Sienna Senior Living Inc. (SIA) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us for Sienna Senior Living Inc.'s conference call covering the first quarter of 2026. Nitin Jain, our President and Chief Executive Officer, is hosting today's session, along with David Hung, Chief Financial Officer and Executive Vice President, Investments at Sienna Senior Living Inc. I'd like to remind you that some of the statements or information we discuss today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statement or information. For more information, please refer to the forward-looking information and risk factors sections in the company's public filings, including its most recent MD&A and IIF. A more fulsome discussion of the company's results can also be found in its MD&A and financial statements for the period, which are posted on SEDAR+ and available 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. The details are provided in the company's news release. The company has posted slides which accompany the host's remarks on the company's website under Events and Presentations. With that, I will now turn the call over to Mr. Jain. Please go ahead, Mr. Jain.

Thanks, Tina. Morning, everyone, and thanks for being with us today. Sienna kept its growth momentum going in Q1 2026. We began the year posting strong organic growth for a 13th quarter in a row and carried on expanding through acquisitions, among them our recently announced deals to buy a newly opened Long-Term Care home in the Greater Toronto Area and a retirement residence in the Ottawa area. Our Long-Term Care redevelopments are also moving along nicely, and we've had success securing land for upcoming projects in the GTA. All of this is helping Sienna at an exciting moment for senior living. The sector is still exceptionally strong, powered by rapidly rising demand from an aging population, limited supply in the near term, and very little exposure to today's geopolitical volatility. In Q1, both operating platforms turned in strong results. Same-property NOI rose 15.8% in the Retirement segment and 1.7% in Long-Term Care. Leaving out one-time items in both years, our Long-Term Care segment produced same-property NOI growth of 6.7%. The main drivers behind the double-digit gain in the Retirement segment were the year-over-year rise in occupancy, continued rental rate growth, and extra care revenue. Average same-property occupancy climbed 180 basis points year-over-year and stood at 94.7% in Q1.

A 280 basis point margin improvement helped make this possible. Occupancy is unchanged from Q4 of 2025 on a quarter-over-quarter basis, mainly reflecting normal seasonal patterns along with unusually severe winter weather across many of our key markets. Our strong sales platform and targeted marketing efforts were driving our year-over-year growth. Tours rose substantially at a national open house held in February, producing almost 500 new leads and showing how widely our marketing and sales campaign reaches. We also stay strongly focused on hospital outreach and on excellent ties with healthcare partners in the local communities we serve. All of these efforts should generate solid leads and future move-ins. Another major factor powering the strong results of our retirement operations is greater care revenue. That stems from a new Aspira wellness program featuring more efficient processes, better staffing models, and consistent care offerings. Launched in 2025, the program has produced roughly a 25% rise in care revenue. Turning to Sienna's Long-Term Care operations, homes that are fully occupied with expanding waitlists, increased revenue from private accommodations, and higher government funding each contributed to these strong results.

Sienna's government-funded Long-Term Care operations bring substantial value to our company and offer stability, since they are largely shielded from market volatility or economic uncertainty. We remain active on the acquisition side, with CAD 188 million of transactions closed or under contract so far in 2026. We raised our ownership stake in two properties that Sienna majority-owns in the Greater Toronto Area and in Kelowna, and we completed the purchase of The Bartlett, a 129-suite retirement residence in the Greater Toronto Area. Beyond that, at the end of last week we signed two purchase agreements, one for Rockland Manor, a 160-suite retirement residence in the Ottawa region, and one for Ballycliffe, a newly developed 224-bed Long-Term Care community in the Greater Toronto Area. Rockland Manor will be picked up for roughly CAD 41 million, with an initial investment yield of 6%. Ballycliffe's gross purchase price, which includes the rights to a 25-year construction funding subsidy, comes to about CAD 68.3 million, and its investment yield is roughly 6.75%. We will acquire both properties below replacement cost and fund them with cash on hand. These are excellent illustrations of the wide range of opportunities open to us for growing our portfolio. Sienna's acquisition pipeline continues to be robust, and we are confident in sustaining a meaningful pace of acquisitions through the rest of this year.

