Hello and welcome to the Chartwell Third Quarter 2025 Results Conference call. My name is Regina, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I'd now like to turn the conference over to Vlad Volodarski, CEO. Please go ahead.
Thank you, Regina. 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; Jeffrey Brown, Chief Financial Officer; and Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer. Before we begin, I direct you to the cautionary statements on slide two because during this call, we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MD&A and other securities filings contain information about the assumptions, risks, and uncertainties inherent in such forward-looking statements and details of such non-GAAP and other financial measures. More specifically, I direct you to the disclosures in our Q3 2025 MD&A under the heading Risks and Uncertainties and Forward-Looking Information, for a discussion of risks and uncertainties.
These documents can be found on our website or on the CEDAR Plus website. Turning to slide three, Q3 2025 marked our ninth consecutive quarter of double-digit growth in same-property adjusted NOI and FFO per unit. These outstanding results reflect our team's unwavering focus on delivering exceptional resident experiences, driving operational efficiencies, and expanding our portfolio with high-quality assets and strong markets. I am extremely proud of their accomplishments and confident in their continued successes. Looking ahead, we expect continued growth in occupancy and cash flows in 2026 and beyond, supported by robust demand and limited new supply in our markets. More importantly, this growth will be fueled by our innovative operational sales and marketing strategies. We remain committed to enhancing our portfolio through strategic acquisitions, building a future growth pipeline via development partnerships, and divesting non-core assets.
We're also committed to continuous improvements in how we support our residences' teams, regularly reviewing our processes, implementing new technologies and automation, including a responsible use of artificial intelligence tools. We are looking forward to sharing with you more details on our three-year strategy, Chartwell 2028, at the upcoming Investor Day next week. Today, my partners will provide you with more color on various aspects of our business. Karen will do an operating update, Jeff will dive deeper in our Q3 financial results, and Jonathan will discuss our portfolio optimization and growth activities. Karen, over to you.
Thanks, Vlad. Moving on to slide four, we had another strong quarter of leasing activity with a positive net permanent move-in to permanent move-out of +104 units, with an increase in both leases and permanent move-ins compared to Q3 2024, and continued growth in occupancy in all four provinces. We held our fourth and final 2025 open house event in September with over 1,400 new prospects visiting our homes, creating a strong pipeline to support continued growth in Q4. We continued to implement property-specific marketing strategies, including focusing on each home's unique selling feature that makes them stand out in their local community. During the quarter, our marketing contact database grew by another 10,000 people, with the total reaching over 175,000.
We garnered a significant amount of earned media attention in Q3 based on positive local community stories and Chartwell's Wish of a Lifetime national fundraising events held this past summer. The collective efforts of our homes helped raise over CAD 160,000, which will allow us to continue to grant wishes to seniors across the country. With an increasing number of our homes reaching 100% occupancy, we also recently introduced a waitlist strategy to keep prospects interested while they wait for a suite or a specific type of suite to become available. Turning to slide five, we reduced our staffing agency cost by 66% in Q3 2025 compared to Q3 2024 through our continued focus on recruitment and retention activities.
I'm also very proud to say that we reached our goal of 67% very satisfied residents, according to our most recent survey results, which were conducted by Sensis, a U.S.-based company that specializes in seniors housing. This means that over two-thirds of our residents gave us a score of five out of five on their overall satisfaction with their home, as well as the likelihood that they will recommend their Chartwell home to others. Our combined satisfied and very satisfied score is 88%. Sensis administers surveys annually to over 77,000 residents in 881 homes across 21 companies. The average score in 2025 of very satisfied residents in these residences was 51% compared to our score of 67%. Finally, I want to share examples of our ongoing efforts to develop property-specific strategies in two of our Toronto homes.
