Sienna Senior Living Inc
TSX:SIA
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
10.64
17.49
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Sienna Senior Living Inc
You don't have any saved screeners yet
Ladies and gentlemen, welcome to Sienna Senior Living Inc. Q2 2021 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 sections 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's remarks on the company website under events and presentations. With that, I will now turn the call to Mr. Jain. Please go ahead, Mr. Jain.
Thank you, Shalom. Good morning, everyone, and thank you for joining us on our call today. At Sienna, we believe it is a privilege to care for and serve Canada's seniors, and we are continuing our relentless efforts to ensure that live with utmost comfort, dignity, and respect. Recent months have been marked with the renewed optimism, a clear view to the future and some exciting developments at our company.Over the past year, we conducted an in-depth assessment of our retirement platform and identified opportunities that will set us apart in a competitive market. We believe that by repositioning our retirement operations, we can fill our current gap in Canada -- in Canadian Seniors' living. As part of this repositioning initiative, our retirement operations will start operating under the brand name Aspira. At the center of a new brand is a conviction that seniors should be able to lift the light to deserve with an increased emphasis on being a vital part of the local community.Initially, we'll enhance service offerings, such as dining and resident programs. Our culinary experience will feature more choices, carefully curated ingredients, healthier options, vibrant presentations, and a greater emphasis on local products. With the help of technology and the addition of signature programming, our resident engagement programs will focus on motivating residents to explore more possibilities to get stronger and healthier and to be more engaged within their local communities. In addition, our wellness programs will be expanded and more clearly communicated, enabling our residents to discover more choices and create their own path.The Aspira name and enhanced product and service offerings will be launched later this year through the early 2022 and will be supported with the widespread communications and a marketing campaign with a designated website for the new retirement platform. We expect our Aspira brand and service offerings will support occupancy growth and contribute to improved financial performance as a result of better brand awareness and loyalty. We are creating a distinct online presence for our retirement portfolio. We can more effectively drive traffic to our residences. We also expect the new brand to support our talent attraction and retention efforts. It is our belief that a consistent and comprehensive set of standards under the new brand will allow us to continue to scale our platform and support our continued growth.Moving to development. Our current joint venture retirement development with Reichmann Senior Housing in Niagara Falls is progressing well. We started construction of the 150 suite greenfield development in May, which is expected to achieve an approximate development yield of 7.5%. We also continue to make good progress on our 160-bed long-term care redevelopment in North Bay, where we expect to start construction later this year. The new long-term care community named Northern Heights Care Community will replace our Woodbridge Care Community and is designed to the newest industry standards. In early July, the premier of Ontario and other senior members of the government participated in the site ceremonial groundbreaking event. We are grateful to play an important role in building the future of seniors living in Canada through developments such as this, we are also contributing to the long-term economic growth in the region.We're also making imaging upgrades to the older C Class long-term care portfolio independent of the timing of redevelopment. To elevate the experience of our residents and the work environment for our team members, we're investing $2 million this year for capital upgrades in the common areas, such as lobbies, staff rooms, and recreation rooms. These investments are made on top of regular annual maintenance capital expenditures. Furthermore, we are proceeding with upgrading and installing 1,800 new air conditioning units in resident rooms at over 30 of our long-term care communities. We strongly believe that all residents room should be a condition and committed to this project prior to mandatory regulations coming into effect.Moving to Slide 8. Addressing vaccine hesitancy proof to be crucial. Our approach was focused on ensuring everyone is well informed, which included in our far-reaching communication and education plan and logistical support for our team members and residents to get the vaccine. We also have a