities available to us to expand our portfolio.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Sienna's acquisition pipeline remains strong, and we are confident to maintain a significant pace of acquisition through the balance of this year. Moving to redevelopments. We are also advancing our redevelopment pipeline, in particular in the Greater Toronto Area. We expect to start construction at Sienna's first project in the city of Toronto later this year, where we are redeveloping a 448 bed Long-Term Care community at our existing Glenrothes site. This is one of several projects in our 1,600 bed pipeline. More than 80% of the pipeline is located in the GTA, where new funding has significantly improved the development fundamentals. We've been actively sourcing land for projects in the GTA that do not have sufficient land at their existing sites.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

With the recent purchase of a site in Brampton, we are getting closer to a goal of having all lands for every C home project. Each completed redevelopment will modernize and strengthen our Long-Term Care platform and support the continued growth of our business. Beyond our acquisitions and redevelopments, we remain focused on creating value within our existing portfolio through asset optimization, strategic renovations, and general enhancements to our retirement and Long-Term Care platforms. In our Retirement segment, our initiatives are focused on better aligning residences with market demands, exploring alternative property uses or expanding services by adapting them to support seniors as their care needs change. We increasingly apply our expertise in clinical care at our retirement platform. Our updated wellness program increases residents' access to in-house wellness and care, helps improve their quality of life, and allows them to stay in our Retirement Homes longer.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

In Long-Term Care segment, we continue to make improvements to the Circle platform through ongoing input from residents, families, and team members. Our Circle approach places residents at the center of everything we do. With initiatives such as the Circle Spa and Circle Cafe, each initiatives are designed to elevate the resident experience. We see the impact reflected in resident satisfaction surveys in our consistently strong accreditation results. Moving to our team members, as we continue to expand, the timely integration of each new community in our operating platform remains a top priority. Delivering an exceptional resident experience from day 1 begins with our team members. With approximately 15,500 employees, we recognize the importance of investing in programs that foster a strong culture of ownership and engagement.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Our initiatives range from town halls that foster learning and connections, leadership development to recognition and share ownership programs through which shares have been awarded to over 12,000 team members. We are also investing in our team member health and well-being and have introduced a new employee and family assistance program with greater access to mental health, wellness, and work-life support. Each of these initiatives play a role in the continued reduction in turnover, which reached a record low of less than 20% in 2025. Our initiatives also resulted in the 5th consecutive year of increased team member engagement and helped reduce Sienna agencies costs, which are below 1% of total labor cost. We are extremely proud of these achievements, which put us in a strong position to attract and retain the best in Canadian senior living.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

With that, I'll turn it over to David for an update on our financial results.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Thank you, Nitin, and good morning, everyone. I will start on slide 11 for financial results. In Q1 2026, revenue on a proportionate basis increased by 17.3% year-over-year to CAD 286.3 million. This increase was largely due to acquisitions, 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 revenues, CAD 1.1 million in retroactive funding from the B.C. government, and additional revenues from acquisitions and developments completed in 2025.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Same property NOI increased by 7.9% to CAD 47.4 million in Q1 2026, including by 15.8% in our Retirement segment and by 1.7% in the Long-Term Care segment. In the Retirement segment, same property NOI increased by CAD 3 million in Q1 2026 compared to last year, largely as a result of improved occupancy, rate growth, and higher care revenues. Combined with our strict focus on operating expenses, the year-over-year operating margin improved by 280 basis points. In the Long-Term Care segment, same property NOI increased by CAD 1.3 million. Continued improvements in private occupancy and government funding increases were the key drivers behind the year-over-year growth.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Our Q1 results include one-time items relating to prior years, including retroactive funding from the government of British Columbia in 2026 and WSIB refunds in 2025. Excluding these one-time items in both years, same property NOI would have increased by 10% overall, including by 13.8% in the Retirement segment and by 6.7% in Long-Term Care. During Q1 2026, operating funds from operations increased by 42.5% to CAD 37.1 million compared to last year, primarily due to higher NOI and lower cash taxes. Adjusted funds from operations increased by 45.1% to CAD 35.1 million compared to last year. The increase was mainly due to higher OFFO and construction funding income for redevelopments completed last year, offset in part by an increase in maintenance capital expenditures.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