First, Chartwell Grenadier, which is a large 257-unit residence in Toronto's Hyde Park neighborhood, is in the final stages of a renovation project to their 73-unit assisted living and memory care tower. The occupancy in these units has now reached 96%. We have plans to continue to renovate the rest of the building in 2026 and 2027 to increase overall occupancy and offer a variety of service levels to meet the evolving needs of residents in this busy urban community. Chartwell Lansing, a smaller 90-unit home in North York, started the year at 75% occupancy and in September reached 100%. We have also made investments in interior upgrades to the common areas in this property, and the management team continues to focus on providing services for residents in this multicultural Toronto neighborhood. I will now turn it over to Jeff to take you through our financial results.
Thank you, Karen. As shown on slide six, in Q3 2025, net loss was CAD 5.2 million compared to net income of CAD 23.6 million in Q3 2024. FFO grew to CAD 73.1 million in Q3 2025, an increase of 30.8% compared to Q3 2024. Our reported FFO does not include CAD 1.7 million or CAD 0.005 per unit of income guarantees related to recently acquired properties. Q3 2025 FFO growth benefited from higher adjusted NOI of CAD 22.1 million, higher adjusted interest income of CAD 1.5 million, and higher other lease revenue of CAD 0.8 million, partially offset by higher adjusted finance costs of CAD 3 million, lower management fees of CAD 1.9 million, lower other income of CAD 1.4 million, and higher G&A expenses of CAD 0.9 million. In Q3 2025, our same property occupancy increased 470 basis points to 93.1%, and our same property adjusted NOI increased CAD 10.2 million or 15.8%.
Slide seven summarizes our same property operating results for each platform. All of our platforms posted occupancy gains in Q3 2025 compared to Q3 2024, and all are now operating above 90% occupancy, which positively impacted our results. Our Western Canada platform, same property adjusted NOI increased CAD 2.7 million or 13%. Our Ontario platform, same property adjusted NOI increased CAD 5.3 million or 14.8%, and our Quebec platform, same property adjusted NOI increased CAD 2.2 million or 28%. Turning to slide eight, at November 6, 2025, liquidity amounted to approximately CAD 508 million, which included CAD 113 million of cash and cash equivalents and CAD 395 million of borrowing capacity on our credit facilities. During the nine months ended September 30, 2025, we raised CAD 480.5 million of equity through our ATM program at an average price of CAD 17.86, which helped support our transaction activity.
We continue to improve our leverage metrics, with interest coverage ratio growing to 3.2 times and our net debt to adjusted EBITDA ratio declined to 6.9 times. For the remainder of 2025, our debt maturities include CAD 151.1 million of mortgages with a weighted average interest rate of 4.39%. As of November 6, 2025, we estimate the 10-year CMHC insured mortgage rate to be approximately 3.89% and the five-year unsecured dementia rate to be approximately 3.87%. I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities.
Thank you, Jeff. Turning to slide nine, we continue to execute on our portfolio strategy of enhancing our asset base to generate increased quality NOI. On October 1, 2025, we acquired a 100% interest in the 449 suite Les Tours Engrignon in Montreal, Quebec for CAD 88.5 million.
The three-tower complex, rebranded Chartwell Les Tours Engrignon, offers a mix of independent and assisted living accommodations. The purchase price was partially settled through the assumption of a CMHC insured mortgage of CAD 68.7 million, with the remainder of the purchase price subject to normal working capital and other adjustments paid in cash. On November 1, 2025, we acquired a 100% interest in the 376 suite Résidence Lauvier in Lévis, Quebec, from Vademo for a total purchase price of CAD 128.2 million. Located in proximity to numerous local amenities, the residence boasts state-of-the-art indoor and outdoor amenities for its residents. It opened in June 2024, enjoyed a rapid lease-up, and is currently 82% occupied. Chartwell has managed operations at this residence since its opening. The purchase price was settled in cash, and the repayment of a CAD 10 million loan extended by Chartwell to Vademo.