vaccine contest to incentivize and thank our team members for getting vaccinated and have recently awarded cash prices to 3 personal support workers. The most recent winner was Marcia Palmer, to whom I had the privilege to present a $10,000 check when her name was drawn after we reached our 85% vaccination targets across the company. Marcia was among the first team members to get vaccinated and has dedicated 19 years working as a PSW on night shifts at a Saint George Care Community in central Toronto.According to our most recent vaccination data, 96% of our residents and 88% of our team members received their first dose of the vaccine with 95% of our residents and 77% of the team members fully vaccinated. With many public health restrictions being lifted in our key markets in Ontario and British Columbia, we have been able to gradually reopen and welcome prospective residents and visitors to residences. Together with our vigilant infection prevention in control measures, this contributed to the very low number of active COVID-19 cases across our portfolio in recent months. As of yesterday, none of our 83 owned and managed residentials have any active COVID-19 cases.Our focus continues on improved quality of care and strengthening our ongoing review of quality of care based on quality indicators, clinical reviews, and inspection reports. We also continue our collaboration with the Seniors Quality Leap Initiative. This is an initiative we joined last year to better understand quality outcomes and opportunities for improvements. Based on our initial report card from SQLI, our performance is in line with SQLI members and international benchmarks.Moving to occupancy. The improved operating environment resulted in the resumption of in-person tours and increased the number of residents moving into a retirement and long-term care communities. The effort of our marketing and sales teams who have been working on numerous initiatives are also paying off. This quarter's online leads tripled year-over-year and resulted in a 147% increase in rent deposits and 121% increase in move-ins compared to Q2 2020. These strong lead indicators are reflected in the occupancy improvements in our retirement portfolio. Same-property retirement occupancy reached 80.6% at the end of second quarter, and an increase of 200 basis points from the end of Q1. Average occupancy continued to improve in July at 79.7%, an increase of 80 basis points from average occupancy of 78.9% in June. For the remainder of 2021, the forecast continued gradual occupancy improvements in our retirement portfolio.Based on the assumption that residences will remain open for in-person tours and continued pent-up demand. In our long-term care portfolio, we have made good progress with respect to new resident admissions. Q2 occupancy increased by 130 basis points from the previous quarter to 81.6%. This number is not adjusting for approximately 500 beds, which were unavailable, mainly as a result of capacity limitations in 3 and 4-bed wardrooms. Our long-term care occupancy ended the quarter at 83.5% and is expected to continue to improve in the second half of the year as admissions accelerate.As of now, the government has indicated that effective September 1, 2021, occupancy targets required for full funding will be reinstated. This excludes unavailable beds. Given the long waiting list for long-term care beds in Ontario and the resumption of admissions of residents, we anticipate that we can achieve the necessary occupancy targets required to full funding as the majority of our residences. Excluding the impact of net end and expenses, we expect our financial performance of a long-term care portfolio in 2021 to be slightly below 2020.Our internal forecasts are based on the impact of earlier access restrictions on preferred accommodations and the possibility of not achieving the required occupancy targets at some of our residences. Moving to our continued focus on diversity, inclusion and fair compensation. With nearly 13,000 team members, our employees at Sienna's are most important assets. Our commitment to corporate social responsibility, and our team is highlighted in a midyear update to our ESG report, which focuses on diversity in our approach to fair compensation and gender pay equity.At Sienna, over 95% of our workforce receives compensation above minimum wage. And approximately 80% of our frontline team members receive compensation that exceeds minimum wage by 50% or more. Furthermore, our predominantly female workforce is mirrored in our management teams, with approximately 80% of our top 380 leadership positions held by women. When it comes to Gender Pay equity, male and female frontline team members' compensation for similar position is comparable. Our strong endeavors team will support our effort to ensure that people work with at most comfort, dignity, and respect. With that, I'll turn it over to Karen for an update on our financials.
