Sienna Senior Living Incorporated (TSX: SIA), a prominent player in the Canadian senior living market, has reported a strong first quarter for 2024, showcasing stability and growth across its operations.
The company highlighted the significant support from the Ontario and British Columbia governments, which has been instrumental in addressing the challenges of the pandemic and aiding in the sector's growth. With improved occupancy rates and a robust financial position, Sienna expects continued expansion in both its long-term care and retirement businesses.
Key Takeaways
- Sienna Senior Living reported positive Q1 2024 results, with increased revenues and net operating income.
- Government support has led to retroactive pandemic cost reimbursements and increased funding for care and construction.
- The company plans to add 400 new care staff positions and continue its redevelopment program.
- Occupancy rates in the retirement sector are improving, targeting a 95% stabilized occupancy.
- Sienna has strengthened its balance sheet, ending Q1 with $303 million in liquidity and improved debt metrics.
- Long-term care Net Operating Income (NOI) is expected to grow in the high single digits for the full year.
- The company is focused on growth opportunities in the Canadian senior living market, with favorable demographic trends.
Company Outlook
- Sienna Senior Living anticipates growth in the high single-digit percentage range for both long-term care and retirement operations NOI.
- The company is comfortable with its current guidance, including an 11.5% increase to cover inflationary impacts.
- Sienna expects NOI margins to improve over time, although a specific forecast is not provided.
Bearish Highlights
- The company cannot provide a specific forecast for NOI margin improvements.
- Construction on new projects will not contribute to NOI during the construction period.
Bullish Highlights
- Sienna's debt to adjusted EBITDA ratio improved significantly from 8.8 times in Q1 2023 to 7.1 times in Q1 2024.
- The debt service coverage ratio increased from 1.8 times to 3.4 times year-over-year.
- The company has a comfortable liquidity position and plans to refinance upcoming debt with favorable terms.
Misses
- There were no specific misses mentioned in the provided context.
Q&A Highlights
- Sienna Senior Living expects funding to align with inflation rates of 2% to 3% next year.
- The company is actively seeking acquisition opportunities in the retirement space and is open to further development projects.
- Adjusted Funds from Operations (FFO) of $0.27 is considered a baseline for the remainder of 2024.
Sienna Senior Living's earnings call reflected a company in a strong position to capitalize on demographic trends and government support in the Canadian senior living market. With a strategic focus on team member engagement, occupancy growth, and financial stability, the company is poised for continued success in the coming years.
Full transcript - Sienna Senior Living Inc (SIA) Q1 2024:
Operator: Ladies and gentlemen, welcome to Sienna Senior Living Incorporated's First Quarter 2024 Conference Call. Today's call is hosted by Nitin Jain, President and Chief Executive Officer; and David Hung, Chief Financial Officer of Sienna Senior Living Incorporated. 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 statements or information. Please refer to the forward-looking information and Risk Factors sections in the company's public filings, including its most recent MD&A and AIF for more information. You will also find a more fulsome discussion of the company's results in its MD&A and financial statements for the period, which are posted on SEDAR+ and can be found on the company's website, siennaliving.ca. Today's call is being recorded and a replay will be available. Instructions for accessing the call are posted on the company's website, and the details are provided in the company's news release. The company has posted slides, which accompany the hosts' remarks on the company's website under Events and Presentations. [Operator Instructions] With that, I will turn the call to Mr. Jain. Please go ahead, Mr. Jain.