A portion of the purchase price is being held back to support vendor NOI guarantee obligations to Chartwell. On November 3, 2025, we acquired a 100% interest in Résidence Panorama in Laval, Quebec, for CAD 76 million. Résidence Panorama, now rebranded Chartwell Panorama, includes 206 IL and 32 AL suites, as well as 49 individually owned condominium suites in a 31-story tower overlooking the Rivière des Prairies. Built in 2018, the residence offers exceptional views, state-of-the-art amenities, and well-designed, spacious suites. The residence is currently 98% occupied. We expect to acquire Résidence Azalis, located in Rue Pontigny, Quebec, before year-end. Résidence Azalis, to be renamed Chartwell Azalis, includes 304 IL and 30 AL suites in a 30-story tower overlooking the St. Lawrence River. Built in 2021, the residence offers exceptional views, state-of-the-art amenities, and well-designed, spacious suites. The residence is currently 97% occupied.
The purchase price of CAD 111 million before closing costs and working capital adjustments will be settled in cash. In addition, the previously announced acquisition of a portfolio of six seniors' housing communities in Ontario is expected to close once third-party approvals are in place, likely in Q1 2026. To date, in 2025, we have completed over CAD 1 billion of acquisitions, with further committed investments of CAD 700 million for completion in 2025 and early 2026, on the heels of approximately CAD 1 billion of acquisitions in 2024. We are also actively engaged in discussions with local and national developers across the country to restart our development program and create a meaningful pipeline of state-of-the-art assets to bring into our portfolio. We will pursue such developments in a prudent manner, with a preference for off-balance sheet development, similar to our arrangement in Quebec.
Further to this initiative, Chartwell announced the development of the 111-suite Chartwell Kingsview Retirement Residence in Calgary, with an advance of CAD 4.5 million of the total committed CAD 6.5 million mezzanine financing to local developers. Chartwell will be the operations manager of the project and will have a call option to acquire the residence on stabilization. The project is in an affluent residential area of Calgary in proximity to various neighborhood amenities and will feature self-contained IL apartments and an attractive amenity package. As I've noted, we have invested significant financial and management capital pursuing acquisitions in line with our strategy and have initiated new development projects to support a strong pipeline of future property growth. We have also identified properties within our portfolio that no longer fit our core strategic focus due to their location, size, age, and/or service offering. These non-core properties represent approximately 5,700 suites.
We intend to pursue dispositions of some or all of these properties as market conditions allow, with proceeds expected to be used to support future development and acquisition activity that's in line with Chartwell's current strategy. I'll turn the call back to Vlad to wrap it up.
Thank you, Jonathan. Slide 10 highlights the strong fundamentals driving our industry. We believe we are at the front end of what is going to be a multi-year period of growth in retirement living in Canada. Demand for our services should continue to grow for decades, driven by the senior population's growth. Forecasts show that to maintain supply-demand balance, the sector would need to build 200,000 suites in the next 10 years, which is almost three times the number of suites built in the previous 10 years. With high construction costs and aging inventory, supply shortages are likely to persist, supporting higher occupancies, rental and services rates, and profitability of the existing operators. As one of the largest participants in the senior living sector, Chartwell stands to benefit from these dynamics. Turning to slide 11, we are not just waiting for the rising tide to lift our boat with others.
We are taking decisive steps to pursue operating excellence, future-proof and grow our portfolio, and prudently manage unitholders' capital. Some of the examples you heard today from Karen, Jeff, and Jonathan, there are many others that we hope to share with you over time. We are looking forward to sharing our Chartwell 2028 strategy, financial objectives, and risk management guidelines, as well as the details of our key operating, investment, capital, and risk management initiatives at our upcoming Investor Day on Thursday, November 13, 2025, at 1:00 P.M., which will take place at our beautiful Chartwell hub. At this event, you will have an opportunity to hear from several Chartwell leaders, participate in a Q&A session, and interact with Chartwell executives and directors over a beverage of your choice. If you have not done so, please register for the event.