Thank you, Nitin, and good morning, everyone. In recent months, in-person tours have resumed at our retirement residences and resident admissions have accelerated across many of our long-term care residences. At the same time, incremental pandemic-related expenses have started to moderate, and we anticipate further improvements as the pandemic subside. However, the timing of pandemic expenses versus the funding of such expenses continue to affect our financial results. While our operating improvement has improved significantly, our financial results remain below prior-year levels.As shown on Slide 13, revenue decreased by 0.1% year-over-year to $162.7 million this quarter. Consolidated net operating income decreased by 2.8% to $31 million this quarter compared to last year. This was largely the result of lower occupancy in our retirement portfolio and lower preferred accommodation revenues in our long-term care portfolio, which was partially offset by lower net pandemic expenses, rental rate increases in retirement, and inflationary funding increases in long-term care. Retirement same-property NOI decreased by $2.30 to $12.8 million this quarter compared to last year. Excluding net pandemic expenses, retirement same-property NOI for this quarter decreased by $2.8 million year-over-year to $13.7 million, mainly due to lower occupancy, partially offset by annual rental rate increases in line with market conditions. Rent collection levels remained high at approximately 99%, consistent with pre-pandemic levels. Long-term care same-property NOI increased by $1.5 million year-over-year to $18.1 million, largely due to lower net pandemic expenses in this quarter. Excluding net pandemic expenses, long-term care NOI for Q2 decreased by $2.4 million compared to last year to $20.5 million, mainly as a result of lower revenues from preferred accommodation. During Q2 2021, Sienna incurred $3.8 million of net pandemic expenses. This represents a decline of $1.6 million or 30% lower compared to Q1 2021. After adjusting for retroactive pandemic funding, which we received last quarter. Although we continue to incur extraordinary pandemic expenses, the quarter-over-quarter improvement was largely driven by the reduced reliance on agency stack.Compared to Q2 2020, net pandemic expenses decreased by $6.8 million or an increase of 64%, largely on the result of additional government funding and a moderation of pandemic-related costs related to additional staffing. Q2 OFFO per share was $0.226, a decrease of $0.023 compared to the prior year. Excluding net pandemic expenses for the quarter, OFFO per share would have decreased to $0.268 year-over-year. And Q2 AFFO per share was $0.21, a decrease of $0.038 compared to the prior year. Excluding net pandemic expenses for the quarter, AFFO per share would have decreased to $0.249 year-over-year.Moving on to Slide 15, looking at our debt metrics. Our restive gross book value improved by 270 basis points to 45.5% as of June 30 compared to the end of 2020, mainly as a result of repaying our credit facilities. Debt to adjusted EBITDA improved to 7.4 years in 2021 compared to 9.4 years in 2020. Our weighted average cost of debt was 3.4% year-to-date 2021, our marginal increased from 3.2% in 2020, while our total debt decreased by $85 million as of June 30 compared to the end of last year. And our interest coverage ratio was 3.9x year-to-date in 2021 compared to 3.1x in 2020, effectively returning to pre-pandemic levels.In terms of our balance sheet on Slide 16. Sienna maintains a strong financial position and an investment-grade credit rating. On June 3, we issued $125 million in unsecured debentures at an interest rate of 2.82% maturing in March 2027. With this financing, we further reduced near-term debt maturities and improved our long-term debt ladder. The debentures were issued at the lowest interest rate and longest maturity compared to any of our previous debenture offering. We ended the second quarter with $235 million in liquidity, an increase of $34 million since Q1, and an unencumbered asset total of nearly $1.1 billion, an increase of approximately $247 million compared to the end of Q1. Our debt is distributed between unsecured debentures, conventional mortgages, and CMHC insured mortgages. I will now turn the call back to Nitin for closing remarks.
Thank you. We're in a very different place than we were a year ago. While we stayed vigilant and are prepared for a possible fourth wave, recent months have been marked with renewed optimism at Sienna. As I mentioned in my opening remarks, at the center of our rebranding initiative is the conviction, the seniors should be able to live the life they deserve with an increased emphasis on being a vital part of the local community. We also continue to work with stakeholders to improve the way we care for our seniors and stay focused on advancing our long-term care redevelopments. The strength of our balance sheet and our operations will support our ambitious $600 million redevelopment plan to modernize long-term care in Ontario. I want to finish by thanking our team members whose drive, compassion, and commitment will support this purpose by providing our residents with the highest level of care and services for years to come. Thank you for your participation on the call today. We are now pleased to answer any questions you may have.
[Operator Instructions] Your first question comes from the line of Jonathan Kelcher from TD Securities.
First question, just on Aspira. Is that something that you guys contemplated prior to COVID? Or does that come from some of the lessons that you've learned over the last 18 months?
So, this is a new initiative. As you know, we have a brand-new executive team. And one of the things we contemplated is how can we position our retirement platform differently. Over the last 5 years since we branded the company to Sienna, at that time that on 11 retirement homes and today, we have 27 retirement homes that we own. And we also manage the Canadian portfolio for Sabra Health Care REIT of additional 8 homes. And given our continued focus on growing this business, we thought it would make sense to have a separate platform, a common platform to really drive efficiency, drive programming, and obviously, help us to grow as we go further.
