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.'s Q3 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 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 the 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 website under Events and Presentations. With that, I will now turn the call to Mr. Jain. Please go ahead, Mr. Jain.
Thank you, Latif, and good morning, everyone, and thank you for joining us on our Q3 call today. Our strong third quarter operating results and occupancy growth reflect the general optimism for Sienna's path forward. Occupancy is up significantly in both our long-term care and retirement portfolios. Our development projects have gained further momentum and the rollout of our new retirement platform, Aspira, is progressing well. We are also in the preliminary stages of developing a new long-term care platform. As part of our new service model, we want to improve our residents' dining experience, activities and recreation programs. We also want to find ways to create a better community experience for residents, whether it is a vintage car club or visit from a local school. We believe that creating more connections with the wider community will give our residents something to look forward to in their day, no matter how big or small. The design of our new long-term care platform is based on best practices and the input from our residents and their families. Our ultimate goal is to significantly enhance the quality of life of our residents by providing holistic and integrated care at our communities. The completion of the platform development is expected in the second quarter of 2022. The launch of the new long-term care platform followed Aspira, our new retirement platform. Aspira will make the retirement brand within the Sienna business lines more distinctive. Our aim is to target prospective residents to consider Aspira Retirement Living as a better option to living at home, an alternative that provides a personalized experience, offers more choices with an increased emphasis on being a vital part of the local community. During the third quarter, we concentrated on the development of our resident-centric model, which emphasizes personalization and expanded choices and included team member training on the new resident experience model and marketing initiatives. We're also in the final stage of developing the brand design and identity for a dedicated Aspira website. The website's feature include a centralized lead management system, chat options, webinar series and transparent pricing, all of which will support brand awareness, lead generation and occupancy growth. In addition, we are continuing the development of the platform's brand awareness strategy, which includes both online and off-line marketing initiatives specific to the local communities as well as widespread communications campaign. We're also developing new programming, which will support the brand's promise of a refined culinary program and enhanced residence programming. We are currently piloting various concepts at select retirement residences. Moving to Slide 7. Throughout the summer and fall, our operating environment continues to improve. We saw the positive impact of high vaccination levels with a limited number of COVID-19 cases at our residences. In addition, our strong infection prevention and control practices, our extensive education programs, incentives to get vaccinated and a new mandatory vaccine policy were all very helpful. To date, many of our residents have received their booster shots. As of last week, over 70% of our long-term care residents and over 40% of the residents in our retirement communities have received their third dose of their vaccines. As a result of a more stable operating environment in current months, pandemic-related expenses continued to decrease, and we are encouraged by the improvements in occupancy in our retirement and long-term care portfolios. Our retirement portfolio benefited from in-person tours and continued strong lead generation, which resulted in a 44% year-over-year increase in resident move-ins for the quarter. Average same-property occupancy improved by 280 basis points during the quarter, increasing from 79.3% in Q2 2021 to 82.1% in Q3 2021. In the long-term care communities, admissions of new residents accelerated and resulted in a 460 basis point increase in occupancy during Q3, ending the quarter with an occupancy rate of 87.8% or 92.4% if we exclude the unavailable third and fourth beds in multi-bed rooms. Given the long-term care waiting list of 40,000 seniors in Ontario, we expect these strong occupancy gains to continue. The government of Ontario announced the extension of the occupancy protection funding until January 31, 2022, and we expect to achieve the average annual occupancy target of 97%, which is required for full funding in 2022. Moving to the focus in building a team for the future. During the third quarter, we continued with a proactive staffing strategy to lessen our reliance on agency staff and to position Sienna well for the increase in direct hours of care in our Ontario long-term care portfolio. Our proactive approach helped us fill positions resulting from attrition from our company-wide mandatory vaccination policy, which came into effect on October 12. It also supported extensive new talent acquisition and helped us bring back approximately 330 former teammates since April of this year who previously were restricted to work at single location as a result of the single site directive. In addition, during the third