Details are on our website at investors.chartwell.com under Press and Market Information tab. I will now close our prepared remarks with a story from one of our residences as pictured on slide 12. At Chartwell Heritage Valley, one small act of kindness grew into something extraordinary. A resident visiting his wife in memory care asked if he could paint a few walls, wanting to help and contribute. That simple gesture sparked a wave of engagement throughout the residence. Soon, residents were volunteering across the community, helping with bingo, newsletters, and events. The team created a Resident Volunteer of the Month program, and from there, two resident-led clubs were created: a choir and a drama club. Their first original play, Old MacDonald's Farm, written and performed by the residents, brought laughter, pride, and connection, so much so that they took the event on the road to another Chartwell home.
Moments like these remind us what Chartwell is truly about: people finding purpose, joy, and belonging through community. Thank you for your attention this morning. We would now be pleased to answer your questions.
We will now begin the question-and-answer session. As a reminder, to ask a question, simply press star one on your telephone keypad. Our first question will come from the line of Lorne Kalmar with Desjardins. Please go ahead.
Thanks. Good morning. I'm just looking at the drama club rehearsal picture here, and it looks awesome. Just maybe on the rent growth side of things, now you're going to get to slowly get to 95, and you're still kind of high threes on the rent growth side. When do you see that starting to pick up, and sort of what do you see the cadence of rent growth looking like over the next couple of years?
Thanks, Lorne . The items that impacted a bit the rental rate growth this quarter in particular was the annualization of the incentives that were put in place over the last couple of years, or last year in particular and this year, to help with the occupancy growth as we continue to have more and more homes reaching that 95% occupancy. Our expectation is that these incentives will be pulled out. In fact, when we look at the new incentives granted this year, they have actually already started coming down compared to last year, and we expect that trend to continue. In terms of the kind of more longer-term rental rate growth, our expectation is that in the environment where there is demand growing and supply is not, we will have an opportunity to increase market rents at a faster pace.
We will certainly limit the increases to the existing residents at a more historical level, which is inflation plus a little bit, to compensate for the increase in the labor costs that we're experiencing across the sector. Market rate, we expect them to grow faster.
Okay. Can you maybe just give us a little more color in terms of what the incentives are that are kind of rolling off and where you see them going, I guess, next year?
Today, the overall incentives are about 5% of revenue. As we continue to remove those incentives in the homes that are achieving higher occupancy levels, that overall number will start coming down, and that will contribute to the overall rental rate growth over time.
Okay. Perfect. That's very helpful. And then maybe just one last one from me. Obviously, you guys had some pretty meteoric earnings growth. Has the board talked about a potential distribution bump here?
Our intent is to begin distribution increases and then maintain those increases over the year, similar to what we've been doing pre-pandemic. If you recall, I think we started our distribution increases back in 2014, and we continued growing them every year all the way up to 2020. During the pandemic, we chose to maintain the level of distributions. We feel like we are getting to a point where our cash flow fully covers distributions and capital investments that we need to make in our properties, and our expectation that we will start growing distribution increases. I can't tell you exactly the timing of it just yet, but that's certainly the intent.
Fair enough. Okay. Thank you very much. I'll turn it back.
Our next question will come from the line of Jonathan Kelcher with TD Cowen. Please go ahead.
Thanks. Good morning. First question, just on the acquisition. You guys are obviously very active this year, and you're just recharging the ATM now. How would you say the pipeline looks over the next few quarters?
We're actively working on that pipeline. As I mentioned, we have two kind of pipelines going. One is on the development side where across the country, we're in active discussions with local and national developers so that we can address that pipeline for maybe when the real estate cycle isn't as robust on the acquisition side. On the acquisition side, we are seeing a number of deals, and we think we have a decent pipeline going both on the ones and twos type deals and also on the portfolio side.
Okay. And by across the country, you mean in your existing geographies, correct?
Correct.
You're looking at new stuff?
Correct.
Okay. Secondly, you talked a little bit about renovations, giving the Grenadier as an example. How do you pick homes for that, and what type of returns do you target on those investments?
