Ladies and gentlemen, welcome to Sienna Senior Living Inc.'s Q2 2020 conference call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and Karen Hon, Chief Financial Officer of Sienna Senior Living Inc. Please be aware that certain statements or information discussed today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statement or information. Please refer to the forward-looking information and risk factors section in the company's public filings, including its most recent MD&A and AIF for more information. You will also find a more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted on SEDAR and can be found on the company's website, siennaliving.ca. Today's call is being recorded, and a replay will be available.
Instructions for accessing the call are posted on the company's website, and the details are provided in the company's news release. The company has posted slides which accompany the host remarks on the company's website under Events and Presentations. With that, I will turn the call to Mr. Jain. Please go ahead, Mr. Jain.
Thank you, Joel, and good morning, everyone, and thank you for joining us on our Q2 call this morning. This is my first conference call as the President and Chief Executive Officer of Sienna. With me today is Karen Hon, our new Chief Financial Officer. Both Karen and I have deep roots at Sienna and have closely worked together for the last five years in our previous roles. The impact of COVID-19 on long-term care has been particularly serious across Canada. Without a doubt, the last few months have been the most challenging in our company's 48-year-old history, and I'm truly grateful for the support of our team and our stakeholders as we navigate this difficult time. My focus is on resident-centered, people-driven solutions to navigate Sienna through this pandemic and beyond. We will take all necessary steps to minimize the impact of new outbreaks and a potential second wave.
We will do everything we can to keep everyone healthy and safe while providing the best quality care and services for our seniors. In order to stay connected with our team members and to show my support and gratitude, I started in-person visits of our residences in Ontario. Over the past weeks, I have toured 11 residences, and it has given me a much better insight into the incredible work our team members are doing on the ground. It also gave me an opportunity to connect with residents and their families. We are encouraged that as of yesterday, we have no active cases of COVID-19 in any of our residences. We've continued to make good progress in implementing important measures in our fight against COVID-19, many of them outlined in our six-point action plan we announced in early June.
Since the onset of the pandemic, we have sourced over 4 million pieces of PPE for use at our residences. We continue to build capacity to ensure adequate future supply of PPE at all times. We added additional healthcare expertise and have accelerated the hiring and retention of frontline staff members. We have enhanced training and re-education of our team members and continue to make improvements to the way we engage with our residents and families. Since early June, we have engaged four senior health experts whose expertise and background is nothing short of impressive. Joseph Mapa has been engaged as an Executive Advisor. He's the former President and Chief Executive Officer of Mount Sinai Hospital, and during that time, he played a critical leadership role in managing Mount Sinai's response to SARS. Dr. Andrea Moser has been engaged as our Chief Medical Consultant.
Dr. Moser is a family physician with deep expertise in long-term care. Her advice will help us enhance our medical and physician practices and policies. We have engaged Dr. Allison McGeer as our Chief Infection Prevention and Control Consultant. Dr. McGeer is a highly recognized infectious disease specialist and played a leading role in the fight against SARS for Canada. Dr. Moser and Dr. McGeer will also help us put best practices in place and prepare us for future potential outbreaks, including COVID-19. We have engaged Joanne Dykeman to help us develop a best-in-class resident and caregiver engagement program that aligns with our focus on meaningful engagement with residents, caregivers, and families. I've now been Chief Executive Officer for nearly 60 days, and I've recently visited eight Ontario long-term care communities and three retirement residences across Ontario.
Most of the properties I visited had been in outbreak during the pandemic, and my visits are part of my Thank You tour. The main purpose of my tour is to show my appreciation for all the outstanding efforts from our team members. When most of the world was scared to even go grocery shopping, our team members were coming into work every single day. One of the main things that stood out for me was how the teams supported each other and have been doing everything they can during the pandemic. Over the past months, we have gone to extensive means to ensure adequate staffing at our residences, and we have hired more than 900 full-time and nearly 1,000 part-time staff members since the beginning of March.
Driven by the single site order, which requires staff members to work at only one residence, we have increased the ratio of full-time to part-time from 47% to approximately 66%. We are in the process of reviewing each property for the optimal mix of part-time and full-time team members. We believe that increasing the ratio of full-time team members also benefit our residents and our operations, as it provides more stability to our staffing and resident needs. In April, the governments of Ontario and British Columbia announced a temporary pandemic pay program for frontline workers. We supplemented that program to cover team members not covered in the government pay program. Moving to slide seven. Inspired by the dedication and efforts of staff members, Sienna, together with three national senior living operators, initiated the CaRES funds.
