Hello, everyone. Thank you for joining us, and welcome to the Chartwell Third Quarter 2026 results conference call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Vlad Volodarski, CEO. Please go ahead.
Thank you, Christine. 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, Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer, and Gordon Chiu, Chief Technology 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 2026 MD&A under the heading Risks and Uncertainties and Forward-Looking Information for a discussion of such risks and uncertainties. These documents can be found on our website or on the SEDAR+ website. Turning to slide three, we delivered another quarter of strong financial performance. FFO per unit increased 25% to CAD 0.30 per unit. It marks our 13th consecutive quarter of double-digit FFO per unit growth. Our teams delivered strong results in our same property portfolio with adjusted NOI increasing 14.1%, adjusted operating margin improving to 43.4%, and same property occupancy growing to 94.8%. At the same time, we continue to invest in our residences, integrate newly acquired properties, and advance our portfolio optimization initiatives. I am grateful to our teams across Chartwell for their tremendous commitment and hard work.
Delivering these results while welcoming new residents and employees into Chartwell demonstrates both the strength of our culture and the scalability of our management platform. Turning to our 2028 strategy scorecard, as pictured on slide four, our 2026 year-to-date results demonstrate strong progress against the objectives we established in our three-year strategy. Same property occupancy averaged 94.6% year-to-date. Revenue per occupied suite growth of 5.1% is ahead of our target, and same property adjusted NOI increased 13.9% year-to-date. Our balance sheet metrics also remain within our strategic targets. Net debt to adjusted EBITDA was 6.8 x, interest coverage was 3.5 x, and our FFO payout ratio was 54.5%. We are also making meaningful progress renewing and growing our portfolio.
Completed acquisitions and developments totaled CAD 1 .04 billion towards our CAD 2 billion three-year objective, while completed dispositions totaled CAD 307.7 million towards our CAD 1 billion target. We built a strong operating business with significant embedded growth in our recently acquired portfolio, a growing development pipeline, and a scalable platform that is converting growth in NOI into increasingly strong FFO per unit. My partners will now provide you with more insights in each of these areas. We will start with Karen's operating update. Karen?
Thanks, Vlad. Moving on to slide five, we had another strong quarter of leasing activity with a positive net permanent move-in to permanent move-out of +234 units, with contributions from all operating platforms. Our marketing strategies continue to be effective with a 26% increase in personalized tours from marketing sources quarter-over-quarter. Our conversion ratio of marketing initial contacts to personalized tours was 50% in Q3 of this year compared to 44% in Q3 2025. Our September open house event strengthened our prospect funnel, leading into what is typically our best-selling season. The event provided an opportunity to showcase our residences, including the many new additions to the portfolio participating in their first-ever open house. The event brought many new initial contacts, with nearly eight in 10 of the personalized tours being new prospects to the residence.
Our Joy is Ageless campaign continued to build national brand visibility with the fall campaign running across TV, out-of-home radio, Facebook, and website takeover placements. The campaign reinforces Chartwell's active aging positioning through broad market reach and lifestyle-led storytelling. We also partnered with La Presse, Quebec's leading digital news platform, to publish a resident story from Chartwell Rosemont highlighting joy, wellness, and community living through premium editorial content and multimedia assets. The campaign generated nearly 700,000 impressions, over 120,000 article reads, and 5,900 website visitors. Turning to slide six, in terms of expense control, we reduced our staffing agency costs by 37% year-to-date 2026 compared to 2025 through our continued focus on recruitment and retention activities. We also continued to focus on resident satisfaction and employee engagement.
This year, we moved to using the internationally recognized Net Promoter Score, or NPS, and Employee Net Promoter Score, or eNPS, as our measure. It is based on an 11-point scale of zero to 10. Those who provide a score of nine or 10 are considered promoters, and those who provide a score of zero to six are considered detractors. The NPS score is determined by the percentage of promoters minus the percentage of detractors, with scores ranging from -100 to +100. I am pleased to report that our NPS score was 58, which is considered excellent by international standards, and was 16 points higher than the baseline score we received in 2025. Although there are less international comparison benchmarks available, our eNPS score of 42 was also impressive and was 3 points higher than our 2025 baseline score.
