Reeflex Solutions - Management Reports 2023

Management’s Discussion and Analysis

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2022
Report to Shareholders
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MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIS OF PRESENTATION .................................	1
ADDITIONAL INFORMATION ............................	1
REVIEW AND APPROVAL BY THE BOARD OF
DIRECTORS ........................................................	1
COMPANY PROFILE ..........................................	2
NON-IFRS PERFORMANCE MEASURES ............	2
KEY PERFORMANCE INDICATORS ...................	7
FOURTH QUARTER 2022 SUMMARY ..............	9
BUSINESS UPDATE ............................................	11
OUTLOOK ..........................................................	18
SIGNIFICANT EVENTS ........................................	21
OUR PURPOSE AND VISION .............................	21
COMPANY STRATEGY AND OBJECTIVES ..........	22
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (ESG) RESPONSIBILITY ..............	23
INDUSTRY UPDATE ...........................................	26
BUSINESS OF THE COMPANY ...........................	31
QUARTERLY FINANCIAL INFORMATION ..........	32
SELECTED ANNUAL FINANCIAL INFORMATION	33
OPERATING RESULTS ........................................	34
JOINT ARRANGEMENT ....................................	35
NET OPERATING INCOME CONSOLIDATED .....	36
NET OPERATING INCOME BY SEGMENT .........	38
RETIREMENT ..............................................	38
LONG-TERM CARE .....................................	40
DEPRECIATION AND AMORTIZATION .............	41
IMPAIRMENT LOSS ..........................................	41
ADMINISTRATIVE EXPENSES ...........................	42
SHARE OF NET LOSS IN JOINT VENTURE .........	42
NET FINANCE CHARGES ..................................	43
TRANSACTION COSTS ......................................	43
INCOME TAXES ................................................	44

BUSINESS PERFORMANCE ................................	44
ADJUSTED FUNDS FROM OPERATIONS ..........	44
FOURTH QUARTER 2022 PERFORMANCE .......	46
CONSTRUCTION FUNDING ..............................	46
MAINTENANCE CAPITAL EXPENDITURES ........	47
RECONCILIATION OF CASH FLOW FROM
OPERATIONS TO ADJUSTED FUNDS FROM
OPERATIONS ...................................................	48
RECONCILIATION OF NET INCOME TO NET OPERATING INCOME .......................................	49
FINANCIAL POSITION ANALYSIS .......................	49
LIQUIDITY AND CAPITAL RESOURCES ..............	51
LIQUIDITY ........................................................	51
DEBT ................................................................	51
CREDIT RATINGS .............................................	56
FINANCIAL COVENANTS ..................................	56
EQUITY ............................................................	59
CAPITAL DISCLOSURE ......................................	60
CONTRACTUAL OBLIGATIONS AND OTHER
COMMITMENTS ................................................	61
CRITICAL ACCOUNTING ESTIMATES AND
ACCOUNTING POLICIES ....................................	61
SIGNIFICANT JUDGEMENTS AND ESTIMATES .	61
RISK FACTORS ...................................................	62
RISKS RELATING TO THE BUSINESS .................	62
RISKS RELATING TO A PUBLIC COMPANY AND COMMON SHARES ..................................	72
CONTROLS AND PROCEDURES .........................	75
FORWARD-LOOKING STATEMENTS .................	76

Basis of Presentation

The following Management's Discussion and Analysis (" MD&A ") for Sienna Senior Living Inc. (the " Company " or " Sienna ") provides a summary of the financial results for the year ended December 31, 2022. This MD&A should be read in conjunction with the Company's audited consolidated financial statements (" consolidated financial statements ") for the year ended December 31, 2022. This material is available on the Company's website at www.siennaliving.ca. Additional information about the Company, including its most current Annual Information Form (" AIF ") can be found on the System for Electronic Document Analysis and Retrieval (" SEDAR ") at www.sedar.com.

All references to " we ", " our ", " us ", " Sienna ", or the " Company ", unless otherwise indicated or the context otherwise requires, refer to Sienna Senior Living Inc. and its direct and indirect subsidiaries. For ease of reference, the "Company" is used in reference to the ownership and operation of seniors' living residences and its third party management business. Subsidiaries of the Company are the direct owners and operators of such residences.

Financial information has been prepared in accordance with International Financial Reporting Standards (" IFRS "). In this document, " Q1 " refers to the three-month period ended March 31; " Q2 " refers to the threemonth period ended June 30; " Q3 " refers to the three-month period ended September 30; and " Q4 " refers to the three-month period ended December 31.

With the exception of this MD&A's Business Update, Outlook, Significant Events, Industry Update and Environmental, Social and Governance (" ESG ") Responsibility sections, or unless otherwise stated, all dollar amounts referred to in this MD&A, including tabular amounts, are expressed in thousands of Canadian dollars.

This MD&A contains forward-looking information based on management's expectations, estimates and projections about the future results, performance, achievements, prospects or opportunities for Sienna and the seniors' living industry as of the date of this MD&A. Please refer to the "Forward-looking Statements" section and the "Risk Factors" section of this MD&A for more information.

Additional Information

Additional information relating to the Company can be found on the Company's website at www.siennaliving.ca, by accessing the Company's public filings on SEDAR, or by contacting David Hung, the Company's Chief Financial Officer and Executive Vice President, at 905-489-0258 or [email protected].

Review and Approval by the Board of Directors

This MD&A is dated as of February 23, 2023, the date this report was approved by the Board of Directors of the Company, and is based on information available to management of the Company as of that date.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Company Profile

The Company and its predecessors have been operating since 1972. The Company is a seniors' living provider serving the continuum of independent living (" IL "), independent supportive living (" ISL "), assisted living (" AL "), memory care (" MC ") and long-term care ( "LTC" or "Long-term Care" ) through the ownership and operation of seniors' living residences in the Provinces of British Columbia, Saskatchewan and Ontario. As at December 31, 2022, the Company owns and operates a total of 80 seniors' living residences: 38 retirement residences (" RRs " or " Retirement Residences ") (including the Company's 50% joint venture interest in 12 residences in Ontario and Saskatchewan); 34 LTC communities; and eight seniors' living residences providing both private-pay IL/AL and funded LTC (including the Company's joint ownership in two residences in British Columbia). The Company also provides management services to an additional 13 seniors' living residences in the Provinces of British Columbia and Ontario.

The table below represents the number of suites or beds owned and operated or managed by the Company, by business segment.

by business segment.
Owned Residences	Retirement Long-term Care Total(1)
	Residences Suites Residences Beds(2) Residences Beds / Suites
100% Owned - operating PartiallyOwned - operating (3)	26 3,156 40 6,258 66 9,414 12 1,234 2 374 14 1,608
Total Owned Managed Residences	38 4,390 42 6,632 80 11,022 9 812 4 649 13 1,461
Total	47 5,202 46 7,281 93 12,483

Notes:

79.2%, 16.3% and 4.5% of total beds/suites are located in Ontario, British Columbia and Saskatchewan, respectively.
180 of the LTC beds are privately funded.
We have a 50% ownership in 12 retirement residences (1,234 suites), a 40% ownership in one long-term care community (256 beds) and a 77% ownership in one long-term care community (118 beds) as at December 31, 2022.

The Company is traded on the Toronto Stock Exchange (" TSX ") under the symbol "SIA".

The Company's business is carried on through a number of wholly owned limited partnerships and joint ventures formed under the laws of the Province of Ontario.

As at February 23, 2023, the Company had 72,939,941 common shares outstanding.

Non-IFRS Performance Measures

In this MD&A, the Company uses certain supplemental measures of key performance that are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. These performance measures are net operating income (" NOI "), funds from operations (" FFO "), operating funds from operations (" OFFO "), adjusted funds from operations (" AFFO "), earnings before interest, taxes, depreciation and amortization, and impairment loss (" EBITDA ") and maintenance capital expenditures (" maintenance capital expenditures ", and collectively with NOI, FFO, OFFO, AFFO and EBITDA, the " Non-IFRS Measures "). These terms are defined in the following table and reconciliations to most comparable IFRS measures are referenced, as applicable.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

The Company also uses the following key performance indicators (the " Key Performance Indicators "): Occupancy, Total Adjusted Revenue, Total Adjusted Operating Expenses, NOI, OFFO and OFFO per share, AFFO and AFFO per share, EBITDA, Adjusted EBITDA, AFFO Payout Ratio, Debt to Gross Book Value, Weighted Average Cost of Debt, Debt to Adjusted EBITDA Ratio, Interest Coverage Ratio, Debt Service Coverage Ratio, Weighted Average Term to Maturity, Same Property and Development and Other to assess the overall performance of the Company's operations.

These Key Performance Indicators and Non-IFRS Measures should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS as indicators of the Company's performance. The Company's method of calculating these measures may differ from other issuers' methods and accordingly, these measures may not be comparable to measures presented by other publicly traded entities.

Non-IFRS Measure	Definition	Reconciliation
Total Adjusted Revenue	Total Adjusted Revenue is defined as	N/A
	revenue, including the Company's share
	of revenue in Equity-Accounted Joint
	Venture (as defined below).
Total Adjusted Operating	Total Adjusted Operating Expenses is	N/A
Expenses	defined as operating expenses, including
	the Company's share of operating
	expenses in Equity-Accounted Joint
	Venture (as defined below).
Equity-Accounted Joint Venture	Equity-Accounted Joint Venture is	N/A
	defined as the Company's interest in
	Sienna-Sabra LP joint venture.
Net Operating Income ("NOI")	NOI is defined as property revenue and	Section - Business
	government assistance related to the	Performance - Reconciliation
	pandemic, net of property operating	of Net Income to Net
	expenses, including the Company's share	Operating Income
	in the Equity-Accounted Joint Venture.
	The Company believes that NOI is a
	useful additional measure of operating
	performance as it provides a measure of
	core operations that is calculated prior to
	taking into account depreciation,
	amortization, administrative expenses,
	impairment loss, net finance charges,
	transaction costs, gain on disposal of
	properties and income taxes. The IFRS
	measure most directly comparable to
	NOI is "net income".

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Non-IFRS Measure	Definition	Reconciliation
Funds from Operations (“FFO”)	FFO is defined as NOI less certain	Section - Business
	adjustments including administrative	Performance - Adjusted
	expenses, net finance charges and	Funds from Operations
	current income taxes. FFO is a
	recognized earnings measure that is
	widely used by public real estate entities,
	particularly by those entities that own
	and/or operate income-producing
	properties. The use of FFO, combined
	with the required IFRS presentations, has
	been included for the purpose of
	improving the understanding of the
	Company's operating results. The IFRS
	measure most directly comparable to
	FFO is "net income".
Operating funds from	OFFO is FFO adjusted for non-recurring	Section - Business
operations (“OFFO”) and OFFO	items, which includes restructuring costs,	Performance - Adjusted
per Share	and presents net finance charges on a	Funds from Operations
	cash interest basis. Management of the
	Company is of the view that OFFO is a
	relevant measure of the operating
	performance of the Company.
Adjusted funds from operations	AFFO is defined as OFFO plus the	Section - Business
("AFFO") and AFFO per share	principal portion of construction funding	Performance - Reconciliation
	received, less actual maintenance and	of Cash Flow from Operations
	net pandemic capital expenditures.	to Adjusted Funds from
	Management of the Company believes	Operations
	AFFO is a cash flow measure, which is
	relevant in understanding the Company's
	ability to earn cash and pay dividends to
	shareholders. The IFRS measure most
	directly comparable to AFFO is "cash
	flow from operating activities".
Earnings before interest, taxes,	EBITDA is defined as net income	Section - Liquidity and Capital
depreciation and amortization	excluding net finance charges, taxes,	Resources - Financial
("EBITDA")	transaction costs, depreciation and	Covenants
	amortization, impairment loss, and
	including the Company's share of NOI in
	the Equity-Accounted Joint Venture.
	EBITDA is relevant in understanding the
	Company's ability to service its debt,
	finance capital expenditures and pay
	dividends to shareholders. The IFRS
	measure most directly comparable to
	EBITDA is "net income".
Adjusted EBITDA	Adjusted EBITDA is defined as EBITDA,	Section - Liquidity and Capital
	adjusted for construction funding	Resources - Financial
	proceeds and non-recurring items.	Covenants

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Non-IFRS Measure	Definition	Reconciliation
Maintenance capital	Maintenance capital expenditures are	N/A
expenditures	defined as capital investments, including
	the Company's share of capital
	investments in Equity-Accounted Joint
	Venture, made to maintain the
	Company's residences to meet residents'
	needs and continually improve resident's
	experience. These expenditures include
	building maintenance, mechanical and
	electrical spend, suite renovations,
	common area maintenance,
	communications and information
	systems, furniture, fixtures and
	equipment. Please refer to the
	Maintenance Capital Expenditures
	section of this MD&A for additional
	financial information.
Occupancy	Occupancy is a key driver of the	N/A
	Company's revenues.
AFFO Payout ratio	Management of the Company monitors	N/A
	the AFFO payout ratio, which is
	calculated by dividing dividends per
	share over basic AFFO per share.
Debt to Gross Book Value	In conjunction with the debt service	N/A
	coverage ratio, management of the
	Company monitors this ratio to ensure
	compliance with certain financial
	covenants.
Weighted Average Cost of Debt	This is a point in time calculation which is	N/A
	useful in comparing interest rates, either
	period over period, or to market rates.
Debt to Adjusted EBITDA ratio	This ratio which is calculated by dividing	N/A
	total debt (including the Company's
	share of debt in Equity-Accounted Joint
	Venture), over Adjusted EBITDA.
Interest Coverage Ratio	Interest coverage ratio, which is	N/A
	calculated using Adjusted EBITDA divided
	by net finance charges, is a common
	measure used to assess an entity's ability
	to service its debt obligations.
Debt Service Coverage Ratio	This ratio is calculated using total debt	N/A
	service (including the Company's share of
	debt in Equity-Accounted Joint Venture),
	divided by Adjusted EBITDA, useful for
	management of the Company to ensure
	it is in compliance with its financial
	covenants.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Non-IFRS Measure	Definition	Reconciliation
Weighted Average Term to	This indicator is used by management of	N/A
Maturity	the Company to monitor its debt
	maturities.
Same Property	Measures with "same property" are	N/A
	similar to "same-store" measures used in
	a number of other industries and are
	intended to measure the period over
	period performance of the same asset
	base. The same property portfolio
	excludes acquired properties owned for
	less than one year, assets undergoing
	new development, redevelopment,
	assets held for sale or that were sold.
	Properties undergoing new development
	or redevelopment are considered "same
	property" once they are operating at
	stabilized occupancy levels.
Development and Other	The development and other portfolio	N/A
	includes properties undergoing new
	development or redevelopment, and
	assets held for sale or that were sold.
	Development properties are moved to
	same property at the earlier of three
	years since completion or upon achieving
	stabilized occupancy levels.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Key Performance Indicators

The following table represents the Key Performance Indicators for the periods ended December 31:

Thousands of Canadian dollars, except occupancy, share and ratio data	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
OCCUPANCY Retirement - Average same property occupancy Retirement - Acquisition, development and others - Average occupancy Retirement - Average total occupancy LTC - Average total occupancy LTC - Average private occupancy LTC - Average total occupancy excl. 3 and 4 ward beds and isolation beds(1)	88.6 % 84.2 % 4.4 % 87.3 % 80.8 % 6.5 % 85.3 % 49.3 % 36.0 % 82.1 % 51.9 % 30.2 % 88.0 % 82.7 % 5.3 % 86.7 % 79.5 % 7.2 % 89.9 % 88.9 % 1.0 % 88.8 % 85.2 % 3.6 % 84.6 % 82.2 % 2.4 % 83.0 % 80.7 % 2.3 % 96.3 % n/a n/a 95.5 % n/a n/a
FINANCIAL Total Adjusted Revenue Total Adjusted Operating Expenses, net Same property NOI(2) Total NOI(2)(8) Administrative expenses EBITDA(3)(8) Net income (loss)(8)(9) OFFO(4)(8) AFFO(5)(8) Total assets(6)	193,216 174,175 19,041 736,841 668,494 68,347 160,699 140,729 19,970 602,948 526,353 76,595 31,150 32,596 (1,446) 128,753 137,957 (9,204) 32,517 33,446 (929) 133,893 142,141 (8,248) 13,307 7,599 5,708 39,370 31,270 8,100 19,214 25,825 (6,611) 118,249 110,841 7,408 (6,675) 4,654 (11,329) 10,668 20,648 (9,980) 17,701 18,258 (557) 69,078 76,992 (7,914) 17,302 16,555 747 67,475 72,757 (5,282) 1,680,428 1,609,189 71,239 1,680,428 1,609,189 71,239
PER SHARE INFORMATION Net income (loss) per share, basic and diluted OFFO per share(4) AFFO per share(5) Dividends per share AFFO Payout ratio(7)	(0.092) 0.070 (0.162) 0.149 0.310 (0.161) 0.243 0.272 (0.029) 0.965 1.148 (0.183) 0.237 0.247 (0.010) 0.943 1.085 (0.142) 0.234 0.234 — 0.936 0.936 — 98.7 % 94.7 % 4.0 % 99.3 % 86.3 % 13.0 %
FINANCIAL RATIOS Debt to Gross Book Value as at period end Weighted Average Cost of Debt as at period end Debt to Adjusted EBITDA as at period end Interest Coverage Ratio Debt Service Coverage Ratio Weighted Average Term to Maturityas atperiod end	43.9 % 44.7 % (0.8) % 43.9 % 44.7 % (0.8) % 3.7 % 3.4 % 0.3 % 3.7 % 3.4 % 0.3 % 8.9 7.9 1.0 8.9 7.9 1.0 3.1 3.4 (0.3) 3.3 3.7 (0.4) 1.9 1.8 0.1 1.8 2.1 (0.3) 4.5 5.2 (0.7) 4.5 5.2 (0.7)
CHANGE IN SAME PROPERTY NOI Retirement LTC	4.6 % 11.1 % (11.3) % (17.6) %
Total	(4.4) % (6.7) %

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Notes:

Long-term care residences received occupancy protection funding for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19, and for capacity limitations and isolation requirements.
NOI for the three months and year ended December 31, 2022 includes net pandemic expenses (recoveries) of $2,597 and $8,223, respectively (2021 - $21 and $(7,219), respectively).
EBITDA for the three months ended December 31, 2022 decreased by $(6,611) to $19,214, compared to same period in 2021, primarily due to lower NOI and restructuring costs. EBITDA for the year ended December 31, 2022 increased by $7,408 to $118,249, compared to comparative period primarily due to a gain on the disposal of properties, offset partly by lower NOI as a result of lower net pandemic recoveries compared to prior year and restructuring costs.
OFFO for the three months and year ended December 31, 2022 includes after-tax net pandemic expenses (recoveries) of $1,740 and $6,095, respectively (2021 - $113 and $(3,639), respectively), mark-to-market recovery on share-based compensation of $(220) and $(910), respectively (2021 - $(78) and $(159), respectively) and excludes restructuring costs of $6,550 (refer to Business Update section in this MD&A for further details).
AFFO for the three months and year ended December 31, 2022 includes net pandemic capital expenditures (recoveries) of $nil (2021 - $(295) and $10, respectively), after-tax net pandemic expenses (recoveries) of $1,740 and $6,095, respectively (2021 - $113 and $(3,639), respectively), markto-market recovery on share-based compensation of $(220) and $(910), respectively (2021 - $(78) and $(159), respectively) and excludes restructuring costs of $6,550 (refer to Business Update section in this MD&A for further details).
Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization and impairment loss.
AFFO payout ratio for the three months and year ended December 31, 2022 excluding after-tax net pandemic impact would be 89.7% and 91.0%, respectively (2021 - 92.5% and 90.8%, respectively).
Includes the Company's 50% share of each of the revenue, operating expenses, and NOI of its Equity-Accounted Joint Venture.
Net income for the year ended December 31, 2022 includes an impairment loss of $12.8 million, a gain on disposal of properties of $23.7 million and restructuring costs of $6.6 million.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Fourth Quarter 2022 Summary

We continued to make significant progress with respect to many strategic initiatives to improve our operating platforms, while benefiting from favourable sector fundamentals, including an aging demographic and slowing supply of seniors' living residences. This was reflected in continued occupancy gains in our retirement operations and steady resident admissions at most care communities.

At the same time, intense competition for talent resulting in high agency staffing costs, high inflation, and funding gaps in our LTC operations resulting from insufficient pandemic funding and the expiry of the occupancy protection funding continue to impact our operations and operating margins.

With respect to Sienna's balance sheet, we ended 2022 well capitalized, with ample liquidity, $1.2 billion in unencumbered assets, and an issuer rating and senior unsecured debenture rating of "BBB" with stable trends from DBRS.

Retirement Occupancy - Average same property occupancy in the Retirement portfolio was 88.6% in Q4 2022, up 440 basis points ("bps") from 84.2% in Q4 2021.

The following chart shows the monthly average Retirement same property occupancy percentage over the past three years:

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Rent collections during Q4 2022 remained high at approximately 99% and are consistent with pre-pandemic levels.