quarter, we supported the placement of approximately 350 students in our residences through our collaboration with colleges and universities. We are thankful that the government of Ontario extended its wage enhancement of $3 per hour for personal support workers until March 31, 2022. Sienna's culture of fairness and equal opportunity is also reflected in our fair compensation and gender pay equity models. Over 95% of our frontline team members earn more than the minimum wage, and approximately 80% earn at least 50% more than minimum wage. In addition, male and female frontline team members in similar positions receive comparable compensation. Moving to the next slide. Our team members are our most important asset, which inspired us to launch SOAR, the first employee ownership and rewards program of its kind in Canadian seniors living. We are initially investing approximately $3 million to provide our employees with the opportunity to become shareholders. This will be done through onetime grants of common shares of approximately $500 for full-time employees and $300 for part-time employees. We're also introducing an employer matching program for employees who wish to further invest in the company. We launched this program to recognize the compassion, effort and dedication that team members bring to our residents and communities every single day. Moving to Slide 12. We continue to make good progress with respect to our development projects. Our $50 million joint venture development of a retirement residence in Niagara Falls is progressing well. In early November, we secured construction financing for this project. And last week, we started construction at our new Northern Heights Care Community in North Bay. We're monitoring current cost escalations, which will impact our original cost estimate of $55 million. Our near-term redevelopment programs in Ontario also includes the replacement of the current 60 long-term care beds with 160 new beds in a campus of care in Keswick and the redevelopment of our current 120-bed long-term care community in Bradford to 160 new long-term care beds with modern design with the addition of 147 suite retirement residents to create an integrated campus of care. We expect construction at these 2 locations to start during the first half of 2022. We are also currently in the process of selling 2 assets. The sales include our 138-suite retirement residents located in Burnaby, British Columbia and a 236-bed long-term care community located in the Greater Toronto area for a combined selling price of approximately $53 million. We intend to invest the net proceeds to further grow our business to our development programs. These dispositions are part of a fulsome review of our assets to add value through capital recycling. With that, I'll turn it over to Karen for an update on our financial results.
Thank you, Nitin, and good morning, everyone. I will start on Slide 14. The operating environment continued to improve in the third quarter, and we saw the positive impact of high vaccination levels in particular with respect to the decrease in pandemic-related expenses. We are also encouraged by the improvement in occupancy in both our retirement and long-term care portfolios and the continued pandemic funding support that we are receiving from our government. These positive developments are reflected in our Q3 and year-to-date financial results. Revenues increased by 2.1% year-over-year to over $170 million this quarter. Net operating income increased by 15.4% to $33.4 million this quarter compared to last year. Sienna's long-term care NOI increased by $5.1 million to $20.1 million compared to last year, primarily due to annual inflationary funding increases and lower net pandemic expenses, partially offset by lower preferred accommodation revenues, annual inflationary labor cost increases, higher insurance premiums and utilities costs and timing of repairs and maintenance due to deferrals from the prior year. Retirement same-property NOI decreased by $700,000 to $12.9 million compared to last year, primarily due to higher agency staffing costs, utilities costs and insurance premiums, partially offset by annual rental rate increases in line with market conditions and decreases in pandemic expenses. Rent collection levels remained high at approximately 99%, consistent with pre-pandemic levels. Over the past 2 years, we have seen significant cost pressures, in particular, with respect to staffing. Agency premiums are generally 75% to 100% above regular staffing rates, and we have been experiencing a generally higher reliance on agency staff as a result of staffing shortages. We forecast that agency staffing costs for 2021 will total approximately $44 million compared to $35 million in 2020 and $19 million in 2019. The estimated impact on NOI from additional agency staffing costs is approximately $2 million for 2021 compared to 2020 or $4 million compared to 2019. We are thankful that a significant portion of the increased staffing costs are covered by government funding in long-term care. We believe that agency staffing costs will moderate as more health care workers reenter the workforce and as we start to see the impact of the government's enhanced focus on training of personnel, support workers and nurses to address the current labor shortage. We have also experienced a significant increase in insurance premiums and notable market rate increases with respect to gas and hydro. Pandemic expenses continued to decline during the third quarter as a result of the improved operating