Sienna Senior Living Inc. (LWSCF) CEO Nitin Jain on Q4 2021 Results – Earnings Call Transcript – Seeking Alpha
Sienna Senior Living Inc. (OTCPK:LWSCF) Q4 2021 Results Conference Call February 25, 2022 10:00 AM ET
Company Participants
Nitin Jain – President and CEO
Karen Hon – CFO
Conference Call Participants
Jonathan Kelcher – TD Securities
Scott Fromson – CIBC
Joanne Chen – BMO Capital Markets
Tal Woolley – National Bank
Pammi Bir – RBC Capital Markets
Operator
Ladies and gentlemen, welcome to Sienna Senior Living Inc.’s Q4 2021 Conference Call.
Today’s call is being hosted by Nitin Jain, President and Chief Executive Officer; and Karen Hon, Chief Financial Officer of Senior Living Inc.
Please be aware that certain statements or information discussed today are forward-looking, and actual results could differ materially. The company does not undertake to update any forward-looking statement or information. Please refer to the forward-looking information and Risk Factors section in the company’s public filings, including its most recent MD&A and AIF for more information. You will also find a more fulsome discussion of the company’s results in its MD&A and financial statements for the period, which are posted on SEDAR and can be found on the company’s website, siennaliving.ca.
Today’s call is being recorded, and a replay will be available. Instructions for accessing the call are posted on the company’s website, and the details are provided in the company’s news release. The company has posted slides, which accompany the host’s remarks on the company website under Events and Presentations.
With that, I’ll now turn the call to Mr. Jain. Please go ahead, Mr. Jane.
Nitin Jain
Thank you, Andrew, and good morning, everyone, and thank you for joining us on our fourth quarter call today. The recent months have been marked with some exciting developments and important progress at Sienna. Our strategic priorities have been focused on enhancing team engagement, elevating the quality of life of our residents and advancing our growth initiatives. This included notable investments in our operating platform, our properties and the well-being of the residents and our team. Our solid Q4 results reflect the impact of these investments. They also highlight generally including fundamentals in the senior living sector and put us in a strong position to accelerate investments in strategic growth and value creation initiatives. Under this backdrop, demand for the services and care view offer continued to build in 2021. This was reflected in our strong Q4 operating results. Occupancy in our retirement portfolio reached its highest level in nearly 2 years and resident admissions at our long-term care communities continue to accelerate for most of the fourth quarter.
Our retirement portfolio benefited from in-person tours and our robust marketing and sales programs. This resulted in strong lead generation and 140% increase in resident movements year-over-year in the fourth quarter. In December, average same-property occupancy levels reached 85.3% and further increased to 85.9% in January 2022, the eighth consecutive monthly increase. Since May of 2021, average same property occupancy has improved by a total of 710 basis points. In our long-compared communities, admissions of a new residents accelerated for most of the fourth quarter, excluding the bets that are unavailable due to the capacity limitations and isolation requirements. Safe property occupancy reached 95.3% at the end of 2021.
We anticipate continued occupancy gains throughout 2022, given the long wait list of long-term care beds in Ontario and British Columbia. In recent months, the operating environment continued to improve, which has led to the easing of restrictions across the residents. There are currently no significant outbreaks at any of Sienna’s long-term care communities or retirement residences with most of our residents and team members haven’t received their booster shots and the majority for residents and team member symptoms have been either mild or moderate. In 2021, we announced the launch of a new retirement platform as per and the development of our new long-term care platform, both to be launched later this year. These platforms are expected to innovate the quality of life and care of our residents and include enhancements to their dining experience activities and programming. With respect to Aspira, our recent efforts have been concentrated on team member training, our new resident experience model, marketing initiatives and the rollout of pilot programs of various concepts at selected time residences. In addition, we finalized the core brand and marketing elements for the launch of the platform in the second quarter of 2022. Development of our new Long-Term Care platform is well underway and is aimed at providing holistic and integrated care. The platform is expected to be launched in Q3 of 2022.