Nitin Jain: Thank you, Kat. Good morning, everyone, and thank you for joining us on our call today. We are up to a great start in this year. Our first quarter results highlight that we have transitioned into a period of stability and growth. We are grateful to the Governments of Ontario and British Columbia who continue to prioritize seniors and the growing need for long-term care. The recent funding announcements recognize the exceptional cost pressures operators in long-term care have experienced over the past four years. As for our retirement business, we continue to benefit from strong demand and limited new supply in many of our key markets. Construction starts of new retirement residences are at multiyear low, and combined with an aging population, we anticipate notable occupancy gains across our retirement platform in the coming years. Our success would not be possible without our 12,000 strong team members, who are our greatest strength and at the core of everything we do. Creating a workspace where they can put their passion for their work into action is something we strive for each and every day. Moving to Slide 5 our results show the significant progress we have made in closing the GAAP left behind by the pandemic, supporting our results for fully occupied long-term care homes with higher revenue from preferred accommodations and significantly reduced staffing agency cost as a result of our ability to fill vacant positions with our own team members. The strong results also reflect notable one-time government funding from both Ontario and BC. As a result, our same property NOI increased by $27.6 million to $63.9 million year-over-year. The recent funding announcements from the Government of Ontario and BC are expected to have a lasting impact on the sector and wellbeing of our Canadian seniors. A total of $13.4 million of one-time funding in Ontario and $13.6 million of retroactive funding from the Government of British Columbia are included in our Q1 2024 results. Essentially, the governments are reimbursing us for the remaining unfunded pandemic costs and recognizing the significant cost escalations due to inflation over the past four years. Recent funding announcements also include enhancements with a construction funding subsidy of up to $35 per day for next 25 years and a 6.6% increase in the level of care funding. The level of care funding increase includes a 4.5% increase in the flow through funding envelope and an 11% increase in the other accommodation funding envelope. With a shortfall in recent years put significant pressure on long-term care operators. Supported by these improvements, we expect to add up to 400 new care staff positions across Sienna. The funding improvements will benefit seniors in Ontario and have a positive impact on the redevelopment momentum of Ontario's older long-term care homes. This will also support the Ontario Government's important goal of building new and redeveloped long-term care spaces and enable us to advance our redevelopment program.
Cedarvale: The project has an expected development yield of approximately 8%. This will be our third long-term care redevelopment project, adding to the two projects currently under construction in North Bay and Brantford, which we expect to complete in the second half of 2025. Combined, these projects will support the government's important goal of building new and redeveloped long-term care spaces for the benefit of Ontario seniors. Moving to retirement, at our retirement operations, same property occupancy grew to 88.1% in Q1. This was an improvement of 30 basis point year-over-year. Monthly same property occupancy increased for the past three months and reached 88.9% in April. We are making good progress in leasing suites at our recently completed retirement residence in Niagara Falls, which is currently in a lease up. Looking forward, we continue to make steady progress towards a goal of stabilized occupancy of 95%. This is a level that is aligned with industry wide forecast for the Canadian retirement sector. An aging population and limited new supply as a result of very few construction starts in recent years are the key reasons for this expected increase in occupancy. Our intensified focus on homes with lower occupancy, in addition to annual rent increases contributed to the increase in same property NOI year-over-year in the quarter. Now moving to Slide 9, team member engagement and retention are a core focus of our initiatives. We are always looking for new ways to differentiate Sienna in a competitive labor market. In Q1 we introduced a program called Learning Bites. Through this program, we are providing one hour of learning per month to all of our team members in addition to their job specific training. This is just one of many initiatives that we introduced at Sienna in recent years to ensure we are aligned with our 12,000 strong team members. At a signature program, Soar and Spark remain very successful. The second round of Spark, Sienna's version of Dragon's Den, is well underway. 175 ideas were submitted in the most recent round and we are currently implementing pilot programs for those top submissions of our finalists. Ideas range from National Hiring Day to creating Digital Resident Folders and more. With respect to soar our share ownership program, which is unique in the Canadian senior living sector, thousands of eligible team members have now received shares with the next round of awards taking place later this month. We believe that initiatives like these were the key drivers for the 11% reduction in turnover in 2023. Combined with various recruitment programs including the placement of internationally educated nurses, these initiatives played a significant role in reducing our reliance on staffing agencies. Agencies costs have returned to pre-pandemic level and it is our goal to keep agency staffing at a minimum which will have a lasting impact on Sienna's culture and our residents quality of life. With that, I'll turn it over to David for an update on our results.
