Chartwell Retirement Residences (CSHUN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Q3 2020 Financial Results Conference Call. I would now like to turn the meeting over to Vlad Volodarski. Please go ahead.

Thank you, Ana. 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; Sheri Harris, Chief Financial Officer; and Jonathan Boulakia, Chief Investment and Chief Legal Officer. Let me remind everyone that during this call, we may make statements containing forward-looking information and non-GAAP measures. 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. More specifically, I direct you to the added disclosure in our Q3 2020 MD&A under the heading forward-looking information and COVID-19 risk for a discussion of risks and uncertainties introduced by the pandemic. These documents can be found on our website or sedar.com. As new waves of the pandemic continues throughout Canada, Chartwell people are once again being called upon to step up to protect the most vulnerable segment of our population and step up, they do, day in and day out from our residences to our regional and corporate support teams and Critical Incident Command, our people work tirelessly to preserve the safety and wellbeing of our residents, their families and support each other. I am grateful to each one of them for their exceptional work in these challenging times. Nothing speaks better to this work as the recognition received from our residents and their families, the heartwarming stories of empathy, care and love that we receive every day. It is clear that even when restrictions make it difficult to visit with family and friends, because of our staff, our residents are never alone. I would like to take this opportunity to express my appreciation to the federal government and provincial governments for their support during the pandemic. Particularly, I would like to highlight the efforts of the Ontario government in supporting the long term care sector in the province, including a commitment to fund the average 4 hours of care per resident by 2025, and as a result of recent improvements made to the long term care redevelopment program. We commenced the redevelopment of a 100 bed Chartwell Ballycliffe Long Term Care Residence in Ajax, Ontario. This project has been 5 years in making, and I want to extend my thanks to our development and operating teams for their tenacity and commitment to make it a reality. Once completed in the spring of 2023, the new residence built to current design standards will serve 224 residents, 134 of them in private rooms. We are seeing a much improved collaboration of retirement and long term care operators with our healthcare system partners, public health authorities, hospitals and governments. This is a welcome change from our experience in the spring. Only working together, we can overcome this unprecedented challenge and protect the most vulnerable segment of our population. Our Q3 and year-to-date 2020 results have been significantly impacted by the pandemic primarily because of occupancy declines and significant additional expenses incurred to keep our residents and staff safe. Unfortunately, these headwinds are expected to continue to impact our results in the short term. Various restrictions and conditions on prospective residents' visits and new residents' move-ins remain in place in many of our markets. And with the recent increases in the number of cases in the community, more of our residences are being impacted by COVID-19 outbreaks. While these outbreaks have not been as severe as the ones we experienced in the spring, they negatively affect our ability to conduct personal live tours and resident move-ins, which, in turn, continue to negatively impact our occupancies in the short term. To continue to weather the storm, while prioritizing resident, family and employee safety, we are focused on efficiencies and cost controls. We have become even more selective in allocating our capital and deferred some discretionary capital expenditures. We maintain a strong liquidity, which as of November 5, 2020, amounted to $408 million, including $61.6 million of cash and cash equivalents and $347 million of available borrowing capacity on our credit facilities. We continue to access debt financing on favorable terms, refinancing our maturing debt and topping up maturities during the term where applicable. I believe that once the current restrictions ease, the pent-up demand for our services, combined with continuing severe shortage of long term care beds, will support our occupancy recovery in the medium term. Over the long term, I believe the prospect of our sector remain bright. The growth in the over-75-year old population is accelerating, particularly in 2022 and 2023, which in turn should drive the demand for our services. I also believe that the pace of new construction starts has slowed down through this pandemic, which should result in fewer new suites coming to market at the time when the demand is expected to pick up, creating strong conditions for further occupancy growth. Our team has tremendous depth of expertise, which now includes operating through a pandemic, a resolve to succeed and dedication to our purpose of making people's lives better. Our culture is exceptional. Our brand is strong and getting stronger, and our strategy is clear. I believe Chartwell is well-positioned to persevere in the current conditions, come out stronger and succeed in creating lasting value for all our stakeholders. I'm going to turn the call over to Karen to provide a more detailed operational update.