environment. We incurred $1 million of net pandemic expenses, which included retroactive government funding of $1.9 million for expenses incurred in Q1 of this year. This represents a $2.8 million decline compared to Q2 2021 and a decline of $8.8 million compared to Q3 of last year. We expect pandemic expenses to moderate further as the pandemic subsides, while related government funding gradually declines. We also expect continued timing differences between the incurrence of pandemic expenses and the recognition of related government funding. To offset cost pressures, we expect that continued occupancy gains in our retirement portfolio and an improving operating environment will support our operating margins in 2022 and beyond. Moving on to Slide 15. During Q3, OFFO increased by 34% to $18.3 million compared to the prior year, primarily due to higher NOI driven by the timing of government funding, lower pandemic expenses, lower interest expense and lower administration expenses due to mark-to-market adjustment on share-based compensation, partially offset by lower recovery of current income taxes. Q3 OFFO per share increased by 34% to $0.272. AFFO increased by 10.5% to $15.7 million compared to the prior year primarily for the same reasons as the increase in OFFO, which was partially offset by higher maintenance capital expenditures resulting from spend deferrals from last year and onetime capital improvement in the long-term care Class B community as well as the lower construction funding principal. Q3 AFFO per share increased 10.4% to $0.234. Looking at our debt metrics on Slide 16. Our debt to gross book value improved by 260 basis points to 45.6% as of September 30 compared to 48.2% at the end of 2020, mainly as a result of repaying our credit facilities. Debt to adjusted EBITDA improved to 7.8 years for the 9 months ended September 30 compared to 9.4x in 2020. Our interest coverage ratio improved to 3.8x compared to 3.1x in 2020, and we have limited debt maturities over the next few years. In terms of our balance sheet on Slide 17, Sienna maintains a strong financial position and an investment-grade credit rating. On October 7, DBRS confirms Sienna's issuer rating and senior and secured debenture ratings of BBB mid with stable trends. These ratings underscore the resiliency and strength of our business and support of our redevelopment plans. We ended the third quarter well capitalized with $222 million in liquidity and an unencumbered asset pool of $1.1 billion. I will now turn the call back to Nitin for his closing remarks.
Thank you, Karen. Our third quarter operating results reflect the general optimism at Sienna. Strong occupancy gains, the transformational changes to our operating platforms and our continued development momentum all support our optimistic outlook for 2022 and beyond. We forecast continued occupancy gains across our operations. In our long-term care portfolio, we expect to achieve the required occupancy target of 97% of full funding in 2022, and we anticipate that retirement occupancy levels will reach between approximately 87% to 89% by the end of 2022. The transformational platform changes currently underway will further support our operations in 2022 and beyond. Over the past year, we have gained many insights through intensified stakeholder engagement and market research, which informed our strategy to launch Aspira and inspired us to develop a new long-term care platform. Both platforms are aimed at significantly enhancing the quality of life of our residents. As we execute our strategic goals, we'll continue to draw on the insights we gain from our residents, families and our team to build a stronger future for all stakeholders. Every initiative we have put into motion over the past year is grounded in the belief that it is a privilege to care for and serve Canada's seniors, ensuring they live with utmost comfort, dignity and respect. I want to finish by thanking our team members whose drive, compassion and commitment will support our mission to provide our residents with the highest level of care and services for years to come. On behalf of our management team and our Board of Directors, I want to thank all of you for your continued support and your participation on the call today. We are now pleased to answer any questions that you may have.
[Operator Instructions] Our first question comes from the line of Jonathan Kelcher of TD Securities.
First question, just on the occupancy, you seem pretty confident that's a good outlook you're giving for next year. But if we look on the cost side, when do you think margins on the retirement side can return to close to pre-pandemic levels?
Jonathan, that's -- yes, we do feel comfortable with some of our leading indicators on the retirement occupancy, not only compared to 2020, which is going to be an off year to compare, but even compared to 2019, where deposits are significantly up. I think margins, as Karen mentioned in her remarks, the 3 areas of costs we see is utilities, insurance and agency costs related to labor. So it's really hard to predict those. We feel a lot more comfortable on the revenue side, still uncertainty on the cost perspective. And I don't think we can give you any more guidance than that at this stage.
Okay. Okay. Then I guess to switch gears on -- just on the asset sales. I thought capital recycling is not something you guys have done a ton of historically, and you mentioned going into -- putting it towards development. What about on the acquisition side? Are you seeing much in the way out there?