Cedarvale: The project has an expected development yield of approximately 8%. This will be our third long-term care redevelopment project, adding to the two projects currently under construction in North Bay and Brantford, which we expect to complete in the second half of 2025. Combined, these projects will support the government's important goal of building new and redeveloped long-term care spaces for the benefit of Ontario seniors. Moving to retirement, at our retirement operations, same property occupancy grew to 88.1% in Q1. This was an improvement of 30 basis point year-over-year. Monthly same property occupancy increased for the past three months and reached 88.9% in April. We are making good progress in leasing suites at our recently completed retirement residence in Niagara Falls, which is currently in a lease up. Looking forward, we continue to make steady progress towards a goal of stabilized occupancy of 95%. This is a level that is aligned with industry wide forecast for the Canadian retirement sector. An aging population and limited new supply as a result of very few construction starts in recent years are the key reasons for this expected increase in occupancy. Our intensified focus on homes with lower occupancy, in addition to annual rent increases contributed to the increase in same property NOI year-over-year in the quarter. Now moving to Slide 9, team member engagement and retention are a core focus of our initiatives. We are always looking for new ways to differentiate Sienna in a competitive labor market. In Q1 we introduced a program called Learning Bites. Through this program, we are providing one hour of learning per month to all of our team members in addition to their job specific training. This is just one of many initiatives that we introduced at Sienna in recent years to ensure we are aligned with our 12,000 strong team members. At a signature program, Soar and Spark remain very successful. The second round of Spark, Sienna's version of Dragon's Den, is well underway. 175 ideas were submitted in the most recent round and we are currently implementing pilot programs for those top submissions of our finalists. Ideas range from National Hiring Day to creating Digital Resident Folders and more. With respect to soar our share ownership program, which is unique in the Canadian senior living sector, thousands of eligible team members have now received shares with the next round of awards taking place later this month. We believe that initiatives like these were the key drivers for the 11% reduction in turnover in 2023. Combined with various recruitment programs including the placement of internationally educated nurses, these initiatives played a significant role in reducing our reliance on staffing agencies. Agencies costs have returned to pre-pandemic level and it is our goal to keep agency staffing at a minimum which will have a lasting impact on Sienna's culture and our residents quality of life. With that, I'll turn it over to David for an update on our results.
David Hung: Thank you Nitin and good morning everyone. I will start on Slide 11 for financial results. In Q1 2024, total adjusted revenues increased by 19.9% year-over-year to $239.4 million. This increase was largely due to rental rate and occupancy growth, as well as increased care revenue in our retirement segment and significant one-time and retroactive funding in addition to annual inflationary funding increases and higher preferred accommodation revenue in our LTC segment. Total net operating income increased to $63.5 million this quarter compared to $36.3 million in Q1 2023. NOI in our long-term care segment increased by $27 million in Q1 2024 due to significant one-time and retroactive funding, higher preferred accommodation revenues and lower staffing agency costs. Year-over-year we reduced our total agency staffing costs from approximately $10.3 million in Q1 2023 to $6.1 million in Q1 20 24. Agency costs, which are predominantly covered by flow through government funding, have now returned to pre-pandemic levels. In our retirement segment, same property NOI increased by $0.5 million in Q1 2024 compared to last year, primarily as a result of rate growth as well as improved occupancy.
OFFO: Moving to Slide 13, with respect to our debt metrics, we have seen notable improvements and further strengthened our balance sheet. We maintained ample liquidity with $303 million at the end of Q1 2024 and extended the weighted average term to maturity for our debt to 5.7 years from five years in Q1 2023. Our debt to adjusted EBITDA was 7.1 times at the end of Q1 2024 compared to 8.8 times at the end of Q1 2023 and our debt to service coverage ratio was 3.4 times in Q1 2024 compared to 1.8 times in Q1 2023. We ended Q1 2024 with a debt to adjusted gross book value of 44.3% and $1 billion of unencumbered assets. This provides financial flexibility and supports our refinancing initiatives at attractive rates, in particular, as we're actively exploring opportunities to refinancing our upcoming debt expiry in the fourth quarter of 2024. We have the ability to refinance a portion of our expiring debt with proceeds from our new financing or up financing of assets with CMHC insured mortgages at interest rates significantly below those of other financing options. Our strong financial position will also support the redevelopment of our older long-term care homes. We will continue to prudently manage capital and stagger construction starts to ensure our debt ratios remain strong as we support the Ontario government with this important initiative. With that, I will turn the call back to Nitin for his closing remarks.
Nitin Jain: Thank you, David. There's tremendous growth potential in Canadian senior living, with the oldest baby boomer turning 80 in just two years and life expectancy continued to increase. At the same time, waitlists for long-term care and getting longer, and the supply of new senior living accommodations continues to decline. We are grateful to the Governments of Ontario and British Columbia who recognize the growing need of long-term care in their recent funding announcements and continue to prioritize seniors We expect that these updates will have a lasting impact on the health and wellbeing of our residents and our team members. As a result, we expect long-term care NOI for the full year to grow in the high single digit percentage range compared to last year. With respect to retirement operations, we expect same property NOI to benefit from continued occupancy and rental rate growth, as well as other initiatives to optimize revenue and grow in the high single digit percentage range. A year ago, we first outlined in detail how our initiatives to grow occupancy, reduce agency staff and address government funding shortfalls were expected to have a positive impact on our financial results and our ability to grow and serve more seniors for generations to come. Since then, quarter after quarter, we have seen growth in both businesses, affirming our commitment to a diversified approach to owning both retirement and long-term care homes. Combined with the flexibility provided by a very strong balance sheet and the continued support of our stakeholders, 2024 is shaping up to become the year of senior living. Fueling this momentum is our belief that as human beings, the two things we love the most in our lives, our parents and our kids and this is demonstrated daily by our team members who strive to bring happiness into the lives of our residents.