LTC Occupancy - Average occupancy in the LTC portfolio was 96.3% in Q4 2022, excluding the unavailable 3rd and 4th beds in multi-bed rooms due to capacity limitations, and isolation beds. As at December 31, 2022, approximately 500 beds were unavailable, mainly as a result of capacity limitations and isolation requirements.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Total Adjusted Revenue increased by 10.9% in Q4 2022, or $19,041, to $193,216, compared to Q4 2021. In the Retirement segment, revenues increased by $10,958 or 28.4% compared to Q4 2021, driven by occupancy growth, annual rental rate increases in line with market conditions, and additional revenue from the 12 properties acquired in Q2 2022, offset partly by the sale of a retirement residence in Q1 2022. Revenues from the LTC segment for Q4 2022 increased by $8,083, or 6.0%, compared to Q4 2021, primarily due to flow-through funding for increased direct care provided to residents, as well as higher preferred accommodation revenues from increased occupancy, offset partly by lower revenues as a result of the sale of a LTC community in Q1 2022 and reduced revenue due to an occupancy shortfall below the 97% required for full funding at certain LTC communities.

Total Adjusted Operating Expenses, net of government assistance increased by $19,970 in Q4 2022, or 14.2%, to $160,699, compared to Q4 2021. In the Retirement segment, expenses increased primarily due to higher labour and food costs, increased maintenance, and property taxes from same property, as well as additional operating expenses related to the 12 retirement properties acquired in Q2 2022. In the LTC segment, expenses increased mainly due to higher net pandemic expenses, higher direct care wages, maintenance and property expenses.

Total NOI decreased by $929 in Q4 2022, or 2.8%, to $32,517, compared to Q4 2021, mainly due lower NOI in the LTC segment which decreased by $2,858 due to higher operating costs in excess of funded revenues and due to the sale of a long-term care community in Q1 2022. NOI in the Retirement segment increased by $1,929 driven by an increase in same property NOI as well as additional NOI from the 12 retirement properties acquired during Q2 2022, offset by higher operating costs.

Net income (loss) was $(6,675) for Q4 2022 as compared to net income of $4,654 in Q4 2021. The decrease was primarily due to lower NOI, the share of net loss in joint venture of $3,430, restructuring costs of $6,550, partially offset by lower income taxes impacted by restructuring costs compared to Q4 2021.

OFFO decreased by 3.1% in Q4 2022, or $557, to $17,701 compared to Q4 2021. The decrease in OFFO was primarily due to lower NOI, restructuring costs, and higher interest expense. OFFO per share decreased by 10.7% in Q4 2022, or $0.029, to $0.243, primarily due to lower OFFO and additional shares issued in March 2022 to finance the Company’s growth initiatives.

AFFO increased by 4.5% in Q4 2022, or $747, to $17,302 compared to Q4 2021. The increase in AFFO was primarily related to lower maintenance costs as a result of timing of expenses, partially offset by lower OFFO. AFFO per share decreased by 4.0% in Q4 2022, or $0.010, to $0.237.

Debt The Company's Debt to Gross Book Value decreased by 80 bps to 43.9% at the end of Q4 2022 from 44.7% at the end of Q4 2021, primarily due the repayment of certain mortgages with proceeds from property dispositions. Debt to Adjusted EBITDA increased to 8.9 times in Q4 2022 from 7.9 times in Q4 2021 and the Debt Service Coverage Ratio increased to 1.9 times in Q4 2022 from 1.8 times in Q4 2021. The Interest Coverage Ratio decreased to 3.1 times in Q4 2022 from 3.4 times in Q4 2021. The Weighted Average Term to Maturity decreased to 4.5 years from 5.2 years in Q4 2021. The Company is in compliance with all of its debt covenants.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Our debt is well distributed between unsecured debentures, an unsecured term loan, credit facilities, conventional mortgages and CMHC insured mortgages.

Business Update

Sienna ended 2022 well capitalized, with a strong balance sheet, ample liquidity and an issuer rating and senior unsecured debenture rating of "BBB" with stable trends from DBRS.

With respect to the Company's retirement operations, our successful leasing strategy and solid demand in key markets supported stable occupancy in both the same-property and the acquisition portfolios in Q4 2022. Sienna's long-term care operations saw steady resident admissions across the majority of its communities, although continued COVID-19 outbreaks and seasonal respiratory illnesses impacted admissions and occupancy at some care communities, resulting in a number of residences not reaching the required 97% occupancy targets for full funding.

In addition, ongoing cost pressures and inflation continue to put pressure on our operating margins in both our retirement and long-term care segments. Significant sector-wide staffing challenges, requiring increased levels of agency staff, have been a major factor in the cost increases. Many of Sienna's current initiatives are focused on lessening our reliance on agency staff by improving team member engagement and retention, in addition to creating efficiencies by streamlining processes and improving team member scheduling.

Growth and Diversification Initiatives

The significant growth of our retirement platform with the addition of 12 retirement residences in Ontario and Saskatchewan in Q2 2022 highlights our strategy of owning a diversified portfolio of private-pay retirement residences and government-funded long-term care communities in Canada. With deep experience and scale in each segment, we run two distinct business lines, while taking advantage of the benefits inherent in shared services and scale. We believe that diversification adds to the financial strength of our business as it allows us to capture higher potential growth and operating margins inherent in our retirement portfolio, while benefiting from the stability of the government-funded long-term care operations.

Integration of Acquired Portfolio into the Aspira Platform

The 12 retirement residences, which were acquired in a joint venture with Sabra Health Care REIT, Inc. (" Sabra "), have been fully integrated into the Company’s sales and operating platforms during the second half of 2022. The Company owns a 50% ownership interest in these assets and acts as the manager of the 12 retirement residences.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

The following table summarizes key information about the 12 acquired retirement residences:

Property City Year Built / Expanded	Number of Suites (at 100%)
	IL AL MC Total Potential Expansion
The Barrieview Barrie, ON 2019 Douglas Crossing Uxbridge, ON 2017 Harvest Crossing Tillsonburg, ON 2011/15 Lynde Creek Gardens Whitby, ON 2004/14 Bolton Mills Bolton, ON 2019 Cedar Crossing Simcoe, ON 2016 Empire Crossing Port Hope, ON 2015	78 23 23 124 - 102 28 18 148 - 100 - - 100 52 93 - - 93 77 112 - - 112 - 67 - - 67 45 63 - - 63 59
Total Ontario	615 51 41 707 233
Stonebridge Crossing Saskatoon, SK 2012 Yorkton Crossing Yorkton, SK 2016 West Park Crossing Moose Jaw, SK 2016 Riverbend Crossing Memory Care Regina, SK 2013 Hunter Village Retirement Living Saskatoon, SK 2016	89 - 27 116 - 79 - - 79 - 57 - 22 79 - - - 67 67 - 159 27 186
Total Saskatchewan	384 27 116 527 -

Total Portfolio	999 78 157 1,234 233

Acquisition of Woods Park Care Centre, Barrie, Ontario

On January 3, 2023, Sienna finalized the acquisition of Woods Park Care Centre (" Woods Park "), which has historically been managed by the Company, for a purchase price of $26.3 million. The Company intends to allocate approximately $1 million for further capital improvements, which are expected to be completed within the near term. Woods Park is located in Barrie, Ontario, and offers a continuum of care,` comprised of 55 private-pay independent living retirement suites and 123 government-funded Class A long-term care beds.

Development of a Joint Venture Retirement Residence in Ontario

Our joint venture development of a 150-suite retirement residence in Niagara Falls is progressing well and is expected to be completed by the end of 2023. The estimated total capital investment for 100% of the project is approximately $55 million, an increase from the previous estimate of $50 million, largely due to higher interest costs to finance the project. The expected development yield is approximately 7.5%. Sienna’s share of this greenfield joint venture with Reichmann Seniors Housing is 70% and the total net capital investment to date is $6.2 million.

Development and Redevelopment of Long-Term Care Portfolio in Ontario

The Government of Ontario has committed to make a significant investment to upgrade long-term care beds in Ontario. The investment is tailored to account for regional differences in land and construction costs.

In recent quarters, high inflation and significant cost escalations with respect to material and labour altered the economic feasibility of long-term care redevelopment projects. Sienna, together with other sector participants, have been actively working with the government to revise the construction funding model in

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

order to ensure the financial feasibility of long-term care redevelopment. In late 2022, the Ontario government announced a time-limited supplemental increase to the construction funding subsidy for projects commencing construction by August 31, 2023.

Based on the revised construction funding model, we expect to have a total of 480 beds under construction by mid-2023, including projects in North Bay, Keswick and Brantford, Ontario. We also plan to develop 147 retirement suites as part of a campus of care at our Brantford location, with an estimated total development cost for the campus of approximately $140 million and a projected development yield of approximately 7.5%.

In addition, over 1,000 beds are currently in the planning stages in the Greater Toronto Area, including in Scarborough and Mississauga.

To date, the Government of Ontario has provided bed licence allocations relating to 12 of our older longterm care communities, comprising approximately 2,600 beds, of which approximately 1,800 are for renewals and over 800 are for new beds. These allocations cover substantially all of Sienna's Class B and C portfolio. Once completed, the redevelopments will elevate the quality of life of our residents, provide additional capacity and a great workplace for our team.

Retirement Operations Update

As at December 31, 2022, the retirement portfolio comprised 4,390 suites across Ontario, Saskatchewan and British Columbia and contributed approximately 50% to the Company's NOI in Q4 2022.

The Company's successful marketing and sales initiatives under its Aspira brand resulted in further occupancy gains, making Q4 2022 the sixth consecutive quarter of occupancy improvements. Average same property occupancy was 88.6% in Q4 2022, representing a 440 bps gain year over year compared to Q4 2021. In addition, average rental rate increases in line with market rates have partially offset the significant cost increases and inflationary pressures experienced in recent quarters.

With respect to our 2022 acquisitions, average occupancy was approximately 85.3% in Q4 2022, representing a 310 bps increase since we acquired the 12 assets in May 2022. This is is a clear indication of the successful integration of the retirement residences into the Aspira platform.

Successful marketing and sales initiatives generating strong interest in Company's retirement residences

Enhancing community engagement remains a key objective of Sienna's sales and marketing teams, with a keen focus on building and maintaining excellent relationships with healthcare and business partners in the local communities of our residences.

We will continue to leverage the Company’s Aspira brand and signature programs to generate strong interest in our residences. Qualified leads have increased by approximately 29% during Q4 2022, compared to the same period in 2021. We expect that continued strong lead generation will result in further occupancy growth and ultimately contribute to improved financial performance.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Our efforts, coupled with strong demand in many of our key markets, resulted in 277 rent deposits and 281 resident move-ins in our same property portfolio in Q4 2022. In addition, rent collection levels remained high at approximately 99% throughout Q4 2022.

Long-term Care Operations Update

In Q4 2022, the Company's long-term care portfolio, which comprises 6,632 beds in Ontario and British Columbia, contributed approximately 50% to the Company's overall NOI.

Implementation of New LTC Platform

Sienna’s new LTC platform is deeply aligned with the Company’s purpose of Cultivating Happiness in Daily Life and is based on our belief that happiness drives wellness.

Our goal is to increase the quality of life of residents providing holistic and integrated care and by elevating their experience with respect to dining, recreation and community-focused interactions, in addition to improving residents' move-in experience.

The platform design is based on best practices and the input from our residents and families, with the aim to distinguish Sienna as a LTC provider of choice and comprises the following four pillars:

Settle In - the move-in experience
Savour It - the food and dining experience
Stimulate - engagement and meaningful recreation
Socialize - meaningful visits and social connections

We are currently in the process of rolling out the first two pillars across our long-term care communities.

"Settle In" reflects the importance of the first experience residents have at our communities. Changes to our residents' move-in experience include a new platform-wide standard aimed at decreasing anxiety of residents and families and truly making them feel welcome and at home. By the end of 2022, pilot programs were under way at seven of our communities, with a focus on the new move-in standard.

"Savour It" is focused on revitalizing residents’ dining experience. The transformation of dining is led by an executive chef who is responsible for the development of more savory and better presented meals. In addition, the social aspect of eating is emphasized as we aim to bring more of a hospitality-like feel to our dining rooms over time.

Focus on Residents’ Quality of Life and Care

Our focus continues to be on improved quality of life and care outcomes. We have strengthened our ongoing review of quality of care based on quality indicators, clinical reviews and inspection reports. Sienna’s care communities participate in third-party assessments, supporting the ongoing process of quality improvement and operational excellence.

The Company's efforts are reflected in the recently completed third-party assessments by Sienna's long-term care communities. During Q4 2022, the Commission on Accreditation of Rehabilitation Facilities (" CARF ") and Accreditation Canada conducted surveys at our long-term care communities in Ontario and British

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Columbia, respectively. In Ontario, Sienna maintained the highest achievement status of Aspire to Excellence, a three-year award received from CARF. In British Columbia, the Company received an award of Exemplary Standing , indicating that the Company has gone beyond the requirements of the accreditation program and demonstrates excellence in quality improvement.

As part of our commitment to improve clinical quality and safety for seniors, we are a member of the Seniors Quality Leap Initiative (" SQLI "), a group of large long-term care providers from across North America that shares quality indicators and benchmarks against international standards. The most recent data available validates our efforts and is reflected in Sienna's strong accreditation results.

Going forward, we are committed to continued quality improvement efforts by continually identifying what we are doing well and where improvements are needed.

Update on Closing of LTC Residence in Ontario

In early 2023, the Ministry of Long-Term Care formally approved the closure plan of one of Sienna's LTC homes. The property sustained significant damage linked to the original building design and construction predating Sienna's ownership. The Company's initial renovation plans expanded beyond a reasonable scope. As a result, Sienna made the decision to wind down operations at this community and expects to permanently close the property in 2023, once every resident has moved to a new home.

In connection with this closure, we recorded restructuring costs of $6.6 million, including severance payments, retention bonuses and a write-down with respect to construction funding receivables, offset by a deferred tax impact of approximately $1.7 million.

Update on Government Funding and Orders

COVID-19 Prevention and Containment and PPE Funding - The Ontario Ministry of Long-Term Care ( "MLTC" or "Ministry" ) has been providing funding for incremental costs associated with COVID-19 prevention and containment and PPE to LTC homes. This funding can be applied for eligible expenses with Sienna's maximum share for expenses incurred from April 2022 to March 2023 being approximately $20.0 million. This represents a decrease of approximately 57% compared to the funding we received for the period from April 2021 to March 2022, and is reflective of a decrease in respective costs.

Occupancy Protection Funding - In February 2022, the Government of Ontario reinstated its occupancy targets of 97% for long-stay beds and 90% for interim short-stay beds, excluding beds unavailable as a result of capacity limitations in multi-bed rooms and isolation requirements. However, for the period from February 1, 2022 to September 30, 2022, LTC communities that did not achieve target resident days, received a minimum of 90% of their funding.

Effective October 1, 2022, beds that should otherwise be available for occupancy, became subject to full occupancy target requirements, although communities in both Ontario and British Columbia continued to receive full funding for vacancies caused by the temporary closure of admissions due to an outbreak, including COVID-19.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Estimated funding reductions as a result of a number of homes not having reached the required occupancy target are reflected in Sienna's NOI for the quarter and year ended December 31, 2022.

Given the long waiting list for LTC beds across Ontario and long wait times of up to two years for beds at LTC communities in British Columbia, coupled with increasing pressure on the hospital system, we anticipate the achievement of the average annual occupancy target required for full funding at the majority of our care communities in 2023.

Funding Changes with respect to 3[rd] and 4[th] beds in multi-bed rooms - On August 30, 2022, the Ministry advised that it is not planning to re-open the 3[rd] and 4[th] beds in multi-bed rooms in long term care communities for resident admissions and has signaled that it intends to introduce phased in revisions to the funding provided for the 3[rd] and 4[th] beds.

Funding changes were expected to begin in January 2023, and have now been delayed until the end of March 2023 to allow for further consideration of the funding formula.

Sienna's approximate 350 3rd and 4th beds in Ontario will be impacted by this expected change and we continue to assess the impact of these potential funding changes while waiting for further updates from the Ministry.

COVID-19 Update

Sienna continues to have effective COVID-19 outbreak management and IPAC capabilities in place to manage the impact of COVID-19 at its residences. With the added protection of vaccinations, infected residents’ and team members’ symptoms have been mostly mild or moderate during recent waves of the pandemic, which have been largely defined by staffing shortages. A high vaccination rate among residents and team members coupled with effective anti-viral treatments, the disease burden for our residents has been lessened substantially throughout 2022. However, homes in outbreak continue to incur significant pandemic costs and Sienna, together with other seniors’ living operators and sector associations, is advocating for continued government funding of pandemic costs.

As of February 22, 2023, 8 of Sienna’s 93 owned or managed residences are in outbreak with active cases of COVID-19 at 6 long-term care and 2 retirement residences. Of these residences, 6 residences have five or less active COVID-19 cases among its residents.

Staffing Update

As part of our strategic objectives, we aim to become the employer of choice in Canadian seniors’ living by offering a compelling team experience and by nurturing a purpose-driven culture. We believe that the appeal of our new purpose, vision and values are an opportunity to differentiate Sienna from competitors and will help us attract and retain a highly engaged workforce and build a talent pipeline amid staffing shortages in the seniors’ living sector and the wider health care sector.

Staffing Strategy

We continued with our proactive staffing strategy to lessen our reliance on agency staff and to position Sienna well for the gradual increase in direct hours of care across the long-term care platform. In addition to

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

attracting new talent, we have been working on a number of other initiatives, including offering additional shifts to part-time team members and supporting the placement of Ukrainian refugees at communities with significant staffing challenges.

Centralized scheduling and call-out system

To further support and improve the staffing process, we have launched a new centralized scheduling and call-out system. The system has been rolled out to most of our long-term care communities and provides greater flexibility to meet staffing requirements on a real-time basis and a more seamless process to fill staffing gaps. This is expected to support our efforts to reduce the use of agency staff and enable tighter controls on overtime.

In addition, we have been piloting improvements to our onboarding process, including enhancements to team member orientation and team member mentoring, in addition to a more streamlined pre-boarding process. The process, which is currently rolled out across Sienna's LTC communities, includes enhanced multi-day orientation programs for Executive Directors, PSWs and clinical leaders.

Talent Acquisition

As part of our ongoing talent acquisition strategy, we expanded our collaboration with educational and government institutions and intensified our social media campaigns. To ensure a talent pipeline for future staffing needs, we enhanced our campus recruitment campaigns at key colleges and universities across Ontario and British Columbia. Sienna’s collaboration with colleges and universities has resulted in approximately 1,200 student placements in 2022, many of whom we hope to hire once they graduate.

SPARK

Based on feedback from the 2021 team member satisfaction survey, team members seek opportunities to share their ideas. As a result, Sienna created its own version of Dragon’s Den called SPARK, allowing team members to share ideas on how Sienna can grow and improve and fulfil its purpose of Cultivating Happiness in Daily Life. We received approximately of 170 ideas during the first round of submissions in October 2022.

A number of ideas are currently being piloted at some of our residences and communities to assess which ideas should be implemented across the Company.

Sienna Ownership and Reward Program

The Sienna Ownership and Reward Program (" SOAR ") awards common shares of the Company to all permanent employees who have been with the Company for one year or longer. Eligible team members have the opportunity to receive a one-time award of Sienna shares. In 2022, a total of 150,818 Sienna shares were issued to team members.

Resident, Family and Team Member Satisfaction

Resident & Family Satisfaction Surveys

During Q4 2022, we conducted our annual resident and family satisfaction surveys. These surveys are a crucial tool to engage with our stakeholders and learn from their feedback. Nearly 80% of residents and approximately 84% of family members indicated that they would recommend Sienna's long-term care communities.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

At our retirement residences, we have started to measure our residents' willingness to promote our residences based on the internationally recognized net promoter score method (" NPS "). This will help us better understand and analyze what it takes to improve our residents' happiness in daily life.

Early results of our first platform-wide NPS survey are favourable and will be used as an important baseline to measure the success of our platform enhancements.

Team Member Engagement Surveys

Team member engagement surveys are crucial to identify opportunities to enhance the team member experience. Approximately 85% of Sienna's team members feel that they are able to do meaningful work every day, which is very aligned to our Company's purpose. This is the second consecutive year of improvement in our employee engagement score.

Cost Pressures in Current Market Conditions

In recent years, we have seen cost pressures on agency staffing costs due to a tight labour market, increased insurance premiums in the senior housing sector, rising interest rates, and rising utilities costs in line with the overall market. More recently, decades-high inflation has further added to cost pressures in other expense categories, including food, supplies and contracted services.

Significant agency premiums averaging 75% to 100% over the regular staffing rates combined with generally higher reliance on agency staff have resulted in a substantial increase in staffing costs. Agency staffing costs totaled approximately $52 million in 2022, compared to $47 million in 2021 and $35 million in 2020, with the majority of the staffing costs covered by government flow-through funding.

We expect that continuing occupancy growth, rental rate increases, as well as the added scale as a result of acquisitions and developments will help to mitigate these increased costs and support our operating margins in 2023.

