Good morning, ladies and gentlemen. Welcome to the Chartwell Retirement Residences Q2 2020 financial results conference call. Following the formal comments, we will hold a question and answer session. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Vlad Volodarski , Chief Executive Officer of Chartwell Retirement Residences. Please go ahead.
Thank you, Justina. Good morning, and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website at chartwell.com under the investor relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer, Sheri Harris, Chief Financial Officer, and Jonathan Boulakia, 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&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 disclosure in our Q2 2020 MD&A under the heading Forward-Looking Information and COVID-19 Risk for discussion of risks and uncertainties introduced by the COVID-19 pandemic. These documents can be found on our website or at sedar.com.
Cultures are built over time and are tested in crisis. This pandemic certainly tested ours, and I cannot be more proud of how our culture manifested itself. The commitment and dedication of our employees in our residences and corporate offices has been nothing but extraordinary. Chartwell is lucky to have them, and I am grateful to each and every one of them for the exceptional work they have been doing in these challenging times. Service excellence is one of our company's values. We strive to deliver an exceptional resident experience that is personalized, memorable, and feels like home, where families and friends feel welcome and respected. This is our customer experience vision statement. I believe that direct customer feedback is crucial in understanding areas for improvement in delivering on this customer experience vision. It is arguably even more important in times of crisis like we're experiencing now.
A month ago, we launched an extensive program called Listening to Serve You Better, which includes, in addition to internal reviews of our pandemic management protocols and procedures, online surveys of our residents, families, and employees, and virtual sessions with families and residents hosted by me. This program is intended to solicit timely and direct feedback from our residents, families, and staff about their experiences during the past five months and to get their input on things we could do better, both in operating our residences going forward and in preparing for a potential wave 2 of this pandemic. We expect to receive these survey results in September. I've now completed 12 virtual sessions with our residents and families across the country.
Without exception, the participants praised the outstanding work of our employees that they have been doing in keeping our residents safe, well cared for, and even entertained despite the tremendous challenges posed by restrictions. The participants also recognized decisiveness and speed of our response in the early days of pandemic, from the quick implementation of screening and enhanced infection control protocols to directing our staff to wear masks prior to it being mandated by health authorities to regular and informative communications being delivered to residents and their families. I've also received a number of interesting suggestions, particularly in the areas of dining and lifestyle and program services, which could make our residents' and families' experience even better. Our operating teams are reviewing these suggestions, and I have no doubts that some of them will be implemented at our residences.
We're proud to be one of the founding members of the CaRES Fund, established to provide emergency relief support to workers in Canadian retirement and long-term care sectors and their families. Chartwell contributed CAD 725,000 to this fund, including a CAD 225,000 contribution by our board members. To date, the fund, run by a group of volunteers, including many Chartwell employees, disbursed CAD 1.8 million to over 400 deserving sector employees. Our Q2 and year-to-date 2020 results have been significantly impacted by the COVID-19 pandemic, both in occupancy declines and additional expenses incurred in order to keep our residents and staff safe.
As provincial economies begin to gradually open and numerous restrictions are being lifted, we are resuming our leasing activities, including virtual and traditional personalized tours for our prospective residents. In July 2020, same-property retirement leasing activity represented 70% of July 2019, and our occupancy decline continued to slow down.
July 2020 occupancy in our same-property retirement portfolio declined 0.6 percentage points, a marked improvement from May and June declines of 1.2 and 1.1 percentage points respectively. Our financial position remains strong. Our liquidity as of August 6, 2020, was CAD 408.8 million, including CAD 82.8 million of cash and cash equivalents and CAD 326 million of available borrowing capacity on our credit facilities. We know this pandemic is not over yet. The uncertainty regarding pace of occupancy recovery and potential for wave two restrictions remain high. I look to the future with optimism. Long-term demographic trends are favorable. Our teams have tremendous depth of experience, which now includes operating through a pandemic, a resolve to succeed, and dedication to our purpose of making people's lives better. Our culture is exceptional, our brand is strong and getting stronger. Our strategy is clear.
Chartwell is well positioned to weather this storm and succeed in creating lasting value to all our stakeholders. I am going to turn the call over to Karen to provide a more detailed operational update.
Thank you, Vlad. Turning to slide five, I'm pleased to report that we only have one home in outbreak with one confirmed case of COVID-19. Chartwell's Operations Critical Incident Command continues to meet twice per day to assist our residences to interpret and effectively implement new and evolving directives and guidelines in all four provinces where we operate. Our most recent efforts have been to allow our residences to open to visitors and begin to bring back some of the services that are now allowed in our homes, including, depending on the province or municipality, hairdressing, fitness rooms, group activities, et cetera, with strict physical distancing as well as additional infection prevention and control measures in place. These include mandatory masking for staff in all Chartwell residences, enhanced cleaning of high-touch surface areas, vigilant hand hygiene practices, and in Ontario, testing of staff for COVID-19 every two weeks.