On a per share basis, OFFO and AFFO increased by 21.5% and by 23.5% respectively in Q1 2026. Sienna's Q1 2026 AFFO payout ratio was lowered to 68.5% compared to 86% in Q1 2025. This improvement highlights Sienna's strong operating results. The contributions from our completed redevelopments and accretive acquisitions, as well as the progressive deployment of capital to fund growth initiatives. We ended Q1 2026 with a strong financial position, including approximately CAD 557 million in liquidity and nearly CAD 1.5 billion of unencumbered assets. At approximately 37%, our net debt to adjusted gross book value is conservative, and our weighted average cost of debt remained low at 3.9%.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Year over year, we also further improved Sienna's debt service coverage ratio to 2.6x from 2.4x in Q1 2025/2026. Sienna had approximately CAD 160 million of debt coming due in the next 12 months. Given our access to a broad range of capital, we are confident in our ability to refinance our expiring debt at attractive terms. With respect to our equity, demand for Sienna shares remains strong. As a result, we were able to fully deploy Sienna's CAD 150 million at-the-market distribution program during Q1, which provides the necessary liquidity to fund our continued growth through acquisitions and developments. With that, I will turn the call back to Nitin for his closing remarks.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Thank you, David. We believe that our ability to operate and invest across the full continuum of care continues to differentiate Sienna and gives us a wide range of growth opportunities from private pay independent living to government-funded Long-Term Care and from acquisitions to redevelopments. Our strategy supports our growth initiatives at a time demand for senior living continues to grow while supply remains constrained. Against this backdrop, we grew our assets by approximately 30% last year, and the momentum continues in 2026 with nearly CAD 200 million of acquisitions closer under contract and a CAD 250 million redevelopment project starting later this year. Yesterday, we announced a renewal of the ATM program, which gives us the opportunity to issue another CAD 150 million of equity to grow and scale our platform.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

With the strong support of our investors, we remain extremely selective when considering opportunity to expand. We will continue to stay disciplined in our approach to raising and allocating capital and will maintain a strong balance sheet. In the near term, our confidence is reflected in Sienna's growth targets for 2026. Excluding one-time items, we expect same-property NOI growth in excess of 10% and occupancy to achieve 95% in Retirement segment. In Long-Term Care, we anticipate low to mid-single digit growth, not factoring in one-time items. Canadian senior living is performing exceptionally well, and we believe Sienna is ideally positioned to benefit in both the near and long term. With the support of our 15 and a half thousand team members, who are at the heart of our success, we are confident in our ability to capture the tremendous opportunities ahead.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

On behalf of our entire team and our board of directors, I want to thank all our shareholders and all of you on this call for your continued support. Tina, we can open now for questions.

Operator

As a reminder, to ask a question, simply press star one on your telephone keypad. Our first question is from the line of Lorne Kalmar with Desjardins. Please go ahead.

Lorne Kalmar
Lorne Kalmar
Analyst at Desjardins

Thanks. Good morning. Maybe just touching on the announcement around defunding the third and fourth beds. I was wondering how many of those, about 300 that you have, do you think that you can actually have redeveloped by 2030?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Hi, Lorne. Good morning. That is actually a great question that there is a chance that, you know, we can probably redevelop half of them or would be in the process of redeveloping others. The big thing that, you know, from our view, what government is focused on is a path for redevelopment of these beds, knowing that if the funding is removed, it will be very hard to continue to run those beds, and it is in no one's interest to close any capacity in Long-Term Care. You know, our belief is as we continue to build and redevelop, you know, the advocacy from our association and us from us would be to continue to keep this funding at least to a sustainable level to keep these homes and beds open.

Lorne Kalmar
Lorne Kalmar
Analyst at Desjardins

Okay. Then maybe just sort of sticking on the LTC redevelopment theme here. You announced the purchase of the land in Brampton. Could you maybe give us a little bit of color on exactly what the plans for that site are? You also mentioned you're getting close to acquiring all the land that you need for your C redevelopments. How many more sites would you need to acquire?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

We're down to two last sites which we have to acquire. After, at that stage, we would have land for every single C home redevelopment that we have to do. The Brampton site we just acquired, we have a home, you know, a few kilometers from there, that we will move there eventually. The project, you know, if everything works well, you're probably in construction 18-24 months from now and then 24 months of construction. Your date of 2030 is pretty aligned with what we will do. We also have other projects and, you know, our commitment is that obviously we want to expedite Long-Term Care redevelopment, but we would not take significant development risk. In our mind, it's 10% of our asset base.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

You know, it's now close to CAD 2.5 billion in assets. You know, CAD 200 million-CAD 300 million probably in development at any given stage in total. We'll just manage those things. We do think there's a path for us to redevelop all of our C homes now, considering there is a robust CFS funding for GTA.