So for sure, acquisition market has been quite competitive. We have not actively participated because our focus has been to ensure that we focus on our platforms first, so Aspira first and now the work that we're doing in long-term care. But -- and we wanted to ensure our development projects get started. So one started last week and we have 2, which we expect to start over the next 6 months or so. So now is the time, and we do feel confident that we can do acquisitions and write them well and integrate them well and ensure that we can create value. So we would be looking for both. You're right, we have not done asset recycling before, but the reality is we have 70 properties and time to time, you might have 1 or 2, which do not fit your portfolio. So we do not have a long list of assets. These are the 2 where it made sense. One, because the market has changed; and the second, it was a [ C ] home, and it fits extremely well for the needs of local community in terms of long-term care capacity and hospital capacity. So you might see 1 or 2 from time to time, but there's nothing -- overall, our portfolio is in very good shape.
Our next question comes from Scott Fromson of CIBC.
Just a question on the occupancy in retirement residents, it was pretty strong and just wondering what you attribute this growth to. Is it representative of normal activity on a quarter-over-quarter basis? And maybe just looking at move-ins, you mentioned a 44% increase. Were move-outs lower than expected or lower than normal?
No. So move-outs actually were also higher than before. I mean -- so we talked about 2020, but maybe I'll give you even perspective 2019 because last year, we were in the middle of wave 1 and wave 2. So for example, our deposits in Q3 of 2019 were around 200, and our deposits in Q3 of this year is around 400. So we have 100% increase there. And our attrition rate has stayed strong. So it's not that people are staying longer, like attrition rate in 2019 was around 10%, and now it's similar. So we've been talking about focus, our marketing initiatives, local approach, having a centralized call center, getting back to people on a quick basis, and all the work that our retirement team and our sales and marketing team have been doing to -- on our platform. So we're really happy to see the results and that what gives us comfort in terms of our forecast for the next year.
Our next question comes from Himanshu Gupta of Scotiabank.
So staying on the retirement home occupancy discussion, how is that trending between Ontario and British Columbia?
So we -- Himanshu, we do not split that because we only have 5 retirement homes in British Columbia, and we are in the process of selling one. So it's not really one home could have a significant impact. I mean the changes we are seeing in occupancies across the portfolio, there's not really one market or one asset, which is driving it. So it's been consistent across both Ontario and BC overall.
Got it. Fair enough. And then if I look at the guidance, 87% to 89% for the next year, is that a conservative number? Or I mean do you think there's more scope to beat that guidance of yours?
No, at this stage, it's still a year away. So we feel comfortable with 87% to 89% as we get closer. Obviously, we can keep updating it on a regular basis. But at this point, no, we don't think it's aggressive. This is -- it's realistic at the moment, and we'll find out as we get closer to that time line.
Got it. And maybe just on your Ontario portfolio composition, are you more independent? Or are you more assisted learning? Any color there?
Our portfolio, it's a very -- so for many of our retirement homes, we have dedicated assisted living floors. But even in homes where we do not have that, we would provide care behind doors. So no, it's not really geared towards one side. It's a really good mix of independent assisted living and some memory care. And we are getting more into memory care with our campus in Brantford and also some of the assets that we've acquired in the past.
Got it. Okay. And just switching gears to LTC pandemic expense recovery. Karen, I think there was a $1.9 million catch-up related to Q1 LTC expenses. So have you now fully recovered Q1 LTC?
For Q1 LTC, after that retroactive funding, we still have some unfunded expenses. And more so on the BC side of the funding regime is a little bit different. So we are not yet fully covered, and that might remain the case for Q1.
Got it. And is it fair to say that eventually you're going to recover pretty much everything with regard to LTC? I mean there is a timing difference, but eventually, there seems to be recovery happening?
No, it's hard to tell. What we have experienced is that there have been 2, 3 quarters of delays between when we incur the expenses and when the government might come back with more funding.What we would say is that we do expect some unfunded pandemic expenses for some time. However, quarter-over-quarter, we have seen sequential declines in our net pandemic expenses as our operating environment continues to be stable and improving.