Thanks, Vlad. Turning to Slide 5. Our efforts in Q3 focused on learning from Wave 1 of the pandemic in order to best be prepared for Wave 2. The fundamental difference this fall compared to last spring is that we know more about the asymptomatic spread of the virus. Testing is improving. PPE is much more readily available and our processes for handling outbreaks and suspected outbreaks have been well-established, tested and standardized. This has allowed our retirement residences and long term care homes to continue to put the safety of our residents and staff at the forefront while also allowing visitors in our homes as well as new admissions who require our care and services. This balance takes significant effort from our teams across the country who've worked tirelessly to adapt to changing provincial directives while caring for our residents physically and emotionally and supporting their families through this difficult time. I could not be more proud of the Chartwell teams in our homes as well as on our operations Critical Incident Command. The CIC, as we call it, continues to meet daily to assist our residences to interpret and effectively implement directives and guidelines that are now changing, not only based on the province, but also the city, municipality or health region within that province. This support continues to include a 24/7 hotline operated with nursing staff to assist our homes with questions and concerns. With respect to resident safety, we have hired an Infection Prevention and Control, or IPAC specialist for each of our long term care homes and reorganized our corporate departments to include an IPAC lead for both the long term care and retirement platforms. We are also well underway with our typical flu season clinics. In order to ensure that we have an adequate supply of PPE, personal protective equipment, we continue to not only utilize our regular supplier, but we are augmenting this with our own supply chain distribution strategy, which allows us to obtain and distribute PPE as quickly as possible to meet our residences' needs and to get the best price possible as PPE prices stabilize. In addition, where we have had outbreaks during Wave 2, specifically in our long term care homes, we have been working very closely with local hospitals, public health and Ontario health officials to coordinate infection control practices and staffing strategies, particularly with respect to physicians and nurse practitioners. These partnerships are a vast improvement from the spring when long term care homes did not get the support required to help our most vulnerable residents. Our partners in the healthcare system have been invaluable, and in turn, they have been highly complementary of our Chartwell teams for their efforts and ability, in particular, to stabilize staffing during an outbreak. This is due to our national recruitment campaign that has resulted in over 1,800 people being hired since March as well as our strategic relationships with a variety of staffing agencies. The response to the pandemic is being studied by the Ontario Long-Term Care Commission on COVID-19, which began meeting with key stakeholders, including Chartwell, in October. A series of interim recommendations has already been published, focusing not only on proactive collaboration with hospitals and public health units, but also funding to increase the supply of PSWs, implementation of the recently released LTC staffing study and access to point-of-care and less invasive testing as it becomes available. In response, the provincial government just announced, as Vlad said, their intention to fund LTC homes to provide an average of 4 hours of care per resident per day by 2024-'25. In addition to the commission, the Ontario government has also announced funding to continue to assist LTC homes with operating pressures, occupancy protection, minor capital repairs and renovations, IPAC resources and an 8-week supply of PPE per home. Turning to Slide 6. We continue to focus on sales initiatives in our retirement residences, including personalized tours in our Quebec, BC and Alberta homes as well as in our Ontario homes that are not in alert or high alert status. We are also offering personalized virtual tours in all of our properties. Our new approach to selling was the focus of our sales training this fall, which was done virtually with our 180 member sales force. In addition, we rolled out our new referral strategy and an updated winter stay program. With respect to marketing, we are continuing our multimedia campaign called Life is Better, Together. The campaign focuses on the importance of social engagement while maintaining enhanced safety standards. This campaign is running on TV, social media, print ads, direct mail and radio throughout November. Turning to Slide 7. Throughout this pandemic, we have been guided by and have benefited from our focus on our unique value proposition, the Chartwell Experience. Our service vision statement is to deliver an exceptional resident experience that is personalized, memorable and feels like home where family and friends feel welcome and respected. To this end, we have adapted some of our strategies such as modifying our Welcome to Chartwell program and making changes to some of the curriculum in our customer experience training for our frontline staff. We've also introduced new programs and initiatives, including developing a 14-day Transition Together program to assist residents who must isolate when they move in, introducing specific customer service training for our screeners who are the first point of contact for visitors, modifying our life enrichment best practices for COVID-19, developing a healthy living series so that residents can remain active and connected and modifying our care service offerings in our Ontario retirement residences to ensure that we are meeting the needs of our current and future residents. In terms of families and loved ones, we continue to send communication to them via e-mail every week as well as more often if the home goes into outbreak or suspected outbreak. We are also seeing our residents' families more often as visitor restrictions have eased, and in many cases, as loved ones have chosen to be designated as essential caregivers. We believe all of these efforts are helping our retirement residences feel like home for our residents and their loved ones feel welcome even during this challenging time. I continue to be extremely proud of our ChartwellStrong team, including, most importantly, our frontline workers and our management teams in our residences as well as our corporate team members who support our homes. Their hard work and dedication and fearless effort to contain this virus will continue to help us to make people's lives better.

