Good morning, ladies and gentlemen, and welcome to the Chartwell Retirement Residences Q2 2024 Financial Results Conference Call. I would now like to turn the meeting over to the CEO, Vlad Volodarski. Please go ahead, sir.

Thank you, Giselle. 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 Karen Sullivan, President and Chief Operating Officer; Jeffrey Brown, Chief Financial Officer; and Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer. Before I begin, I direct you to the cautionary statements on Slide 2, because during this call, we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MD&A and other security filings contain information about the assumptions, risks and uncertainties inherent in such forward-looking statements and details of such non-GAAP and other financial measures. More specifically, I direct you to the disclosures in our Q2 2024 MD&A under the headings 2024 Outlook and risks and uncertainties and forward-looking information for a discussion of risks and uncertainties. These documents can be found on our website or on the SEDAR+ website. Turning to Slide 3. Our teams delivered another quarter of strong operating and financial results in Q2 2024, achieving year-over-year same property occupancy growth of 660 basis points, which drove operating margin expansion of 280 basis points, same property net operating income growth of 20.6% and funds from operations increase of 45.3%. We expect this occupancy growth momentum to continue and forecast September 2024 same property occupancy of 88.7%. It is our conviction that to achieve long-term sustainable value creation in our business, we must focus on delivering exceptional services and quality care to our residents, which we believe will generate high resident satisfaction rates and resident referrals. This, in turn, will drive high occupancies and strong profitability. Such resident experiences can only be delivered by highly engaged employees, who are committed to our vision of making people’s lives better. That is why I’m grateful to the leaders in our residences for the great work they had done promoting a positive, inclusive and rewarding work environment. Their success was evidenced this year by our employee engagement score reaching 57% highly engaged. Remember, in our survey, we only count top box responses on a five point scale, and the score comprises of the average responses to 25 core engagement statements. The combined score of highly engaged and engaged employees, those who mark boxes four and five in our survey, was 86%. Our 2024 score of 57% represents a three percentage points increase from 2023, and remarkably, it is two percentage points higher than our 2025 aspirational target of 55%. It is wonderful to see the fruits of our team’s labor in so many aspects of our operations. And, I will now turn the call to Karen, to provide some more color on our ongoing initiatives.

Thanks, Vlad. Moving on to Slide 4. In Q2 2024, our marketing strategies led to an increase in personalized tours from marketing sources of 22% compared to Q2 2023 and an overall increase of 6% quarter-over-quarter. Leasing activity continued to be strong with year-to-date ahead of 2023 and a steady increase in closing ratios. We hosted two open house events in Q2, one in April and for the first time ever, another in June, both of which helped us to drive new leads. Our marketing strategies now include Facebook ads and we have also improved the volume of Google ad conversions and continue keyword optimization, which resulted in an increase to the click through rate and a decrease in the cost per click. In Q2, we introduced a new more comprehensive approach to sales training designed to set up our new retirement living consultants for success from their first day through month 12. We also held sales training for all of our RLCs in Q2 and redesigned and improved our competitive analysis process. We are also pilot testing an online post tour survey for prospects to complete after they have visited our home. As occupancy continues to recover, we are determining property specific pricing strategies, which include faster growing market rates and or eliminating recurring discounts for communities with high occupancies targeting specific suites for incentives to accelerate lease up or in select cases continuing with broader incentives depending on occupancy levels and competitors’ rates. Turning to Slide 5, we reduced our staffing agency cost by 60% in Q2 2024 compared to Q2 2023 through focused recruitment and retention activities. This agency spend continues to be below pre-pandemic levels. We have also fully redesigned our Resident Manager onboarding program, which is designed to reduce turnover and improve performance of these key leaders in our residences. Although always a difficult decision to close a property, I’m pleased to say that we have found alternative accommodation for all 186 residents at Chartwell Heritage Glen, and we expect to have all residents relocated by mid-August. Finally, the operations team has been busy integrating the five new homes that we recently purchased in Sherbrooke, Terrebonne, Saint Jerome, Saint Jean, suburb of Vaudreuil and Gatineau region in Quebec. Being agile certainly mattered in this case as we only had 30 days to close this transaction and transition these residences into our key systems. By all accounts, including feedback from the teams at these five homes, this transition was a success. We are also excited to be welcoming five more properties to the Chartwell family later this year with our new partners group Champlain. I will now turn it over to Jeff, to take you through our financial results.