We've also been developing, over the past number of months, new strategies for sales and marketing in light of the pandemic. I'm pleased to say we are now able to put these in place across our retirement home portfolio, as we have been able to begin in-person personalized tours, again, with IPAC protocols in place, in all of our residences except the 13 properties in Alberta, where we are still restricted to virtual tours. The combination of a new virtual selling kit that includes, for example, e-collateral for each property and the tools for sales personnel to create both pre-recorded and live virtual tours, along with the ability for prospects and their loved ones to come in for tours in most of our residences, is helping us to begin to take advantage of the potential pent-up demand for retirement living.
We've also created a comprehensive Transition Together program with an easy-to-follow schedule to successfully transition new residents during the mandatory 14-day isolation period, that is a requirement in Ontario and Western Canada. Having a focus for these new residents each day, even though they are in their suite, is a definite selling feature and differentiator. With respect to marketing, we launched a new multimedia campaign on August third called Life is Better, Together. The campaign focuses on the importance of the social setting that Chartwell offers to its residents from a peer-to-peer perspective, distinguishing healthy and active seniors in retirement residences from the recent media portrayal of frail LTC residents, and overcoming the objections of those who would hesitate to make the decision or delay their decision to choose retirement living due to COVID-19. This campaign is running on TV, social media, print ads, direct mail, and radio.
Turning to slide six, Chartwell has also been very involved in our provincial associations, which are working with government on responding to the pandemic. Recently, there has been a great deal of focus on long-term care, particularly in Ontario, where the provincial government has now announced the members of the commission into long-term care, as well as their terms of reference. Ontario long-term care represents approximately 10% of Chartwell's business. We have significant expertise in this sector. Prior to joining Chartwell, I spent 21 years at the Ontario Long Term Care Association, including serving as its CEO for six years. Sheri Harris, our CFO, has over 20 years of industry experience and has served on the OLTCA board of directors. Fraser Wilson, our VP of long-term care, has been in the sector since 1992, including running his family business of 16 LTC residences for 15 years.
Our former CEO and current board member, Brent Binions, has over 40 years experience in the sector. To say the least, we remain active, working with OLTCA, governments, and other sector partners to improve the system. We are pleased with the recent Ontario government's announcements with regard to long-term care, which include a revised capital program that is an improvement to the previous program in terms of the capital funding subsidy, variable amounts based on geography, and funding some upfront costs. We are in the process of analyzing our various redevelopment projects based on this information. There's also a regular government funding increase for April 1st of 1.5%, as well as an increase to the residents' base accommodation rate of 1.9%, which will be effective January 1st, 2021.
It's a delay of six months from the typical July 1st increase date, but there's been a guarantee from the government that they will make up any revenue lost for this period. The introduction of a minor capital fund beginning on April 1st, 2021, that will replace our Structural Compliance Premium, which will continue until March 31st, 2021. Turning to slide seven, our other focus has been to learn from all that has occurred over the past five months and ensure that we continue to be prepared as the pandemic evolves. As Vlad mentioned, this included his Listening to Serve You Better virtual town hall sessions.
This qualitative data will be combined with quantitative data from an online survey of our residents, their loved ones, and our staff on our response to the pandemic. We are also undertaking a communication audit of all the information, memos, posters, letters, et cetera, provided to our residents, their families, and our management teams and frontline employees so that we can, again, continuously improve. We're also working to ensure that we have sufficient personal protective equipment, as well as reviewing our housekeeping policies and procedures and our IPAC infection prevention and control material and training. In addition, our corporate office support teams are now back in our properties with a focus on auditing the residences for compliance with COVID requirements and assisting them to get back on track with regard to sales.
Due to the size of the corporate support team, we can limit the number of residences that each person goes to per week and work as a team to cover all of the properties in a few short weeks. We've also kept in place our enhanced recruitment support for our residences to ensure that they continue to have sufficient frontline staff and to reduce agency costs. I'm extremely proud of how our frontline staff, managers, GMs, administrators, and corporate support team members have worked together throughout the pandemic with a focus on resident safety and open and transparent communication with their loved ones. You certainly cannot create a positive culture during a crisis, but you can absolutely take advantage of one that already exists. I believe that our focus and investments in the Chartwell experience has served us well so far and will continue to do so going forward.
I'd now like to turn it over to Sheri Harris, our Chief Financial Officer, to talk about the financial results.