Yes, that's [indiscernible].

Oh, sorry, now I'd like to -- sorry, I'd like to turn it over to Sheri here, our Chief Financial Officer, to talk about our financial results.

Thank you very much, Karen. As shown on Slide 8, in Q3 2020, our net loss was $6.8 million compared to a net loss of $0.8 million in Q3 2019. For Q3 2020, FFO was $38 million or $0.17 per unit compared to $53.7 million or $0.25 per unit in Q3 2019. Our same property adjusted NOI decreased by $13 million or 17.2% in Q3 2020. Same property occupancy was 83.3% in Q3 2020 compared to 89.7% in Q3 2019. In our retirement residences, same property occupancy declined to 82.5% in Q3 2020 compared to 88.3% in Q3 2019. Permanent move-ins were 75% of previous year volumes and move-out activity continued to be slightly below previous year levels. Through Q3, we saw increases each month over the previous month in move-in activity, along with a slight increase in move-out activity. In addition to the impact of lower occupancies on our Q3 results, we have made investments in initiatives to enhance resident safety and staff safety and our pandemic expenses continued to exceed announced government funding by approximately $4.1 million for Q3 2020. The majority of our pandemic expenses are for additional staff to provide screening, enhanced cleaning and disinfection, to expand dining service hours to facilitate physical distancing. And in many of our retirement residences for additional care where families were not able to provide assistance in person, or earlier governments were not able to provide home care services. To date, investments in our Ontario long term care homes are not yet fully funded. Reduced marketing, food, supplies and repairs and maintenance in our residences and contributions from our acquisitions and developments partially offset our reduced occupancy and unfunded pandemic-related expenses. Turning to Slide 9. I will discuss our same property operating platform's results. In Ontario, occupancy was 77.5% compared to 83.8% in Q3 2019. NOI decreased $6.9 million or 18.3% due to lower occupancies, pandemic-related expenses net of funding of $2.4 million, higher property taxes, utilities and office expenses, which were partially offset by rental rate increases in line with competitive market conditions and lower food and marketing expenses. In Western Canada, our occupancy was 88.3% compared to 95% in Q3 2019. NOI decreased $1.5 million or 9.9% due to lower occupancies, higher property tax, staffing costs and office expenses, which were partially offset by rental rate increases in line with competitive market conditions, government funding net of pandemic expenses and lower food and marketing expenses. In Quebec, occupancy was 86.7% compared to 91.2% in Q3 2019. NOI decreased $3.4 million or 21.8% due to lower occupancies, higher property taxes resulting from a rebate in Q3 2019, for which there is not a comparable amount in Q3 2020, pandemic-related expenses net of funding of $0.6 million and staffing costs, which were partially offset by rental rate increases in line with competitive market conditions. In long term care, occupancy was 88.3% compared to 98.8% in Q3 2019. NOI decreased $1.5 million or 17.8%. Same property adjusted NOI decreased $1.2 million or 16% due to reduced preferred accommodation revenues and increased nursing and pandemic expenses that exceeded government funding. Turning to Slide 10, you will see our monthly occupancies. In October 2020, occupancy declined 0.3 percentage points. The pace of decline in occupancy has steadily slowed since the onset of the pandemic in mid-March, with move-in activity increasing each month. Leasing activity has been slower in October with increased restrictions on in-person tours in certain of our residences and with elevated COVID-19 cases in the community. We collected substantially all rent and service fees for October and November, consistent with our past experience. As noted, we continue our investments to protect our residents and staff and reduce the spread of COVID-19. We do anticipate costs decreasing as we move to a more steady state. Our priority must be to protect our residents and staff. And as such, our reduction in costs is expected to be gradual and will be based on careful risk assessments. We will rationalize and improve schedules where and while single site staffing restrictions remain