Throughout Q3, the operations teams, with support from cross-functional departments, have been focused on integration activities for the six homes previously owned by Sifton, the 17 Chartwell Fengate, previously Seasons properties, as well as the newly acquired Chartwell Palermo and Chartwell Greenway . We've also off-boarded three non-core residences. Finally, I want to share a new collaboration that began in Q3 with Sprout, a popular Canadian media brand that shares older adults' experiences, advice, and perspectives through social media video interviews. A dozen Chartwell residents shared their wisdom on topics such as the advice they would give their younger selves. The videos generated more than 1 million views on their YouTube channel and another 500,000 views on Instagram. I'll now turn it over to Jeff to take you through our financial results.
Great. Thank you, Karen. As shown on slide seven, in Q3 2026, net income was CAD 115 million, compared with a net loss of CAD 5.2 million in Q3 2025, primarily reflecting a CAD 113.3 million gain on disposal of assets and from higher property revenue and other items. This was partially offset by current tax expense, higher depreciation, property operating expenses, finance costs, and transaction costs related to dispositions. FFO increased 38% to CAD 100.8 million, or CAD 0.30 per unit, compared with CAD 73.1 million, or CAD 0.24 per unit in Q3 2025. Reported FFO excludes CAD 1.4 million, or CAD 0.01 per unit of income guarantees related to recently acquired properties. The increase in FFO primarily reflected CAD 34.9 million of higher adjusted NOI, CAD 1.2 million of lower G&A expenses, and CAD 1.1 million of higher other income.
These benefits are partially offset by CAD 6.5 million of higher finance costs, CAD 1.9 million of lower management fees, and CAD 1.2 million of lower interest income. For the first nine months of 2026, FFO increased 40.7% to CAD 276.9 million, and FFO per unit increased 25% to CAD 0.85. Year-to-date, FFO excludes CAD 7.5 million, or CAD 0.02 per unit of income guarantees related to recently acquired properties. Same property adjusted NOI increased CAD 11.2 million, or 14.1% in Q3.
Weighted average occupancy increased 230 basis points to 94.8%. Adjusted operating margin increased 230 basis points to 43.4%. Revenue per occupied suite increased 5.8%, and NOI per occupied suite increased 11.3%. Turning to slide eight, our stabilized same property portfolio continues to deliver strong growth. Year-to-date, revenue per occupied suite was CAD 4,936, an increase of 5.1%, while DOE per occupied suite was CAD 2,879, an increase of only 1.8%.
The result was NOI per occupied suite of CAD 2,141, up 10.1%, and a 190 basis point improvement in adjusted operating margin to 42.7%. At this level of occupancy, our focus is increasingly on revenue and margin growth. For the 2026 same property portfolio, we estimate that each 1% change in occupancy represents approximately CAD 8.7 million of annual revenue, while each 1% change in rate represents approximately CAD 8.2 million. Beyond the continued growth in our stabilized same property portfolio, we have another important source of embedded growth in properties acquired more recently, as pictured on slide nine. Our growth portfolio consists of 52 properties and approximately 9,300 suites at our ownership share, representing approximately 35% of our total suites. These are generally newer and larger residences. In Q3, the growth portfolio operated at an average occupancy of 91.6%, compared with our same property target of greater than 95%.
Closing that occupancy gap represents approximately CAD 14.7 million of annualized revenue opportunity. Importantly, despite lower occupancy, the growth portfolio is already generating a 46% adjusted operating margin, compared with 43.4% for the same property portfolio. This demonstrates both the quality of the assets and the operating leverage available as occupancy increases. As these residences move towards stabilized occupancy, the growth portfolio provides a meaningful runway for NOI and FFO growth without additional acquisition capital. Turning to slide 10, at November 5th, 2026, liquidity was CAD 573.4 million, consisting of CAD 178.3 million of cash and cash equivalents, and CAD 395.1 million of available borrowing capacity. Net debt to adjusted EBITDA was 6.8 x, interest coverage was 3.5 x, and the consolidated weighted average interest rate was 4.03%. During Q3, we did not issue trust units under our 2026 at-the-market program.
