MARKHAM, Ontario, Aug. 12, 2020 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today provided an update on its operations and announced its financial results for the three and six months ended June 30, 2020. The Unaudited Condensed Interim Consolidated Financial Statements and accompanying Management’s Discussion and Analysis are available on the Company’s website at www.siennaliving.ca and on SEDAR at www.sedar.com.

“COVID-19 has highlighted the urgency to come up with solutions to better serve and protect our seniors,” said Nitin Jain, President and Chief Executive Officer of Sienna Senior Living. “Together with my team, we will focus on resident-centred, people-driven solutions to navigate the Company through this crisis and beyond.”

COVID-19 Update

Sienna has always prioritized the health and safety of its residents, team members, their families and other community stakeholders, and today more than ever, has been proactive and diligent in implementing extensive infection prevention and other precautionary measures aimed at limiting the spread of COVID-19.

• COVID-19 cases – As of August 11, 2020, there are no active cases of COVID-19 in any of Sienna’s 83 owned or managed residences.
• Six-Point Action Plan –Sienna has made good progress in its action plan announced in June that focuses on adding additional health care expertise and enhancements to staffing, training and re-education in addition to improved communication and engagement with residents and their families.
• Staffing – From March to July, Sienna hired approximately 900 full-time and 1,000 part-time staff members and increased the ratio of full-time staff members.

Second Quarter Operating and Financial Performance

The Company’s financial performance was significantly impacted and is expected to continue to be impacted by an increased level of expenses to manage COVID-19.

• Total same property NOI decreased by 20.1% (or $8.0 million) to $31.9 million in Q2 2020, compared to Q2 2019, mainly due to net pandemic expenses of $10.6 million;
• Average occupancy in Sienna’s Long-Term Care (“LTC”) portfolio was 92.6%;
• Average same property occupancy in Sienna’s retirement portfolio (“Retirement”) was 83.0%;
• Operating Funds from Operations (“OFFO”) per share decreased by 30.1% year-over-year to $0.249 per share;
• Adjusted Funds from Operations (“AFFO”) per share decreased by 32.6% year-over-year to $0.248 per share;
• Payout ratio was 94.4% for the three months ended June 30, 2020.

Solid Financial Position

The Company maintains a strong financial position with significant liquidity and a substantial unencumbered asset pool.

• Liquidity increased to $240.5 million as at June 30, 2020, from $144.0 million as at December 31, 2019, comprised of cash and cash equivalents and available credit facilities. Subsequent to Q2 2020, the Company repaid $60 million of its credit facilities;
• Fair value of unencumbered asset pool is approximately $540 million as at June 30, 2020, increased from approximately $300 million as at December 31, 2019;
• Weighted average cost of debt lowered to 3.4% as at June 30, 2020, from 3.7% as at December 31, 2019.

Financial and Operating Results

$000s except occupancy, per share and ratio data	Three months ended June 30, 2020			Three months ended June 30, 2019			Six months ended June 30, 2020			Six months ended June 30, 2019
Retirement – Average same property occupancy(1)(2)		83.0%			88.4%			84.1%			89.7%
Retirement – As at same property occupancy(1)(2)		81.6%			87.3%			81.6%			87.3%
LTC – Average total occupancy(3)		92.6%			98.3%			95.3%			98.3%
LTC – Average private occupancy		91.6%			98.1%			94.4%			98.2%
Revenue	$162,922			$165,957			$328,549			$329,626
Operating expenses, net	$131,031			$126,028			$260,147			$250,785
NOI(4)	$31,891			$39,929			$68,402			$78,841
Net (loss) income	($6,778)			$2,230			($9,274)			$2,672
Operating Funds from Operations (OFFO)(5)	$16,699			$23,602			$41,117			$44,924
Adjusted Funds from Operations (AFFO)(5)	$16,623			$24,428			$42,207			$47,811
Net (loss) income per share	($0.101)			$0.034			($0.140)			$0.040
OFFO per share(5)(6)	$0.249			$0.356			$0.614			$0.678
AFFO per share(5)(6)	$0.248			$0.368			$0.630			$0.721
Dividends declared per share	$0.234			$0.230			$0.468			$0.459
Payout Ratio		94.4%			62.5%			74.3%			63.7%