Fair enough. And then on your higher agency cost, so if I got it right, you said $4 million compared to 2019 level. So is that something we should expect in 2022 also? And is it mostly LTC? Or is it LTC plus redundant homes?
So on long-term care, because we have our government funding, a lot of that $44 million cost that we have incurred for agency is related to long-term care just based on the nature of the operations with our staffing. But most of that has been covered through the government funding. So the impact on long-term care is less. And so that a variation compared to 2020 and 2019 is more heavily weighted on the retirement side.
I think, Himanshu, to your other part of the question, at this stage, human services is a crisis across all sectors. So it's hard to say at this point. I mean, our focus -- we have initiatives internally, whether it's working with universities, supporting PSW, supporting nurses. We are doing all the things we can internally, but it's hard to predict a significant decline in those agency costs.
Got it. Okay. And then just a final question from me. On the LTC development, it looks like I think North Bay has started in terms of construction and you're working on Keswick and Brantford as well. So are you advancing the pace of development pipeline? Is that the idea here?
Yes. So our goal was to be in ground with 2 projects this year. So between Niagara Falls and North Bay, we have done that. And our goal is to add 2 additional ones next year. So both Keswick and Brantford would happen. So our goal is to start a couple of projects each year and then really get in a phase where 2 come out each year and 2 go in. So that's going to take us until 2023 to build that run rate. So -- but we -- our goal is to start around a couple of projects each year.
Our next question comes from Joanne Chen of BMO Capital.
Maybe just sticking on the development side of things. With expected some of the timing of projects, there's no changes given the current inflationary environment?
Yes, no changes in time line. I mean in North Bay, we disclosed previously our cost is 55. We are seeing some inflationary pressure there. It's hard to predict that cost is going to go up. We expect it to go up, whether it's 2% or 5%, I think we'll still have to figure that out, but that project still makes operational and financial sense. So at this stage, they work, but it is getting -- it is definitely getting more and more difficult with construction costs in some areas being up closer to 30%.
30%. Wow. Is that on, I guess, on the labor side of things and also material?
I mean, there's a huge supply chain issue as well. I mean there's a huge issue with labor. So it's -- So I think it's a combination of all of those things. People talked about lumber went up, came down, but the building we're building in North Bay, for example, we're not using any lumber. So that going up of price and coming down is not really helping us there. Overall prices are going higher. And the idea is continue to work with good partners, try to manage cost, try to fix cost as much as possible upfront. So those are all the things we're doing. And we'll -- again, if it comes to escalate, we'll rethink our development program. At this stage, we are comfortable where we are in terms of 2 projects a year.
Okay. Got it. And then maybe just going back on the question on disposition and capital recycling opportunities. Looking forward to 2022, you did mention that the current acquisition environment is quite competitive. Do you think yours would likely be net sellers or net acquirers over the near term?
Yes. We don't really have many other assets to be selling. Again, as we've said, it might be 1 or 2. So we expect to be net buyers only if it makes financial sense, and we do want to grow across Canada. So we are on in 2 provinces, so the idea would be to grow nationally.
Okay. Got it. And maybe just one last one on the broader picture. The recent Ontario bill for long-term care, is there any direct -- how is the direct impact on your guidance with that bill?
I mean, overall, what the Bill 37 is talking about is increasing care hours, which is excellent news because the resident acuity level has changed significantly since the last funding model was put into place. It talks about increased transparency and accountability, which we are aligned with. People should be accountable and transparent. And there's a big focus on increasing new capacity and also upgrading long-term care capacity. So overall, I think we're all headed in the right direction. Obviously, there's a -- we are in the process of consultation through our association directly with the ministry to ensure that we understand the changes coming and be able to implement them.
Our next question comes from Pammi Bir of RBC Capital Markets.
Just in terms of your occupancy forecast, what are some of the underlying assumptions in your outlook? And then maybe just secondly, is that more back-end weighted to the end of 2022? Or is it more evenly dispersed?
So I'll let Karen answer the second part. But just in terms of assumptions, what we have been doing is working with our retirement team and build property by property. So it's not a high-level assumption. Obviously, the big assumption built into it is that there's no significant fourth or fifth wave. So if there's significant COVID for some reason. Obviously, all of these things go out of the place. And then I'll let Karen talk about our occupancy projections for Q4 and also how it might play out next year.