For the first nine months of 2026, we issued approximately 3.3 million trust units under the program at an average price of CAD 21.74 per unit for gross proceeds of CAD 72.7 million. One final point I would highlight is how effectively growth in property-level earnings is translating into FFO. As shown on slide 11, our NOI to FFO conversion has improved significantly over the last several years. In 2023, each dollar of NOI per unit generated approximately CAD 0.48 of FFO per unit. This increased to CAD 0.58 in 2024 and CAD 0.62 in 2025. Over the same period, FFO per unit increased from CAD 0.55 to CAD 0.95. The improvement demonstrates the scalability of our management platform. As we generate incremental NOI through occupancy, rate growth, margin improvement, and stabilization of acquired properties, an increasing proportion flows through to FFO.
This operating leverage is an important part of our growth story. I will now turn the call to Jonathan to discuss acquisition and development activities.
Thank you, Jeff. Turning to slide 12, our Greater Montreal area portfolio provides a compelling example of how Chartwell's management platform can create value following an acquisition. We acquired five high-quality residences in June 2024 with an average age of approximately six years. Since acquisition, occupancy has increased by 600 basis points. Revenue per occupied suite has grown at a 6.6% compound annual rate. Operating margin has improved by 8.1 percentage points, and adjusted NOI has grown at an 18.1% compounded annual rate. Based on the methodology outlined on the slide, we estimate that this operating performance has created over CAD 100 million of value since acquisition, and the portfolio is now generating an implied NOI yield of 7.7%. There is further opportunity ahead. The acquired portfolio contains 1,428 suites.
With 93 suites in development, 285 in pre-development, and a further 202-suite opportunity, the portfolio could ultimately grow to approximately 2,008 suites. This case study illustrates our acquisition strategy. We are not simply acquiring real estate. We are applying our operating, asset management, and development capabilities to improve performance and create additional value over time. We continue to execute on our portfolio optimization strategy by acquiring newer properties in core markets, selling non-core assets, repositioning selected residences, and developing a pipeline of future growth, as pictured on slide 13. on September 1st, we completed the acquisition of Greenway Retirement Residence, a 237-suite residence in Brampton, Ontario, for CAD 136 million. On the same date, we completed the sale of one Ontario property for CAD 91 million.
On October 1st, we completed the sale of a non-core property in Victoriaville, Quebec, for CAD 8 million, and another property in Kitchener, Ontario, for CAD 41.8 million. Our objective is to continue recycling capital from assets that no longer fit in our long-term strategy into newer, larger, and more operationally efficient residences in Canada's principal retirement markets. Moving to slide 14, acquisitions remains an important part of our growth strategy, and we are increasingly complementing them with a substantial development pipeline. Today, that pipeline comprises 38 projects, representing approximately 9,456 suites in high-demand core markets across British Columbia, Alberta, Ontario, and Quebec. Eight projects, representing 1,466 suites, are under construction, while 30 projects, representing 7,990 suites, are in pre-development. The pipeline is geographically diversified, with approximately 2,600 suites in British Columbia, 1,200 suites in Alberta, 2,050 suites in Ontario, and 3,600 suites in Quebec.
Our approach is to work with experienced development partners, combining their development capabilities with our market knowledge, operating platform, and our brand. This can give Chartwell access to new purpose-built residences in the markets where we want to grow, while managing development and balance sheet risk prudently. We remain disciplined in our underwriting, due diligence, integration plans, and capital commitments. Our focus is on opportunities that enhance the quality of our portfolio, strengthen our long-term growth profile, and meet our required investment returns. I will turn the call back to Vlad to wrap it up.
Thank you, Jonathan. Turning to slide 15, our Q3 results and opportunities described today reinforce my confidence in Chartwell's momentum and long-term growth prospects. The fundamentals supporting retirement living in Canada remain very strong. Demand is accelerating as the population ages, while the new supply remains constrained. This creates a favorable backdrop for occupancy, revenue, and NOI growth. We are well-positioned to benefit from these trends. Our stabilized portfolio is performing strongly. Our recently acquired growth portfolio has meaningful occupancy and earnings upside. Our development partnerships are building a long-term pipeline of modern residences in attractive markets, and our scalable management platform is converting incremental NOI into strong FFO per unit growth. At the same time, we remain focused on what matters most, delivering exceptional experiences to our residents and peace of mind for their families.