I'll take that one. There are different levels of renovations and the ways we look at them. In some cases, we renovate properties that have been operating for a period of time and are now due for renovations. Our approach to that is, instead of doing a little bit here, a little bit there, to renovate the whole property at the same time. Sometimes it can take more than one year just because of the size of the undertaking. We are trying to do it in a way that minimizes as much as possible the disruption to the existing operations and the residents. That would be one approach. The other approach would be when we holistically look at the properties that may not need to be fully renovated just yet and look at the potential of repositioning those properties in the marketplace.
Grenadier would be a good example of that. Over the years, we've been investing in this property. It looks wonderful already. We just feel that given its location and the potential, that property is being now under significant review for significant renovation and repositioning. Renovation of the assisted living neighborhood that Karen talked about is completed, and there'll be potentially or likely other phases of renovations for these properties, which will take quite a few years. We will be targeting pretty good returns on these through the increase in market rates over time. Those renovations also will make the operations of the buildings more efficient, so there may be some opportunities on the expense savings over time as well.
Okay. Do you sort of, so it sounds like the first bucket is sort of almost a maintenance CapEx, just given that the properties age, and the second one is more of a push NOI on an existing basis. Is that a good way to think about it?
Not necessarily, because when the property is completely renovated, even just because it was due to be renovated, there are still opportunities to drive higher market rate increases over time because it becomes just so much more attractive to the potential customers. It is just the timing of the execution of these projects coincided with the timing, effectively, the existing sort of aesthetics getting to the end of their useful life. In some cases, we would renovate buildings even before that is the case.
Okay. That's helpful. I'll turn it back. Thanks.
Our next question will come from the line of Himanshu Gupta with Scotiabank. Please go ahead.
Thank you, and good morning. On your same property occupancy, I mean, it looks like you have reached that 95% target for December. What is the next goal post from here? I mean, how do you keep the sales team hungry or motivated from here?
Yeah. It's a great question. Just to remind you, our turnover is about 30% across portfolio. They have their work cut out for them. Even without the occupancy growth, there is quite a bit of units to be leased every year. Anyway, the conversations that we're having with our teams in the field and our sales teams corporately that supports them is that the target for each individual property should be 100% occupancy with a healthy waitlist. Now, we're under no illusion that this is possible to be achieved across 160-170 residences across the country, so I wouldn't want you to start putting that in your models. Certainly, everybody's motivated to drive to that number.
We have—and again, we will talk about it at the Investor Day even more—but we are putting changes in place, both on the compensation side of things and the training side of things. Karen mentioned waitlist management strategies. There are a number of strategies that are being put in place to help people continue to focus on replacing units that are turning over every year and continue to grow occupancy as much as possible.
Got it, thank you. Just to follow up there, do you have a sense what is the occupancy for your immediate competition in your same property portfolio? I mean, what I'm getting at is that is there still opportunity to take the market share from your competitor from here, or do you think they are also at very similar levels or kind of further as well?
It's very hard to answer that question, Himanshu, because it's so local and case-specific. With the current environment where demand is growing and supply has not been, I think there's enough for everybody to run high occupancy. What we're trying to do with our portfolio through all these portfolio optimization and growth initiatives is to position it in such a way that we can continue to maintain market-leading occupancies in everywhere where we operate. That would be our target.
Okay. Fair enough. Switching gears to same property expenses here, I think it was kind of up like 4% on year-over-year basis in Q3. Agency staffing is obviously down. I mean, good progress there. How should we think about same property expenses into next year? Like similar 4% range or more like 3-4%?
Hey, Himanshu. We think we do have still some occupancy-related increases in our DOE this year. We'll have some of that next year as we have the sort of annualization growth of 95%, but less so. We think we should be able to have a lower growth level in DOE next year.
I would mention that, Himanshu, there continues to be some pressure on compensation costs for our employees pretty much in all of our markets. The intervention by the government during the pandemic years continues to impact, or sort of lagging effect of that continues to impact, wage rates across the country. Our expectation is the 2026 compensation cost will be higher than what we've got used to historically, where historically these costs increased by 2-3% a year. Now we've seen several years of 4-5% increases, and we're probably going to see at least another year of that given the dynamics in the labor market.