Notes:

(1)	Retirement same property occupancy excludes the results from the expansion at Island Park Retirement Residence, which opened in July 2019 and is in lease-up. Retirement total average occupancy is 82.2% for Q2 2020 (2019 - 88.4%) and 83.2% for the six months ended June 30, 2020 (2019 - 89.7%).
(2)	The quarter-over-quarter and year-over-year declines in Retirement occupancy are primarily related to a decline in new residents moving in due to access restrictions during the COVID-19 pandemic.
(3)	Long-term care residences are fully funded for vacancies caused by temporary closure of admissions due to an infectious outbreak, including COVID-19. The Government of Ontario has announced that occupancy protection funding will be in place for long-term care residences until December 31, 2020.  In addition, residents in Ontario currently cannot be placed in rooms with three or four beds.  While accommodations are limited to a maximum of two beds per room, the Government of Ontario will continue to fund the beds at full capacity until the end of 2020.
(4)	NOI for the three and six months ended June 30, 2020 includes net pandemic expenses of $7,661 and $7,765, respectively.
(5)	OFFO and AFFO for the three and six months ended June 30, 2020 include an after-tax mark-to-market recovery on share-based compensation of $1,296 and $3,836, respectively (2019 - after-tax expense of $261 and $1,662, respectively).
(6)	OFFO and AFFO per share for the three months ended June 30, 2020 excluding the after-tax mark-to-market adjustments on share-based compensation would have decreased by $0.019 to $0.230 and $0.229, respectively (2019 - increased by $0.004 to $0.360 and $0.372, respectively).  OFFO and AFFO per share for the six months ended June 30, 2020 excluding the after-tax mark-to-market adjustments on share-based compensation would have decreased by $0.057 to $0.557 and $0.573, respectively (2019 - increased by $0.025 to $0.703 and $0.746, respectively).

2020 Second Quarter Summary

Average occupancy in LTC was 92.6% in Q2 2020, a decrease from 98.3% in Q2 2019. Long-term care residences are fully funded for vacancies caused by temporary closure of admissions due to an infectious outbreak, including COVID-19. The Government of Ontario has announced that the occupancy protection funding will be in place for long-term care residences until December 31, 2020.  In addition, residents in Ontario currently cannot be placed in rooms with three or four beds.  While accommodations are limited to a maximum of two beds per room, the Government of Ontario will continue to fund the beds at full capacity until the end of 2020, which will partially support the additional costs of managing the pandemic.  The Company’s LTC portfolio generated 52.2% of total Company NOI in Q2 2020.

Average same property occupancy in Retirement was 83.0% in Q2 2020, a decrease from 88.4% in Q2 2019. Contributing factors to the occupancy softness are related to a decline in new residents moving in due to access restrictions during the COVID-19 pandemic, partially offset by some conversions from temporary to permanent stays during the quarter.

The following table provides an update on the monthly average same property occupancy and rent collections in Sienna’s Retirement portfolio during and subsequent to the end of Q2 2020:

	2020
	April		May		June		July
Retirement same property occupancy (average)	83.7	%	83.0	%	82.3	%	81.2	%
Retirement rent collection (%)	98.5	%	99.4	%	99.2	%	99.8	%

NOI decreased by 20.1% (or $8.0 million) to $31.9 million in Q2 2020, compared to Q2 2019, mainly due to net pandemic expenses of $7.7 million. Excluding net pandemic expenses, NOI decreased by 0.9% (or $0.4 million) to $39.6 million mainly due to softness in Retirement occupancy, partially offset by in-place annual rental rate increases in line with market conditions.