Thank you, Karen. As shown on slide eight, in Q2 2020, our net loss was CAD 1.9 million compared to a net loss of CAD 1.6 million in Q2 2019. For Q2 2020, FFO was CAD 39 million, or CAD 0.18 per unit, compared to CAD 47.1 million or CAD 0.22 per unit in Q2 2019. Our same property adjusted NOI decreased by CAD 5.8 million, or 9.7%, in Q2 2020. Same property occupancy was 85.6% in Q2 2020, compared to 89.9% in Q2 2019. In our retirement residences, same property occupancy declined to 84.5% in Q2 2020, compared to 88.5% in Q2 2019. Permanent move-ins declined 65% in that time period. We also saw a decrease in move-outs of 23% compared to Q2 2019. Through Q2, we saw increases each month over the previous month in move-in activity, along with a smaller increase in move-out activity.
In addition to the impact of lower occupancies on our Q2 results, we have made investments in initiatives to enhance resident and staff safety. As a result, our pandemic-related expenses exceeded announced government funding by CAD 7 million in Q2 2020. The majority of our pandemic expenses are for additional staff to provide screening, enhanced cleaning and disinfection, to expand dining service hours to facilitate physical distancing, and in many of our retirement residences for additional care where families were not able to provide assistance in person or where governments have reduced home care services. We also invested additional funds to recognize the extraordinary efforts of our frontline and management staff who go above and beyond to care for our residents.
We are continuing to invest in PPE and will continue to consume more cleaning and housekeeping supplies, along with incurring costs for disposables for meal services where residences are in outbreak. In addition, as a result of government single site directives, we offered additional hours for our part-time employees to allow them to maintain their earnings during the period of time while they are not permitted to work at another retirement residence or long-term care home. We also reduced marketing and repairs and maintenance expenses in our residences while access was restricted. We saw contributions from our acquisitions and developments, and this partially offset our net pandemic expenses. Turning to slide nine, I'd like to discuss our same property operating platform results. In Ontario retirement, our occupancy was 79.1% compared to 84.4% in Q2 2019.
NOI decreased CAD 3.4 million or 9.2% due to lower occupancies, COVID-19 related expenses, which were partially offset by funding, higher property tax expense, staffing costs, and office expenses, which were partially offset by rental rate increases in line with competitive market conditions and lower marketing expenses. In Western Canada, our occupancy was 91.2% compared to 94.7% in Q2 2019. NOI decreased CAD 1.3 million or 8.8% due to lower occupancies, COVID-19 related expenses, higher property tax, staffing costs, and office expenses, which were partially offset by rental rate increases in line with competitive market conditions, funding which provided a small offset to the additional expenses related to COVID-19, and lower marketing expenses. In Quebec, our occupancy was 88.8% compared to 91.3% in Q2 2019. NOI for this period decreased CAD 0.6 million or 4%.
Lower occupancies, higher staffing costs and food expenses, COVID-19 related expenses net of funding were partially offset by rental rate increases in line with market conditions and lower utilities and marketing expenses. In long-term care, NOI decreased CAD 1.9 million or 25.1% due to COVID-19 expenses and higher staffing costs. Occupancy was 92.6% compared to 98.7% in Q2 2019. While occupancy-based funding in our Ontario long-term care residences is protected until December 31st, 2020, funding announcements to date are not sufficient to cover the cost of long-term care homes, investments in protecting our residents, and reducing the spread of COVID-19. Turning to slide 10, I'd like to provide you with a more current update on our same property retirement residence occupancy.
April was 85.7%, May 84.5%, June 83.4%, and July 82.8%. As Vlad noted, the pace of decline in occupancy has steadily slowed since the onset of the pandemic in mid-March.
Move-in activity has steadily increased each month. In July, permanent move-ins were approximately 65% of previous year volumes, and move-out activity was approximately 80% of July 2019 volumes. It remains too early in the reopening process to identify trends related to pent-up demand, particularly as July and August is typically lower in volume in initial contract generation due to seasonality. We collected substantially all of our rents for July and August, consistent with the past experience. As noted, we continue our investments to protect our residents and staff and prevent the spread of COVID-19. With our strong management operating platform with benefits of scale that Karen has touched on, we were able to quickly mobilize to ensure that we had the necessary staff and equipment to reduce the spread of COVID-19.
We do anticipate costs decreasing as we move to a more steady state, albeit while we are still on high alert for a potential second wave, it will be gradual. We are also beginning to look to rationalize and improve schedules where and while single site staffing restrictions remain in place. In addition, where we are providing additional services previously provided by families or by home care that has not been available, we will work with our residents to assess additional service revenue opportunities on a go-forward basis. We also continue to advocate for the government to fund the home care services that we have replaced out of necessity to ensure that our residents are cared for appropriately.
