© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to Sienna Senior Living Inc.'s Q2 2020 Conference Call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer; and Karen Hon, Chief Financial Officer of Sienna Senior Living Inc. Please be aware that certain statements or information discussed today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statement or information. Please refer to the forward-looking information and Risk Factors section in the company's public filings, including its most recent MD&A and AIF for more information. You will also find a more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted on SEDAR and can be found on the company's website, siennaliving.ca. Today's call is being recorded, and a replay will be available. Instructions for accessing the call are posted on the company's website and the details are provided in the company's news release. The company has posted slides, which accompany the hosts' remarks on the company's website under Events & Presentations. With that, I will turn the call to Mr. Jain. Please go ahead, Mr. Jain.
Thank you, Dylan, and good morning, everyone, and thank you for joining us on our Q2 call this morning. This is my first conference call as the President and CEO of Sienna, and with me today is Karen Hon, our new Chief Financial Officer. Both Karen and I have deep roots at Sienna and have closely worked together for last 5 years in our previous roles. The impact of COVID-19 on long-term care has been particularly serious across Canada. Without a doubt, the last few months have been the most challenging in our company's 48-year-old history, and I'm truly grateful for the support of our team and our stakeholders as we navigate this difficult time. My focus is on resident-centered, people-driven solutions to navigate Sienna through this pandemic and beyond. We will take all necessary steps to minimize that impact of new outbreaks and a potential second wave. We will do everything we can to keep everyone healthy and safe while providing the best-quality care and services for our seniors. In order to stay connected with our team members and to show my support and gratitude, I started in-person visits of our residences in Ontario. Over the past weeks, I have toured 11 residences, and that has given me a much better insight into the incredible work our team members are going -- are doing on the ground. It also gave me an opportunity to connect with residents and their families. We are encouraged that as of yesterday, we have no active cases of COVID-19 in any of our residences. We continue to make good progress in implementing important measures in our fight against COVID-19, many of them outlined in our 6-point action plan we announced in early June. Since the onset of the pandemic, we have sourced over 4 million pieces of PPE for use at our residences. We continue to build capacity to ensure adequate future supply of PPE at all times. We added additional health care expertise and have accelerated the hiring and retention of frontline staff members. And we have enhanced training and reeducation of our team members and continue to make improvements to the way we engage with our residents and families. Since early June, we have engaged 4 senior health experts, whose expertise and background is nothing short of impressive. Joseph Mapa has been engaged as an executive adviser. He's the former President and CEO of Mount Sinai Hospital, and during that time, he played a critical leadership role in managing Mount Sinai's response to SARS. Dr. Andrea Moser has been engaged as our Chief Medical Consultant. Dr. Moser is a family physician with deep expertise in long-term care. Her advice will help us enhance our medical and physician practices and policies. We have engaged Dr. Allison McGeer as our Chief Infection Prevention and Control Consultant. Dr. McGeer is a highly recognized infectious disease specialist and played a leading role in the fight against SARS for Canada. Dr. Moser and Dr. McGeer will also help us put best practices in place and prepare us for future potential outbreaks, including COVID-19. We have engaged Mary Jane Dykeman to help us develop a best-in-class resident and caregiver engagement program that aligns with our focus on meaningful engagement with residents, caregivers and families. I've now been CEO for nearly 60 days and have recently visited 8 Ontario Long-Term Care Communities and 3 Retirement residences across Ontario. Most of the properties I visited had been in outbreak during the pandemic, and my visits are part of my [ tanker ] tour. The main purpose of my tour is to show my appreciation for all the outstanding efforts from our team members. When most of the world was scared to even go grocery shopping, our team members were coming into work every single day. One of the main things that stood out for me was how the teams supported each other and have been doing everything they can during the pandemic. Over the past months, we have gone to extensive means to assure adequate staffing at our residences in that we have hired more than 900 full-time and nearly 1,000 part-time staff members since the beginning of March. Driven by the single-site order, which requires staff members to work at only 1 residence, we have increased the ratio of full-time to part-time from 47% to approximately 66%. We are in the process of reviewing each property for the optimal mix of part-time and full-time team members. We believe that increasing the ratio of full-time team members also benefit our residents and our operations as it provides more stability to our staffing and resident needs. In April, the governments of Ontario and British Columbia announced a temporary pandemic pay program for frontline workers. We supplemented that program to cover team