We are continuing to enhance wellness, dining, activities, care, and support services while making our organization more agile and efficient through simpler processes and responsible use of technology, automation, and AI-enabled tools. What gives me the greatest confidence is our people. I am grateful to our residences teams and support teams for their tremendous commitment, especially as they continue to integrate newly acquired properties and strengthen our growing portfolio. Their dedication to residents and to one another is the foundation of our success. I will now close our prepared remarks with a story of how we are bringing wellness to life for our residents in Québec. It is pictured on slide 16. For the past six years, we have brought residents together at Beach Club in Pointe-Calumet for a day dedicated to fitness, wellness, and connection.
The event has grown into something our residents look forward to each year, bringing together hundreds of participants for activities ranging from aqua dancing and aerobic to yoga and relaxation, with support from our wellness partner, Kinélite. What makes this event meaningful is not just the physical activity, but the opportunity it creates for residents to come together, try new things, and enjoy an active lifestyle. It is a great example of our approach to wellness at Chartwell. We are creating opportunities for residents to stay healthy, connected, and engaged while continuing to enjoy the experiences that bring them joy and contribute to their quality of life. 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. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Lorne Kalmar with Desjardins. Your line is open. Please go ahead.
Thanks. Good morning. Congrats on a good result here. Just on the direct operating cost side of things, it looks like you guys have done pretty well in the quarter and year-to-date. I was just wondering, what is sort of the upside risk on the cost front, given the guidance of sub 4%? I assume the idea was to be somewhere around there. Just wondering, what is the upside risk, and is this a level you think is repeatable for the near and medium term?
Yeah. Hey, good morning, Lorne. We think that level of staying below 4% on a DOE per occupied suite basis is achievable over the period and demonstrated that in the quarter and year-to-date basis.
Obviously, you have a pretty nice buffer here between the whatever it is, 1.8% and the 4%. What would be, in your guys' view, risk to cost moving close to that 4%, or is there nothing really foreseeable?
There is still some. That is our three-year target, is to achieve that goal over the three years. We still have Our overall DOE was up 4.1% in the quarter, so there is still some benefit from the occupancy increase that is driving the per occupied suite number down. I think as we stabilize at these higher occupancy levels, you will see that number get closer to the 4% level.
Okay, that is very helpful. Thank you. With the expectation for a less severe winter here, which I think we deserve after the last couple we had, does that typically lead to a less severe flu season? If so, could that eliminate some of the seasonality impact you would normally see in Q1 and, I guess, early Q2?
This is always a puzzle, Lorne. We really can't predict with accuracy whether warmer weather translates into fewer flu outbreaks and cases. We are hearing that the current strain of the vaccine is effective, so hopefully that will help to mitigate the usual seasonal impact. To be definitive about it is not really possible.
Can I just add, though, when the weather is nicer, it does make it easier for people to come out for personalized tours. Not related to the flu, but just sort of the accessibility for older people to visit our homes in those winter months.
Okay, that's very helpful. Just maybe last one. I think both in Canada and the U.S., we haven't really seen much in the way of new construction starts, certainly nothing that was close to what was anticipated beginning of the year. Any idea of maybe what's behind that and when we can expect to see a more meaningful pickup in activity?
Well, we certainly are doing our part. I think in terms of general activity, clearly the recent rise in interest rates doesn't help many of the pro formas. I think that certainly is the most obvious reason for some of the deferral of previously expected construction starts for 2026. We'll see what happens in 2027. From our perspective, the projects that we have on the go, they continue to be economical, so we're proceeding with those.
Okay, great. Thank you so much. I will turn it back.
Your next question comes from the line of Jonathan Kelcher with TD Cowen. Your line is open. Please go ahead.
Thanks. Good morning. Just to follow along on that, with the increase in interest rates, are there any of your projects that are in pre-development that might be getting pushed back?
Yes.
What sort of—
Jonathan, obviously, you see the pipeline that we have on that slide. It is pretty large, and there is a different variety of projects and economics that we see. Some have a lot more cushion than others in terms of the profitability and return, and the ones that are thinner, then they become harder to commence at this point in time. For sure, some of these will be deferred.
Okay. If we look at the 30, how many do you think start next year?