As you can see on slide 11, at June 30th, 2020, our liquidity amounted to CAD 346.1 million, which included CAD 48.9 million of cash and cash equivalents and CAD 297.3 million of available borrowing capacity on our credit facilities. In addition, our share of cash and cash equivalents held in our equity accounted for JVs was CAD 7.5 million. At June 30th, 2020, our unencumbered assets had a value of CAD 957.3 million. Our mortgage maturities remain well staggered, with an average term to maturity of 6.9 years at June 30th, 2020. Our interest coverage ratio was 3.1 at June 30th, 2020. Our debt to gross book value, calculated using the historical cost of our assets, was 52.7% at June 30th, 2020.
Net debt to adjusted EBITDA ratio was 8.7 times. Consistent with our business strategy to build and purchase high-quality, state-of-the-art new properties, our portfolio includes several new properties in lease-up.
In Q2 2020, five newly developed properties, including one we acquired, with an aggregate gross book value of CAD 274.5 million and weighted average occupancy of 42.6%, generated adjusted NOI of CAD 800,000 , compared to their expected stabilized occupancy of 96% and stabilized estimated annual adjusted NOI at share of CAD 20.3 million. Our net debt to adjusted EBITDA metric will be higher while these properties lease up. Turning to slide 12, we have CAD 68.7 million of mortgage maturities remaining in 2020, of which CAD 26.3 million are CMHC insured, and also includes CAD 40.7 million related to mortgages on two properties that we acquired from Batimo Inc in the first half of 2020.
We do expect to replace these with CMHC debt later this year. New property specific financings in Q2 2020 amounted to CAD 68.5 million, including a CMHC-insured mortgage of CAD 17.2 million with a 2.04% interest rate and a 10-year term to maturity, a conventional mortgage of CAD 45.8 million with a 3.4% interest rate and a 1.9-year term to maturity, and construction financing for two properties under development of CAD 5.5 million, with a weighted average interest rate of 1.71% and weighted average term to maturity of 2.5 years. On July 31st, 2020, we refinanced two conventional mortgages with new CMHC-insured mortgages for net proceeds of CAD 12 million and financed one 10-year CMHC-insured mortgage of CAD 17.9 million on a property which was previously unencumbered.
The weighted average interest rate of these three new mortgages is 1.85%. We have CAD 243.3 million of mortgage maturities in 2021, of which CAD 37.5 million are CMHC insured.
We have strong lending relationships and expect to refinance our mortgage maturities as they come due, and discussions in respect of our 2021 maturities are well underway. Projects under construction are budgeted to require an additional CAD 68.9 million to complete. Chartwell Le Teasdale II has achieved stabilized occupancy as defined in our agreements with Batimo. We expect to complete the acquisition of an 85% ownership interest in this project for a purchase price of approximately CAD 54.4 million in Q4 2020, and anticipate assuming the related construction financing of CAD 37.3 million. In normal circumstances, we regularly reinvest capital in our owned property portfolio, with the goal of growing our property NOI and protecting and maintaining our properties. Due to strict restrictions allowing only essential visitors in our residences, beginning in late March 2020, only emergency capital works were undertaken.
With the easing of restrictions on visitors in all provinces, we have now begun to allow contractors into our buildings with strict requirements on infection control practices. As Vlad mentioned, at August 6, 2020, our liquidity is strong, amounting to CAD 408.8 million, which included CAD 82.8 million of cash and cash equivalents and CAD 326 million of available borrowing capacity on our credit facilities. In addition, Chartwell's share of cash and cash equivalents held in its equity accounted for JVs was CAD 14.4 million, and our unencumbered asset pool is CAD 927.9 million at August 6th, 2020. We expect to be able to meet all of our obligations as they come due, primarily utilizing cash flow generated from our operations, property-specific mortgages, and our secured and unsecured credit facilities if needed. The COVID-19 pandemic has introduced significant uncertainties. We continue to monitor the situation closely.
I will now turn the call back to Vlad to wrap up.
Thank you, Sheri. We will now be pleased to answer any questions anybody might have. I will turn it over to Justina to open the line, please.
Thank you. We will now take questions from the telephone lines. If you have a question and using a speakerphone, please mute your handset before making your selection. If you have a question, please press star one on your telephone keypad. If at any time you wish to cancel your question, please press the pound sign. Please press star one at this time if you have a question. There will be a brief pause for the participants register. Thank you for your patience. The first question is from Brendon Abrams from Canaccord Genuity. Please go ahead.
Hi, good morning.
Morning.
It looks like there was about CAD 6.4 million in pandemic-related expenses incurred during the quarter. Just wondering, going forward in terms of modeling purposes, what would you expect the increased expenses to be for the next few quarters?