members not covered in the government pay program. Moving to Slide 7. Inspired by the dedication and efforts of staff members, Sienna, together with 3 national senior living operators, initiated the CaRES Fund. This fund provides onetime financial grants of up to $10,000 to eligible employees of long-term care and retirement operators in Canada, who are facing extraordinary circumstances amid the pandemic. By July of this year, the CaRES Fund has awarded more than 400 employees in the senior living sector over $1.8 million in emergency financial assistance. Moving to government funding. To date, the government of Ontario has announced $243 million in additional funding for the long-term care sector and $20 million for the retirement sector to fund COVID-19 costs. The government of British Columbia has also committed approximately $27 million in funding for cost and connection with mandating single-site work locations and infection prevention and control. The government of Ontario has announced that occupancy protection funding will be in place for long-term care residences until the end of 2020. Residents in Ontario currently cannot be placed in rooms with 3 or 4 beds. While accommodations are limited to a maximum of 2 beds per room, the government of Ontario will continue to fund the beds at full capacity until the end of this year. All long-term care operators will also receive full funding for long-term care residences in Ontario and British Columbia if a vacancy is caused as a result of the closure of admissions of new residents because of an outbreak, including COVID-19. The additional funding is crucial for long-term care operators to help offset the significant costs driven by the pandemic, and we are very grateful for the support and leadership of our government in the fight against COVID-19. We will continue to advocate for additional funding and changes that benefit the sector as a whole. Moving to preparing for the potential second wave. Together with our health care advisers, we have been working on numerous initiatives and procedures to ensure the health and safety of our residents and team members and to prepare for a potential second wave. These initiatives include increased training of staff members, include cross-training to ensure a more nimble team and the reeducation of frontline workers, which is focused on quality and safety. In addition to ensure adequate staffing at all residences, we are also enhancing our clinical and infection control teams. We have increased COVID-19 testing at our residences, including the biweekly testing of all team members in addition to regular screening, and we expect to continue to do so in the foreseeable future. We will also continue to build our PPE capacity to ensure adequate supply at our residences at all times. We are very thankful for our hospital partners' support to care for and protect our residents and team members. They have been sharing best practices and are assisting us to plan for a potential second wave. Our hospital partners have been invaluable in promoting system integration and have helped us evaluate and implement additional measures, processes and protocols. We are committed to increased and transparent communications with our residents and their families. We believe that maintaining an open line of communication is very important to all of us. Over the past 6 weeks, we have hosted 26 virtual town halls and have issued 106 newsletters to keep everyone informed of relevant developments, programs and initiatives. We also understand importance of open and transparent communication with our team, and have launched our Stay Connected video series. In the series, I answered anonymous questions of all staff members, and this is done in addition to regular virtual town hall meetings. Moving to our marketing and sales initiatives. Over the past few weeks, we have increased our marketing efforts, intensified sales activities across our Retirement portfolio and connected with thousands of prospective residents. These efforts have resulted in a significant increase of our active lead base. Since the end of May, our total number of leads have increased by approximately 30%. We also continue to enhance our outreach strategy by leveraging our strong clinical wellness teams. Our outreach is focused on hospitals, community partners and professional organizations with the aim to broaden our referral sources. To further support these efforts, we have relaunched our referral program, which is extended to our professional contacts as well as our residents. Early indicators are positive. In addition, we have redesigned our sales incentive program, which is aimed at converting potential leads by the end of Q3. Since we launched this program 3 weeks ago, it has resulted in more than 100 new commitments, with residents scheduled to move in by September 30 of this year. In Q4 of this year, we will be launching a new centralized call center. This call center will enhance our communication and marketing efforts with current and prospective residents and their families. As new team members and new residents have started to move in again, they're required to follow a mandatory 14-day isolation period. This can be quite hard, and we're doing everything to make this time as enjoyable as possible. As part of a number of initiatives, we have launched our Staycation program, which includes personalized gifts, access to technology and entertainment, like in-suite concerts. We are quite encouraged by the momentum we see and the feedback we have received since reopening our residences. During the month of July, deposits have nearly doubled compared to the previous month. With that, I'll turn it over to Karen, who will provide an update on our operating and financial performance.