Got it. Fair enough. Thank you. Last question is on the recent acquisitions. I look at Panorama and Azalis, I think both in Quebec. Fully stabilized occupancy. What kind of NOI growth do you expect on these acquisitions, or what kind of IRRs did you underwrite for these stabilized acquisitions here?
We think that these properties improve the overall quality of our portfolio. Even though they do not have a lot of room to run on occupancy growth, our ability to increase market rates over time, we think, is going to be better in these homes than in some of the existing homes that we operate that are older in the similar markets. We certainly feel and see some accretion to our cost of capital from the IRR perspective on a 10-year basis from these acquisitions. Otherwise, we would not be doing that.
Yeah. No, fair enough. Is it more of a value angle here? I see all these three acquisitions are around CAD 300,000 per suite or per unit. I mean, what's your estimated replacement cost for these units? Is that the biggest reason to go for these acquisitions?
Yeah. They're still done at significant discount to replacement costs. Jonathan mentioned that we started two development projects in Quebec. Yes, both of them are in Montréal, greater Montréal area, where we're building additions to the existing residences. Even though you are not building a lot of common areas, these are just unit additions, so the construction is a bit more efficient. On the greenfield development, the cost of these additions are significantly higher than CAD 300,000 a door.
Okay. Fair enough. I'll join the queue. Thank you.
Our next question will come from the line of Giuliano Thornhill with National Bank Capital Markets. Please go ahead.
Hey, guys. Good morning, everyone. I'm just wondering on the waitlist that you mentioned at the beginning, kind of how long is the waitlist there and what markets that's in? What's kind of the gap to in place to market rent that you're seeing for those properties?
Again, it varies location by location. There may be more properties that have waitlists for a certain number of, for a certain type of units. They may not be having 100% occupancy everywhere, but people waiting for specific types of units. There are some properties that have waitlists for all kinds of units. A lot of these properties are located in, for example, in British Columbia. That market's been underbuilt for a period of time. Many of our homes in that market have robust waitlists. In those homes, market rates go up by at least high single digits, more often than not in low double digits. That should give you a sense of the gap between the in-place rents and market rents.
Okay. Is there any cadence for the number of homes that you could provide that are kind of in that, I guess, fully occupied waitlist area?
In the same property portfolio, it's close to 10 homes that are now at 100% occupancy, and there's probably another 30 homes that are between 95% and 100% occupancy.
Okay. Thank you. Then just turning to the disposition candidates. I think last call, you kind of provided a rough estimate of 3,500. Now it's gone up to 5 or 3.5 thousand to now 5.7. I'm just wondering what's the delta attributed to there?
We continue to review our portfolio and sort of the types and the qualities of properties that we own. We reevaluate our approach to determine what we consider to be non-core is also driven by the acquisition opportunity both completed and what we are seeing out there that are potential. As a result of these ongoing exercises, we have increased the size of this non-core portfolio. Now, it will take some time to sell these properties. It is not going to be unlikely to be sold all at one time. I would also mention that these properties are performing properties. They are not struggling in any sense of the word.
The reason that they ended up being as part of non-core portfolio is just they do not fit necessarily in our view and aspirations of what we want Chartwell portfolio to look like in, say, a couple of years' time from now.
Okay. So it's kind of a mix of the repositioning and whichever one do you want to, I guess, optimize your same property portfolio?
The 5,700 suite that Jonathan mentioned would be eventually sold. That's non-core portfolio that we identified that we are unlikely to reposition and remain in the Chartwell portfolio over a long period of time.
Is there a lot of properties in that bucket which have some conversion potential into apartments or something else?
No. I think the hard work that we had to do when we repositioned some properties for alternative use or sold them for maybe a little lower valuations, all that work had been done. By now, we do not have even I cannot think of one property that is left that would be in that kind of bucket. This non-core property portfolio are well-performing properties. They just do not fit our view of Chartwell portfolio going forward because maybe of their size, their location, their vintage, their capital requirements, things like that.