We continue to actively work, alongside other participants in the seniors' living sector, with the government to receive funding that is aligned with the current inflationary conditions to offset the significant cost increases.

Outlook

Our sector's resiliency is largely driven by the rising needs of seniors, who make up the fastest-growing demographic in Canada. Long-term demand fundamentals in Canadian seniors living remain strong despite economic uncertainty and a challenging labour market.

Retirement Operations

Sienna's retirement operations reached an average same property occupancy rate of 88.6% in Q4 2022, supported by strong demand in our key markets and our continued investments in sales and marketing initiatives and the Company's operating platforms. In addition, as a result of the successful integration of the 12 retirement residences, which the Company acquired in Ontario and Saskatchewan in May 2022, average

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

occupancy in the acquisition portfolio increased to 85.3% in Q4 2022, an improvement of 310 basis points since their acquisition.

Heading into 2023, we continue to capitalize on the growing demand for quality seniors living. With our successful marketing and sales initiatives, supported by strong demographic trends, we expect further occupancy gains. Average Q1 2023 occupancy is expected to remain at a similar level as Q4 2022. For the full year ending December 31, 2023, we expect average same property occupancy to exceed 90% and average occupancy in our acquisition portfolio to exceed 87%.

We further expect year-over-year NOI growth in our retirement portfolio in 2023 to be supported by occupancy improvements and rate increases of approximately 5%, in line with market rates. These factors will contribute to revenue growth, while cost pressures will remain for some time, in particular with respect to labour shortages resulting in high agency staffing costs, as well as high overall inflation.

In addition, we expect continued unfunded pandemic expenses in our retirement operations to be approximately $0.4 million in Q1 2023.

Taking all factors into account, we expect the operating margin in our retirement segment in Q1 2023 to be similar to the full year margin of 35.7% in 2022. We further expect the 2023 operating margin for the full year to improve by approximately 150 bps - 200 bps compared to 2022.

Long-Term Care Operations

In Sienna's LTC portfolio, resident admissions continued to progress steadily at most care communities throughout Q4 2022, although COVID-19 outbreaks and other seasonal respiratory illnesses impacted admissions and occupancy at some care communities. Average same-property occupancy, excluding the unavailable 3rd and 4th beds in multi-bed rooms due to capacity limitation and isolation beds, was 96.3% during the fourth quarter.

In February 2022, the Government of Ontario reinstated occupancy targets of 97% required for full funding, as discussed in more detail in the Business Update section of this MD&A. Other Accommodation funding reductions of approximately $1.3 million are reflected in Sienna's operating results for the full year of 2022, resulting from a number of care communities not reaching the required occupancy targets. Given the long waiting list for long-term care beds, we anticipate to meet the occupancy targets at the majority of our care communities for full funding in 2023.

With respect to government-funding for our long-term care operations, we expect cost pressures to remain for some time due to labour shortages and high overall inflation. Together with associations and other operators, we have been actively working with the government to have funding adjusted to accommodate significant inflationary pressures experienced in recent quarters. Adequate funding will ensure that we can continue to provide service excellence and quality clinical care, which are key to a positive resident experience and crucial for the long-term economic viability of the sector.

We expect continued unfunded pandemic expenses of between $2 million to $3 million in Q1 2023 within our long-term care segment, primarily as a result of additional labour cost, although some of these expenses may be covered by retroactive government funding in future periods.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Taking all factors into account, we expect our 2023 NOI for the full year in the LTC segment to remain at a similar level compared to 2022.

Developments

Redevelopment of Long-Term Care Portfolio

With respect to our long-term care redevelopment plans, we have also been working with associations and other providers in seniors' living to have government funding aligned with the significant inflationary and cost pressures.

In late 2022, the Ontario government announced a time-limited supplemental increase to the construction funding subsidy for projects commencing construction by August 31, 2023. Based on the revised construction funding model, eligible projects will receive an additional construction subsidy of up to $35 per bed, per day for 25 years.

We expect to have a total of 480 beds under construction by mid-2023, including the projects in North Bay, Keswick and Brantford, Ontario. We also plan to develop 147 retirement suites as part of a campus of care at our Brantford location, with an estimated total development cost for the campus of approximately $140 million and a projected development yield of approximately 7.5%.

In addition, over 1,000 beds are currently in the planning stages in the Greater Toronto Area, including in Scarborough and Mississauga.

Development of Retirement Residences

Sienna's current development project in Niagara Falls is scheduled to be completed in Q4 2023. The estimated total capital investment for 100% of the project is approximately $55 million, an increase from the previous estimate of $50 million, largely as a result of rising of higher interest costs to finance construction.

Capitalizing on long-term demographic fundamentals despite headwinds

In 2023, we intend to capitalize on the outstanding long-term demographic fundamentals in Canadian seniors' living. We will continue to focus on adding value to our operating platforms by making ongoing improvements to resident experience and team member engagement, as well as our physical assets largely through the redevelopment of our older long-term care communities.

After a year of significant growth through acquisitions in our retirement portfolio in 2022, we will focus on operational excellence in 2023, including occupancy improvements, rental rate increases and cost savings resulting from operational efficiencies and reducing our reliance on agency staffing.

These initiatives will put us in a strong position to navigate current economic uncertainties and set us up for continued long-term success.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Significant Events

Financing Update

On October 26, 2022, the Company increased its senior unsecured revolving credit facility ( "Unsecured Revolving Credit Facility" ) by $100 million to $300 million and extended its maturity term by two years to March, 2027. Borrowings under the Unsecured Revolving Credit Facility can take place by way of Canadian Bankers Acceptance Rates (" BAs ") at 145 bps per annum over the floating BA rate, or at the Canadian prime rate plus 45 bps per annum.

DBRS Rating Renewal

On December 9, 2022, DBRS confirmed Sienna's issuer rating and senior unsecured debenture rating of "BBB" with stable trends. These ratings underscore the resiliency and strength of our business and are a reflection of Sienna's strong balance sheet.

Acquisition of Woods Park, Barrie, Ontario

On January 3, 2023, Sienna finalized the acquisition of Woods Park, which has historically been managed by the Company, for a purchase price of $26.3 million. Woods Park is located in Barrie, Ontario, and offers a continuum of care, comprised of 55 private-pay independent living retirement suites and 123 governmentfunded Class A long-term care beds. The Company intends to allocate approximately $1 million for further capital improvements, which are expected to be completed within the near-term.

Our Purpose, Vision and Values

Our Purpose:

Cultivating Happiness in Daily Life .

Each of our actions and initiatives affects our residents’ quality of life and well-being and impacts our team members and the communities we serve across the country. This is at the heart of what we do and is reflected in Sienna's purpose. It conveys our belief that our role does not stop at providing the highest quality of service and care to our residents - it goes much further. Each and every day, we will strive to bring happiness into our residents’ lives by enabling our team to put their passion for their work into action and supporting families to bring joy into our homes.

Our Vision is to be:

Canada's most trusted and most loved seniors' living provider.

In retirement and long-term care, we are committed to helping residents discover happiness through personalization, choice and community engagement in a comfortable, home-like setting. Doing this each and every day supports Sienna’s vision to be Canada’s most trusted and most loved seniors’ living provider. With this vision, we will meet the needs and expectations of our residents, families, team members and the communities we serve.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Our Values:

Act positively:

We inspire happiness and hope in the people around us

Be accountable: We do what we say we will and work as a team to get things done Create community: We foster strong relationships and celebrate diversity

Demonstrate caring: We are passionate about what we do and engage with empathy and understanding

Company Strategy and Objectives

Sienna’s strategic objectives are centered around the following three pillars:

Strengthening Team Engagement

Sienna strives to recruit, retain and develop a high performing and engaged team and reduce voluntary turnover by:

Offering a compelling team experience

Conduct team member engagement surveys to gain insights and identify opportunities to enhance team member experience;
Design, develop and introduce an essential program for new and developing frontline managers;
Offer learning and development growth to support orientation, onboarding and enhancements to operating platforms; and
Increase talent pipeline in leadership roles.

Creating a purpose-driven, differentiated culture

Align employer brand with Company's purpose, vision, values and value proposition; and
Implement initiatives, such as a renewed team member recognition program and education with respect to the Company's refreshed values, aimed at building a purpose-driven culture.

Elevating Quality of Life of Residents

Sienna aims to elevate the quality of life of its residents by:

Offering outstanding resident experience

Enhance dining, recreation and community-focused interactions through rebranded operating platforms;
Improve quality of care by leveraging insights from quality indicators, clinical reviews and inspection reports; and
Collaborate with all levels of government, sector associations, regulatory authorities and others to help shape and improve the future of seniors' living in Canada.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Achieving operational excellence

Invest in Sienna's team culture and operating platform to deliver quality resident experiences;
Create operating efficiencies by streamlining processes to enhance resident experience and improve operating results; and
Distinguish retirement product and services from competitors through the Company's Aspira platform, offering customer-centric personalization and expanded choices.

Achieving Growth & Enhanced Performance

Outperforming the market

Grow organically through investments in sales and marketing programs, supporting improved occupancy, expanded services and rental rate increases;
Maintain a diversified portfolio of private-pay retirement residences and government-funded longterm care communities; and
Maintain a strong balance sheet and liquidity, including a diversified debt portfolio with staggered debt maturities, an investment-grade credit rating and a sizeable pool of unencumbered assets.

Growing the Company's footprint

Redevelop older LTC communities in key Ontario markets with both new and upgraded facilities;
Establish and deepen joint venture partnerships to provide additional avenues for growth; and
Expand high-quality retirement portfolio through strategic and disciplined acquisitions, joint venture developments, as well as growing capacity at existing retirement residences with excess land.

Environmental, Social and Governance (ESG) Responsibility

Sienna's commitment to corporate social responsibility is highlighted in our continued enhancements of the Company’s ESG initiatives and disclosures, including Sienna's second ESG Report, which was published in August 2022. For more information on Sienna’s ESG initiatives and our most recent report, please refer to the ESG section on Sienna’s website under https://www.siennaliving.ca/investors/esg.

ESG practices across Sienna’s operations have long been integrated into our overall strategy and daily business practices and are reflected in our actions and initiatives, each of which affect the quality of life and well-being of our residents, their families and our team members.

With approximately 12,000 team members, our employees are our most important asset. Creating a positive experience and supporting personal and professional growth are key objectives at Sienna. Attracting and retaining a diverse team and nurturing a culture in which women and people of diverse backgrounds have equal opportunity to achieve their potential are important to us.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Diversity, Equity and Inclusion

A Diverse and Inclusive Workforce

Gender - Sienna's total workforce is predominantly female, with approximately 87% of our team members working at our long-term care and retirement residences being female. The high percentage of women in our workforce is also reflected in our management team with approximately 80% of the Company’s nearly 400 leadership positions being held by women. Sienna has been recognized once again in the Globe and Mail's 2022 "Women Lead Here" for its commitment to gender diversity and support of female leaders.

Age - Sienna’s workforce is equally distributed between the age ranges of under 35, 35 – 50, and over 50, with approximately one third of our team members in each of these age groups.

Fair Compensation and Gender Pay Equity

Essentially all of Sienna’s frontline team members earn more than minimum wage with approximately 80% earning at least 30% above minimum wage.

With respect to gender pay equity across our long-term care and retirement operations, male and female frontline team members in similar positions receive comparable compensation.

Sienna Ownership and Reward Program

SOAR was launched to recognize the compassion, effort and dedication that team members bring to Sienna’s residents and communities every day. Through this ownership and reward program, team members are further invested in making Sienna a leader in seniors' quality of life and at the same time, have the opportunity to meaningfully invest in the Company and in their future.

SOAR awards common shares of the Company to all permanent employees who have been with the Company for one year or longer. Subsequent to the shareholder approval of SOAR in April 2022, a total of 150,818 shares were issued to team members in three separate grants in 2022.

Indigenous Relations and Reconciliation

We continue to place enhanced emphasis on Indigenous Relations and Reconciliation. As a company, we are committed to ensuring we do everything we can to understand what has happened in the past, acknowledge it and make amends to the best of our ability, over time. We believe that education is an important first step to bring about reconciliation between Indigenous and non-Indigenous people.

Sienna has partnered with Reconciliation Education, an Indigenous-owned organization, to provide resources for all team members. Sienna is committed to ensure our residences and care communities are inclusive for Indigenous team members and residents and acknowledges the pain and suffering the Indigenous members of our team have been through.

Labour Relations and Union Representation

Labour rights are an important consideration with respect to Sienna's human capital management strategies. Sienna's labour strategy is focused on educating management teams at our local communities, cultivating strong relationships with union stakeholders and aligning our collective agreements to our longterm operational strategies.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

We respect our team members’ rights to unionize, Sienna has a strong, positive relationship with union leaders and a good working relationship with union representatives at its owned and managed residences.

Sienna’s support of freedom of association and the right to collective bargaining is evidenced by the level of unionization in our residences, which includes over 100 collective bargaining units and an approximate 85% unionization rate among our team members.

Excluding management positions, this number would be even higher with 90% of all non-management team members being represented by a union, and whose compensation is determined by collective bargaining agreements.

Giving Back to the Community

Sienna for Seniors Foundation (" Foundation ")

The Foundation was formed in April 2021 as part of our ongoing commitment to supporting the communities we serve across Canada and allows us to raise and give funds for a variety of important seniorsrelated initiatives.

With food insecurity a pressing concern, the Foundation's latest initiative is "Sienna Sunday Supper". Spearheaded by one of Sienna's communities, team members prepared Thanksgiving meal for the local Meals on Wheels program. A great success, which highlights the generous spirit we see at Sienna every day, Sienna Sunday Supper will be expanded across many of Sienna's communities in the future.

In December 2021, the Foundation’s support for Indspire, a national Indigenous charity, helped establish a bursary award for Indigenous students in British Columbia who are pursuing education in nursing or health care assistant programs. In September 2022, the first two bursaries were awarded to students.

The Foundation is also a sponsor of the Chilliwack & District Seniors' Resources Society's community bus in 2023, connecting seniors to entertainment, history, arts, culture, recreation, shopping and more.

Sienna Senior Living Dino Chiesa Scholarship

In August 2022, the Company announced the Sienna Senior Living Dino Chiesa Scholarship of $50,000, which offers one scholarship annually to a Sienna employee, or a member of their immediate family, to receive formal education and certification as a Personal Support Worker.

Three scholarships for $5,000 each have been awarded in 2022.

CaRES Fund

The CaRES Fund, which was launched by Sienna and a number of sector peers in 2020, has helped nearly 900 frontline staff who have been impacted by the pandemic with over $2.9 million in financial assistance to date.

Initially established to provide hardship funding in recognition of the extraordinary efforts of seniors' living employees, the CaRES Fund has shifted its focus from crisis funding for economic hardship as a result of the pandemic to education bursaries. In 2022, the CaRES Fund provided $250,000 in bursaries to 100 staff members in seniors' living.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Improving Sienna's Environmental Footprint

Addressing Climate Change through Development

Our development plans are an opportunity to address climate change in both the Company's existing residences and the development portfolio as we adopt environmentally-friendly designs and install energyefficient features, all with the goal of significantly reducing the environmental footprint of these homes.

The development plans include energy-efficient heating and cooling systems, LED lighting and updated energy-efficient windows and fixtures.

Committing to Waste Reduction by Going Paperless

Reducing the amount of paper use and ultimately “going paperless” is an important aspect of Sienna’s waste reduction strategy for 2023. Team members are encouraged to minimize the use of physical paper whenever possible. Recent achievements include going digital with respect to all accounts payable invoices and frequently updated policy and procedure manuals at our care communities and retirement residences. These initiatives target a reduction in Sienna's paper usage by approximately 760,000 sheets annually.

Industry Update

Demand driven by Rapid Growth in Target Demographic

Demand for seniors’ living is driven by an aging population. According to Statistics Canada, growth in the 85+ years of age cohort is expected to triple over the next 25 years as a result of baby boomers reaching retirement age and life expectancy continuously increasing. In Canada, more than one quarter of people aged 85 and older live in a nursing care, long-term care or seniors' residence with the proportion increasing in age.

By 2026, the number of people living in Canada aged 85 and older is expected to reach approximately one million and is estimated to grow to nearly three million by 2051.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

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The needs-based driven demand for seniors’ living is expected to outpace supply growth in the coming years, due to a combination of factors delaying construction starts and driving up building costs. In addition, the significant equity many seniors have built up in their homes over the decades, will further support demand in the coming years, although a softer residential housing market may delay the move to a retirement residence for some seniors who rely on the sale of their primary residence to unlock their net worth.

Slowing Supply of Retirement Residences

Due to a combination of factors, including rising construction costs, new construction activity of retirement residences in Canada has declined significantly in recent years. While development prior to the pandemic caused some headwinds in several regions across the country due to oversupply, slowing development activity since 2018 is resulting in less competition from newly completed developments and is expected to support continued occupancy recovery in Canadian seniors' living.

Robust Fundamentals in Sienna’s Key LTC Markets

Demand for long-term care beds is higher than ever, with long waiting lists and increasing pressure on hospital systems.

In the Ontario LTC sector, the number of LTC beds per 1,000 Ontarians aged 75+ is expected to decline over the next several years as a result of a rapidly aging population, despite the government’s commitment to add 30,000 new beds and upgrade 28,000 older beds.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

In late 2022, the Ontario government announced that it is increasing its construction funding subsidy to support the cost of developing or redeveloping a long-term care home amid escalating interest rates and construction costs. The additional funding is expected to help fast-track the construction of new long-term care beds commencing before August 31, 2023. This supports the government’s $6.4 billion commitment to build more than 30,000 net new beds by 2028 and 28,000 upgraded long-term care beds across the province.

Similarly, there is strong demand for LTC beds in British Columbia with the number of LTC beds having increased by only 2% while the 75+ population increased by 20% over the past five years.

High barriers to entry

The seniors' living sector in Canada continues to be fragmented and highly regulated, with significant barriers to entry. The sector is regulated by provincial governments and regional health authorities, with growing and varied obligations placed on operators. Additionally, the sector requires an increasingly complex level of specialized expertise and a solid operating platform in order to succeed in meeting regulatory requirements and providing positive resident and family experiences. All LTC and Retirement residences require an approved licensed operator.

Seniors' Living Continuum

Private-pay vs. Funded Care

Retirement residences are privately funded by the residents who are responsible to cover their monthly rent and cost of services. In long-term care, most residences are funded by the provincial governments. Residents' monthly rent is typically subsidized and the care they receive is fully funded. Select long-term care residences across Canada also offer private-pay options.

Seniors' living residences provide a range of services and programs based on an individual's needs and level of independence. Seniors who enjoy a high level of independence and require little assistance with the activities of daily living may choose to live in seniors' apartments or condominiums with minimal or no assistance or with the option of care and services on an as-needed basis, while those who require extensive assistance with the activities of daily living, healthcare needs and access to 24-hour nursing care support are best suited to LTC. A general and broad description of the services is detailed below:

Independent Living ("IL") : IL provides the privacy and freedom of home combined with the convenience and security of on-call assistance and a maintenance-free environment. Residents typically have the option of purchasing à la carte services including meal packages, housekeeping, transportation and laundry. It is typically apartment-style accommodation with a full kitchenette and is private-pay. Tenure may be rental or some form of ownership, such as condominium or life lease.
Independent Supportive Living ("ISL") : ISL is designed for seniors who pay for services such as 24hour response, housekeeping, laundry, meals, transportation and accommodation as part of a total monthly private-pay fee or rental rate. These residents require little or no assistance with daily living activities but benefit from the social setting and meal preparation. Some residences include a minimum amount of daily care but primarily this level of accommodation is for the senior who can

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

live more independently with the option of additional care and services available on an as needed basis. Accommodation is studio, one or two bedroom units with kitchenettes.

Assisted Living ("AL"): AL is intended for seniors who need assistance with daily living activities but do not require skilled nursing care. While most of AL is provided as private-pay, some residences deliver AL services through private-pay or government funded home care services.
Memory Care ("MC"): MC serves seniors with memory impairment, Alzheimer's or other forms of dementia. Mild cases of dementia are typically suitably addressed within secure AL accommodation suites in a dedicated area within the residence, or more broadly throughout the residence. Moderate to severe cases require dedicated accommodation suites and specialized and more intensive care.
Long-term Care : LTC is for those who are not able to live independently and require assistance with the activities of daily living and care, including skilled nursing care on a daily basis. Eligibility for access to a LTC home is based on a person's assessed care requirements and is determined and arranged through government agencies. The resident pays for the accommodation as set by the government and the government typically pays for care, programs and supplies. In most provinces, there is a waiting period for access to LTC accommodations. In certain provinces, there are also LTC homes providing entirely private-pay accommodations and are subject to the same regulatory oversight.

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Source: NIC Investment Guide.

Retirement Residences

Retirement residences focus on IL, ISL, AL, and in some cases MC, and generally provide studio, onebedroom or two-bedroom accommodation suites and amenity space. Suites are rented to residents on a monthly basis, and provide for meals, snacks, leisure activities, transportation and AL services, which include some care and services based on resident needs and preferences (such as assistance with bathing, medication administration and other ADL). Accommodation and services are private-pay based on market rates.

