Sienna Senior Living Inc
TSX:SIA
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Sienna Senior Living Inc
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Ladies and gentlemen, welcome to Sienna Seniors Living Inc.'s Third Quarter 2024 Conference Call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer, and David Hung, 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'll 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 hosts' remarks on the company website under events and presentations.
With that, I'll now turn the call to Mr. Jain. Please go ahead, Mr. Jain.
Thank you, John. Good morning, everyone, and thank you for joining us on our call today. Our third quarter has been a great progress and success. Our operating results continue to strengthen for the seventh consecutive quarter. Our recent initiatives to raise capital were met with overwhelming demand by investors and our efforts to expand into a new province were successful. These achievements did not happen by chance. They're the direct results of our ongoing initiatives to improve our operating platforms, strengthen team engagement, and deliver on our growth strategies. Our team members are the key drivers of our organizational strength, and as shareholders of the company, they're deeply aligned with Sienna's success.
For the past 7 quarters, we have consistently achieved year-over-year growth in our operating results across both lines of our businesses. Sienna's total adjusted same property NOI increased by 14.7% year-over-year, including an 18.3% increase in a long-term care segment and an 11% increase in our Retirement segment. Supporting our long-term care results, this quarter were fully occupied homes with higher revenues from preferred accommodation and increased government funding. On the retirement side, rising demand, limited new supply, and focused marketing and sales campaigns were the key drivers of improved occupancy. Further supporting our results was ongoing improvements to our operating and our residents' experience.
Moving to Slide 6, same property occupancy in retirement segment increased by 250 basis point year-over-year to 89.6% in the third quarter. Monthly occupancy levels improved throughout the quarter and exceeded 90% for the first time in over 5 years at the end of Q3. Occupancy reached 90.3% in September and further grew to 90.6% in October. Our continued focus on homes with lower occupancy levels was a key driver for this improvement. More than half of these homes have achieved notable occupancy improvements with occupancy increasing and average of nearly 7% over the past years in these homes. Our combinations of targeted onsite sales and marketing initiatives, strengthening operations and leadership teams, as well as investments in the homes' infrastructure are key reasons for this significant improvement.
As occupancy moves closer to stabilization, each percentage increase has a significant impact on our bottom line. Our consistently strong financial results for nearly 2 years contributed to a sector-leading stock performance and invested interest this year. As a result, we have been able to leverage the capital markets and have completed 2 key financings in recent months. In August, we raised $144 million of equity at $15 per share, and in October, we issued $150 million of unsecured debentures. Both the equity and debt financings were significantly oversubscribed, highlighting the increased interest of investors in the senior living sector and in Sienna. These financing initiatives further strengthen our position for growth.
Last month we announced our expansion into Alberta with $182 million portfolio acquisition of 4 continuing care homes. We expect to complete the acquisition, which is subject to regulatory approvals in early 2025. The portfolio is less than 3 years old and consists of 540 suites located in Calgary metropolitan area, Edmonton, Port Saskatchewan, and Medicine Hat. Each of the 4 properties are located in vibrant and growing communities and offer contemporary senior living accommodations. The portfolio has an occupancy rate of approximately 96% with 3 of the 4 properties essentially at full occupancy and one property in lease-up. We have been considering expanding into Alberta for some time, and this acquisition provides image at scale in one of fastest growing provinces in Canada. We believe that there's an opportunity for additional growth as a result of synergies as we further expand in Western Canada.
We are also in the process of finalizing the acquisition of remaining 30% interest in Nicola Lodge, our 256-bed long-term care community in the greater Vancouver area. Nicola Lodge was built in 2016 and is the best-in-class, long-term care community. The acquisition is expected to be closed in early 2025 and will increase our ownership interest to 100%.
Moving to Slide 9, on development. On the development side of our business, we started construction at our newest long-term care redevelopment project in Keswick in October. We are developing a 160-bed long-term care home, which will replace the current 60 beds and 100 new beds. We are also on track to complete the Ontario long-term care Campus of Care development projects in North Bay and Brantford next year. With respect to our Campus of Care in Brantford, we have recently opened a sales center for the 147-suite retirement residents and have received strong interest from prospective residents and their families. The combined development costs for these 3 projects are exceeding $300 million. Once completed and operational, these projects will make a significant contribution to Sienna's operating results and lower our AFFO payout ratio.
