Sienna Senior Living ((TSE:SIA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Sienna Senior Living’s recent earnings call painted a predominantly positive picture, highlighting strong acquisition activity, significant increases in same property NOI, and robust occupancy growth. While there were some concerns regarding temporary dilution impacting per-share metrics and an increased AFFO payout ratio, the overall sentiment was optimistic, buoyed by the company’s strategic positioning and growth potential.
Strong Acquisition Activity
Sienna Senior Living completed $315 million in acquisitions during the quarter and is on track to add nearly $100 million more by the end of this quarter. The company also hinted at further potential acquisitions throughout the remainder of the year, showcasing its aggressive growth strategy.
Increase in Same Property NOI
The company reported a notable increase in same property NOI, with the Retirement segment seeing a 12.3% rise and the Long-Term Care segment experiencing a 4.8% increase. This growth underscores the company’s successful operational strategies.
Occupancy Growth
Sienna achieved a year-over-year increase in average same-property occupancy by 150 basis points, reaching 92.1% in the second quarter. The subsequent monthly occupancy rose to 93.1% in July, indicating a positive trend in occupancy rates.
Positive Impact of Repositioning Efforts
The company’s repositioning efforts paid off, with the second quarter NOI increasing by approximately 32% year-over-year in the optimization portfolio, alongside an average margin increase of around 400 basis points.
Operational and Financial Stability
Sienna reported a 17.4% year-over-year revenue increase, reaching $253.6 million, and a 24.3% rise in operating funds from operations to $29.3 million. These figures highlight the company’s robust financial health and operational efficiency.
Development and Expansion
The completion of the first Long-Term Care redevelopment project in North Bay and the finalization of a $140 million campus of care in Brantford, Ontario, are expected to add 3% to AFFO per share when fully operational, marking significant milestones in the company’s expansion efforts.
Improvement in Retirement Segment
The Retirement segment saw a 12.3% increase in same property NOI, driven by improved occupancy and rate growth, which supported a 230 basis point improvement in operating margin.
Temporary Dilution from Equity Issuances
The company experienced a decrease in OFFO and FFO per share by 1.5% and 4.0%, respectively, due to temporary dilution from equity issuances in August 2024 and February 2025.
Increased AFFO Payout Ratio
The AFFO payout ratio increased by 380 basis points to 89.5%, primarily due to temporary dilution, reflecting a short-term challenge in the company’s financial metrics.
Forward-Looking Guidance
Looking ahead, Sienna Senior Living maintains its growth momentum with plans to complete approximately $100 million in acquisitions by the end of the quarter and additional potential acquisitions throughout the year. The company aims for a stabilized occupancy target of 95% by Q1 2026 and expects same-property retirement NOI growth to exceed 10%, with low single-digit growth in the Long-Term Care segment. Despite temporary dilution impacts, Sienna remains financially strong with $313 million in liquidity and no major debt maturities until Q1 2026.
In summary, Sienna Senior Living’s earnings call conveyed a generally positive outlook, driven by strong acquisition activity, increased NOI, and occupancy growth. While temporary dilution posed some challenges, the company’s strategic initiatives and robust financial health position it well for continued growth and success.