30. Well, we have announced what we are starting, and the rest of them we will continue to evaluate. We think that there is going to be additional projects started next year, but right now, talking about quantum is a bit premature.
Okay, fair enough. Secondly, you guys have a pretty large cash balance, lots of liquidity. What is the acquisition pipeline looking like for the next couple of quarters?
We're seeing a strong acquisition pipeline for the next few quarters. We're constantly evaluating a number of different opportunities, and we're, as you just discussed, enhancing that pipeline with our own pipeline of development.
Okay. Any particular markets that you're seeing more or less in?
We're actually seeing a fair bit of activity in all of the markets that we operate in.
Okay. That's it for me. I'll turn it back. Thanks.
Your next question comes from the line of Tom Callaghan with BMO Capital Markets. Your line is open. Please go ahead.
Thanks. Good morning there. Maybe just sticking on Jonathan's line, a question just with respect to the acquisition pipeline and I guess really the disposition side too. Any kind of movement pricing expectation-wise, bid-ask spread, just given the rate volatility we've seen, or no, just given the demand level for this product?
We're still continuing to see really strong demand, both in the class A assets and what we would consider our non-core bank of assets. So we have not seen much adjustment in pricing.
Got it. Okay. Next one for me was just maybe if you could talk a bit about the revenue per occupied suite into 2027. Obviously, the metric continues to move higher quarter-over-quarter. I think it was 5.8% in Q3, and maybe there's a small contribution there for prior period funding. But it's quite comfortably covering that greater than 4% over the three-year outlook. And I guess just given the broader fundamental backdrop where your occupancy is there any reason to think why this wouldn't kind of be another mid to high 5 percentage number next year in 2027?
Hey, Tom. Just to put some numbers around that adjustment, it is about 5.5% excluding that prior period funding for the quarter. Our pricing strategy remains very much the same. Our in-place increases are all targeted to be just above inflation, and the market pricing is very locally driven. We are pushing market pricing as much as we are able to, and we are also now having some success in bringing down the incentives. Those came in at 4.5% of resident revenue in the quarter. That is what is helping also sort of push the REVPOS up to that above 5% range.
Okay, got it. So presumably still some kind of tailwind for burn of incentive as we go forward here?
Yeah, correct.
Okay. Last one on my end, just housekeeping. In terms of the fees on the Seasons portfolio and the Fengate, I think there is about CAD 0.5 million of asset management-related costs, and the CAD 2.1 million transition fee. I assume the CAD 2.1 million is kind of a one-time non-recurring, but that CAD 0.5 million of asset management costs, is that a good kind of run rate to put through the model?
Yeah, that's the right run rate, and those transition costs were one time and were only in Q3.
Okay, so nothing for Q4. Got it. Thanks a lot, guys. I'll pass back.
Your next question comes from the line of Brad Sturges with Raymond James. Your line is open. Please go ahead.
Hey, good morning. Just going to your slide nine here on the growth portfolio and the upside available to you on the revenue side. As you push occupancy higher towards your target stabilized levels, what's the timeline you expect for that to occur? Is that over the next 12 months, or is it a little bit of a longer timeline?
It's a little difficult because that portfolio does change as we have new acquisitions come in. It won't be a static portfolio next quarter. But we are seeing similar occupancy growth in that portfolio as we have in our same property portfolio. We think there's good traction to get towards that 95% + target.
Okay. On the same property bucket, I guess expectations to reach 96% by December. Where do you see the gains coming from? I think there's some room to push in Ontario, but just curious to get a bit more color in terms of where those gains are concentrated in the portfolio today.
Clearly, there's a bit more room in Ontario than in other provinces that are at close to 96% now. But we have properties that been operated with 100% occupancy for a very long period of time. So every one of the property, at least from my perspective, that is not at 100% has room to grow. Our expectation that the whole platform will contribute to that occupancy growth to get to 96% on portfolio-wide.
Last question for me, just on the ATM program. Given where the balance sheet is today and the organic growth on business, how do you envision the usage of the ATM program on a go-forward basis? Do you see it being less active than what we've seen over the last, call it, 12 months or plus?
I mean, it is really dependent on our capital needs. We do have funding priorities. We always prioritize retained cash flow first, disposition proceeds second. Then we look at equity and debt third and fourth, depending on our leverage levels. During the quarter, we were able to satisfy our capital needs between that retained cash flow and disposition proceeds. It is really a function of what we are seeing in terms of requirements going forward.