As we grow our operating platform, we'll continue to make team member engagement and retention a core focus of our initiatives as staffing will likely remain one of the biggest challenges in senior living. We are so very proud of our recent team member engagement results. 2024 was the fourth consecutive time of improvements across all drivers of engagement. One of Sienna's top driver is our team member's ability to do meaningful work. Sienna's core for this driver was in the top 5% of the global healthcare industry benchmark among approximately 350 other organizations. The strong results also tell us that the investment we have made in our team members from training and development, improving onboarding, and shift scheduling to our ownership program are all having an impact. Equally important, these improvements directly correlate with resident satisfaction, which impacts our operating results.
And with that, I will turn it over to David for an update on our results.
Thank you, Nitin, and good morning, everyone.
I will start on Slide 12 for financial results. In Q3 2024, total adjusted revenues increased by 12.5% year-over-year to $224.8 million. This increase was largely due to occupancy and rental rate growth, as well as increased care revenue in our retirement segment and a government funding increase and higher private accommodation revenue in our LTC segment.
Total adjusted same property NOI increased by 14.7% to $43.4 million in Q3 2024 compared to $37.8 million in Q3 2023. NOI in our long-term care segment increased by $3.5 million, largely due to higher revenue offset by inflationary expense increases. In our retirement segment, adjusted same property NOI increased by $2.1 million in Q3 2024 compared to last year, primarily as a result of improved occupancy and rental rate growth.
Moving to Slide 13, during Q3 2024, operating funds from operations increased by 19% to $23.9 million compared to last year, primarily due to higher NOI, lower transaction costs, and lower interest partly offset by higher income tax. OFFO per share increased by 13.5% to $0.312 in Q3 2024. Adjusted funds from operations increased by 3.8% to $20.4 million compared to last year. The increase was due to a higher OFFO offset by a decrease in construction funding income and increased maintenance capital expenditures.
AFFO per share decreased by 1.1% to $0.266 in Q3 2024 due to the temporary dilution resulting from our recent equity issuance of shares in connection with our $144 million equity race. Throughout the third quarter, we have strengthened our financial position and balance sheet. We substantially increased Sienna's liquidity to $517 million at the end of Q3 2024, largely as a result of the proceeds from our recent equity offering. We also extended the weighted average term to maturity of our debt from -- to 6.2 years from 5.7 years in Q3 2023, and we improved the debt-to-adjusted EBITDA to 7x at the end of Q3 2024 compared to 8.3x at the end of Q3 2023. We ended Q3 2024 with a debt-to-adjusted gross book value of 42.3% and approximately $1 billion of unencumbered assets.
Subsequent to the end of Q3, we issued $150 million of unsecured debentures at an interest rate of 4.436%. These proceeds were used to refinance our $150 million Series A unsecured debentures, which matured on November 4, 2024. Our strong financial position with no major debt maturity until Q1 2026 coupled with significant liquidity provides flexibility and supports our growth initiatives with respect to both our acquisitions and our development program.
Our 3 development projects in Ontario have an average development yield of more than 8%. Once they are completed, they will make a significant contribution to Sienna's operating results. And as Nitin mentioned, we will have a notable impact in lowering our AFFO payout ratio in the high single digits. Going forward, we will continue to prudently manage our capital as we further expand our asset base through developments, look for intensification opportunities at existing sites and grow through acquisitions.
With that, I will turn the call back to Nitin for his closing remarks.
Thank you, David. I would like to conclude with a message that is familiar, but it is worth repeating. There is unprecedented growth potential in Canadian senior living. With the oldest baby boomer turning 80 in just over a year and life expectancy on the rise, demand is set to soar. According to Statistics Canada, the number of Canadians aged 85 and older is projected to reach 1 million by 2026 and is further expected to grow by additional 65% over the falling decade. This promising demographic trend coupled with limited new supply and a strong financial performance, future optimism as we look ahead.
We expect to round out the year with long-term care NOI to grow in the low double-digit percentage range in 2024. And with respect to retirement operations, we expect same property NOI to benefit from continued occupancy and rental rate increases in growing the highest single-digit percentage range for the year.
We also expect our growth momentum through our development and acquisitions to continue. We are very pleased to reinstate our DRIP program, which allows eligible shareholders to invest their cash dividends in shares at a 3% discount from the market price. Starting with the November dividend, investors can benefit from this convenient and cost effective way to increase their holdings and participate in Sienna's continued growth. As we expand our operating platform, we will stay focused on elevating the resident experience and deepening team member engagement. Our team members' commitment to our purpose and our residents remain a key driver of our organizational strength.
