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. I would now like to turn the meeting over to Mr. Vlad Volodarsky, 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 charwell.com under the Investor Relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer Sherry Harris, Chief Financial Officer and Jonathan Balacki, Chief Investments 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 disclosure in our Q2 2020 MD and A under the heading Forward Looking Information and COVID-nineteen Risk for a discussion of risks and uncertainties introduced by the COVID-nineteen 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. Char will 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 and delivering on this customer experience with 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 5 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 have 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 supports to workers in Canadian retirement and long term care sectors and their families. Charwill contributed $725,000 to this fund, including a $225,000 contribution by our Board members. To date, the fund run by a group of volunteers, including many Chartwell employees, disbursed 1,800,000 to over 400 deserving sector employees. Our Q2 and year to date 20 results have been significantly impacted by the COVID-nineteen 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 June declines of 1.2 and 1.1 percentage points, respectively. Our financial position remains strong. Our liquidity as of August 6, 2020, was $408,800,000 including $82,800,000 of cash and cash equivalents and $326,000,000 of available borrowing capacity on our credit facilities. We know this pandemic is not over yet and the uncertainty regarding pace of occupancy recovery and potential for Wave 2 restrictions remain high.
Still, I look to the future with optimism. Long term demographic trends are favorable. Our teams had 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, and our strategy is clear. So Charcoal 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 5, I'm pleased to report that we only have one home in outbreak with one confirmed case of COVID-nineteen. 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, etcetera, with strict physical distancing as well as additional infection prevention and control measures in place. These include mandatory masking for staff Chartwell Residences, enhanced cleaning of high touch surface areas, vigilant hand hygiene practices, and in Ontario, testing of staff for COVID-nineteen every 2 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 August 3rd 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 and 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-nineteen. This campaign is running on TV, social media, print ads, direct mail and radio. Turning to Slide 6, 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 6 years. Sherry 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. So to say the least, we remain active working with OLTCA governments and other sector partners to improve the system. We are pleased with the current 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 1 of 1.5 percent as well as an increase to the residence base accommodation rate of 1.9%, which will be effective January 1, 2020.
It's a delay of 6 months from the typical July 1 increase date, but there has been a guarantee from the government that they will make up any revenue loss for this period. Also, the introduction of a minor capital funding minor capital fund beginning on April 1, 2021, that will replace our structural compliance premium, which will continue until March 31, 2021. Turning to Slide 7, our other focus has been to learn from all that has occurred over the past 5 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, etcetera, 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 Sherri Harris, our Chief Financial Officer, to talk about the financial results. Sherry?
Thank you, Karen.
As shown on Slide 8, in Q2 2020, our net loss was $1,900,000 compared to a net loss of $1,600,000 in Q2 2019. For Q2 2020, FFO was $39,000,000 or $0.18 per unit compared to $47,100,000 or $0.22 per unit in Q2 2019. Our same property adjusted NOI decreased by $5,800,000 or 9.7 percent in Q2 twenty twenty. Same property occupancy was 85.6 percent in Q2 2020 compared to 89.9 percent in Q2 twenty 19. In our retirement residences, same property occupancy declined to 84.5 percent in Q2 2020 compared to 88.5% in Q2 2019.
Permanent move ins declined 65% in that time period. However, 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. And as a result, our pandemic related expenses exceeded announced government funding by $7,000,000 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 directive, 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 pandemic expenses. Turning to Slide 9, 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 $3,400,000 or 9.2 percent due to lower occupancies, COVID 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 $1,300,000 or 8.8 percent due to lower occupancies, COVID-nineteen 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-nineteen and lower marketing expenses. In Quebec, our occupancy was 88.8% compared to 91.3% in Q2 2019. NOI for this period decreased $600,000 or 4%. Lower occupancies, higher staffing costs and food expenses, COVID-nineteen 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 $1,900,000 or 25.1 percent due to COVID-nineteen 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 31, 2020, funding announcements to date are not sufficient to cover the costs of long term care homes, investments in protecting our residents and reducing the spread of COVID-nineteen. 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% 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 percent 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 August is typically lower in volume in initial contact generation due to seasonality. We collected substantially all of our rents for July August, consistent with the past experience. As noted, we continue our investments to protect our residents and staff and prevent the spread of COVID-nineteen.