Okay. I will turn it back. Thank you.
Your next question comes from the line of Himanshu Gupta with Scotiabank. Your line is open. Please go ahead. Just a reminder to unmute your device. Your next question comes from the line of Pammi Bir with RBC Capital Markets. Your line is open. Please go ahead.
Thanks. Good morning. Just maybe coming back to the commentary around the growth portfolio. You mentioned similar traction from an occupancy standpoint as, I guess, the same property assets. Would it be fair to assume that you are basically looking at potential 300 basis points of occupancy pickup over the next year or so?
Maybe I will take this, Pammi. That portfolio has a wide range of different properties. Some of them are stabilized, and some of them are in early days of lease up, and are like 50%, 60% occupied. Our expectation is that those properties that have more room will contribute more, obviously, to the occupancy growth. Our expectation is that within 12 months or so, we should see at least this growth portfolio as it stands today to achieve 95% average occupancy.
Just one thing to note, Pammi, that, as I mentioned earlier, that will change. Any acquisitions we close in Q4 will join that portfolio. That will drive the occupancy, and then some of those properties will move into same property for Q1 next year.
Right. Yeah.
What some of the embedded growth that exists within the portfolio today.
Yeah. I was just thinking more so what's on the balance sheet today in the growth bucket. Okay. Maybe just coming back to, there was obviously some commentary coming out of the unions. Can you talk about maybe what's happening there and any anticipated maybe labor cost pressures or any issues with any labor availability at all?
Sure. I mean, we continue working with all our 20 unions that we have across the country, and there is a normal sort of cycle of bargaining processes that our teams undertake with the unions. Our increases in terms of the total compensation on average, you've seen in our numbers, or we've been talking about it for the last several years, have been between 4% and 5%. We expect that we'll continue to see those kind of increases in 2027, and we'll see where it goes after that. Historically, the increases in our compensation were between 2% and 3%. We are now been in a period for four or five years of above historical normative increases. As I said, we expect that to continue for 2027.
Okay. There's some very good color on the scalability of the platform, and on the G&A side, we did see a pretty sizable drop in Q3, and I think some of that maybe was just the unit-based comp and maybe some timing as well. Just maybe stepping back, do you expect sort of G&A to hover near year-to-date sort of levels as a percentage of revenue, or are there still some further efficiencies you think you can generate?
Yeah, I think the way we've developed the management platform is we should be able to scale revenue faster than we need to add G&A. There always are some G&A requirements, but it should not be at the same rate growth that we're seeing revenue grow at.
Okay. All right, last one for me. Just on the incentives, I think, Jeff, you mentioned it was 4.5% of revenue in Q3. What did that figure drop from, I guess, last quarter or maybe the start of the year?
It was 4.8%.
Yeah, 4.8%.
Sorry, it was 4.8% in Q2, or beginning of the year?
Q3 last year was 4.8%.
Oh, last year. Okay. All right. Thanks very much. I'll turn it back.
Your next question comes from the line of Himanshu Gupta with Scotiabank. Your line is open. Please go ahead.
Thank you, and good morning. Hope you can listen to me this time.
Yes, we can hear you.
Awesome. Okay. In your 2028 strategy, you have expectations of 95% + occupancy target. Do you see the stabilized occupancy definition moving to more like 96% now? I mean, given the success in December.
At this point in time, we are not planning on moving any of these target numbers, but be happy to continue to outperform them. The challenge with setting up different targets is, I think we have talked about it before, historically, there is no history of our portfolio or industry overall performing at these kind of occupancy levels. So it is really hard for me to point to something and say, "Seven years ago, we were at 97% occupancy, so that is where we are striving to achieve." So we are in these uncharted territories right now, and we continue to work very hard, or our teams, rather, continue to be working very hard to make sure that all of our properties run as full as possible, and we provide services to as many residents as possible who want to access those services in our properties.
Got it. Thank you. Would you know what percentage of portfolio or how many homes are almost at 100% occupancy here?
I don't have these numbers in front of us, Himanshu.
