Lois Cormack - President and Chief Executive Officer Nitin Jain - Executive Vice President and Chief Financial Officer

Troy MacLean - BMO Capital Markets Yash Sankpal - CIBC Michael Smith - RBC Capital Markets

Ladies and gentlemen, welcome to Sienna Senior Living Inc.’s Q1 2016 Conference Call. Today’s call is hosted by Lois Cormack, President and CEO and Nitin Jain, Executive Vice President and CFO. Please be aware that certain information discussed today is forward-looking. Actual results could differ materially. The company does not undertake any duty to update any forward-looking statements. Please refer to the Risk Factors section in the company’s public filings for more information. Today’s call is being recorded and a replay will be available. Instructions for accessing the call are posted on the company’s new website siennaliving.ca and details are provided in the company’s news release. The company has posted slides, which accompany the hosts’ remarks on the company website under Events & Presentations. With that, I will now turn the call over to Ms. Cormack. Please go ahead, Ms. Cormack.

Thank you, Melanie. Good morning and thank you for joining us on our call this morning. With me on the call is Nitin Jain, our Chief Financial Officer. I will begin by reviewing some of the key highlights of the quarter. I am going to speak about Sienna’s recent announcements and Nitin will then discuss the financial results of the quarter in more detail. Now, during the quarter, we continued to execute on our key objectives to provide quality care and service to seniors, building on local brand recognition, maintaining a strong financial position, enhancing the value of the company’s assets and promoting the growth of our portfolio and improving support services. During our remarks, we will touch on some of the key achievements on these four priorities. I will also refer you to Page 3 and 4 of our MD&A, which outlines how we are executing in these key areas. Now, 2016 is off to a great start with strong operational and financial performance, including a 6% increase in same property NOI, 11.6% increase in diluted OFFO per share and a 10.5% increase in diluted AFFO per share. Our retirement residences finished the quarter with overall occupancy of 91.5%, which was up 4.7% over the first quarter of last year. Same property net operating income was up 14%. We believe that this strong year-over-year increase is attributable to our re-branding efforts, our continued focus on improving the resident experience as well as strengthening our operating platform. Now, in long-term care which is Slide 7, our same property NOI increased by 3% from the prior year. And subsequent to the quarter on April 4, 2016, Associate Minister of Health and Long-Term Care, Dipika Damerla, visited our long-term care community in Stouffville had announced the Ministry’s approval of our application to redevelop 31 beds from C Class. When completed, this will be a significant improvement to our residents. In addition, we continued to make good progress on our future redevelopment plans for our Class C homes, which are all subject to further feasibility and regulatory approval. I will now touch on some of Sienna’s recent announcements. Now, during the first quarter, we announced the sale of Preferred Healthcare Services to Spectrum Healthcare. The transaction subsequently closed on April 28 for cash proceeds of $16.5 million before working capital adjustments. This disposition is consistent with Sienna’s strategy to focus on growing our core business of high-quality retirement living and long-term care residences in Canada. And in mid-April, we were very excited to announce that Sienna has entered into an agreement for a $255 million acquisition of the high-quality seniors living portfolio in BC. This transaction contemplates the purchase from Baltic Properties, BayBridge Senior Living and Amica Mature Lifestyles of a seniors living portfolio in BC consisting of 8 high-quality assets, which will add 984 beds to Sienna. The transaction also contemplates a 50% ownership interest in a BC management company as well as the option to acquire ownership interest in two newly built seniors living residences out of discount to fair market value. We do expect that this acquisition to be immediately accretive to OFFO per share and AFFO per share on a leverage neutral basis. As well as a result of this acquisition, we expect to welcome over 1,300 dedicated and experienced employees to the Sienna’s team. Now, turning to Slide 11, we are really excited about the opportunity to increase our presence in British Columbia, including the Greater Vancouver area. The properties to be acquired include two retirement residences, the Mayfair 85 suites in Port Coquitlam and Rideau Manor, 138 suites in Burnaby. There are six Baltic properties with 761 beds, which are all best-in-class senior living residences providing long-term care, independent living and assisted living as well as some specialized programs. 20% or 154 of these beds are private pay. Each of the properties are very well located throughout British Columbia and have excellent reputations in their respective communities. Now on Slide 12, this acquisition will increase Sienna’s retirement suites by 29% and funded beds by 11%, further solidifying our position as a leading seniors living provider in key markets in Canada. Now turning on to Slide 13, Sienna will also acquire a 50% ownership interest in Pacific Seniors Management. This partnership will provide Sienna with the opportunity to leverage a strong operating platform, a development partner and relationship with local stakeholders including the BC regional health authorities. Over a 2-year period, we will be working with our partners to fully transition the management of the Baltic Homes to Sienna. We believe that our relationship with our partners will also lead to further growth opportunities. The first component of the deal is Sienna’s option to acquire ownership interest in two newly built state-of-the-art long-term care residences. Nicola Lodge in Port Coquitlam and Glenmore Lodge in Kelowna. Together, these properties consist of 374 beds, approximately 10% of which are private pay. In summary, this transaction represents a great opportunity to expand our presence and our operating platform in BC, it is inline with our strategy to diversify the mix of senior living in our portfolio. We do expect to complete this acquisition in the third quarter of 2016. Sienna is on a path to growth and we believe that this transaction is an excellent example of our focus on our patience in the pursuit of accretive acquisitions that improve the quality of our portfolio and drive long-term value creation for our shareholders. I will now turn the call over to Nitin for our financial summary of our first quarter.