Turning to redevelopments. We're also pushing our redevelopment pipeline forward, especially in the Greater Toronto Area. Later this year, we expect to begin construction on Sienna's first project within the city of Toronto, where a 448-bed Long-Term Care community is being redeveloped at our existing Glenrothes site. That represents one of several projects within our pipeline of 1,600 beds. Over 80% of that pipeline sits in the GTA, where fresh funding has markedly bettered the fundamentals for development. We've been busy sourcing land for GTA projects whose existing sites lack enough land. Having recently bought a site in Brampton, we're moving nearer to the objective of securing all lands for every C home project. Every redevelopment we complete will modernize and reinforce our Long-Term Care platform and underpin continued growth of our business. Past our acquisitions and redevelopments, we stay focused on generating value inside our current portfolio via asset optimization, strategic renovations, and general enhancements across our retirement and Long-Term Care platforms. Within our Retirement segment, our efforts center on aligning residences more closely with market demands, investigating alternative property uses, or widening services by adapting them to support seniors as their care needs evolve.

We're bringing more and more of our clinical care know-how to bear on our retirement platform. The refreshed wellness offering we've rolled out gives residents expanded access to wellness and care right where they live, supports a better quality of life for them, and lets them remain in our Retirement Homes for a longer period. Over in the Long-Term Care segment, we keep refining the Circle platform, guided by continuous feedback from residents, families, and team members. Everything we do under our Circle approach puts residents at the centre. Through efforts like the Circle Spa and Circle Cafe, every one of these initiatives is built to lift the resident experience. That impact shows up in resident satisfaction surveys and in accreditation results that stay consistently strong. Turning to our team members, as we keep growing, bringing each new community into our operating platform promptly stays a leading priority. An outstanding resident experience from day 1 starts with the people on our teams. With roughly 15,500 employees, we understand how important it is to put money into programs that build a solid culture of ownership and engagement. Our efforts span town halls that encourage learning and connections, leadership development, and recognition and share ownership programs, under which shares have been granted to more than 12,000 team members. We're putting investment into team member health and well-being as well, and we've launched a new employee and family assistance program offering broader access to mental health, wellness, and work-life support.

Every one of these programs contributes to the ongoing decline in turnover, and in 2025 that figure hit an all-time low of under 20%. Those same efforts gave us a fifth straight year of higher team member engagement and helped bring down Sienna agencies costs, now under 1% of total labor cost. These accomplishments make us very proud, and they leave us well placed to draw in and keep the finest people in Canadian senior living. On that note, I'll hand things over to David to walk us through our financial results.

Thanks, Nitin, and good morning, everyone. I'll begin with slide 11, covering the financial results. For Q1 2026, revenue on a proportionate basis rose 17.3% compared with a year earlier, reaching CAD 286.3 million. The gain came mainly from acquisitions, occupancy, and rental rate growth, along with higher care revenue in the Retirement segment. Also contributing were our Long-Term Care platform — including greater flow through funding for direct care, higher private accommodation revenues, CAD 1.1 million of retroactive funding from the B.C. government, and added revenues from acquisitions and developments finished in 2025. Same property NOI grew 7.9% to CAD 47.4 million in Q1 2026, which includes 15.8% growth in our Retirement segment and 1.7% in the Long-Term Care segment. Within Retirement, same property NOI was up CAD 3 million in Q1 2026 versus last year, driven largely by better occupancy, rate growth, and higher care revenues. Together with our strict attention to operating expenses, the operating margin improved 280 basis points year-over-year. In Long-Term Care, same property NOI rose CAD 1.3 million. Ongoing gains in private occupancy and increases in government funding were the main drivers of that year-over-year growth.

