Good morning, ladies and gentlemen, and welcome to the Chartwell Retirement Residences Q1 2021 Financial Results Conference Call. I would now like to turn the meeting over to the CEO, Vlad Volodarsky. Please go ahead, sir.
Thank you, Paul. Good morning, and thank you for joining us today. There is a slide presentation to accompany this conference All available on our website at charwell.com under the Investor Relations tab. Joining me today are Karen Sullivan, President Chief Operating Officer Sherry Harris, Chief Financial Officer and Jonathan Balakia, Chief Investment and Chief Legal Officer. Let me remind everyone that during this call, we may make statements containing forward looking information and non GAAP measures.
I direct you to our MD and A and other security filings for information about the assumptions, risks and uncertainties inherent in such forward looking information and details of such non GAAP measures. More specifically, I direct you to the added disclosures in our Q1 2021 MD and A under the heading COVID-nineteen Business Impacts and Related Risks for a discussion of risks and uncertainties related to the pandemic. These documents can be found on our website or atsedar.com. While our financial results We continue to be impacted by the pandemic in Q1 2021 with the increasing vaccination rates among our residents and employees and the community at large. Every day, we're getting closer to the easing of various restrictions that have been significant barriers for new residents moving into our residences.
Charles, people have been doing extraordinary work for almost 15 months now in most difficult circumstances, Providing much needed services, care, engagement and compassion to our residents. I am proud of the efforts of our people and grateful for their unwavering dedication and commitment to making people's lives better. I know that these extraordinary people are now ready and excited to welcome And deliver exceptional personalized experiences to new residents as we begin our path to recovery. I I will now turn over the call to Karen to provide more insight on our operations. Karen?
Thanks, Vlad. Turning to Slide 4, I'm pleased to report that
the number of outbreaks in Our properties across the country have reduced significantly. Currently, we have 3 long term care homes and 5 retirement homes in outbreak with only 6 residents affected. Prioritization of the vaccine to our vulnerable population has been a true game changer. Our vaccine rates for our residents Are between 92% 97% in all provinces, and we are continuing to see increases in staff vaccination rates with over 70% of Staff having received at least the first dose in BC, Alberta and Ontario. The number of staff vaccinated in Quebec is lower, but only because access for These essential workers occurred later than in the other provinces.
Our infection prevention and control leads from Long Long Term Care and Retirement have collaborated to develop a vaccine hesitancy campaign and managers in our homes are in the midst of having one to one conversations with We are also seeing a trend where certain changes in directives are being applied to fully vaccinated staff, We believe that these initiatives, along with the increasing access to vaccines in the coming weeks, Will lead to continued increases in staff vaccination rates. The safety and well-being of our residents remains our number one focus With high community spread and the introduction of variants of concerns during wave 2 of the pandemic. That said, due to the reduced outbreaks in our homes and the need To assist with the possible overcrowding, we have also begun to see reduced restrictions, including the elimination of the 14 day Isolation period for new resident admissions who are fully vaccinated and that's in Ontario. In addition, in Quebec, Our residents are back eating in the dining room and left the home with an outbreak. Again, we expect to see these restrictions continue to ease In the coming weeks months as vaccination rates in the community increase and community spread decreases.
Turning to Slide 5, Our support for our homes continues with daily meetings of our critical incident command, daily interpretation and update memos to our homes and weekly communication to residents and families. We also continue to have 20 fourseven COVID support hotline that Now fielded over 10,000 calls since the beginning of the pandemic. Recently in Ontario, we introduced a nurse on call program For our retirement residences, so that the health and wellness managers and our RPNs have access to support in the evenings and on weekends. In April, we hosted our 1st ever virtual leadership conference, which gave us the opportunity to not only provide updates to our general managers, administrators and corporate office leadership teams, but also to thank them for their significant contribution over the past 14 months, including presenting both leadership and frontline staff awards. This week, we also held our annual sales training sessions, again in a virtual fashion to assist our sales force as they continue to adapt to the new online sales technology solutions that we have introduced and to focus on occupancy recovery in our retirement residences.