Thanks, Brendon. We would look at our long-term care portfolio, which you would see same property NOI decreased compared to Q2 2019 of about CAD 1.9 million. We're optimistic that the governments will fund our additional expenses in our long-term care operations. We're hopeful that that's a timing adjustment. We would've provided direction in our monthly business updates that the majority of our expenses had been funded up until the end of May. In June, you would see those numbers coming through in our quarterly results. About CAD 4.5 million would be the monthly run rate of expenditures that we expect. As I said, we will continue to be prepared for a second wave, but we should be able to rationalize staffing in light of single site restrictions. We have more experience now. We should be able to gradually bring those down.
Okay. No, that's very helpful. Maybe just on the financing front, with some uncertainty in the credit markets. As it relates to CMHC financing, I think it's about 70% of your current mortgages outstanding today. Would you expect CMHC-insured mortgages to increase as a percentage of your total mortgages or even debt outstanding? Then secondly on that, how have CMHC values compared recently to maybe the old values or what you were using previously?
In terms of CMHC will continue to be our very important source of financing, and we'll continue to access that program as much as we possibly can for the stabilized properties. In terms of the percentage of mortgages that will constitute across our overall portfolio, over time, it will probably grow. In the short term, it's not. We have quite a few non-CMHC insured mortgages that are still going to be outstanding for a number of years. Those will be converted at the time when they mature. Historically, we've been around 70% of total mortgages being CMHC insured. We'll probably remain around that overall balance going forward. In terms of the valuations, that really hasn't changed significantly.
Even in the past, we were never getting full value in terms of the leverage that we were getting from CMHC, and that continues to be the case pretty consistently now.
That's helpful. Just last question from me before I turn it over. Occupancy in the retirement segment has declined. As you noted, the pace of the decline has slowed as well. Just curious, what you're seeing the last few weeks in terms of resident interest, phone calls, leads, or otherwise for prospective residents looking to move into one of your homes. Where it would compare to maybe the same period last month, in terms of a percentage basis decrease.
Yeah. It really is such early days because we've opened up tours just in the last short while. We're pretty pleased that we have all these new processes in place to have virtual tours as well, and much more availability online to look at our homes. No. It's just, I would tell you, almost too early to tell. I would say that the RLCs, our sales folks are sort of well-positioned as we've opened back up. We're going to watch that in the coming weeks.
Okay. That's great. I'll turn it over. Thank you.
Thank you. Next question is from Himanshu Gupta from Scotiabank. Please go ahead.
Sure. Thank you, and good morning. A follow-up on the unfunded pandemic-related expenses. I think, you mentioned CAD 1.9 million related to the long-term care, and you're optimistic that government will fund. Wondering, is that a guaranteed amount, or is it still at the discretion of the government? For the remaining CAD 4.5 million on retirement homes, what is the breakdown? Is it more PPE and one-time expenses, or is it going to be more permanent in nature?
Sure. Thanks. Good morning, Himanshu. In terms of, is it a guaranteed amount? No. We are continuing to advocate through the Ontario Long-Term Care Association. The government funding announced so far for long-term care is a pot of CAD 88 million that relates to pandemic expenses, of which they've issued funding announcements for CAD 78 million. There's CAD 10 million remaining in that. They've also announced CAD 130 million that was originally allocated for new capacity and surge capacity from hospitals. We continue to work with them. They are continuing to understand what the expenses are that are incurred by long-term care home operators. We are optimistic that that will be funded on the go forward. In our retirement home residences, the vast majority of the expenses relate to staffing. As we mentioned, we are providing active screening in every residence. There is staff time that goes with that.
We wanted to ensure that we maintained physical distancing in our dining rooms, so we have significantly extended dining hours, and that increases the staff service costs. We are also putting additional hours into housekeeping and cleaning. Single site, offering full-time hours in many cases to our part-time employees also has costs associated with it, and we can optimize our schedules to a reasonable approach to maintain staff levels in advance of a potential second wave. We do think that second wave, based on what we know now, is we've got the experience to know how to handle things and don't feel that we are as anxious about what those staff levels are on the go forward. It's more of a known commodity. In the early days, many staff were frightened, and we wanted to make sure we were covered.
Thank you. That's very helpful. On the staffing topic, what kind of staffing shortages are you facing now versus a few months back? As other businesses open up, do you see any staff turnover now? Staff could be going to better paying jobs or outside of healthcare, which might be perceived to be less risky there.