With our strong management operating necessary staff and equipment to reduce the spread of COVID-nineteen. 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 30, 2020, our liquidity amounted to $346,100,000 which included $48,900,000 of cash and cash equivalents and $297,300,000 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 7,500,000 At June 30, 2020, our unencumbered assets had a value of 957,300,000 dollars Our mortgage maturities remain well staggered with an average term to maturity of 6.9 years at June 30, 2020. Our interest coverage ratio was 3.1 at June 30, 2020. Our debt to gross book value calculated using the historical cost of our assets was 52.7 percent at June 30, 2020. Net debt to adjusted EBITDA ratio was 8.7x.
Consistent with our business strategy to build and purchase high quality state of the art new properties, our portfolio includes several new properties and lease up. In Q2 2020, 5 newly developed properties, including one we acquired, with an aggregate gross book value of $274,500,000 and weighted average occupancy of 42.6 percent generated adjusted NOI of $800,000 compared to their expected stabilized occupancy of 96% and stabilized estimated annual adjusted NOI at share of $20,300,000 Our net debt to adjusted EBITDA metric will be higher while these properties loose up. Turning to Slide 12, we have $68,700,000 of mortgage maturities remaining in 2020, of which $26,300,000 are CMHC insured and also includes $40,700,000 related to mortgages on properties that we acquired from Bassmo Inc. In the first half of twenty twenty. We do expect to replace these with CMHC debt later this year.
New property specific financings in Q2 2020 amounted to $68,500,000 including a CMHC insured mortgage of $17,200,000 with a 2.04 percent interest rate and a 10 year term to maturity, a conventional mortgage of $45,800,000 with a 3.4% interest rate and a 1.9 year term to maturity, and construction financing for 2 properties under development of $5,500,000 with a weighted average interest rate of 1.71% and weighted average term to maturity of 2.5 years. On July 31, 2020, we refinanced 2 conventional mortgages with new CMHC insured mortgages for net proceeds of 12,000,000 dollars and financed 1 10 year CMHC insured mortgage of 17,900,000 dollars on a property which was previously unencumbered. The weighted average interest rate of these 3 new mortgages is 1.85%. We have $243,300,000 of mortgage maturities in 2021, of which $37,500,000 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 $68,900,000 to complete. Chartwell with Teasdale 2 has achieved stabilized occupancy as defined in our agreements with Batimo. We expect to complete the acquisition of an 85 percent ownership interest in this project for a purchase price of approximately $54,400,000 in Q4 2020 and anticipate assuming the related construction financing of $37,300,000 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 408 $800,000 which included $82,800,000 of cash and cash equivalents and $326,000,000 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 $14,400,000 dollars and our unencumbered asset pool is $927,900,000 at August 6, 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-nineteen pandemic has introduced significant uncertainties and we continue to monitor the situation closely.
I will now turn the call back to Vlad to wrap up.
Thank you, Sherry. I will 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. And the first question is from Brandon Abrams from Canaccord Genuity. Please go ahead.
Hi, good morning. Good morning. It looks like there was about $6,400,000 in pandemic related expenses incurred during the quarter. Just wondering going forward in terms of modeling purposes, what would you expect kind of the increased expenses to be for the next few quarters?
Thanks, Brendan. We would look at our long term care portfolio, which you would see same property NOI decrease compared to Q2 2019 of about $1,900,000 And we're optimistic that the governments will fund our additional expenses in our long term care operations. So we're hopeful that that's a timing adjustment. We would have provided direction in our monthly business updates that the majority of our expenses had been funded up until the end of May. And in June, you would see those numbers coming through in our quarterly results.
So about $4,500,000 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. And maybe just on the financing front and 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 be to increase as a percentage of your total mortgages or even debt outstanding? And then secondly on that, how have CMHC values compared recently to maybe the old values or what you were using previously?
So in terms of TMHC 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, but 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, and those will be converted at the time when they mature. So historically, we've been around 70% of total mortgages being CMHC insured. We probably remain around that overall balance going forward.
And so in terms of the valuations, that really hasn't changed significantly. We're still getting even in the past, we were never getting full value from in terms of the leverage that we're getting from CMHC, and that continues to be the case pretty consistently now.