in place. And where we have added staff to provide additional services previously provided by families and home care that has not been available, we will work with our residents to assess additional service revenue opportunities on a go-forward basis. In addition, some discretionary corporate projects will be deferred. We continue to advocate for the government to fund -- the governments to fund incremental expenses and home care services that we have replaced out of necessity to ensure that our residents are cared for appropriately. In addition, we are in the process of implementing the Canada Emergency Wage Subsidy, CEWS, to maintain quality jobs for our employees who provide necessary services. We expect to apply for approximately $3 million to $4 million of staffing support for Q3 2020. As you can see on Slide 11, at September 30, 2020, our liquidity amounted to $357.8 million, which included $51.4 million of cash and cash equivalents and $306.4 million of available borrowing capacity on our credit facilities. In addition, our share of cash and cash equivalents held in our equity accounted JVs was $7.6 million. At September 30, 2020, our unencumbered assets had a value of $928.8 million. Our mortgage maturities remain well-staggered with an average term to maturity of 6.4 years at September 30, 2020. Our interest coverage ratio was 3x at September 30, 2020. Our debt to gross book value calculated using the historical cost of our assets was 52.6% at September 30, 2020. Our net debt to adjusted EBITDA ratio was 9.1x. Consistent with our business strategy to build and purchase high-quality state of the art new properties, our portfolio currently includes several new properties in lease-up. In Q3 2020, 4 newly developed properties and 1 recently acquired property with an aggregate gross book value of $274.5 million and weighted average occupancy in Q3 2020 of 44.2% generated adjusted NOI of $0.7 million in Q3 2020. Upon achieving the expected stabilized occupancy of 96%, these residences are estimated to generate annualized adjusted NOI of $20.3 million of our share of ownership. Our net debt to adjusted EBITDA metric, when calculated with the additional incremental NOI of these properties, has thus stabilized of $18.1 million would be 8.6x. Turning to Slide 12. As Vlad noted, at November 5, 2020, liquidity amounted to $408.6 million. We expect to be able to meet all of our obligations as they come due, utilizing primarily cash flow generated from our operations, property-specific mortgages, secured and unsecured credit facilities or term loans. The pandemic has introduced significant uncertainties, and we continue to monitor the situation closely. We have $14.2 million of remaining mortgage maturities in 2020, of which $12.4 million are CMHC-insured. CMHC refinancings for 10-year terms are currently being arranged approximately 1.75%. In 2021, we have $244.3 million of mortgage maturities, of which $37.5 million are currently CMHC-insured. With strong lending relationships and scheduled refinancings, our mortgage maturities in 2020 and 2021 are proceeding in the normal course, with top-up opportunities available. Projects under construction are budgeted to require an additional $109 million to completion. This includes $52.5 million related to the redevelopment of Chartwell Ballycliffe, which we anticipate financing with construction financing. Chartwell Le Teasdale II has achieved stabilized occupancy, as defined in our agreements with Batimo. We expect to complete the acquisition of an 85% interest in this project in Q4 2020 and are currently in negotiations on pricing. We anticipate settling the purchase price by assuming the related construction financing of $37.3 million and repayment of the outstanding mezzanine loans of $3.9 million, with the balance to be paid in cash. We regularly reinvest capital in our owned property portfolio with the goal of growing our property NOI and protecting and maintaining our properties. Due to restrictions in accessing our residences, only emergency capital works were undertaken during the first wave of the pandemic. While we have begun to allow contractors into our buildings with very strict requirements on infection control practices, we do anticipate that our 2020 capital investments will be approximately 85% of our historical spend. I will now turn the call back to Vlad to wrap up.