I think we've done very well through this. I'm not suggesting it hasn't been difficult, particularly in March and April, but our recruitment campaign was very successful. We've hired 1,500 people during this time. I think the other thing that is going to change this quite dramatically, two things. School is coming back. People who might have chosen to be at home during this period, I think will have more of an opportunity to come back because of the issues with childcare and also the CERB is ending. I think all of those will play to our favor in terms of allowing us to continue to recruit, and also reduce our agency staff.
Got it. On the move-outs, they're still down, I think around 20% in July. Why is that? Is it because long-term care homes are accepting residents on a restricted basis? Or hospitals are asking or keeping more reserved capacity?
Yeah. The long-term care homes in Ontario, one of the issues that certainly came to light through this was that it's not great to have three and four-bed wards with shared washrooms during an outbreak. The homes that have those through attrition are reducing to only having two in those ward rooms, that's taking somewhere between 4,000 and 5,000 beds out of play in Ontario. The waiting list was long to begin with, and I think that's playing into it for sure.
Got it. Maybe just one final question from me in terms of cap rate movements. Obviously there has not been much transactions out there. Looks like you sold three properties for CAD 30 million. What was the cap rate or pricing achieved there? In general, do you see evidence that buyers' underwriting assumptions have changed with respect to stabilized occupancy?
Sure. On the three properties that we've entered into agreement to sell, we would have very low cap rates on in-place income. One of the properties isn't fully leased up, so our cap rate on that sale would be quite low. These are non-core assets that we're selling and we're continuing to look at other non-core assets that we might want to dispose of. The cap rates that we're seeing are still low.
Okay. Thank you, guys. Thanks for the color. I'll jump in back.
Thank you. Next question is from Jonathan Kelcher from TD Securities. Please go ahead.
Thanks. Good morning. First question, just on your same property NOI, the breakdown by region. Quebec seems to have really outperformed both Ontario and Western Canada. Can you maybe give us a little color as to why?
We were still able to take admissions during the pandemic. We didn't take many, for sure. Because the sales cycle in Quebec is longer, right? We've talked about that before, how people in Ontario and the West come to us sometimes within the month or around a month later. In Quebec, it's a three-month sales cycle, typically. During the period of the pandemic, we would have had people who had already sold their house, who were still looking to come into our homes. You just saw more of that in Quebec than you would have the rest of the portfolio.
In addition, benefit from some reduced utility costs there. There were some additional savings on that.
Okay. It wasn't the government funding it better than, say, Ontario or the West?
I think we're looking for additional funding, in particular from Ontario and Quebec for the expenses that we've incurred. All of the governments have funded the majority of the top-up pay to date. It's the additional cost for screening, supplies, disposables, staff time around cleaning, those types of things that are unfunded. Both Quebec, Ontario, B.C. and Alberta, we're short in each of those provinces. I wouldn't say Ontario or Quebec did any better than the other. We are incurring additional costs in each of those jurisdictions.
Okay. Switching over to LTC. It's good that there's government funding for occupancy to the end of the year. Have the LTC facilities started to fill back up again?
We're taking admissions. As I said, there's that attrition issue in the older homes. We don't have a lot of those. There are so many less outbreaks than there were, so we are starting to see that. Yeah.
Right. Do you think you'll get back to the 97 % by the end of the year, excluding the ward beds that you can't use anymore?
Yes.
Okay. Now, have you guys talked to any hospitals or the government about using excess retirement space for alternate level of care patients?
To some extent. There was a lot of talk about that in the early days of the pandemic, and then that's not actually how things went. I almost feel like right now there's more focus on how to make sure that we're keeping people safe in long-term care, and in retirement, although the narrative played out very differently in retirement, than there is around surge capacity. We would only be interested in that in very few homes, in really specific circumstances.
Okay. Just lastly, and kind of related to that, the LTC refilling, would it be fair to assume that that's mostly coming from hospitals and not yet coming from retirement homes?
Yeah. Yes, you're correct. Because if you're a critical admission, you're higher on the list. Often people in retirement aren't considered critical because they're actually getting care from us or our competitors. Yes, I think that is what you're going to see. As a result, that could assist with our occupancy and also assist with us getting some additional care revenue.
Okay, thanks. I'll turn it back.
Thank you. Next question is from Chris Couprie from CIBC. Please go ahead.
Good morning. Just wanted to clarify something on the pandemic-related expenses. In the MD&A, you call out CAD 1.8 million of additional compensation. Is that something that is expected to be repeated in subsequent quarters?
No, we don't think so, Chris. Good morning. Certainly, there was top-up pay put in place for frontline staff that was funded, the majority, by governments. We really felt our management teams in our residences just went above and beyond through the early days of the pandemic, and we just wanted to make sure that we were recognizing their efforts as well.