Turning to Slide 6. These recovery efforts also include our current multimedia marketing campaign, Safe Just Got Safer, which addresses move in hesitancy With an additional incentive for prospects to book a virtual personal tour to access our exclusive digital Why Now guide With valuable information and videos to help people in their research or to start the conversation with a loved one. We are also enhancing our approach to and focus on social media efforts, including sharing the multitude of positive stories that are happening in our residences every day. I'm pleased to say that we have seen a significant increase in our Google reviews and that our rating is on average 4.73 out of 5. Given the importance of referrals, the marketing team is heavily focused on supporting sales enablement strategies such as and business development tools, including an online business to professional digital strategy.
The latter is focused on physicians, Realtors and Financial Planners. All of these efforts are beginning to bear positive results with our leading indicators, both calls and emails, Having increased 29% from Q4. Also, our initial contacts in Q1 are the highest volumes since the pandemic started. Although personalized tours are still down due to restrictions, this is the first indication that there is, in fact, pent up demand. I'd now like to turn it over to Sherry to discuss our financial results.
Thank you, Karen.
As shown on Slide 7, in Q1 21, our net loss was $4,900,000 compared to a net income of $11,400,000 in Q1 2020. For Q1 2021, FFO was $35,100,000 or $0.16 per unit compared to $45,300,000 for $0.21 per unit in Q1 2020. The decrease is primarily due to lower same property adjusted NOI Due to lower occupancy and continued investments in resident care and infection prevention and control measures. Turning to Slide 8, I will discuss our same property operating platform's results. Our same property adjusted NOI decreased by $12,200,000 or 16.4 percent in Q1 2021 Compared to Q1 2020, same property occupancy was 78.8% in Q1 2021 compared to 89.3 percent in Q1 2020.
Same property retirement occupancy was 78 7% for Q1 2021 compared to 87.8% for Q1 2020 or a decline of 9.1 percentage points. This resulted in lower revenue of approximately $17,800,000 Compared to Q1 2020, occupancy in all of our retirement platforms was significantly reduced by lower move in activity as a result of the COVID-nineteen pandemic and associated restrictions that Karen has discussed. This was partially offset by lower move out activity, primarily due to reduced departures to long term care spaces. In addition to the impact of lower occupancies on our Q1 2021 results, the following factors affected our same Property Retirement Operations results. We continue to make investments and initiatives to enhance residents and staff safety.
We have maintained and enhanced our staffing levels and we have experienced higher insurance costs. We partially offset these negative impacts by generating increased revenue from inflationary and market based rental and service increases and also from the provision of additional care and services as residents age in place longer. With fewer departures over the last year to long term care, Their needs have increased. Our food costs were lower due to lower occupancies and supplies expenses were lower due to restrictions on activities. Our same property long term care home occupancy was 79% compared to 98.5% In Q1 2020, a decrease of 19.5 percentage points.
As a result, We have produced move in activity and capacity limitations affecting B and C Class shared accommodations, which limit occupancy to 2 individuals in those rooms. Occupancy protection provided by the Ontario government Has been extended to August 31, 2021. There are approximately 38,000 individuals in need of long term care services On waiting list today. This is an increase of over 8% from pre pandemic levels. We expect occupancies to recover in our LTCs Due to the demand for this essential care service, and we will do our part to assist the government with hospital capacity where appropriate.
For Q1, twenty twenty one, same property adjusted long term care NOI decreased $4,200,000 or 58.8 percent, primarily due to increased investments in resident care and infection prevention and control measures, which exceeded allotted government funding by $3,300,000 and cumulatively since the onset of the pandemic Have exceeded funding by $6,500,000 Our preferred accommodation revenues were also lower by $600,000 And we experienced higher insurance costs. As Karen mentioned, the introduction of highly effective vaccines has been a game changer. We do anticipate that the level of our unfunded investments will decrease over the course of 2021. Turning to Slide 9, you will see our monthly occupancies. Pandemic related restrictions and government directives Affecting operations have resulted in reduced move in activity in our retirement residences and as a result lower occupancy.