Thank you, Nitin, and good morning, everyone. As Nitin highlighted, we did not leave any stone unturned to fight COVID-19. The magnitude and impact of the pandemic is reflected in our second quarter results, which include the extraordinary expenses to manage the pandemic. I will start with our Q2 operating performance on Slide 13. Average occupancy in the Long-Term Care portfolio declined to 92.6% in the quarter from 98.3% in the same period last year. As Nitin mentioned, Long-Term Care residences are fully funded for vacancies that are caused by temporary closure of admissions due to outbreak, and we will receive funding protection until the end of the year. Sienna's average same-property occupancy in the Retirement portfolio declined to 83% in the quarter from 88.4% in the same period last year. During the quarter, occupancy declined by 90 basis points in April and 70 basis points in each of May and June, largely as a result of COVID-19 restrictions that have reduced the move-in activity and the ability to conduct in-home tours. Monthly rent collection levels remained high at approximately 99%, consistent with our experience prior to COVID-19. Moving on to our Q2 financial results. Our same-property NOI of $31.8 million in Q2 decreased by $8.1 million or 20.4% over the prior year, mainly related to net pandemic expenses of $7.7 million. Long-Term Care NOI decreased by $5.9 million to $16.6 million year-over-year, and Retirement same-property NOI decreased by $2.3 million to $15.1 million. Excluding net pandemic expenses, consolidated same-property NOI decreased by 1.2% year-over-year mainly due to the softness in Retirement occupancy partially offset by in-place rental rate increases in line with market conditions and timing of expenses. Moving on to our pandemic expenses. We expect to continue to incur an increased level of expenses to support the cost of managing COVID-19, mainly comprised of investments in additional staffing, employee pandemic pay program and procurement of PPE, infection control and cleaning supplies. It is important to note that there may be timing differences between the time of incurring these expenses and the funding of such expenses. During the quarter, we recorded net pandemic expenses of $10.6 million related to managing COVID-19. Turning to Slide 16. OFFO in Q2 was $16.7 million compared to $23.6 million in the prior year, a decrease of $6.9 million primarily due to net pandemic expenses partially offset by mark-to-market adjustments on share-based compensation, lower current income taxes and lower net interest expense. Q2 OFFO per share was $0.249 compared to $0.356 in the prior year. In terms of our balance sheet, Sienna maintains a strong financial position with significant liquidity and a substantial unencumbered asset pool. Sienna ended the second quarter with over $240 million in liquidity, comprised of cash and cat equivalents as well as available credit facilities. Subsequent to the end of Q2, we repaid $60 million of our credit facilities. With our diversified debt profile and an unencumbered asset pool of approximately $540 million, we expect that we will continue to have access to multiple sources of financing. We have limited debt maturities for the remainder of 2020, and we believe that we'll be able to successfully refinance our Series B debentures in the amount of $240 million, net of its principal reserve fund, coming due next year. Our debt capitalization is well distributed between unsecured and secured debentures, credit facilities, conventional mortgages and CMHC-insured mortgages. Looking at our debt metrics on Slide 18. Our debt to gross book value increased by 190 basis points to 48.5% year-over-year mainly due to $167 million drawdown from our credit facilities, of which $105 million has been invested in short-term investments during the quarter. This provides the company financial flexibility. We decreased our weighted average cost of debt by 30 basis points to 3.4% year-over-year primarily due to increasing of mix of floating rate debt to capitalize on the low interest rate environment. Due to the significant amount of net pandemic expenses, debt to adjusted EBITDA increased to 8.6 years (sic) [ 8.6x ] in Q2 from 6.7 years (sic) [ 6.7x ] in the prior year, and our interest coverage ratio decreased to 3x in Q2 from 4x in the prior year. Factoring in the repayment of $60 million of our credit facility subsequent to Q2, our Q2 pro forma debt to gross book value would be 45.9%, a decrease of 260 points, and our Q2 pro forma debt to adjusted EBITDA would improve by 6 points to 8.1 years (sic) [ 8.1x ].Sienna's AFFO payout ratio increased to 94.4% in the second quarter from 62.5% in the comparable prior year period mainly as a result of the net pandemic expenses. We expect an increased level of expenses for some time. And given the ongoing uncertainty around the impact and duration of COVID-19, we have withdrawn our 2020 guidance earlier this year. In the meantime, we remain committed to providing periodic updates on the impact of COVID-19 on our business operations and financial results. With that, Nitin will provide his closing remarks.
Thank you, Karen. COVID-19 has highlighted the urgency for our sector to come up with solutions to better serve and protect our seniors. They represent a generation that has contributed so much to our society and to our country. We owe it to them to help them age with dignity. I'm hopeful that collectively, we will be able to address the challenges we face and drive progress across our sector. We are pleased with the Ontario government's announcement on July 15 of a new funding model for the redevelopment of long-term care. The model is expected to accelerate the much-needed construction and redevelopment of long-term care homes across the province. We have long advocated for a revised model, such as this, that recognizes regional development needs, and our team is in the process of evaluating the impact of the revised model, and we are committed to working with all stakeholders. The construction and redevelopment projects will not only allow more seniors to age in a new home, but the development of these homes will also have a positive economic impact resulting from increased employment opportunities. We are also continuing the planning of our joint venture development of a retirement home with Signature Retirement in Niagara Falls. The planned development is located in a market we know well and expected to benefit from future demand in this community. I'm incredibly grateful for our team, who continue to demonstrate commitment, compassion and resilience, and I want to sincerely thank our residents and their families for their encouragement and support. I also want to acknowledge the many partners who are supporting us in the fight against COVID-19 and their swift leadership, including our hospital partners, the governments of Ontario and British Columbia and many other key stakeholders. With the support of our stakeholders and the exceptional expertise of our team and advisers, we are implementing the learnings from recent months. We have been working on numerous initiatives to keep our team members and residents healthy and safe and have improved the way we communicate with our residents and their families. Our marketing efforts are showing a positive trend in commitments from future residents, and our development plans have been gaining momentum in recent weeks. I see many positive signs in our Long-Term Care communities and Retirement residences and feel confident about the plan we have put in place for our path forward. Thank you for your participation on the call today. We are now pleased to answer any questions you may have.