Okay. That's helpful. And then just last question for 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 in the last few months sorry, 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. I don't know if you could where it would compare to maybe the same period last month in terms of a percentage basis decrease?
Yes. It's such it really is such early days because we've opened up 2 tours just in the last short while. So 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. So it's just I would tell you almost too early to tell. But I would say that the RLCs, our sales folks are sort of well positioned as we've opened back up.
So 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. Just a follow-up on the unfunded pandemic related expenses. I think you mentioned €1,900,000 related to the long term care and you're optimistic that government will fund. Just wondering, is that a guaranteed amount or is it still at the discretion of the government?
And for the remaining $4,500,000 on retirement homes, what is the breakdown? I mean, is it more PP and E 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 with through the Ontario Long Term Care Association. The government funding announced so far for long term care is a pot of $88,000,000 that relates to pandemic expenses, of which they've issued funding announcements for $78,000,000 so there's $10,000,000 remaining in that. They've also announced $130,000,000 that was originally allocated for new capacity and surge capacity incurred by long term care home operators. And 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 And we are also putting additional hours into housekeeping and cleaning. Single sites and 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. And on the staffing topic, are you I mean, what kind of staffing shortages are you facing now versus a few months back? And as other businesses open up, do you see any staff turnover now? I mean, staff could be going to better paying jobs or outside of healthcare, which might be perceived to be less risky there?
So I think we've done very well through this. I'm not suggesting it hasn't been difficult, particularly in March April, but our recruitment campaign was very successful. We've hired 1500 people during this time. I think the other thing that is going to change this quite dramatically, 2 things, school is coming back. And so people who might have chosen to be at home during this period, I think we'll have more of an opportunity to come back because of the issues with childcare and also the SERB is ending.
So I think all of those will play to our favor in terms of allowing us to continue to recruit and also reduce our agency stuff.
Got it. And then on the move outs, they're still down, I think, around 20% in July. Why is that? I mean, is it because long term care homes are accepting residents on a restricted basis or hospitals are asking or keeping more reserved capacity?
Yes. So 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 3 and 4 bad boards with shared washrooms during an outbreak. So the homes that have those through attrition are reducing to only having 2 in those ward rooms, and that's taking somewhere between
the waiting list was long to begin
with, and I think that's playing into it, for sure.
Got it. And maybe just one final question for me in terms of cap rate movements. I mean, obviously, there has not been much transactions out there. It looks like you sold 3 properties for $30,000,000 What was the CapEx or pricing achieved there? And in general, do you see evidence that buyers' underwriting assumptions have changed with respect to stabilized occupancy?
Sure. So on the 3 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 those on that sale would be quite low. And 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, but the cap rates that we're seeing are still low.
Okay. Thank you, guys. Thanks for the color. I'll turn it back.
Thank you. Next question
First question just on your same property NOI, the breakdown by region. Quebec seems to really outperform both Ontario and Western Canada. Can you maybe give us a little color as to why?
So
we were still able to take admissions during the pandemic. We didn't take many for sure. But 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 3 month sales cycle typically. And so 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.
So you just saw more of that in Quebec than you would have the rest of the portfolio.
In addition, yes, benefit from some reduced utility costs there. There were some additional savings on that.
Okay. So it wasn't the government funding it better than say Ontario or the West?
I mean, 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, disposable staff time around cleaning, those types of things that are unfunded. So both Quebec, Ontario, BC and Alberta were short in each of those provinces. So I wouldn't say Ontario or Quebec did any better than the other.
We are incurring additional costs in each of those jurisdictions. Okay.
And then switching over to LTC, it's good that there's government funding for occupancy to the end of the year, but 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. But and there are so many less outbreaks than there were. So you are starting we are starting to see that.
Yes.
Right. So, do you think you'll get back to the 97 ish percent by the end of the year, excluding the ward beds that you can't use anymore?
Yes.
Okay. And 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. So 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. And we would only be interested in that in very few homes in really specific circumstances.
Okay. And then just lastly and kind of related to that, has the LTC refilling, is that would it be fair to assume that that's mostly coming from hospitals and not yet coming from retirement homes?