The pandemic and the corresponding impact of such restrictions and directives are likely to continue for some time in 2021. We expect that as the vaccination programs in each of the provinces in which we operate proceed and as restrictions in our retirement residences And in the community are lifted, move ins and occupancies will begin recovering in our retirement residences. Our forecast occupancy for May 2021 shows the pace of decline in occupancy is slowing. And as Karen mentioned, our leading indicators are beginning to improve. We collected substantially all rent and service As you can see on Slide 10, Our interest coverage ratio was 2.8 times at March 31, 2021.
Our debt to growth book value calculated using The historical cost of our assets was 52.6 percent at March 31, 2021 And our net debt to adjusted EBITDA ratio was 9.9 times. As you can see on Slide 11, at March 31, 2021, our liquidity amounted to $444,900,000
which included $75,900,000
of cash and cash equivalents and $368,900,000 Have available borrowing capacity on our credit facilities. In addition, our share of cash and cash equivalents held in our equity accounted JVs It was $4,700,000 At March 31, 2021, our unencumbered assets had a value of approximately $1,000,000,000 Our mortgage maturities remain well staggered with an average term to maturity of 6.6 years at March 31, 2021. Turning to Slide 12. At May 6, 2021, our liquidity amounted to $466,100,000 which included $97,200,000 of cash and cash equivalents and $368,900,000 of borrowing capacity on our credit facilities. As at May 6, 2021, we have $89,900,000 of mortgage maturities remaining in 2021 that are proceeding in the normal course.
In addition, Chartwell's share of the remaining mortgage maturities in 2021 The company is $41,500,000 refinancing of which is also proceeding in the normal course. Turning to Slide 13, we currently have 3 development projects, which are budgeted to require $81,500,000 that are currently under construction. In addition, we regularly reinvest capital in our owned property portfolio with With the goal of growing our property NOI and protecting and maintaining our properties, we expect to continue to be selective in our capital allocations In 2021, turning to Slide 14, we are pleased to announce the expansion of our partnership with Welltower Through the joint acquisition of Chartwell with Teasdale, Chartwell with Teasdale 2 achieved stabilized occupancy in 2020. And on April 14, 2021, Chartwell acquired a 42.5 percent ownership interest. Simultaneously, Welltower Tower acquired 42.5 percent of Chartwell with TESALE 2 and purchased 42.5% or 50% of our 85% interest in Baiduemu retained their 15% interest in both bases, aligning ownership across the campus.
The contractual purchase price for Chartwell T Cell 2 at our share was approximately $30,300,000 We settled the purchase price through assuming 42.5 percent of the related construction financing of $18,700,000 and through the settlement of the outstanding mezzanine loan of $4,000,000 With the balance paid in cash, Welltower's acquisition of the 42.5% interest in Chartwell with T Cell 2 from us was completed at $30,700,000 and Welltower assumed its share of the related mortgage. As noted on Slide 15, our distribution reinvestment program, the DRIP, was temporarily suspended beginning in March 2020, We'll be reinstated effective with the May 2021 distribution payable on June 15, 2021. Our DRIP offers unitholders the opportunity to receive their distributions in new Chartwell units with a 3% discount and no commissions. Unitholders can contact their investment advisor to enroll. I will now turn the call back to Vlad to wrap up.
Thank you, Sherry. Turning to Slide 16. While Ontario Long Term Care represents less than 10% of Chartwell Business, We have a long standing and deep expertise in the sector. I am extremely proud of our 5,000 people strong LTC team, especially during this pandemic. They started nothing to support our residents and families during these most challenging times.