[Operator Instructions] Our first question comes from Brendon Abrams from Canaccord Annuity.
And first of all, I just want to congratulate you and your team on really a challenging quarter, but everyone stepping up in terms of protecting the residents and having 0 cases right now. So that's great. Just wanted to touch on a few things. Just in terms of occupancy funding for the Long-Term Care. I know it's secured through 2020, the end of 2020. What's your expectation from the government after that, and if you've had any conversations with them?
Thank you, Brendon, first of all, for your comments. The -- this is the right thing to do at this time, given that there is really no vaccine at this moment. And it is not only a difficult thing to limit the spread of COVID-19, but just being able to serve people who are 4 people in a room is difficult as well. So this is a key challenge for the province and for our sector. By this change, I think the system has lost close to 5,000 beds in capacity. So I do not really have any guidance into what it would look like in the future. But we are committed to working with our hospital partners, with the government to find a sustainable solution going forward. And as we have more insight, we will provide so.
Okay. Yes. No, that makes sense. And I think you touched on this in your opening remarks just in terms of upcoming debt maturity, the Series B. Not too far from now, I believe, February 2021. What do you see as the most likely scenario or maybe option or 2 to address this maturity? And how do you think maybe the rate might compare to the existing debenture?
Yes. The existing debenture, the rate is around 3.4% or so. And depending on what we do with it. And given the flexibility we have had as a company, there's an opportunity for us to do an unsecured financing, potential to do some in mortgage financing or a blend of that. Unfortunately, there's no CMHC program as it relates to Ontario long-term care, but there are some assets in an encumbered asset pool, which are retirement residences, so we might be able to swap some. So at this point, we feel very confident in our ability to do so. We have had very positive conversations with our lenders over the last month or so in terms of our path forward for Series B. So at this point, we are really looking at all different options. So we have multiple plans into place. And again, as we have a bit more confirmed view of what we might want to do, we will be announcing it in due course.
Okay. And do you have an idea of the -- just to follow up, an idea of the clear title value of maybe your Retirement portfolio where there is -- which is eligible for the CMHC financing?
Sorry, Brendon, I'm not sure I got the question. You said the value of that portfolio, is that what you were asking?
The value of the clear title asset in the Retirement portfolio, which, I guess, presumably, you could secure CMHC financing on?
Yes. So we have $540 million in assets which are unencumbered at the moment. So some of them are Retirement residences. I do not have the split on top of me at this point. But I think that's -- when we look at Series B combined, that's one of the ways we're going to look at it as well.
Okay. And then just last question for me before I turn it over, just in terms of maybe G&A and expectations maybe for 2021 onward. Obviously, I mean, last quarter was unique, and maybe even the next 2 as well, dealing with the heart of the pandemic. Can you provide some color on where you see maybe G&A normalizing, I should say? Would it be fair to be somewhere between maybe last quarter and maybe Q4 '19?
Right. Brendon, thanks for your comments at the beginning. So during the quarter, we spent on, let's say, our regular wages and benefits and G&A of about $5.6 million in the quarter. And we know that we have added pandemic expenses as a result of what we were managing. And going forward, on a normalized basis, we expect to -- it to be back to normal levels at around 3.4% to 3.6% of revenues, as we have experienced in the past.
Our next question comes from Chris Couprie from CIBC.
Maybe just following up along Brendon's lines of questioning. With respect to the pandemic expenses that were incurred in the quarter, my take is that the -- in the Long-Term Care side, there could be some recovery of the net amount kind of outstanding in the quarter. And maybe, ultimately, the LTC pandemic expenses should mostly be recovered. What about Retirement? Is that kind of $3 million a quarter of pandemic expenses likely to persist? And is there any other government assistance that you could get on that side?
Right. Chris, so on the Retirement side, we have a little bit of a government funding announcement left. But really, the impact of the pandemic on Retirement has been significantly different between Long-Term Care and Retirement. And when we look at our expenses across the board between the 2 segments, they really relate to additional staffing to support a residence, the employee pandemic pay program, purchase of PPE and infection control and cleaning supplies. And when we look at these 2 segments together, we expect that these costs would moderate over time. And for the remainder of the year, we'd be looking at approximately $4 million of pandemic expenses in our NOI, mainly attributed to Long-Term Care segment. And this does not factor in the possible additional government funding that might be announced later in relation to the pandemic.
