Sienna Senior Living Inc. Reports Strong Third Quarter 2024 Financial Results and Continues on its Growth Path
MARKHAM, Ontario, Nov. 11, 2024 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. ("Sienna" or the "Company") (TSX:SIA) today announced its financial results for the three and nine months ended September 30, 2024. The Consolidated Financial Statements and accompanying Management's Discussion and Analysis ("MD&A") are available on the Company's website at www.siennaliving.ca and on SEDAR+ at www.sedarplus.ca.
Sienna's third quarter results highlight the Company's sustained growth path and mark its seventh consecutive quarter of year over year adjusted same property NOI growth since the beginning of 2023. In addition, the Company's recent capital markets initiatives are supporting Sienna's development initiatives, platform expansion in Alberta and refinancing of its Series A Unsecured Debentures, which matured on November 4, 2024.
"The third quarter has been one of considerable progress and success for our company. Our operating results continued to strengthen, our recent initiatives to raise capital have been met with overwhelming investor demand, and our efforts to expand into Alberta were successful," said Nitin Jain, President and Chief Executive Officer. "Backed by the sector tailwinds driven by an aging population, our accomplishments highlight our effective initiatives to improve our operating platforms, strengthen team engagement, and execute our growth strategies."
Operating Highlights
Adjusted Same-property NOI increased by 14.7% to $43.4 million, compared to Q3 2023, including
an 11.0% year over year increase in the Retirement segment, and
an 18.3% year over year increase in the LTC segment
Retirement same property occupancy surpasses 90% in September, Average same property occupancy increased by 250 bps to 89.6% in Q3 2024 compared to Q3 2023; average monthly occupancy exceeded 90% for the first time in over five years in September 2024, further improving to 90.6% in October 2024;
Team member engagement reaches new high, Significant improvement in Sienna's team member engagement across all drivers of engagement with survey participation rate exceeding 80%.
Successful Financing Initiatives
Sienna completed the following successful financing initiatives during and subsequent to Q3 2024:
$144 Million Equity Raise, On August 28, 2024, Sienna completed the issuance of 9,591,000 common shares at a price of $15.00 per share for aggregate gross proceeds of $143.9 million, including 1,251,000 shares issued in connection with the exercise of the over-allotment option granted to the underwriters.
$150 Million Unsecured Debenture Issuance, On October 17, 2024 Sienna completed its offering of $150 million of Series D senior unsecured debentures, bearing an interest rate of 4.436% per annum and maturing on October 17, 2029.
Proceeds from these financing activities are supporting Sienna's growth initiatives, including its platform expansion in Alberta, developments as well as the refinancing of the Company's $150 million Series A senior unsecured debentures, which matured on November 4, 2024.
Portfolio Expansion in Western Canada
Acquisition of Continuing Care Portfolio in Alberta - On October 16, 2024, the Company announced the acquisition of a $181.6 million continuing care home portfolio in Alberta, adding four new, high-quality properties to the Company's senior housing portfolio in Western Canada, and further diversifying its portfolio.
Immediate scale in the highly attractive Alberta continuing care segment and platform for further expansion opportunities;
Government funding for 100% of care services from the Alberta Health Services ("AHS");
High occupancy with three of the four properties exceeding 98% and one property currently in lease-up;
Immediately accretive to Operating Funds From Operations ("OFFO") and Adjusted Funds From Operations ("AFFO") per common share subsequent to closing of the Acquisition;
Acquisition at a discount to replacement value;
Investment yield expected to be approximately 6.5% during the first year of operations, with opportunity for additional growth.
The Acquisition is financed through the assumption of approximately $150.0 million of CMHC debt with a weighted average interest rate of approximately 4.6% and a remaining average term of approximately 4.7 years. The balance is financed with the proceeds from Sienna's recent equity raise.
Completion of the Acquisition is subject to customary closing conditions for transactions of this nature, including the receipt of all necessary regulatory approvals, including the approvals from the relevant health authorities in Alberta. Sienna expects the completion of the Acquisition to occur in early 2025.
Acquisition of Ownership Interest Nicola Lodge, Port Coquitlam, British Columbia, Sienna is in the process of finalizing the acquisition of the remaining 30% interest in Nicola Lodge, a 256-bed best in class long-term care community in Port Coquitlam, British Columbia. The transaction, which is subject to customary approvals and is expected to close in Q1 2025, will be financed with proceeds from Sienna's equity raise in August 2024 and will increase Sienna's ownership interest to 100%.
Reinstatement of Dividend Reinvestment Plan ("DRIP")
Effective with Sienna's November 2024 dividend payable on December 15, 2024 to shareholders of record as of November 29, 2024, Sienna is reinstating its DRIP. The DRIP allows eligible shareholders of the Company to direct their cash dividends to be reinvested in additional common shares of the Company at a 3% discount from the market price. Participation in the DRIP is optional and shareholders can enroll in the DRIP by contacting their investment advisor or financial institution. Shareholders that were previously enrolled in the DRIP at the time of its suspension and remain enrolled at the time of its reinstatement will automatically resume participation in the DRIP.