We are also grateful To our provincial government and public health system partners for their support, especially during the 2nd wave of the pandemic. It is because of these extraordinary efforts of our teams and collaboration with public health system partners, none of our LTC homes required support from Canadian Armed Forces Red Cross will have to request hospital managerial assistance through voluntary management contracts. Our Deans received numerous expressions of praise and recognition for our public health partners for the speed of their response and their ability to stabilize situations in the homes that did In the past few weeks, the Ontario COVID-nineteen Commission and Ontario Auditor General released their reports on the Ontario Your LTC sector experience and the government response during the pandemic and provided their recommendation for improving the sector. As we expected, most of the recommendations have been consistent with those raised in the numerous previous studies, reports and submissions to the government, including those made by the Ontario Long Term Care Association and Charwill over the years. These include, Others improved, predictable and sustainable funding to the sector, redevelopment program for older vets, Enhanced IPAC and medical expertise in long term care homes, better integration of long term care with the broader health care system, including partnerships With hospitals and solving staffing shortages including easier pathway to attaining PSW designation.
As we previously pointed out, we are pleased to see that the government has proactively addressed a number of these important recommendations already. There are some recommendations from the commission that would require more analysis and review. For example, while we Fully supportive of the drive to increase the proportion of full time jobs in our homes, achieving the 70% full time workforce target In our 20 fourseven business, it would likely require the implementation of 12 hour shifts. This would require collaborative work of operators, employees and unions. While not a part of the 85 numbers recommendations, the idea of separation of construction and Service delivery in the long term care sector has been mentioned throughout the Commission's report.
The report discusses a model from the builder over time, allowing the developer to achieve a return on their investment. The government then would be directly responsible for The idea seems to be to eliminate profit from care delivery. However, as we know, there is no profit in the current model of care delivery due to the flow through It is not clear how this approach would result in better care delivery or more efficient use of resources. Chartwell is a purpose driven company. We're here to make people's lives better and everything we do is evaluated through this lens.
We are an experienced LTC operator whose quality of care indicators have consistently exceeded provincial averages. We're also an experienced developer. We know our customer and have proven that we can build high quality long term care residences. We were one of the very few companies who rebuilt some of our Alder Homes, 3 of our Alder Ontario LTC Homes, where we built to the new design standards in 2013. We also rebuilt 2 Alder Long Term Care In British Columbia, clearly, we can do both construction and operations successfully.
It is not clear how making companies like us choose 1 or the other Citi would benefit our health care system or society. Turning to slide 17. Over the years, we built a company that is purpose driven, has a strong culture, clear strategy and exceptional people. We also put a strong foundation in place to sustain disruptions brought by crisis by being prudent in our capital allocation decisions and maintaining strong liquidity. The current crisis has certainly tested this foundation.
I am proud of how Charbel responded and persevered through it. While the current fight is not over, we are looking to the future with optimism. We deliver much needed services and care to Canada's seniors. This need has not gone away. Likely, it has been exacerbated by the pandemic, creating a pent up demand for our services, which will support eventual occupancy recovery.
Long term prospects for our business remain bright. The growth The first question comes from the line of David. Congrats on the line of David. Congrats on the line of David. Thank you, David.
Thank you, David. Good morning, ladies and gentlemen. This growth will remain robust over the next 20 plus years, supporting demand for our services. There is that they will be able to fund new beds to fully satisfy this existing and growing demand. Retirement residences We are well positioned to fulfill that void.
In the medium term, the slowdown of new construction starts during the pandemic will And fewer building openings in 20222023, further supporting occupancy recovery. Chartwell has always had a strong corporate culture. I believe this pandemic has only further strengthened it. This strengthened culture combined with our focus on delivering exceptional personalized experiences to our residents, Our knowledge of customers and our strong national brand are the key ingredients of our future success. I'm confident with the strength Our people combined with the accelerated growth of the seniors population and slowdown of supply growth in our markets, we will recover our occupancies and continue creating sustainable value for our stakeholders for years to come.