Sorry, you expect the net pandemic expenses on the NOI line to be about $4 million for the balance of the year. Is that right?
No. That won't be net, that would be before any government funding announcement.
Okay. So it's gross. All right. And then what about on the administrative side? I know you've made a number of -- or engaged a number of health care experts. Just on that, is there anything that you can share that you've learned so far? And maybe anything with respect to how long these engagements may last in terms of the extraordinary admin expense?
Yes. So the -- our admin expense for this quarter related to pandemic was $3 million. We expect it to be kind of, call it, around $3 million for the balance of the year, not $3 million by quarter. Really, the expertise that we got from our key advisers in health care has been truly extraordinary and is to really help us get better prepared for the second quarter, making sure we have good physician practices in place. We expect the long-term care sector to be a lot more collaboration, working with hospitals. So having someone like Joe to advise us on those items is a key for us as well. So I think we shared many of the things that we are doing over the last 60 days based on the advice we've got. And I truly believe that there's a real opportunity for us to make a key difference in our seniors in both Long-Term Care and Residents with that advice. So going forward, we -- our G&A is what Karen talked about, let's call it, 3.5% or 3.6% as a percentage of revenue. And if we have further information on it in 2021 and onwards, we'll definitely do that on a timely basis.
Okay. Great. And then maybe just one last question for me. On the Long-Term Care side, have you noticed any shift or change at all in the wait-list for your residences?
I mean the wait-list has gone longer. As you might notice, in our Long-Term Care, occupancy has gone down to 92%. It has -- and it's not going down because they're not people looking to move in, it has gone down because of COVID-19, many of the homes were shut down for taking any new residents in. So the wait-list is now close to 38,000 people, and we do not see really any change in that.
And the wait-list for your residents is specifically -- there's been no real material change?
Correct. No material change.
And Chris, maybe I'll just clarify. I think I might get why you were asking if it's net or gross. I want to clarify that NOI would be looking at about $4 million per month for the rest of the year.
Okay. And then that's mostly in the Long-term Care segment?
That's right.
Our next question comes from Pammi Bir from RBC Capital Markets.
As you've kind of worked to address some of the issues over the last few months, what are some of the areas that you've identified in terms of the more urgent need of addressing? And then secondly, can you provide some color on the recommendations from Paul Boniferro?
Sure. The first one, I think it really has been a learning, not only for Canada, not only for Ontario, not only for long-term care, but for Sienna. Because the things that the world knows today about the virus, no one knew it 3 months back. So for example, there are 3 things, in my view, which make a lot of sense today but they were not in place on the very beginning, the first one being universal masking. This was implemented in early April in Long-Term Care. We started a few days before the directive came out. And now you see every place you go out, you see people wearing a mask. And if we would have started it much sooner or people knew, there would have been a different outcome potentially for Canada. The single-site staffing, that has been a huge support in limiting COVID-19. And the last one is universal testing. So we would -- previously, the tests were not being done. So you could have had asymptomatic patients or residents living with people who had no COVID at that point. And without any universal testing, that was not possible. So we think those 3 things have made a key difference, and we continue to look forward with the government to see how we can increase staffing in Long-Term Care. We have long advocated for it that the number of staffing needs to go up. And from a company perspective, adding the health care expertise and infection prevention and control expertise has been truly instrumental, as you can -- when you go to a hospital, you -- as you would notice, the amount of infection control you would have. That is different in Long-Term Care. Long-Term Care truly is a resident's home. So when you go and you -- people bring in their own furniture, their own bedding because it is supposed to be home like versus in an acute care setting, such as a hospital. So I would say those would be the key learnings. In terms of Paul Boniferro's analysis on us, we are reviewing it at the moment. And we will figure it out, some of the implementations from it.
Sorry, just any color on -- you mentioned that there are a number of recommendations that he made. Can you just maybe just highlight a few? Or...
Sure. The few of the ones that we've addressed even in the beginning is really enhanced training for our staff. The 0 -- making sure that people are aware and reinforcing our 0 tolerance policy as it relates to abuse. Those will be the 2 biggest ones that we already started as we were starting with the Paul Boniferro's investigation, and the big one is on communication with both residents and family members. So that's where our call center is coming into place because when everyone was extremely busy with COVID-19 and dealing with it, it is difficult sometimes to attend to the phone, and that keeps family members guessing as to what is happening since they were not able to visit. So those would be the 3 key areas: staffing, communication and training.