So for Q4, typically, in the winter months, we do see movements a bit slower because it's a winter, people don't really want to move. It's a holiday season, and that could also trickle into the Q1 time frame. And when we resume the normal seasonality of the movements, then we expect the recovery will happen during those months.
Okay. Sorry. So more, I guess, Q2 2022 onward over that, I guess, the last 3 quarters of next year?
Yes. Q2, Q3, that would be the normal season. I mean in the past couple of quarters, the seasonality seems to be a bit different. And looking at Q4 next year, if the same pattern has been happening next year, then Q4 might also be a bit lower for next year.
Okay. Just with respect to the retirement portfolio, maybe without giving away too much of the secret sauce, can you maybe provide more color on the types of sales and marketing initiatives that you use in your local communities and how the referral program works?
So it's really a combination of a lot of this -- a lot of different things. The referral program could be a referral from current residents, where they would get some kind of incentive, whether it's some rent -- whether it's some free rent, whether it's a new TV. And there's obviously incentive for the new resident moving in, similar to what we have done in the past, whether it's 1 month free or move-in expenses and others. There are also referral programs for medical offices and others to help guide them to us. So I wouldn't really think there is one specific thing, which has done that. But it's really -- whether it's training of sales consultants, whether it's our online lead generation, it's the centralized call center. So I don't think there is really one thing that we can point to versus really a system of great execution, whether the time and operations, great work by our sales and marketing team. I think that's really what it comes down to.
And maybe just to clarify, I guess, with respect to the comments around referrals from -- or incentives, I guess, for the surrounding communities like medical offices or other local health care operators, is that sort of like a financial incentive that they're incentivized with? Or is it something else?
So a lot of that is really a partnership with the hospitals because people go for a surgery, and then they're looking for saying, "Well, my needs have changed." So it's reconnecting with the hospital system. So it's not really a financial incentive. It is really a service in the local community. That's the big focus. And those are really generally the type because people are looking for the right recommendations for a place. So that's what they were before.
Okay. Just lastly, with respect to, I guess, the disposition in BC. Any color you can share with respect to maybe the NOI impact or a cap rate range? And then just secondly, was that a stabilized asset?
So again, let me talk to the last part, and then Karen can cover the first one. So that asset in Burnaby, the market conditions have changed significantly. It has become a very, very expensive area to be in with a lot of high-rise condominium really coming to that area. So there's not much interest in senior housing. So the location has changed. So that's where we got to and that home was not stabilized. So we -- so our point was either we have to significantly change the current asset or look to sell it. So we decided to sell it. And in this case, it's going to be bought by a not-for-profit, which focus on providing affordable housing for younger seniors. So this is -- so that's why it made sense. And then I'll have Karen provide you a bit of update on NOI for both of those properties, both the retirement one and actually even the long-term care disposition.
So for the 2 properties that we are in the process of selling, when we look at the stabilized NOI, those 2 combined would be contributing about $4 million, $4.5 million. And currently, those 2 would have contributed on a full year basis approximately $3 million, $3.5 million.
Sorry, the $4 million to $4.5 million that was the stabilized and the $3 million to $3.5 million is the in place?
That's right.
Our next question comes from Yash Sankpal of Laurentian Bank.
Just what was the cap rate on the assets you sold or you're in the process of selling?
So they're not really sold by cap rates because the first one is being bought by a not-for-profit, which is working with the government of BC to provide affordable housing, so it's not written as a cap rate. And the second one is a [ C ] home where the long-term care beds are going to be moving to a new community that [ Partners Health ] is building in Mississauga and the land is being bought by the hospital. So it's not really sold on a cap rate basis versus more the highest and best use for the current asset.
Okay. And then moving to the bill 37 discussion, based on what you're seeing right now, how should we model your long-term care margins and retirement home margins given the increased labor costs and probably your insurance costs will also go up because of the bill 37. Is that a fair comment?