Okay. No, fair enough. Okay. Thank you. Moving on asset dispositions, obviously a couple down in Waterloo-Kitchener area. Are you there now in terms of where you want to be in that region, in terms of market share?
No, we continue to see that general region as an area of growth for us, and Ontario, Southwestern Ontario, is one of our areas of focus for growth.
Okay. On Quebec City, do you see more recycling, more dispositions in that region, again, to right-size the market share?
Potentially, yes, over time. We clearly have grown a lot our Quebec portfolio over the years, and it is very heavily concentrated in Montreal and Quebec City, and Quebec City in particular, and it's a relatively smaller market. Over time, there may be some non-core asset dispositions in that market.
Got it. Okay. Fair enough. Moving on to the acquisitions, the Greenway Residence in Brampton. What's the opportunity there in terms of occupancy or margin upside? By the way, thanks for providing the color on the Montreal acquisitions, that case study. Significant margin increases and value creation, so just getting a sense of where do you see on this acquisition?
Sure. For us, it's a relatively new market. We haven't been in Brampton for a while, so we're excited about the opportunity to lease up this home. It's not quite yet at stabilized occupancy, so there's some opportunity on occupancy. We think that over time, we can achieve higher occupancy in that home, just as we had done in the rest of the portfolio, and continue to offer more Chartwell-like services to the residents, including wellness offerings and care services that we are rolling out across our portfolio. That home will be the beneficiary of that as well.
Okay. In terms of going in, cap rate, fair to say sub-6%, and that can move up by, let's say, 100 basis points?
Yes, high 5%.
High 5%. Okay. I think that's good. Oh, yeah. One last question here. On the rent growth, properties that are full capacity or almost there, what kind of rents are you seeing on the market rent side?
It really depends on the market. In the properties that are fully occupied and the markets are strong, there are some that we are increasing rents by high single digits. In some cases, a little higher than that as well. In other cases where property may run at high occupancy, but there are still competing properties that have vacant units, then the market rate increase is a little lower than that.
Got it. Okay. Thank you so much, and I will turn it back.
Your next question comes from the line of Giuliano Thornhill with National Bank. Your line is open. Please go ahead. Just a reminder to unmute your device. Your next question comes from Sairam Srinivas with ATB Capital Markets. Your line is open. Please go ahead.
Thank you, operator. Good morning, everybody. Most of my questions have already been answered, so I'll just stick to a broader macro 10,000-ft question here. Jonathan, Vlad, when you look at acquisitions and dispositions, can you talk about the kind of players you're seeing in the acquisition market you're competing with, and the kind of players who are actually looking to buy the assets you're selling?
So just to clarify, you're asking who we're competing with and how competitive the acquisition market is?
Yeah, generally in terms of the nature of the players who are buying assets you're competing with, and secondly, the nature of the players you're selling these assets to.
Yeah. I guess we can categorize it into the different kinds of assets that we are buying and selling. In the Class A assets, we are seeing competition, and it would be from the usual characters that you would assume. We are seeing increased and renewed institutional interest in this asset class. On the Class B assets, we have seen more interest in these assets than I have frankly ever seen. This wouldn't generally be by the same kinds of buyers, more local buyers, but we are seeing deep and broad interest in this asset class.
All right. Jon, thanks for that. Maybe in terms of the Class B asset classes, is it more from a local operative perspective, or is it also more institutions coming in there?
It depends on the market and where the assets are located, but I would say it is more of the former. It would be more of the local-type operators or people who want to get into the market that are looking into these assets. We do see some more institutional, larger players looking at this asset class, but generally, it is the former.
It would be fair to say that over the last couple of years, there have been a number of private equity groups that are beginning to play more actively in this asset class, where in the past, it was mostly individual local operators. Now, there are groups of people that are trying to build portfolios of these Class B assets, and they have been pretty active in this market.
That is great color, Jon. Thank you for that. I will turn it back.
Your next question comes from the line of Giuliano Thornhill with National Bank. Your line is open. Please go ahead.
Hey, guys. Good morning. Hopefully, you can hear me. I think I will take the hint from Himanshu. Just, I guess, sticking with the construction theme there, have you seen all the infrastructure announcements start to kind of increase the cost to build yet, or do you think there is any risk to that spilling over into your sector?
