Brent Binions - President & Chief Executive Officer Vlad Volodarski - Chief Financial Officer Karen Sullivan - Chief Operating Officer

Jimmy Shan - GMP Securities

Good morning, ladies and gentlemen. Welcome to the Q2 2015 Financial Result Conference Call. I would now like to turn the meeting over to Mr. Brent Binions. Please go ahead, Mr. Binions.

Thank you. Good morning and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website at chartwell.com under the Investor Relations tab. Joining me are Vlad Volodarski, Chief Financial Officer and Chief Investment Officer; and Karen Sullivan, Chief Operating Officer. Let me remind everyone that during this call, we may make statements containing forward-looking information and non-GAAP measures and I direct you to our MD&A and other Securities filings for information about the assumptions, risks and uncertainties inherent in such forward-looking information and details of such non-GAAP measures. These documents can be found on our website or at sedar.com. With our objective of building lasting value for investors I'm pleased with the progress we made Q2 2015 on our strategic priorities, as shown on Slide 3. Same-property portfolio occupancy improved to 19.2% in Q2 2015 compared to 88.8% in Q2 in 2014 with all operating platform hosting strong occupancy gains. Same property NOI increased $0.3 million or 0.6% in Q2 2015 and 1.1 million or 1.1% in 2015 year to date. Improve brand awareness and online and also social media strategies have generated a 4.6% increase in initial contacts and 5.3% increase in personal visits in year-to-date 2015. Ongoing updates to our website have generated significant improvements to several key online metrics with our web traffic increasing by 33% in Q2 2015 from Q4 2014. Our focus on gradual improvements in our financial position through earnings growth debt refinancing and the non-core asset sale continue to strengthen as shown on Slide 4. Our interest coverage ratio improved to 2.6 times in Q2 2015 compared to 2.23 times in Q2 2014. Our net debt to adjusted EBITDA ratio improved to 6.4 at June 30, 2015 compared to 8.8 at June 30, 2014. At June 30, 2015, we had cash on hand of $423.7 million and $31.1 million of available borrowing capacity under our credit facility. In Q2 2015, we renewed our credit facility for a three-year term increase decide to $150 million and achieved meaningful reduction in interest rates. While our main focus remains on building and improving our management platform and our own property portfolio, we continue to actively manage our portfolio of properties and to seek opportunities for career growth as shown in Slide 5. We completed the sale of our U.S. portfolio for US$847 million on June 30, 2015. To date in 2015 we have completed acquisitions of interest in five retirement residence in Canada for $162.6 million further improving the quality of our portfolio. We continue to see a good flow of interesting acquisition opportunities. In accordance with our strategy to innovate innovatively develop modern market specific and operationally efficient senior communities that remain competitive over the long-term. We maintain a modern internal development program. We also partner with other reputable developers in order to gain access to attractive sites and strong markets At this time, we have to projects in construction and six projects and predevelopment that are expected to commence construction in 2015. Together with the recently completed project despite plan while out over 1,300 modern suite to our portfolio over time. Together with our partners we continue to evaluate a number of other development opportunities in our markets across the country. I’d now like to turn over to Karen Sullivan, our Chief Operating Officer to talk about some operational initiatives that she and her team are working. Karen.

Thanks, Brent. Turning to Slide 6 and I’ve noted in our MD&A our Q2 results were affected by our decision to utilize a significant portion of our annual marketing budget in Q2 in order to maximize impact of our national marketing campaign. The campaign which included television and print advertising ran for eight straight weeks this past spring and all of our markets across Canada. We effect this significant exposure will set for successful Q3 and Q4 which of the months where the factor typically it’s during since higher leasing activity. The goal of the campaign was to drive more traffic to our properties in the short and longer-term and to continue to build Chartwell national brand. Not only have we seen an increase in our total sales call volumes, but were also experiencing very positive leasing trends in July. Specifically, in Q2 our Contact Center responded to 4,157 new sales inquiries and of these 3,880 were forwarded to our homes. The Contact Center has also booked 1,320 personal visits an increase of 6% over Q1. We participated in [Ipsos MORI Omnibus Survey] before and after the campaign to measure awareness of the Chartwell brand our scores increased in terms of both aided and unaided awareness in all age categories in both English, Canada and Quebec. Turning to Slide 7 our sales strategies also included completing a series of third-party mystery shops, which helped us to assess the performance of our sales consultants compared to their counterparts from other local retirement homes. They also completed an intensive training session with our Directors of Regional Sales to continue to hone their sales force management skills. The operations team welcomed our new home Chartwell Isabella in Thunder Bay and prepared for the integration of Chartwell Grenadier which closed on August 1. And our ongoing effort to continue to attract the best talent to Chartwell we completed and launched a major upgrade to the career section of our website. Finally, the operations team continue to focus on operational excellence and operational efficiency, which included a focus on a number of ancillary service offerings for our residents, central negotiations of key contracts for a variety of major spend categories and developing and testing new performance audit tools to ensure our brand standards are being met in all of our homes across the country. I will now turn it over to Vlad to discuss for financial performance for Q2 2015.