Lorne Kalmar
Lorne Kalmar
Analyst at Desjardins

Okay. That's great to hear. Maybe just one last kind of ticky-tacky one for David. Just on the G&A, I think if you exclude the SOAR and the share-based comp, it was about 21% year-over-year. Could you maybe just give us a little bit of color on if this was a timing issue or if this is sort of a good run rate going forward?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Sure. I can happily answer that. It's a couple of things. First of all, the growth would include additional headcount as a result of the acquisitions that we made. In 2025, normal wage inflations on a year-over-year basis. We did have, you know, some incremental professional fees in the quarter, call it about CAD 500,000, you know, that would not continue through 2026.

Lorne Kalmar
Lorne Kalmar
Analyst at Desjardins

Okay. Effectively, we should kind of reset our G&A expectations based on the 1 Q results.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

I think if you normalize for, you know, some of the one-time costs within G&A, you could normalize for, reset for 2026.

Lorne Kalmar
Lorne Kalmar
Analyst at Desjardins

Okay. Thank you very much. I'll turn it back.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Thank you.

Operator

Your next question comes from the line of Jonathan Kelcher with TD Cowen. Please go ahead.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Thanks. Good morning. Just turning to the retirement operations and on your optimization portfolio, how do you see occupancy growth playing out for that portfolio this year?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Yeah, sure. We, you know, we continue to make good progress on our optimization portfolio. We do continue to see that it will grow. Our occupancy in that portfolio was around 85%. As we continue to, you know, right-size some of the properties within there, we would expect that the occupancy for a couple of those properties will grow towards stabilization. As that happens, we will move those properties into our same property portfolio.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Okay. The target would be to move one or two of them into same property by next year?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

That's correct. Yeah.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

That's fair. Okay. On the rate growth you're getting in the retirement portfolio, are you getting much pushback on that? Secondly, can you maybe break down what you're seeing on new leases on turnover leases versus what you're seeing on renewal leases?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Good morning, Jonathan. For rental rates, you know, we are around, call it 4% increases. We do quite a bit of education with inflationary increases and what has happened to food cost and utility and everything to explain why our rents are going up. Our goal is to be very disciplined without creating a lot of shocks in the system, so we're not after higher rent increases in 1 year and upsetting every resident that lives with us. We would rather have a steady stage for multiple years. We take the same approach on new leases. It is market dependent. I mean, there are some markets where, you know, we are seeing higher than 4% increases at a new lease given what has happened in the market.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

In some cases it is closer to the 4%. In, you know, cases where we have optimization portfolio, you might see flat changes because, you know, the goal is to build occupancy there rather than increase rate first.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Okay. Fair enough. Just lastly on the Ballycliffe, the 6.75% investment yield, how does that break down between NOI and construction financing for funding?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Sure. That's a good question, Jonathan. The 6.75% is on the NOI itself. As, as you know, there's two streams of income on Ballycliffe, one being the NOI and one being on the 25 CFS. The 6.75% is on the NOI. On the CFS, you know, we would've, the way we would've looked at it is based on the present value of that cash flow using a risk-adjusted discount rate.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Okay. That 6.75%, is that on the CAD 68 million?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

No, it would be on the piece relating to the NOI.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Okay. What would that piece be?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Well, we have-

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

I'm just trying to get how much to add into NOI versus how much to add into AUP itself.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Yeah. I think that, I mean, you remember that we bought Cawthra Gardens a year ago.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Yeah

David Hung
David Hung
CFO and EVP at Sienna Senior Living

bought that at 6.75%. If you were trying to, you know, kind of work through the numbers, you might take Copper Gardens as an example, and then use that as a, as the, as a good, jump-off for calculating your NOI.

Jonathan Kelcher
Jonathan Kelcher
Analyst at TD Cowen

Okay. Thanks. I'll turn it back.