Q1 results for us contain some one-time items tied to earlier years — retroactive funding from the government of British Columbia in 2026 and WSIB refunds in 2025. If you set aside those one-time items in both years, same property NOI would be up 10% overall, with a 13.8% rise in the Retirement segment and 6.7% in Long-Term Care. In Q1 2026, operating funds from operations rose 42.5% to CAD 37.1 million versus last year, driven mainly by higher NOI and lower cash taxes. Adjusted funds from operations were up 45.1% to CAD 35.1 million versus last year. That gain came mostly from higher OFFO and construction funding income on redevelopments finished last year, partly offset by more maintenance capital expenditures. Per share, OFFO and AFFO rose 21.5% and 23.5% respectively in Q1 2026. Sienna's AFFO payout ratio for Q1 2026 came down to 68.5% from 86% in Q1 2025. That improvement reflects Sienna's strong operating results. The contributions from our completed redevelopments and accretive acquisitions, as well as the progressive deployment of capital to fund growth initiatives. We finished Q1 2026 in a strong financial position, with roughly CAD 557 million in liquidity and close to CAD 1.5 billion of unencumbered assets.

Our net debt to adjusted gross book value sits at roughly 37%, which is a conservative position, and the weighted average cost of our debt stayed low at 3.9%. On a year-over-year basis, we also pushed Sienna's debt service coverage ratio higher, reaching 2.6x compared with 2.4x in Q1 2025/2026. Roughly CAD 160 million of debt at Sienna was scheduled to mature over the coming 12 months. Because we can tap a wide range of capital sources, we feel confident about refinancing that maturing debt on attractive terms. Turning to our equity, demand for Sienna shares continues to be strong. That allowed us to fully deploy Sienna's CAD 150 million at-the-market distribution program in Q1, giving us the liquidity needed to fund continued growth through acquisitions and developments. With that, I'll hand the call back to Nitin for his closing remarks.

Thank you, David. We think Sienna's capacity to both operate and invest right across the continuum of care is still what sets us apart, and it opens up a broad range of growth opportunities — everything from private pay independent living to government-funded Long-Term Care, and from acquisitions to redevelopments. Our strategy backs our growth initiatives at a moment when demand for senior living keeps rising while supply stays constrained. With that as the backdrop, we grew our assets by roughly 30% last year, and that momentum is carrying into 2026, with close to CAD 200 million of acquisitions under contract and a CAD 250 million redevelopment project kicking off later this year. Yesterday, we announced a renewal of the ATM program, which lets us issue another CAD 150 million of equity to grow and scale our platform. Thanks to the strong support of our investors, we stay extremely selective when weighing opportunities to expand. We'll keep being disciplined in how we raise and allocate capital, and we'll maintain a strong balance sheet. Near term, our confidence shows in Sienna's growth targets for 2026. Excluding one-time items, we expect same-property NOI growth above 10% and occupancy reaching 95% in the Retirement segment.

For Long-Term Care, we expect growth in the low to mid-single digits, excluding one-time items. Canadian senior living is doing extremely well, and we feel Sienna is perfectly placed to gain from that in both the near term and over the long run. Thanks to our 15 and a half thousand team members, who sit at the core of what we achieve, we have confidence in our capacity to seize the huge opportunities that lie ahead. On behalf of the whole team and our board of directors, I'd like to thank every one of our shareholders and all of you joining this call for your ongoing support. Tina, let's open it up now for questions.

Just a reminder that you can ask a question by pressing star one on your phone's keypad. Our first question comes from Lorne Kalmar at Desjardins. Go ahead, please.

Thanks. Morning, everyone. Perhaps I could just ask about the announcement on removing funding for the third and fourth beds. Of those roughly 300 that you have, how many do you figure you can realistically get redeveloped by 2030?

Hi, Lorne. Good morning. That's actually an excellent question — there's a chance we could probably redevelop half of those, or we'd be in the process of redeveloping others. The main thing, from where we sit, is that what government is focused on is a path for redeveloping these beds, knowing that if the funding gets removed, running those beds will be very difficult to continue, and closing any capacity in Long-Term Care serves nobody's interest. Our belief is that as we keep building and redeveloping, the advocacy from our association and from us would be to keep this funding at least at a sustainable level so these homes and beds stay open.