I want to finish by thanking our employees From residences to corporate offices, people who demonstrated tremendous drive, ingenuity and commitment in these most challenging circumstances, People who volunteered to work in our homes in outbreaks, often staying in hotels for weeks months, people who stopped at nothing to keep our residents, their families What our people accomplished through this pandemic will live in the thousands of individual stories of courage and sacrifice and and the thousands of expressions of gratitude and encouragement from our residents and families. To our Chartwell employees, thank you for everything. Thank you for your time and attention this morning. We will now be pleased to answer your questions. Paul?
Thank you. We will now take questions from the telephone lines. Please lift your handset before making your selection. You
may
There will be a brief pause while the participants register. We thank you for your patience. The first question is from Hidanshu Gupta from Scotiabank. Please go ahead. Your line is open.
Thank you and good morning.
Good morning. So
Just on the retirement home occupancy, occupancy PFS decline is expected to slow in the month of May As per your projection, so what is causing that change? Are you seeing the late of move in activity improving despite the lockdown?
Yes. As I said in my remarks, our leading indicators are definitely better. And so we are, I think beginning to see that pent up demand, not having in person tours is still an issue. But I would tell you, as these We're pretty pleased this week to hear about the increases in vaccines that are being delivered across Canada. And I think as we see that, we'll obviously then see community spread decrease and we'll see those restrictions come off.
And that's certainly going to help us with that pent up demand.
Got it. So In your May occupancy assumption, what is the percentage of decline in move ins and move outs are you assuming for the month of May?
So we're seeing an increase month over month, Himanshu, good morning, in trends for move in activity. Move out activity is trending about the same as it has been through the last months of the pandemic.
Okay. I actually meant when you say, I mean, obviously, month on month improvement, but in terms of percentage decline compared to the normalized Can you share any number? I mean, is it like 60% of the pace or is it more or is it less?
I mean, I think we're running about just under 15% reduction year to date in move out activity, and we're Running at about 60% of move in activity compared to last year.
Got it. Okay. That's very helpful. Thank you. And then in terms of seasonality, I mean, is it fair to say that summer months are usually slow with respect to the movements?
So it's really September, October is when we start seeing 1st positive occupancy recovery.
Yes. I mean, I think we feel that as community restrictions ease and as restrictions ease around our residences That with the announcements are that July 1 is when everyone who would like a shot would have a shot. So I think it's reasonable to assume Through July August that hopefully restrictions will be eased into September, October, November.
Got it. Okay. Okay. And then maybe just turning to the operating margins. And if I look at the same property NOI Decline in Quebec was much larger than Ontario and Western Canada.
What is causing Quebec operating expenses to be higher? Or What's different in Quebec versus the other 2 regions there?
Agency and overtime costs. So as you know, coming into the pandemic, we had had a number of Quebec markets that were tight in terms of employment. That would have And resulting in some increased cost pressures there through the winter months.
Okay. And if I look at overall operating costs in the Retirement Homes segment, same property operating expenses We're actually down 2.8% on year over year basis. But if you just look at labor costs and insurance costs, how much were they up on a year over year basis?
So we are overall seeing labor costs generally in the 2.5% range. That is what we are consistently addressing. In terms of the insurance costs, there was an Insurance is a relatively small component of our overall cost structure, but it still did have an impact year over year.
Okay. Thank you. Thank you. I'll turn it back. Thank you so much.
Thank you. The The next question is from Lorne Kalmar from TD Securities. Please go ahead. Your line is open.
Thanks. Good morning. Maybe just going back to the occupancy discussion, it looks like a few of your counterparts who have Operations in the U. S. And the U.
K. Where vaccinations are a little bit further ahead than we are here, have already started to see occupancies begin to trend up. Do you guys think there's any read through for your portfolio?
Thanks very much, Lauren, and welcome to the call. We are certainly cautiously optimistic on pent up demand. Karen has talked about our leading indicators being up and we're continuing We see that trend despite the current community restrictions. So we're hopeful that we will follow that pattern in the fall. We do think we're about 3 to 4 months behind where they are.
Okay. That's helpful. And Maybe just looking at developments, I guess completed developments, in this case Meadowbrook, it looks like the yield came down a little bit Quarter over quarter and the stabilization date was pushed out. Could you maybe give us a little bit of color around that?