This fund provides one-time financial grants of up to CAD 10,000 to eligible employees of long-term care and retirement operators in Canada who are facing extraordinary circumstances amid the pandemic. By July of this year, the CaRES Fund has awarded more than 400 employees in the senior living sector over CAD 1.8 million in emergency financial assistance. Moving to government funding. To date, the government of Ontario has announced CAD 243 million in additional funding for the long-term care sector and CAD 20 million for the retirement sector to fund COVID-19 costs. The government of British Columbia has also committed approximately CAD 27 million in funding for costs in connection with mandating single-site work locations and infection prevention and control. The government of Ontario has announced that occupancy protection funding will be in place for long-term care residences until the end of 2020.
Residents in Ontario currently cannot be placed in rooms with three or four beds. While accommodations are limited to a maximum of two beds per room, the government of Ontario will continue to fund the beds at full capacity until the end of this year. All long-term care operators will also receive full funding for long-term care residences in Ontario and British Columbia if a vacancy is caused as a result of the closure of admissions of new residents because of an outbreak, including COVID-19. The additional funding is crucial for long-term care operators to help offset the significant costs driven by the pandemic, and we are very grateful for the support and leadership of our government in the fight against COVID-19. We will continue to advocate for additional funding and changes that benefit the sector as a whole. Moving to preparing for the potential second wave.
Together with our healthcare advisors, we have been working on numerous initiatives and procedures to ensure the health and safety of our residents and team members, and to prepare for a potential second wave. These initiatives include increased training of staff members, include cross-training to ensure a more nimble team, and the re-education of frontline workers, which is focused on quality and safety. In addition, to ensure adequate staffing at all residences, we are also enhancing our clinical and infection control teams. We have increased COVID-19 testing at our residences, including the biweekly testing of all team members in addition to regular screening, and we expect to continue to do so in the foreseeable future. We will also continue to build our PPE capacity to ensure adequate supply at our residences at all times.
We are very thankful for our hospital partners' support to care for and protect our residents and team members. They have been sharing best practices and are assisting us to plan for a potential second wave. Our hospital partners have been invaluable in promoting system integration and have helped us evaluate and implement additional measures, processes, and protocols. We are committed to increased and transparent communications with our residents and their families. We believe that maintaining an open line of communication is very important to all of us. Over the past six weeks, we have hosted 26 virtual town halls and have issued 106 newsletters to keep everyone informed of relevant developments, programs, and initiatives. We also understand the importance of open and transparent communication with our team and have launched our Stay Connected video series.
In the series, I answer anonymous questions of all staff members, and this is done in addition to regular virtual town hall meetings. Moving to our marketing and sales initiatives. Over the past few weeks, we have increased our marketing efforts, intensified sales activities across our retirement portfolio, and connected with thousands of prospective residents. These efforts have resulted in a significant increase of our active lead base. Since the end of May, our total number of leads have increased by approximately 30%. We also continue to enhance our outreach strategy by leveraging our strong clinical wellness teams. Our outreach is focused on hospitals, community partners, and professional organizations with the aim to broaden our referral sources. To further support these efforts, we have relaunched our referral program, which is extended to our professional contacts as well as our residents. Early indicators are positive.
In addition, we have redesigned our sales incentive program, which is aimed at converting potential leads by the end of Q3. Since we launched this program three weeks ago, it has resulted in more than 100 new commitments with residents scheduled to move in by September 30th of this year. In Q4 of this year, we will be launching a new centralized call center. This call center will enhance our communication and marketing efforts with current and prospective residents and their families. As new team members and new residents have started to move in again, they're required to follow a mandatory 14-day isolation period. This can be quite hard, and we're doing everything to make this time as enjoyable as possible. As part of a number of initiatives, we have launched our staycation program, which includes personalized gifts, access to technology, and entertainment, like in-suite concerts.
We are quite encouraged by the momentum we see and the feedback we have received since reopening our residences. During the month of July, deposits have nearly doubled compared to the previous month. With that, I'll turn it over to Karen, who will provide an update on our operating and financial performance.
Thank you, Nitin, and good morning, everyone. As Nitin highlighted, we did not leave any stone unturned to fight COVID-19. The magnitude and impact of the pandemic is reflected in our second quarter results, which include the extraordinary expenses to manage the pandemic. I will start with our Q2 operating performance on slide 13. Average occupancy in the long-term care portfolio declined to 92.6% in the quarter, from 98.3% in the same period last year. As Nitin mentioned, long-term care residences are fully funded for vacancies that are caused by temporary closure of admissions due to outbreaks, and we will receive funding protection until the end of the year. Sienna's average same-property occupancy in the retirement portfolio declined to 83% in the quarter from 88.4% in the same period last year.