All right. So perhaps staying with the LTC redevelopment topic for a moment. You announced that you're buying the land in Brampton. Could you give us some detail on what exactly is planned for that site? You also said you're nearing the point of having secured all the land required for your C redevelopments. How many additional sites would you still need to acquire?

We have just two remaining sites left to acquire. Once that's done, we'd have land in place for every C home redevelopment we need to carry out. At the Brampton site we recently bought, we already have a home a few kilometers away, and eventually we'll relocate it there. If all goes smoothly with that project, construction would likely begin 18 to 24 months from now, followed by 24 months of building. Your 2030 date lines up fairly well with our plans. We have additional projects as well, and our commitment is that we clearly want to move Long-Term Care redevelopment ahead quickly, though we wouldn't accept significant development risk. In our view, that's 10% of our asset base. It now sits at close to CAD 2.5 billion in assets. Probably CAD 200 million to CAD 300 million would be under development at any one time in total. We'll simply manage those items. We do believe there's a route for us to redevelop all of our C homes at this point, given that robust CFS funding exists for the GTA.

All right, that's wonderful to hear. Perhaps just a final rather nitpicky question for David. Regarding G&A, I believe that if you strip out SOAR and share-based comp, it rose roughly 21% versus the prior year. Would you be able to offer us a bit of insight into whether that reflected a timing matter or whether it's more of a solid run rate to expect ahead?

Absolutely, happy to address that. There are a few factors involved. To start with, that growth would factor in extra staff coming from the acquisitions we completed. In 2025, you'd see the usual wage increases compared with the prior year. We also recorded some added professional fees during the quarter — roughly CAD 500,000 — and those won't carry over into 2026.

Alright. Given what we saw in the first-quarter results, we really ought to recalibrate what we expect for G&A.

I'd say that once you adjust for a few of those one-time G&A costs, you'd be able to normalize — reset — for 2026.

All right, many thanks. I'll hand it back over.

Thanks.

Jonathan Kelcher from TD Cowen has the next question in the queue. The line is yours — go ahead.

Thank you, and good morning. Moving over to retirement operations and the optimization portfolio you mentioned — how do you expect occupancy growth to unfold across that portfolio during this year?

Yeah, absolutely. We're, you know, still making solid headway with our optimization portfolio. And we do keep expecting it to expand. Occupancy across that portfolio came in at roughly 85%. As we go on, you know, adjusting the size of certain properties in it, we'd anticipate that occupancy at a couple of those properties will climb toward stabilization. Once that occurs, we'll shift those properties over into our same property portfolio.

Right, so the goal would be getting one or two of those onto a single property by next year?

You've got that right. Yeah.

That's reasonable. Okay. Regarding the rate growth you're achieving in the retirement portfolio, are you encountering much resistance to that? Second, could you perhaps break down what you're observing on new leases and turnover leases compared with what you're seeing on renewal leases?

Good morning, Jonathan. On rental rates, we're sitting at roughly 4% increases, call it that. We spend a fair amount of time educating people about inflationary increases and about what's happened with food costs, utilities, and all of that, to explain the reason our rents are going up. Our aim is to stay very disciplined without generating a lot of shocks in the system, so we're not looking for bigger rent increases in 1 year and upsetting every resident who lives with us. We'd prefer a steady stage across multiple years. We follow the same approach on new leases. It depends on the market. I mean, some markets are seeing increases above 4% at a new lease given what's happened in the market. In certain cases it's closer to the 4%. In cases where we have an optimization portfolio, you might see flat changes, because the goal there is to build occupancy rather than raise rate first.

All right, understood. One final point on Ballycliffe and that 6.75% investment yield — how is it split between NOI and construction financing for funding purposes?

Absolutely, Jonathan — that’s a fair question. The 6.75% applies to the NOI itself. As you’re aware, Ballycliffe has two income streams: one is the NOI, and the other is on the 25 CFS. That 6.75% relates to the NOI. For the CFS, the approach we would have taken is to look at the present value of that cash flow, applying a risk-adjusted discount rate.