Now moving to our recent joint venture. On February 3, 2022, we announced that we entered into an agreement to acquire a 50% ownership interest in our portfolio of 11 to residences on entering Saskatchewan with a joint venture partner, Sabra Health Care REIT for a total of $308 million. This transaction, which we expect to close in late second quarter will increase the number of our owned and managed retirement suites by 26%. The portfolio is currently owned by Extendicare and represents an entire private pavement portfolio in Canada. This is a high-quality portfolio with an average age of approximately 60 years, and it offers extensive amenities, which reflect the changing lifestyle of seniors. With an approximate 6% unlevered yield in the first 12 months all in closing, the acquisition is expected to be created to Sienna’s OFFO and AFFO per share. The portfolio is located in growing communities and on Teton [ph] Saskatchewan and will provide us with immediate scale our platform for future expansion and entry into new problems. We expect to capitalize on the growing demand for quality senior living in each community. In Ontario, the assets are strategically located around the GTA and in Southern Ontario. The portfolio will increase our footprint in the Niaga [indiscernible] corridor and expand our position in the highly desirable bearing market. Through the acquisition, we will also increase the number of memory care units, which are in high demand, and this will better position us to serve this growing segment. With excess land at 4 of the properties, we also had the option for future development of over 200 suites. And once the transaction is complete, we will act as a manager of the 11 properties, which will deepen an already established relationship with Sabra.
Now moving to our focus on development. Our growth initiatives also include a significant expansion of our development pipeline. In December of 2021, we got a pool for 3 additional long-term care redevelopment projects, including a first of its kind campus of care in partnership with cargo Health Network. The campus will combine Altamont Care Community and Rockcliffe Care Community in Toronto onto a single site. Once the 478 bed campus is completed, it will support the growing need for seniors in the Scarborough area. We are also progressing well in several other projects in Ontario. In North Bay, construction started as a Northern Heights Care Community last November, where we are replacing the current 148 older scars beds with 160 new beds. In addition, we expect to start construction at our communities in Keswick and Brantford to start during the first half of 2022. The Keswick, we will be replacing the current 60 long-term care beds with a 160-bed facility. And in Bradford, we will replace the current coming 22 long-term care beds with 160 new long-term care beds and add 147 suite retirement residents to create an integrated campus of care. In total, these 6 long-term care projects in Ontario comprised over 1,500 beds or approximately 2/3 of Sienna’s Class C beds, planning for the balance of Sienna’s Class C portfolio is well underway. In addition, construction at 150 suite retirement residence in Niagara Falls Reichmann Senior Housing as a joint venture partner is well underway, and we expect to complete this development by the end of 2023. As part of the continuous review of our portfolio, we completed the sale of 128-suite retirement residents in British Columbia at the end of January and have agreed to also sell our 236 bet long-term care home in GTA, [ph] which is expected to close in the second quarter. The net proceeds will be reinvested in our recent acquisition.
Staffing remains a key focus as we grow our company and build our team for the future. Our goal is to become the employer of choice in senior living markets where we operate. We achieved this by offering a compelling team member experience and by nurturing a purpose-driven culture. We believe it helps to differentiate our company and attract and retain a highly engaged workforce in a very tight and competitive labor market. One of the differentiators is sold the Sienna ownership and Rewards program. So will provide company shares to team members who have been with Sienna for 1 year or longer. This initiative is the first of its kind in Canadian senior living, and I cannot think of anyone better suited to be invested as owners in our company and our team members. The rollout of this program is well underway and is estimated to represent an initial investment of approximately $3 million. We’re also working on a number of initiatives to support the credit growth of our frontline team and into which the current labor gap in our sector. One of the government-sponsored program is beginning, which supports frontline team members, in particular, PSWs who wanted further good education in order to become a nurse. We’re also participating in programs that offers placement in our residences for internationally educated nurses who require Canadian qualifications and for college and university students to finish their education. Many of them will be offered permanent placements of Sienna once they’ve completed the required tactical work experience. With the team of approximately 12,000, our employees are our most important asset, creating a positive experience with them and supporting personal and professional growth are key objectives as we grow our company and our team in the months and years ahead.
With that, I’ll turn it over to Karen for an update on our operations and financial results.
Karen Hon
Thank you, Nitin, and good morning, everyone. I will start on Slide 13 for financial results. With the operating environment continuing to improve in the fourth quarter, we saw a significant increase in resident move-ins across our retirement platform and admissions of resident accelerated at our long-term care communities. We are also encouraged by the moderation of pandemic-related expenses and the continued pandemic funding support we are receiving from our government. These positive developments are reflected in our financial results.