The retirement sector requires that a residence must be licensed to operate. Further, expansion of retirement residences or new development require feasibility studies, which support that there is adequate income qualified demand for any given community to accommodate additional retirement

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

residence capacity. Feasibility studies and proven demand are required for financing. The regulations and operational nature of the business and licensing requirements pose increasing barriers of entry.

Long-term Care

The LTC sector in Ontario and British Columbia, Sienna's key markets, is comprised of a number of private operators, public sector operators and not-for-profit organizations offering a variety of services similar to those offered by the Company. The sector has experienced consolidation in recent years, which is expected to continue, although remains fragmented with small operators (including not-for-profit operators) providing most of the beds.

The LTC sector, which provides essential health services to its communities, can be distinguished from other segments of the seniors' living sector based on a number of factors, including the following:

Provision of an essential service : LTC residences provide essential health services in the form of 24hour registered nursing support, assistance with ADL and mobility, to individuals with complex physical and medical care needs who may otherwise require hospital care.
Significant barriers to entry : Barriers to entry are both regulatory and operational. The LTC sector requires that a residence and operator must be licensed by the regulatory authority in order to operate. In addition to the regulatory barriers to entry, the successful operation of an LTC residence requires a broad range of specialized expertise.

LTC Financial Model

All aspects of the operation of LTC are highly regulated by provincial government and regional health authorities. In British Columbia and Ontario, access to LTC is controlled though a government agency based on eligibility. Provincial health programs provide funding for certain care services, with the residents contributing a co-payment (the rate is set by the regulatory body). Since each province establishes its own system for carrying out the oversight of LTC residences and administering programs, there are differences in the regulations governing care providers, as well as in the actual funding programs.

Ontario

Licensed operators of Ontario LTC residences are entitled to operational funding for care services to residents, as well as various other payments from the MLTC. Operational funding of LTC residences is used to fund certain eligible care services and is currently paid monthly in what is known as flow-through "envelopes". Generally, a licensed LTC operator is funded the ‘level-of-care’ per diem for every licensed or approved bed in the residence.

Funding received for flow-through envelopes in excess of the amounts spent by the operator must be returned to the MLTC during an annual reconciliation process. Funding provided pursuant to flow-through envelopes may only be applied to certain eligible expenses.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

British Columbia

Funded LTC Beds

The funding contracts between LTC operators and the applicable health authorities in British Columbia are on a per diem basis, adjusted annually, for resident services provided and capital cost of the residences, and outline the hours of direct care required by a resident per day, minimum occupancy thresholds and minimum levels of professional staffing.

Private-Pay Long-term Care Beds

In British Columbia, operators may designate a number of beds for private-pay LTC whereby the operator provides the same level of care and services to the resident as in the funded beds. Rates paid by the resident are market driven and the beds are subject to the same regulations and inspection as funded LTC beds.

Business of the Company

Please refer to the Company's current AIF for a discussion of the Business of the Company.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Quarterly Financial Information

Thousands of Canadian dollars, except occupancy, per share and ratio data	2022 2021
	Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Total Adjusted Revenue Total Adjusted Operating expenses, net of government assistance Net income (loss) Per share basic and diluted OFFO Per share basic OFFO, excluding net pandemic expenses (recoveries) Per share, excluding net pandemic expenses (recoveries) AFFO Per share basic AFFO, excluding net pandemic expenses (recoveries) Per share, excluding net pandemic expenses (recoveries) Dividends declared Per share Occupancy Retirement - Average total occupancy Retirement - Average same property occupancy LTC - Average total occupancy LTC - Average private occupancy Debt to gross book value as at period end Debt to Adjusted EBITDA as at period end Debt to Adjusted EBITDA, excluding net pandemic expenses (recoveries), as at period end Interest coverage ratio Interest coverage ratio, excluding net pandemic expenses (recoveries) Total assets Total debt Weighted average shares outstanding	193,216 189,192 180,151 174,282 174,175 170,423 162,668 161,228 160,699 154,172 145,933 142,144 140,729 137,020 131,643 116,961 (6,675) 2,513 (11,190) 26,020 4,654 4,533 1,318 10,143 (0.092) 0.034 (0.154) 0.385 0.070 0.070 0.020 0.151 17,701 17,944 17,299 16,134 18,258 18,265 15,126 25,343 0.243 0.246 0.237 0.239 0.272 0.272 0.226 0.378 19,439 18,922 19,231 17,549 18,371 18,990 17,925 18,068 0.268 0.260 0.264 0.260 0.274 0.283 0.268 0.269 17,302 16,564 17,162 16,447 16,555 15,671 14,102 26,430 0.237 0.227 0.236 0.243 0.247 0.234 0.210 0.394 19,040 17,542 19,094 17,862 16,964 15,858 16,715 19,572 0.262 0.241 0.263 0.264 0.253 0.237 0.249 0.292 17,065 17,059 17,055 16,136 15,687 15,687 15,687 15,687 0.234 0.234 0.234 0.234 0.234 0.234 0.234 0.234 88.0 % 87.5 % 86.6 % 84.7 % 82.7 % 80.3 % 77.7 % 77.7 % 88.6 % 88.4 % 87.1 % 85.5 % 84.2 % 81.6 % 78.9 % 79.1 % 89.9 % 89.7 % 88.5 % 87.0 % 88.9 % 86.2 % 82.8 % 80.3 % 84.6 % 84.0 % 82.4 % 80.4 % 82.2 % 82.9 % 79.4 % 78.2 % 43.9 % 43.3 % 43.4 % 41.5 % 44.7 % 45.6 % 45.5 % 46.0 % 8.9 9.0 9.2 8.7 7.9 7.8 7.4 6.2 8.3 8.4 8.5 8.1 8.2 8.3 8.2 8.4 3.1 3.3 3.4 3.3 3.4 3.4 3.1 4.7 3.3 3.4 3.7 3.6 3.4 3.6 3.5 3.5 1,680,428 1,736,319 1,747,872 1,702,288 1,609,189 1,606,834 1,592,009 1,616,357 977,964 983,596 985,754 923,584 950,284 962,353 958,212 964,873 72,914,451 72,899,509 72,855,687 67,614,123 67,039,123 67,039,123 67,039,123 67,039,123

Thousands of Canadian dollars, except occupancy,
per share and ratio data

2022
2021

Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1

Total Adjusted Revenue
Total Adjusted Operating expenses, net of
government assistance
Net income (loss)
Per share basic and diluted
OFFO
Per share basic
OFFO, excluding net pandemic expenses
(recoveries)
Per share, excluding net pandemic
expenses (recoveries)
AFFO
Per share basic
AFFO, excluding net pandemic expenses
(recoveries)
Per share, excluding net pandemic
expenses (recoveries)
Dividends declared
Per share
Occupancy
Retirement - Average total occupancy
Retirement - Average same property
occupancy
LTC - Average total occupancy
LTC - Average private occupancy
Debt to gross book value as at period end
Debt to Adjusted EBITDA as at period end
Debt to Adjusted EBITDA, excluding net
pandemic expenses (recoveries), as at
period end
Interest coverage ratio
Interest coverage ratio, excluding net
pandemic expenses (recoveries)
Total assets
Total debt
Weighted average shares outstanding

193,216
189,192
180,151
174,282
174,175
170,423
162,668
161,228
160,699
154,172
145,933
142,144
140,729
137,020
131,643
116,961
(6,675)
2,513
(11,190)
26,020
4,654
4,533
1,318
10,143
(0.092)
0.034
(0.154)
0.385
0.070
0.070
0.020
0.151
17,701
17,944
17,299
16,134
18,258
18,265
15,126
25,343
0.243
0.246
0.237
0.239
0.272
0.272
0.226
0.378
19,439
18,922
19,231
17,549
18,371
18,990
17,925
18,068
0.268
0.260
0.264
0.260
0.274
0.283
0.268
0.269
17,302
16,564
17,162
16,447
16,555
15,671
14,102
26,430
0.237
0.227
0.236
0.243
0.247
0.234
0.210
0.394
19,040
17,542
19,094
17,862
16,964
15,858
16,715
19,572
0.262
0.241
0.263
0.264
0.253
0.237
0.249
0.292
17,065
17,059
17,055
16,136
15,687
15,687
15,687
15,687
0.234
0.234
0.234
0.234
0.234
0.234
0.234
0.234
88.0 %
87.5 %
86.6 %
84.7 %
82.7 %
80.3 %
77.7 %
77.7 %
88.6 %
88.4 %
87.1 %
85.5 %
84.2 %
81.6 %
78.9 %
79.1 %
89.9 %
89.7 %
88.5 %
87.0 %
88.9 %
86.2 %
82.8 %
80.3 %
84.6 %
84.0 %
82.4 %
80.4 %
82.2 %
82.9 %
79.4 %
78.2 %
43.9 %
43.3 %
43.4 %
41.5 %
44.7 %
45.6 %
45.5 %
46.0 %
8.9
9.0
9.2
8.7
7.9
7.8
7.4
6.2
8.3
8.4
8.5
8.1
8.2
8.3
8.2
8.4
3.1
3.3
3.4
3.3
3.4
3.4
3.1
4.7
3.3
3.4
3.7
3.6
3.4
3.6
3.5
3.5
1,680,428
1,736,319
1,747,872
1,702,288
1,609,189
1,606,834
1,592,009
1,616,357
977,964
983,596
985,754
923,584
950,284
962,353
958,212
964,873
72,914,451 72,899,509 72,855,687 67,614,123 67,039,123 67,039,123 67,039,123 67,039,123

The Company's quarterly financial results are impacted by various factors including, but not limited to, timing of pandemic related funding and incurrence of pandemic related expenses, occupancy levels, timing of operating expenses and maintenance capital expenditures, seasonality of utility expenses, timing of resident co-payment increases, timing of funding rate increases or additional funding, the timing of disposals and acquisitions, and capital market and financing activities. For the three months and year ended December 31, 2022, the Company's results have been impacted by the timing of government assistance

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

received related to pandemic expenses and capital costs, occupancy rates, increased costs pertaining to labour and higher utilities and insurance premiums, mark-to-market adjustments on share-based compensation and fair value adjustments on interest rate swap contracts.

A discussion of the operating results for the year ended December 31, 2022 compared to the same period in the prior year is provided in the section "Operating Results".

Selected Annual Financial Information

The following table summarizes selected annual financial information for the years ended December 31, 2022, 2021 and 2020:

Thousands of Canadian dollars, except per share data	2022	2021	2020
Revenue	718,590	668,494	664,233
Income (loss) before provision for (recovery of) income taxes	11,181	28,033	(34,437)
Net income (loss)	10,668	20,648	(24,487)
Per share basic and diluted	0.149	0.310	(0.365)
OFFO	69,078	76,992	68,897
Per share basic and diluted	0.965	1.148	1.028
AFFO	67,475	72,757	69,568
Per share basic and diluted	0.943	1.085	1.038
Dividends declared	67,315	62,749	62,732
Per share	0.936	0.936	0.936
Total assets(1)	1,680,428	1,609,189	1,678,129
Total debt(2)	977,964	950,284	1,032,624

Notes:

Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization.
The principal reserve fund was fully paid in October 2020, upon the redemption of the Series B Secured Debentures.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Operating Results

The following table represents the operating results for the periods ended December 31:

Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Revenue Expenses Operating expenses, net(1) Depreciation and amortization Administrative expenses Share of net loss in joint ventures Impairment loss Net finance charges Transaction costs Gain on disposal ofproperties	185,870 174,175 11,695 718,590 668,494 50,096 154,475 140,729 13,746 588,481 526,353 62,128 11,755 11,923 (168) 47,337 53,069 (5,732) 13,307 7,599 5,708 39,370 31,270 8,100 3,430 22 3,408 11,275 30 11,245 — — — 12,788 — 12,788 9,164 6,886 2,278 25,689 27,380 (1,691) 2,554 783 1,771 6,195 2,359 3,836 (4) — — (23,726) — (23,726)
Income(loss) beforeprovision for income taxes	194,681 167,942 26,743 707,409 640,461 66,948 (8,811) 6,233 (15,044) 11,181 28,033 (16,852)
Provision for (recovery of) income taxes Current Deferred	(73) (388) 315 4,299 2,320 1,979 (2,063) 1,967 (4,030) (3,786) 5,065 (8,851)
Net income(loss)	(2,136) 1,579 (3,715) 513 7,385 (6,872) (6,675) 4,654 (11,329) 10,668 20,648 (9,980)
Total assets	1,680,4281,609,189 71,239 1,680,4281,609,189 71,239
Total debt	977,964 950,284 27,680 977,964 950,284 27,680

Note:

1.Operating expenses are net of pandemic related funding.

Retirement

The Company's Retirement portfolio consists of 38 Retirement Residences as of December 31, 2022, four of which are located in British Columbia, five are located in Saskatchewan, and 29 are located in Ontario. Our Retirement portfolio operates in well located markets and generated approximately 50% of the Company's total NOI for Q4 2022.

Long-term Care

The Company's LTC portfolio consists of 42 LTC communities, eight of which are located in British Columbia and 34 of which are located in Ontario. Our LTC portfolio contributed approximately 50% to the Company's total NOI for Q4 2022.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Joint Arrangement

A joint arrangement can be a joint venture or a joint operation. In a joint venture, the parties that have joint control of the arrangement have the rights to the net assets of the arrangement. In a joint operation, the parties that have joint control of the arrangement have the rights to the assets, and obligations for the liabilities, relating to the arrangement.

The following table summarizes the classification of properties which are owned through the Company's joint arrangements, or which are partially owned as at December 31, 2022:

Joint Arrangements	Number of	Sienna	Joint arrangement	Accounting
	properties	ownership	type	treatment
Sienna Baltic Development LP(2)	2	40 % / 77 %	Joint operation	Proportionate
Sienna-RSH Niagara Falls LP(1)	0	70 %	Joint venture	Equity
Sienna-Sabra LP	12	50 %	Joint venture	Equity

Notes:

The property of Sienna-RSH Niagara Falls LP is under development as of December 31, 2022.
Sienna Baltic Development LP owns 40% of Nicola Lodge and 77% of Glenmore Lodge.

On January 25, 2022, the Company formed a joint venture with a third party for the purpose of owning and operating retirement residences. The Company owns 50% interest in this joint venture. The joint venture first acquired a portfolio of 11 seniors’ living assets in Ontario and Saskatchewan on May 16, 2022, and subsequently acquired another retirement residence in Saskatchewan on June 1, 2022. The Company has accounted for this joint venture using the equity method of accounting, since this joint arrangement is structured through a separate legal vehicle, and the Company has rights to the net assets of the arrangement.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Consolidated Net Operating Income

The following table represents the Company's consolidated net operating income, including the Company's share of net operating income from Equity-Accounted Joint Venture, for the period ended December 31:

Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Revenue Same property Share of revenue from Equity-Accounted Joint Venture(2) Acquisition, development and other	185,473 168,887 16,586 711,799 648,041 63,758 7,346 — 7,346 18,251 — 18,251 397 5,288 (4,891) 6,791 20,453 (13,662)
Total Adjusted Revenue	193,216 174,175 19,041 736,841 668,494 68,347
Operating Expenses, net Same property Net pandemic expenses (recoveries)(1) Share of operating expenses from Equity-Accounted Joint Venture(2) Acquisition, development and other	151,541 136,099 15,442 574,865 516,073 58,792 2,597 21 2,576 8,223 (7,219) 15,442 6,224 — 6,224 14,467 — 14,467 337 4,609 (4,272) 5,393 17,499 (12,106)
Total Adjusted Operating Expenses, net	160,699 140,729 19,970 602,948 526,353 76,595
NOI Same property Share of Equity-Accounted Joint Venture(2) Acquisition, development and other	31,150 32,596 (1,446) 128,753 137,957 (9,204) 1,122 — 1,122 3,784 — 3,784 245 850 (605) 1,356 4,184 (2,828)
Total NOI	32,517 33,446 (929) 133,893 142,141 (8,248)

Notes:

For Q4 2022, includes government assistance related to the pandemic of $11,662 (2021 - $16,494) and incremental pandemic related expenses of $14,259 (2021 - $16,515), resulting in net pandemic expenses of $2,597 (2021 - $21). For the year ended December 31, 2022, includes government assistance related to the pandemic of $58,808 (2021 - $101,061) and incremental pandemic related expenses of $67,031 (2021 - $93,842), resulting in net pandemic expenses (recoveries) of $8,223 (2021 - $(7,219)). Government assistance related to the pandemic is recognized to the extent that eligible expenses have been incurred and funding allocations are reasonably determinable.
Includes the Company's pro rata share of each of the revenue, operating expenses, and NOI of its Equity-Accounted Joint Venture.

Fourth Quarter 2022 Operating Results

The Company's total same property revenues for Q4 2022 increased by $16,586 to $185,473, compared to Q4 2021. Retirement's same property revenues for Q4 2022 increased by $4,042 to $41,780, compared to Q4 2021, primarily due to occupancy growth and annual rental rate increases in line with market conditions. LTC's same property revenues for Q4 2022 increased by $12,544 to $143,693, compared to Q4 2021, primarily due to flow-through funding for increased direct care provided to residents, as well as higher preferred accommodation revenues from increased occupancy.

The Company's total same property operating expenses, excluding net pandemic expenses, for Q4 2022 increased by $15,442 to $151,541, compared to Q4 2021. Retirement's same property operating expenses, excluding net pandemic expenses of $268, for Q4 2022 increased by $3,146 to $26,652, compared to Q4 2021, primarily due to higher agency and food costs, and increased maintenance and property taxes. LTC's operating expenses for Q4 2022, excluding net pandemic expenses of $2,329, increased by $12,296 to

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

$124,889, compared to Q4 2021, mainly due to higher expenses related to an increase in governmentfunded direct care provided to residents, as well as increased labour, agency staff costs, insurance and utilities costs.

Net pandemic expenses for Q4 2022 increased by $2,576 to $2,597 compared to Q4 2021, mainly due to an increase in LTC's net pandemic expenses for Q4 2022 by $2,471. During the quarter, the LTC segment received retroactive pandemic funding of $2,215, of which $645 related to prior years and $1,569 related to Q2 and Q3 of 2022. In the previous year, the LTC segment received retroactive pandemic funding of $2,603 to support pandemic expenses incurred during the year of 2020 and Q1 2021. Excluding retroactive pandemic funding, net pandemic costs were $4,811 in Q4 2022 compared to $2,624 in Q4 2021.

The Company's total same property NOI for Q4 2022 decreased by $1,446 to $31,150, compared to Q4 2021. Retirement's same property NOI for Q4 2022 increased by $642 to $14,712. LTC's same property NOI for Q4 2022 decreased by $2,088 to $16,438 compared to Q4 2021.

Year ended December 31, 2022 Operating Results

The Company's total same property revenues for the year ended December 31, 2022, increased by $63,758 to $711,799, compared to the year ended December 31, 2021. Retirement's same property revenues for the year ended December 31, 2022 increased by $12,705 to $156,842, compared to the year ended December 31, 2021, primarily due to occupancy growth and annual rental rate increases in line with market conditions. LTC's same property revenues for the year ended December 31, 2022 increased by $51,053 to $554,957, compared to the year ended December 31, 2021, primarily due to flow-through funding for increased direct care provided to residents, annual inflationary funding increases, and higher preferred accommodation revenues from increased occupancy compared to the prior period.

The Company's total same property operating expenses, excluding net pandemic expenses, for the year ended December 31, 2022 increased by $58,792 to $574,865, compared to the year ended December 31, 2021. Retirement's same property operating expenses, excluding net pandemic expenses, for the year ended December 31, 2022 increased by $7,553 to $96,966, compared to the year ended December 31, 2021, primarily due to higher labour, increased food, utilities, insurance, property taxes, maintenance and marketing costs. LTC's operating expenses for the year ended December 31, 2022, excluding net pandemic expenses of $6,759, increased by $51,239 to $477,899, compared to the year ended December 31, 2021, mainly due to higher expenses related to an increase in government-funded direct care, annual inflationary labour cost increases, and higher insurance and utilities.

Net pandemic expenses for the year ended December 31, 2022 increased by $15,442 to $8,223 compared to the year ended December 31, 2021. This is mainly due to an increase in LTC's net pandemic expenses for the year ended December 31, 2022 by $16,220, which included $4,766 of retroactive funding received in the current period related to pandemic expenses incurred in excess of available funding during years 2021 and 2020. In the previous year, the LTC segment received retroactive funding of $17,176 to support pandemic expenses incurred during 2020. Excluding retroactive pandemic funding, net pandemic costs were $12,989 for the year ended December 31, 2022 compared to $9,957 in 2021.