Thanks, Karen. As shown on Slide 9 for Q2 2015 AFFO from continuing operations was $25.9 million or $0.15 per unit diluted a 21.8% increase from $21.3 million or $0.12 per unit diluted in Q2 2014. This increase is primarily due to incremental AFFO from our same property portfolio as a result of lower interest costs and growth in NOI. Lower G&A expenses and a growing contribution from our acquisitions portfolio net of the impact of property sales. In addition Q2 2014 AFFO included early mortgage repayment cost of $2.4 million and the proceeds of the settlement of certain commodity tax matters of $0.8 million they were no comparable items in Q2 2015. In Q2 2015 combined same property occupancy was 90.3% compared to 88.8% in Q2 2014 and same property NOI increasing 0.6%. As Karen, noted in the first half of 2015 we accelerated our investments in marketing activities with the related expenses increasing by $1 million or 56% and by $1.2 million or 40% in Q2 2015 and 2015 year-to-date respectively impacting year-over-year same property NOI growth in our Canadian Retirement portfolio. We expect this trend to reverse in the second half of the year with the annual growth in marketing costs being more in line with inflationary increases. Turning to our operating platform results, as shown an Slide 10, our Ontario retirement same-property NOI decreased 0.8% primarily due to higher staffing marketing and utilities expenses partially offset by higher occupancies and regular annual rental increases in line with competitive market conditions. In Q2 2015 occupancies in our retirement same property portfolio were 86.6% and 1.4 percentage points increase from Q2 2014. Ontario leasing activity remains robust and we expect containing occupancy and NOI growth in Ontario in the second half of the year. Our Western Canada platform same property NOI increased 3.3% in Q2 2015 as shown on Slide 11. This NOI growth was primarily due to higher occupancies regular annual rental rate increases in line with competitive market conditions and lower utilities expenses. These were partially offset by higher staffing, marketing, insurance and property tax expenses. Market conditions remain positive from most of our Western Canada properties and leasing activity continues to be strong. On Slide 12, you will see our Quebec platform same-property NOI increased 1.3% in Q2 2015 primarily due to higher occupancies, regular annual rental rate increases in line with competitive market conditions and lower property tax. These were partially offset by higher staffing, marketing, insurance and bad debt expenses. We continue to experience positive market conditions in many of our Quebec markets and the leasing activity remains strong. As shown on Slide 13, our Canadian long-term care platform same-property NOI decreased 1% in Q2 2015 primarily due to the timing of expenses. Weighted average occupancies in the same-property portfolio increased to 98.9% compared to 98.5% in Q2 2014. As outlined on Slide 14, G&A expenses decreased $0.7 million or 8.9% in Q2 2015 primarily due to lower legal, education and severance costs partially offset by higher stock compensation expenses. G&A expenses as a percentage of revenue were 4.1% in Q2 2015 and 4.4% in Q2 and in 2015 year to date compared to 4.6% in Q2 2014 and 5.1% in 2014 year to date. I’ll now turn the call back to Brent to wrap up.

Thanks Vlad. As shown on Slide 16, our key priority remains growing the contribution to AFFO for our core property portfolio. We believe that the projected growth in Seniors population, stable economic conditions and housing market and a moderate pace of new supply growth will provide continued support for occupancy and NOI growth in our portfolio in 2015. We believe that our recent investments in branding, marketing and sales initiatives will allow us to increase awareness at Chartwell name, increase prospect traffic to our residences and increase our occupancies. We expect to continue to grow our revenue from additional care and services offered to our residence. We will also continue to focus on managing controllable operating and capital costs to ongoing operations, efficiency reviews and centralized purchasing. We will continue to invest in our people, recruitment, training and development as only through having the right people with the right skills and providing clear direction that we can deliver an excellent customer experience to our residents and their families in each of our communities. We will continue to improve existing service levels and to implement new information technology solutions to better understand our customers, communicate with our employees and reduce administrative time commitment in the field. Our focus remains on maintaining a strong balance sheet and flexible liquidity position, utilizing the proceeds from sale of our U.S. portfolio in July 15, sorry our product portfolio in July 2015, we repaid $120 million of Canadian mortgages. We now have ample balance sheet capacity to grow our Canadian portfolio through developments and acquisitions. We have already completed a number of acquisitions and developments in 2015 and our acquisition and development pipelines remain strong. We expect to commence a number of development projects on balance sheet and with our partners in 2015 and 2016. We also believe that we will able to complete a number of the acquisition opportunities that we are currently working on. This gives us confidence that we will accretively reinvest the expected net proceeds from our U.S. portfolio sale over time. Thank you for your time and attention this morning, we’d now be pleased to answer any questions you may have.