In Q4 2021, revenues increased by 3.2% year-over-year to over $174 million. Net operating income increased by 16.7% to $33.4 million this quarter compared to last year. Retirement same property NOI increased by $2 million to $13.9 million compared to last year, primarily due to occupancy improvement, annual rental rate increases in line with market conditions and decreases in net pandemic expenses. This was partially offset by higher agency stocking costs, utilities costs and insurance premiums.
Rent collection levels remained high at approximately 99%, consistent with key pandemic levels. CNA’s long-term care same-property NOI increased by $2.4 million to $18.5 million compared to last year, primarily due to annual inflationary funding increases, timing of retroactive pandemic funding and a decrease in pandemic expenses. This was partially offset by lower preferred accommodation revenues from lower occupancy in private and semi-private rooms, which are not covered by occupancy protection funding, higher utilities cost and insurance premiums and increased repairs and maintenance expenses.
For the full year, same-property NOI increased by 11.3% or $14 million to $137.5 million compared to last year. Total net pandemic expenses decreased by $7.6 million to $200,000 this quarter compared to last year. The decrease was mainly due to the moderation of pandemic costs and retroactive government funding of $2.6 million for unfunded expenses we incurred in 2020 and Q1 2021. Over the past 2 years, we have seen significant cost pressures on agency costs due to staffing shortages, increased insurance premiums in the senior living sector and rising utility costs in line with the overall market. We expect the continued occupancy gains, rental rate increases in our retirement portfolio and an improving operating environment will help mitigate these cost pressures and support our operating margins in 2022 and beyond. We expect pandemic expenses to further moderate as pandemic subside while related government funding gradually declined.
Moving to Slide 14. During Q4, operating funds from operations increased by 29% to $18.3 million compared to last year, primarily due to higher NOI, lower administrative expenses and lower interest expense on long-term debt, partially offset by higher current income taxes. Q4 OFFO per share increased by 28.9% to $27.2. For the full year, OFFO per share increased by 11.7%. Adjusted funds from operations increased by 25.7% to
$16.6 million compared to last year, primarily due to the same reasons of the increase in OFFO, partially offset by higher maintenance capital expenditures. AFFO per share increased by 26% this quarter to $24.7. For the full year, AFFO per share increased by 4.5%. AFFO payout ratio was 94.7% for the quarter and 86.3% for the full year.
Moving on to our debt metrics on Slide 15. Our debt to gross book value improved by 350 basis points to 44.7% at the end of 2021 compared to 48.2% at the end of 2020, mainly as a result of reducing the drawdown on our credit facilities. Debt to adjusted EBITDA improved to 7.9 years at the end of 2021 compared to 9.4x last year. Interest coverage ratio improved to 3.7x in 2021 compared to 3.1x last year, and we have limited debt maturities over the next 2 years.
Moving to Slide 16. We continue to maintain a strong balance sheet. This was evidenced in the renewal of CBR issuer credit rating and our senior unsecured debenture ratings of BBB with stable trends in October 2021. We also maintained significant liquidity, which has exceeded $200 million for the past 8 quarters. In connection with our recently announced joint venture acquisition, we have secured a $150 million acquisition term loan at 145 basis points over the floating BA rate for a 12-month term to support the financing of this transaction. We ended the year well capitalized with $226 million in liquidity and an unencumbered asset pool of $1.1 billion. This underscores the resiliency and strength of our business and, of course, our growth plans going forward.
I will turn the call back to Nino for his closing remarks.
Nitin Jain
Thank you, Karen. Recent months have been marked with optimism at our company and strengthen fundamentals in the Canadian senior living sector. Strong demand for the services and care offered in senior living support our optimistic outlook and growth strategy for 2022 and beyond. Over the next 20 years, the 75-plus population is expected to grow by nearly 4% annually and outpaced Canada’s overall population growth by 5x. At the same time, the uncertainty cost for the pandemic, coupling with rising construction costs has led to a significant decline in new construction activity of retirement residences in Canada, supporting strong occupancy rates for existing residences.
We intend to capitalize on the improving fundamentals and the growing demand for corner-case living and put into motion several transformational initiatives over the past 18 months, including our joint venture acquisition with Sabra. We’re also pleased about the added momentum in our long-term care redevelopment plans and the addition of 2 retirement residences in Niagara Falls and Brantford. Once completed, these developments will add approximately 1,500 long-term care beds in over 300 atonal suites to our portfolio. For 2022, we forecast gradual occupancy improvements in our in-place retirement portfolio and maintain our forecast for occupancy levels to reach approximately 87% to 89% by the end of 2022.
