Edited Transcript of SIA.TO earnings conference call or presentation 12-Nov-20 2:30pm GMT

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Q3 2020 Sienna Senior Living Inc Earnings Call MARKHAM Nov 18, 2020 (Thomson StreetEvents) -- Edited Transcript of Sienna Senior Living Inc earnings conference call or presentation Thursday, November 12, 2020 at 2:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Karen Hon Sienna Senior Living Inc. - Senior VP & CFO * Nitin Jain Sienna Senior Living Inc. - CEO, President & Director ================================================================================ Conference Call Participants ================================================================================ * Brendon Abrams Canaccord Genuity Corp., Research Division - Analyst of Real Estate * Himanshu Gupta Scotiabank Global Banking and Markets, Research Division - Analyst * Joanne Chen;BMO Capital Markets;Analyst * Jonathan Kelcher TD Securities Equity Research - Analyst * Pammi Bir RBC Capital Markets, Research Division - Analyst * Tal Woolley National Bank Financial, Inc., Research Division - Research Analyst * Yashwant Sankpal Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, welcome to Sienna Senior Living Inc.'s Q3 2020 Conference Call. Today's call is being 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 result 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 the Events & Presentations. With that, I will now turn the call to Mr. Jain. Please go ahead, Mr. Jain. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [2] -------------------------------------------------------------------------------- Thank you, Andrew, and good morning, everyone. Thank you for joining us on our Q3 call this morning. Since the onset of COVID-19, we have been focused on steering Sienna through this crisis, always with the health and well-being of our residents and team members being our top priority. Eight months into the pandemic, we are continuing with the relentless efforts to fight COVID-19 and to minimize the impact of new outbreak. While we continue to manage through a very difficult environment, we were able to adjust and strengthen our operations and become more knowledgeable and better prepared in our response to the second wave. We continue to invest in our frontline teams and processes, strengthen the way we communicate and expanded our leadership team. In order to further strengthen clinical quality and resident safety measures across our platform, our Board of Directors established a quality committee to focus on the quality of resident care and resident experience. This also includes resident and team member satisfaction, safety and many other initiatives directed towards improving the quality of our resident's life. I'm very pleased that Dr. Andrea Moser joined Sienna as Chief Medical Officer. In her role, she's focused on leading and implementing all aspects of medical services, improving our resident quality platform and building on Sienna's virtual care capabilities so that physicians can come to the bedside of our residents via technology, enabling access to broader range of medical expertise. In addition to Dr. Moser, we continue to receive advice from some of Canada's premier health care experts, including Joe Mapa, the former President and CEO of Sinai Health Systems; Dr. Allison McGeer, one of Canada's premier infection prevention and control specialist; and Mary Jane Dykeman, an expert in health care risk management. We are also in the process of joining Seniors Quality Leap Initiative, an initiative that helps us to benchmark our quality indicators against international standards and allows us to participate in the sharing of best practices, all with the goal to improve the clinical quality and quality of life for our seniors. Moving to infection prevention and control. During the third quarter, we continued to make good progress in implementing important quality and safety measures and to prepare for the second wave. Our incident management team meets daily to monitor the impact of COVID-19 at our residences, reviews announcements and changes to provincial directives and provides guidance and oversight for implementing changes to applicable policies and procedures. We enhanced our training and education of team members and have been holding weekly training seminars and webinars, many of which are focused on learnings from the first wave and addressing site-specific needs. We also substantially increased our personal protective equipment reserves and centralized our order inventory system through establishing 8 regional hubs in Ontario and B.C. Each of our residences now has 30 days worth of supply, and we are grateful for the government's additional supply of personal protective equipment. We implemented enhanced restrictions for nonessential visitors and nonessential outings in many of our communities ahead of government-mandated requirements to do everything we could as COVID cases started to rise across many of the regions in September. During the peak of the first wave, we entered into hospital management agreements at 3 of our Long-Term Care residences. Our hospital partners' support helped us evaluate and implement additional measures, processes and protocols. In September, 2 of the 3 agreements have concluded. Over the past months, we enhanced our pandemic staffing strategy to support our frontline team members and to ensure continuity of care for our residents. Our staffing needs are met internally through regionally focused talent acquisition teams and further supported by external agencies, who are specifically focused on short-term ready-to-deploy qualified team members. We are very grateful for the continued government support that helps us cover some of the extraordinary pandemic expenses so far. At the end of Q3, the government of Ontario announced additional funding for long-term care of over $500 million, increasing total funding to over $800 million. As of September 30, approximately $327 million has been allocated to the long-term care sector. The government of British Columbia has allocated approximately $187 million in funding for costs in connection with additional screening and staffing, infection prevention and control measures and social visitations. The funding is crucial to help offset from the significant costs driven by the pandemic. Moving to communications, marketing and sales initiatives. We continued to strengthen the way we communicate with our residents and our team members. We launched a team member's mobile app, which gives us the ability to reach out to thousands of team members in different locations quickly and directly with new information. We also launched our new centralized call center, which supports our communication and marketing efforts with current and prospective residents and their families. Over the summer, we intensified our marketing and sales activities across our Retirement portfolio and connected with thousands of prospective residents. We made significant investments with respect to a digital presence with a goal to drive online traffic to our website and social media sites, and ultimately, increase the number of leads as we saw the positive outcomes during the third quarter. In addition, we redesigned our sales incentive program, which successfully converted potential leads to resident move-ins by the end of Q3, and we started our winter staycation campaign for shorter-term stays in our retirement residences over the winter months. Our marketing and sales efforts resulted in a significant increase in deposits and move-ins from prospective residents in our Retirement portfolio. Average monthly occupancy was 81.7% in September, up 60 basis points from August, and it increased by another 100 basis points to 82.7% in October. This positive occupancy trend over the past 2 months was a result of our intensified marketing and sales campaign ahead of the second wave. Retirement occupancy was 81.9% at the end of October, and we expect that the second wave will negatively impact occupancy in the coming months. Rent collection levels remained high at over 99%. Comparing year-over-year occupancy rates, the average same-property occupancy in our Retirement portfolio declined to 81.4% in the quarter from 86.9% in the same period last year. This was primarily related to a decline in new residents