Thank you, Karen. As shown on Slide 6, in Q2 2024, net loss was $2.8 million compared to a $7.5 million loss in Q2 2023, primarily due to higher resident revenue, lower G&A expenses and higher net income from joint ventures, partially offset by higher direct property operating expense, absence of income from discontinued operations due to the completed LTC transactions, deferred tax expense in Q2 2024 as compared to a deferred tax benefit in Q2 2023, net loss on asset sales as compared to net gain in Q2 2023, higher finance costs and higher depreciation of property, plant and equipment. FFO from continuing operations increased 72.6% and total FFO increased 45.3% in Q2 2024 compared to Q2 2023 from strong operating results in our core property portfolio. FFO growth also benefited from $4.2 million of lower G&A expenses, primarily due to the CFO transition costs that were incurred in 2023, lower compensation costs as we continue to execute on our plan to achieve efficiency improvements, partially offset by higher unit based compensation costs due to the increase in value of our trust units. In Q2 2024, our same property occupancy increased 660 basis points to 87.2% and our same property adjusted NOI increased by $10.4 million or 20.6%. Slide 7 summarizes our same property operating results for each platform. All of our platforms posted occupancy gains in Q2 2024 compared to Q2 2023, which positively impacted our results. Our Western Canada platform same property adjusted NOI increased $1.9 million or 11.4%. Our Ontario platform same property adjusted NOI increased $6 million or 21.6%. And, our Quebec platform same property adjusted NOI increased $2.5 million or 43.3%. Turning to Slide 8, at August 8, 2024, liquidity amounted to approximately $341.9 million which included $41.9 million of cash and cash equivalents and $300 million of borrowing capacity on our credit facilities. For the remainder of 2024, we have $152.6 million of mortgage debt maturing at the weighted average interest rate of 6.58%. We expect to renew or refinance these loans during the year. At August 8, 2024, 10 year CMHC insured mortgage rates are estimated approximately 4.1% and five year conventional mortgage financing is available at approximately 5.0%. Moving to Slide 9. With the continuing strong prospect traffic and leasing activity, we expect occupancy to continue to grow in 2024. We now forecast to achieve 88.7% same property occupancy by September of this year. We have been using targeted incentives in certain markets to support this rapid occupancy growth. As more residences achieve higher occupancy rates, we expect to gradually reduce the use of these incentives. We believe that improving occupancies combined with lower new supply coming to market will support higher than historical market rate increases over the next several years. We expect these dynamics will result in the growth of our adjusted operating margins from the current levels. I will now turn the call to Jonathan, to discuss our recent acquisitions and portfolio optimization activities.

Thank you, Jeff. Turning to Slide 10, over the past couple of months, we announced the acquisition of several newer high-quality residences in the province of Quebec. On July 22, 2024, we closed on the acquisition of a portfolio of five modern residences totaling 1,428 suites in the Greater Montreal area, Gatineau and Sherbrooke for a purchase price of $297 million. We are working towards closing the acquisition of a 50% interest in a portfolio of another five beautiful residences totaling 1,805 suites in Quebec City and Shawinigan and look forward to a successful relationship with our new partner on these assets. Further, we’ve acquired an 85% interest in three state-of-the-art residences totaling a further 1,053 suites in Montreal and Quebec from our development partner EMD Batimo. On Slide 11, you can see more pictures of these residences. All of these newer high-quality assets are located in strong markets and are complementary to our existing portfolio which allows for efficient management, lower incremental overhead costs and smooth transitions into our management platform. We acquired these high-quality assets at attractive pricing significantly below replacement cost. Occupancy at most of the acquired properties is at stabilized levels averaging 95% with three properties and lease up supported by NOI guarantees as part of the structured acquisitions. We expect higher market rate growth out of these assets than our same-store portfolio over the medium-term which will generate strong investment returns. These acquisitions totaling over $750 million at share and over $1 billion of assets taken on under management represent Chartwell’s strategic objective to grow in our markets with newer quality assets. This is shaping out to be a record year of investments for Chartwell. We’re not done with a number of exciting strategic acquisitions being evaluated and at various stages of negotiation. We want to take this moment to express our gratitude to our investors and our investment banking syndicate members for their strong support in our recent equity offering of $345 million to finance these important transactions. We appreciate the strong investor demand for this offering and are glad to see our investors being rewarded with the meaningful appreciation in our trust unit trading prices post transaction. I’ll turn the call back to Vlad, to wrap up.