Got it. That's helpful. And then just maybe switching gears. Looking at the retirement home occupancy erosion, it seemed to, I guess, pick up in July, but maybe the indications to date from some of your commentary seem a bit more positive. Can you just provide some context on that slippage in July relative to some of the other months? It seems to be in a bit more contrast with some of your peers, which saw a bit less erosion. And then just what you're seeing in perhaps the first few weeks of August here?
Sure. No, thank you, Pammi. And again, it's a bit of a challenge when the universe of people who disclose this information is very limited, call it, 2 or 3 people. I'm just going on a limb, and I'm guessing that's who you're comparing it to as well. And really, for us, we saw a slower decline in the beginning months. So year-to-date, for example, we started -- if you look at the last 3 months or 4 months, April, May, June and July, we had a cumulative decline of around 3.4%. So we are looking at it more from that perspective. The thing we saw in our communities is that end of June is when Long-Term Care started to open up. There definitely was a pent-up demand of residents who needed to go into Long-Term Care, and that's what we saw. That is really the major decline of our occupancy. It wasn't people moving to competitor. Just -- we -- but we also see pent-up demand for Retirement, and that's the numbers we shared in terms of our number of leads going up. We have more than 100 deposits for people looking to move in before Q3. But there's usually a bit of lag between people leaving versus people coming in, and that's what we are experiencing.
I got it. I understand. And I guess, just maybe last one for me. Just with respect to hospital management agreements, do you have a sense of how long those will -- how long they'll continue to, I guess, remain in place? And presumably, the costs associated with those agreements is incorporated into your, I guess, outlook for the pandemic-related costs?
Correct. So starting with the last question first, yes, that cost is included in the pandemic-related cost going forward. They're -- I would say, out of our 3 management agreements, there are 2 which have a time line to it, but it's just not -- it's not decided finally yet, so I'm hesitant to share the time line. The third one would be potentially a bit longer, but the 2 should be coming out in short to medium-term, if I want to say that. And again, as we get further more clarity, we would announce those dates.
Our next question comes from Jonathan Kelcher from TD Securities.
Just to follow up on Pammi's question there on the Retirement side, I guess, in the -- in your disclosure, you said that deposits and signed leases were nearly double July over June and double over July -- or nearly double over July of last year. I guess, 2 things. One, how long does it take for that to translate into occupancy?
Yes. So one of -- the deposits that I'm talking about, Jonathan, so there is usually a lag, but we also are quite focused on ensuring that people move in a bit sooner because there is a conversation of potential second wave. And no one really knows, but people are talking maybe sometime in October. So we are hugely focused on having people move in by Q3. So the deposits that I'm referring to, the 100 or more, they are all supposed to -- they are due to move in before Q3. And having said this, we're also working towards how do we have people move in when COVID-19 does come back in a bit more bigger way, and that's what I talked about, our Staycation process of when people come in and they're self-isolating. Even though they are in the room, it does not mean they have to be uncomfortable. So there's a lot of work that our Retirement team is doing to ensure that they're enjoying their time in -- of that 14 days rather than feel that they are -- they can't go outside.
Okay. Does everybody who moves in now have to self-isolate for 14 days?
That's correct.
Okay. And then your -- so I guess, your deposits and signed leases were up nearly double versus July last year. How did May and June compare to 2019 May and June in terms of those stats?
I don't have those numbers top of mind. In May and June, again, people were quite hesitant because they -- you don't really know when this would happen. Even during the pandemic, and if the home was or a retirement residence was not in an outbreak, we had people moving in because if you have decided to move and you have sold your house and everything was done, so we had people move in. We obviously did that with the most precaution to ensure that they were isolated, that we -- they are well taken care of and that we are not putting others at risk. But May and June activity would be quite low.
Okay. Now would it be fair to say that July might be the bottom in terms of occupancy based on the leads that you have?
It's difficult for me to commit to something, but we hope so. I mean deposits look promising to us, and our number of deposits grow every day, which is a positive sign. So I hope that that's where July could be the bottom. But I think it's hard for me to commit at this point. And again, we are committed to providing our monthly occupancy, as needed, to everyone.
Okay. And then just one last one for me. And on the Long-Term Care, it has obviously started to open up. Do you see any issues? I guess, what can your occupancy get to given that you do have those 500 or so ward beds that you can no longer use? And what do you think it gets to by the end of this year?
Yes. I would say our occupancy -- if you remove those roughly 500 beds, which are taken away because of the 4 beds and we have funded for it, we expect our occupancy to go up to 97%, 98%. There are very healthy wait-lists. And again, the reason the occupancy has not gone up is just because you could not accept admissions. But there's a high amount of demand, as we just talked about, 38,000 people on our wait-list. So we expect that to go up unless homes are going to shut down again because of COVID-19.
Okay. So that should be up sort of by the end of Q3 then?