Okay. Fair enough. And then just on the retirement occupancy, good to see that moving up. How is the trend so far in August?
I think it's too early to talk about August, there's a bit of delay usually in getting the data. July numbers we just talked about that we are seeing continued occupancy increase in July versus June. We continue to see some improvements. Usually, summer months are a bit slower. So I think it's hard to predict at this point, but we do expect for the balance of the year to continue to have a gradual increase in our occupancy.
Okay. And then how would -- just lastly, how would the leads and deposits compare to a similar time in 2019?
So, I don't have the 2019 data, just top of my head. We have 2020, but I'm assuming the reason you're asking 2019 is because of volatile 2020 was. So we don't really have the data readily available, but it's something we can provide at a later date, Jonathan.
Your next question comes from the line of Frank Leo (sic) [ Lee ] from BMO Capital Markets.
So, my first question really comes to the net dynamic expenses. So I see that lower, which is the sign. But I wonder what's your expectation for the remainder of this year and the beginning of 2022, do you expect -- like keep trending lower to a certain level? Because I heard from a like a bit [Technical Difficulty]
I'll start answering the first part of the question. I couldn't hear the second part clearly, so let me know what I can fill afterwards. No, we are very encouraged to see the direct correlation with our high back destination rates and our very low or no COVID case count, which directly contributed to a reduction in pandemic expenses quarter-over-quarter. And that also helped us to be able to rely less on agency staff. We expect that our pandemic expenses could further moderate some more as we continue to see a stable operating environment. However, you continue to expect that our pandemic expenses could come in higher than pandemic funding. One partly due to timing, but also, our retirement business doesn't get the same amount of pandemic funding. So we do expect for some time unfunded pandemic expenses. And looking ahead, it is still hard to predict what our net pandemic expenses would be because we are seeing very vigilant as we have a fourth wave that is looming.
So my question, sorry, can you hear it better now?
A bit.
A bit? Sorry. So my second question really comes as what's your -- do you think the pandemic-related expenses will meet at a certain level. [Technical Difficulty] was not needed moving forward even after COVID?
Frank, so I think you -- again, the voice is a bit muffled. I think they all have hard time working from different places at times. I think what your question is the is that the permanent aspect to pandemic expenses potentially. I would -- we continue to believe that there might be a small impact, but not really huge. I mean if -- let's say, if people continue to wear masks for a period of time, masks cannot come down significantly in price. They usually cost $0.05 to $0.10. They went up to nearly $1. Now they're back to that $0.05 pricing or so. So even if there is a limit -- if there's some limitations on wearing some PPE, I don't think that will have a significant impact on pandemic expenses and restrictions are coming off. So -- and if there is -- if they continue to use some vigilance in long-term care to a small amount, we do expect that part to be funded going forward as well.
Okay. That's great. Can you hear me better now? I just want to confirm.
I'm sorry, can you repeat that?
Sorry. Sorry. Can you hear me better now?
Yes.
That's great. And my second question is regarding the long waiting list for LTC beds, I just wonder how that has been changing since Q1? And do you expect any spillovers from your LTC tenants -- for tenants who was looking for LTC bad to your retirement homes?
I mean it's possible. But usually, there's too way different kind of residents in the time and the long-term care. So you might have residents in retirement who are looking to move into long-term care. So they might stay a few extra months while they're looking for a long-term care space. Usually, residents who are looking for long-term care would not necessarily move really into retirement.
Got it. Okay. And then lastly, I see you guys had an issuance unsecured that. And I just wondered how the conversation with the rating agency. And I just want to get some color from there.
Well, I think color is pretty clear on their rating confirmation, that was really the extent of what we can talk about. It was no different than going through getting a rating confirmation, which we -- which everyone has to go before you issue that debt.
Your next question comes from Himanshu Gupta from Scotiabank.
So, on the long-term care, what could be your LTC occupancy by the end of August? And where do you need to be to achieve full funding?
Himanshu, so we have been working very closely with the various long-term residents on an expedited basis. And we do see that there's traction being gained. So it is hard to predict now where we would be ending at the end of August. And we did end the quarter at 83.5% on an unadjusted basis, meaning without removing the unavailable beds, which we expect that would not be included in the occupancy target. We do expect that will come September that the majority of our homes would be meeting the occupancy target. And for a small portion of our homes that it's really a matter of time to get to that target and that the impact would not be significant in our overall year's results.