Aspira: This story highlights the impact of a team that is engaged and committed to living Sienna's purpose and values. We see inspiring stories each and every day of residents like Keith and the team members who are dedicated to helping residents live meaningful lives. On behalf of our entire management team and our Board of Directors, I want to thank all of you for your continued support and commitment. We are now pleased to answer any questions you may have.
Operator: Thank you. [Operator Instructions] Your first question comes from the line of Jonathan Kelcher with TD Cowan. Your line is open.
Jonathan Kelcher: Thanks. Good morning.
Nitin Jain: Good morning.
Jonathan Kelcher: First question just on the long-term care funding, the 11.5% increase and how we should think about that going forward, if we back out all of the prior period funding from 2023, does Q1 NOI become a pretty good run rate?
Nitin Jain: That would be a good way of thinking about it and the other way this is the 11.5% is a catch-up of last four years. I mean our whole thesis has been that governments funding always stayed in line with CPI. And I think as you plan forward, the funding increases would be more closer to CPI. This was a one-time catch-up for last four years.
Jonathan Kelcher: Okay. And that kind of answers my second question. And then, so I guess flipping over to the retirement side, margins and probably margins were actually down a little bit in the quarter. Was there anything one-time in there? And how did the retirement results look versus your internal expectations?
Nitin Jain: Yes, I mean there were some technical things in it. For example, this is a leap year, so we have one extra day of expenses. The Good Friday happened in March versus April and I think we can say part of it was that. But the reality is we have some work we need to do in better expense management. What we are happy to see is the rental rate growth and we are happy to see on positive momentum and occupancy. But we have quite a bit of work to do over the next three months to ensure that what got us from 76% to 88% we know is not going to get us to 95%. So we'll have to do things, some things differently and we are on it.
Jonathan Kelcher: Okay, thanks. I'll turn it back.
Nitin Jain: Thank you.
Operator:
Desjardins:
Lorne Kalma: Thanks. Good morning, everybody. Maybe you guys were very kind and put out the fact that you expect to get to 95% occupancy in the retirement portfolio. And if I look at some of the Canadian forecasts, they're expecting that in about 2026 at a national level. I was just wondering if there's anything that you're seeing right now that would indicate why you couldn't achieve that level of occupancy by that point in time?
Nitin Jain: So we haven't said that we will not, but we also have not said that we will. So I think this is more around, we are not ready to give an outlook that far out. And as you know, it's an, I am as well. We're going to focus more on outlook on same property NOI, because as important in occupancies, I'm not walking away from that. Our focus is NOI. So, if we get to 93% or 94% and have a much better NOI than 96%, because it will take us a lot more in marketing and sales expense, we will stop at 94%. And so the idea is not try to get to a point and give an outlook, which then we are explaining every quarter why we can't get there at that time. So it's more our comfort level in giving a forecast out that far.
Lorne Kalma: Okay, I promise I won't ask about it again next quarter. And then on the development side, so you mentioned, I guess now with Keswick coming on, you're going to have three ongoing LTC redevelopments. How many of you are you comfortable carrying at one time?
Nitin Jain: Yes. So, Lorne thanks for that question. We're pretty comfortable with the three that we currently have on hand right now. We're trying to stagger our construction starts. So we finished off Elgin Mills at the end of last year. North Bay and Brantford are well underway. And we think that by the end of Q4 of this year, starting Keswick would make sense just from a funding standpoint.
Lorne Kalma: Do all of a sudden, do all of the developments now make sense and now you just kind of got to pick and choose which ones to initiate or are there still some developments where even with the funding improvements, the numbers still don't work?