That's our intention, and that's what we're seeing that people are moving into Long-Term Care.
Okay. And it's -- I guess, it's just way too early to figure out how any sort of funding would work if the government doesn't change on those 5,000 beds -- those 5,000 ward beds, right?
Yes. That's correct. And sorry, I just want to correct. So we have not -- the move-ins have not started into Long-Term Care, but we are in the process of speaking to [ Lance ] and others as to how that would happen because, again, the health and safety comes first. So we are just finalizing that. So you might not -- we might not see a big difference in Q3 as it comes to an average. But again, that's something we are watching, and it's more to do with when everyone feels comfortable that we should be adding more people to Long-Term Care and not put others at risk.
Our next question comes from Yash Sankpal from Laurentian.
I just wanted to clarify one thing. I'm not sure if you guys have started moving people into your ward rooms in your LTC homes? Has that process started? Or you don't expect it to start?
So let me just clarify. I think my answer probably confused that -- so first, there's no one moving into long-term care in Ontario at the moment, whether ward or no ward. The second conversation is that the 4 bedrooms would be only limited to 2 people in a room. So that's -- and that would stay until the end of 2020, as per directive.
Got it. Okay. You mentioned that your staff-to-patient ratios have gone up, I think you said 47% to 66%. Would you maybe...
Full-time to part-time ratio has gone up, that's correct.
But are you allocating more staff to your patients than that is required? That's what I'm trying to understand.
Sure. So as we've talked about, Karen mentioned the increase in expenses for COVID-19, and the majority of that expense is related to staffing, whether it's screening, whether it's additional staff to take care of residents. And that's what we talked about, roughly $4 million of expenses going forward. But it does not factor in government funding. So if -- we expect government funding would come, and that -- those expenses would come down.
Okay. And about your debt maturity, you mentioned that you have $440 million of unencumbered assets. How much of that is assigned to your unsecured debenture pool?
Sure. So we have $540 million of unencumbered assets. And our unsecured financing, we have a $200 million revolver and $150 million unsecured financing, so $350 million. The covenant we need to meet is 1.3x. So call it $450 million that is taken away out of that $540 million, so you're left with close to $90 million or so and you can borrow additional $70 million from that unencumbered asset pool. Our goal is to always have some buffer and cushion in it. And our refinancing, which is coming due, which is Series B, is backed by 26 Long-Term Care assets. And just the value, there are 12 A Long-Term Care assets in it. And we -- based on the -- some of the valuation work we have done, we find between just the A properties and the liquidity that we have, we should have enough ability to put -- to be able to refinance the upcoming debt maturity of $245 million.
Okay. And just on -- last one on your margins. So based on what you're seeing and hearing from the government, do you think your margins -- your margin profile has gone down -- your Long-Term Care margin profile has gone down? Or do you think -- or will go down from where it was, say, last couple of years, permanently?
Yash, so our Long-Term Care and Retirement margins have been impacted by our pandemic expenses. But really, if we exclude those for Q2 and year-to-date, those would be comparable to the 2019 margins.
And it's hard for us to -- just to follow up on it, Yash, it's hard for us to predict the model going forward, and that's why we are sharing the pandemic expense -- related expenses. Excluding pandemic, our margin stays consistent. So I think it's too early for us to predict what the future might look like for both Long-Term Care and Retirement residences.
Our next question comes from Himanshu Gupta from Scotiabank.
So first of all, congrats to you, Nitin and Karen. You guys have taken the responsibilities in different times. Nitin, how is your opinion of being CEO so for with the opportunities you see in front of you?
Thank you, Himanshu, for the question. Many of you might not know, but I, in fact, started my career in operations and attended hotel school. So this is really me coming back to my roots. And to say that last 60 days has been a blur, I think that would -- that word is too slow to describe the pace of what we have done as a team. It is not lost on me that it truly is a privilege to be serving 12,000 residents and 12,000 team members. I would say the highlight of my last 60 days, I've been visiting 11 of our communities, 8 Long-Term Care, 3 Retirement; and speaking to team members one-on-one and really talk about some of the heroic work that they have done during COVID-19. I mentioned in my script that when most of the world was scared of going to grocery store, people went into work. Some of them stayed into Long-Term Care homes so that they don't go back and in fact, anyone at home. So there is really no words to describe what the teams have done. We're very pleased with the able -- with the health care expertise we were able to bring in to Sienna. These are some of the best names in Canada and health care. And we have a very strong operations team, a very strong team at our corporate office. And I'm really confident about the path forward, the redevelopment program is encouraging. Focus from the government on long-term care to fix some of the challenges is encouraging. So I'm encouraged, and I'm optimistic about not only our sector, but definitely for Sienna.
Our next question comes from Troy Maclean from BMO Capital Markets.