Thank you, Jonathan. Moving to Slide 12, we believe we’re now at the front-end of what is going to be a multi-year of growth in retirement living in Canada. Demand for our services should continue to grow for decades, driven by the senior population growth and lack of long-term care accommodation. With persistently high cost, new construction has been virtually non-existent, which combined with the obsolescence of some of the existing inventory is creating shortages of new suites. These dynamics are likely to result in growing occupancies, market rates and profitability of the existing operators. As one of the largest participant in the senior living sector, Chartwell stands to benefit from them. As shown on Slide 13, we’re not just waiting for the rising tides to lift all boats. In addition to delivering on our 2025 aspirational targets in resident satisfaction, employee engagement and occupancy, we are focused on transitioning our management operations into an agile and scalable management platform. This will be achieved by further empowering the teams in our residences to take charge of developing and executing property specific strategies and adopting the changing market conditions, while delivering resident experiences. Such empowerment will be aided by enhanced training, coaching and targeted support delivered by our corporate teams as well as more robust performance-based monetary incentives. We believe with such agile and scalable platform, we will be better positioned to innovate, make decisions and take actions faster, generate management cost efficiencies and ultimately outperform. We will also continue to focus on optimizing our property portfolio to make it more efficient and resilient to future competition. We’re doing this through acquiring newer properties in strong locations, which generate higher rental rate and operating margin growth and require lower capital investments. We will also continue our program of disciplined dispositions of older, less efficient properties, which often require a disproportionate amount of management time and higher capital investments. And, we continue focusing on asset management, repositioning properties to be more successful in their markets. These repositioning projects so far have taken many forms, from changing service offering to cater to specific ethnic communities, to investing capital to upscale some of our residences, to offering additional care services, including government funded care or alternatively moving towards more independent living options, all driven by local market demand and positioning of each residence in their respective markets. These are exciting times to be in retirement living sector in Canada and even more so to be the part of the dynamic customer focused and evolving Chartwell. I will now close our prepared remarks with a story from one of our residences as pictured on Slide 14. Recently, we celebrated Canadian Multicultural Day across our residences with Chartwell Gibson hosting a particularly vibrant Cultural Appreciation Day. The event featured captivating performances, traditional attire and a diverse array of cuisine from around the world. Residents, staff and local community members came together to dance, dine and celebrate the many cultures that enrich their residents. Vida Gavia, General Manager of Chartwell Gibson, along with her dedicated team, has been organizing similar events for several years, aiming to create an environment where everyone feel welcome and respected. As Vida observed, understanding our differences and similarities helps unite us and educate us and sentiment that resonates deeply within our communities. By organizing and participating in these events, we reinforce our ongoing commitment to diversity and inclusion values central to Chartwell’s culture and success. These efforts help foster a sense of belonging and connection among our residents, allowing them to engage with diverse cultures and perspectives. This enriches their daily experiences and strengthens the overall well-being, supporting our mission of making people’s lives better. Thank you for your attention this morning. We would be pleased to answer your questions.

Thank you. We will now take questions from the telephone line. [Operator Instructions] We will take the first question from Jonathan Kelcher, TD Cowen. Please go ahead.

Thanks. Good morning. First question, just digging into the same property NOI growth by region a little bit. Quebec really stands out at 43%. Can you maybe give a little bit of color on what drove that versus the other two regions?

Sure. Good morning, Jonathan. Yes, and we did see strong growth in all platforms this quarter. One of the things that did lower the growth in the Western Canada platform was we did have a one-time staffing cost reversal in Q2 of 2023 at $1.7 million that would have impacted that year-over-year comparison. In Quebec, in particular, they have very strong occupancy growth. And, I think they’ve done a very good job of managing labor costs and reducing the reliance of agency costs. Those were Quebec in particular has been it will continue to be a problematic region, but they’ve done an amazing job reducing the reliance on these agency costs. So, the labor costs helped with this outsized NOI growth.

Okay. That’s helpful. And then as, just on your margin overall, and I think, I don’t think I heard it, but I think 38% is still sort of your target for 2024 on a same property basis. But going forward, how should we think about that as occupancy gets closer to 95%?

Sure. Yes. We do believe that we still will be able to hit that 38%. We delivered 37.9% in the quarter. And, as we get into future years, we expect that continue to grow as occupancy grows above current levels. And, we also believe that there will be potential as the properties achieve higher occupancy rates, there will be potential to increase market rates at a higher pace, because the supply and demand dynamics are such given low construction starts and continued growth in demand that would allow all existing operators to do that. And so, the margin should be positively impacted by that.