In our long-term care portfolio, admissions a new resident accelerated it for most of the fourth quarter, and this resulted in an increase in occupancy during Q4, and we anticipate continued improvements in 2022. Our strategic initiatives for making transformational changes to our operating platform through ambitious growth plans are expected to be a source of future growth for Sienna and will benefit by team members, shareholders, partners and ultimately, Canadian seniors for years to come. Our strategy agave in the belief that it is a privilege to care for and serve Canada’s seniors, ensuring the live with utmost comfort dignity and respect. On behalf of our management team and our Board of Directors, I want to thank all of you for your continued support and your participation on the call today.
We are now pleased to answer any questions you may have.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from the line of Jonathan Kelcher with TD Securities.
Jonathan Kelcher
First question, just on the occupancy. You guys had a good quarter and a good start to the year. But you’re keeping your forecast for 87% to 89%. You’re almost — I think you’re just at 86% right now. So what are the chances that you think you may exceed the top end of that?
Nitin Jain
At this stage, we are comfortable with our forecast, Jonathan. Usually, January, February, March are a little bit slower. We did not see that in January, which was late, but February market usually slower months. So — and we will — we are seeing some of that softness from our early indicators so far for February. So at this stage, we are pretty comfortable with the 87% to 89%. And as an restriction that does coming out where people can now tour again. And if that accelerates, obviously, we’ll continue to provide — change the guidance and need be in the quarters to come. But at the current time, we remain at 87% to 89%.
Jonathan Kelcher
Okay. Now are you guys operating much in the way of incentives to help drive occupancy?
Nitin Jain
So we did that in 2020 as a onetime thing. That’s not really our strategy because their usual incentives like half a month free and things like that, which is pretty normal. But other than that, for us, it’s really very specific sales and marketing program for each of the different communities because we do have very different assets from community to community.
Jonathan Kelcher
Okay. And then I guess just switching gears on the new developments of — sorry, the 3 projects that you got approval for in December. What are the thoughts on timing for starting those?
Nitin Jain
So 2 of those projects are in Scarborough, which is in the Saga [ph], all 3 would take a significant amount of time from municipal pools, considering that they’re in the GTA area and difficult municipal scale approvals. However, this is as good a card as any. So at this stage, we’re not really sort of timing. And we also — our goal is not to exceed 5% to 10% of our asset base under development. So even though, let’s say, if you had approvals, we don’t want to start 6 projects in a year. So we like the pace. We started on late last year. We are on track to start 2 this year, one being a campus and you also have a retirement active asset in Niagara Falls Reichmann. So I think to a year is a good pace for us. So we will slop these for 2023 and beyond.
Jonathan Kelcher
Okay. And as the Rockcliffe and Altamont, you’re combining in one location. I would assume that’s at the Altamont location. Is that correct?
Nitin Jain
That’s correct. So we happen to have more than 4 acres of land in Scarborough, which were fortune for. And we are doing this in partnership with Sabra Health Network, and we will combine both of that, and then we will repurpose the current drop lost.
Operator
And our next question comes from the line of Scott Fromson with CIBC.
Scott Fromson
Just wondering what impact Omicron has had on net employee turnover. In other words, what impact on resignation levels?
Nitin Jain
Not really anything different than usual. I would say from a senior living sector, Omicron was more of a staffing crisis than a health care crisis because thanks to the booster and the mild manner of this variation of COVID, we did not see huge health care issues, but we did see staffing issues. So we have not seen significant change in employee resignation based on Omicron.
Scott Fromson
And do you think that your differentiated strategy or your stock ownership et cetera, and employer of choice programs. Do you think that’s going to — is going to continue to help you attract employees against other options in either seniors housing or other sectors? Do you think that’s going to prevent you from having to incur costs in excess of inflation?
Nitin Jain
So most of our frontline team members are unionized, so we follow in contracts for that pricing. For us, we believe that there’s not going to be one silver bullet, which is going to solve all of it. So CN ownership program is one of them. We had a huge vaccine contest that was another, having a purpose-driven culture because we recently did an employee survey, we got close to 20,000 comments from our team members and being aligned to our purpose of taking care of seniors is the big reason why team members continue to choose this sector. So we don’t think it’s going to be one thing which will solve this. It’s going to be a combination of that, how do we take care of our current team members and how do we attract them?