Nitin Jain: There are more projects that work and there are a bunch of projects that work in the last funding announcement, so we started two with this funding announcement another one works. So we started with that one. We have a few others in the pipeline. The GTA one continues to be challenging, but there's significant land value in GTA homes as well. So we have options open to us. But the idea is, I think with each funding announcement there are projects that will progress. And the bigger thing with this funding announcement and catching up to inflation, because the whole idea behind long-term care was this is infrastructure kind, steady, stable cash flow and did not happen for four years and as we know, a lot of capital left our sector. So there's been less development than people would have liked, including the government. And I think catching up to this and going back to the 30-year run rate where the funding always stayed up with inflation, we feel very optimistic that is going to bring capital back into long-term care, which will also help build more long-term care beds, including some of the ones that we have in our pipeline.
Lorne Kalma: Okay. And then maybe just last one from me on the retirement, same property NOI outlook, obviously a little bit are in the low single digits this quarter. What's sort of underpinning that? Is it mostly recovery in margin or occupancy or both?
Nitin Jain: Are you referring to Q1 or are you referring to the full year?
Lorne Kalma: To the full year, sorry for high single digits?
Nitin Jain: Yes, I mean, we're expected, our guidance is in the high single digit range. That's going to come from a growth in occupancy as well as rental rate growth, which for the past two years has been in the 4% to 5% range, so that's going to help as well. And it's also going to come from additional revenues such as care revenues as well.
Lorne Kalma: Okay. Thank you so much. I will turn it back.
Nitin Jain: Thank you.
Operator: [Operator Instructions] Your next question comes from the line of Himanshu Gupta with Scotiabank.
Himanshu Gupta: Thank you and good morning. So just on the LTC guidance, I mean, obviously you're saying high single digit NOI growth this year. For the next year, should we say that it's going back to low single digit?
Nitin Jain: I think it's too early to, we haven't gone out to next year's guidance on that Himanshu, other than the fact, I think that going back to the question that Jonathan asked, the 11.8 is because the inflation was up nearly 18% and funding was up 4% or 5% in the last four years. So if inflation next year is 2% or 3%, I think we should expect the funding to be in that range as well. Other than care funding, which is expected to keep going up because we need a lot more care hours to support the fairly of seniors coming into long-term care. But I think it's too early because we cannot be predicting inflation for next year.
Himanshu Gupta: Okay. And how is the visibility on this year, high single digit? Could there be an upside to this number or are we there in terms of visibility?
Nitin Jain: Yes, we feel comfortable with our current guidance of high single digits. As we mentioned, we are getting the 11.5% increase. But keep in mind that some of that is to cover inflationary impacts as well, between 2.5% to 3%. So, when you take all that together, we think that once you exclude the one-time funding relating to prior years, we would be in the range of the high single digits for long-term care.
Himanshu Gupta: Got it, okay. And then just on the retirement home side, I'm looking at the NOI margins and it looks like the usage of agency staffing has come back to pre-pandemic levels. I mean, you're saying that 4% to 5% rental growth as well and occupancy moving as well. Why is it not showing up in the NOI margins yet?
David Hung: Yes, so again, as Nitin mentioned, there was a couple of anomalies within the quarter, first being leap year compared to the last year, as well as Good Friday being in March of this year versus April of last year. So that definitely impacted our margins by about 1%. And in addition to that, I think that we are working towards growing those margins and it's going to take three months or a little bit longer for it to pick back up.
Himanshu Gupta: Okay, so 23 NOI margins was around like 36%. Do you think we're still looking for 100 basis point expansion for the full year?
Nitin Jain: Himanshu, so as we reflect in the M.D.&A as well, we're going to start focusing on the same property NOI growth versus giving margin forecast. I unfortunately can't really guide you towards a margin number.
Himanshu Gupta: Okay, fair enough. Okay, thank you. Maybe the last question is on the Keswick. I think the construction will be started or going to be started. Just getting a sense, is there any NOI downtime while the construction is ongoing? I mean, overall do you have a sense of how it's going to impact the FFO in the near-term and in the long-term [indiscernible]
Nitin Jain: Sorry. Is the question would, during construction time, would there be any impact on NOI? Is that what the question was?
Himanshu Gupta: That's right.
Nitin Jain: In this case it would not have, because all of our projects have been greenfield. So even this building where it's being built is on the same site, but the site is actually close to 40 acres, so there's a lot of land available. And so it is not impacting any operations from a team member's perspective or resident perspective at all. And similar to North Bay and Brantford we're going to start construction. It will take a couple of years to build it and when it's ready, we will move the residents. And in this case, they frankly would be moving few hundred meters from their current place, so even the move would be much, much simpler, so no impact at all.