Okay. So, would it be unreasonable to think low-40s, if you’re close to 95%?

Yes. That’s reasonable.

Okay. Thanks. I’ll turn it back.

Thank you. The next question is from Fred Blondeau from Green Street. Please go ahead.

Thank you and good morning. Three questions for me. First maybe for Jeff. In terms of the balance sheet, I was wondering where do you see the debt to EBITDA ratio hitting at the end of 2024?

It probably will move up a bit from current levels because we did have the equity raise that brought it down ahead of closing on some of the acquisitions planned for the year. So, we closed at 8.5 times at the end of Q2, but that will increase a bit as we get to the end of the year.

And also depending on the level of acquisition activity, as Jonathan pointed out, we’re looking at several interesting opportunities. They’re one off, and we feel that we have balance sheet room to do these acquisitions without any external financing at this point of time. And so if we’re successful negotiating and getting those deals, they will also move debt-to-EBITDA a little higher for a short period of time. This will obviously be offset by the earnings growth. And our long-term goal is to run the company at about 7.5 times debt-to-EBITDA, and we are continuing moving down this path and this will be achieved through primarily growth in our EBITDA.

Fair enough. Thank you. And then just looking at one of your most recent acquisitions at Trait Carre in Quebec City, I was wondering, I mean, I understand that’s relatively recent, but how is the asset performing so far? And whether you’re seeing supply in Quebec City becoming at risk or not really since demand is so strong?

Trait Carre is performing extremely well. It’s high 90s occupancy. And in terms of the supply in Quebec City, there is just like in the rest of the country, there’s not a lot being built. So, we do not see Quebec City supply being riskier situation than anywhere else in the country.

Okay. Thank you. And lastly on the same-store agreement with the Batimo and the three properties, maybe you could share your views on this for I guess for the second half of the year since coming due in January?

Sure. So, these properties are attractive properties to Chartwell. We currently manage them and they’re performing well. As part of these acquisitions, we did buy three properties from EMD Batimo in the year. And so as part of these acquisitions, Batimo agreed to stand down from any of its put rights on the balance of any of its properties for the balance of the year. And so everything would revert back on January 1, 2025, but again I would emphasize that these are all great properties that we want to bring into our portfolio. This was just a question of timing and part of the overall transactions that we had with Batimo.

Fair enough. Thank you. I’ll leave it here.

Thank you. Next question is from Lorne Kalmar from Desjardins. Please go ahead.

Thanks. Good morning. Maybe just following on the Batimo line of questioning with the three properties stabilized and presumably you’ll take those in in the not too distant future. And I guess it’ll just be just the one left in the pipeline. Is there an expectation for that to sort of be the end of the relationship with Batimo or do you guys expect them to initiate additional projects that then you’ll be able to take in?

We don’t expect that to be at the end of our relationship with Batimo. We have a very strong and collaborative relationship with them and we have a number of different projects that we are in discussions with them on. So, we would expect the pipeline to continue.

Are those projects, would they be, still predevelopment? Or would they be ones there they have now that is not part of this pipeline?

There are predevelopment projects that we are talking about and redevelopment projects.

Okay, perfect. And then maybe moving off of the acquisition side of things, you’ve done a couple of one off dispositions. Could you maybe give us an idea of the quantum of dispositions you expect to do over the balance of the year and into 2025?

We continue to work to evaluate all our properties, and there’s certainly going to be some, but we are not prepared at this point to give you the quantum of this. It’s all dependent on the timing of the disposition. We want to make sure that we generate value that is appropriate to us when we’re selling these properties. So, we continue going through the process of evaluation our portfolio and determining what would be the appropriate time to sell properties that we decided to sell. But you should expect us to continue to dispose noncore assets in 2025.

Could you maybe give us an idea then of how big of a bucket this noncore asset pool would be?

Well, it depends what you use as a measurement in terms of the value to overall company. It’s not going to be material. It may be quite a few suites. But in terms of value, these are, as we said, noncore properties older. The valuations are not as high as on the rest of our portfolio.

Okay. Fair enough. And then maybe just last one. We’ve obviously seen the headlines around slowdown in the housing market, and I know, obviously, retirement is a needs based business. But I was just wondering, do you think that because the slowdown has been so material that it’s creating some pent up demand that could continue to drive even higher occupancy growth as things start to heat up or not so much?