Thank you, Lois and good morning everyone. Before I would begin, I would like to note that you will find a more fulsome discussion of our results in our MD&A and financial statements for the period which are posted on SEDAR and can also be found on our website siennaliving.ca. I will start on Slide 16, in the first quarter of 2016 Sienna Senior Living generated net operating income of $21.4 million which is up $1.4 million or 7.2% versus the same period last year. Our retirement division had another strong quarter with same-property NOI growth of 14% and $0.5 million of NOI from Traditions of Durham acquisition which closed on December 31, 2015. Our same-property long-term care NOI growth was 3.4%. The retirement growth was driven by strong occupancy gains as our as at occupancy increased by 4.7% to 91.5% versus Q1 2015. The long-term care NOI was driven by increase in preferred rates, disciplined cost management, timing of expenses year-over-year and lower utility expenses due to the warmer temperature. We are very pleased with our overall operating performance and particularly pleased with achieving over 90% occupancy in our retirement division over the winter season. Moving to Slide 17, in the first quarter of 2016 diluted operating funds from operations per share was up $0.03 or 11.6% and diluted adjusted funds from operations per share was also up $0.03 or 10.5% over first quarter of 2015. The increase was primarily driven by strong year-over-year operational performance in both the retirement and long-term care divisions and the Traditions of Durham acquisition. Our maintenance capital expenditure for Q1 2016 was $400,000. And as previously advised for total year 2016, we expect to spend similar amounts as in 2015 adjusted for inflation. Our Q1 2016 administrative expenses were $4.4 million, which are consistent with the spend in Q1 2015. Now, moving to the next slide and our focus on reducing leverage at the end of Q1 2016, our debt to gross book value was 55.2%, which is a 120 basis point below our first quarter 2015 metrics. The decline was driven by voluntary repayments towards the company’s revolving credit facilities, monthly payments to the Series B debenture principal reserve fund and to mortgage liabilities. Our interest coverage ratio increased by 30 basis points from 3.1% at the end of Q1 2015 to 3.4% at the end of Q1 2016. Subsequent to the quarter, we completed the sale of Preferred Healthcare Services on April 28, 2016 for total sale proceeds of $16.5 million with an estimated tax payable of $700,000 on the sale. We have used the proceeds to pay down our credit facilities by $14 million, approximately the same amount that we drew to pay down for the Traditions of Durham acquisition in December 2015. Moving to Slide 20, the pending $255 million acquisition in the BC market is a great growth opportunity for Sienna. To partially finance the acquisition, we launched our $120 million bought deal public offering of subscription receipts on April 18, 2016, with an over-allotment option of 15%, which was fully exercised for total proceeds of $138 million prior to the underwriters’ fee. Total receipts issued were $8.8 million. We would also be assuming approximately $137 million in existing mortgages at a weighted average interest rate of 3.9% and a weighted average term to maturity of 5.5 years. In addition, we will be issuing $10 million of shares to the principal of Baltic Investment Company at the same price as the offering price for the subscription receipts. Going forward and the impact of subscription receipts, as discussed the receipts were issued as on May 6, 2016. While these receipts remain outstanding, the holder of these receipts would be entitled to receive payment equivalent to dividends paid on common shares. Between now and posing of the acquisition of the BC portfolio, which is expected in the third quarter of 2016, these dividend equivalent payments and the receipts will have a dilutive impact on our funds from operations, operating funds from operations and adjusted funds from operations on per share metrics. We intend to identify the impact of these receipts and the dividend equivalent payment by adding new metrics of diluted OFFO per share with subscription receipts and diluted AFFO per share with subscription receipts in our disclosure going forward for the applicable time period. The first dividend equivalent payment would be made to the receipt holders on June 15, 2016. With that, I would like to turn it back to Lois.

Thank you, Nitin. As we have shared in our presentation today, 2016 is off to a great start. We are really pleased with the progress that we have made to-date in executing on our key objectives, particularly on our growth strategy. As we move forward, we expect to continue to experience organic growth through occupancy, rate increases and conversion to the new long-term care rates. We plan to leverage our existing assets with the future redevelopment of older long-term care homes in addition to retirement suites, which will create seniors living campuses in some of our locations and we will continue to be strategic and disciplined in our approach to acquisition. We believe that the tremendous efforts to-date on strengthening our operating platform has positioned us very well for future growth in key markets in Canada. As demonstrated by the BC acquisition, our strategy is to continue growing the diversified mix of senior living in our portfolio from independent living, assisted living and long-term care. We know that the demand for seniors living services will continue to grow exponentially. And as a leading operator in the sector, Sienna Senior Living is in a very strong position to meet that demand. Thank you so much for your participation on our call today. Nitin and I will be pleased now to take any questions.