As I said in my opening remarks, our achievements did not happen by chance. They are the direct results of our ongoing initiatives to improve our operating platform, strengthen team member engagement and deliver on our growth strategy. The same focus will guide us as we build on our success and seize the favorable demographics in Canadian senior living. As we like to say at Sienna, we are just getting started. On behalf of our management team and our board of directors, I want to thank all of you for your continued support and commitment.
We are now pleased to answer any questions you may have.
[Operator Instructions] Your first question comes from the line of Jonathan Kelcher of TD Cowen.
First question, just, and I know you guys don't give guidance, but just sort of high-level for next year. I guess, as you get closer to 95% on the occupancy front in retirement, the growth is going to be more rate-driven. Just curious as to what you're seeing in terms of rate growth on turnover in your homes that are currently full or close to being full?
You're right. We don't have a guidance for 2025 just yet, and we also don't have the guidance while we'll get to 95. I think the next year, we definitely are in the ramp up of getting closer to the 95. So we will see that growth in our retirement NOI. I would say on an average, our rental growth is around 5%, which is a mix of both annual rent increases and market rent increases. And the market rent is really driven by supply and demand in that specific market. But on an average, it's closer to 5%.
Well, I guess, that's fairly consistent across the board.
For our portfolio, yes. When I say it's an average, because our goal is to be at 95%, but there are going to be homes which are at 90% because it's market-driven. And there are homes which are a 100% which we have plenty today. The ones which are 100% occupancy, obviously the market -- ability to adjust market rate is much higher there versus a home which is at a 90% with good supply in the market where the rates might be a bit lower, but on an average, it's around 5%.
And then on long-term care, similar sort of question. You got the good growth, probably Ontario bump this year, and that goes through Q1 next year. And would it be fair to say you'd expect same property growth to sort of head back to in and around the 2% historical levels?
Yes. No. So I mean, going forward, we would expect that long-term care would grow somewhere in the range of 0% to 2%, similar to how it grew historically before the pandemic.
Your next question comes from line of Lorne Kalmar of Desjardins.
Nitin, you mentioned you guys expect to be active on the acquisition front. You still got a lot left over from the equity raise. Can you maybe give us an update on the acquisition pipeline?
I'm happy to give a general view on it because we don't really get into how long the pipeline is and they're all different stages. I would say, on an average, you look around 5 or 6 acquisitions before we go on 1, I think the number actually might be even higher, close to 10 to 1. So there are opportunities in the market that really remains. Our focus is the right markets for us, a sweet size over a 100 minimum for retirement, close to 150 for long-term care, NOI of a certain number and either newer properties or properties where there's opportunity to invest significant capital to do a bit of a value add. But those are, I would say, minority of the acquisitions we look for. So I would say there continue to be good opportunities in the market. It is an active space and it's great to see investor interest in our sector as we continue to move forward.
Are you guys seeing a lot of competition for assets or is there not many institutional buyers out there at the moment?
Nearly every property we have looked at, there is competition for those assets. So, which is, again, a bad thing because you have to compete for those assets. But as the owners of nearly 93 buildings, that's a great problem to have because it shows that there continues to be strong valuation of these homes. I would also say the cap rates that you look at, published cap rates are a bit backward-looking because those trades have not happened, and there's been a significant change in interest rates, which again has not been reflected in cap rates. What we have not seen and we never even saw that during the last 4 years, there's really no distressed assets that come to market. Even the retirement homes, which are not doing the best, I mean, and by the definition of that is instead of being 95% occupied, they might be 80% occupied. So there are no really desperate sellers which is, again, a good thing for the market because it's been stable. When a deal would happen, in all cases, they would be a fair market value. I have not seen a deal at least from the things that have been published publicly, anything to be a bargain price, which again not a great thing as a buyer, but a great thing because we are owners of so many properties.
And just last one for me. Would you look to dispose of any less productive assets or are you guys pretty happy on that front?
If I divide our portfolio into 2, the long-term care assets, it's really the -- if you can use the word dispose or asset recycling, I think we can use them differently. Our C homes are the ones which needs a repurpose and what we are doing, instead of selling them, we obviously are on the goal of redeveloping them. We continue to be, I think, we are one foot of the way already in redeveloping our beds, and we continue to work through our association with government to find a path for GTA homes. We have some incredible sites. And when those homes redevelop, which I do think they will redevelop, we would have an opportunity to value that -- the land that they're on today. So which again, would be enough left in -- in future years. Our retirement portfolio is basically new. We started really in retirement business in 2012 and got to 50% now. So other than maybe 1 or 2 properties from time to time that you might think about, not a fit, we don't really have a portfolio which really needs any reduction in it. So we are very happy -- we are very happy with the portfolio and we do think it's an enviable position not to be selling our assets in any way, shape, or form.