Yes. So yields came down a little bit as costs were up. We're seeing increased costs in construction Pretty much everywhere. So yes, costs did go up and it was a little bit over. In terms of the stabilization date on part of the development, We did have to push out the occupancy date because of some issues getting some servicing.
Things do slow down sometimes with Approvals and permitting, so that was the cause of that.
Okay. And then maybe just sticking With this train of thought here, it didn't look like any development yields changed on the in progress developments, but would you expect those to get Come under pressure with the broader theme of rising development costs?
Right now, we're keeping a very close eye on that. And so We are sensitive to that, but to date, we're not anticipating any increased costs
to get to bring these to completion. Great. Thanks so much for the color. I'll turn it back.
Thank you. The next question It's from Frank Leo from BMO Capital Markets. Please go ahead. Your line is open.
Hi. Good morning, everyone. So My first question is around the dispositions. So I wonder, do you see any capital recycling opportunities in 2021 through disposition of your non core assets?
Yes, Frank. As usual, we always look at our portfolio to identify assets That do not fit our long term strategy. And we've done, as you could see, some dispositions over the years. You should expect us to continue to do this work and identify assets that do not fit our long term profile, and we will You should also understand that these dispositions usually take time and predicting timing and the Valuation of these properties is really hard until you actually get on the process.
Yes. Yes. Thanks for the color. And I'll just To add on to that, so I wonder if you could provide any color, any active discussion at this point or It's quiet at this point.
At this point, there is nothing to update you on.
Okay. Thank you. And so My next question turns to the your debt to EBITDA range. So do you expect any improvement this year? And what's the main driver for any improvement in 2021?
I mean, I think we're Looking for improvement in improving EBITDA over time. As Vlad mentioned in his remarks, we had really come The pandemic building this company to be strong through a storm. This has been a very significant storm, And we will look to continue to improve as occupancy recovers.
Okay. Thank you. So my last question is coming from us. So the budget 2021 proposed spending of $3,000,000,000 over the next 5 years in LTC systems. So could you provide your view of this new budget, any impact to your LTC operations in the future or in the long term?
Sure. I mean, we certainly are pleased to see the attention that governments All levels are now putting on the long term care system that as we all know has been neglected for a long period of time by various previous governments. So these investments, both on the federal level and provincial level, will be positive for the sector, may Not generate additional profitability for operators, but certainly will improve resident experience in these homes And purely from the sort of business perspective, you can achieve same returns with lower risk. It's a better proposition, and we've been advocating for these Changes for a long period of time. So we are very pleased to see those additional investments that will go Into improving experience of the residents in these homes.
Okay. Thank you very much. That's all my questions today and I'll turn it back.
Thank you. The next question is from Tal Woolley from National Bank Financial. Please go ahead. The line is open.
Hi, good morning, everyone.
Good morning. Good morning.
Just maybe as a bigger picture, you talked about how You expect that you will be able to recover occupancy as community spread declines. Like do you have a sense of like what percentage of your Assets are really within like the highest spread areas. I mean, I've got a good idea myself of where they are, but I'm just trying to think of like In terms of the overall proportion?
No, it's really a difficult question. And I think the whole of Ontario is now in lockdown. So I guess we have 90 with Amazons here and they're all in this Hi, risk area. So I think these lifting of restrictions, they already started, right? And we have Some release in Ontario, there's some lifting of restrictions in other provinces that are happening in Quebec and Alberta.
And so as these continue to roll throughout the country, that's where we believe the occupancy will begin to recover as people are You're free to come for the tours and can then have activities that are less restrictive and can have dining in the dining And have more social activities with their peers.
Would it be fair to say that like if things get a lot better in the GTA and Peel area, things are going to get Your prospects local operator, that's definitely the fair statement though, just given where your asset base is? Okay. Yes. As things start to improve, I'm just wondering if there's Much thought given to how your marketing message will change coming out of the pandemic in terms of you Trying to start to rebuild the occupancy in the homes like or do you think the messaging and everything will be pretty consistent with where it was before?