The following table summarizes the government assistance and pandemic expenses recognized for the three and six months ended June 30, 2020:

		Three months ended											Six months ended
$000s		June 30, 2020											June 30, 2020
		Retirement		LTC			Administrative			Total					Retirement		LTC				Administrative		Total
Total government assistance		2,065		22,852			—		24,917						2,141		23,587				—		25,728
Total pandemic expense		3,426		29,152			2,981		35,559						3,527		29,966				3,012		36,505
Total net pandemic expenses		1,361		6,300			2,981		10,642						1,386		6,379				3,012		10,777

LTC same property NOI decreased by 26.1% (or $5.9 million) to $16.6 million in Q2 2020, compared to Q2 2019, mainly due to net pandemic expenses of $6.3 million, partially offset by timing of expenses.  Excluding net pandemic expenses, LTC same property NOI for Q2 2020 increased by 1.9% or $0.4 million to $22.9 million, compared to Q2 2019.

Retirement same property NOI decreased by $13.1% (or $2.3 million) to $15.1 million in Q2 2020, compared to Q2 2019, primarily attributable to net pandemic expenses of $1.4 million and lower occupancy, partially offset by lower variable expenses from cost management in accordance with occupancy and in-place annual rental rate increases in line with market conditions. Excluding net pandemic expenses, Retirement same property NOI for Q2 decreased by 5.3% or $0.9 million to $16.5 million, compared to Q2 2019.

Revenue decreased by 1.8% (or $3.0 million) to $162.9 million in Q2 2020, compared to Q2 2019. In the Retirement segment, the decrease of $0.9 million was mainly a result of occupancy softness, partially offset by in-place rental rate increases. LTC’s revenues decreased by $2.4 million. However, $5.0 million of government funding, which would have typically been included in LTC revenues, has been recorded against operating expenses related to the pandemic.

Operating expenses, net increased by 4.0% (or $5.0 million) to $131.0 million in Q2 2020, compared to Q2 2019. The increase was mainly a result of net pandemic expenses of $7.7 million, which consists primarily of additional staffing and personal protective equipment to manage COVID-19, partially offset by lower variable expenses in accordance with occupancy in Retirement, and timing of expenses.

The Company generated a net loss of $6.8 million in Q2 2020, representing a decrease of $9.0 million compared to Q2 2019. The decrease was primarily related to net pandemic expenses, non-recurring restructuring costs, softer Retirement occupancy and fair value adjustments on interest rate swap contracts, partially offset by annual rental rate increases in Retirement, lower income taxes and mark-to-market adjustments on share based compensation.

OFFO decreased by 29.2% (or $6.9 million) to $16.7 million in Q2 2020, compared to Q2 2019. The decrease was primarily due to net pandemic expenses after-tax of $7.8 million.  Excluding net pandemic expenses, OFFO increased by 3.9% (or $0.9 million) to $24.5 million, compared to Q2 2019, mainly due to a decrease in mark-to-market adjustments on share-based compensation of $2.0 million and lower current income taxes of $3.4 million, partially offset by softer Retirement occupancy.

AFFO decreased by 32.0% (or $7.8 million) to $16.6 million in Q2 2020, compared to Q2 2019. The decrease was primarily related to the decrease in OFFO noted above and timing of maintenance capital expenditures.  Excluding net pandemic expenses, AFFO was $24.4 million, which is consistent compared to Q2 2019.

2020 Six Months Summary

NOI decreased by 13.2% (or $10.4 million) to $68.4 million over the comparable prior year period, mainly due to net pandemic expenses of $7.8 million.  Excluding net pandemic expenses, NOI decreased by 3.4% (or $2.7 million) to $76.2 million mainly due to lower Retirement occupancy.

LTC same property NOI decreased by 14.5% (or $6.3 million) year-over-year, primarily attributable to net pandemic expenses of $6.4 million. Excluding net pandemic expenses, LTC same property NOI for the six months ended June 30, 2020 increased by 0.2% or $0.1 million to $43.6 million, over the comparable prior year period.