Okay. And then just kind of last question on that is just, is there any kind of timeline you can provide on Valley Cliff quite yet?
There's no update on Valley Cliff at this point in time. The building's open. The residents are moved in into their new environment, and it's operating, and we continue to evaluate our options. It's certainly not something that we intend to hold for a long period of time, but right now, there's no impact on that.
Okay. Thanks, guys.
Our next question will come from the line of Pammi Bir with RBC Capital Markets. Please go ahead.
Thanks. Good morning. Just on the development side, you are pursuing some new projects, but are you starting to see perhaps more developers kickstart some new developments? Maybe which markets are more active than others?
Sorry. You're asking whether we're seeing more?
Yes. Yeah. Are you seeing more developments?
Yeah. I think as our asset class is becoming more and more attractive to people and people are looking for alternative uses for the land that they are looking to develop, that is becoming more of a trend. We are getting approached frequently by local developers and more national institutional developers who are figuring out master plans in communities. We have a number of those that we're looking at, and it's becoming more and more active.
I guess if you step back and just think about the broader market and new projects starting by others as well, in terms of deliveries, how do you—at what point do you start to expect them to pick up? Is that perhaps more 2028, 2027, or just kind of get a sense of the cadence?
We expect to see a pickup in starts in 2026. Probably a pickup in deliveries. Yeah, you're probably right. 2028, 2029. Some of these master plan communities might take a bit longer, but 2028 and thereafter.
Okay. I just wanted to reconcile some of the comments around rent growth. I think if you're putting up, let's say, overall an average of roughly 4%, I think this year, just given the momentum that we've all seen across occupancy in the broader market, does that look something more like 5% on a blended overall average for the portfolio in 2026, or is it still kind of hovering in that, I'll call it, 3-4% range?
Yeah. For 2026, we'll target something higher than 4%. So probably between 4-5% on a blended basis, depending on turnover, depends on a lot of other things. Also, remember, part of what's included in these numbers is some government-funded beds that we have in Alberta, for example, and they would drive down overall rent increases because the government increases are not as high as what we're passing on a private basis.
Got it. Okay. This last one for me. The leverage has obviously come down pretty nicely. The ATM has been quite effective. As you think about the next year or two, I think you've previously cited 7.5 times debt to you, but that's sort of your target. Is that the right figure? I mean, is there perhaps any consideration of taking that lower just to really sort of solidify the balance sheet and insulate it from any sort of future shocks even more, or is that sort of the level that you're comfortable with?
Yeah. Pammi, we did end the quarter 6.9 times. That was more timing based on some of the acquisitions closing in October and November. We are still targeting 7.5 times, and it's a number we do review, but still think it's the right leverage level for the company. It does provide some good balance sheet flexibility for us for the future.
Okay. Thanks very much. I'll turn it back.
Our next question will come from the line of Tal Woolley with CIBC. Please go ahead.
Hi. Good morning, everybody. Just wanted to start on talking a little bit about turnover. I think, Vlad, you mentioned earlier on the call that three years is still typically around the average stay. I'm just wondering if you expect that to shift at all going forward, just now that the LTC system is sort of full again. There's maybe not quite as many options. Do you expect to see turnover increase? Also wondering if you can sort of provide a—what is an average rent lift you would typically see on turnover?
The first question, Tal, I think turnover changes will be a function of renewal of our portfolio. If we focus more on more independent type of residents, for example, the turnover in Quebec portfolio for us is about 25%, and turnover in the rest of the country is between 35-40%. As we focus more on independent residents, some of the acquisitions that you saw us announcing in Ontario and British Columbia are in that independent space, then turnover will probably come down a little bit. Again, the portfolio size is such that some additions of these homes may not necessarily change that dynamic significantly. In terms of the rent gap between in-place and market, it is very building-specific.