Thank you, Mr. Binions. We will now take questions from the telephone line. [Operator Instructions] The first question is from Jimmy Shan from GMP Securities. Please go ahead.

Thanks, good morning.

Good morning.

I wonder if you just maybe first on the acquisition side, if you could maybe just give us a sense of what your acquisition pipeline look like it sounds pretty confident and be able to close and if number of acquisitions in the near-term?

Yes, Vlad.

Jimmy, as we said the acquisition pipeline remain strong, we see quite a few good opportunities that we are looking at. As I said before we are very selective about these opportunities and what kind of properties we are looking at it. It has to be newer assets in the strong markets where we already operate so all of the ones that we are looking at the present time fit to those criteria. It's too early at this point of time to talk about the size and the timing of these acquisitions, but we are pretty comfortable that hopefully in the next couple of months we will be able to announce some of them.

Okay. And just moving on to the development projects I guess a couple questions there. I think most of the once you have in the predevelopment have a two-year lease up. I guess how comfortable are you with that timeframe and how would that compare with this recent lease up experience? That would be the first question. The second one is and also noticed that most of the projects in southern region park are adjacent to an existing Chartwell facility so it’s that sort of the approach that you are taking with your development programs to build in the market that you are already in or in a new site that you are already in?

So I guess the second part of your question is a partial answer does the first part of your question. We are very comfortable that we’ll be able to lease up these projects within the allotted timeframes, in fact we are trying to be a bit conservative when we are underwriting this list of time period particularly because a lot of these projects are on the existing campuses were the existing properties are performing very well at either full occupancy or in high 90% occupancy where we believe the market is very strong and is able to absorb additional units. Our recent experience in lease up of the properties has been rather positive and the property that we build in Hamilton I think we all visited recently leased up in about 18 months. Properties that we've been opening with our partners in Quebec, the one that we just announced the acquisition on August 5 leased up to 70% in less than three months. So that all of this experience and the fact that these properties are located in the strong markets gives us confident that we should be able to hit the timelines that we outlined there.

Okay. And the development yield, does that include the land value as well in other words those projects or these expansion on existing land that you own or are you actually buying in the land?

So the development costs do include the value of the land whether we bought it or allocated value to it from our existing property where that land was separable and available for sale, we would allocate a portion of value of that land to the development pro forma. Where the land was not salable and it was just addition on the land that we just had then that we did not allocate any value to.

Okay and most of the projects there are would you have to buy the land or not?

Where its additions to the existing projects in most cases we would have the land already own where its Greenfield development. Yes it would be buying land.

So which one with the majority be Greenfield?

While looking over the list bank said in Kitchener we own the land that a broken lively we own the land others we would be buying Oakville we own the land, others we would be buying land.

Okay. So last question just on the development. On the region park notice it’s called apartments. Can you talk about the business model there? How it is different or similar to the other once is it more of the lighter care model.

Yes, Jimmy for sure this is where our first major for Brooklyn move into this market in the Ontario marketplace we do an extensive amount of this in our Québec marketplace where it’s the lighter care of the spectrum people come in a little bit earlier they will agent place over time made by services over time, but at the beginning is there buying the security all the nurse call systems and this food available if you want but it is la carte, there is activity, there is some programmer on the building if you choose to take part. And there is a nurse call things for securities I said so it’s the much lighter care model, but very similar to what we do in Québec and we believe this will translate extremely well into the marketplace were building this.

Okay. Okay great thank you.

Thank you. [Operator Instructions] Thank you. There are no further question register at this time. I will now like to turn the meeting over to Mr. Binions.

All right, will that wraps up today's conference call. And thanks again for joining us as always if you have any further questions please do not hesitate to give us a call. Thank you and goodbye.

Thank you. The conference has now ended. Please disconnect your line at this time and we thank you for your participation.