We have not really been seeing it play out at this point. I suppose there is the risk that it spills over into the sector, but right now, we are seeing a whole lot of development opportunities being brought to us by condo developers and condo developments that are not working out anymore, and so that probably translates into still a lot of capacity among trades.
What are the kind of characteristics of these markets that you are seeing, maybe this new or renewed interest to developing and adding supply?
Characteristics of the markets that we are seeing?
Yeah.
I think we are seeing more opportunities in core urban markets that maybe previously did not work as well for our asset class, so we do get that benefit of having the benefit of being a little pickier in site selections, as we see more and more of these condo and, in some cases, multifamily sites looking for alternate uses of their land.
Is there much spec development ongoing right now, or very speculative kind of development starts quite yet, or no?
In our space?
Yes.
I wouldn't say so. We're probably more active with our third-party development program.
The gap to rents to really making it work is still quite large, or do you have some idea around that as well?
Well, as Vlad said earlier, it's very project-specific, so we still have a number of development projects that are penciling out nicely, and those ones will proceed. As those gaps change, we continuously reevaluate projects, and some might not be as feasible with interest rate changes, but it's a continuous review.
All right. My last question was on the GMA portfolio. Appreciate all the disclosures there. Do you guys know what IRR that would pencil out to, like double digits or high single digits?
With this kind of growth, it's probably double digits.
Okay. What's the permanent financing there, like the amount of debt and the rate? Are you aware of that as well?
We bought that portfolio for cash, so we primarily use that to support the unencumbered pool.
Okay. All right. Thank you, guys.
Thanks.
Your next question comes from the line of Tal Woolley with CIBC Capital Markets. Your line is open. Please go ahead.
Hey, good morning, everybody. As more and more sites get filled up, I'm just wondering, does the nature of selling service-plans change at all? Do you see a higher attachment rate or, just because I think when the buildings are more empty, it's a little bit harder to provide those services, or it's more costly. Obviously, I think the profitability's gone up, but I'm just wondering if the customer taste has changed, and if also the fact that you have more boomers entering the system now, is that sort of the attachment rate on services changing at all?
Yeah. We certainly think that that's an area of opportunity for us to deliver more and better services to the residents that live with us, those that they require and desire, and we certainly see opportunity in us getting better at it. There's a number of things that Karen's team have been doing in designing the offering and the wellness side of things, and improving the way we deliver care services to our residents. We've added a new person to Karen's team, Vice President of Care Experience and Innovation. We didn't have that position before. Now we do have a very talented individual running this process, so we clearly are very focused on those opportunities.
Can you give some specific examples of some of the changes you've made?
Early days, we're developing our programs and building our service offering, but probably within the next six to nine months, we'll be able to talk a lot more to you about it.
Okay. Just wondering on the service side of the business, if you can just talk about the pricing outlook. I know in your strategy update last year, you talked about rent plus service growth greater than 4%, I believe, if I recall correctly. Is that still the range?
Yeah. Look, as Jeff pointed out, our increases to the existing residents are limited by basically increases in our costs, so it's slightly above inflationary increases. In some cases, when it comes to apartments that are regulated, they're limited by regulations. The market rate increases, we believe in strong markets where the properties are operating at high occupancy, we can increase those rates by high single digits. We think that all of these blends to 4% or 5% rental rate growth on average.
Would you put the inflationary impact on your inputs, like for food and all that other stuff, at around the same level?
Sorry, you are talking increases to the existing residents, whether we would do it at a higher rate?
I am just talking about the cost to provide. If you are looking at mid-single digit increases, would you say that your cost to provide is increasing at the same rate?
Yeah. The increases to the existing residents would be more in line with our overall cost increases, particularly labor costs, which are growing by 4%, 4.5% for the last many years. The market rate increases, so the rates that we are asking new residents to pay when they join us, those rates are increasing faster because of the demand-supply dynamics.
Okay. That is great. Thanks, Vlad. Appreciate it.
We have reached the end of the Q&A session. I will now turn the call back to Vlad Volodarski, CEO, for closing remarks.
Thanks again to everybody for joining us. Of course, if you have any further questions, please do not hesitate to give us a call. Goodbye.
This concludes today's call. Thank you for attending. You may now disconnect.