Well, I think the messaging that we've been putting out there is the one of testimonials from our residents, Families and employees, and I think fundamentally, I believe that these are the best voices To explain the experience that people have in the retirement living and particularly at Chartwell, and we have Thousands of those in our portfolio across the country and it's the amplification of these voices is what's important. We've been For a while now that it's a strange situation that we operate in where people who do not live with us and whole bunch of studies show that Prefer to stay in Age at Home. Those who do move and live with us tell us things like these are about 5 years of my life And I wish I moved here 5 years earlier. This is my home, and I will never move out of here. By the way, that last comment is by a person who won $4,500,000 in Lottery.
And so it's those voices that are true authentic voices that speak on behalf of those who experience Chartwell That need to be heard out there for those who are thinking or considering retirement living. And that's our goal to amplify those voices and make them heard.
And I wonder when you're thinking about like planning sort of how the recovery evolves, like how Do you guys are you working on like sort of a time frame of when you think you'll start to step up that effort?
Yes. We have mapped out our marketing plan throughout the year and there is a Program and messaging is out there today and this will continue throughout the year.
Okay. And then you'd made reference To some of the findings from the Long Term Care Commission report, in particular, you're talking about achieving the 70% full time employee ratio, Not having had to schedule labor for thousands of employees in a 20 fourseven operation before myself, can you just explain to me why You would need to move to 12 hour shifts.
Well, right today, because of the 20 fourseven nature of the business, just Think about one shift. Let's take one 8 hour shift and you have 5 days a week that would be full time equivalent, at least 2 days a week for somebody else to work. So by just pure that definition, you have to have 50% of your workforce being part time, right? You have one time Person for 5 days a week and part time person for 2 days a week. In addition to that, if either a full time person or a part time person takes A day off, vacation, sick leave, you have to have somebody else sailing into the ship.
So there is another component of the workforce, what we call casual, So for every full time employee, you effectively have 1 part time employee plus Some people who come as a casual. So that's why you have more than 50% of our workforce today being in part time and casual Structure. So to change that requires some changes in how the scheduling is done in 12 hour shift. You can achieve high percentage of full time employment if you move to 12 hour shifts. The issue with the 12 hour shifts is that The work particularly in the long term care that our Tiring.
Is physical and hard and average age of our employees In this sector is close to 50 years old. So it's not easy for them to do 12 hour shifts. And historically, it was It's not really accepted through with the unions. And so that's why I'm saying the collaboration and work of operators, unions and employees together would be required To increase the full time staffing complement. Having said all of that, at Chartwell, we already particularly on the retirement side, we have a project that is ongoing That is looking at various ways and our abilities to increase full time jobs in our sector.
Some of the myths that's been propagated throughout This pandemic was that it's cheaper to employ part time and casual employees and that's why we have this high percentage of these people. That is not true. In Part time and casual employees because of higher turnover in these jobs is more expensive to us because we have to invest in recruitment. And then when people turn over, you have to bring new people in and recruit and onboard them. That requires time and money.
So we much prefer to have more full time employment. It's just not as easy to execute as some headlines would suggest.
Got it. And then Finally, just your comments with respect to splitting sort of the physical capital from the delivery of care in long term care over time. If I'm sort of reading between the lines of your statement, it seems to me first that you really think like the first priority here is like Increase the funding and then to provide more care and then let's Sort of see how it goes from there. Like it feels like you're really saying like that's kind of priority number 1 for us.
Well, I don't think it's just me who's saying that's Priority number 1, all these reports are saying the same thing. That's the priority number 1. We all said that this sector has been neglected for decades By various governments where the funding never kept up with the inflationary increases and more important with increases in And acuity of the people that were asked to look after in the sector. And so for sure, you need increased investments in care. And then that we'll see how that fixes the system.