I can't tell you what the gap is other than that our expectation is that with the declining incentives that we're required to provide to continue to maintain and drive occupancy, and the properties are achieving high occupancy levels more broadly, our expectation is that we will be able to increase market rates significantly higher than what we would do in terms of increases to our existing residents.
Okay. Your non-core portfolio sales, who are the typical buyers you expect to see at the table when you put these on the market?
I guess we'll have to see. We haven't had things on the market recently, but there are a number of private equity groups that are focused on this asset class now, interested in a more value-add play. To the extent that they come to the table, I think those would be the more natural purchasers of these assets.
Okay. When you segment your portfolio, the repositioning portfolio, when I look forward, I appreciate it's sort of like the least same property-like of the group of the segments. Should we be expecting that occupancy to materially improve, or is that going to be a bucket that's sort of constantly changing going forward?
Our expectation is that the occupancy will continue to improve in all properties in our portfolio, whether they're non-core or core. There is no reason why it shouldn't be the case. Dynamics are similar across the board in pretty much every market where the demand is growing and supply is not, so every home should operate at high occupancy levels. The bucket itself, or that portfolio composition, will change. I mean, we will change that on January 1, 2026, like we always do, where some of the properties that were acquired in the last couple of years will move into the same property portfolio when they have full 12 months comparative, and some of the properties will move to a different bucket. Hold on for that.
On January 1st or before, we will let you know what the composition of same property portfolio, growth portfolio, and repositioning portfolio would look like going forward.
Okay. And then just lastly, I think in your MD&A sort of reference that effectively your 10-year CMHC insured borrowing costs are pretty much the same as 5-year unsecured right now. Are you tempted to use the unsecured market more going forward? I know administratively, it's a lot easier to work with. I'm just curious about financing options on the debt side.
Yeah. Hi, Tal. Yeah. I mean, they're different tenors, so they're not exactly apples to apples, but we have been more active in the debenture market over the last 18 months. As we look and have a need for debt financing, we do look at both of those options and are picking the lower cost of the two.
Got it. Okay. Thanks very much, Jonathan.
Once again, for any questions, press star one. Our next question will come from the line of Tom Callaghan with BMO Capital Markets. Please go ahead.
Thanks. Good morning, guys. Maybe just going back to Pammi's line of questioning on the development side. Obviously, you guys have had lots of ongoing discussion with different developers and looking at these yourselves. Just curious, looking to get a sense cost-wise, what are you seeing? Are you starting to see some deflation trickle in on the cost side of things? If so, is there a way to think about that deflation, say, if you were looking at that same project 12 months ago?
We are seeing some deflation on cost. It really depends on where, in which jurisdiction, and what buckets. Certainly, on some materials and some trades, we see more availability on the trade side, and that results in some deflation on cost. These developments, frankly, also become more feasible as rate catches up, which it has done in the last couple of years. That is helping also with the equation.
Okay. Okay. On the project there that you announced with a partner in Calgary, Kingsview, I think, is there a cost per suite that we could kind of think of for that type of development?
This development is off balance sheet for us, so we would be buying it at fair market value at the back end. Cost per suite, I'd have to get back to you on.
Okay. No, no. Yeah. I understand it's off balance sheet, just more trying to get a broader sense or picture of cost for a new development. Maybe switching gears, just housekeeping one for me. I think earlier in the year, you'd mentioned some potential for CMHC upfinancing proceeds. Is that still to come? If so, how much should we be thinking about there?
You're asking about what's left to do this year in terms of CMHC?
Yeah. I think, Jeff, you'd mentioned maybe potentially some upfinancing opportunity on CMHC, like incremental.
Yeah. We still have some financings to close for the balance of the year. As we look out over the next 12 months, just close to CAD 300 million of total CMHC financings. The bulk of that would be refinancings of conventional mortgages on some properties. It's probably less than half of that is incremental new financing.
Okay. Okay. So less than half of 300. Okay. Got it. That's helpful. Thanks, guys.
That will conclude our question and answer session. I will now turn the call back over to Vlad for any closing comments.
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