Thank you, Sheri. Thank you for your time and attention this morning. We would now be pleased to answer your questions. Elena, please open the lines.

Certainly. [Operator Instructions] The first question is from Brendon Abrams.

This might be a difficult question to answer, but just as it pertains to retirement occupancy, it looks to have stabilized here over the last few months at around 82%. Just wondering your expectations over the next few months, based on whichever indicators you're looking at, whether it be deposits, site visitor tours, et cetera, maybe just would you expect this to trend maybe a little bit upward, a little bit downward or stay relatively flat through kind of the fall and -- remaining fall and winter months? Just maybe some color there.

Sure. So I'll give you some color sort of on occupancy just overall since the pandemic and where it is and where we see it going. So in Wave 1, we really -- as we all know, as a society, really shut down. So we would have had very limited move-ins, and that's when you would have seen our occupancy decline. When the summer came and we were able to start to open up, we actually saw improvements in our occupancy in August and into September. So...

You mean in move-ins.

In move-ins, sorry, in move-ins. And so we see that as a good sign. October, when we are now seeing Wave 2, that's where we've seen a bit of a decline in leases. But the other thing I would say is we're not shutting down across provinces the way we were before. It's being done in these pockets where they see community spread. And so we saw that in October, but we're already starting to see some of those communities open up. So in Ontario, they put us in either high alert or alert status, but then they take a community out of that status so that we can do personalized tours. And I think we'll start to see a pickup where that happens. And the other thing I would say is the needs of the seniors who are living at home are not changing. If anything, they're increasing. So that -- I think those needs will have to be filled. I think people are probably thinking about whether they can actually stay home for the winter as opposed to whether they need care and service in retirement homes. And then we have a number of strategies in place as well, whether it's our -- make a friend, a neighbor referral program or a winter stay program. So that's just a bit of color on where we see that going.

Yes. And Brendon, of course, in this environment, nobody will be able to give you any kind of definitive answers or numbers of where we see it going. It really will be dependent on the severity of restrictions that remain in place or the openness that remain in place, and we are doing all we can to encourage people and help them understand the safety and precautions that we're taking on residences to make -- to help with their decision to move in. As Karen pointed out, the pent-up demand, I believe, is in the system. And when these restrictions are lifted or the case count in the community starts to go down, my expectation is that we will start seeing much better pace of move-ins and recovery. But when this will happen is, at this point in time, very hard to predict.

Yes. No, of course, difficult to forecast in this environment for sure. And maybe just on a related topic of rental rates, it looks like overall it's -- you've been able to hold rates fairly firm, maybe even increase in certain instances. Where occupancy is within your portfolio in the sector, I know historically that's not really an area where you wanted to either reduce rates or give incentives because it could be a bit of a slippery slope. I'm just wondering if that philosophy may have to change over the near or maybe medium term, especially as potentially some of your competitors who are not as well capitalized, smaller operators, depending on what they do with market conditions. So I'm just wondering if you could give some color there.