The Company's total same property NOI for the year ended December 31, 2022 decreased by $9,204 to $128,753, compared to the year ended December 31, 2021. Retirement's same property NOI for the year

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

ended December 31, 2022 increased by $5,860 to $58,424. LTC's same property NOI for the year ended December 31, 2022 decreased by $15,064 to $70,329 compared to the year ended December 31, 2021. The decrease in LTC's same property NOI was due to net pandemic expenses of $6,759 for the year ended December 31, 2022, which included $7,445 of retroactive pandemic funding related to prior periods as compared to net pandemic recoveries of $9,461 for the year ended December 31, 2021. The year to date December 31, 2022, included a retroactive pandemic funding of $4,766 received in 2022 related to pandemic expenses incurred in excess of available funding during the 2021 and 2020 year end.

Due to the timing or seasonality of certain operating expenses such as utilities and maintenance, occupancy levels, government assistance and annual adjustments to government funding, trends which may appear in operating margins may be merely coincidental, as operating margins may vary from quarter to quarter.

Net Operating Income by Segment

The Company's consolidated net operating income consists of its Retirement and LTC business segments.

Retirement

The following table represents the results of the Retirement segment for the periods ended December 31:

Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Retirement Revenue Same property Share of revenue from Equity-Accounted Joint Venture(2) Acquisition, development and other	41,780 37,738 4,042 156,842 144,137 12,705 7,346 — 7,346 18,251 — 18,251 397 827 (430) 2,412 3,840 (1,428)
Total Adjusted Retirement Revenue	49,523 38,565 10,958 177,505 147,977 29,528
Retirement Expenses, net Same property Net pandemic expenses(1) Share of expenses from Equity-Accounted Joint Venture(2) Acquisition, development and other	26,652 23,506 3,146 96,966 89,413 7,553 268 163 105 1,464 2,242 (778) 6,224 — 6,224 14,467 — 14,467 232 678 (446) 1,169 2,889 (1,720)
Total Adjusted Retirement Expenses, net	33,376 24,347 9,029 114,066 94,544 19,522
Retirement NOI Same property Share of Equity-Accounted Joint Venture(2) Acquisition, development and other	14,712 14,070 642 58,424 52,564 5,860 1,122 — 1,122 3,784 — 3,784 313 148 165 1,231 869 362
Total Adjusted Retirement NOI	16,147 14,218 1,929 63,439 53,433 10,006

Notes:

For Q4 2022, includes government assistance related to the pandemic of $587 (2021 - $621) and incremental pandemic related expenses of $855 (2021 - $784), resulting in net pandemic expenses of $268 (2021 - $163). For the year ended December 31, 2022, includes government assistance related to the pandemic of $2,495 (2021 - $3,932) and incremental pandemic related expenses of $3,959 (2021 - $6,174), resulting in net pandemic expenses of $1,464 (2021 - $2,242). Government assistance related to the pandemic is recognized to the extent that eligible expenses have been incurred and funding allocations are reasonably determinable.
Includes the Company's pro rata share of each of the revenue, operating expenses, and NOI of its Equity-Accounted Joint Venture.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Fourth Quarter 2022 Retirement Results

Retirement's same property revenues for Q4 2022 increased by $4,042 to $41,780, compared to Q4 2021, primarily attributable to occupancy growth and annual rental rate increases in line with market conditions.

Retirement's same property operating expenses, excluding net pandemic expenses, for Q4 2022 increased by $3,146 to $26,652 compared to Q4 2021, primarily due to higher labour and food costs, increased maintenance and property taxes. Net pandemic expenses for Q4 2022 were $268 representing an increase of $105 compared to Q4 2021.

Retirement's same property NOI for Q4 2022 increased by $642 to $14,712, compared to Q4 2021. Excluding net pandemic expenses, Retirement's same property NOI for Q4 2022 increased by $896 to $15,128, compared to Q4 2021.

Year ended December 31, 2022 Retirement Results

Retirement's same property revenues for the year ended December 31, 2022 increased by $12,705 to $156,842, compared to the year ended December 31, 2021, primarily attributable to occupancy growth and annual rental rate increases in line with market conditions.

Retirement's same property operating expenses, excluding net pandemic expenses, for the year ended December 31, 2022 increased by $7,553 to $96,966 compared to the year ended December 31, 2021, primarily due to higher labour, food, utilities, insurance, property taxes, maintenance and marketing costs. Net pandemic expenses for the year ended December 31, 2022 were $1,464 representing a decrease of $778 compared to the year ended December 31, 2021.

Retirement's same property NOI for the year ended December 31, 2022 increased by $5,860 to $58,424, compared to the year ended December 31, 2021. Excluding net pandemic expenses, Retirement's same property NOI for the year ended December 31, 2022 increased by $5,152 to $59,876, compared to the year ended December 31, 2021.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Long-term Care

The following table represents the results of the LTC segment for the periods ended December 31:

Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Long-term Care Revenue Same property Development and other(1)	143,693 131,149 12,544 554,957 503,904 51,053 — 4,461 (4,461) 4,379 16,613 (12,234)
Total Long-term Care Revenue	143,693 135,610 8,083 559,336 520,517 38,819
Long-term Care Expenses, net Same property Net pandemic expenses (recoveries)(2) Development and other(1)	124,889 112,593 12,296 477,899 426,660 51,239 2,329 (142) 2,471 6,759 (9,461) 16,220 105 3,931 (3,826) 4,224 14,610 (10,386)
Total Long-term Care Expenses, net	127,323 116,382 10,941 488,882 431,809 57,073
Long-term Care NOI Same property Development and other(1)	16,438 18,526 (2,088) 70,329 85,393 (15,064) (68) 702 (770) 125 3,315 (3,190)
Total Long-term Care NOI	16,370 19,228 (2,858) 70,454 88,708 (18,254)

Notes:

Includes the financial results of one long-term care community which was sold in March 2022.
For Q4 2022, includes government assistance related to the pandemic of $11,075 (2021 - $15,873) and incremental pandemic related expenses of $13,404 (2021 - $15,731), resulting in net pandemic expenses (recoveries) of $2,329 (2021 - $(142)). For the year ended December 31, 2022, includes government assistance related to the pandemic of $56,313 (2021 - $97,129) and incremental pandemic related expenses of $63,072 (2021 - $87,668), resulting in net pandemic expenses (recoveries) of $6,759 (2021 - $(9,461)). Government assistance related to the pandemic is recognized to the extent that eligible expenses have been incurred and funding allocations are reasonably determinable.

Fourth Quarter 2022 Long-term Care Results

LTC's same property revenues for Q4 2022 increased by $12,544 to $143,693, compared to Q4 2021, primarily due to flow-through funding for increased direct care provided to residents and higher preferred accommodation revenues from increased occupancy compared to Q4 2021, partly offset by occupancy clawbacks from homes that did not meet the 97% occupancy level.

Excluding net pandemic expenses, LTC's same property operating expenses for Q4 2022 increased by $12,296 to $124,889, compared to Q4 2021, mainly due to higher expenses related to an increase in labour.

LTC's net pandemic expenses for Q4 2022 were $2,329, representing an increase in net pandemic expenses of $2,471 compared to Q4 2021. During the quarter, the LTC segment received retroactive pandemic funding of $2,215, of which $270 related to 2020, $376 related to 2021 and $1,569 related to Q2 and Q3 2022. In Q4 2021, the LTC segment received retroactive pandemic funding of $2,603 to support pandemic expenses incurred in prior periods. Excluding retroactive pandemic funding, net pandemic costs were $4,544 in Q4 2022 compared to $2,461 in Q4 2021.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

LTC's same property NOI for Q4 2022 decreased by $2,088 to $16,438, compared to Q4 2021. Excluding net pandemic expenses, LTC's same property NOI for Q4 2022 increased by $248 to $18,804, compared to Q4 2021.

Year ended December 31, 2022 Long-term Care Results

LTC's same property revenues for the year ended December 31, 2022 increased by $51,053 to $554,957, compared to the year ended December 31, 2021, primarily due to flow-through funding for increased direct care provided to residents, annual inflationary funding increases, and higher preferred accommodation revenues from increased occupancy compared to Q4 2021.

LTC's same property operating expenses, excluding net pandemic expenses, for the year ended December 31, 2022 increased by $51,239 to $477,899, compared to the year ended December 31, 2021, mainly due to higher expenses related to an increase in government-funded direct care, higher labour, insurance and utilities costs.

LTC's net pandemic expenses for the year ended December 31, 2022 were $6,759, which included $4,766 of retroactive pandemic funding related to pandemic expenses incurred in 2021 compared to net pandemic recoveries of $9,461 to the year ended December 31, 2021, which included retroactive pandemic funding of $17,176 received during 2021 related to pandemic expenses incurred in excess of available funding during the year ended December 31, 2020. Excluding retroactive pandemic funding, LTC's net pandemic costs were 14,204 for the year ended December 31, 2022 compared to $7,715 for year ended December 31, 2021.

LTC's same property NOI for the year ended December 31, 2022 decreased by $15,064 to $70,329, compared to the year ended December 31, 2021. Excluding net pandemic expenses, LTC's same property NOI for the year ended December 31, 2022 decreased by $186 to $77,058, compared to the same period in 2021.

Depreciation and Amortization

Fourth Quarter 2022

Depreciation and amortization for Q4 2022 decreased by $168 to $11,755, compared to Q4 2021, due to timing of additions and disposals during the period.

Year ended December 31, 2022

Depreciation and amortization for the year ended December 31, 2022 decreased by $5,732 to $47,337 compared to the comparative prior year period, due to completion of the amortization of resident relationships in 2021 and timing of additions and disposals.

Impairment loss

Fourth Quarter 2022 and Year ended December 31, 2022

In Q2 2022, the Company incurred an impairment loss of $12,788 before recognition of a deferred tax benefit of $3,398 on one of its long term care communities. The impairment provision is comprised of a write-down of property and equipment of $11,362, and of licences in the amount of $1,426.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Administrative Expenses

Thousands of Canadian dollars	Three months Ended Year ended December 31, December 31,
	2022 2021 Change 2022 2021 Change
General and administrative expenses Restructuring costs SOAR Program Share-based compensation Pandemic related expenses	6,300 7,123 (823) 28,667 27,566 1,101 6,550 — 6,550 6,550 — 6,550 465 — 465 2,125 — 2,125 213 343 (130) 1,951 1,440 511 (221) 133 (354) 77 2,264 (2,187)
Total administrative expenses	13,307 7,599 5,708 39,370 31,270 8,100

Fourth Quarter 2022

Administrative expenses for Q4 2022 increased by $5,708 to $13,307, compared to Q4 2021, primarily due to the restructuring costs of one LTC community, partially offset by lower general and administrative costs.

Year ended December 31, 2022

Administrative expenses for the year ended December 31, 2022 increased by $8,100 to $39,370, compared to the year ended December 31, 2021, primarily due to the restructuring costs of one LTC community, the Company's introduction of the SOAR program and an increase in general and administrative costs, partially offset by lower share-based compensation costs.

Share of Net Loss in Joint Venture (JV)

Fourth Quarter 2022

The Company's share of net loss in a joint venture of $3,430 (2021 - $22), was primarily related to the newly entered into joint venture with Sabra. This balance is comprised of NOI of $1,122, less depreciation and amortization of $4,146, less finance costs of $192 and transaction costs of $214.

Year ended December 31, 2022

The Company's share of net loss in a joint venture of $11,275 (2021 - $30), was primarily related to the newly entered into joint venture with Sabra. This balance is comprised of NOI of $3,784, less depreciation and amortization of $10,781, less finance costs of $500 and transaction costs of $3,778.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Net Finance Charges

Thousands of Canadian dollars	Three months ended Year ended December 31, December 31,
	2022 2021 Change 2022 2021 Change
Finance costs Interest expense on mortgages Interest expense on debentures Interest on unsecured term loan Interest expense on credit facilities Interest expense on right-of-use assets Redemption premium paid Amortization of financing charges and fair value adjustments on acquired debt Net settlement payment (recovery) on interest rate swap contracts Fair valuegain on interest rate swapcontracts	4,479 3,808 671 16,11215,554 558 3,586 3,585 1 14,22612,748 1,478 984 — 984 2,305 — 2,305 568 230 338 1,100 2,075 (975) 28 14 14 99 61 38 — — — — 160 (160) 699 560 139 2,471 2,510 (39) (556) 685 (1,241) 408 2,773 (2,365) (87) (1,629) 1,542 (9,194) (6,776) (2,418)
	9,701 7,253 2,448 27,52729,105(1,578)
Finance income Interest income on construction funding receivable Other interest income	185 314 (129) 878 1,269 (391) 352 53 299 960 456 504
	537 367 170 1,838 1,725 113
Net finance charges	9,164 6,886 2,278 25,68927,380(1,691)

Fourth Quarter 2022

Net finance charges for Q4 2022 increased by $2,278 to $9,164, compared to Q4 2021, primarily attributable to decrease in fair value gain on interest rate swap contracts, interest on the new term loan to finance the acquisition earlier in the year, and higher interest expense on floating rate debt, partially offset by favourability from interest rate swap contracts.

Year ended December 31, 2022

Net finance charges for the year ended December 31, 2022 decreased by $1,691 to $25,689, compared to the year ended December 31, 2021, primarily attributable to higher fair value gain on interest rate swap contracts and favourability from interest rate swap contracts, partially offset by interest on new term loan in the year and interest on Series C Unsecured Debenture issued in June 2021.

Transaction Costs

Fourth Quarter 2022

Transaction costs for Q4 2022 increased by $1,771 to $2,554 compared to Q4 2021 primarily attributable to one-time development costs and the increase in activities related to development projects.

Year ended December 31, 2022

Transaction costs for the year ended December 31, 2022 increased by $3,836 to $6,195 compared to the year ended December 31, 2021 primarily attributable to the acquisitions and development projects.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Income Taxes

Fourth Quarter 2022

Income tax expense for Q4 2022 decreased by $3,715 resulting to an income tax recovery of $2,136 (current tax recovery of $73 and deferred tax recovery of $2,063), compared to Q4 2021 income tax expense of $1,579 (current tax recovery of $388 and deferred tax expense of $1,967). This is primarily attributable to a net loss for Q4 2022 and timing differences related to depreciation of property and equipment.

Year ended December 31, 2022

Income tax expense for year ended December 31, 2022 decreased by $6,872 resulting in an income tax expense of $513 (current tax expense of $4,299 and deferred tax recovery of $3,786), compared to income tax expense of $7,385 (current tax expense of $2,320 and deferred tax expense of $5,065) for the year ended December 31, 2022. This is primarily attributable to lower NOI, timing differences related to the impairment loss and depreciation of property and equipment, partially offset by the tax gain on property dispositions.

Business Performance

Non-IFRS Measures

Readers are cautioned that certain terms used in the MD&A listed below, including any related per share amounts, used by Management of the Company to measure, compare and explain the operating results and financial performance of Sienna do not have any standardized meaning prescribed under IFRS and, therefore, should not be construed as alternatives to net income, cash flow from operating activities, or any other measure prescribed under IFRS. These terms are defined in the following table and reconciliations to the most comparable IFRS measure are referenced, as applicable. The following terms do not have a standardized meaning prescribed by IFRS and may not be comparable to similarly titled measures presented by other publicly traded entities.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Adjusted Funds from Operations

The IFRS measure most directly comparable to FFO and OFFO is "net income". The following table represents the reconciliation of "net income" to FFO and OFFO for the periods ended December 31. The reconciliation from FFO to AFFO is provided as supplementary information.

Thousands of Canadian dollars, except share and per share data	Three months ended December 31, Year ended December 31,
	2022 2021 Change 2022 2021 Change
Net income (loss) Deferred income tax expense (recovery) Depreciation and amortization Transaction costs Net settlement payment on interest rate swap contracts Fair value gain on interest rate swap contracts Gain on disposal of properties, net of tax Shares granted under SOAR program Impairment loss Equity-Accounted Joint Ventures: Depreciation and amortization Shares granted under SOAR program Transaction cost	(6,675) 4,654 (11,329) 10,668 20,648 (9,980) (2,063) 1,967 (4,030) (3,786) 5,065 (8,851) 10,898 11,038 (140) 43,951 49,511 (5,560) 2,554 783 1,771 6,195 2,359 3,836 (556) 685 (1,241) 408 2,773 (2,365) (87) (1,629) 1,542 (9,194) (6,776) (2,418) (3) — (3) (20,873) — (20,873) 465 — 465 2,125 — 2,125 — — — 12,788 — 12,788 4,146 — 4,146 10,781 — 10,781 58 — 58 58 — 58 254 — 254 3,819 — 3,819
Funds from operations (FFO) Depreciation and amortization - corporate Amortization of financing charges and fair value adjustments on assumed debt(2) Net settlement receipt (payment) on interest rate swap contracts Restructuring costs Redemption premium paid, net of tax	8,991 17,498 (8,565) — 56,940 73,580 (16,698) 857 885 (28) 3,386 3,558 (172) 747 560 187 2,610 2,510 100 556 (685) 1,241 (408) (2,773) 2,365 6,550 6,550 6,550 — 6,550 — — — — 117 (117)
Operating funds from operations (OFFO) Construction funding Maintenance capital expenditure(3) Net pandemic capital expenditure(1)	17,701 18,258 (557) 69,078 76,992 (7,914) 2,030 2,365 (335) 9,102 9,780 (678) (2,429) (3,773) 1,344 (10,705) (14,025) 3,320 — (295) 295 — 10 (10)
Adjusted funds from operations (AFFO)	17,302 16,555 747 67,475 72,757 (5,282)
Adjusted funds from operations (AFFO) Dividends declared	17,302 16,555 747 67,475 72,757 (5,282) (17,065) (15,688) (1,377) (67,315) (62,749) (4,566)
AFFO retained	237 867 (630) 160 10,008 (9,848)

FFO per share OFFO per share AFFO per share Weighted average common shares outstanding	0.123 0.261 (0.138) 0.795 1.098 (0.303) 0.243 0.272 (0.029) 0.965 1.148 (0.183) 0.237 0.247 (0.010) 0.943 1.085 (0.142) 72,914,45167,039,123 71,589,104 67,039,123

Notes:

For Q4 2022 and year ended December 31, 2022, includes pandemic capital expenditures of $2,582 and $25,652, respectively (2021 - $203 and $9,860), offset by related pandemic funding of $2,582 and $25,652, respectively (2021 - $18 and $9,443, respectively), resulting in net pandemic capital expenditures of $nil and $nil (2021 - $185 and $417, respectively). Government assistance related to the pandemic is recognized to the extent that eligible expenses have been incurred and funding allocations are reasonably determinable.
For Q4 2022 and year ended December 31, 2022, includes the Company's share of amortization of financing charges and fair value adjustments on assumed debt in Equity-Accounted Joint Venture of $50 and $139 respectively (2021 -$nil and $nil).
For Q4 2022 and year ended December 31, 2022 includes the Company's share of maintenance capital expenditure in Equity-Accounted Joint Venture of $177 and $289.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Fourth Quarter 2022 Performance

For Q4 2022, FFO decreased by $8,565 to $8,991, compared to Q4 2021. The decrease was primarily due to lower NOI, restructuring costs, and higher share of net loss in JVs.

For Q4 2022, OFFO decreased by $557 to $17,701, compared to Q4 2021. The decrease was primarily attributable to lower NOI.

For Q4 2022, AFFO increased by $747 to $17,302, compared to Q4 2021. The increase was primarily related to the lower spend on maintenance capital offset by the decrease in OFFO.

Year ended December 31, 2022 Performance

FFO for the year ended December 31, 2022 decreased by $16,698 to $56,940, over the prior year. The decrease was primarily due to lower NOI, driven mainly by a higher retroactive pandemic funding received in 2021, and restructuring costs.

OFFO for the year ended December 31, 2022 decreased by $7,914 to $69,078, over the prior year. The decrease was primarily attributable to lower NOI, partially offset by net settlement payments on interest rate swap contracts.

AFFO for the year ended December 31, 2022 decreased by $5,282 to $67,475, over the comparative year. The decrease in AFFO was principally related to the decrease in OFFO, offset by lower spend on maintenance capital.

Construction Funding

The Company receives construction funding subsidies from the Government of Ontario on a per bed per diem basis to support the costs of developing or redeveloping eligible LTC homes. There are several eligibility requirements, including receiving approval from the Ministry on the development or redevelopment and completing the construction in accordance with a development agreement signed with the MLTC. This funding is non-interest bearing, and is received subject to the condition that the residences continue to operate as long-term care residences for the period for which they are entitled to the construction funding. As at December 31, 2022, the condition for funding has been met.

The construction funding amount to reconcile from OFFO to AFFO represents the change in the construction funding receivable balance, which consists of the cash to be received, offset by the interest income on the construction funding receivable recognized in "net income". For the years ending December 31, 2022 through 2027, and thereafter, the Company estimates that the construction funding amount will be as follows:

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Thousands of Canadian dollars	Construction funding interest income(1)	Construction funding principal(2)	Total construction funding to be received
2023	377	5,953	6,330
2024	295	2,539	2,834
2025	214	1,323	1,537
2026	147	1,193	1,340
2027	109	461	570
Thereafter	617	3,193	3,810
	1,759	14,662	16,421

Notes:

The interest income relates to interest accretion resulting from the construction funding receivable that was initially measured at fair value and subsequently measured at amortized cost using the effective interest method.
The construction funding principal received is an adjustment to reconcile from OFFO to AFFO.