Yes. Yes, you're correct. Because if you're a critical admission, you're going to get higher on the list. And often people in retirement aren't considered critical because they're actually getting care from us or our competitors. So yes, I think that is what you're going to see.
And 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 Therese Couprie from CIBC. Please go ahead.
Good morning. Just wanted to clarify something on the pandemic related expenses. In the MD and A, you kind of call out $1,800,000 of additional compensation. So is that something that is expected to be repeated in subsequent quarters?
No, we don't think so, Chris. Good morning. That was 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 this pandemic, through the early days of the pandemic and we just wanted to make sure that we were recognizing their efforts as well.
Okay, got it. And then kind of dovetailing on Jonathan's questions about same property experience by geography. I don't know if it's just not 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?
Yes, Chris. So Karen sort of talked about Quebec where it's a 90 day sales cycle. So for through the early part of the pandemic, many people, as she said, would have sold their homes. So that assisted in supporting occupancy levels in Quebec. In our Western platform, there's also more funded that's within our Western platform.
So 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.
And then maybe just I know you guys have indicated that it's still kind of early days on trying to assess the pent up demand recovery. But if you do look at your kind of 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. So it's 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 have seen that we just launched the new campaign on August 3. For July, we were at 70% of our leases that we would have had in the previous year. So I think that's good trending in terms of what we were seeing compared to June and compared to May April certainly.
We are now as of about July 7, 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. So 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. And then you have to add in those walk ins of 15%.
Right.
Okay, understood. Thanks for that. And then just last question for 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 lawsuits from happening during COVID-nineteen. Just wondering if you've heard any update on that and whether or not long term care would could potentially fit into that immunity?
Sure, I can answer that. And 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. So 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. So 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. But 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. So that also helps.
And 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 what we're trying to that's how we can make this work by adding some beds on some sites.
Right. Okay. And then 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 And the balance, yes, it's 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. I just wanted to ask a few operations questions. So 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 the situation?
So 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. And I think there's a lot of evidence to suggest that, that could be 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. And we've learned so much in terms of masking and knowing that people can be asymptomatic, so we have to focus on testing. And so there's 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, we actually this 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. And so that part is extremely critical where we need to have a better balance between the 2.
And 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 who there's some family members who come in every day and do things to help their loved one, not just visiting, but to actually help them. And you're seeing just such a push for that and that helps us overall as well. So that would be another one I think that you're going to see.
Okay. And then you're back into restarting your marketing programs. And 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 or is that sort of like the top mindshare 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. Like do you just notice anything early on, a change in the tone perspective rather than
Yes. 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. But 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. And so that's definitely talked about through the sales process. And again, I just think we're in a really good position because I think we've done we've learned a lot and we've done this very well.
The other thing that people are concerned is with 14 day isolation that they have to go through when they move in. And so 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. And hopefully, it will become differentiator for us during this period of time while this restriction is still in place.
And 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 don't get sort of they're not in their suites the whole time. And I actually think government will be open to those kinds of discussions.
Okay. And just 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?
Like, I think early on you were talking about how restaurant and hospitality workers like this would be a it could be a natural fit. Like have you seen that in your has that played out as you expected?
I think Karen spoke about, serves 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 1500 people. We think that will start to change through the fall.
Okay. And union negotiations, you typically have a few of those every year. Has the tenure of those conversations changed as a result of this full 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. But 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, the number of people that we employ, and these conversations are going.
In fact, we had quite a few settlements during this pandemic of some contracts, and this will continue in normal course.
Okay. Thanks very much, everybody. I appreciate it.
Thank you.
Thank you. And 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.
And then 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?
Yes. 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. So we're not at this point considering some broad discounting. We'll have to watch obviously and see what happens with our leasing activity.
But if we felt we had to do anything, I would tell you, it would be very, very targeted to maybe a specific area.
So would there be more discounting by competitors going on right now than there was than it was 6 months ago? Or is it 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 suffers at the time. So it's hard to tell whether there's more or less It seems the same. Yes.
That's it for me.
I'll turn it back. Thank you for the commentary.
Thank There are no further questions at this time. I would like to turn the meeting back to Mr. Bolodarski.
Thank you, Justina, and 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 and thank you for your participation.