All right, so the 6.75% — does that apply to the CAD 68 million?

No, that would apply to the NOI-related item.

All right, and what exactly would that component be?

Well, we have—

What I’m really trying to pin down is how much should go into NOI and how much should go into AUP itself.

Right. I think, you know, you'll recall that Cawthra Gardens was acquired by us 12 months back.

Yeah

We acquired that at 6.75%. So if you're, you know, sort of trying to work through the numbers, you could take Copper Gardens as an example, and then use that as a good jumping-off point for calculating your NOI.

All right, thank you. I’ll hand it back.

Brad Sturges from Raymond James has the next question in the queue. The floor is yours.

Morning, everyone. Regarding what you said about acquisitions, you're anticipating a notable pace. Is there a target you have in mind for what you might accomplish this year? Perhaps you could offer a little additional context on what the pipeline looks like beyond the deals announced or closed so far this year.

Morning, Brad. I'd just adjust that slightly and say we're seeing a good pace rather than a significant one. That distinction matters because the market holds plenty of opportunities, but there's plenty of competition too. We win our fair share of deals, and our aim isn't to overpay. Obviously, that's stating the obvious. Still, some deals carry a bit of frothiness. From our standpoint, if the numbers don't work financially, we'd prefer not to grow. We don't have a specific target in mind. Last year we did close to CAD 600 million in acquisitions and CAD 200 million in development, and our run rate is heading toward that. Our development spending already sits at CAD 250 million this year, and it's May, so call it one-third of the year in, and we're at around CAD 200 million of acquisition. That could be achievable. It isn't a stated target or an outlook, but that could be a reasonable picture of what we might achieve this year.

Thanks, I appreciate that. Then, regarding my other question, it's just about leverage. It has come down a bit below what I believe you'd describe as your target. So, given some of the acquisition activity anticipated ahead and perhaps somewhat more ramp-up on development, would it be fair to say that leverage would return to normal within your target range over the course of the year? How should we think about leverage going forward?

Yes, Brad, that’s right. We would anticipate that our leverage targets will come back toward a more normal level somewhat. Leverage in Q1 sits somewhat low since we raised CAD 150 million via our ATM. That being said, we’re going to deploy, you know, most of those proceeds toward our recent acquisitions of Rockland Manor and Ballycliffe. You know, by year-end, you know, with everything else held constant, we would expect our leverage ratios to rise back up.

That’s great. I appreciate it.

We'll take the next question from Himanshu Gupta at Scotiabank. You have the floor.

Thanks. Morning, everyone. Starting with LTC, Long-Term Care — so you've now raised your guidance to low to mid-single digit. What was behind that shift?

Absolutely. Himanshu, there are essentially two factors behind that. First, our Long-Term Care NOI rose 6.7% in Q1 when one-time items are excluded. Second, the government of Alberta announced a funding increase of 7.25%. Initially they had announced 1.25%, and then they revised it to 7.25% because of the cost pressures operators had been dealing with over the last several years. We would expect that a good portion of that incremental 6% would flow to the bottom line. Because of that, we changed our outlook to single to mid-digit growth this year.

Thanks. That boost in Alberta funding is set to apply retroactively starting last April, if I'm not mistaken. Has any retroactive payment from Alberta come through so far, or will that instead appear in Q2 and later quarters?

Right, so none of that funding has come through to us at this point. It was only in April that they made the announcement. A portion of that bump will end up going into wages. And again, as you know, operators' cost pressures were acknowledged by the government of Alberta. We might have to raise wages a bit, so the bottom line wouldn't capture the full amount, but a solid share of it ought to.

Correct.

Regarding what you asked, none of that has come to us so far.

Understood. The 6.7% figure you posted for Q1 did not include any effect from Alberta. For the remainder of the year, you could simply add that runway back in.

Correct. Alberta's funding wasn't part of that 6.7%. What I mean is the increase in funding.