Financial performance - Q3 2024
Total Adjusted Revenue increased by 12.5% in Q3 2024, to $224.8 million, compared to Q3 2023. In the Retirement segment, the increase was mainly driven by occupancy increases, annual rental rate increases, and care and ancillary revenue. In the LTC segment, the increase was primarily due to increased flow-through funding for direct care, significant government funding increases offsetting cost pressures in recent years, and higher private accommodation revenue.
Total Adjusted NOI increased by 14.8%, to $43.4 million, compared to Q3 2023. Adjusted NOI in the Retirement segment increased by $2.1 million mainly due to occupancy increases, annual rental rate increases, and higher care and ancillary revenue. NOI in the LTC segment increased by $3.5 million largely due to a significant annual government funding increase to support cost increases in recent years, offset by inflationary increases in expenses.
Adjusted Same Property NOI increased by 14.7% to $43.4 million, compared to Q3 2023, including a $20.6 million contribution from the Retirement segment, and a $22.8 million contribution from the LTC segment.
OFFO per share increased by 13.5% in Q3 2024, or $0.037, to $0.312. The increase was primarily attributable to higher Adjusted NOI, lower transaction costs, and lower interest, partially offset by higher income tax.
AFFO per share decreased by 1.1% in Q3 2024 to $0.266. The decrease was primarily related to the temporary dilution due to the Company's recent equity issuance in addition to a decrease in construction funding income and an increase in maintenance capital expenditure.
AFFO payout ratio was 91.3% in Q3 2024, compared to 87.1% in Q3 2023.
Financial performance in the nine months ended September 30, 2024
Total Adjusted Revenue increased by 14.4%, or $85.9 million, to $683.6 million, compared to the nine months ended September 30, 2023. In the Retirement segment, the increase is mainly driven by occupancy growth, annual rental rate increases, and higher care and ancillary revenue. In the LTC segment, the increase is mainly driven by $23.7 million One-Time and Retroactive Funding related to prior years recognized in Q1 2024, annual inflationary funding increases, higher preferred accommodation revenue and a one-time Workplace Safety and Insurance Board ("WSIB") refund of $3.4M relating to prior years.
Total Adjusted NOI increased by 35.3% to $152.9 million, compared to the nine months ended September 30, 2023. Retirement segment total NOI increased $3.9 million primarily attributed to annual rental rate and occupancy increases, and higher care and ancillary revenue. LTC segment total NOI increased by $36.0 million mainly due to $23.7 million One-Time & Retroactive Funding relating to prior years in Q1 2024, higher annual inflationary funding increases and a one-time WSIB refund of $3.0 million, offset by inflationary increases in expenses.
Adjusted Same Property NOI increased by 35.7% to $153.4 million, compared to the nine months ended September 30, 2023, including a 61.6% increase to $94.6 million in the LTC segment, and a 7.9% increase to $58.8 million in the Retirement segment.
OFFO per share increased by 42.2%, or $0.347, to $1.169, compared to the nine months ended September 30, 2023. The increase was primarily attributable to higher Adjusted NOI, including $17.4 million of One-Time & Retroactive Funding of $23.7 million less $6.3 million of taxes relating to prior years in Q1 2024.
AFFO per share increased by 33.8%, or $0.266, to $1.053, compared to the nine months ended September 30, 2023. The increase was primarily related to the increase in OFFO, offset by higher maintenance capital expenditures, and a decrease in construction funding income.
AFFO payout ratio was 67.5% for the nine months ended September 30, 2024, compared to 89.3% for the same period prior year.
Financial position
The Company maintained a strong financial position during Q3 2024:
Increased liquidity to $516.5 million as at September 30, 2024, compared to $324.4 million as at September 30, 2023, partially resulting from Sienna's equity raise in August 2024 as well as the timing of debt refinancing;
Improved Interest Coverage Ratio to 3.4 for the three months ended September 30, 2024, compared to 3.3 for the three months ended September 30, 2023;
Extended Weighted Average Term to Maturity of its debt to 6.2 years as at September 30, 2024, from 5.7 years as at September 30, 2023;
Improved Debt to Adjusted EBITDA for the trailing 12 months to 7.0 as at September 30, 2024, from 8.3 as at September 30, 2023;
Decreased Debt to Adjusted Gross Book Value by 210 bps to 42.3% as at September 30, 2024 from 44.4% as at September 30, 2023.
Financial and Operating Results
Three months ended September 30,
Nine months ended September 30,
$000s except occupancy, per share and ratio data
2024
2023