I'm pretty confident that with more investments, We will have more staff. We will have more expertise. We will have better experience for our residents no matter what side of profit or not profit or municipal home You're in. And Charle specifically, as I mentioned in my remarks, we have for years now quality indicators that are Way above the provincial averages and we've been receiving praise and recognition by various public health And partners for our response to this pandemic and the work that we've done, our long term care team has done in these homes. So for sure, Funding will improve outcomes, improve resident experience, and then whatever decisions come after that will be should be Done on that basis.
Okay. That's helpful, Vlad. Thank you.
Thank you.
Thank you. The next question is from Pammi Bir from RBC Capital Markets. Please go ahead. Your line is open.
Thanks and good morning. Maybe just sticking with that line of thinking on the commission's report, Just considering, I guess, all the announcement the government has already made with respect to funding For the projects or for the rebuild, I mean, what are your thoughts on perhaps the prospects of, I suppose, Even I guess adopting that recommendation on the separation of care.
It remains to be seen. For sure, if there is any kind of indication, I From the government or anybody else that this is being considered, that will certainly put a significant pause in these redevelopment efforts because without certainty, I mean, as You're all investment people. If you don't have certainty, it's very hard to figure out how to invest capital in new initiatives. So I am pretty I hope and I think I'm confident that these projects that's been announced We'll continue in the format that's been promised to people who started these investments, and we will continue with the redevelopment program. I The reality is this is the first time in decades that the government came up with a program that is actually viable not for every project, but for many.
And you see already so many approvals been given to the project that I expect will proceed. As you know, Charrole is in construction of one property in Ajax. It's in progress. We also received approvals for 4 other projects that we are proceeding with. And so my expectation is that The government will stand by their promise to allow these redevelopments and bringing new capacity that is much needed into the system.
Got it. Yes, I know that makes sense certainly for the projects that are already underway. Just maybe switching gears, Looking at the occupancy again in April May and the slower pace of erosion, was that driven by particular markets Or was it more so broad based across the portfolio?
We're seeing uptick And leading indicators across the portfolio, but where things are needs based, I would say it's picking up faster. So I don't think it's by jurisdiction, it's by need.
Okay. And then just looking at long term care again for a minute, The pandemic related expenses were pretty heavy in Q1. Just any thoughts as Recoveries of any of those amounts in the subsequent quarters and or was there anything you've received to date in Q2?
Nothing in Q2 is yes. We certainly are cautiously optimistic. These are the incremental expenses For additional infection control and prevention and additional staffing. And so that is intended to Funded by the government and sometime in Q2, Q3, while they work through the allocations of how that will be managed. We are cautiously optimistic about that.
Got it. And just coming back to the comments around, I guess, Assisting hospitals with providing additional capacity. I'm just curious, would there be any positive impact on the retirement portfolio We're even, I guess, the long term care with that program.
I guess, I see that they would More focused, we're seeing that for sure in terms of moving people to long term care. So that will then If those people are appropriate, they'll come to us and that will help us get to our back to our 97%. So that would be positive. On the retirement side, it would be on a one off basis that we would have to assess whether that's something that We could do, but I don't see it as being broad based as a way to address occupancy.
Got it. Just maybe one last one. We have seen some transactions pick up in the private market in the retirement space. Just actually, I guess, recently, of course, you've done a few transactions with your partners as well. Are you seeing any changes in the overall investment appetite From whether it's private or other public players, just given the progress now that we've seen in vaccines and again, the Perhaps the pent up demand that should start to surface, let's think towards the back half of the year.
Yes. So we are obviously keeping our eye on what's going on in the market. We haven't really observed much change either in Transaction volume or values, but we continue to stay out there with our eyes open.
Okay. Thanks very much. I will turn it back.
Thank
you. There are no further questions registered at this time. I will now turn the call back to Mr. Volodarsky.
Thank you, Paul. This wraps up Today's conference call, thank you very much for joining us. Our virtual AGM will be held on Thursday, May 20, at 4:30 p. We're looking forward to you joining us at our AGM. Further details will be posted on our website today.
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