Yes. And Karen, can you quantify the impact? I know you said it's going to be small in the context of full year earnings. But what could be the September impact of not achieving full funding?
Yes. I'd say that because it is hard to predict each month where our occupancy would be. It is equally hard to predict what that impact would be. We are working very hard to move in the resident very quickly. As we know, it is centrally controlled by the lens, and that administrative process does take some time.
Okay. That's fair enough. And then sticking to LTC. Again, there was a funding shortfall in Q2. And do you expect a catch-up for the next few quarters?
I would say, Himanshu, that we, as a sector, we certainly advocate for those funding short posts be made whole, but we don't really know if that will happen or not. So we are hopeful, but it's not something we can confirm or count on at this moment.
Okay. That's fair enough. And then just moving to the retirement home occupancy. I mean we have seen some recovery in the last 2 months. Is the recovery consistent with the overall markets you operate in?
No. It is quite different for each market. There are markets such as Ottawa, which continue to have a challenge because of supply and then occupancy is even lower, the supply challenge becomes even bigger. So no, it's not consistent across markets, but we hope, however, overall, we are seeing an occupancy change across all markets that the amount of it would differ from market to market.
Okay. And then given that your occupancy moved, I mean, consistently in the last 2 months. Are you offering like more concessions? Are you aggressively marketing your product?
So usually, when we say concessions, our approach is, there might be a one-time incentive to move such as moving costs or others. We don't really reduce rates. That's not a good recipe for success because you have the residence with you and if someone new coming in has a significantly lower rental rate that does not sit well with the current residents. So we do offer one-time incentive, and that really approach has not changed. So there's no significant incentive, which is driving this. It's really working with our marketing team, training, following up on leads, our centralized call center. So I think there are multiple reasons why we're seeing this growth not incentives is not necessarily one-time.
Okay. And are -- do you think like smaller operators or your competitors are offering more concessions today to lease-up their products?
Maybe one-off. We really haven't heard anything systematic Himanshu.
Okay. Awesome. Okay. So maybe just last question from my side on development projects. I mean 2 projects obviously underway. How many more you can take on at the same time? I mean, is there internal limits or how much development dollars you're going to allocate to?
Yes. We feel -- I think if we can go to $150 million of active projects in the development. I think that is pretty reasonable. And depending on the size of the project, that could be 3 to 4 projects because there could be one completely winding down where it's fully constructive. And next one is just getting started is just by land. So I think you could have 3 or 4 projects in active development in very different stages. And the risk of development is also quite different. In retirement, we have the risk of both the construction or the development risk and the lease at risk in a long-term care, the risk is more on the first part on construction cost and development cost. So we do feel, given a big chunk of our development is going to be long-term care, that potentially, it is less risky from a lease-up perspective if we can ensure that we can have a control on cost and other things.
The next caller is Tal Woolley from National Bank.
I wanted to start with something, maybe a little less financial. I'm just wondering, like if you can explain to us the on the ground process of doing the redevelopment, like if I'm a resident in a facility -- or sorry, if I'm a resident in one of your facilities in a market where you are going to be redeveloping that facility you construct the new facility, I get moved over, like is there a de-leasing process at the old facility that we should be aware of? How do you -- how should we think about moving costs, things like that, like who bears, that kind of stuff. Can you just talk a little bit about that and bolts of like that actual process?
Sure. So I think the way you described this call is exactly how it works. The -- any cost, there would be some moving costs as you're moving to residents. And there is usually a provision by the ministry, and we definitely have included that as part of the development cost. It is not material because we're moving people across the town. It does take a bit of time because moving residence to another place, you cannot really just hire 2 buses and move everyone in one go. There is a slow deliberate process. You usually limit the number of people in each week. So for 160 bed home, that process could take a couple of months to do it properly and staffing, as you might have some staff in the new place and some of the old, you might be hiring some contract staff because there would be a bit of a double count for a period of time because you might have 2 kitchens running at the same time. So -- but those costs are not material and are factored as part of our development yield.
And the older facility, like do you stop additions like 4 months in advance? I don't know exactly when you would stop admissions in that market?