Got it. Kind of dovetailing on Jonathan's questions about same-property experience by geography. I don't know if it's just anything more than just chance, but the same-property occupancy change in Ontario was quite a bit above the other geographies. Any thoughts on that?
Chris, Karen sort of talked about Quebec, where it's a 90-day sales cycle. Through the early part of the pandemic, many people, as she said, would've sold their homes, so that assisted in supporting occupancy levels in Quebec. In our western platform, there's also more funded beds that sit within our western platform, occupancies would have remained a bit higher, again, in readmission there. Ontario areas were harder hit by the pandemic. Slightly shorter length of stay there, where turnover is a bit higher, is really driving more of that.
Okay, got it. I know you guys have indicated that it's still kind of early days on trying to assess the pent-up demand recovery. If you do look at your initial contacts or your leading indicators, where they are versus where they would be a year ago, is there any color you could provide us on that front?
Certainly. We have just reopened our marketing campaigns as well. As we reopened the residences to personalized tours, we turned on our digital campaigns, and you would've seen that we just launched the new campaign on August 3rd. For July, we were at 70% of our leases that we would've had in the previous year. I think that's good trending in terms of what we were seeing compared to June and compared to May and April, certainly. We are now, as of about July 7th, as I said, fully operational on all of our digital campaigns, and we do see increases that are a bit higher than that 70% in call volumes. One of the things that will change, we used to have fairly significant volumes from walk-in activity, about 15%. Now those walk-ins are phoning us. As I said, our call volumes are up.
It's not fully covering off the walk-ins that it also needs to replace, but we are getting close to prior year levels. You have to add in those walk-ins of 15%.
Right. Okay. Understood. Thanks for that. Just last question from me is, maybe a month and a half or so ago, there were reports that there could potentially be some type of legislation or something that gives good faith immunity to people to kind of prevent class action lawsuits from happening during COVID-19. Just wondering if you've heard any update on that, and whether or not long-term care could potentially fit into that immunity.
Sure. I can answer that. To be clear, BC has implemented this legislation, and it's not really immunity as much as it is protection from litigation where an operator has complied with public health requirements and where there's no gross negligence. We've seen that in BC. We are hopeful that that kind of legislation will come out in our remaining three jurisdictions. We haven't seen any real indication that that's the case, but I know that the provincial associations or the industry associations continue to push government to get that kind of legislation in place.
Thanks. I'll turn it back.
Thank you. Next question is from Pammi Bir from RBC Capital Markets. Please go ahead.
Thanks, and good morning. Just in terms of the new construction funding subsidy for long-term care, can you maybe just comment on what impact this might have on your redevelopment plans and if there's any color you can provide on the potential returns there?
Sure. It's going to have a positive impact on our redevelopment plans. It's important to note, I think, that out of our 30,000 beds, we only have 577 B and C LTC beds that require redevelopment. For those redevelopment plans, we are evaluating the impact of the new funding. There's a 17% upfront development grant on certain costs, and an increase to the baseline construction funding subsidy. It's going to help with our redevelopment, but we're still evaluating the full impact of that. It's also important to note that we do have plans for all of our redevelopments, and some of them are to redevelop on existing sites. That also helps.
Would some of those redevelopments also involve additions of retirement home suites on those sites?
It could, but it could also involve additions of actual new beds to sites, and that's how we can make this work, by adding some beds on some sites.
Right. Okay. Just lastly, the government also announced, I guess, an ability to perhaps accelerate the development of some of these beds. Is there perhaps a possibility for Chartwell to participate in that as well?
There is, and we're looking at that, and we have one long-term care redevelopment that is well into the works. The balance, yes, is something we're looking at.
Great. Thanks very much. I will turn it back.
Thank you. Next question is from Tal Woolley from National Bank Financial. Please go ahead.
Hi. Good morning, everybody.
Hi, Tal.
I just wanted to ask a few operations questions. You've been in this sort of state for a few months now. I'm sure you've gotten a lot of staff and resident feedback about how things are running. If you take that into account, what are some of the regulations or temporary rules or things that have been introduced during this period that you'd like to see changed, or maybe new rules put in place for the retirement business and the long-term care business that you think would be effective in helping to manage this situation?
One of the things, and we're working closely with our associations on this, is because the story of the outbreaks played out so differently in long-term care versus retirement, we're looking for them to understand that we don't have to have all of the exact same directives in both sectors. I think there's a lot of evidence to suggest that we could still be very safe, but we could also help with the overall system issues if our retirement homes could be more accessible during the next wave. We've learned so much in terms of masking and knowing that people can be asymptomatic, so we have to focus on testing. I think there's so many lessons learned that could allow us not to shut down the whole system like we did in the first round of this.