Operator

Your next question comes from the line of Brad Sturges with Raymond James. Please go ahead.

Brad Sturges
Brad Sturges
Analyst at Raymond James

Hey, good morning. Just on your acquisition commentary, you're expecting a significant pace. Do you have a target in mind for what you could achieve this year? Maybe just give a bit more context of what you're seeing in the pipeline beyond what's been announced or closed so far this year.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Good morning, Brad. you know, I would just tweak it and say I think we see good pace, not significant pace. The reason why that is important is, there is a lot of opportunities in the market. There is also a lot of competition. We get our fair share of deals, and our goal is not to overpay. Obviously, I'm saying, stating the obvious here. But there is a bit of frothiness in some of the deals. For us, if it doesn't make financial sense, we would rather not grow. We don't have a specific target in mind. you know, what we did last year, which was close to CAD 600 million in acquisitions and CAD 200 million in development, and our run rate is towards that.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

I mean, our development is already CAD 250 million for this year, and it's May, and we, you know, call it one-third of the year in and, you know, we are at around CAD 200 million of acquisition. That could be achievable. It's not a stated target or an outlook, but that's, you know, that could be reasonable what we might achieve this year.

Brad Sturges
Brad Sturges
Analyst at Raymond James

Okay, I appreciate that. Just on my other question would be just on leverage. It's ticked down a little bit below, I guess, what you would suggest is your target. I guess, would it be fair to say, given some of the expected acquisition activity going forward and maybe a bit more ramp-up on development, would that normalize back into your target range by over the course of the year? How should we think about leverage going forward?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Yeah, Brad, it would. We would expect our leverage targets to normalize a little bit. Q1 leverage is on the lower side because we issued the CAD 150 million through our ATM. That said, we're going to use, you know, the bulk of that proceeds for our recent acquisitions for Rockland Manor and Ballycliffe. You know, by the end of the year, you know, all else being equal, we would expect that our leverage ratios would tick back up.

Brad Sturges
Brad Sturges
Analyst at Raymond James

Perfect. Thank you.

Operator

Our next question is from the line of Himanshu Gupta with Scotiabank. Please go ahead.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Thank you. Good morning. First on LTC, Long-Term Care, I mean, you increased your outlook to low to mid-single digit now. What led to that change?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Sure. Himanshu, there's really two reasons. The first one is because our Long-Term Care NOI, we did grow by 6.7% in Q1, if we exclude one-time items. The second is because the government of Alberta announced a 7.25% funding increase. They had originally announced 1.25%, and then changed it to 7.25% as a result of the cost pressures that operators were facing throughout the last several years. We would expect that, you know, a good portion of that incremental 6% would flow to the bottom line. For that reason, we changed our outlook to single to mid-digit growth this year.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Thank you. That Alberta funding increase, that will be retroactively from April last year, I believe. Have you received any retroactive amount from Alberta yet, or that's gonna show up in Q2 and onwards?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Yeah, we have not received any of the funding yet. They just announced that in April. Some of the increase is going to flow through to wages. Again, you know, the government of Alberta recognized the cost pressures that operators are facing. We may need to increase wages somewhat, so not all of it would flow to the bottom line, but, you know, a good portion of it should.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Yeah.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

To answer your question, we have not received any of it yet.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Got it. That 6.7% whatever you achieved in Q1 was without the Alberta impact. You could literally re-add this runway for the rest of the year.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

That's right. The 6.7% did not include the funding for Alberta. The funding increase, I should say.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Okay. Thank you. Thank you. Moving on to Retirement Homes. Obviously, you know, seasonal dip in Q1 so far on the occupancy side. Are you feeling I mean, as you get into April and May months, are you seeing some glass ceiling here at 95% on overall portfolio basis? Or based on the lead generation, you think, you know, 95%, 96% could be achievable here?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Where we feel confident is that we will get back to 95%. You know, can we get to 96%? I think that remains to be seen. We saw similar things last year, where our occupancy dipped till April/May and then it climbed up. We actually didn't see seasonality early in the year. Like in January, if you would ask us this question, we'd not see that. February, we started to see a decline. So, you know, our expectation is we will be 95%+. I think could it get to 96%? I think it's, I can argue either way on that one at this moment, Himanshu.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Yeah, no, that's fair enough. Maybe just on Retirement Homes. Margin expansion looks like, you know, tracking ahead of what your full year guidance is in Q1. Was it ahead of your internal expectations as well in Q1, the margin expansion?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