Thank you, Ms. Cormack. [Operator Instructions] Our first question is from Troy MacLean of BMO Capital Markets. Please go ahead.

Good morning.

Good morning Troy.

I want to get the platform in BC, would you consider developing new assets in those markets or will it still be just buying stabilized properties?

We will Troy. We have a couple of the properties that we acquired through Baltic do have some excess land and we do intend to add over time some additional suites to a couple of those locations. So there is an opportunity for further development of private pay which would be consistent with our goal to develop seniors living campuses. So there definitely is that opportunity, as well our partner that the Pacific Seniors Management partner is a very strong developer and operator. So we see a tremendous opportunity to leverage that relationship and that expertise.

And then just on the acquisition market, any comments about cap rates, are you seeing cap rates continue to trend down or are we kind of at a stabilized level?

Well, I think cap rates generally depends on the asset type, location, market, whether it’s a primary or secondary or territory market. So I wouldn’t – I can’t really say overall I wouldn’t want to – I think I mean it’s still very competitive and there is still a lot of interest in the space, so.

That’s it for me.

Thank you, Troy.

Thank you.

Thank you. Our next question is from Yash Sankpal of CIBC. Please go ahead.

Good morning.

Good morning Yash.

The retirement home occupancy has come down a bit in the quarter, was it seasonal in nature or do you think 92% is a stable level going forward?

Yes. Actually we are very pleased with our occupancy in Q1, because normally in the winter months we do see significant attritions that we were very pleased that we were able to maintain it pretty much. But overall we do expect to be consistent with where we ended in Q4 overall. Most of our communities will be around stabilized with the exception of Royal Oak in Canada or Red Oak rather in Canada.

So, you expect to reach our – by the end of 2016 you expect your occupancy in the 93% range?

Yes. In the low-90s, yes.

Okay. And Nitin, just about – for the Baltic acquisition what would be the incremental impact of – on your G&A and cash taxes from that acquisition?

Sure, Yash. So for the G&A roughly for our company our G&A is around 3.5% of revenue and we do have a good platform. So we don’t expect incremental G&A to be in that range. It’s hard to give an exact number. But for – on annual basis we expect G&A to go up roughly in the $0.5 million to $750,000 range with the BC acquisition. And on the income taxes, assuming our Q3 close for BC acquisition, the cash taxes portion or the current income tax portion for 2016 would be minimal. And for 2017, we estimate it to be around $0.5 million to $1 million incremental.

Alright, incremental. And this quarter it was around – your cash taxes were about $1.1 million, so is that a good run rate for the existing portfolio?

Yes. So I think if you use that as a going forward for annual, I think that’s a good way to look at 2016. And then we always have things which come for example last – this is the last year where we have any IPO deferred financing costs which had a bit of a tax shield, so that’s coming up. So when those things come up, it would change. But using our Q1 numbers is a good run rate.

Okay, that’s it for me. Thanks.

Thank you.

Thank you. [Operator Instructions] Our next question is from Michael Smith of RBC Capital Markets. Please go ahead.

Thank you. I am just wondering for Nicola Lodge in Port Coquitlam. Does that compete with your Mayfair property?

Actually, no, we hope that it will be complementary, because we will have – we also have another home in that area. Right, retirement residence, but no, Nicola Lodge is a really state of the art primarily funded. I think it’s about 80% funded care and some specialized programs. So, that would be complementary to what we do.

So, it’s LTC net?

Yes, it’s funded.

Okay.

Yes, about 80% funded.

80%, okay. And the same thing with Glenmore Lodge, I guess, it’s a fund – well, that your property, Lakeview Lodge is an LTC, but I guess do they compete at all, one is in Cologne and one is in West Cologne, I guess?

Yes, no, again they would be complementary. Overall, there is such demand for funded care both private pay – in BC both private pay and funded that it’s – we wouldn’t say it’s competitive we would say, you have to obviously maintain quality and very high standards as you would anywhere, but there is very high demand.

And how is the lease up in Port Coquitlam?

It’s gone extremely well. I believe it’s pretty close to being stabilized.

And then I guess once it stabilized you would have a look at it, I guess?

Yes, we will look at exercising all of the opportunities around that option.

What is the typical lease up for these type of properties, the funded properties?

It’s similar to long-term care in Ontario. It’s depending on how large the community is. It really is a matter of being able to accept admissions in a timely way depending on how many you can accept and transition in smoothly. So, it would be about 60 to 90 days math depending on the size of the community.

Okay. And for IL, is the lease up similar to like the rest of the country like couple of years?

It is. Again, IL is really market specific depending on what market you are in and what the supply and demand of that local market characteristic is.

Okay, thank you.

Thank you, Michael.

Thank you. We have no further questions registered at this time. I would now like to return the meeting over to Ms. Cormack.

Well, thank you, Melanie. Thank you all for your participation today for your interest, your questions and thank you so much for your ongoing support of Sienna and have a great day and we will look forward to speaking to you on our next call.

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