During the quarter, occupancy declined by 90 basis points in April and 70 basis points in each of May and June, largely as a result of COVID-19 restrictions that have reduced the move-in activity and the ability to conduct in-home tours. Monthly rent collection levels remained high at approximately 99%, consistent with our experience prior to COVID-19. Moving on to our Q2 financial results. Our same-property NOI of CAD 31.8 million in Q2 decreased by CAD 8.1 million or 20.4% over the prior year, mainly related to net pandemic expenses of CAD 7.7 million. Long-term care NOI decreased by CAD 5.9 million to CAD 16.6 million year-over-year. Retirement same-property NOI decreased by CAD 2.3 million - CAD 15.1 million.
Excluding net pandemic expenses, consolidated same-property NOI decreased by 1.2% year-over-year, mainly due to the softness in retirement occupancy, partially offset by in-place rental rate increases in line with market conditions and timing of expenses. Moving on to our pandemic expenses. We expect to continue to incur an increased level of expenses to support the cost of managing COVID-19, mainly comprised of investments in additional staffing, employee pandemic pay programs, and procurement of PPE, infection control, and cleaning supplies. It is important to note that there may be timing differences between the time of incurring these expenses and the funding of such expenses. During the quarter, we recorded net pandemic expenses of CAD 10.6 million related to managing COVID-19. Turning to slide 16.
OFFO in Q2 was CAD 16.7 million compared to CAD 23.6 million in the prior year, a decrease of CAD 6.9 million primarily due to net pandemic expenses, partially offset by mark-to-market adjustments on share-based compensation, lower current income taxes, and lower net interest expense. Q2 OFFO per share was CAD 0.249 compared to CAD 0.356 in the prior year. In terms of our balance sheet, Sienna maintains a strong financial position with significant liquidity and a substantial unencumbered asset pool. Sienna ended the second quarter with over CAD 240 million in liquidity, comprised of cash and cash equivalents, as well as available credit facilities. Subsequent to the end of Q2, we repaid CAD 16 million of our credit facilities. With our diversified debt profile and an unencumbered asset pool of approximately CAD 540 million, we expect that we will continue to have access to multiple sources of financing.
We have limited debt maturities for the remainder of 2020, and we believe that we'll be able to successfully refinance our Series B debentures in the amount of CAD 240 million net of its principal reserve fund coming due next year. Our debt capitalization is well distributed between unsecured and secured debentures, credit facilities, conventional mortgages, and CMHC-insured mortgages. Looking at our debt metrics on slide 18, our debt to gross book value increased by 190 basis points to 48.5% year-over-year, mainly due to CAD 167 million drawdown from our credit facilities, of which CAD 105 million have been invested in short-term investments during the quarter. This provides the company financial flexibility. We decreased our weighted average cost of debt by 30 basis points to 3.4% year-over-year, primarily due to increasing of mix of floating rate debt to capitalize on the low interest rate environment.
Due to the significant amount of net pandemic expenses, debt to adjusted EBITDA increased to eight point six years in Q2 from six point seven years in the prior year. Our interest coverage ratio decreased to 3x in Q2 from 4x in the prior year. Factoring in the repayment of CAD 50 million of our credit facility subsequent to Q2, our Q2 pro forma debt-to-gross book value would be 45.9%, a decrease of 260 points. Our Q2 pro forma debt to adjusted EBITDA would improve by six months to 8.1 years. Sienna's AFFO payout ratio increased to 94.4% in the second quarter from 62.5% in the comparable prior year period, mainly as a result of the net pandemic expenses. We expect an increased level of expenses for some time. Given the ongoing uncertainty around the impact and duration of COVID-19, we have withdrawn our 2020 guidance earlier this year.
In the meantime, we remain committed to providing periodic updates on the impact of COVID-19 on our business operations and financial results. With that, Nitin will provide his closing remarks.
Thank you, Karen. COVID-19 has highlighted the urgency for our sector to come up with solutions to better serve and protect our seniors. They represent a generation that has contributed so much to our society and to our country. We owe it to them to help them age with dignity. I'm hopeful that collectively, we will be able to address the challenges we face and drive progress across our sector. We are pleased with the Ontario government's announcement on July 15 of a new funding model for the redevelopment of long-term care. The model is expected to accelerate the much-needed construction and redevelopment of long-term care homes across the province. We have long advocated for a revised model such as this that recognizes regional development needs, and our team is in the process of evaluating the impact of the revised model, and we are committed to working with all stakeholders.
The construction and redevelopment projects will not only allow more seniors to age in a new home, but the development of these homes will also have a positive economic impact resulting from increased employment opportunities. We are also continuing the planning of our joint venture development of a retirement home with Signature Retirement in Niagara Falls. The planned development is located in a market we know well and expected to benefit from future demand in this community. I'm incredibly grateful for our team, who continue to demonstrate commitment, compassion, and resilience, and I want to sincerely thank our residents and their families for their encouragement and support. I also want to acknowledge the many partners who are supporting us in the fight against COVID-19 and their swift leadership, including our hospital partners, the governments of Ontario and British Columbia, and many other key stakeholders.