Yes. Our philosophy is not changing. We are offering value to our residents and lifestyle and quality of lifestyle that we provide in our homes. And we are not going to be competing on discounts with other people. We much rather understand the customer. We would love to understand their needs, what exactly they value and what exactly matters to them and then do our best to address those needs. And if it ends up being a few hundred dollar discount, that might be it. But in many cases, that's not what the customer really wants. And especially in these circumstances, where you think about safety, when you think about quality of staff and quality of services that people provide, the discounts probably is not the first thing that anybody is thinking when they come to the residences. And so not only our philosophy is not changing, it's probably even more reinforced in the situation like today.

Okay. And then maybe just on the unfunded pandemic related costs of just over $4 million. Is that a level that you would expect to incur over the next few quarters, just for modeling purposes?

Yes. I mean it is a bit hard to predict. We continue to advocate with various governments in relation to incremental funding. Last night, there was an announcement from the Ontario government, which will be -- absorb about $1.2 million of the Ontario retirement expenses that we would have included in our results. On a go-forward, in terms of monthly expenses, we would look to stabilize the number there, Brendon, for now.

Right. Okay. That's helpful.

The next question is from Jonathan Kelcher.

First question, just on insurance. You talked a little bit about in the MD&A about increasing rates. What has insurance typically run historically as a percentage of revenue? You're working on that?

We'll have to get to this number, Jonathan. As you know, our expenses are, let's say, in retirement, be 60% labor, 10% foods and realty taxes and utilities. After that, whatever is left is not as much in sort of overall expenses. I'd be guessing right now our number, probably less than $10 million in insurance premiums for the year. That's historical. So I don't know if that answers your question.

Just trying to get -- well, yes. I'm just trying to get a sense of like if I doubled it, what that would sort of do type of thing. And is that sort of the way to think about it? Could it be that high?

Well, no, it's not going to be that high. I'll maybe turn it over to Jonathan just to give you a bit more color on what we're seeing there in the marketplace. We're in the middle of the renewal process right now.

Sure. So it is a very hard market in insurance generally in all classes of insurance. And that is partly due to the industry we're in and partly due to a broader market on insurance. So we're working on our renewal and it renews pretty shortly. We're looking at our retention levels or deductible levels and the premiums we would pay. So we haven't settled on what that will be, but we're pretty confident at this point that we're going to have appropriate coverage and the amount of premium increase is yet to be determined. But...

So we'd be looking for now on that [indiscernible].

We -- yes. Yes.

Yes. The 40% would be a number that we're -- certainly don't think it's going to be more than that.

That's probably worst case. We -- having said all that, we don't think that the insurance climate properly or appropriately reflects the actual risk that we think there is. We think that risk has been greatly mitigated by -- or will be greatly mitigated by proposed legislation in Ontario that would protect service providers like us to the extent we weren't grossly negligent and to the extent we followed public health guideline, and that legislation is already in place in BC. So we think that the risk there has been reduced.

Okay. That's helpful. Switching gears, just in -- I know you probably won't say too much because you're in the negotiations with Batimo. But how has that changed versus the last couple of asset? Or had it changed really versus the last couple of assets that you bought from Batimo earlier this year?

How do you...

Looking for difference in valuations.

Oh. So to start off, we are very keen and excited to get this building connected to our existing building Teasdale. And as you noted, we're negotiating the price. So we can't really -- or won't really get into where we expect to land on that. But we are in those negotiations, and we expect to close in the next few months. In terms of change, there haven't been a ton of transactions out there. So it's hard to see how pricing has changed generally. There's a lot of uncertainty due to the pandemic, and I guess a hesitancy on buyers' parts to deploy capital, and that has been tempered by what we see the very low interest rates. So all that to say there's not a whole lot of data points out there, and we're in the thick of discussions with Batimo on the purchase price. So more to come on that.

Okay. And then just last one for me. The Ontario government, I think, last week announced that it's selling some excess land for purpose-built long term care development. Is that something that you guys would look at, any of those 3 parcels?