Himanshu Gupta: Okay, fair enough. Thank you, guys. I'll turn it back.
Operator: Your next question comes from the line of Pammi Bir with RBC Capital Markets.
Pammi Bir: Thanks. Good morning. With the long-term care funding increases, when you strip out the retroactive and all the one-time stuff that came through this quarter, I guess the operational funding or the other accommodation increase envelope funding there, does this start to get you back to the pre-pandemic levels of NOI in long-term care? And not sure if you sort of have a timeline on when that happens.
David Hung: Thank you, Pammi, good morning. And yes, this does bring us back to the time catching up to inflation. And that was the whole advocacy behind this, is that no one is looking for long-term care to become technology sector where there is big up and down. This is infrastructure, stable, steady cash flow year-over-year, growing with inflation. This catches up for the last four years and our expectation moving forward would be that continuously with inflation. This was a one event in the last 30 years and hoping it will not happen again.
Pammi Bir: Okay. And I know you don't want to maybe focus too much on occupancy and the margins, but more so on the absolute NOI. But looking back to pre-pandemic levels of long-term care, I think you were tracking around 17% in the NOI margin. But given how the nature of the funding, a lot of this being increased flow through, would those be unrealistic? Would that 17% be unrealistic, even with the new OA funding?
David Hung: Yes, that's a great question, Pammi. And yes, we wouldn't expect to get back to 17% margins. The amount of direct care and program funding that the government has provided over the last several years has been quite significant, over 40% increase. So we would anticipate that our margins would decline in the long-term care segment. But that being said, our focus is really on margin dollars, not margin percentage.
Pammi Bir: Right. Okay, last one from me, from a capital allocation standpoint, nice to see another project moving forward in long-term care. But given the more stable environment that we are now in, and with maybe some of the updates or additions to management, is getting you more confident perhaps in putting capital to work from an acquisition standpoint in the retirement space?
Nitin Jain: Yes, for sure. I mean, we have not stopped looking even during this time. Our biggest acquisition was a year and a half back. So we continue to look for opportunities. There have been some things which have been out, but then nothing that, which is that, which fits that well with us, but we'll continue to look. And to your point, I think as capital is returning to the long-term care space, and retirement space we'll continue to invest both through acquisitions and development. But obviously the deal has to make sense in the short and medium term from an accretion perspective.
Pammi Bir: Thanks very much, Nitin. I will turn it back.
Nitin Jain: Thank you.
Operator: [Operator Instructions] And your next question comes from the line of Jake Stivaletti with CIBC. Your line is open.
Jake Stivaletti: Hey guys, good morning.
Nitin Jain: Good morning.
Jake Stivaletti: So just looking at, so excluding the retroactive funding, can we think of the adjusted FFO of that $0.27 as a starting point for 2024 run rate kind of before we add any growth?
David Hung: Yes, I think that would be a good way to look at it. That would be a good starting point for the balance of 2024.
Jake Stivaletti: Okay. And then I think I saw, correct me if I'm wrong, but I think I saw that you have about 62% of your 60% or 62% of your property level mortgages, CMHC insured. Is there a goal to increase that or anything in mind regarding that?
David Hung: Yes, we do plan, yes you're right, 62% of our mortgages are insured with CMHC financing. We do continue to have other properties that are currently unencumbered or that they're low leverage, that we would add some more CMHC financing to that.
Jake Stivaletti: And that's probably the most attractive rates you're seeing, right, with the CMHC insured debt?
David Hung: That's correct. Those are the most attractive rates currently in the market right now, which is why we're pursuing, and we have active applications ongoing with CMHC right now.
Nitin Jain: We have seen this market change. We did a big acquisition in 2018 where CMHC rates were very compelling, and four months later, unsecured money was actually cheaper than CMHC. So we pivoted very quickly. And I think to David's point, our focus is we have the ability to borrow more in CMHC, but the biggest thing for us is really the flexibility of between secured financing and unsecured financing. So we have multiple options as we get closer to the November timeline to refinance the debt.
Jake Stivaletti: Got it. Okay. That's very helpful. I'll turn it back.
Operator: Ladies and gentlemen, that concludes our Q&A session and today's call. Thank you all for joining. You may now disconnect.
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