And the second is how we actually increased the number of people in the sector. So we talked about a few government programs, which we are really appreciative of how do we get more immigrants into the health care space in the provinces where we operate. So frankly, it’s going to be a combination of all of those things, and which is going to need a really different way of thinking than what we people have done in the past in partnership with overall health care sector and partnership with government, especially as it relates to integration, it will be more both federal and provincial for programs. So this is going to be a crisis for all of us, and we will obviously do the best we can internally, but we will have to work together to solve it for overall Canadians.
Scott Fromson
And just final question on labor. What mechanisms do you have within the general union contract frameworks to account for inflation indexing? Is it — can we expect increases above or below general inflation?
Nitin Jain
Yes. It’s hard for me to say that each contract is different. We have multiple unions and multiple contracts with them. Usually, many of them would have other providers in it. You might have a bargaining unit, which have 25, 20 properties of different owners and different ownership type. Usually, they stay pretty consistent with inflation, but 1 or 2 might change here or there. So it’s really — it’s not really one big contract that I can comment on.
Operator
And our next question comes from the line of Joanne Chen with BMO Capital Markets.
Joanne Chen
Just obviously, some of the restrictions are getting lifted and with addition of a nation passport. Just I guess how are you guys managing with the
— are you seeing a significant uptick in terms of business and how will you plan on managing that situation to prevent, I guess, more outwards?
Nitin Jain
So I guess, sorry, Joanne, I just want to make sure we understand the question. Are you asking with Omicron Wave kind of coming towards end and restriction opening, how would it impact business? Is that your question?
Joanne Chen
Yes, exactly. And just to continue to make sure that obviously to minimize the number of outbreaks.
Nitin Jain
For sure. So we now have no restrictions on admissions in long-term care or tours in retirement homes unless is an outbreak. And even during omicron wave, people could still as to a very limited portion of retirement suites and they were being admitted to long-term care. So for us, just opening on restrictions, sorry, go ahead.
Joanne Chen
Oh no, sorry. I guess or what you said apologies.
Nitin Jain
Yes. No worries. So for us, I mean, this is really for — really what it means for our resident team members, the ability to have their livestock because in many cases, people were confined to their rooms. So in many cases, for existing residents, this obviously is a huge improvement in the living experience with team members not being not have to wear isolation gowns and other things would — again, it would be a huge benefit. It will have a benefit from a pandemic cost perspective. And then from a retirement and both long term care, we do anticipate accelerating admissions, broken disinvite in both the command long-term care. And we do not anticipate a huge number of move-outs from a retirement portfolio.
Joanne Chen
Okay. And maybe just going back on, I guess, the staffing costs, think how should we think about kind of the runway over the near term on the staffing cost side of things?
Karen Hon
Right. Hi, Joanne. So if I go into long-term care versus retirements. So while we have significant staffing shortages and therefore, pressure on staffing costs, particularly in long-term care side, most of those roles are funded through the government. And on earlier discussions talk to is that because those are funded, the impact on NOI, while there is some is not going to be materially changing going into 2022. And so when we look at retirement, we do think that with Omicron kind of subsiding, that we would be able to utilize less of agency staff. And as we see our staff also coming back to work that those costs could moderate.
Joanne Chen
Okay. Got it. That’s helpful. And maybe just one last one for me on kind of going back on the development side with obviously the — some of the new projects from the redevelopment. Are you seeing again something just given that with rising development costs right now and I guess potentially thinking about — I guess this was brought up earlier in terms of timing, but has that changed what you’re thinking in terms of when to start and whatnot?
Nitin Jain
Yes, for sure. We are seeing rising development costs. We are not at a stage where this has given us a pause just yet, but there are significant changes in escalation. And there’s also timing issues. We’re hearing from other companies where the projects are delayed because the order window and will be there for another 4 months. So we can’t really open a building without them. So at this stage, we are seeing rising escalation costs. We’re seeing supply chain issues, but not enough for us to take a considerable cause.
Joanne Chen
Got it. Okay. No, that’s helpful. That’s good to hear. Okay. That’s it for me. Thank you. I’ll turn it back.
Operator
Our next question comes from the line of Tal Woolley with National Bank.