We are looking at those 3 parcels. Each of them comes with different requirements on size of build. So we are actively looking at that as we look at ways to redevelop our existing Class C homes and the new programs, which we also carefully look at.

Okay. And then would those -- and maybe you can answer this, but would those properties, given that there is a long term care component, would it sort of limit the buyer group to basically operators, current operators of LTC properties?

It's still a little early to answer that question, but I suspect it would, given the fact that there is an LTC component, and I don't think there are a lot of people looking to enter the space that don't have that kind of operating experience. So I suspect the answer is yes.

Or they need management.

Or they would need management, yes.

The next question is from Chris Couprie.

Kind of wanted to circle back on Brendon's questions regarding occupancy. Appreciate we can't -- with the restriction, we don't know what the pace of move-ins might be. But what about overall lead generation? How is that trending on a year-over-year basis? I mean I would imagine part of the change will be commensurate with the -- how much marketing that you're doing, but just any color on lead generation? And just also curious on virtual tours versus in-person tours, if you -- maybe there's just not enough information at this point, but if you've noticed any difference in closing ratios between the 2 types of activity?

I guess it varies month by month depending on what restrictions are in place out there. Clearly, when everybody -- people hear the escalation in number of community cases, the natural reaction for people is to hunker down and not really start looking for move-in. So the lead generation has been slower compared to prior periods. It's better than it was in the middle of the first wave of pandemic. So I think it follows sort of discussion that Karen had answering Brendon's question, it's better than Wave 1. It's not as good as last year, and that's applicable to lead generation, initial context, move-ins, all of our kind of leading indicators are going in the same direction. It's not as good as last year, but better than what we saw in Wave 1.

And I just want to comment. We can do personalized tours in Quebec and Western Canada. It's just in Ontario where we're restricted, and that if our homes are in high alert or alert, which is changing on a weekly basis. They put communities in and out. Mostly they've been -- on our case, it was reduced the number of homes week over week that were in those higher status categories. I'd also say it's just like all of us are getting used to Webex and all of the different, Zoom, whatever we're using to do business. Our sales force has, I would suggest, done a very good job learning how to use the new technology to do -- and they're not just virtual tours, they're personalized virtual tours with our prospects and their families. And our trading has gone very well. So I think the fact that we have this kind of technology now has been very advantageous for us. And then people do, of course, come in to be able to sign their lease and sort of see their suite before they actually move in.

Okay. That's good color. And then maybe a series of questions just regarding different legislation that's out there. The wage subsidy, do you expect to potentially receive more funding in Q4? And just technical perspective, how is this going to flow through on the financials? And then 2 other quick ones. That Bill 218 that was alluded to, sort of timetable as to when that may pass? And then the occupancy protection funding in long term care. I think it's still December, any kind of update on what's happening there? That's it for me.

Sure. So I'll take CEWS first. It's a function of the revenue decline and the factors for that time period. The federal government program, those factors have been changing. The program has been announced to go through to June of 2021 at this point, but the factors will decline over time. So we do expect that we will continue to be eligible for certain entities. It's defined at the eligible employer level. We will record this the same way we're recording other government funding, which is in our retirement residences. It is net in the expenses and in our Ontario long term care homes, it is gross. So you'll see at revenue and expense so nil. Again, it will be [indiscernible] depending on the revenue decline and the factors in place for the government for Q4, but it should continue on until at this point the announced time frame as to June 2021. In terms of the occupancy protection, we would have -- I mean it's about 4,500 beds that come out of the system by closing the 3 and 4 bed wards to a maximum of 2 occupants. We are very optimistic that that will continue on through to -- through the next wave of the pandemic into 2021 as long as we're in this position of only 2 occupants in those rooms.

And for Bill 218, it's passed its second reading. So we would expect it to become law soon. I'd note that it's a government bill or proposed by a member of government of the majority government. So we don't expect there to be any issues, but speculating.

Yes. And we are hoping that once that is in place that that mitigates some of our insurance issues, discussions as well.