I mean, not really because everyone gets moved over to the new place unless you're going down in capacity, which we're not doing. So we're actually going from 148 beds using the north example to actually 160. And in a couple of other places, other 2 projects which are approved for us, we are also going up in capacity. So it does not -- we don't really limit admissions at any period of time.
And as we get closer to these projects getting completed, are you going to be able to disclose to us what the NOI was on the existing property? So we have an idea of what the pickup will be?
Sure. I think we can start to provide some disclosure on it. Just to -- when we compare the NOI from an existing building and compare the NOI of a new building. And just to clarify, when we do talk about a development deal, we're talking the new NOI for the new home over the construction cost of the new home. And one could say that we're not factoring in the NOI from the cutting home. That would be true. However, it's a bit of an apples-to-oranges comparison because you have a seabed license, which is going to expire in the next 5 to 7 years as these homes get redeveloped versus a new license, which is going to last for 30, 40, 50 years. So I do think there's a bit of a comparison issue, but you're right from a -- just from a pure financial model perspective, you would need to know how much is coming out and know-how much is going in. So you can factor the incremental. And we can start providing that visibility as we get closer to opening.
Okay. That would be helpful. And then my last question is -- this is like the redevelopment of the long-term care facilities that you have to do, you're sort of in control of the timing, I would say, like you're not entirely in control of the timing because the government's got to plan off and everything, but it feels like you're sort of in control of timing. How should we think about your ability to scale the retirement business when you're going to have this redevelopment process to work through because it's going to consume a fair bit of capital simultaneously.
Yes. That's a fair point. Usually, when we have done material retirement transactions. I mean we have a very robust balance sheet. We have a lot of availability to cash down even going to capital markets at the moment. And our debt, which is at 45.5% is debt to book value. So it's not even market to firm value will be in low 40s at the least. So we do have even room in our balance sheet to go up in that during the time of active construction. So at this stage, given our program of $150 million to $200 million because all the things you just talked about, even if you wanted to develop all 12 long-term care homes, you cannot really do that. There's a ministry process. You have to get license approved, you have to buy land. So that process is going to take 5 to 7 years, call it, $100 million to $150 million of active construction in any given period of time, which we don't think is very material given the size of our balance sheet. And then we have done big acquisitions in the past for retirement growth. We have access capital markets, and that's not something you can always rely on necessarily, but we have had good success over the past 5, 6 years. And we do hope that continues to stay that way, which was recently confirmed when we accessed the unsecured market for our $125 million offering. So long way of saying that we don't feel constrained that by doing one, we would necessarily give up on the growth opportunity on another.
Next question comes from the line of Yashwant Sankpal from Laurentian Bank.
I just want to understand your new retirement home platform. What is the most distinguishing factor between your existing platform and this new platform?
Yes. I think those are the details, Yash, that we will be going through, as we sort of official -- we're naming it we -- showing the name of it today. All the program that comes along with it, we provided some details around food around programming around well-being. So we are sharing some of it. However, the majority of it will come out later this year or early next year because we're still in the early phases of it. I would say the few reasons to rebrand. The first one is to just reflect how the company has changed from 11 retirement homes when we branded them all to Sienna and with a local name. Currently, today, when it is half -- nearly half of the part of the business, so that's one. Second, as we have grown through acquisitions, each one of the homes that we bought have their own platforms at times, their own way of doing things. So having a consistent way of doing things across the platform, we believe is going to have significant impact on service delivery, on team member experience, and also how we solve those homes going forward. So those will be some of the things that we can share today, but I think the more details as we progress through the year.
So, if I understand this correctly, this is a rebranding, not a new platform. Is that right?
I would say it's a combination of both. Like there -- it's not just a name change because then it will be just rebranding. It is coming up with how we do service delivery, we talked about focus on a few different things, how we do food differently, how we do some of the programming differently, how we think of the well-being program, it would also have some impact on the programs for team members. So no, it's just not a name change. It has other operational aspects to it.
Okay. And then moving on to the JV. You talked about your retirement home JV. Are you providing any mezzanine funding or anything in this project? And are you -- do you have to be like in the future buy the interest of your partners? Are there any of those conditions?