Retirement same property NOI decreased 12.3% (or $4.3 million) year-over-year, primarily attributable to net pandemic expenses of $1.4 million, lower occupancy, and higher sales and marketing costs to drive occupancy, partially offset by lower variable operating expenses from cost management in accordance with occupancy and rental rate increases in line with market conditions.  Excluding net pandemic expenses, Retirement same property NOI for the six months ended June 30, 2020 decreased by 8.3% or $2.9 million to $32.4 million, over the comparable prior year period.

Revenue decreased by 0.3% (or $1.1 million) to $328.5 million over the comparable prior year period. In the Retirement segment, the decrease of $1.5 million was due to lower Retirement occupancy, partially offset by in-place rental rate increases in line with market conditions. LTC’s revenues increased by $0.4 million due to annual inflationary increases, partially offset by $5.0 million of government funding, which would have typically been included in LTC revenues, has been recorded against operating expenses related to the pandemic.

Operating expenses, net increased by 3.7% (or $9.4 million) to $260.1 million over the comparable prior year period. The increase was mainly a result of net pandemic expenses of $7.8 million, which consists primarily of additional staffing and personal protective equipment to manage COVID-19, partially offset by lower variable expenses from cost management in accordance with occupancy in Retirement.

The Company generated a net loss of $9.3 million, representing a decrease of $11.9 million over the comparable prior year period. The decrease was primarily related to net pandemic expenses, non-recurring restructuring costs and fair value adjustments on interest rate swap contracts, partially offset by lower income taxes and mark-to-market adjustments on share based compensation.

OFFO decreased by 8.5% (or $3.8 million) to $41.1 million over the comparable prior year period. The decrease was primarily attributable to net pandemic expenses after-tax of $7.9 million. Excluding net pandemic expenses, OFFO would increase by 9.1% (or $4.1 million) to $49.0 million, compared to Q2 2019, mainly due a decrease in mark-to-market adjustments on share-based compensation of $6.9 million and lower current income taxes of $3.9 million, partially offset by softer Retirement occupancy.

AFFO decreased by 11.7% (or $5.6 million) to $42.2 million over the comparable prior year period. Excluding net pandemic expenses, AFFO would increase by 4.8% (or $2.3 million) to $50.1 million, compared to Q2 2019, mainly due to the increase in OFFO noted above and timing of maintenance capital expenditures.

Conference Call

The conference call will be on Thursday August 13, 2020 at 9:30 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 9815106. A webcast of the call will be accessible via Sienna's website at: www.siennaliving.ca/investors/events-presentations. The webcast of the call will be available for replay until August 13, 2021 and archived on Sienna's website.

About Sienna Senior Living

Sienna Senior Living Inc. (TSX:SIA) offers a full range of seniors' living options, including independent living, assisted living, long-term care, and specialized programs and services. Sienna's approximately 12,000 employees are passionate about helping residents live fully every day. For more information, please visit www.siennaliving.ca.

Risk Factors

Refer to the risk factors on “General Business Risks” and “COVID-19 and Other Outbreaks” disclosed in the Company’s MD&A for the three and six months ended June 30, 2020, and other risk factors disclosed in its most recent annual MD&A and Annual Information Form for more information.

Forward-Looking Statements

Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management’s current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as “anticipate,” “continue,” “could,” “expect,” “may,” “will,” “estimate,” “believe,” “goals” or other similar words and include, without limitation, statements with respect to business strategy and financial condition, and in particular in respect of the impact of COVID-19 and measures taken to mitigate the impact, supply-chain integrity and availability of PPE, the availability of various government programs, government funding and financial assistance. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions.  The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Karen Hon
Chief Financial Officer and Senior Vice President
(905) 489-0254
karen.hon@siennaliving.ca 

Nancy Webb
Senior Vice President, Public Affairs and Marketing
(905) 415-7623
nancy.webb@siennaliving.ca