With the support of our stakeholders and the exceptional expertise of our team and advisors, we are implementing the learnings from recent months. We have been working on numerous initiatives to keep our team members and residents healthy and safe, and it improved the way we communicate with our residents and their families. Our marketing efforts are showing a positive trend in commitments from future residents, and our development plans have been gaining momentum in recent weeks. I see many positive signs in our long-term care communities and retirement residences and feel confident about the plan we have put in place for our path forward. Thank you for your participation on the call today. We are now pleased to answer any questions you may have.
Thank you, sir. As a reminder, to ask a question, you would need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. I show our first question comes from Brendon Abrams from Canaccord Genuity. Please go ahead.
Hi, good morning. First of all, I just want to congratulate you and your team on a really challenging quarter, but everyone's stepping up in terms of protecting the residents and having zero cases right now. That's great. Just wanted to touch on a few things. Just in terms of occupancy funding for the long-term care, I know it's secured through the end of 2020. What's your expectation from the government after that, and if you've had any conversations with them?
Thank you Brendon, first of all, for your comments. This is the right thing to do at this time, given that there is really no vaccine at this moment. It is not only a difficult thing to limit the spread of COVID-19, but just being able to serve people who are four people in a room is difficult as well. This is a key challenge for the province and for our sector. By this change, I think, the system has lost close to 5,000 beds in capacity. I do not really have any guidance into what it would look like in the future, but we are committed to working with our hospital partners, with the government to find a sustainable solution going forward. As we have more insight, we will provide so.
Okay. Yeah, that makes sense. I think you touched on this in your opening remarks, just in terms of upcoming debt maturity, the Series B. Not too far from now, I believe February 2021. What do you see as the most likely scenario or maybe option or two to address this maturity, and how do you think maybe the rate might compare to the existing debenture?
Yeah. The existing debenture, the rate is around 3.4% or so. Depending on what we do with it and given the flexibility we have had as a company, there's an opportunity for us to do an unsecured financing. Potentially do some in mortgage financing or a blend of that. Unfortunately, there's no CMHC program as it relates to Ontario long-term care, but there are some assets in an unencumbered asset pool which are retirement residences, so we might be able to swap some. At this point, we feel very confident in our ability to do so. We have had very positive conversations with our lenders over the last month or so in terms of a path forward for Series B. At this point, we are really looking at all different options. We have multiple plans into place.
Again, as we have a bit more confirmed view of what we might want to do, we will be announcing it in due course.
Okay. Do you have an idea, just to follow up, an idea of the clear title value of maybe your retirement portfolio, which is eligible for the CMHC financing?
Sorry, Brendon, I'm not sure I got the question. You said the value of it, of the portfolio. Is that what you were asking?
The value of the clear title assets in the retirement portfolio, which I guess presumably you could secure CMHC financing on.
We have CAD 540 million in assets, which are unencumbered at the moment. Some of them are retirement residences. I do not have the split on top of me at this point. I think that's when we look at Series B combined, that's one of the ways we want to look at it as well.
Okay. Just last question from me before I turn it over, just in terms of maybe G&A and expectations, maybe for 2021 onward. Obviously, last quarter was unique and maybe even the next two as well, dealing with the heart of the pandemic. Can you provide some color on where you see maybe G&A normalizing I should say? Would it be fair to be somewhere between maybe last quarter and maybe Q4 2019?
Right. Hi, Brendon. Thanks for your comments at the beginning. During the quarter, we spent on let's say, on regular wages and benefits in G&A of about CAD 5.6 million in the quarter. We know that we've added pandemic expenses, as a result of what we were managing. Going forward, on a normalized basis, we expect it to be back to normal levels, at around 3.4%-3.6% of revenues as we have experienced in the past.
Okay. That's very helpful. Thank you. I'll turn it over.
Thank you.
Thank you. Our next question comes from Chris Couprie from CIBC. Please go ahead.
Good morning. Maybe just following up, along Brendon's lines of questioning with respect to the pandemic expenses that were incurred in the quarter. My take is that in the long-term care side, there could be some recovery of the net amount, kind of outstanding, in the quarter. Maybe, ultimately, the LTC pandemic expenses should mostly be recovered. What about retirement? Is that kind of CAD 3 million, a quarter of pandemic expenses likely to persist? Is there any other government assistance that you could get on that side?
Right. Hi, Chris. On the retirement side, we have a little bit of government funding announcements left. Really, the impact of the pandemic on retirement has been significantly different between long-term care and retirement. When we look at our expenses across the board between the two segments, they really relate to additional staffing to support our residents, the employee pandemic pay programs, purchase of PPE and infection control and cleaning supplies. When we look at these two segments together, we expect that these costs would moderate over time. For the remainder of the year, we'd be looking at approximately CAD 4 million of pandemic expenses in our NOI, mainly attributed to long-term care segment. This does not factor in the possible additional government funding that might be announced later in relation to the pandemic.