I think we’re seeing pretty strong demand right now. And the housing market slowdown, remember we talk about this slowdown from the record levels of sales and pricing. And so it’s not really slow in any kind of historical comparison, just slow compared to the peaks that the market was at. And we do not at this time see any kind of pressure from the slowdown on the demand. And remember, our business also predominantly needs driven. People come to us because they need some sort of assistance or foresee that need. And yes, maybe an ability to sell their house may delay their decision, but it’s not going to be a long delay. So, from that perspective, we’re not seeing much pressure at this time.

Okay, perfect. Thank you very much. That’s all for me.

Thank you. Next question is from Himanshu Gupta from Scotiabank. Please go ahead.

Thank you and good morning. So, let’s just start with G&A, and it came in lower in Q2. Is this the new run rate?

Good morning, Himanshu. Yes, this is a good run rate for us. We didn’t have any efficiency related severance costs this quarter, but do expect those to come in future quarters this year as we move to exit the Welltower JV. So, that would increase above the current run rate when those do occur.

Okay. And does this incorporate any savings from like exiting the LTC platform?

Yes. All costs that related to LTC platform were transitioned to the new cost. It was actually the platform itself was transitioned to the new manager. There were some incremental savings on the kind of back-office staff perspective, but those costs are out of Chartwell’s system.

Okay. And thanks for that. And then this Quebec acquisition, which should be closed Q3, that will not lead to any G&A increase as such?

Nothing significant.

Okay, awesome. Okay, thank you. Okay, now let’s talk about NOI margins. Same property NOI margin, good to see expansion in Q2, like what led to margin expansion in Q2? I mean you were already seeing staffing agency staffing reductions and rental rate increases, but what happened in Q2?

Just that occupancy growth, rent increases and good control of other expenses. We also have been beneficiary of lower utility costs all the year. That helped a bit for the margins as well.

Okay. And what about incentives? I think incentives were the word used in your prepared remarks quite a bit. Is it like the incentives were lower in Q2 versus Q1? Or do you think that is something in the future where incentives can be lower than what they are at compliance?

That’s more applicable to the future. Once property is achieving occupancies in 90s, then we’re pulling back discounts. And at that point of time, as I mentioned, we think that the ability to grow market rates, not the rates for existing residents, but market rates for new residents, will be much better.

Okay. And on the incentives, is it like focusing like Orchard Durham kind of markets, tough markets or very property specific across the board?

The incentives that we use are property specific and different properties have different programs that they use. And it all depends on the local market conditions. That’s why we talk a lot about this empowerment and local approach to sales and marketing. There is no one recipe that could be applicable to everyone property to every home in our portfolio. And so there’s a lot of detailed work that goes behind to figure out the appropriate pricing and appropriate level of incentives for each individual property. So, it’s really tough for me, Himanshu, to tell you kind of broad strokes and averages they are deceiving in this case.

Okay. Fair enough. So maybe the last question is around the growth bucket and margins in particular, right? I mean, thanks for clarifying same property NOI margin at 38% for the year. Is there a reason that margin expansion and growth bucket will be different compared to same property portfolio?

It’s also difficult to answer that question, Himanshu. The growth bucket contains properties that are recently acquired or have recently been developed. Often, they are not yet at stabilized occupancy levels, and that bucket changes constantly during the year as we buy new properties that are being put in these buckets. So, it’s really a mishmash of many different properties with many different specific features that also depending on the timing of where the properties are in lease up will affect the margins. So generally, they should be increasing just like the rest of our portfolio. Generally, probably, they should be increasing faster because many properties in that bucket are in lease upstage more so than our existing property portfolio. But those are very broad generalization of a very eclectic mix of properties.

Okay. And is it fair to say that the ultimate growth bucket margin should be much higher than your same property NOI margin? I mean, given the average age of your growth bucket is like significantly lower than your same property.

That would be correct. On stabilized basis, these properties should deliver higher margin than our same property portfolio.

Okay. Fantastic. Okay. Thank you so much, and I’ll turn back.

Thank you. [Operator Instruction]. The next question is from Pammi Bir, RBC Capital Markets. Please go ahead.

Thanks. Good morning. You’re clearly making some good occupancy traction. I think you’re on pace to pick up maybe another 100 basis points in Q3. As you tackle maybe some of the more challenged properties, how do you see that maybe that cadence trending over the next few quarters? And maybe just the second part of that question is really what gives you the confidence that you’ll get to 95% by the end of next year?