That part is very important, Tal, because while we were keeping people safe from COVID, actually, this isolation and restrictions have impact on their overall health. Because it's lasting for so long, it creates another challenges for people not being able to see their loved ones, not being able to have activities or normal meal programs in the homes. That part is extremely critical, where we need to have a better balance between the two.
I would say even in long-term care, there will be a lot of push to continue to allow essential visitors to come in, and that would be family members. There are some family members who come in every day and do things to help their loved one, not just visiting, but to actually help them. You're seeing just such a push for that, and that helps us overall as well. That would be another one I think that you're going to see.
Okay. Then, you're back into restarting your marketing programs, so you're talking to prospective residents. What's been sort of top of mind when they're reaching out to you now? Is there more of a concern about COVID-19 or is that sort of the top mind share thing, or has it not really changed that much, where the concerns are kind of the same thing? It's like, I want to be close to my family. I want to see the amenities. Do you just notice anything early on a change in the tone from prospective residents?
I think all of the regular things are still part of the mix. Location and referrals and whatnot, because we have some fabulous stories of what happened through this, that are some of the best testimonials I've ever seen for coming to retirement living. For sure, and I think it's just like society, it depends. Some people are very concerned about safety and others are kind of, "Okay, we've seen how this played out," and they just want to make sure that we have processes in place. That's definitely talked about through the sales process. Again, I just think we're in a really good position because I think we've learned a lot and we've done this very well.
Well, the other thing that people are concerned is with 14-day isolation that they have to go through when they move in. We've created the program for them that is very specific, that provides for activities during these 14 day of isolation that would keep them entertained and engaged and fed in their suite. Hopefully it will become differentiator for us during this period of time while this restriction's still in place.
We're also asking government not to have 14 days of isolation for retirement people, but instead to have what we call precautionary measures, so that they still get to go. They have to have a test before they can, and they still go to the dining room, and they wear masks more in the hallways, but they're not in their suites the whole time. I actually think government will be open to those kinds of discussions.
Okay. This is my last question on the staffing. You've obviously wanted to step up your recruitment. Has the pool of employees, like where they've come from, changed that much as a result of the change in the economy, or are you still kind of drawing from the same sources? I think early on you were talking about how restaurant and hospitality workers could be a natural fit. Have you seen that? Has that played out as you expected?
I think Karen spoke about CERB coming to an end and schools going back. I think that's when we'll really start to see that shift. Certainly, the pool has been very active in terms of, as Karen mentioned, we were successful in hiring 1,500 people. We think that will start to change through the fall.
Okay. Union negotiations, you sort of typically have a few of those every year. Has the tenor of those conversations changed as a result of this whole experience?
No. Obviously, you may have noticed that during this period of time, certain unions chose more public means to drive their agenda forward. That's unfortunate, of course. Generally, the negotiations are ongoing. Just as we always say, we always have a number of these going on at any given time, given the number of collective bargaining agreements and number of people that we employ. These conversations are going. In fact, we had quite a few settlements during this pandemic, of some contracts, this will continue in normal course.
Okay. Thanks very much, everybody. I appreciate it.
Thank you.
Thank you. Once again, please press star one on your telephone keypad if you have a question. The next question is from Troy MacLean, from BMO Capital Markets. Please go ahead.
Thank you. Good morning. It might be a little too early, but are there people coming into the retirement now, mostly people who need some level of care, like assisted living, who can no longer stay at home, or are you seeing interest from potential independent living residents as well?
It's always been the case, Troy, that people that come to us either need some kind of assistance with activities of daily living now or anticipate having these needs shortly. That has not changed.
Just my final question is, given it's a very competitive environment, are you seeing competitors lower rents to fight for occupancy or offer discounts? Is there anything happening there that could impact the rents that you can charge?
Yeah. There's always a little bit of that going on. I would tell you we're going to focus, and continue to sell the value of the Chartwell experience, and I'm very confident in that. We're not, at this point, considering some broad discounting. We'll have to watch, obviously, and see what happens with our leasing activity. If we felt we had to do anything, I would tell you it would be very targeted, to maybe a specific area.
Would there be more discounting by competitors going on right now than it was six months ago, or any commentary there?
There's always been discounting in certain areas, depending on how desperate people are to lease up their new developments or properties that suffered at the time. I can't tell whether there's more or less. Seems the same.
Yeah.
That's it for me. I'll turn it back. Thank you for the commentary.
Thank you. Once again, please press star one on your telephone keypad if you have a question. There are no further questions at this time. I would like to turn the meeting back to Mr. Volodarski.
Thank you, Justina, thank you everybody for joining us. If you have any other questions, please feel free to reach to us directly at any time. All the best to you all. Bye.
Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.