That's, I don't know if that's a fair question. I would just say, you know, when we saw a dip in occupancy and one of the things we stay quite focused in is not to give into incentives, because that will have significant tail to it. You know, we saw margin challenges, you know, when we buy properties from people who have done incentives. We'll stay quite focused and only go for incentives in very specific market. Our care has been a big change into our margin because when we started, our care hours went up significantly, but two years back, we actually lost money every time we provided a care hour. That has been a big change.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Then just when you are at 95%+, you're optimizing the portfolio. The operating team, you know, has a good rhythm of making sure the homes are running well. It really is a combination of those things, but I would say we are not overly shocked where our margin is, and we expect to continue on that trend.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Got it. Thank you. Last question is on acquisition cap rates. You know, Bartlett at, like, I think 5.75%, Ballycliffe at, like, 6.75%. They're both kind of in the same market, both kind of newly developed as well. Is 100 basis points the spread between Retirement Home and LTC? I know, you know, there's a funding element to Ballycliffe or LTC. There are, I mean, a few nuances to it. But bigger picture is 100 basis point the right spread between RH and LTC here?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Absolutely. I, you know, we are, you know, we have been talking about it for a period of time. There are hardly any LTC deals. The last two public ones were ours. They both were at 6.75%. The Alberta one that we bought last year was really in the same range. Both these properties, the Ballycliffe that we bought and Cawthra Gardens that we bought last year, they had two or three other bids attached to it, so it wasn't that we were looking to pay 20% above market, they were all very, very close. The reality is it is nearly impossible to find anything below 6.75% from a LTC perspective.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

You're right, I mean, retirement is in a 5.5%-6% range depending on the market.

Himanshu Gupta
Himanshu Gupta
Analyst at Scotiabank

Thank you so much for the color, and I'll turn it back. Thank you, guys.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Thank you.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Tina, do we have a next question?

Operator

We still have a Pammi on the line.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Tina, do we have our next question?

Operator

Your next question is from the line of Pammi Bir with RBC Capital Markets.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Thank you.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Hi. Thanks. Good morning. maybe just sticking with the acquisition side, Nitin, I think you mentioned, you know, it's getting more competitive. You know, have you considered maybe perhaps trying to secure like a steady pipeline or cadence of acquisitions through by maybe partnering up with some developers to build sort of a multi-year pipeline of opportunities? Or is there still enough out there that you can continue to compete effectively on one-off or portfolio deals?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Hi, Pammi. Good morning. Great question. I mean, we have considered some partnerships and in fact have done. We did one with Reitmans a few years back on a Retirement Home that we now own together, and eventually we will buy that. That would be under consideration, but I wouldn't call it a big strategy. We might, you know, if we find the right partners, we might get one every year or in 18 months. It's not a place we'd be looking to invest a lot of money. A lot of these forward contracts in our mind have significant risk. 5, 6 years from now, the market could look different. We're also at a place where we have many markets where we don't really have any properties. You know, Quebec being one.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Alberta, we have only one retirement home that we manage. We feel there is enough opportunities for us to grow. At some stage, you know, it probably will become important for us to look at those partnerships, and we might consider it. The last one just for us, you know, in many cases, the joint ventures are looking for your development dollars and are at this stage, our development focus is in LTC. Now, you know, it's economically quite robust, and it's a need that we have to resolve for our C homes.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Okay. Yeah. No, makes sense. Just, you know, you mentioned in some markets you don't have exposure, maybe in others, of course, you maybe have more heavier exposure. I'm just curious, you know, we've seen the Competition Bureau scrutinize. It seems like they're scrutinizing deals more. I'm just curious if you've seen that come up in any of the transactions that you've been involved with, or not really the case at this point.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

I would maybe just give a broader question, you know, broader answer to it. There's really, you know, other than probably one city we can think of, we don't really have any market concentration in any market where we think this would become an issue. I mean, we announced a deal, property in Ottawa. We have 6% or less properties in Ottawa, and the threshold is close to 30%+, so we could be 5x our size in Ottawa. Quebec, we have zero properties. Alberta, we have one, which we actually manage and not even own. B.C., we only have four retirement homes. We do believe that, you know, we have a lot of tailwinds on our side as it relates to competition.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