Your next question comes from line of Pammi Bir of RBC Capital Markets.
Just coming back to the retirement portfolio. Occupancy was up both sequentially and from last year. Margins were, I think, kind of flat. Can you maybe just expand on, sorry, I was just stripping out the, I guess, the equity component, but can you maybe just expand on the dynamic there and maybe how you see the margins trending as you get north to 90% and should we start to see that margins start to accelerate even further over the next few quarters?
Sure, I can answer that, Pammi. So as we've mentioned before, our focus is really around margin dollars, not necessarily margin percentage. That being said, we do view our growth in occupancy to contribute towards margin percentage growth. So as we move from 90% towards our 95% target, our margin percentage will increase. What does impact margins now is really our work around care. So what we see is that our residents, they're coming in older, they're more frail, they need more care than they did just a couple of years back. And so that has the effect of compressing the margin percentage and therefore the overall margin percentage decreases. So again, that is why we really focus on the dollars as opposed to the percentage itself.
Just coming back to the, I guess, from a capital deployment standpoint, you've got the Alberta portfolio closing in Q1, Nicola Lodge, I think, as well. As you think about maybe putting the rest of that equity that was raised back, putting it to work, can you maybe just talk about how you see that splitting up or how you're thinking about that splitting up in terms of additional acquisitions and maybe preserving some for the long-term care redevelopments?
I think you basically have -- you answered the question there, Pammi. I think for us, the intent is do both acquisition and development. So some of it is going to be towards, we just started development in Keswick, so that's around an $80 million project. So that'll use some of our equity in that we own the land on it today. The Alberta acquisition, the Nicola acquisition will use some of it, but we still have quite a bit left for us, which will do both in the development side and acquisition side. And the acquisition for us, where we have a competitive advantage is areas especially in the western Canada, there are a lot more assets, which are campuses. They have both government funding and retirement homes. And some of our peers are either in one business and not the other one. So for us, that does give us a competitive advantage. So instead of competing with 3 other people for those assets or, sorry, 5 other people for those assets, we might be competing with 3. And that obviously tips a bit of a balance in our favor. So I think you should expect us just to do acquisitions in both retirement and long-term care in all the 4 provinces we are in; Ontario, B.C., Saskatchewan, and now Alberta.
Maybe just last one for me, just on the long-term care construction funding subsidy top up, is that expected to be extended, I think beyond November, and does that maybe -- how does that sort of influence the redevelopment plans going forward?
This is again not my personal view, not a policy view. There is a huge shortage of long-term care beds in Ontario. So I think any way they can be built would be great. Government will continue to provide that incentive to build those beds. The November timeline has officially not been molded, but what the instructions are out is that there's flexibility in those timelines. Again, I would read it as if you have a project which is ready to go, it's not a pipe dream, then I would say the construction funding would be there. And I do expect that program to continue. But that, again, that's a personal opinion, not a policy out just yet.
Your next question comes from the line of Himanshu Gupta of Scotiabank.
So just on retirement home NOI margins, I mean, it looks like the care mix is more now in the portfolio and perhaps compressing the margins. So maybe what percentage of NOI today's assisted living or health care, and how does that compare to, say, pre-COVID level?
I would say, Himanshu, that percentage has not changed significantly. What has changed is because the view is some of our homes have assisted living floors and there is a care component built into the annual rent rate increases. So that mix has not changed considerably. What has changed is the a la carte services of care. So someone might actually be living on an independent living floor, but are now getting more services. That mix has gone up significantly, I would say, we don't disclose our care revenue numbers separately, but just a year-over-year, they're up close in double-digit percentage. I would say over the 4 years, the number would be very meaningfully different, more than 50% change in care revenue.
So that mix has been changing and that is high expense because most of it is labor. There has been a lot of labor inflation, especially that because it's mostly nurses when it comes to that kind of care and services and the rates have not kept up with that. We are in the process of catching up with some of those things. So that's why the mix will continue. So as occupancy goes up, as David mentioned, we will see our NOI margin go up for the rental portion because inside we do have that look, but the care is going to come at a very low margin. I would say even when get -- things get stabilized, I would say more than 15% to 20% would be quite difficult to get to.