Tal Woolley
In terms of — you guys made some investments in marketing over the course of the pandemic. I’m thinking about call center investments, that kind of stuff. And prior to this, we sort of hadn’t seen this kind of occupancy performance or this lift that you’re seeing right now. Can you just talk a bit about — I recognize the pandemic like that things were depressed and it’s a bit of a reboot of the pandemic, too. But I’m just wondering if you can talk a little bit about how your leasing and marketing functions are working now versus pre-pandemic? And what some of the differences are that you are seeing right now?
Nitin Jain
Thank you for that, Tal. I will not get into the detail of that because for us, we think that is proprietary to us one of the changes we made and the things we’re doing different. What I would say is that there’s a big focus on community by community rather than the overall because we do have different kind of buildings in different markets. And really for us, in addition to sales and marketing is the whole overview of our platform, which rose to Aspira because we were not going after a name change. We were going after what do we stand for as a retirement platform. And that prompted a name change. So there are significant things we are working on in terms of increasing the resident experience, moving to personalization, more choices, how we become a bigger product community. For us, those are all — it’s a bit of a mix of all of those things and how do we go to market with those, how do we sell, how do our local people sell it. For us, that’s what we’re finding has been good for us rather than just one thing making a difference.
Tal Woolley
Okay. And sorry, just going back before it was a couple of questions ago. you have been offering some like half month incentives and stuff like that selectively or not? That’s.
Nitin Jain
Those are — what I meant to say is that we offer usual incentives time to time. So usually, a 0.5 month length will be something usual that the retirement homes would offer in certain markets. So our view has not changed. And we — in 2020, we offered some bigger incentives for a short period of time, but we have not done that since then.
Tal Woolley
Got it. Okay. And then you highlighted the North Bay project that you’re getting underway. I’m just wondering like for us to understand the economics like you’re picking up some beds on that site. Like can you give us a sense of what the uplift in NOI off that is from adding the new beds? Like I’m still struggling a bit with like thinking about the redevelopment projects of how to think about the NOI that you’re replacing and what the potential growth opportunity is when you’re adding some new beds here?
Nitin Jain
For sure. Let’s — and that’s a great question. You really have to look at it from a few different ways. When you look at pure financial. Obviously, there’s a huge operational impact and the huge resident impact of having a new building. So the first one is NOI, and we have 148 longer care beds and 50 old buildings, they only have a small number of preferred that’s call it 10%, where you can charge the next $18, $19 because in C Homes [ph] , you can only charge a certain amount of time and a certain amount of dollars for the private event. In a 160-bed long-term care home brand new, you will have — you will have 60% private events, which is sort of having 15 and we have close to 96 now. So there are incremental NOI because of that is incremental NOI.
I know because of the 12 additional beds. Now there’s even a bigger impact at AFFO level because you have a construction funding from the government that flows into it. So it increases the construction funding or at least minimize the loss of some of those construction fundings are coming off. And the last one really is the quality of the assets. So we have NOI coming from a C Home [ph], which the market would look at it differently. So they might still be getting $1, but it has a much higher cap rate versus the $1 from a brand new long-term care home built to the newest standard, which we expect those cap rates to be in like a 6.5% or so. So for us, it’s really a play about all of those same when it comes to financial, it’s just not a NOI increase.
Tal Woolley
Okay. And you’re going to close this deal with pre this year. And you’ve traditionally grown the retirement portfolio via acquisition of generally stabilized properties. I’m just wondering as the long-term care redevelopment projects get greenlit. Assuming the market cooperates, yes, you could grow through acquisition and hopefully issue equity at attractive prices to be able to finance that and keep your balance sheet in check. Is that how we should be expecting you to grow? Or are you — potentially do you start looking maybe more at doing more development of retirement homes as well? Like how do you continue to sort of build momentum in the growth of the retirement platform while you’ve got this process you have to go through on the long-term care side.
Nitin Jain
Sure. For us, our view is the development for our company shouldn’t be more than 5% to 10% of our asset base, so call it $2.5 billion. So anywhere from $125 million to, call it, $200 million of development. And they do have significant amounts of development that we want to do in long-term care. And in some cases, we would add retirements, such as the one in Brantford. So if it’s attached to long-term care home, they will do the development with it, but not separately. So unless we — there are specific reasons where we did intensification. For example, the 4 sites we are buying has some excess land, so we can add some more suites. We have a couple of other setting homes that own that we are looking at intensification opportunities. So we will look at those from a development perspective for retirement homes, but over mostly, our development is going to be focused on long-term care or retirement attached to it. And our retirement growth is going to really come organically and second, through acquisitions.