Sorry, you expect the net pandemic expenses on the NOI line to be about CAD 4 million for the balance of the year. Is that right?
No, that won't be net. That would be before any government funding announcement.
Okay. That's gross. All right. What about on the administrative side? I know you've made a number of, or engaged a number of healthcare experts. Just on that, is there anything you can share that you've learned so far and maybe anything with respect to how long these engagements may last and in terms of the extraordinary admin expense?
Our admin expense for this quarter, related to pandemic, was CAD 3 million. We expect it to be, call it around CAD 3 million for the balance of the year, not CAD 3 million by quarter. The expertise that we got from our key advisors in healthcare has been truly extraordinary, and is to really help us get better prepared for the second quarter, making sure we have good physician practices in place. We expect the long-term care sector to be a lot more collaboration, working with hospitals. Having someone like Joe to advise us on those items is a key for us as well. I think we shared many of the things that we are doing over the last 60 days, based on the advice we've got.
I truly believe that there's a real opportunity for us to make a key difference in our seniors in both long-term care and residents with that advice. Going forward, our G&A is what Karen talked about, call it 3.5% or 3.6% as percentage of revenue. If we have further information on it, in 2021 and onwards, we'll definitely do that on a timely basis.
Okay, great. Maybe just one last question from me. On the long-term care side, have you noticed any shift or change at all in the wait lists for your residences?
The wait lists have gone longer. As you might notice in our long-term care, occupancy has gone down to 92%. It's not going down because there are not people looking to move in. It has gone down because of COVID-19. Many of the homes were shut down for taking any new residents in. The wait list is now close to 38,000 people, and we do not see really any change in that.
The wait list for your residences specifically, there's been no real material change?
Correct. No material change.
Thank you.
Chris, maybe I'll just clarify. I think I might get why you were asking if it's net or growth. I want to clarify that NOI would be looking at about CAD 4 million per month for the rest of the year.
Oh, okay. That's mostly in the long-term care segment?
That's right.
Thank you.
Thank you. Our next question comes from Pammi Bir from RBC Capital Markets.
Thanks, good morning. As you've worked to address some of the issues over the last few months, what are some of the areas that you've identified in terms of the more urgent need of addressing? Secondly, can you provide some color on the recommendations from Paul Boniferro?
Sure. The first one, I think it really has been a learning not only for Canada, not only for Ontario, not only for long-term care, but for Sienna, because the things that the world know today about the virus, no one knew it three months back. For example, there are three things in my view, which make a lot of sense today, but they were not in place from the very beginning. The first one being universal masking. This was implemented in early April in long-term care. We started a few days before the directive came out. Now you see, every place you go out, you see people wearing a mask. If we would've started it much sooner or people knew, there would've been a different outcome potentially for Canada. The single site staffing, that has been a huge support in limiting COVID-19.
The last one, is universal testing. Previously, the test was not being done, so you could have had asymptomatic patients or residents living with people who had no COVID-19 at that point. Without any universal testing, that was not possible. We think those three things have made a key difference. We continue to look forward with the government to see how we can increase staffing in long-term care. We have long advocated for it, that the number of staffing needs to go up. From a company perspective, adding the healthcare expertise and infection prevention and control expertise has been truly instrumental. When you go to a hospital, as you would notice the amount of infection control you would have. That is different in long-term care. Long-term care truly is a residence home.
When you go and people bring in their own furniture, their own bedding, because it is supposed to be home-like versus an acute care setting such as a hospital. I would say those would be the key learnings. In terms of Paul Boniferro's analysis on us, we are reviewing it at the moment, and we will figure it out to some of the implementations from it.
Sorry, just any color on, you mentioned that there are a number of recommendations that he made. Can you maybe just highlight a few or?
Sure. A few of the ones that we addressed even in the beginning is really enhanced training for our staff. Making sure that people are aware and reinforcing our zero tolerance policy as it relates to abuse. Those would be the two biggest ones that we already started, as we were starting with the Paul Boniferro investigation. The big one is on communication with both residents and family members. That's where our call center's coming into place because, when everyone was extremely busy with COVID-19 and dealing with it is difficult sometimes to attend to the phone. That keeps family members guessing as to what is happening, since they were not able to visit. Those would be the three key areas, staffing, communication, and training.
Got it. That's helpful. Thank you. Just maybe switching gears, looking at the retirement home occupancy erosion, it seemed to, I guess, pick up in July, but maybe the indications to date, from some of your commentaries seem a bit more positive. Can you just provide some context on that slippage in July relative to some of the other months? It seems to be in a bit more contrast with some of your peers, which saw a bit less erosion, j ust what you're seeing in perhaps the first few weeks of August here.