For the three months and year ended December 31, 2022, interest income on construction funding of $185 and $878, respectively (2021 - $314 and $1,269, respectively) was recognized, and an adjustment of $2,030 and $9,102, respectively (2021 - $2,365 and $9,780, respectively) was made to AFFO for construction funding principal received.

Maintenance Capital Expenditures

The Company monitors all of its properties for ongoing maintenance requirements. As part of the capital investments' monitoring process, items are assessed and prioritized based on the urgency and necessity of the expenditure to sustain or maintain the condition of buildings, or to meet residents' needs. The following table summarizes the Company's maintenance capital expenditures for the periods ended December 31:

	Three months	ended	Twelve months	ended
Thousands of Canadian dollars	2022	2021	2022	2021
Building maintenance	690	1,896	3,386	3,416
Mechanical and electrical	965	469	2,770	2,684
Suite renovations and common area upgrades	520	1,260	2,595	5,790
Communications and information systems	67	64	351	208
Furniture, fixtures and equipment	187	84	1,603	1,927
Total maintenance capital expenditures	2,429	3,773	10,705	14,025
Capital Investments in Equity-Accounted Joint Venture	177	—	289	—

Building Maintenance

Building maintenance include the costs for structures, roofing, exterior grounds, fire safety, and sprinklers. For the three months and year ended December 31, 2022, the decline in building maintenance compared to the prior year is due timing of repairs and sprinkler replacement.

Mechanical and Electrical

Mechanical and electrical expenditures include the costs for heating, air conditioning and ventilation systems, generators, boilers, pumps and building elevators.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Suite Renovations and Common Area Maintenance

Suite renovations and common area maintenance are expenditures to maintain the marketability of the Company's residences. Flooring and carpeting replacements are often done in conjunction with suite renovations. For the three months and year ended December 31, 2022, the decline in suite renovations compared to the prior year is due timing of upgrades.

Communication and Information Systems

Communication and information systems' expenditures include the costs for purchasing and installing computer equipment, software applications, telecommunication systems and wireless solutions.

Furniture, Fixtures and Equipment

Furniture, fixtures and equipment expenditures include the costs for replacing or maintaining residences' furnishings and equipment, including those in residents' rooms, as well as kitchen facilities, laundry facilities and dining furnishings.

Reconciliation of Cash Flow from Operations to Adjusted Funds from Operations

The IFRS measure most directly comparable to AFFO is "cash flow from operating activities". The following table represents the reconciliation of cash provided by operating activities to AFFO for the periods ended December 31:

December 31:
Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Cash provided by operating activities Construction funding principal Transaction costs Maintenance capital expenditures Net pandemic capital expenditures Net change in working capital, interest and taxes Restricted share units recovery Tax on disposal of properties Redemption premium Restructuring costs Shares granted under SOAR program FFO of Equity-Accounted Joint Venture	14,957 31,923 (16,966) 106,077 98,516 7,561 2,030 2,365 (335) 9,102 9,780 (678) 2,809 783 2,026 10,015 2,359 7,656 (2,429) (3,773) 1,344 (10,705) (14,025) 3,320 — (295) 295 — 10 (10) (7,835) (14,605) 6,770 (58,741) (24,434) (34,307) (19) 157 (176) 636 434 202 1 — 1 2,852 — 2,852 — — — — 117 (117) 6,550 — 6,550 6,550 — 6,550 465 — 465 2,125 — 2,125 774 — 774 (436) — (436)
Adjusted funds from operations (AFFO)	17,303 16,555 748 67,475 72,757 (5,282)
Adjusted funds from operations (AFFO) Dividends declared	17,302 16,555 747 67,475 72,757 (5,282) (17,065) (15,688) (1,377) (67,315) (62,749) (4,566)
AFFO retained (shortfall) over dividend reinvestment	237 867 (630) 160 10,008 (9,848)

The AFFO retained over dividends declared for Q4 2022 and the year ended December 31, 2022 is lower compared to prior year periods, primarily due to decrease in NOI as a result of retroactive pandemic funding received in 2021, as well as additional dividends declared as a result of the issuance of shares in 2022.

Refer to the "Cash Flow Analysis" section for details on the change from Q4 2021 to Q4 2022 on cash flow provided by operating activities.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Reconciliation of Net Income to Net Operating Income

The IFRS measure most directly comparable to net operating income is "net income". The following table represents the reconciliation of net income to NOI for the periods ended December 31:

	Three Months	Ended	Year Ended
Thousands of Canadian dollars	2022	2021	2022	2021
Net income (loss)	(6,675)	4,654	10,668	20,648
Add back:
Depreciation and amortization	11,755	11,923	47,337	53,069
Administrative expenses	13,307	7,599	39,370	31,270
Net finance charges	9,164	6,886	25,689	27,380
Provision for income taxes	(2,136)	1,579	513	7,385
Transactions costs	2,554	783	6,195	2,359
Share of net loss in Equity-Accounted Joint Venture	3,430	22	11,275	30
Gain on disposal of properties	(4)	—	(23,726)	—
Impairment loss	—	—	12,788	—
Share of NOI in Equity-Accounted Joint Venture	1,122	—	3,784	—
Net operating income (NOI)	32,517	33,446	133,893	142,141

Financial Position Analysis

Balance Sheet Analysis

The following table summarizes the significant changes in assets, liabilities and equity as at December 31, 2022 compared to December 31, 2021:

Thousands of Canadian dollars	2022	2021	Change
Total assets	1,680,428	1,609,189	71,239
Total liabilities	1,245,736	1,203,336	42,400
Total equity	434,692	405,853	28,839

Total assets increased by $71,239 to $1,680,428 primarily due to the Company's investment in Sienna-Sabra LP, increases in cash and cash equivalents, prepaid expenses and deposits, partially offset by decreases in construction funding receivable, government funding receivable, the disposal of assets held for sale and impairment losses.

Total liabilities increased by $42,400 to $1,245,736 primarily due to the addition of a new unsecured term loan and increase in government funding payable, partially offset by decreases in deferred income taxes and share-based compensation liability.

Total equity increased by $28,839 to $434,692 primarily due to the Company's issuance of shares, partially offset by dividends declared during the period.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Cash Flow Analysis

The following table represents the summary of cash flows for the periods ended December 31:

Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Cash provided by (used in): Operating activities Investing activities Financingactivities	14,957 31,923 (16,966)106,077 98,516 7,561 (4,619) (7,497) 2,878 (134,726) (18,046) (116,680) (23,201) (27,813) 4,612 37,646 (147,094)184,740
(Decrease) increase in cash and cash equivalents during theperiod	(12,863) (3,387) (9,476) 8,997 (66,624) 75,621
Cash and cash equivalents, end ofperiod	38,050 29,053 8,997 38,050 29,053 8,997

Fourth Quarter 2022

Cash inflows provided by operating activities for the three months ended December 31, 2022 decreased by $16,966 to $14,957 primarily due to lower accounts payable due to timing of payments, and lower net government funding and assistance received compared to Q4 2021.

Cash outflow from investing activities for the three months ended December 31, 2022 increased by $2,878 to $4,619 primarily due to lower net additions to property and equipment compared to Q4 2021.

Cash outflows used in financing activities for the three months ended December 31, 2022 decreased by $4,612 to $23,201 primarily due to net proceeds from long-term debt offset by higher dividends paid due to a higher number of common shares outstanding.

Year ended December 31, 2022

Cash inflows provided by operating activities for the year ended December 31, 2022 increased by $7,561 to $106,077 primarily due to timing of government funding and assistance received compared to the prior year, offset by higher income tax payments, lower accounts payable due to timing of payments and higher interest paid on long-term debt.

Cash outflows used in investing activities for the year ended December 31, 2022 increased by $116,680 to $134,726 primarily due to the Company's investment in Sienna-Sabra LP and net additions to property and equipment, partially offset by proceeds from disposal of properties.

Cash inflows provided by financing activities for the year ended December 31, 2022 increased by $184,740 to $37,646 primarily due to issuance of equity in Q1 2022, lower repayments of long-term debt and proceeds received from the Company's new unsecured term loan, partially offset by an increase in dividends paid compared to the prior year.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Liquidity and Capital Resources

Liquidity

The Company's primary source of liquidity is cash flow generated from operating activities. The Company expects to meet its operating cash requirements, including required working capital, capital expenditures, and currently scheduled interest payments on debt through fiscal 2023 and beyond, from cash on hand, cash flow from operations, proceeds from refinancing its debt, its committed but unutilized borrowing capacity and, if necessary, will pursue debt or equity financing to provide the Company with additional financial flexibility.

As at December 31, 2022, the Company's liquidity was $286,550, as follows:

Thousands of Canadian dollars	December 31, 2022	December 31, 2021
Cash and cash equivalents	38,050	29,053
Available funds from credit facilities	248,500	196,500
Total	286,550	225,553

As at December 31, 2022, the Company had drawn $60,000 from its available facilities. The Company's liquidity was $329,172 as at February 23, 2023.

In addition, as at December 31, 2022, the Company's share of cash and cash equivalents held in our EquityAccounted Joint Venture was $2,280.

The Company had a working capital deficiency (current liabilities less current assets) of $252,951 as at December 31, 2022, including the current portion of long-term debt of $126,099. To support its working capital deficiency, the Company has available cash from operations, access to multiple sources of financing and has a history of successfully refinancing credit facilities.

The Company has an unencumbered asset pool with a fair value of approximately $1,181,300 as at December 31, 2022, representing an increase of $80,300 from $1,101,000 as at December 31, 2021. The increase in the unencumbered asset pool since the beginning of the year is due to the addition of the retirement properties acquired in Q2 2022, substantially offset by the sale of one long term care community and updated valuations of certain LTC residences.

The unencumbered asset pool provides the Company with financial flexibility to enter into different financing options.

Debt

The Company's objectives are to access and maintain the lowest cost of debt with the most flexible terms available. The Company's debt strategy involves primarily unsecured debentures, conventional and CMHC insured mortgages, and secured and unsecured credit facilities.

The Company's goal is to continue to optimize its debt maturity schedule over a 10-year period in order to manage interest rate and financial risks. The Company's strategy is to build a 10-year debt maturity ladder

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

by refinancing approximately 10% of its debt annually, which is approximately $97,796 as at December 31, 2022. On December 9, 2022, DBRS confirmed Sienna's "BBB" investment grade credit rating with a "Stable" trend from DBRS, along with the "BBB" credit rating for the Company's Series A Unsecured Debentures, Series B Unsecured Debentures and Series C Unsecured Debentures (later defined in the "Debentures" section).

The Company's total debt is comprised as follows:

The Company's total debt is comprised as follows:
Thousands of Canadian dollars	December 31, 2022	December 31, 2021
Series A Unsecured Debentures	150,000	150,000
Series B Unsecured Debentures	175,000	175,000
Series C Unsecured Debentures	125,000	125,000
Unsecured Term Loan	50,000	—
Credit facilities	60,000	12,000
Mortgages	422,678	496,167
Lease liability	2,844	1,312
	985,522	959,479
Fair value adjustments on assumed debt	2,343	2,683
Less: Deferred financingcosts	(9,901)	(11,878)
Total debt	977,964	950,284

The Company's total debt as at December 31, 2022 was $977,964 (December 31, 2021 - $950,284). The increase of $27,680 was primarily related to the unsecured term loan used by the Company to invest in Sienna-Sabra LP for its acquisitions and an increase in the amount drawn under the Unsecured Revolving Credit Facility (defined in the "Credit Facilities" section of this MD&A), partially offset by repayment of property-level mortgages.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

The following table summarizes the scheduled principal maturities of the Company's long-term debt commitments as at December 31, 2022:

Thousands of Canadian dollars, except interest rate Year Series A Unsecured Debentures (1) Series B Unsecured Debentures (2) Series C Unsecured Debentures (3) Unsecured Term Loan Credit Facilities Capitalized Lease Principal Payments (4)	Mortgages Regular Principal Repayments Principal Due at Maturity Weighted Average Interest Rate on Maturing Mortgages Total Consolidated Weighted Average Interest Rate on Maturing Debt
2023 — — — 50,000 — 364 2024 150,000 — — — — 365 2025 — — — — — 407 2026 — 175,000 — — — 423 2027 — — 125,000 — 60,000 440 2028 — — — — — 457 2029 — — — — — 388 2030 — — — — — — Thereafter — — — — — —	16,922 60,824 3.39 % 128,110 4.58 % 15,123 50,104 4.10 % 215,592 3.38 % 11,557 41,065 3.78 % 53,029 3.78 % 11,643 — — % 187,066 3.45 % 11,033 35,115 3.30 % 231,588 3.75 % 5,975 115,703 3.35 % 122,135 3.35 % 1,810 5,477 5.20 % 7,675 5.20 % 1,410 9,230 1.65 % 10,640 1.65 % 11,924 17,763 5.00 % 29,687 5.00 %
150,000 175,000 125,000 50,000 60,000 2,844	87,397 335,281 3.64 % 985,522 3.69 %
Fair value adjustments on assumed debt Less: Deferred financing costs	2,343 (9,901)
Total debt	977,964

Notes:

The interest rate for the Series A Unsecured Debentures is 3.109%.
The interest rate for the Series B Unsecured Debentures is 3.450%.
The interest rate for the Series C Unsecured Debentures is 2.820%.
The weighted average interest rate for capitalized lease principal payments is 3.87% for each year.

The following tables are supplemental information and summarize the components of the Company's debt for our Equity-Accounted Joint Venture:

for our Equity-Accounted Joint Venture:
Thousands of Canadian dollars	December 31, 2022	December 31, 2021
Mortgages	26,177	—
Fair value adjustments on assumed debt	(2,522)	—
Less: Deferred financingcosts	(12)	—
Total mortgages	23,643	—

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

	Regular Principal
Year	Repayments
2023	915
2024	936
2025	957
2026	978
2027	1,000
2028	1,023
2029	1,046
2030	1,069
Thereafter	18,253
	26,177
Fair value adjustments on assumed debt	(2,522)
Less: Deferred financingcosts	(12)
Total debt	23,643

Debentures

The Series A senior unsecured debentures were issued on November 4, 2019, and bear interest at a rate of 3.109% per annum, payable semi-annually in May and November of each year and mature on November 4, 2024 (the " Series A Unsecured Debentures ").

The Series B senior unsecured debentures were issued on October 2, 2020, and bear interest at a rate of 3.45% per annum, payable semi-annually in February and August of each year and mature on February 27, 2026 (the " Series B Unsecured Debentures ").

The Series C senior unsecured debentures were issued on June 3, 2021, and bear interest at a rate of 2.82% per annum, payable semi-annually in March and September of each year and mature on March 31, 2027 (the " Series C Unsecured Debentures ").

The balances related to the debentures are as follows:

Thousands of Canadian dollars	December 31, 2022	December 31, 2021
Series A Unsecured Debentures	150,000	150,000
Series B Unsecured Debentures	175,000	175,000
Series C Unsecured Debentures	125,000	125,000
Less: Deferred financingcosts	(1,924)	(2,558)
	448,076	447,442

Unsecured Term Loan

The Company acquired a portfolio of assets through its joint venture on May 16, 2022. To finance its 50% share of the joint venture's acquisition, the Company entered into a credit agreement with a Canadian lender for an unsecured acquisition term loan facility of $90,000 maturing May 15, 2023. Borrowings under the Unsecured Term Loan were at an interest rate of CDOR plus 145 bps per annum. The Unsecured Term Loan is subject to certain customary financial and non-financial covenants. As at December 31, 2022, the balance of the Unsecured Term Loan was $50,000 (December 31, 2021 - $nil).

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Credit Facilities

The Company has a combined total borrowing capacity of $308,500 pursuant to its credit facilities as at December 31, 2022.

On March 19, 2020 the Company entered into a credit agreement for $200,000 senior unsecured revolving credit facility (the "Unsecured Revolving Credit Facility"). On October 26, 2022, the Company increased the Unsecured Revolving Credit Facility by $100,000 to $300,000 and extended its maturity to March 19, 2027. The Unsecured Revolving Credit Facility may be extended for additional one-year terms, subject to certain conditions. The capacity of the Unsecured Revolving Credit Facility may be increased by up to $50,000 during the term of the facility, subject to certain conditions. Borrowings under the Unsecured Revolving Credit Facility can take place by way of banker's acceptances (" BAs ") at 145 bps per annum over the floating BA rate, or at the Canadian prime rate plus 45 bps per annum. The Unsecured Revolving Credit Facility is subject to certain customary financial and non-financial covenants.

The Company has a non-revolving acquisition loan facility totaling $6,000 that matures on June 6, 2025. Borrowings under the credit facility are available by way of loans at the Canadian prime rate plus 75 bps per annum and BAs at 175 bps per annum over the floating BA rate.

The Company has other property credit facilities totaling $2,500 that can be accessed for working capital purposes. Borrowings are available at the Canadian prime rate plus 50 bps per annum.

As at December 31, 2022, the Company had drawn $60,000 under the Unsecured Revolving Credit Facility (December 31, 2021 - $12,000).

The balances related to the Company's unsecured credit facilities are as follows:

Thousands of Canadian dollars	December 31, 2022	December 31, 2021
Credit facilities drawn	60,000	12,000
Less: Deferred financingcosts	(891)	(493)
	59,109	11,507

Mortgages

The Company has both fixed and variable rate mortgages with various financial institutions. The Company is subject to interest rate risk on mortgages at variable rates associated with certain residences, which is substantially offset by interest rate swap contracts. Property-level mortgages are secured by each of the underlying properties' assets, guaranteed by the Company and subject to customary financial and nonfinancial covenants.

The Company has low-cost mortgage financing with CMHC. As at December 31, 2022, 59% of the Company's total property-level mortgages, including the Company's proportionate share of Equity-Accounted Joint Venture, were insured by CMHC.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

The balances related to property-level mortgages are as follows:

Thousands of Canadian dollars	December 31, 2022	December 31, 2021
Mortgages at fixed rates	291,487	351,046
Mortgages at variable rates(1)	131,191	145,121
Fair value adjustments on acquired debt	2,343	2,683
Less: Deferred financingcosts	(7,086)	(8,827)
	417,935	490,023

Note:

Includes floating rate mortgages that have been fixed through interest rate swaps.

The following table summarizes some metrics on the Company's property-level mortgages:

	December 31, 2022 December 31, 2021
	Fixed Rate Variable Rate Total Total
Weighted average interest rate Weighted average term to maturity (years)	3.58 % 3.76 % 3.64 % 3.60 % 5.0 3.3 4.5 5.2

Lease Liability

The lease liability as at December 31, 2022 of $2,844 represents the Company's lease on its office equipment and the renewed Markham corporate office space.

Credit Ratings

The Company's credit ratings for its debentures are summarized below:

Debt	Rating Agency	Credit Rating	Outlook
Series A Unsecured Debentures	DBRS	BBB	Stable
Series B Unsecured Debentures	DBRS	BBB	Stable
Series C Unsecured Debentures	DBRS	BBB	Stable

Financial Covenants

The Company is in compliance with all financial covenants on its borrowings as at December 31, 2022. However, there can be no assurance that covenant requirements will be met at all times. If the Company does not remain in compliance, its ability to amend the covenants or refinance its debt could be adversely affected.

The Company has adopted interest coverage guidelines which are consistent with the coverage covenants contained in its bank credit facility agreements. Interest coverage ratios are used to assess the Company's ability to service its debt obligations. The interest coverage ratio calculations may differ depending on the lender.

Interest Coverage Ratio

The Interest Coverage Ratio is a common measure used to assess an entity's ability to service its debt obligations. In general, higher ratios indicate a lower risk of default. Adjusted EBITDA as referenced below, is

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

presented in accordance with defined terms in certain covenant calculations. The interest coverage ratio is calculated as follows for the periods ended December 31:

Thousands of Canadian dollars, except ratio	Three months ended Year Ended
	2022 2021 2022 2021
Net finance charges Add (deduct): Redemption premium paid Amortization of financing charges and fair value adjustments on acquired debt Interest income on construction funding receivable Interest expenses from Equity-Accounted Joint Venture Other interest income Fair valuegain on interest rate swapcontracts	9,164 6,886 25,689 27,380 — — — (160) (699) (560) (2,471) (2,510) 185 314 878 1,269 147 — 367 — 352 53 960 456 87 1,629 9,194 6,776
Net finance charges, adjusted Adjusted EBITDA	9,236 8,322 34,617 33,211 28,499 28,504 113,236 121,890
Interest coverage ratio	3.1 3.4 3.3 3.7

The following table represents the reconciliation of net income to EBITDA and Adjusted EBITDA for the periods ended December 31:

Thousands of Canadian dollars	Three months ended Year Ended 2022 2021 2022 2021
Net income (loss)(2) Depreciation and amortization(1) Net finance charges(1) Provision for income taxes Transaction costs(1) Impairment loss	(6,675) 4,654 10,668 20,648 15,902 11,923 58,118 53,069 9,357 6,886 26,189 27,380 (2,136) 1,579 513 7,385 2,766 783 9,973 2,359 — — 12,788 —
EBITDA Restructuring costs Proceeds from construction funding SOAR program(1) Gain on disposal ofproperties and other assets	19,214 25,825 118,249 110,841 6,550 — 6,550 — 2,216 2,679 9,980 11,049 523 — 2,183 — (4) — (23,726) —
Adjusted EBITDA	28,499 28,504 113,236 121,890

Notes:

Includes the Company's proportionate share of Equity-Accounted Joint Venture.
2022 figures include retroactive pandemic funding recovery of $4,766 (2021 - $17,176) received in 2022 for pandemic expenses incurred in prior years.