Tal Woolley
And do you think with the asset mix that you’ve got, you’re going to be able to compete for retirement properties if the cap rates continue to trend in the direction they’re trending?
Nitin Jain
We really like the mix of both long-term care and retirement. One provides stability of cash flow, which is reflected in our vetting and another one has the growth aspect built into it from retirement. So we are very comfortable how we are structured. And in fact, we don’t want to be closing to one site completely either. So for us, our focus and Board’s focus is a diversified company between both long-term care and retirement. And for diversity for us, it means anywhere we did no side of business, less than long-term. So if the long-term care becomes 60%, that would be just fine by us. And if retirement becomes 60%, that’s just fun by assets just a moment in time
Tal Woolley
And given that this is an operating business, it’s not a REIT, you’re going to be integrating a fairly chunky acquisition this year and greenlighting a lot of development projects. Do you have like the right — or do you have enough management resources to continue at a function at sort of this pace?
Nitin Jain
So that was a very important thing for us to consider. And for example, in 2021, there was a period of time when Omicron or be COVID was not that severe, and there were other acquisition opportunities in 2021. But we decided that, that was not the time for us. Our first focus was really starting when I came into the role in June of 2020 is to ensure that we first come out crisis, so from a health care view. So that was our first focus. How do we insured team members and residents are taken care of. The focus right afterwards to ensure that we have the right team and the senior executive team and the leadership panel. So we did that. And the focus changed to our platform because we are an offering business, as you said, and we can’t really be adding things to a platform, which we’re not comfortable with. So we changed — made significant changes to our platform, both retirement and long-term care will be launched shortly.
So we do feel quite optimistic in our growth. And the way we have structured our teams is people who are focused on organic operations, let’s call it that. We don’t really want their focus to be on acquisitions. So we are quite diligent in keeping those teams different. Obviously, we have to stretch some people, if they’re looking for opportunities to learn different things. But we want to be very diligent to make sure that we are not focusing on acquisitions at the detriment of organic growth because for us, that is more important than acquisitions.
Operator
[Operator Instructions] Our next question comes from the line of Pammi Bir with RBC Capital Markets.
Pammi Bir
Just really one question for me. I realize this might be tough just given all the volatility and the — maybe the visibility issues in funding. But are you anticipating any further recoveries in long-term care pandemic cost this year? Or is your baseline assumption for 2022 to effectively assume that the $17 million of retroactive recoveries received last year or — you should basically just strip that out.
Karen Hon
Hi, Pammi. Yes. So 2021 was an unusual year. Same was really for 2020. And I just pointed out, we received $17 million of retroactive pandemic funding relating to 2020 unfunded expenses. It is difficult to say if we would expect additional retroactive funding into 2022 because we are entering into a new funding year. However, the government has been very supportive of the sector. And so it is difficult to predict whether we would expect anything more. And to be prudent, probably not to factor any of that other than we do expect still some timing differences between our pandemic expenses versus the timing of any related pandemic funding.
Pammi Bir
Okay. And maybe just as a follow-up. The — how much is left to be recovered in terms of maybe what you’ve spent over the last couple of years. I don’t know if there’s still any catch-up funding from 2020, but what would you say the estimate of what has not been recovered?
Karen Hon
So if we look at 2021, our total unfunded pandemic expenses between retirement and long-term care is about $10 million. And 3/4 of that was in long-term care and 2 million is in retirement. And we carry, we don’t really expect much pandemic funding related to that. And if you look at the long-term care unfunded expenses of $8 million, again, it is difficult to say because we’re still going through the process. And that would be the amount of unfunded for 2021. And as we entered into Omicron that when we look at Q4, long-term care pandemic expenses versus Q3. We did see some slight moderation. However, in the second half of December, it did go up. And no, it is still early to say what those expenses would be for Q1. And however, the government has come up and announced additional funding support.
Operator
And I’m showing no further questions. So with that, I’ll turn the call back over to Mr. Jain for any further remarks.
Nitin Jain
Thank you, Andrew, and thank you, everyone, for joining our call. On behalf of our management team and our Board of Directors and to thank you for your continued support and look forward to speaking to you in the next quarter. Thank you.
Operator
Ladies and gentlemen, this concludes today’s conference call. Thank you for participating, and you may now disconnect.