Yes. We don't really anticipate insurance changes because of bill 37. So I mean insurance cost has been going up across the sector because there were significant losses for insurance companies, whether it was the floods in BC or -- sorry, the wildfires in BC or other things. So we don't think it has anything to do with insurance cost. Having said that, the insurance utilities and labor costs are the 2 drivers. And really we don't really have any insight to provide at this time in terms of how -- when and how they would come down. We do expect them to moderate over time. The timing of it is really -- I don't think we can provide you any guidance on that.
Okay. And for modeling purposes, of those ward beds, how many should be removed? And what would be the total NOI impact of those beds?
So we have about 380 third and fourth beds that have put as unavailable for a very long time. And in terms of how occupancy is calculated and how we would be funded, it would also exclude the isolation beds that are unavailable. So between the third and fourth beds and the isolation beds, that make up about 500 beds that we continue to get full funding. And as you know, the occupancy protection has been extended to end of January 2022. And our expectation is that those unavailable beds will continue to be funded as it has been based on directive that they are -- they have come out of capacity. And so we haven't really modeled out like what is the impact of the third and fourth beds because we expect continued funding for those.
So you think the funding will continue until end of 2022?
That's the expectation, Yash.
Okay. 2% of your employees have been barred from working as of now. How many people is that? And has there been any impact -- like a positive impact of that move?
Sorry, say that again? I'm not sure we get your question.
Based on your disclosure, I think 2% of your employees have -- because they are not vaccinated, they are not allowed to work right now. Is that right?
Yes, roughly. That's correct.
How many people is that?
So we have close to 10,000 employees. So you can do the math there of 2%. So it's a couple of hundred.
Right. And have you seen any conversion after that move? Like anybody willing to take vaccines?
It's one-off cases. We have -- this is really October 12, come after a year of -- before the vaccines were available, but we know they were coming. We did a lot of vaccine education through our Chief Medical Officer and our Chief Infection Prevention Control Officer. So we did that. Then we provide all sorts of support to ensure people were getting vaccinated, and then we provided incentives for people to be vaccinated, and the last one was mandatory vaccine policy. So this was not abrupt. So when we got to the balance of the 200 people, I think they made their choices in terms of finding employment elsewhere. So we did not see a huge change on that. And there might be 1 or 2 people who might come back, but nothing significant from that pool.
These are diehard guys, okay. And just one last follow-up question on your accretion comment. You said about 10% of your residents leave the facility. How much of that is because they move to a long-term care home or how much of that is move to some other retirement home?
It's really -- we don't see a lot of people moving into another common home. I mean moving is a challenge for anyone. And when you're a senior, you make friends, it is -- unless you are really unhappy with the place you are in, people don't move out. So I would say that would be 1% or 2% of people. And the difference between people moving to long-term care for other reasons would be around 50-50.
Our next question comes from Tal Woolley of National Bank.
Just on the Aspira relaunch, you're obviously going to want to invest some money behind the launch of the new brand in Q1. How should we think about just costs for that unfolding over the course of 2022?
So the Aspira platform would be a onetime investment of about $1 million, and there's going to be a portion of that in capital investment and another portion for onetime launch costs. But over time, we expect that for the first while, it will be cost neutral in the sense that we expect there will be revenue gains from occupancy lift as a result of the brand. And over time, it would help us contribute to further occupancy gains as well as supporting rent growth. And therefore, in the longer term, we expect that it will be a positive contribution to our NOI as well as our margin.
Okay. And can you just speak to like the marketing mix like online versus traditional media versus promotions within your partner -- your health care provider partners. And how that might change from sort of maybe where you were and how you're spending your money like 3, 4 years ago?
Yes. So it's really -- I would say, first of all, it is quite local. So there's no really one national strategy for marketing, and that's on purpose because it doesn't work that way. Majority of our spend is digital. And when I say majority, more than 65%, 70%. And the balance would be the combination of all the things you mentioned, whether it's referral programs, whether it's local newspaper advertising or others.
Okay. And for the long-term care platform enhancements you're making, do you intend to rebrand the long-term care side of the business, too?
Long-term care is a very local decision. People do not -- there's no attraction to a brand. The attraction is to the quality of care and services that we provide. So our goal is to stay very hyper-local for long-term care versus the brand that we launched for retirement, which is Aspira. So we expect our long-term care homes to be locally named with no common brand across.