Debt Service Coverage Ratio

The Debt Service Coverage Ratio is a common measure used to assess an entity's ability to service its debt obligations. Maintaining the debt service coverage ratio forms part of the Company's debt covenant requirements. In general, higher ratios indicate a lower risk of default. Adjusted EBITDA as referenced below, is presented in accordance with defined terms in certain covenant calculations. The following is the calculation for the periods ended December 31:

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Thousands of Canadian dollars, except ratio	Three months ended Year Ended
	2022 2021 2022 2021
Net finance charges, adjusted(1) Principal repayments(1)(2)	9,235 8,322 34,617 33,211 4,591 4,894 19,644 20,803
Total debt service(1)	13,826 13,216 54,261 54,014
Adjusted EBITDA Deduct: Maintenance capital expenditures Net pandemic capital (expenditures) recoveries Cash income tax(paid)refunded	28,499 28,504 113,236 121,890 (2,429) (3,773) (10,705) (14,025) — (295) — 10 (274) (167) (2,474) 5,938
Adjusted EBITDA(for covenant calculations)	25,796 24,269 100,057 113,813
Debt service coverage ratio	1.9 1.8 1.8 2.1

Notes:

Includes the Company's proportionate share of Equity-Accounted Joint Venture.
Debt repayments on maturity and voluntary payments towards the Company's credit facilities have been excluded from the debt service coverage ratio calculation.

Debt to Adjusted EBITDA Ratio

The Debt to Adjusted EBITDA ratio is an indicator of the approximate number of years required for current cash flows to repay all indebtedness. The following is the Adjusted EBITDA calculation for the years ended:

Thousands of Canadian dollars, except ratio	December 31
	2022 2021
Total indebtedness Series A Unsecured Debentures Series B Unsecured Debentures Series C Unsecured Debentures Unsecured Term Loan Credit facilities Mortgages Mortgages related to Equity-Accounted Joint Venture Lease liability	150,000 150,000 175,000 175,000 125,000 125,000 50,000 — 60,000 12,000 422,678 496,167 26,177 — 2,844 1,312
	1,011,699 959,479
Adjusted EBITDA	113,236 121,890
Debt to Adjusted EBITDA	8.9 7.9

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Debt to Gross Book Value

Debt to gross book value indicates the leverage applied against the total gross book value (original costs) of the entity.

Thousands of Canadian dollars, except ratio	December 31
	2022 2021
Total indebtedness Series A Unsecured Debentures Series B Unsecured Debentures Series C Unsecured Debentures Unsecured Term Loan Credit facilities Mortgages Mortgages related to Equity-Accounted Joint Venture Lease liability	150,000 150,000 175,000 175,000 125,000 125,000 50,000 — 60,000 12,000 422,678 496,167 26,177 — 2,844 1,312
Total indebtedness	1,011,699 959,479
Total assets(1) Accumulated depreciation on property and equipment(1) Accumulated depreciation on held for sale assets Accumulated amortization on intangible assets(1)	1,706,751 1,609,189 403,024 346,028 — — 196,624 189,016
Gross book value(1)	2,306,399 2,144,233
Debt togross book value	43.9 % 44.7 %

Note:

Includes the Company's proportionate share of assets of Equity-Accounted Joint Venture.

Equity

Share Capital

The Company is authorized to issue an unlimited number of common shares or preferred shares, without nominal or par value. The following table summarizes the common shares issued and outstanding:

Thousands of Canadian dollars, except shares	Common shares	Amount
Balance, January 1, 2021	67,039,123	878,516
Long-term incentive plan, net of loans receivable	—	187
Share purchase loan	—	325
Balance, December 31, 2021	67,039,123	879,028
Long-term incentive plan, net of loans receivable	—	416
Common shares issued, net of share issuance costs	5,750,000	82,945
Common shares issued pursuant to SOAR program	150,818	2,125
Balance, December 31, 2022	72,939,941	964,514

On June 15, 2022, the Company received approval from the TSX on its notice of intention to renew its normal course issuer bid ( "NCIB" ) for a portion of the Company's common shares. Pursuant to the notice, the Company has the authority to acquire up to a maximum of 3,644,975 of its common shares for cancellation over the next 12 months. Purchases by the Company under the NCIB will be made through the facilities of the TSX or through a Canadian alternative trading system and in accordance with applicable

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

regulatory requirements at a price per common share equal to the market price at the time of acquisition. The number of common shares that can be purchased pursuant to the NCIB is subject to a current daily maximum of 83,079 common shares, subject to the Company's ability to make one block purchase of its common shares per calendar week that exceeds such limits. All common shares purchased by the Company under the NCIB will be cancelled upon purchase. The Company had the option to purchase shares beginning on June 20, 2022. The NCIB will terminate on June 19, 2023.

No common shares were purchased pursuant to the Company's normal course issuer bids.

Dividends

The Board of Directors of the Company determines the appropriate dividend levels based on its assessment of cash provided by operations normalized for unusual items, expected working capital requirements and actual and projected capital expenditures.

The following table summarizes the dividends declared in relation to cash flows from operating activities and AFFO for the periods ended December 31:

Thousands of Canadian dollars	Three Months Ended Year Ended
	2022 2021 Change 2022 2021 Change
Cash flows from operating activities AFFO Dividends declared	14,957 31,923 (16,966) 106,077 98,516 7,561 17,302 16,555 747 67,475 72,757 (5,282) (17,065) (15,688) (1,377) (67,315) (62,749) (4,566)
Cash flows from operating activities over dividends declared	(2,108) 16,235 (18,343) 38,762 35,767 2,995
AFFO retained	237 867 (630) 160 10,008 (9,848)

The Company believes that its current dividend level is sustainable. However, cash dividends are not guaranteed and may fluctuate with the performance of the Company.

The Company has suspended its dividend reinvestment plan.

Capital Disclosure

The Company defines its capital as the total of its long-term debt and shareholders' equity less cash and cash equivalents.

The Company's objectives when managing capital are to:

(i) maintain a capital structure that provides options to the Company for accessing capital on commercially reasonable terms, without exceeding its debt capacity, or the limitations in its credit facilities, or taking on undue risks;
(ii) maintain financial flexibility in order to preserve its ability to meet financial obligations, including debt service payments and regular dividend payments; and
(iii) deploy capital to provide an appropriate investment return to its shareholders.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

The Company's financial strategy is designed to maintain a flexible capital structure consistent with the objectives stated above and to respond to changes in economic conditions. In order to maintain or adjust its capital structure, the Company may issue additional shares, additional long-term debt, or long-term debt to replace existing long-term debt with similar or different characteristics, or adjust the amount of dividends paid to the Company's shareholders. The Company's financing and refinancing decisions are made on a specific transaction basis and depend on factors such as the Company's financial needs and the market and economic conditions at the time of the transaction.

The Board of Directors of the Company determines and approves monthly dividends in advance on a quarterly basis.

There were no changes in the Company's approach to capital management during the period.

Contractual Obligations and Other Commitments

Leases

The Company has a 10-year lease with respect to its Markham corporate office, which was set to expire on October 31, 2024. In February 2022, the Company extended the lease for a further period of five years, commencing on November 1, 2024 and expiring on October 31, 2029.

The Company has various leases for office and other equipment that expire over the next two years.

Critical Accounting Estimates and Accounting Policies

The accounting policies and estimates that are critical to the understanding of the Company's business operations and results of operations are identified in Note 3 of the Company's annual audited consolidated financial statements for the year ended December 31, 2022. New or changes in accounting policies are identified in Note 3 of the Company's annual audited consolidated financial statements for the year ended December 31, 2022. Please refer to those audited consolidated financial statements for further details.

Significant Judgments and Estimates

The preparation of consolidated financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events, that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions, which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities, are discussed below.

Long-term care licences

In Ontario, the Fixing Long-Term Care Act (" FLTCA ") contains a licence term regime for all LTC residences which will result in licence terms for the Company's residences ranging from 15 years for Class B and C residences to 30 years for Class A residences. Under the FLTCA, ultimate control of LTC licences in Ontario remains with the MLTC, including approval of new licences, and transfer, renewal or revocation of existing licences. Although the licence does not support any guarantee of continued operation beyond the term of

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

the licence, based on the current demographics in Canada and the demand for LTC beds projected to increase, management of the Company is of the view that licences will continue to be renewed.

In British Columbia, the LTC licences have an indefinite term.

Impairment analysis of indefinite-lived intangible assets (significant estimate)

The Company views long-term care licences as indefinite-lived intangible assets. These indefinite-lived intangible assets do not generate largely independent cash inflows and are therefore tested as part of the cash generating units (CGUs) to which they belong. The Company has defined each owned residence to be a CGU. CGUs that contain indefinite-lived intangibles are tested for impairment annually and whenever there is an indication of impairment. The carrying value of each CGU is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. An impairment loss is recognized if the carrying amount of a CGU exceeds its recoverable amount.

Fair value is determined using the direct capitalization method. This method considers capitalization rates derived from transactions involving properties comparable to the subject properties. The capitalization rate is applied to a stabilized single-year estimate of net operating income to determine market value. The significant assumptions used in the valuation include capitalization rates and growth rates.

Risks Relating to the Business

General business risks

The Company is subject to general business risks, including those inherent in the seniors’ living sector. These risks include changes in government regulation and oversight, changes in consumer preferences, fluctuations in occupancy levels and business volumes, changes in government funding and reimbursement programs, competition from other seniors care providers, changes in neighborhood or location conditions and general economic conditions, natural disasters, health related risks (including disease outbreaks such as COVID-19 and influenza) and control risks, negative media reports or publicity, critical third party supply failures, imposition of new or increased taxes, capital expenditure requirements, and increased operating costs. Additional risks include possible future changes in labour relations, reduction of personnel below acceptable levels (including due to events such as pandemic illness or quarantine), increases in labour and other personnel costs (including pursuant to the pay equity litigation discussed below under "Developments related to Pay Equity"). Any one or a combination of these factors may adversely affect the business, operating results or financial condition of the Company.

COVID-19 and other outbreaks

The occurrence of a pandemic, epidemic, or other outbreak of an infectious illness or other public health crisis in areas in which we operate could have a material adverse effect on the business, operating results and financial condition of the Company. Also, enhanced procedures, protocols and care put in place to assist in reducing the likelihood of exposure or addressing actual illness in our LTC and Retirement Residences (for example, testing of residents and team members, enhanced screening and use of personal protective equipment (PPE)) would result in increased costs. In addition, a pandemic, epidemic or other outbreak may adversely impact our operations by causing staffing and supply shortages. Resident satisfaction and team member engagement may also be adversely impacted during this period.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Although continued or enhanced government funding or assistance may mitigate some of these impacts, there is no certainty of the extent to which that will be the case. In addition, outbreaks, such as COVID-19, cause our residences and our management to spend considerable time planning for and addressing such events, which diverts their attention from other business matters.

The spread of COVID-19 has caused an economic slowdown and increased volatility in financial markets, which could have a material adverse effect on the business, results of operations and financial condition of the Company with the potential to impact, among others: (i) the valuation of our properties and assets; (ii) the availability or the terms of financing that we have or may anticipate utilizing; (iii) our ability to make principal and interest payments on, or refinance, any outstanding debt when due; (iv) the occupancy rates in our properties; (v) the ability of our residents to satisfy their payment obligations to us, including the payment of rent; and (vi) the market price for the equity securities of the Company. Further, as we continue to operate in the face of the COVID-19 pandemic, we may continue to be exposed to claims related to COVID-19, including class actions and other lawsuits, labour proceedings, union complaints, inquiries, investigations and otherwise.

The Company has been named as a defendant in litigation related to its handling of the COVID-19 pandemic in its residences. There is risk that further litigation could be commenced by, or on behalf of, persons impacted by an outbreak at a Sienna residence which, even if not meritorious and even if covered by the Company’s insurance, could result in increased operating costs to the Company.

The impact of COVID-19 on the overall economy may adversely affect credit markets, which may make it more difficult for the Company to access credit or, if able to do so, it may be at a higher cost or on less favourable terms, potentially impacting, among other things, re-financings and our development plans and timelines. Governments and central banks have attempted to stabilize economic conditions through monetary and fiscal interventions, but it is not currently known how these interventions will impact the financial markets, interest rate volatility or the economy in general.

To the extent that interest rates continue to increase as a result of the Bank of Canada’s actions or otherwise, the availability of refinancing alternatives for credit facilities and other loans may be reduced.

Ongoing COVID-19 outbreaks, may result in some or all of these negative outcomes and adversely impact the business, operating results and financial condition of the Company. There can be no assurances that a pandemic, epidemic or outbreak of a contagious illness, such as COVID-19, would not have a material adverse effect on the business, operating results and financial condition of the Company.

Liability and insurance

The businesses which are carried on, directly or indirectly, by the Company entail an inherent risk of liability, including with respect to injury to or death of its residents. From time to time, the Company is subject to lawsuits as a result of the nature of its businesses, including the proposed class actions described below. The market for insurance for the senior living sector has been challenging and has resulted in increased insurance costs for the Company. The Company maintains business and property insurance policies in amounts and with such coverage and deductibles as deemed appropriate, based on the nature and risks of the businesses, historical experience, industry standards and coverage availability to the sector. There can be no assurance, however, that claims in excess of the insurance coverage or claims not covered by the

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

insurance coverage will not arise or that the liability coverage will continue to be available on acceptable terms. There are certain types of risks, generally of a catastrophic nature, such as floods, earthquakes, power outages, war, terrorism or environmental contamination, which are either uninsurable or are not insurable on an economic basis. A successful claim against the Company not covered by, or in excess of, its insurance may have a material adverse impact on the business, operating results and financial condition of the Company. Claims against the Company, regardless of their merit or eventual outcome, also may have a material adverse impact on the ability to attract residents or expand the Company's business, and requires management of the Company to devote time to matters unrelated to the operation of the business. Sienna and its consolidated subsidiaries are defendants in various actions and proceedings.

In May 2020, the Company became aware of a statement of claim in respect of a proposed class action alleging, among other things, negligence, breach of contract and breach of fiduciary duties in respect of the care and treatment of residents at the Company’s residences during the COVID-19 pandemic. The claim is brought against the Company and certain of its subsidiaries on behalf of residents residing at all of the Company’s owned and managed long-term care residences in Ontario during the pandemic, as well as the families of those residents, and seeks damages in the aggregate amount of $120 million. The claim is a joint claim against the Company and another senior living operator.

Between June and September 2020, the Company became aware of statements of claim in respect of four proposed class actions alleging, among other things, negligence, breach of contract and breach of fiduciary duties in respect of the care and treatment of residents at Altamont Care Community, Woodbridge Vista Care Community, Weston Terrace Care Community and Camilla Care Community during the COVID-19 pandemic. These claims are brought against the Company and certain of its subsidiaries on behalf of all residents residing at each of these respective residences during the pandemic, as well as the families of those residents, and seeks damages in the aggregate amount of $20 million, $16 million, $16 million and $25 million, respectively. These actions are currently staged, as discussed below.

In September 2020, the Company became aware of a statement of claim in respect of a proposed class action alleging, among other things, negligence and breach of fiduciary duties in respect of the care and treatment of residents residing at various long-term care residences in Ontario, including nine Sienna owned and managed residences, during the COVID-19 pandemic. This claim is a joint claim against Sienna, certain of its subsidiaries as well as other defendants, including the Province of Ontario, the City of Toronto and other senior living operators, on behalf of residents and their families and seeks damages in the aggregate amount of $600 million. These actions are currently staged, as discussed below.

On January 21, 2022, the Superior Court of Justice made an order consolidating the above proposed class actions in the form ordered by the Court. The aggregate amount of damages claimed in the consolidated claim against the Company is $260 million. The Court ordered that the proposed class actions, other than the consolidated claim, be stayed pending the outcome of the certification motion on the consolidated claim and that no other class proceedings may be commenced in Ontario in relation to the subject matter of the consolidated claim without leave of the Court. The consolidated claim, in effect, replaces all of the other proposed class actions.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

None of the above proposed class action claims, including the consolidated claim, have been certified as a class action. The Company is vigorously defending itself against these claims.

Given the status of the proceedings, management is unable to assess the potential impact of any of these proposed class actions, including the consolidated claim, on the Company’s financial results.

On November 20, 2020, the Government of Ontario enacted the Supporting Ontario's Recovery Act (the " Recovery Act "). The Recovery Act provides civil liability protection to organizations that made a good faith effort to follow public health guidance and COVID-19 related laws, and did not act with gross negligence. The Recovery Act also deems existing civil proceedings related to COVID-19 exposure to be dismissed without costs and will bar future proceedings from being brought, as long as the defendant acted in good faith and not with gross negligence.

Labour intensive operations

The business of the Company is labour intensive, with labour related costs comprising a substantial portion of the Company's direct operating expenses. The Company's businesses compete with other providers with respect to attracting and retaining qualified personnel. Any shortage of qualified personnel and general inflationary pressures may require the Company to enhance its pay and benefits package to compete effectively for such personnel or hire temporary agency staff. LTC residences in British Columbia are subject to direct care hour requirements by the respective health authorities for funding eligibility. An increase in labour-related costs or a failure to attract, train and retain qualified and skilled personnel may have a material adverse impact on the business, operating results and financial condition of the Company.

Developments related to Pay Equity

The Company along with a number of other industry participants and the Ontario Government are currently engaged in proceedings with two unions regarding pay equity maintenance for employees at long-term care facilities, for which wages and benefits are typically funded by the Ministry of Long-term Care. In October 2021, the Supreme Court of Canada denied leave to appeal and upheld the appellate court ruling that the proxy method should be used and comparisons should be made to an outside sector. The Company and the other participants in the long-term care sector are working with the unions and government to assess the impact of the ruling and establish a framework for pay equity suitable for the sector.

Given the current status of the proceedings and significant number of judgements required in establishing the pay equity framework, including ongoing discussions with two unions amongst the parties, that will impact the measurement of any potential provision, management has assessed the conditions required for a provision and have concluded that it is not possible to reliably measure the potential outflow of resources, and accordingly no provision has been recorded in the consolidated financial statements as at December 31, 2022.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Government regulation

Both LTC residences and RRs are subject to extensive regulation with the potential for regulatory change. There can be no assurance that future regulatory changes affecting the seniors' housing industry would not have a material adverse impact on the business, operating results and financial condition of the Company.

All LTC residences and RRs are required to adhere to quality control, public health, infection control and other care-related operating standards. Accordingly, all LTC residences and RRs are subject to regulatory inspections to ensure compliance with applicable regulations and to investigate complaints, including complaints related to resident injury or death. It is not unusual for the stringent inspection procedures to identify deficiencies in operations. Every effort is made by the Company to correct legitimate problem areas that have been identified. It is possible that the Company may not be able to remedy deficiencies or address complaints within the time frames allowed or in a manner satisfactory to the applicable regulatory authority, which could lead to periods of enhanced monitoring and the imposition of sanctions (such as limiting admissions in the case of an LTC residence), which, in turn, may have a material adverse impact on the business, operating results and financial condition of the Company. Further, once deficiencies have been corrected, it could nonetheless take a period of time before public records note the compliance.

The retirement sector requires that a residence and operator must be licensed to operate. Retirement Residences are regulated by the Retirement Homes Act , 2010 (Ontario) (the “ RHA ”) in the Province of Ontario, The Personal Care Homes Act (Saskatchewan) in the Province of Saskatchewan (the “ PCA ”) and the Community Care and Assisted Living Act (British Columbia) (the “ CCALA ”) in the Province of British Columbia. In Ontario, the Retirement Home Regulatory Authority (the “ RHRA ”), a regulatory body created by the RHA, provides consumer protection and regulation, but not funding, for the provision of care and services in retirement residences in the province. Retirement residences are required to be licensed by the RHRA in order to operate in Ontario and are inspected regularly by RHRA inspectors. In Saskatchewan, the Ministry of Health is responsible for the licensing and monitoring of personal care homes. The PCA governs the care, management and administration of care homes, including approving the services to be provided, and which are subject to regular inspections. In British Columbia, the CCALA provides consumer protection and regulation of retirement residences in the province, such that all levels of seniors’ living residences providing personal support in British Columbia must be registered with the Assisted Living Registry.

The Company has obtained all required licences and registrations. There can be no assurance that future regulatory changes affecting RRs would not have a material adverse impact on the business, operating results and financial condition of the Company.