You know, we could really grow our portfolio without running into significant challenges. Now, they might decide, Competition Bureau obviously, might decide to look into a deal and, you know, if that happens, we will obviously work through it at that stage. You know, broadly speaking, we've feel given our market concentration and our number of properties, this is not gonna be a material impact on us for medium to long term.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Okay. Then just maybe a couple of other ones. Just on the tax recovery in Q1. Can you maybe just remind us how we should think about, you know, the right run rate for for 2026 with the accelerated depreciation?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Sure. I think the way that we would think about it is, obviously in 2024, we didn't have too many acquisitions. In 2025, we did have more. I think as you're thinking about 2026, if you exclude the CAD 3.9 million tax benefit, the tax rate should be somewhere between 2024 and 2025 as a percentage of income before taxes. The cash tax rate would be, you know, as a percentage of income before taxes would somewhere be in the range between 2024 and 2025.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Okay. All right. Then just lastly, just in B.C., are you anticipating any sort of changes, from a cost standpoint in terms of the labor wage, I guess, leveling that you're kind of reviewing at this point? Anything you can share on that front would be helpful.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Yeah, we continue to work both through our association and directly with government. You know, at this stage, we do not feel there'll be a material impact on labor. You know, signs from the government is for all the funded properties. Government will fund those things, and for retirement, the reality would be that would have to flow into rent increases. At this stage, we don't really think there would be a material change, but, you know, they continue to provide more information on it.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Okay. Oh, maybe lastly, just on your comments, Nitin, about Quebec and the no exposure. Is that a market where maybe there are some transactions that you're looking at, or are you sticking to maybe where you already have an existing presence?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

We that is a market that is of interest to us. When the right opportunity comes along, we would, you know, we would look at those. Obviously, we look at opportunities everywhere and now including Quebec.

Pammi Bir
Pammi Bir
Analyst at RBC Capital Markets

Okay. I'll turn it back. Thanks very much.

Operator

Your next question comes from the line of Tal Woolley with CIBC Capital Markets. Please go ahead.

Tal Woolley
Analyst at CIBC Capital Markets

Hi, good morning. Just wanted to talk a bit about funding to start. Fair to say you're not expecting any base rate increase for LTC in Ontario this year?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

I wouldn't say that, Tal. I mean, we haven't, the ministry hasn't announced the funding increase for 2026/2027 yet. We would expect that the funding increase would be in line with inflation.

Tal Woolley
Analyst at CIBC Capital Markets

Okay. For these Class C beds, you know, it sort of reminds me a little bit of like what happened with the Class C licenses. You know, they were all supposed to come off at a cliff in 2025 and have subsequently been extended. Have yourselves or the industry thought about, given the demand that, you know, we can sort of see building for some of these services and appreciating the fact that these beds are maybe not suitable under every circumstance, have you as an industry started to think about ways to repurpose these assets? Like maybe it's for hospital step downs or transitional care, rather than maybe full-time residential. Like has there been any thought given around how to best utilize these assets in the interim?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Great point and, you know, and completely agreed with you. I think there is quite a bit work going on, and different people are doing different things. I'll just use two of our examples. Our old property, North Bay, that got sold, and it is now being used for residential purpose. The one we had in Brantford, the City bought it, and they're also using it for residential purpose, you know, including, you know, some of the places we didn't have, you know, where they couldn't find accommodation for people. I don't believe that you will see many of these buildings being demolished because there is a demand. In some cases, the buildings are so foregone that you have no other choice. We have the same interest.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

We have a couple of buildings where, you know, in locations such as downtown, where it'd be hard to replace. We'll continue to find ways to see if they can be repurposed for something else.