I just have one question. Are you seeing competitors -- given what's happened in the retirement sector, are you seeing competitors get more aggressive on either, like, discounting rents or more involved on the sales front? What are you seeing there? Any change from the prior couple of quarters?
No. It's very local, Troy. So markets which have had new competitors moving in, we always look at it as dynamic pricing, so we will adjust those. For most cases, we have had rental increases go in, and the residents are extremely supportive. They understand all the amazing work we have done. Had the opportunity to visit 3 of our Retirement residences. They all talked about -- they're very happy the government is paying the staff extra, that they understand all the steps we have taken with screeners at the door. So not one of them talked about cost, they really talked about, in short, that we continue to do everything we can to keep everyone safe.
That's good. And then just one final question. The LTC redevelopment program has been tweaked by the government. Would it be fair to say that the -- redeveloping the assets -- or has the timing of the redevelopment -- redeveloping these assets, has that changed at all in the last quarter, given what's happening in the industry? Or do you expect to start that -- something in the near term?
Yes. I think the timing has changed in the sense that, previously, we talked about these -- the redevelopment program was not really financially feasible because it is not because of all the construction cost to be the same in North Bay than it would be on Younge and Eglinton in Toronto. So the fact that it's regional, it factors in the development fees that you have to pay, the land cost. So I do think there would be some pickup on it. Obviously, that's the conversation to have with stakeholders, ensuring what the process is, how streamlined the process is to start building again. Lenders are quite active in this space in terms of construction financing as well, so that will continue on. But again, these are all the conversations with lenders, with stakeholders, with the hospitals that will be the conversation moving forward as to how we do that.
[Operator Instructions] Our next question comes from Tal Woolley from National Bank.
I asked this question on another one of your peers' calls. What sort of regulatory changes or operational changes would you like to see that would -- you think that would really help deliver sort of better care during this period? Do you sort of have an idea of like the 2 or 3 things that could really make an impact right now?
I think the 3 things I talked about as it relates to COVID-19, the 3 things have been universal masking and you can make it a bit more broad and just talk about PPE in a bigger way. That's -- I think that the focus will continue on. It was very difficult. Even though because of the size in our platform, we had access to PP&E, but I would tell you it was difficult to ensure that you have continued supply. So we are shoring up supply at this time, and we have a bit of a break. The single-site staffing, that was very beneficial for us. And the last one is on universal testing. So I do think these 3 things should continue on. And then we do have increased some staffing as well to ensure that we are putting extra work around screening and everything. So again, depending on what comes out of this pandemic, if it's going to business as usual, unless the pandemic disappears, there are learnings in it, whether it's infection control, whether it's looking at staffing mix from full-time to part-time. I think it has been a crisis, and I wish it wasn't here, but I think this would make things -- or have definitely driven the focus on many of the things that we have talked about before.
Okay. And then just on the balance sheet, you signaled like you repaid about $60 million of the credit facility drawdown in Q3. And that would still leave you, give or take, I'm sorry, I don't have the number right in front of me, but probably about a $90 million to $100 million cash balance. Is the intention to carry that much for the foreseeable future?
Yes. Tal, going into the pandemic early days, we wanted to be very prudent from an enterprise risk management perspective. And we wanted to make sure that at all times, we have sufficient cash on hand with the quick access to financial flexibility to support additional staffing needs as well as purchase of PPE. And no, now that we've learned more from it, that's why we wanted to note we had the ability to repay some of that back, but we would expect to maintain that higher level of cash on hand.
Okay. And then the call center that you're rolling out, is that outsourced? Or are you doing that in-house yourself?
No. It's a call center, which is fully -- would be fully owned by Sienna with people who understand seniors who know what's more important to residents. It would be our Sienna team members well trained in this -- in our sector. So that will be a key focus for us. And we will start with the right mix, and we will make it bigger as it generates more and more leads.
Okay. And then sorry, Karen, just lastly, I just want to make sure I've got the pandemic expenses that you're sort of expecting to see correct. You had said about $4 million in NOI for the balance of the year and then about $3 million in G&A. That's your best guess at this point?
Yes. Let me clarify that. It's $4 million per month in NOI with most of that in Long-Term Care, and then $3 million for the balance of the year in G&A. So let's call it $0.5 million each month in G&A.
And the $4 million, Tal, does not include any government funding. So we expect government funding to come in, and that would reduce that number of $4 million.
I show no further questions in the queue. At this time, I'd like to turn the call back to Mr. Nitin Jain, President and CEO, for closing remarks.
Thank you, Dylan. Thank you to all of you, and thank you for joining our call this morning. On behalf of our entire management team and our Board of Directors, I want to thank you for your continued support. And I hope all of you have a great day. Thank you.
Thank you, everyone.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.