Sure. No, thank you, Pammi. Again, it's a bit of a challenge when the universe of people who disclose this information is very limited. Call it two or three people. I'm just going on a limb, and I'm guessing that's who you're comparing it to as well. Really for us, we saw a slower decline in the beginning months. Year-to-date, for example, if you look at the last three months or four months, April, May, June, and July, we had a cumulative decline of about 3.4%. We are looking at it more from that perspective. The thing we saw in our communities is that end of June is when long-term care started to open up. There definitely was a pent-up demand of residents who needed to go into long-term care, and that's what we saw. That is really the major decline of our occupancy.
It wasn't people moving to competitor.
We also see pent-up demand for retirement, and that's the numbers we shared in terms of our number of leads going up. We have more than 100 deposits for people looking to move in before Q3. There's usually a bit of lag between people leaving versus people coming in, and that's what we are experiencing.
I got it. I understand. Thank you. I guess just, maybe last one from me. Just with respect to hospital management agreements, do you have a sense of how long they'll continue to, I guess, remain in place? Presumably, are the costs associated with those agreements incorporated into your, I guess, outlook for the pandemic related costs?
Correct. Starting with the last question first, yes, that cost is included in the pandemic related cost going forward. I would say out of our three management agreements, there are two which have a timeline to it. It's not decided finally yet, so I'm hesitant to share the timeline. The third one would be potentially a bit longer, but the two should be coming out in short to medium term, if I want to say that. Again, as we get furthermore clarity, we would announce those dates.
Thanks very much. I will turn it back.
Thank you, Pammi.
Thank you. Our next question comes from Jonathan Kelcher from TD Securities. Please go ahead.
Thanks. Good morning. Just to follow up on Pammi's question there on the retirement side. I guess in your disclosure, you said that deposits and signed leases were nearly double July over June and nearly double over July of last year. I guess two things. One, how long does it take for that to translate into occupancy?
Yeah. One of the deposits that I'm talking about, Jonathan, there is usually a lag. We also are quite focused on ensuring that people move in a bit sooner. There is a conversation of potential second wave, no one really knows, people are talking maybe sometime in October. We are hugely focused on having people move in by Q3. The deposits that I'm referring to, the 100 or more, they are due to move in before Q3. Having said this, we are also working towards how do we have people move in, if COVID-19 does come back in a bit more bigger way. That's when I talked about a staycation process of when people come in and they're self-isolating. Even though they are in the room, it does not mean they have to be uncomfortable.
There are a lot of work that our retirement team is doing to ensure that they're enjoying their time of that 14 days rather than feel that they can't go outside.
Okay. Does everybody who moves in now have to self-isolate for the 14 days?
That's correct.
Okay. I guess your deposits and signed leases were up nearly double versus July last year. How did May and June compare to 2019 May and June in terms of those stats?
I don't have those numbers top of mind. In May and June, again, people were quite hesitant because you don't really know when this would happen. Even during the pandemic, if the home or a retirement residence was not in an outbreak, we had people moving in because if you have decided to move and you have sold your house and everything was done. We had people move in. We obviously did that with the most precaution to ensure that they were isolated, that they are well taken care of, and that we are not putting others at risk. May and June activity would be quite low.
Okay. Now, would it be fair to say that July might be the bottom in terms of occupancy based on the leads that you have?
It's difficult for me to commit to something, but we hope so. I mean, our deposits look promising to us, and our number of deposits grow every day, which is a positive sign. I hope that July could be the bottom. I think it's hard for me to commit at this point. Again, we are committed to providing our monthly occupancy as needed to everyone.
Okay. Just one last one for me. On the long-term care, it has obviously started to open up. Do you see any issues, I guess What can your occupancy get to given that you do have those 500 or so ward beds that you can no longer use, and what do you think it gets to by the end of this year?
Yeah. I would say our occupancy, if we remove those roughly 500 beds, which are taken away because of the four beds, and we are funded for it. We expect our occupancy to go up to 97%-98%. There are very healthy wait lists. Again, the reason the occupancy has not gone up is just because you could not accept admissions. There's a high amount of demand, as we just talked about 38,000 people on a wait list. We expect that to go up unless homes go in a shutdown again because of COVID-19.
Okay. That should be up sort of by the end of Q3 then?
That's our intention, and that's what we're seeing, that people are moving into long-term care.
Okay. I guess it's just way too early to figure out how any sort of funding would work if the government doesn't change on those 5,000 ward beds, right?