So if I look at pre-COVID, you were like 44%, slightly higher than 44%. And if you adjust for the product mix, I mean, are you already closer to your normalized margin? I mean, the point is that it'll not go to 44%, but is like 40% the new normalized or is going to be somewhere between 36% and 40%?
Yes. No. So again, we haven't given the margin percentage outlook only in our occupancy outlook. It's going to be somewhere between 37% and the 44%. We think that we still have runway for sure, especially as we get those additional 5 percentage points in occupancy. So it's going to be somewhere in the middle of that range, but we feel that we've got runway still to go.
David, we've shared previously in the past that each percentage, what does it do to retirement and why, maybe if you can speak to that, that might help.
Sure, yes. So every percentage in occupancy growth that we achieved generates about $2 million of revenue, and that is at a very high margin of around 75%. So we might be generating, let's say, $1.5 million of NOI for every percentage occupancy growth between now and 95%.
And then shifting to occupancy and obviously you've breached 90% mark this time. What are you seeing in your broader markets? I mean, do you think, what is the market occupancy there and do you think the entire sector is likely to move towards 95% or it will be like some selective markets or selective assets which go to 95?
I would say the average would be closer to 95%. We have multiple homes which are 95% plus. There are many homes which are close to 100% occupancy and they have been there for quite some time, so that's not a short phenomenon. But there are also markets which are being closer to 90%. One of the things we are seeing, because the view was, well, if there's not enough senior homes in Canada, why is occupancy not high? And we are now finally seeing that, even some of the markets in the past which have been oversupplied, we are seeing occupancy inching up in some of those markets. So that supply thing is now coming true.
And the other portion is where residents have choices, especially in the markets which have a bit of an oversupply, having the right product mix is going to be important. We recently took investors to one of our home in North York, Kensington Place, where we are undergoing a massive renovation. And we do expect our occupancy to inch up significantly there. We saw similarly in our home in Oshawa area where occupancy was not doing well. We finished a significant renovation there and we have seen a massive increase in occupancy there, and I would say closer to 15% to 20% range to just give you an idea. So I do think there would continue to be an opportunity to get to that 95% as an average. It's not an unreasonable expectation.
Now shifting to acquisitions. The Alberta acquisition 6.5 going in cap rate, I think you mentioned there's a room for upside or growth on this. Can you elaborate? Are you looking for something here, which can expand the growth in cap rate?
I think there are a couple of things. The first one is we have been looking to get into Alberta and there have been opportunities in the past. I think this is probably the minimum scale we are going to go in with. We are building our scale, we are hiring a lot of local senior resources there because we are very bullish on the province given their government funding program and also we own staffing. It is I think the only province which has net immigration into that province from other provinces. So that is all very strong. The ability for an educated nurse to get the certified there is also much, much faster there. So it doesn't have the staffing agencies challenges that some of the other provinces have. So the first part would be, we are going in, we are building a bigger platform. We can easily absorb nearly double the size of the platform with the resources we are putting. So I think that does do that, that's the first one.
Second, the catch up that we've seen in Ontario has not happened in Alberta. So their funding is in fact behind. I mean, we paid less than around $350 a door for these homes. The construction cost is close to $450 and these are just 3 years old. So it's not that there's a lot of depreciation built into it, and that ties into that as government looks to build more -- create more long-term care beds or funded beds in Alberta, the funding, something has to change in it. We don't know what that would be. And again, our approach would be the same as we have done in other provinces, be a good stakeholder for government, give good data, and really advocate and to ensure that the funding is appropriate if you want to build more construction. So that's also, again, that's not a given, that province is very new to us, but we do expect over time the funding to change.
Last question from me on the staffing. I mean, obviously these immigration changes were announced recently, I mean, it impacts non-permanent residents, impacts permanent resident as well. I mean, how does that impact the staffing availability for healthcare sector or for your sector?
So I would say overall it would have an impact on staffing. One of the things in the new immigration rules is healthcare is exempt. So the restrictions which apply to everything else, they're not the same restrictions. They are obviously more restrictions than they were before, but healthcare in most cases is exempt. So we don't really see a significant change in that. But overall, even when immigration was fully open, there were staffing challenges and that's why as -- sometimes it might not be as appropriate to talk about team member engagement on your investor call. But then you're in an operational business with 12,500 employees, with 70% of our expense tied to labor, that is going to become a bigger and bigger issue. So again, there's going to be shortage of team members and companies which have the right culture are going to be more successful than others. And we see that in our turnover. I mean, these things are not only the right thing to do. Our turnover is down 30% year-over-year. And our agency cost, which was close to $50 million, is not touching close to 15, which is 15 with path to 0, which will never get to 0, but we'll get as close to as possible.