Tal Woolley
Analyst at CIBC Capital Markets

Okay. Earlier on the call, you made a comment, I think, saying that you really were losing money per care hour, I think 2, 3 years ago. Was that like across the entire system? Are we just sort of now beginning to see the contribution of profitability from the care side of the business?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

I would just say that that was the case for us at Sienna. Like we are, you know, we had multiple programs under care and, you know, some, and that my comment to you was in aggregate and in smaller homes when you provide care because you need to maintain a certain level of staffing, which is gonna be very important for us as it relates to quality. We, you know, at overall level, either we were breaking even or losing a bit of money. The big part of it was rather than cutting services, making sure we are, first of all, selling the right care opportunities, putting them in the right package, and making sure we have the right staff to deliver that.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

It took us some time, we also didn't want to have major shocks in the system by having significant increases. We were quite tempered in our approach of how to change some of those rates and change some of those packages. This took us 2 years to do that. I do not know if it was a Sienna thing or it was across the industry.

Tal Woolley
Analyst at CIBC Capital Markets

This is just on the retirement side of the business?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

That's absolutely. In Long-Term Care, this is not applicable.

Tal Woolley
Analyst at CIBC Capital Markets

Right. Okay. Then just lastly, you saw, you know, you've announced a couple deals that have yet to close. Have you got any more specific visibility on exactly when you might think the remaining assets under contract might close?

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Are you referring to Ballycliffe and Rockland Manor?

Tal Woolley
Analyst at CIBC Capital Markets

Yes.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Yeah.

Tal Woolley
Analyst at CIBC Capital Markets

We're just wondering for modeling, like when you should start including these.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Ballycliffe, we're expecting to close in the second half of the year and, probably late, like later than earlier part of the second half of the year. Rockland Manor would be within 60 days.

Tal Woolley
Analyst at CIBC Capital Markets

Perfect. Okay. Thanks, gentlemen.

David Hung
David Hung
CFO and EVP at Sienna Senior Living

Thank you.

Operator

Our next question comes from the line of Sairam Srinivas with ATB Capital Markets. Please go ahead.

Sairam Srinivas
Sairam Srinivas
Analyst at ATB Capital Markets

Thank you, Pamela. Good morning, guys. A quick one from me. Just looking at Ballycliffe, it's actually quite surprising to see a 2025 vintage, community come out on the transaction market. Could you perhaps just comment on, you know, the kind of the transaction here and, you know, the counterparty they're selling the asset?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Yeah. This is a property we bought from Chartwell, so I think, I can't really comment why they've sold it. But obviously it is a perfect fit for us. We are in the GTA. We have a lot of scale here, and it fits exactly what we're trying to build at Sienna.

Sairam Srinivas
Sairam Srinivas
Analyst at ATB Capital Markets

All right. Sounds good. Thanks, guys.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

Thank you.

Operator

Our next question comes from the line of Giuliano Thornhill from National Bank Capital Markets. Please go ahead.

Giuliano Thornhill
Analyst at National Bank Capital Markets

Hey, guys. Good morning. Just, I'll keep it brief. I'm just, I'm wondering, like, obviously the larger operators are moving forward with redevelopment, like yourselves. Are the economics beginning to work for the smaller operators yet? Do you think maybe that more funding needs to be announced to kind of incentivize that if that's not the case?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

I would say the funding is appropriate in most cases, Giuliano, in most of the markets. I don't think that would be an issue. If you're a private owner operator, you in fact can borrow close to 85%, 90% on this. I think these projects are viable, and that's why we are seeing a lot of LTC being built, which is great because we need to build close to 60,000 beds as a sector. It is great to see that. There's never been more beds being built at this time. We also look at that as a potential opportunity 3, 4 years down the road because, you know, we are actively looking to grow our LTC, including in Ontario.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

If, you know, hopefully there'll be opportunities on the other side of it, which we are confident that there would be.

Giuliano Thornhill
Analyst at National Bank Capital Markets

Okay. Great. I just wanted to clarify on the earlier comment about the Alberta funding increase from 1.25%-7.25%. Does that entirely relate to other accommodation funding, or will that just be kind of revenue and then flow down into NOI?

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

No, that would be completely accommodation funding.

Giuliano Thornhill
Analyst at National Bank Capital Markets

Okay. Thank you.

Operator

Once again, to ask a question, press star one on your telephone keypad.

Nitin Jain
Nitin Jain
President and CEO at Sienna Senior Living

I think, Tina, we are done. There are no more questions.

Operator

With no further questions in queue, thank you for joining today's call. You may now disconnect.

Executives
    • David Hung
      David Hung
      CFO and EVP
    • Nitin Jain
      Nitin Jain
      President and CEO
Analysts
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