Yeah, that's correct. Sorry, I just want to correct. The movement have not started into long-term care, but we are in the process of speaking to LHINs and others as to how that would happen, because, again, the health and safety comes first. We are just finalizing that. We might not see a big difference in Q3 as it comes to an average. Again, that's something we are watching, and it's more to do with when everyone feels comfortable that we should be adding more people to long-term care and not put others at risk.
Okay. That's it for me. I'll turn it back. Thanks.
Okay. Thank you, Jonathan.
Thank you. Our next question comes from Yash Sankpal from Laurentian. Please go ahead.
Good morning.
Hi, good morning, Yash.
Good morning.
Just wanted to clarify one thing. I'm not sure if you guys have started moving people into your ward rooms in your LTC homes. Has that process started or you don't expect it to start?
Let me just clarify. I think my answer probably confused that. First, there's no one moving into long-term care in Ontario at the moment, whether ward or no ward. The second conversation is that the four- bed rooms would be only limited to two people in a room. That would stay till the end of 2020 as per directive.
Got it. Okay. You mentioned that your staff to patient ratios have gone up. I think you said 47% - 66%. Could you maybe.
Full-time to part-time ratio has gone up. That's correct.
Are you allocating more staff to your patients than that is required? That's what I'm trying to understand.
As we talked about, Karen mentioned the increase in expenses for COVID-19, the majority of that expense is related to staffing, whether it's screening, whether it's additional staff to take care of residents. That's what we talked about, roughly CAD 4 million of expenses, going forward. It does not factor in government funding. We expect government funding would come and that those expenses would come down.
Okay. About your debt maturity, you mentioned that you have CAD 440 million of unencumbered assets. How much of that is assigned to your unsecured debenture pool?
Sure. We have CAD 540 million of unencumbered assets and our unsecured financing, we have a CAD 200 million revolver and CAD 150 million unsecured financing, CAD 350 million. The covenant we need to meet is 1.3, call it CAD 450 million that is taken away out of the CAD 540 million. You're left with close to CAD 90 million or so, and you can borrow additional CAD 70 million from that unencumbered asset pool. Our goal is to always have some buffer and cushion in it. Our refinancing, which is coming due, which is Series B, is backed by 26 long-term care assets.
Just to value, there are 12 A long-term care assets in it, and based on some of the valuation work we have done, we find between just the A properties and the liquidity that we have, we should have enough ability to be able to refinance the upcoming debt maturity of CAD 245.
Okay. Just last one on your margins. Based on what you're seeing and hearing from the government, do you think your margin profile has gone down, your long-term care margin profile has gone down, or will go down from where it was, say, last couple of years permanently?
Hi, Yash. Our long-term care and retirement margins have been impacted by our pandemic expenses. Really, if we exclude those for Q2 and year to date, those would be comparable to the 2019 margins.
It's hard for us to, just to follow up on it, Yash, it's hard for us to predict the model going forward, and that's why we are sharing the pandemic related expenses. Excluding pandemic, our margin stays consistent. I think it's too early for us to predict what the future might look like for both long-term care and retirement residences.
Thank you. That's it for me.
Thank you, Yash.
Thank you. Our next question comes from Himanshu Gupta from Scotiabank. Please go ahead.
Thank you and good morning.
Good morning.
First of all, congrats to you, Nitin and Karen. You guys have taken the responsibilities in difficult times. Nitin, how have you been attending or being Chief Executive Officer so far with the opportunities or challenges you see in front of you?
Thank you, Himanshu, for the question. Many of you might not know, I, in fact, started my career in operations and attended hotel school. This is really me coming back to my roots. To say that last 60 days has been a blur, I think that word is too slow to describe the pace of what we have done as a team. It is not lost on me that it truly is a privilege to be serving 12,000 residents and 12,000 team members. I would say the highlight of my last 60 days, I've been visiting 11 of our communities, eight long-term care, three retirement, and speaking to team members one-on-one and really talk about some of the heroic work that they have done. During COVID-19, I mentioned in my script that when most of the world was scared of going to grocery store, people went into work.
Some of them stayed into long-term care homes so that they don't go back and infect anyone at home. There is really no words to describe what the teams have done. We're very pleased with the healthcare expertise we were able to bring in to Sienna. These are some of the best names in Canada in healthcare. We have very strong operations team, very strong team at our corporate office. I'm really confident about the path forward. The redevelopment program is encouraging. Focus from the government on long-term care to fix some of the challenges encouraging. I'm encouraged and I'm optimistic about, not only our sector, but definitely for Sienna.
Sure. Thank you, Nitin. We wish you all the very best for the role ahead. That's it for me.
Thank you.
Thank you.
Thank you. Our next question comes from Troy MacLean from BMO Capital Markets. Please go ahead.
Good morning. I just have one question. Are you seeing competitors, given what's happening in the retirement sector, are you seeing competitors get more aggressive in either discounting rents or more involved on the sales front? What are you seeing there? Any change from the prior couple of quarters?