So, the challenging properties, again, every property has different story. There is no one answer. How do we see driving these occupancy faster with ongoing focus on every property that we have in our portfolio. And in some cases, the work goes into optimize the pricing because we’re at stabilized occupancy and those market rate increases or pulling back discounts that I talked to you about is the focus of the teams. In most other cases, the focus continues to be occupancy growth. And so how are we going to do this? Through doubling down on the strategies that we saw working in other properties, local marketing, focus on sales, making sure the pricing is right and competitive in the environment and making sure that we deliver great services to our residents so they continue to refer their friends to us. So that’s kind of again pretty generic answer, but every property has their own story, and we’re focusing on each one of them separately. What gives us confidence to get to 95% occupancy? Well, the sort of the traction that we have for the last now two years have been pretty strong, and we expect it to continue. The leading sales indicators continue to be strong, so we continue to see good demand out there. And the overall backdrop of growing demand, no construction start, continued shortage of long-term care beds and continuing closure of some of the existing obsolete properties that we expect to see over the next couple of years, all of that is positive for all operators in senior housing space in Canada including Chartwell. The other part that we continue to do that we talked about is optimizing our property portfolio. Properties that cannot achieve 95% occupancy or really 100% occupancy in this kind of environment, probably not the right properties to be in Chartwell portfolio. And so that’s to the question of dispositions of noncore properties that will continue.

Thanks for the color, Vlad. That’s helpful. Just last one for me. Just on the strategic acquisitions Jonathan mentioned that you’re contemplating, can you just expand on that. What sort of quantum are you thinking? Maybe the geographies and any sort of comments on where pricing seems to be at this stage? I mean, you’ve just done a bunch, but I’m just curious if there’s any real changes as the competitive landscape, maybe picks up a little bit. And then I just want to clarify that you’re not referring to the Batimo properties?

That’s correct. We were not referring to Batimo properties. We are looking at a number of different opportunities across the country. And again, it’s too early to talk about because we don’t have firm deals. Soon as we do, we’ll know all the details about them. The pricing seems to be in line with what the market is today, kind of on stabilized basis, low to mid-six cap rates. It’s what we’re looking to achieve on these acquisitions. Some of them may not be at stabilized levels, and we are prepared to take some short-term dilution for a long-term gain. All of them that we’re looking at will be a great fit for our portfolio and a certain level of upgrade to what our current portfolio is.

And are any of these vendors or deal that you’re working on, would there be any sort of not distressed, but maybe capital structures that aren’t working? Or is it just maybe recycling capital on out of some other funds?

Pammi, same answer as I gave on that property. Every story is different. So, the answer is yes to all of it. It depends on the situation. But yes, some of them are restructuring financing. Some of them are looking to recycle capital to continue developing. All of the above is applicable.

Got it. Thanks very much. I’ll turn it back.

Thank you. Next question is from Giuliano Thornhill from National Bank Financial. Please go ahead.

Hey, good morning, guys. Just on the obsolete supply that you guys comment on, wouldn’t this be potentially be used for as a cheaper alternative for somebody looking for retirement housing? And what kind of percent of the inventory do you consider to be this obsolete supply?

Well, if you look at Cushman and Wakefield report that Sean and Heather and their team did recently this year or maybe a little earlier this year, I think they used something like 10% of inventory being obsolete over the next 10 years. And probably they are right. I mean, they know better than I would know. So, about that, can they be used for cheaper alternatives? I don’t think so. The cost of operating smaller buildings are high. You have inefficiencies in terms of the staffing. You have significant capital requirements and maintenance costs for older buildings. And so it’s difficult to make them affordable enough to attract people to those kind of living arrangements because they’re not as good as the new ones. So, my view would be that not many of them can be used for that more affordable segment of the market. That’d be my view at the present time.

Okay. And then M&A has been pretty featured on this call. But looking towards the next year, would your preference be towards returning capital or future M&A?

It will all depend on the market conditions and opportunities that we have in front of us. So, we want to make sure that we have all options open for us when it comes to capital allocation in the environment where we see multiyear growth in our sector, given the overall factors that I just talked about, adding high quality new properties to our portfolio that can generate significant long-term returns and make our overall portfolio better positioned to do that would be our preference. But who knows what future holds? We’ll evaluate these opportunities when the time is right and when they are in front of us.

Okay. All right. Thanks, guys.

Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to you, Mr. Volodarski.

Thank you, and thank you everybody for joining us. As always, if you have any further questions, please do not hesitate to give us a call. Goodbye.

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