moving in due to the impact of the pandemic, including access restrictions. In our Long-Term Care portfolio, average occupancy declined to 87.4% in the third quarter from 98.2% in the same period last year. Long-term care residences are fully funded for vacancies if new residents cannot be admitted due to an outbreak. In addition, we currently receive full funding if we lost rooms due to capacity limitations of 2 beds per room. This funding protection, however, does not compensate us for the loss of premiums we receive for preferred accommodations for private and semi-private rooms if they're vacant. The impact of the pandemic is reflected in our financial results, which include the extraordinary expenses to manage the pandemic in excess of government funding. We have made investments in additional staffing, personal protective equipment, property infrastructure, entered into management agreements with hospitals and added additional senior health care expertise to navigate the impact of COVID-19. As a result, Sienna's AFFO payout ratio increased to 110% in the third quarter versus last year. Excluding the net pandemic expenses, the payout ratio would have been 75%. While we expect a continued increased level of expenses in the foreseeable future, we are confident that we will steer Sienna through the second wave of the pandemic and beyond. We have taken many actions to strengthen our operations, invested in our frontline teams and processes and maintained a solid financial position with a BBB credit rating. In addition, our liquidity remains healthy at $210 million as of the end of the third quarter. These are all indicators for Sienna's strong fundamentals in the long-term with demand for senior housing expected to remain resilient. There is no doubt the seniors living sector has been deeply affected by COVID-19. However, recent developments regarding a potentially effective vaccine are encouraging, and overall fundamentals for senior housing remains strong. With that, I'll turn it over to Karen. -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [3] -------------------------------------------------------------------------------- Thank you, Nitin, and good morning, everyone. As Nitin mentioned, Sienna has taken extensive precautions to manage the impact of COVID-19 and prepare for the second wave of the pandemic. This impact is reflected in our results in key metrics, and going forward, our results will depend on certain developments, including the duration, extent of the pandemic. I will start on Slide 11 on our Q3 financial results. Revenue decreased marginally by 0.7% year-over-year to $166.9 million in Q3 2020 compared to Q3 2019. Our same-property net operating income of $28.9 million in Q3 2020 decreased by $11.3 million over the prior year, mainly related to net pandemic expenses of $7.2 million. Long-Term Care same-property NOI decreased by $8.4 million to $14.9 million year-over-year and Retirement same-property NOI decreased by $3 million to $13.9 million. Excluding net pandemic expenses, same-property NOI decreased by $4.1 million largely due to lower occupancy, partially offset by rental rate increases in our Retirement portfolio, and lower preferred accommodation revenues in our Long-Term Care Ontario portfolio because of vacancies in private and semi-private rooms. It was further impacted by annual inflationary increases in labor costs and higher property expenses, partly due to timing and seasonality. We continue to incur an increased level of expenses to support the cost of fighting the pandemic and minimizing the impact of outbreak. As outlined in detail in our MD&A, there are various programs and financial assistance provided by the government to support pandemic-related expenses. 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 $9.7 million related to managing COVID-19, a decrease of 8.5% compared to the second quarter's $10.6 million. We maintained higher stocking levels and accelerated recruitment and retention of team members as we entered the second wave towards the end of the quarter. We also incurred management fees for our hospital partner support. This was partially offset by lower per unit cost for PPE and additional funding received from the government for pandemic-related expenses. As we overcome COVID-19, related incremental expenses and its overall impact from the pandemic are expected to subside, and we expect this will lead to improvement in the company's operational and financial performance. Turning to Slide 13. Q3 OFFO per share was $0.203, a decrease of $0.161 compared to the prior year. Excluding net pandemic expenses, OFFO per share would have decreased by $0.054 compared to the prior year. The decrease was mainly due to softer Retirement occupancy and mark-to-market adjustments and share-based compensation, partially offset by annual rental rate increases in Retirement and lower current income taxes. Q3 AFFO per share was $0.212, a decrease of $0.156 compared to the prior year. Excluding net pandemic expenses, AFFO per share would have decreased by $0.055 compared to the prior year. Moving on to our balance sheet. Subsequent to the end of Q3, on October 2, we successfully completed $275 million of our debt financing, which significantly reduced near-term debt maturities and improved our long-term debt ladder. These financings, which reflected the confidence placed in our company, included $175 million in unsecured debentures carrying a coupon rate of 3.45% and maturing in February 2026 and $100 million term credit facility carrying a floating bankers' acceptance rate plus 225 basis points. The proceeds from these financings were mainly used to repay existing debt, including the full redemption of our Series B secured debentures, which were due in February 2021. With these successful financings, the weighted average term to maturity of our debt has been extended to 4.9 years on a pro forma basis from 4 years at the end of Q3. In terms of our debt and liquidity, Sienna maintains a strong financial position. We were reassigned a BBB credit rating from -- with a stable trend by DBRS in September, ended the third quarter with over $210 million in liquidity and further increased our unencumbered asset pool to over $840 million subsequent to our financings on October 2. Our debt is well distributed between unsecured debentures, conventional mortgages, CMHC insured mortgages and credit facilities. Looking at our debt metrics on Slide 16. Our debt to gross book value increased by 80 basis points to 47.3% year-over-year, mainly due to $107 million drawdown from our credit facility, of which $40 million has been invested in short-term investments to provide us with financial flexibility. Subsequent to the quarter, we repaid $30 million of our credit facility. We decreased our weighted average cost of debt 40 basis points to 3.3% year-over-year, primarily due to increase in our mix of floating rate debt. Excluding the impact of net pandemic expenses, debt to adjusted EBITDA increased to 7.2x in Q3 from 6.6x in the prior year, and our interest coverage ratio decreased to 3.6x in Q3 from 4x in the prior year. We expect an increased level of expenses for some time, and given the ongoing uncertainty surrounding 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 the pandemic on our business operations and financial results. I will now turn the call back to Nitin for his closing remarks. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [4] -------------------------------------------------------------------------------- Thank you, Karen. We have taken many actions over the past months to review and strengthen our company's foundation. Our initiatives have helped us adjust and enhance our operations, maintain a strong financial position and made us more knowledgeable and better prepared in our response to the second wave. We look forward to help strengthen the future of Long-Term Care and improve our portfolio with the development of older homes. We have started to evaluate how the government of Ontario's new long-term care development program would benefit Sienna's properties, and we have submitted our applications for the program. In our view, the new long-term care development program would make many projects financially feasible. Three of our current development projects are in advanced stages of planning and approval. Our development plans also include the redevelopment of Sienna's Altamont Care Community in Toronto into a new 320 bed long-term care campus in partnership with Scarborough Health Network. If built, this campus would provide integrated care for the local community, and it includes 161 new beds in addition to the redevelopment of the existing 159 beds. Since the beginning of March, we have taken many actions. We have further increased our focus on quality and safety and strengthen the company's protocols and procedures. We have added over 800 frontline team members. On October 23, the Ontario Long-Term Care COVID-19 Commission issued recommendations in relation to increased staffing, stronger health care sector partnerships and improved infection prevention and control measures. We were able to share our own experience and observations during the first phase of the pandemic with the Commission. As a result of these recommendations, the government of Ontario announced that they would increase the hours of direct care for each long-term care resident to an average of 4 hours per day. This change is expected to be phased-in over the next 4 to 5 years, and we're encouraged by these recent announcements, which are expected to help shape and strengthen the future of long-term care. As we look beyond the pandemic, overall sector fundamentals remain strong. In aging population, long wait list for long-term care and a slowdown in future supply of retirement residences are all expected to support our sector's outlook going forward. I'm incredibly grateful for our team of over 13,000, who were helping Sienna through the first wave of the pandemic with compassion and resilience and is now doing everything they can to prevent the spread in our residences during the second wave. Thank you for your participation on the call today. We are pleased to now answer any questions that you may have. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from the line of Jonathan Kelcher with TD Securities. -------------------------------------------------------------------------------- Jonathan Kelcher, TD Securities Equity Research - Analyst [2] -------------------------------------------------------------------------------- First question, just on the increase in occupancy in the Retirement portfolio. Have you been adjusting rental rates to drive that? And what sort of incentives have you been using, if any? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [3] -------------------------------------------------------------------------------- Our focus has never been to adjust rental rates. First of all, that's not a good thing to do long term. And unlike hotels, where people don't talk to each other, in a retirement home residents talk to each other and it's not a good feeling when someone new coming in is paying substantially different -- lower rates than someone who has been there for some time. Usually, what we use in line with other peers would be onetime incentive or help with moving in. That would be -- that has been our focus rather than adjusting or lowering rental rates. We would adjust rental rates in markets, for example, if there's new supply coming in or we are reacting to some other factors. But as a common practice, adjusting rental rates is not what we follow. -------------------------------------------------------------------------------- Jonathan Kelcher, TD Securities Equity Research - Analyst [4] -------------------------------------------------------------------------------- Okay. That's good. And then secondly, just on the government funding. Do you think you've received all that you will for Q3? Or do you think you might still get some of those expenses covered? And secondly, some of your peers have applied for the CEWS program. Is that something that you guys are looking at? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [5] -------------------------------------------------------------------------------- Sure. So I can answer the first one and Karen can take the second part of the question. We do anticipate future government funding. Just to use Ontario long-term care, where majority of our funding is, we got around $9.5 million in Q3. However, expenses were much higher just because of few onetime items such as hospital management fee and others. So we do expect future funding. We don't really think it will cover past expenses. But our goal would be to narrow the gap between what we're spending versus what we're getting as we better understand where and how we need to deploy resources. And Karen can answer your second part of the question. -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [6] -------------------------------------------------------------------------------- So with respect to the CEWS, we were eligible for that program in Q2. And the amounts, however, were not significant based on our occupancy changes. And as we know, CEWS program is continuing into June 2021, so we expect to continue to evaluate our eligibility and apply accordingly. -------------------------------------------------------------------------------- Operator [7] -------------------------------------------------------------------------------- And our next question comes from the line of Brendon Abrams with Canaccord. -------------------------------------------------------------------------------- Brendon Abrams, Canaccord Genuity Corp., Research Division - Analyst of Real Estate [8] -------------------------------------------------------------------------------- Just want to focus on the -- net pandemic expenses came in just under $10 million for the quarter. Just wondering how we should be thinking about this maybe moving into 2021 for modeling purposes? And as well, maybe a second part of the question. If we look beyond COVID-19 or the pandemic, how much of these, let's call it, net expenses do you think could become potentially structural parts of the business? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [9] -------------------------------------------------------------------------------- I would just say on the current run rate -- our primary focus is to keep our residents and team members safe. The magnitude of expenses differ greatly from property to property, depending on the level of outbreaks. And when there is an outbreak and if a significant one, really all your forecast is out the window because you're doing everything you can to ensure you get additional staff. You might be burning through more personal protective equipment, adding additional staff as needed. So it is very difficult to forecast that because we don't really have much prediction of how and when outbreaks would happen. Having said that, we continue to advocate for better funding. And we always talked about having a conservative balance sheet and having strong liquidity, which we have been putting to work during the second wave. So it is difficult to give us a projection. But on your second question, we continue to believe that majority of these expenses because they relate to additional staffing -- for example, you would have additional staffing for screening. Your dining room might be open longer in retirement homes because there's only one person sitting on the table. Or you might be serving meals in the rooms of the residents in both retirement and long-term care. That adds additional staffing. So we truly do continue to believe that most of these expenses would go away once the pandemic subsides. And given the recent news on the Pfizer vaccine, we do believe that potentially it could happen sooner rather than later. -------------------------------------------------------------------------------- Brendon Abrams, Canaccord Genuity Corp., Research Division - Analyst of Real Estate [10] -------------------------------------------------------------------------------- Right. Okay. Yes. No, that's very helpful. And then just maybe on the -- some of the development initiatives, the one at Altamont and the 3 others you're advancing. Maybe can you just give us a sense of how we should think about -- or how you're thinking about -- whether it's development yields, return on investment, et cetera? Like how does that look? And then the second part of the question is, just in terms of funding the upfront capital costs over time, is there a potential to bring in partners? Would you fund this primarily through construction loans? So maybe just some color on returns and then the funding aspect of it. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [11] -------------------------------------------------------------------------------- Sure. So let me give you an example of the 3 projects we have been -- we have announced previously, which is Brantford, North Bay and Keswick. They're roughly around 160 bed -- new additional long-term care beds. And in some cases, we might decide to add retirements, which we are reviewing at this moment. If it's around 160 long-term care beds, the cost is close to $45 million, give or take. And our goal would be to put construction financing. Currently, there are construction financing available for close to 70% to 85%. So there is a big range there. So if you look at the difference, you're really looking at around $10 million of project of equity on even low side of financing. But as I mentioned, you can get even a bit higher. And the new redevelopment program, there is an upfront grant you get once the construction is complete. So that could further reduce your equity requirement upfront. So our goal would be to really fund it through construction loan and using some of our equity or using our -- and when I say -- when I mean equity, I mean retained cash flow. We're not looking to go into market for something like this. And if you look at development yields -- and for those 3 projects, we are -- we think we can get a development yield of around 8%. The Altamont project is a bit different. In that case, we are working that with Scarborough Health Network. We believe that will be a great partnership and we believe the first one in Ontario between a hospital and a private company. So we are still in early stages of reviewing that. The funding is different because it's in Scarborough. With the new government program, it goes by location. So it's too early for me to reflect on the yields there. But to your point, we are partnering in that project. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- And our next question comes from the line of Himanshu Gupta with Scotiabank. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [13] -------------------------------------------------------------------------------- So just a follow-up on the pandemic expenses. In the LTC segment, unfunded $6.4 million in Q3. What was the amount of onetime items in the Q3 number and -- which you think will not be repeated in Q4? -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [14] -------------------------------------------------------------------------------- During the quarter, we incurred $2 million of hospital partner management fees. We really appreciated their expertise and support at 3 of our long-term care residences. And as was mentioned, 2 of those agreements have concluded in September. So we would view those as onetime expenses. And looking at the amount of unfunded pandemic expenses, again, Nitin touched on it. It's really -- the thing with the staffing is -- we have to be conscious that we're in the second wave. So during the quarter, as we were gradually adjusting staffing, the case count started to rise again, even though during the summer our cases were low and then we actually achieved a 0 active resident case for about 5 weeks. So when second wave hit us, we made sure that we did everything possible to be ready for the second wave to ensure that we have adequate staffing and, at the same time, accelerated this recruiting and retention of our frontline team members. And so that led to higher pandemic labor expenses. Included in our results is also a bit of Sienna's pandemic pain that is included in Q3, and that program has ended during the quarter as well. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [15] -------------------------------------------------------------------------------- Sure. So barring these onetime expenses -- sounds like around $2 million -- so can we assume the unfunded level of expenses in Q4 could be very similar to Q3, I mean, as of today? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [16] -------------------------------------------------------------------------------- Unfortunately, Himanshu, we don't really have any guidance on that because, first, we don't know what the government could fund. We can only make a guess. And secondly, we can make some adjustments -- and if a home is not an outbreak, what we would be spending. But when it goes into an outbreak, depending on the severity of it, where we are located and depending on how -- what happens with staffing, it is very difficult to forecast that. So unfortunately, we don't really have any guidance for you for Q4. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [17] -------------------------------------------------------------------------------- Sure. That's fair enough. And just bigger picture. I mean, it sounds like government is providing certain level of expenses to get through the pandemic. But I think the level of care which you provide, the expenses are much higher. So is there a way you can adjust your LTC operations so that you incur expenses which are in line with the government? I mean is that what government is asking the long-term care operators to be? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [18] -------------------------------------------------------------------------------- Yes, that's an interesting question. Again, that's not how we look at it. I know government is obviously doing whatever they can to help. It is a global pandemic and everyone is getting impacted. So we understand we would have to bear some of the pain of it rather than just the government only. And our focus has not been to see -- what we're not starting with: "This is how much we have to spend, let's come in line with that." What we are starting with: "This is what we need to do to ensure everyone is safe and healthy." And the funding would be what it would be. Again, that's not the long-term viable strategy. So if it continues on for 2 or 3 years, we will have to look at it. But we all believe that especially given the recent vaccine announcement that this is not a long-term thing. This could be a short to medium term, call it, over next 6 to 9 months before a vaccine is commercially available. So at this stage, we're not really -- our focus is not to spend what we are getting. Our focus is to spend what we need to spend, but to do it in a disciplined manner. And hopefully, those things will start to converge, what we [see] and versus what we [get]. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [19] -------------------------------------------------------------------------------- Yes. No, absolutely. That absolutely makes sense. And just switching over to retirement home occupancy, just a follow-up there. So obviously, new occupancy up 2 months in a row. What led to outperformance there? And I mean, it sounds like -- in your previous answer, you said you're not providing much incentives. Is it the sales program or something else which led to the outperformance? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [20] -------------------------------------------------------------------------------- In around early August, we really started to focus -- even from a management team perspective, we kind of thought about who's working on the crisis and who's working on the strategy for the company. Because I think if you all work on crisis, we'll wake up after the pandemic and have a company which is not really focused on strategy. So in the first wave, our Ontario Retirement portfolio or Retirement in general was not impacted significantly by COVID-19 and the team had started to focus keenly on ensuring we are driving the right marketing campaign, spending what we need to spend from a digital perspective and to ensure that we are calling all the previous leads that we had because we believe there is a pent-up demand as people were not able to visit. And that happened to be true. We had significant uptick in people taking tours when restrictions were lifted. And that's really what drove our occupancy. And in August and September -- or middle of August and early September, we were quite optimistic that this is just the start of something great, where we can build on it. However, I would say, based on what has happened, we will now call it refueling our tank. So we know people would leave. As they get frailer, they might have to move into long-term care or hospitals, which we cannot stop. So we kind of got ready by having as many people as we can add to our portfolio. And we will continue to do that once the second wave subsides or comes down a bit. The reality is our virtual tours continue to be quite strong. And in some locations, which are not hotspots where we are safely able to do so, we continue to have in-person tours, including as late as last week. And again, only do it in places which are not an outbreak, which are not in hot regions. So again, we continue to be cautiously optimistic in the forecast of our Retirement occupancy, and if it wasn't for the second wave, we would be -- even be comfortable sharing a bit more in terms of forecast and others. But just not at this point. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [21] -------------------------------------------------------------------------------- Got it. And I think you mentioned about the winter short-term stays or staycation. How much did that contribute to occupancy growth in the month of October? Or do you think they will now be reflected in the month of November? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [22] -------------------------------------------------------------------------------- What we have is some fully furnished suites for some of those prospects who cannot travel south as many people do in every year. It's really going to be the fourth quarter and early first quarter where we'll see some results. It's too early to predict that. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [23] -------------------------------------------------------------------------------- Got it. Okay. So just last question from me. On Bill 218, is that very similar in design -- I mean, to the protection you have in the British Columbia? Or is it a bit different? And then I'm assuming it will be retrospective. And will that cover anything and everything from March and onwards? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [24] -------------------------------------------------------------------------------- So again, our understanding is Bill 218 will provide a degree of civil liability protection. It's similar to what exists in B.C. And the bill frankly recognizes the circumstance of COVID-19 and protects those who responded to this crisis in good faith. And our understanding is that it would be retroactive to March. -------------------------------------------------------------------------------- Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division - Analyst [25] -------------------------------------------------------------------------------- Awesome. And does that mean that the -- a couple of lawsuits which you have in the first wave, that will be covered under that bill as well? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [26] -------------------------------------------------------------------------------- Again, we don't really comment on lawsuits. It is too early to review them anyways. And again, that is something when they become a bit more real and based on the advice from insurance companies and lawyers, we can provide further information. But it's too early to comment on it. -------------------------------------------------------------------------------- Operator [27] -------------------------------------------------------------------------------- Your next question comes from the line of Pammi Bir with RBC Capital Markets. -------------------------------------------------------------------------------- Pammi Bir, RBC Capital Markets, Research Division - Analyst [28] -------------------------------------------------------------------------------- Nice to see the increase in deposits in Q3, although occupancy did slip in October. What can you share with us in terms of maybe deposits or lease commitments thus far that have come through in Q4? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [29] -------------------------------------------------------------------------------- As I mentioned, even as late as last week, we continue to see new virtual tours, some in-person tours. We have had a good sense of deposits even in the first half of this month so far. So things have not slowed down to 0, which is very positive. Obviously, they are not in a stage what they would be otherwise. High level -- deposits so far for the month of October were around, call it, 3/4 or 75% of what we would have seen in the year before. And hopefully, we'll see something similar in November. The challenge is really how do you stop the move-outs, because as people get frailer and at a certain stage, they will start moving into hospitals or into long-term care, wherever it is possible to move into long-term care. So again, we see good traction. We have not -- our deposits have not gone down to 0. We definitely see some positive traction. What is hard to predict at this point is how many people will move out. -------------------------------------------------------------------------------- Pammi Bir, RBC Capital Markets, Research Division - Analyst [30] -------------------------------------------------------------------------------- Yes. Just in terms of the advisers that you still have on board, do you expect that these costs and, I guess, this advisory group will continue into next year? And just curious on perhaps the implications from a G&A perspective. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [31] -------------------------------------------------------------------------------- Sure. One of the advisers was Dr. Andrea Moser, and we did hire her full time. So she would be working with us full time, and we are very excited with the rigors she would bring to our medical practices and others, on overall company. The rest of the health care advisers that I've mentioned, a majority of the cost has already been spent. There would be some going forward next year. But we do not see a significant impact of those costs. Some of the G&A costs would be more around crisis management or commission legal work. So again, that's -- it's hard to predict depending on the next stages of those things. -------------------------------------------------------------------------------- Pammi Bir, RBC Capital Markets, Research Division - Analyst [32] -------------------------------------------------------------------------------- So I guess in terms of the -- I think it was $2.5 million or $2.6 million of G&A costs in pandemic-related costs in G&A in Q3. I think last quarter you talked about maybe $3 million for the back half of the year. So it seems like the majority of that has essentially been spent. Maybe a little bit more to go. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [33] -------------------------------------------------------------------------------- We do expect some pandemic cost to continue on. I just think it's hard, Pammi, to give you insight of what it might look like, because I know whatever we tell you, we would be wrong, because again, we don't really have a view of what it could be. So hard to quantify at this point. -------------------------------------------------------------------------------- Pammi Bir, RBC Capital Markets, Research Division - Analyst [34] -------------------------------------------------------------------------------- Yes. Understood. I guess, just in terms of the potential Long-Term Care project in Scarborough, when would that project be completed if it were to proceed? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [35] -------------------------------------------------------------------------------- That project is still in the early stages. The likelihood of us announcing shovels in the ground are much higher for the other 3 projects that we talked about, because in many cases -- in all 3 of those cases, it's greenfield, nothing exists on that site. In some cases, we even have site plan approval. We have quite a bit of design work done. So they would be much ahead and they could be in ground depending on a few of our other priorities in the next 12 to 18 months. The Scarborough one is still -- we started working on it last couple of months. So it's still in the early stages. There's quite a bit of work to be done there. So it's hard for me to provide you any timing for the Scarborough project. -------------------------------------------------------------------------------- Pammi Bir, RBC Capital Markets, Research Division - Analyst [36] -------------------------------------------------------------------------------- And just on the 3 projects, can you just remind us, again, sort of what -- how much spending you expect to incur, I guess, over the next couple of years? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [37] -------------------------------------------------------------------------------- Sure. So each project is around $45 million or so. So our goal is to start maybe 2 potentially in the next 18 months and then the one after that. So we expect at any given time close to $100 million of development on our books when things ramp up. Because it will not be $0 to $100 million in a day. It will be a few months before it gets to that point. And there's very clear line of sight, a good visibility into construction financing. 75% to 90% what is available for it. So we would -- that's what we would be doing. And the balance, call it, $10 million to $25 million -- and it will take some time to get to the $25 million thing -- we would fund it through our retained cash flow. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- And our next question comes from the line of Tal Woolley with National Bank Financial. -------------------------------------------------------------------------------- Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [39] -------------------------------------------------------------------------------- Just in terms of managing the outbreaks, are you finding now that like -- from an operational perspective, like the -- I don't know the right way to phrase this. But basically, that like you're getting more efficient at controlling these? Like are you seeing an improvement sort of how these are being managed in the home versus where you were sort of at the start? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [40] -------------------------------------------------------------------------------- I think there are 3 things which are different in the second wave than the first wave. The first one is universal masking didn't come until April. Now everyone is wearing a mask and ensuring they're wearing the rest of the personal protective equipment, and it is also readily available now. So that is the first one. The second one is single site, because in all of our residences in Ontario, especially even ahead of government directive, we stopped all visitors into long-term care into Ontario. So that has obviously helped. And the third one is universal testing, where people are getting tested every 2 weeks. So that has been in our view one of -- the 3 key factors of why our number of outbreaks might be less. Having said so, what is different now is more people are getting tested. So it's a combination of that. And things are not being shut down. So I think in Ontario so far, we have 10 days of more than 1,000 cases. And to run any long-term care or retirement community, you need people, you need team members. And they would go home and come back to work. And this is how COVID would get into most of the places. And there's really no way around it because even with the 2 week testing, they would have some delay in that. So it is different in the sense that there's those 3 factors, but also people are dealing with the reality of the economy and not shutting it down completely. So that's what we are struggling with. And where we're seeing significant outbreaks is would be in the GTA area, which have one of the highest count of COVID cases in Canada. So that's the reality what we're dealing with. And a big part of it really is luck. Two properties could be at the same place with the same quality standards and one could have 3 people who somehow got in touch with COVID and the other property no one. So it is very hard to predict that. -------------------------------------------------------------------------------- Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [41] -------------------------------------------------------------------------------- Okay. That's understood. Just going back to the development, you mentioned these projects for about 160 beds or about $45 million. Is that -- that translates to roughly $280,000, give or take, per bed. Is that like -- when we're thinking about -- as more of these announcements go forward, is that a reasonable sort of number for us to think about when we're trying to budget in our head how much these things might cost? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [42] -------------------------------------------------------------------------------- I would say anywhere -- depending on site, anywhere from $260,000 to $300,000. I'm just giving those numbers out just as a midpoint. So it could be anywhere from $260,000 to $300,000 per bed, is what we're seeing now. Obviously, construction cost is probably the only thing which never slows down. So there's continuous inflation in it. So take it for the number as a point in time that those are the kind of costs that we are seeing. -------------------------------------------------------------------------------- Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [43] -------------------------------------------------------------------------------- Okay. And then just on the redevelopment of these properties, like -- I mean, maybe we can use [Altona] as an example. So assuming you get the green light to proceed with the new campus, does the existing facility -- like is that going to run all the way through? Or does that get -- does that capacity get taken off line? I guess, like what I'm trying to figure out is like as we -- as the whole system works through this redevelopment phase, like is the capacity of the system going to get even more acute because we're going to have to start taking beds off-line, not because they're in 3 and 4 bed wards, but also just because they're redeveloping the facilities? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [44] -------------------------------------------------------------------------------- So our development program is really 2 different kinds of developments. And I think I would just bucket these 3 developments in North Bay, Brantford and Keswick separately than the one in Scarborough. So the cost estimate I gave you were for those 3 properties. In all of those cases, they're greenfield. So they're not on existing site where the current long-term care operations are. So building these new would have no impact on current operations for the 3 projects. The fourth one, which is Altamont and Scarborough, in that case, it would be actually demolishing the current site and building on top of it. And part of the challenge is to ensure how do residents and team members get impacted. And that is part of our due diligence at this stage. And how do we ensure that there's a place for those residents and employment -- potential employment for those team members. So that is the work we're doing. So that is quite a bit different. And that is driven by the reality of not really many GTA sites being available. There's some -- the government recently came out with 3 different sites and they're reviewing them if they could be an option. So those are a couple of things we're working on at the current time. But they are 2 very different kind of projects in Scarborough versus the other 3. -------------------------------------------------------------------------------- Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [45] -------------------------------------------------------------------------------- And has there been any conversation about how to handle the license expiries for the older beds with the government, because, obviously, they're not going to get through all of this prior to when the older licenses expire? And I know the licenses can be a bit of an overhang in terms of funding, financing. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [46] -------------------------------------------------------------------------------- For sure. I know our association has a continued dialogue in terms of license expiry, because it will be very difficult to rebuild all the 30,000 beds in the province by 2025. I think it would not be feasible to do that, frankly. So again, that's what our association actively continued to work with the government. And I do think there's an understanding. When this 2025 was announced, I think it was around 3 or 4 years back -- or if I'm not wrong, actually 5 years back. And there has not been much development because the previous redevelopment program did not really work at all. I think they were close to 600 beds built in the last 5 years. So this new program is going to be feasible. But what was difficult to do in 10 years, I'm not sure how would be achieved in 4 now. So we do expect something to change in that, but it's hard for us to predict bucket policy. -------------------------------------------------------------------------------- Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [47] -------------------------------------------------------------------------------- Okay. And then just on the occupancy moves between September and October. Like, was there anything unique in terms of the way -- like, were you expecting a lot of occupancy loss in October? It just seems like it was a fairly meaningful reversion versus trend and versus what some of your peers are reporting. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [48] -------------------------------------------------------------------------------- I would say there's a lot of elbow grease, to people really focused on making sure that we -- for the team, that they're doing everything they can. We looked at our team structure a bit. We looked at how people were -- like our sales team was incentivized. So I wish I can tell you it was some -- a cool new campaign. It wasn't that. It was really team working all out to ensure that was happening and had a singular focus on it to ensure we do that from a sales and marketing perspective and following up on all the leads we had, had in the past. So that is something we are very proud of and we feel we can do more of. But obviously, the second wave is going to damper our enthusiasm as it comes to that. -------------------------------------------------------------------------------- Operator [49] -------------------------------------------------------------------------------- And our next question comes from the line of Yash Sankpal with Laurentian Capital -- Laurentian Bank. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [50] -------------------------------------------------------------------------------- If I understand this correctly, you have -- in your long-term homes, you have vacancy even in your private suites. Is that right? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [51] -------------------------------------------------------------------------------- So right now, long-term care is running at around 87% occupancy, because in many areas -- I mean, as -- that has not changed in terms of (inaudible) really control when people move into long-term care homes. And given the -- if home is an outbreak or if it's in a hot region, the number of move-ins are quite muted. So that -- we are running at 87% occupancy across the portfolio, which includes the A home. So yes, we would have vacancy in our private beds as well. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [52] -------------------------------------------------------------------------------- Okay. So if a home is an outbreak, the government covers the occupancy, but it doesn't pay you any premium accommodation -- premium for premium accommodation. Is that right? -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [53] -------------------------------------------------------------------------------- That's right. So the government is covering us for full occupancy until the end of the year. However, what we have lost is the co-pay from residents on that premiums for semi and semi-private beds as those have -- a portion of those have become vacant as admissions are softer in outbreak. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [54] -------------------------------------------------------------------------------- Okay. Now I just want to focus on the $4 million NOI drop, excluding the pandemic expenses. So how much of that would you attribute to the premiums that you are not receiving? Or any breakdown would be great. -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [55] -------------------------------------------------------------------------------- Yes. So with (inaudible) loss of preferred revenue is about $600,000 for the quarter, and that is not included in our net pandemic expenses. Net pandemic expenses really represent the incremental expenses we have incurred to manage the pandemic net of related government funding. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [56] -------------------------------------------------------------------------------- Right. I just want to get a breakdown of the $4 million you talked about that is excluding net pandemic expenses, the NOI drop of $4 million. -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [57] -------------------------------------------------------------------------------- All right. So you're referring to Long-Term Care? -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [58] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Karen Hon, Sienna Senior Living Inc. - Senior VP & CFO [59] -------------------------------------------------------------------------------- Yes. So included in that is net pandemic expenses. And beyond that, we have, again, the loss in preferred revenue. And then we also have incurred additional property expenses, such as utilities was seasonally higher as we have experienced a very warm summer and early start to that, as well as deferred maintenance expenses from the first half of the year where the pandemic was restricting access. And so much of that work is now heavier on the quarter and expecting to be such for the remainder of the year as well. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [60] -------------------------------------------------------------------------------- Okay. Switching gears. I just want to get some idea. How much incremental cost do you incur when a property or a home goes into outbreak, like generally? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [61] -------------------------------------------------------------------------------- I think -- it is a very difficult question to answer because outbreaks are not all similar. You could have an outbreak where a few team members were tested positive and they are at home isolating and there is no resident which has tested positive. And in that case, your cost might be limited. In other scenario, you could have significant residents and team members both testing positive. So now you're looking to bring agency staff. You're adding up more staffing than you need before because you want to make sure that people are checking on the residents more often. All the regular things are shut down such as eating in the dining room or others. So it is very difficult -- there is no really one formula which applies if it's an outbreak what happens. It really is a case by kid scenario and it would look very different in a retirement home versus long-term care. And it will also look very different if a long-term care home is a A or a C building. So it is -- there's really no one cost structure which works. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [62] -------------------------------------------------------------------------------- Like can you give us a range? The reason I'm asking is I'm trying to understand how -- like if a company like Sienna is facing this, what happens to a small mom-and-pop operator and their facilities in outbreak? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [63] -------------------------------------------------------------------------------- That is correct. It is a province-wide issue or a country-wide issue in our view. And you're right, it's -- this could add significant pressure, because there's really -- the 3 things which drive what happens, I would say the majority of it, if it's out of 100, 80% of it is luck, 15% -- and the last 20% is location and maybe a little bit of your prep work, because that is really -- if someone walks into your home with COVID-19, it is very difficult to find that out even though with 2 weeks testing. So we completely agree that it is a difficult time for everyone, including the smaller owners and operators, whether they're municipal, for profit or charity. And the same applies to us. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [64] -------------------------------------------------------------------------------- Okay. And out of the net pandemic expenses you incurred in Q2, did you recover any of them in Q3 at all? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [65] -------------------------------------------------------------------------------- Again, it's just -- we've got additional funding in Q3, but we incurred more expenses in Q3. So you can look at it as some of it is for recovery of Q2. But essentially, you're spending more and the recovery is what we got. So again, we do not anticipate our previous expenses to be covered in the future. Again, our goal would be to ensure that we are spending money in a disciplined manner, so they start to converge. And if it wasn't for the second wave, we could see a path for that conversion. But during a second wave, again, the focus is not on cost. The focus is to ensure that we are keeping people safe. So again, it's hard to predict that for the next quarter. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [66] -------------------------------------------------------------------------------- No, I'm not trying to forecast it, but I'm just trying to understand. So for example, you have incurred $20 million of non -- sorry, net pandemic expenses. So should we -- is it fair to assume that it's -- like it's gone out of your pocket? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [67] -------------------------------------------------------------------------------- Yes, that would be a fair assessment. I'm not sure how much of it could be recovered. Some of it could be with a new funding program. But we do anticipate a good amount of it might be ours. Some of it is related to G&A, which we know would not be funded. Some of it is related to -- for example, there was a pandemic pay, which applied to frontline workers in the first wave. But we did something additional for our management team for those homes as well because they worked equally hard. A lot of them were working 24/7 in those homes. So we understand that would not be funded and we are okay with that. So again, I think a good chunk of it we do not anticipate funding backwards for the $20 million. -------------------------------------------------------------------------------- Yashwant Sankpal, Laurentian Bank Securities, Inc., Research Division - VP & Equity Research Analyst of REIT [68] -------------------------------------------------------------------------------- Okay. And moving on to your distribution and payout ratio, I'm sure the Board and management you are regularly discussing this issue. So just want to understand at what point would you be forced to consider a cut? Like do you guys have any internal metrics that you track? How should we think about it? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [69] -------------------------------------------------------------------------------- It really comes down to our comfort with liquidity and the strength of the balance sheet. In August, for example, when we had 0 cases and we thought we had a big refinancing risk, we were looking at it in a certain way. When the refinancing risk is gone, you're looking now at it in a different way, but now you have a bit more expenses. And just for context, our payout ratio is more than 100%. But just -- we pay dividends of around $6 million in a month, but our liquidity is $210 million. So again, what we might be funding might be $0.5 million or $1 million over the 100% payout ratio. And as we talked previously, our focus has never been on our payout ratio. Our focus is to ensure what's the -- do we have enough liquidity. So this is something we'll continue to monitor. And again, given that there is a potential vaccine in the horizon and this could be a 6 to 9 month thing -- again, our goal would be to keep the way things they are, but review them on a consistent basis. -------------------------------------------------------------------------------- Operator [70] -------------------------------------------------------------------------------- And our next question comes from the line of Joanne Chen with BMO Capital Markets. -------------------------------------------------------------------------------- Joanne Chen;BMO Capital Markets;Analyst, [71] -------------------------------------------------------------------------------- Most of my questions have been answered, but maybe just a really quick one just to tie things up. Have you noticed any change, I guess, in terms of the competitive environment from the summer and to now given the environment has changed in terms of the number of cases? Are you seeing things getting a little bit more competitive now as we enter into kind of November, December? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [72] -------------------------------------------------------------------------------- When you say competitive, you mean for the retirement resident? -------------------------------------------------------------------------------- Joanne Chen;BMO Capital Markets;Analyst, [73] -------------------------------------------------------------------------------- Yes, that's correct. Sorry. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [74] -------------------------------------------------------------------------------- It's -- the competition is so local in all of our communities. So again, we haven't -- everyone is running at a much lower occupancy. So instead of a competition, I think the focus really has been to ensure that we're reaching out to people on a proactive manner, understand their individual needs, what they might be looking for. So really no significant change in competition. And again, overall as a sector, we don't really see a lot of price cutting because it's not the right message for the current residents and it's not really sustainable long term. So it really is -- the focus is, what is the right fit for each different resident or prospective resident. So really no change in competition from our viewpoint. -------------------------------------------------------------------------------- Joanne Chen;BMO Capital Markets;Analyst, [75] -------------------------------------------------------------------------------- Okay. Got it. And maybe this is a much more longer-term question. But just given the cost pressures that we've seen with this pandemic and your discussions with government, is it too early to tell whether to see -- whether going forward there's going to be a permanent change in terms of the cost structure within the long-term care business? -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [76] -------------------------------------------------------------------------------- Sure. The recent announcement of increasing the direct care hours to 4 hours. And the care has always been funded by the government. Any operator of any kind whether it's profit, not-for-profits or municipal do not make any money off it. So we do anticipate as those care hours go up that there would be additional funding for it. So we don't really see a big -- and which is a positive thing to actually increase the number of care hours. So we do not see a significant change in the overall cost structure for this business. And the positive is that development -- the new development program is now financially feasible and we would see some development there. So that would be, again, in our view positive. -------------------------------------------------------------------------------- Operator [77] -------------------------------------------------------------------------------- Thank you. And I'm showing no further questions. So with that, I will turn the call back over to Nitin Jain for any further remarks. -------------------------------------------------------------------------------- Nitin Jain, Sienna Senior Living Inc. - CEO, President & Director [78] -------------------------------------------------------------------------------- Thank you, everyone, for your time, and we look forward to speaking to you in our next quarterly call. Thank you. -------------------------------------------------------------------------------- Operator [79] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

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