Okay. Again, you're doing this relaunch with Aspira. You've invested in -- you made some investments in call centers, things like that. When we think about your occupancy outlook, can you provide some color on like are you sort of expecting outsized gains from what you would have made in the past because of those investments? If I read into what Karen was saying before, it seems like that would be a fair conclusion.
Yes. I mean that's our expectation. If you invest all this and the result is the same, we should not do those investments. But I mean that's a pretty blunt conversation we've had internally as well. And we do feel it's -- during COVID, it is hard to differentiate if your results are suffering because of COVID or just suffering because you don't have the right programming. So we do feel confident that the programs that we put into place and it does take quite a bit of time to -- for them to take into effect. Like we feel we are headed in the right direction, and that's what gave us comfort in getting occupancy forecast as well. So we do think they are working.
Okay. And then just on the LTC side of the business, there's a lot of focus on redevelopment, obviously. But we also -- at least here in Ontario, we need to grow the number of beds, too. How do you think about -- like do you want to grow the LTC business as the province grows it? Or are you okay leaving your exposure with what it is right now? Like are you looking to add facilities over time?
We have around 6,000 beds in Ontario long-term care. We are one of the largest operators, so we do feel we have enough beds in the system. However, when we do development, and Brantford is a good example, the current home is 122 beds. We're building 160, so we would add capacity there. At Cedarvale Lodge, we have a retirement home, which is attached to only 60 long-term care beds. We are changing that 60 to 160 as we're rebuilding it. So I think there would be places where we are adding capacity. But in Mississauga, for example, we sold our [ C ] home because it was a better use for the hospital. And for residents, it was faster to get to the new long-term care being built by the hospital and partners community versus us going through a whole rezoning process and building in Mississauga. So I think it's really a one-off, but we don't expect our long-term care numbers in Ontario to significantly change in the future. We expect them to stay overall consistent, but with a higher portfolio or a better quality of portfolio as we are redeveloping the [ C ] homes.
Okay. And then just on the emission side, like prior to the pandemic unfolding, we were moving away from the [ LIN ] model, the Ontario health teams. What happened with that? With the pandemic, just for obvious reasons, it sort of follow -- that restructuring kind of is falling out of the news. And I'm just curious, like has it made any difference? Or like has anything changed as a result of those shifts?
Yes. So let's have -- it's Ontario teams that we work very closely with. We have a great relationship across the Ontario health teams. The admissions and long-term care are still directed through Ontario health teams. I mean we have to realize, we have a set of capacity across the system to admit certain number of people into long-term care residents. And when the number grows about 4 or 5x, it will take a bit of time. But working with Ontario health teams, our team and Ontario health have done an incredible job of getting people back into long-term care, which is reflected in our long-term care occupancy. And we continue to see good progress moving forward as well.
And just finally, on the campus model that you guys have been touting over time, I can obviously see the draw for the -- if you have retirement and LTC on the same side, there's a draw for the family to sit there and say, like, "Hey, we've got basically the full spectrum of care in one place." But you sort of have this weird thing, right, where is that technically not you in charge of the admissions into the long-term care facility, like how do...
Yes. I wouldn't -- yes, that's fair. Like for example, Keswick just happens to be campus -- care because there's existing retirement beds, and we have more land. So we're building there. Brantford is a great retirement space as well. There's not much competition, so we're building a campus. No, but we are not focused on only building campuses, I would say, if I had to get a majority of our long-term care home developments would be stand-alone long-term care developments. That's for us. We have limited amount of development dollars, and we want to make sure that we are smart with that. And in long-term care, our focus is to redevelop those long-term care beds because without doubling the cost for a campus. If you find the right land, the market makes sense for retirement, we would add campus. But what we're not doing is we're not saying, okay, we'll only do campuses. So let's find land where it works and that will do. So it's more we will -- the idea is to provide solution for long-term care. And if it somehow lends into a campus, then that's a great outcome.
And at this time, I'd like to turn the call back over to Mr. Jain for closing remarks.
Thank you, Latif. On behalf of our management team and our Board of Directors, I want to thank all of you for your continued support. I hope you have a great rest of the day and a great weekend.
And this concludes today's conference call. Thank you for participating. You may now disconnect.