Your next question comes from line of Giuliano Thornhill of National Bank Financial.
Just the first one was on your LTC outlook and just assume like Q3 LTC NOI is a good run rate for Q4, that implies about a 19% [ ex-NOI ] growth. But you're guiding for low double digits. So I'm just curious what's the delta between the 2?
So our outlook is to grow in the low double-digit range. In our view, 19% would be within that range. The way that I would look at it is I would take our LTC NOI from Q3, which is quite stable at this point, and I would use that as a run rate for Q4.
And then just on the occupancy gains in retirement, is there any like geographic areas that you've seen had outperforming more recently that you could point to?
Not necessarily. I would just say all markets have been doing well and even some of the markets which have oversupply, they seem to be doing better generally. But for us, our occupancy gains have come from -- we talked about a bit before that we have a set of homes which were underperforming, and they were either driven by operational challenges, leadership challenges, not having the right infrastructure, not being competitive from how it shows. And that number is now the, let's call those if the number of homes were X, we are now down to 50% of that in this year. And we saw significant uptick in that occupancy. So that's what's really driving our occupancy, but overall we are seeing better market conditions for occupancy.
And then just coming back to the prior comment about moving coming in older, do you think that's changed like for the long-term or do you see that trending back towards where it was pre-COVID? Like is that still burning off some of the move-ins, which were delayed from COVID? And will that eventually come down to a younger moving age going forward?
So we don't really see any kind of a pent-up of demand. I think we saw that in '21, but I think those things have been well taken care of between now and then. I think that is in general as life expectancy is changing in Canada and is increasing. Residents do -- are choosing to come in later and later. So I do think that trend will continue. For most residents, the view is they want to be in their home as they should. The idea of retirement home is, especially our portfolio is driven by a need. Either it's social isolation, it is some care, whether it's minor housekeeping, whether it's food services. So our retirement portfolio, why we are bullish in our occupancy is because it's driven by need rather than just a choice. And I just think that that demographic would only increase more and more as baby boomers come into retirement space. From all that data we see, we don't see that trend reversing.
And then just on the last one for David, you had a pretty large cash balance at quarter end and there should be around $150 million in CMHC coming due, I think in Q4. How do you anticipate that cash balance and equity being invested over the coming 12 months?
Yes. No. So the $150 million that we had due -- coming due in November, we've already repaid that with the Series D debenture. And then other than that, like our cash balance, we will invest it into term deposits or whatever for instrument will yield the largest return. That would also include repaying conventional mortgages that we have coming due. So we'll definitely make sure that we are prudent around maximizing our return on any cash balances.
Your next question comes from line of Sairam Srinivas of Cormark Securities.
Congratulations on a good quarter. But all the questions have been answered, so I'll turn it back.
Your last question comes from line of Dean Wilkinson of CIBC.
Sorry if I missed this, Nitin. On the move out into Alberta, do you guys have a target of how much of the portfolio you would want to see there long-term? And would that be a mix of both kinds of assets or do you have a preference either way?
I would say that we see opportunities both in retirement long-term care in Alberta. And similar to B.C., there is a tendency in both those provinces, which we like, is to have a bit of a campus which has both really retirement and funded care in some form. So I do think there'll be opportunities for both. We don't really have a target of how much of the portfolio we see other than to say that we like the province. We like the demographic trends there. We like the staffing there. So we do expect to increase our portfolio when we find the right opportunities.
And would it be fair to say you can't get the same kind of acquisition yields, say, in Ontario where you're able to buy stuff at 25% discount to replacement costs and it's just harder to do, say, in our own backyard?
Actually, we see similar yields. I would say, if you were not in Alberta, sorry, if you were in Alberta, the yield would've been higher on the 6.5, it would be closer to 6.75 because we would already have the management platform, in this case we're building. So there's some cost of that, and these assets are really brand new. So I think if they were even 5 or 10 years out, we would've seen a different deal. We see yields similarly in Ontario, call it 6.6 in a quarter, so not really a big difference in that. So the yields are quite similar in both these provinces.
That concludes your Q&A session. And with no further questions, that concludes today's conference call. You may now disconnect.