No, it's very local, Troy. At markets which have had new competitors moving in, we always look at it as dynamic pricing, so we will adjust those. For most cases, we have had rental increases go in, and the residents are extremely supportive. They understand all the amazing work we have done. Been an opportunity, visited three of our retirement residences. They all talked about, they're very happy the government is paying the staff extra. They understand all the steps we have taken with screeners at the door. Not one of them talked about cost. They really talked about ensuring that we continue to do everything we can to keep everyone safe.
That's good. Just one final question. The LTC redevelopment program has been tweaked by the government. Would it be fair to say that redeveloping the assets, or has the timing of redeveloping these assets, has that changed at all in the last quarter, given what's happening in the industry? Do we expect to start that something in the near term?
I think the timing has changed in the sense that previously we talked about the redevelopment program was not really financially feasible, because it does not hold a construction cost to be the same in North Bay than it would be on Yonge and Eglinton in Toronto. The fact that it's regional, it factors in the development fees that you have to pay, the land cost. I do think that there would be some pickup on it. Obviously, that's the conversation to have with stakeholders, ensuring what the process is, how streamlined the process is to start building again. Lenders are quite active in this space in terms of construction financing as well, so that will continue on. Again, these are all the conversations with lenders, with stakeholders, with the hospitals. That will be the conversation moving forward as to how we do that.
Thank you. I appreciate the color, and have a great day.
Thank you, Troy.
Thank you. Our next question comes from Tal Woolley from National Bank. Please go ahead.
Hi. Good morning, everybody.
Good morning, Tal.
Good morning.
I asked this question on one of your peers' calls. What sort of regulatory changes or operational changes would you like to see that you think that would really help deliver sort of better care during this period? Do you sort of have an idea of the two or three things that could really make an impact right now?
I think the three things I talked about as it relates to COVID-19, the three things have been universal masking, and you can make it a bit more broad and just talk about PPE, in a bigger way. I think that the focus will continue on. It was very difficult, even though, because of the size in our platform, we had access to PPE. I would tell you it was difficult to ensure that you have continued supply. We are shoring up supply at this time, and we have a bit of a break. The single site staffing, that was very beneficial for us. The last one is on our universal testing. I do think these three things should continue on. We do have increased some staffing, as well, to ensure that we are putting extra work around screening and everything.
Again, depending on what comes out of this pandemic, if it's going to business as usual, unless the pandemic disappears, there are learnings in it. Whether it relates to infection control, whether it's looking at staffing mix from full-time to part-time. I think it has been a crisis and I wish it wasn't here. I think this would make things or have definitely driven the focus on many of the things that we have talked about before.
Okay. Just on the balance sheet. You signaled like you had repaid about CAD 60 million of the credit facility drawdown in Q3, and that would still leave you, give or take, I'm sorry, I don't have the number right in front of me, but probably about a CAD 90 million-CAD 100 million cash balance. Is the intention to carry that much for the foreseeable future?
Yeah. Hi, Tal. Going into the pandemic early days, we wanted to be very prudent from an enterprise risk management perspective. We wanted to make sure that at all times we have sufficient cash on hand with real quick access to financial flexibility to support additional staffing needs, as well as purchase of PPE. Now that we've learned more from it, that's why we thought that we had the ability to repay some of that back. We would expect to maintain that higher level of cash on hand.
Okay. Then, the call center that you're rolling out, is that an outsourced or are you doing that in-house yourself?
It's a call center which would be fully owned by Sienna with people who understand seniors, who know what's more important to residents. It would be our Sienna team members well-trained in our sector. That'll be a key focus for us. We will start with the right mix, and we will make it bigger as it generates more and more leads.
Okay. Sorry Karen just lastly, I just want to make sure I’ve got the pandemic expenses that you’re sort of expecting to see correct. You had said about CAD 4 million in NOI for the balance of the year, and then about CAD 3 million in G&A?
No.
That's your best guess at this point?
Yeah. Let me clarify that. It's CAD 4 million per month in NOI, with most of that in long-term care. CAD 3 million for the balance of the year in G&A. Let's call it CAD 0.5 a million each month in G&A.
The CAD 4 million, Tal, does not include any government funding. We expect government funding to come in, and that would reduce that number of CAD 4 million.
Got it. Okay. Thanks very much, everybody.
Thank you.
Thank you, Tal.
Thank you. I show no further questions in the queue. At this time, I'd like to turn the call back to Mr. Nitin Jain, President and Chief Executive Officer, for closing remarks.
Thank you, Dylan. Thank you to all of you, and thank you for joining our call this morning. On behalf of our entire management team and our board of directors, I want to thank you for your continued support, and I hope all of you have a great day. Thank you.
Thank you, everyone.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.