Yes. So there is no mezzanine financing in this. Right on senior housing, they are very established operators and builders in the retirement space, very well respected. We're going through -- we will get a conventional construction financing on this project. And our intent going into this project to eventually own all of it. So after a certain period of time, we will eventually own the whole retirement home.
Right. What I'm trying to understand is, are there any -- like are you signing up to buy that property at a certain cap rate or anything like that?
No. Usually, they are at fair market value at that point because it will be much further out. So there's no pre-negotiated cap rate in this situation. It will be bought at kind of fair market value.
Got it. And just one last one. What -- how many bets are you losing if the government says that there won't be more than 2 beds in any room in your LTC division?
Yes. We've previously shared that we would have about 350 third and 4 beds in our portfolio that currently -- we are not moving in residents to based on the Ministry of Regulation.
Your next question comes from the line of Pammi Bir from RBC Capital Markets.
Just maybe coming back to the Aspira platform. Can you just comment on the costs associated with the launch? And I'm just curious if you anticipate maybe ultimately driving some new sources of revenue that you're currently not generating?
Sure. So the cost we expect for this is around $1 million in capital and maybe a couple of $100,000 in operating expenses. Most of it's really related to new website, which will have a whole idea of creating more online leads and selling online. So we feel that, that will further enhance our lead generation. And second, others could be things such as signage and some physical changes to the building. So that's really the extent of it. There are markets where there is quite a bit of competition. So again, as going back to the 2 intents of this is first, to have a common platform, so we can have some common programs across the portfolio. And second is to really rethink the service offerings that we have. So we do expect that to generate some additional revenue, whether it's through occupancy increases or whether through charging for additional programming. Again, I think it's too early for us to share those because we're still in the planning phase for that.
Got it. That's helpful. And just maybe one more for me. In light of some of the recent retirement transactions that we've seen in the market. Any comments on what trends you're seeing in pricing in the retirement space? And maybe any initial thoughts on the Block Stone selection transaction with Rivera.
Yes. So I don't have other information than what's disclosed about the transaction you just talked about. What we are seeing is that pricing is even tighter than pre-pandemic levels, and part of it is reflected in the financing cost that people are seeing. There's -- whether it's CMHC financing, whether it's unsecured financing for a few of the borrowers, we can do unsecured financing in senior housing. Or whether it's conventional financing, rates continue to be quite attractive. And that obviously changes your end of the day, what's your cash flow that is left behind after paying your interest expense. And the -- also the quality of the assets that are coming and the amount of capital that has been changed in senior housing assets. So we are, in fact, seeing pricing even tighter than it was in pre-pandemic level. That's what we have seen from our perspective. And based on the valuation work that Karen led for our unsecured financing, we have not seen any uprising cap rates for the properties that we have.
Got it. And maybe just coming back to that transaction. By chance, did you -- I mean, did you look at those assets at all? Or are you familiar with them?
We do look at transactions time to time. I think it will be -- I don't think it will be right for me to comment on specific transactions.
Okay. Maybe just coming back to, I guess, the overall outlook for the retirement segment of your portfolio. Is it fair to say then, given where you are today and sort of still focused on emerging from the pandemic that retirement transactions are probably a low priority at this stage?
I wouldn't say so. I think part of a strong platform is to be able to do multiple things at the same time. And we have shown that while we were dealing with the first wave, second wave, third wave. We were also working on a redevelopment program, so we can actually have 2 development projects in the swing, and we're working one retirement on long-term care. And we have 2 other development projects which are towards final stages. We launched a new platform, which had a lot of planning behind it. So we do feel quite confident about our team and about ability to execute if we find the right transaction. But to your point, we have to be cautious. So it's not -- growth is not the only thing that we are focused on. We're also focused on ensuring that we can come back to some of the pre-pandemic levels as it relates to occupancy in the retirement division and long-term care. So we have to do all of those things, but I don't think that will preclude us from participating in any right transaction if it comes along.
At this time, there are no further questions. I would like to turn the call back over to Mr. Jain for closing remarks.
Thank you, Sharon, and thank you, everyone, on behalf of our management team and our Board of Directors. We want to thank you for your continued support, and I hope you have a great rest of the summer.
Thank you.
This concludes today's conference. You may now disconnect.