Information technology risk

The Company is a party to agreements with third parties for hardware, software, network, telecommunications and other information technology (" IT ") services in connection with its operations. The Company's efficient operation of its business depends, in part, on computer hardware and software systems and on how well the Company and its suppliers protect networks, equipment, systems and software against damage from a number of threats (including cable cuts, damage to physical plants, natural disasters, terrorism, fire, power loss, hacking, computer viruses, malware, vandalism and theft). The Company's operations also depend on the timely maintenance, upgrade and replacement of systems and software, as

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in IT system failures, delays and/or increase in capital expenses. The failure of IT systems could, depending on the nature of any such failure, adversely impact the Company's reputation and may have a material adverse impact on the business, operating results and financial condition of the Company.

LTC funding

The mandate of certain provincial and regional health regulators includes the authorization to determine the co-payment fees that residents pay to LTC residences. Provincial and regional health regulators also provide funding for care and support programs in LTC residences and subsidize accommodation costs for qualifying residents. Risk exists that provincial and regional health regulators may reduce the level of, or eliminate, such fees, payments or subsidies to residences in the future. There can be no assurance that the current level of such fees, payments and subsidies will be continued or that such fees, payments and subsidies will increase commensurate with expenses of operating LTC residences. A reduction of these fees, payments or subsidies may have a material adverse impact on the business, operating results and financial condition of the Company.

Funding adjustments in the current year

Reconciliations of funding versus actual expenses are performed annually, based on previous calendar years. From time to time, the reconciliations will result in current year adjustments made in respect of prior years. These ‘‘prior period adjustments'' can have either a favourable or unfavourable impact on NOI generally related to differences identified in the reconciliation attributable to occupancy days, special circumstances and differences between projected and actual property tax.

Licence terms

In Ontario, the Fixing Long-Term Care Act (“ FLTCA ”) establishes a licence term regime for all LTC residences. The licence terms for Company's residences ranging from 15 years for Class B and C residences to 30 years for Class A residences. Under the FLTCA, ultimate control of LTC licences in Ontario remains with the Ministry of Long-term Care, including approval of new licences, and transfer, renewal or revocation of existing licences. Although the licence does not support any guarantee of continued operation beyond the term of the licence, based on the current demographics in Canada and the demand for LTC beds projected to increase, management of the Company is of the view that licences will continue to be renewed. In British Columbia, the CCALA establishes a licence term regime for all LTC residences. A failure of the Company's LTC licences to be renewed or conditionally renewed may have a material adverse impact on the business, operating results and financial condition of the Company.

Labour relations

A majority of the employees working at the Company's properties are unionized with approximately 82% of employees represented by union locals of any of the Service Employees International Union, the Ontario Nurses Association, the BC Nurses' Association, the BC Government and Service Employees' Union, the Hospital Employees' Union, the Christian Labour Association of Canada, the Canadian Union of Public Employees, Healthcare Office and Professional Employees, Unifor, Ontario Public Service Employees Union, Workers United Canada Council or United Food and Commercial Workers. While the Company has traditionally maintained positive labour relations, there can be no assurance the Company will not at any time, whether in connection with a renegotiation process or otherwise, experience strikes, labour stoppages

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

or any other type of conflict with unions or employees, which may have a material adverse impact on the business, operating results and financial condition of the Company. Notwithstanding the foregoing, all LTC residences in Ontario are governed by the Hospital Labour Disputes Arbitration Act (Ontario), which prohibits strikes and lockouts in the seniors' living industry. Collective bargaining disputes in Ontario are more likely to be resolved through compulsory third party arbitration.

Capital intensive industry

The ability of the Company to maintain and enhance its properties in a suitable condition to meet regulatory standards, operate efficiently and remain competitive in its markets requires it to commit a portion of cash to its facilities and equipment. Significant future capital requirements may have a material adverse impact on the business, operating results and financial condition of the Company.

Privacy and cybersecurity risk

Information systems are vulnerable to security threats, including cybersecurity incidents. A cybersecurity incident is considered to be any intentional or unintentional material adverse event that threatens the confidentiality, integrity or availability of the Company’s information resources, including malicious software, attempts to gain unauthorized access to data or information systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. Moreover, cybersecurity attacks against large organizations are increasing in sophistication and are often focused on financial fraud, compromising sensitive data for inappropriate use or disrupting business operations. As a custodian of personal information, including health information, relating to residents and employees, the Company is exposed to the potential loss, misuse or theft of any such information, which could result in reputational damage, potential liability to third parties, additional regulatory scrutiny and fines and litigation and other costs and expenses.

The Company takes data privacy and protection seriously and has implemented processes, procedures and controls to help mitigate these risks. Access to personal data is controlled through physical security and IT security measures, and employees are frequently trained in the safeguarding of sensitive information. For information stored with or processed by third parties, the Company undertakes due diligence prior to working with them and uses contractual means to ensure compliance to standards set by the Company. Additionally, the Company monitors and assesses risks surrounding collection, use, storage and protection practices of personal data. However, these measures, as well as its increased awareness of a risk of a cybersecurity incident, do not guarantee that its financial results would not be negatively impacted by such an incident.

Although to date the Company has not experienced any material losses relating to cybersecurity or other information security breaches, there can be no assurance that the Company will not incur such losses in the future. The Company's risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As cybersecurity threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Real property ownership

All real property investments are subject to a degree of risk. They are affected by various factors, including

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

changes in general economic conditions (such as the availability of long-term mortgage funding) and in local conditions (such as an oversupply of space or a reduction in demand for real estate in the area), the attractiveness of the properties to residents, competition from other available space and various other factors, including increasing property taxes. In addition, fluctuations in interest rates may have a material adverse impact on the business, operating results and financial condition of the Company.

Damage to administrative operations or properties

The Company's ability to sustain or grow its business is heavily dependent on efficient, proper and uninterrupted operations at its properties. Power failures or disruptions, breakdown, failure or substandard performance of equipment, improper installation or operation of equipment and destruction of buildings, equipment and other facilities due to natural disasters or other causes could severely affect its ability to continue operations. While the Company does maintain certain insurance policies covering losses due to fire, lightning and explosions, there can be no assurance its coverage would be adequate to compensate the Company for the actual cost of replacing such buildings, equipment and infrastructure nor can there be any assurance that such events would not have a material adverse impact on the business, operating results and financial condition of the Company.

Environmental liabilities

The Company is subject to various environmental laws and regulations under which it could become liable for the costs of removing or remediating certain hazardous, toxic or regulated substances released on or in the properties it owns or manages, or disposed of at other locations, in some cases regardless of whether or not the Company knew of or was responsible for their presence. The failure to address such issues may adversely affect the Company's ability to sell properties or to borrow using properties as collateral and/or could potentially result in claims against the Company. Notwithstanding the above, management of the Company is not aware of any material non-compliance, liability or other claim in connection with any of the Company's owned properties or those it manages. It is the Company's operating policy to obtain a Phase I environmental site assessment, conducted by an independent and experienced environmental consultant, prior to acquiring or financing any property, or to otherwise obtain applicable reliance letters in respect thereof. Where Phase I environmental site assessments identify sufficient environmental concerns or recommend further assessments, Phase II or Phase III environmental site assessments are conducted.

Environmental laws and regulations may change and the Company may become subject to more stringent environmental laws and regulations in the future. Compliance with more stringent environmental laws and regulations may have a material adverse impact on the business, operating results and financial condition of the Company.

Climate change

The company is exposed to climate change risk from natural disasters and severe weather, such as floods, ice storms, windstorms, earthquakes, wildfires or other severe weather that may result in damage or loss to its long-term care communities or retirement residences. These adverse events could cause substantial damage and/or revenue losses as well as cost increases. There can be no assurance that damages or losses caused by these adverse weather and natural events will be fully covered by insurance. Climate change may also have indirect effects on our business by increasing the cost of property insurance on terms we find acceptable or making it unavailable.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Over time, climate change may also affect the Company's operational expenses, including utilities and preventative maintenance expenses, as temperatures fluctuate. In addition, changes in federal, provincial or local legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of existing properties and could also require the Company spend more on new developments or redevelopments without a corresponding increase in revenue.

Acquisitions, dispositions and development

The success of the Company's business acquisition, disposition and development activities will be determined by numerous factors, including the ability of the Company to identify suitable acquisition or development targets, competition for transactional opportunities, purchase and sale price, ability to obtain adequate financing on reasonable terms, financial performance of acquired businesses and the ability of the Company to effectively integrate and operate acquired businesses. Acquisitions, dispositions and development agreements entered into with third parties may be subject to unknown, unexpected or undisclosed liabilities which could have a material adverse impact on the Company’s operations and financial results. Representations and warranties given by such third parties to the Company may not adequately protect against these liabilities and any recourse against third parties may be limited by the financial capacity of such third parties. Further, the acquired businesses may not meet financial or operational expectations of performance due to unexpected costs associated with the acquisition or development of an acquired property, as well as the general investment risks inherent in any real estate investment. In addition, the letters of intent and purchase or sale agreements entered into with third parties with respect to such acquisitions or dispositions, as applicable, are generally subject to certain closing conditions, and in some cases, the granting of regulatory approvals. Such acquisitions or dispositions may not be completed due to the failure to satisfy closing conditions or the failure to receive required regulatory approvals and certain funds paid by the Company may not be recoverable. Moreover, new acquisitions may require significant attention from management of the Company or capital expenditures that would otherwise be allocated to existing businesses. Any failure by the Company to identify suitable targets for acquisition or disposition, or to operate acquired businesses effectively, may have a material adverse impact on the business, operating results and financial condition of the Company.

The Company is pursuing development activities with partners. These activities create development-specific risks, including liens, constructions delays, increasing costs, labour disputes, delays in obtaining municipal and regional approvals and disputes with development partners.

Redevelopment of Class B and C residences

The redevelopment of the Company's Class B and Class C beds in Ontario require regulatory approvals and may include significant capital outlays. To the extent such redevelopment plans proceed on significantly different timing or terms, including with respect to budgets or the levels of expected funding, there may be a material adverse impact on the business, operating results and financial condition of the Company.

Joint venture interests

The Company has entered into several joint-venture arrangements in respect of certain of the Company’s seniors’ housing operations and continues to seek more such opportunities. Joint-venture arrangements

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

have the benefit of sharing the risks associated with ownership and management of properties, including those risks described elsewhere in this section. However, if joint venture arrangements or partnerships do not perform as expected or default on financial obligations, the Company has an associated risk. The Company aims to reduce this risk by seeking to negotiate contractual rights upon default, by entering into agreements with financially stable partners and by working with partners who have a successful record of operating and completing development projects.

Financing risk

The Company expects its working capital needs and capital expenditure needs to increase in the future as it continues to expand and enhance its portfolio. The Company's ability to raise additional capital will depend on the financial success of its current business and the successful implementation of its key strategic initiatives as well as, financial, economic and market conditions and other factors, some of which are beyond its control. No assurance can be given that it will be successful in raising the required capital at reasonable cost and at the required times, or at all. Further equity financings may have a dilutive effect on the value of the Company's common shares. If the Company is unsuccessful in raising additional capital, it may not be able to continue its business operations and advance its growth initiatives, which may have a material adverse impact on the business, operating results and financial condition of the Company.

The Company is in compliance with its financial covenants as at December 31. However, there can be no assurance that future covenant requirements will be met. The Company’s bank lines and other debt may be affected by its ability to remain in compliance with their respective terms. If the Company does not remain in compliance with its financial covenants, its ability to amend the covenants or refinance its debt may be affected.

A portion of the Company's cash flow is devoted to servicing its debt and there can be no assurance that the Company will continue to generate sufficient cash flow from operations to meet the required interest and principal payments on its debt. If the Company were unable to meet such interest or principal payments, it may be required to seek renegotiation of such payments or obtain additional equity, debt or other financing. If this were to occur, it may have a material adverse impact on the business, operating results and financial condition of the Company. The Company is subject to the risk that its existing indebtedness may not be able to be refinanced at maturity or that the terms of any refinancing may not be as favourable as the terms of its existing indebtedness. If the Company requires additional debt financing, its lenders may require it to agree to restrictive covenants that could limit its flexibility in conducting future business activities or that contain provisions that, upon an event of default, result in the acceleration of repayment of amounts owed and that restrict the amount of dividends, if any, that may be paid to its shareholders. Some of the Company's current debt instruments include such covenants.

Credit ratings

The credit ratings assigned to the Company are an assessment of the Company's ability to pay its obligations. The Company received a BBB investment grade credit rating with a Stable trend from DBRS Limited. DBRS Limited has also assigned a rating BBB, with Stable trends, to the Company's Series A Unsecured Debentures, Series B Unsecured Debentures and Series C Unsecured Debentures. There is no assurance the Company will continue to receive such credit ratings. Thus, real or anticipated changes in the Company's credit ratings may affect its capital structure.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

Reliance on key personnel

The Company's success depends upon the retention of senior management. There can be no assurance that the Company would be able to find qualified replacements for the individuals who make up its senior management team if their services were no longer available. The loss of services of one or more members of such senior management team may have a material adverse impact on the business, operating results and financial condition of the Company. The Company does not currently carry any "key man" life insurance in respect of any of its executives.

Competition

Numerous other seniors' living residences, predominantly RRs, compete with the Company's RRs in seeking residents. The existence of competing owners and competition for the Company's residents may have a material adverse impact on the Company's ability to attract residents to its seniors' living residences and on the rents charged, and may have a material adverse impact on the business, operating results and financial condition of the Company.

Geographic concentration

A majority of the business and operations of the Company is conducted in Ontario, although the Company also has a significant presence in Saskatchewan and British Columbia. The fair value of the Company's assets and the income generated therefrom may be adversely impacted by changes in local and regional economic conditions in either jurisdiction.

Tax rules and regulations

The Company is subject to audits from federal and provincial tax jurisdictions and is therefore subject to risk in the interpretation of tax legislation and regulations. Tax rules and regulations are complex and require careful review by the Company’s tax management and its external tax consultants. Differences in interpretation of tax rules and regulations could result in tax assessments and penalties for the untimely payment of the determined tax liability, which could have a material adverse effect on the business, results of operations and financial condition of the Company.

Risks Relating to a Public Company and Common Shares

Volatile market price for securities of the Company

The market price for securities of the Company, including the common shares, may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company's control, including the following:

actual or anticipated fluctuations in the Company's quarterly results of operations;
changes in estimates of future results of operations of the Company or securities research analysts;
changes in the economic performance or market valuations of other companies that investors deem comparable to the Company;
additions to, or departures of, the Company's senior management and other key personnel;

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

imposition or removal of re-sale restrictions on common shares issued pursuant to exemptions under applicable securities laws;
sales or anticipated sales of additional securities, including common shares;
significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors; and
news reports relating to trends, concerns or competitive developments, regulatory changes and other related issues in the Company's industry or target markets.

Financial markets may experience price and volume fluctuations that affect the market prices of equity securities of companies and that are unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the securities of the Company may decline even if the Company's operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. As well, certain institutional investors may base their investment decisions on consideration of the Company's environmental, social and governance practices and performance against such institutions' respective investment guidelines and criteria, and failure to meet such criteria may result in limited or no investment in the securities of the Company by those institutions, which in turn may adversely affect the market price of the Company's securities, including the common shares. There can be no assurance that fluctuations in price and volume will not occur due to these and other factors.

Sienna Senior Living Inc. (" SSLI ") is a holding company

SSLI is a holding company and a substantial portion of its assets consist of the partnership units of its subsidiaries. As a result, investors in SSLI are subject to the risks attributable to its subsidiaries. As a holding company, SSLI conducts substantially all of its business through its subsidiaries, which generate substantially all of its revenues. Consequently, the Company's cash flows and ability to complete existing or future opportunities are dependent on the earnings of its subsidiaries and the distribution of those earnings to SSLI. The ability of these entities to pay distributions to SSLI depends on their operating results and may be subject to applicable laws and regulations and to contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation or reorganization of any of the Company's subsidiaries, holders of indebtedness and trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to SSLI.

Dividend policy

Commencing with the December 2012 dividend, the Board established a dividend policy authorizing the declaration and payment of an annual dividend of $0.90 per common share, to be paid to holders of common shares on a monthly basis. The annual dividend increased by 2% to $0.918 per common share starting with the September 2018 dividend for shareholders of record on August 31, 2018. The annual dividend was further increased by 2% to $0.936 per common share starting with the September 2019 dividend for shareholders of record on August 30, 2019. Any determination to pay cash dividends is at the discretion of the Board after taking into account such factors as the Company's financial condition, results of operations, current and anticipated cash needs, regulatory capital requirements, the requirements of any

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

future financing agreements and other factors that the Board may deem relevant. Cash dividends are not guaranteed and may fluctuate or cease based on the performance of the Company.

Compliance with financial reporting and other requirements as a public company

The Company is subject to reporting and other obligations under applicable Canadian securities laws and Toronto Stock Exchange rules, including Canadian Securities Administrators (" CSA ") National Instrument 52-109 (" NI 52-109 "). These reporting and other obligations place significant demands on the Company's management, administrative, operational and accounting resources. Moreover, any failure to maintain effective internal controls could cause the Company to fail to meet its reporting obligations or result in material misstatements in its consolidated financial statements. If the Company cannot provide reliable financial reports or prevent fraud, its reputation and operating results could be materially harmed, which could also cause investors to lose confidence in the Company's reported financial information, which could result in a lower trading price of its securities.

Management of the Company does not expect the Company's disclosure controls and procedures and internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that its objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of some persons, by collusion of two or more people or by management of the Company's override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Future sales of the Company's securities by directors and executive officers

Subject to compliance with applicable securities laws, officers and directors and their associates may sell some or all of their securities in the Company in the future. No prediction can be made as to the effect, if any, such future sales will have on the market price of the Company's securities prevailing from time to time. However, the future sale of a substantial number of securities by the Company's officers and directors and their associates, or the perception that such sales could occur, may have a material adverse impact on prevailing market prices for the Company's securities.

Conflicts of interest

Certain of the directors and officers of the Company may also serve as directors and/or officers of other companies and consequently there exists the possibility for such directors and officers to be in a position of conflict. Pursuant to applicable law, any decision made by any of such directors and officers involving the Company must be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of the Company.

Dilution and future sales of the Company's securities

The Company's articles permit the issuance of an unlimited number of common shares and an unlimited number of preferred shares, and shareholders have no pre-emptive rights in connection with such further

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

issuances. The directors of the Company have the discretion, subject to compliance with applicable laws, to determine the price and the terms of issue of further issuances of common shares and preferred shares.

Controls and Procedures

Disclosure controls and procedures

Management of the Company is responsible for establishing and maintaining a system of controls and procedures over the public disclosure of financial and non-financial information regarding the Company. Such disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported, on a timely basis, to senior management of the Company, including the President and Chief Executive Officer and the Chief Financial Officer, so that they can make appropriate decisions regarding public disclosure. The Company’s system of disclosure controls and procedures include, but are not limited to, its Code of Business Conduct and Ethics, Disclosure & Insider Trading Policy, Whistleblower Policy, clearly articulated corporate values, procedures in place to systematically identify matters warranting consideration of disclosure by its Disclosure Committee, verification processes for financial and non-financial metrics and information contained in annual and interim filings (including the consolidated financial statements, MD&A, AIF and other documents and external communications), and detailed policies outlining the delegation of authority within the Company.

As required by NI 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, a quarterly evaluation of the adequacy of the design and effective operation of the Company’s disclosure controls and procedures was conducted, under the supervision of and with the participation of management of the Company (including the President and Chief Executive Officer, and the Chief Financial Officer) as at December 31. The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the President and Chief Executive Officer, and the Chief Financial Officer concluded that the design and operation of the Company's disclosure controls and procedures were effective as at December 31, 2022.

Internal control over financial reporting

Management of the Company is also responsible for establishing and maintaining appropriate internal control over financial reporting. The Company’s internal control over financial reporting include, but are not limited to, detailed policies and procedures related to financial accounting, reporting and controls and systems that process and summarize transactions. The Company’s procedures for financial reporting also include the active involvement of qualified financial professionals, senior management and the Company’s Audit Committee.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can only provide reasonable, and not absolute, assurance with respect to the reliability of financial reporting and the preparation and presentation of financial statements for external purposes in accordance with IFRS. Furthermore, no evaluation of controls can provide absolute assurance that all control issues, including any instances of fraud, have been detected. Controls may be circumvented by the unauthorized acts of individuals, by collusion of two or more people or by management’s override. The design of any system of controls is also based, in part, upon certain

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential (future) conditions.

As also required by NI 52-109, management, including the President and Chief Executive Officer and the Chief Financial Officer, evaluated the adequacy of the design (quarterly) and operating effectiveness (annually) of the Company’s internal control over financial reporting as defined in NI 52-109, as at December 31. In making this assessment, management, including the President and Chief Executive Officer and the Chief Financial Officer, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). This evaluation included review of the documentation of controls, evaluation of the design and testing the operating effectiveness of controls, and a conclusion about this evaluation. Based on that evaluation, the President and Chief Executive Officer and the Chief Financial Officer have concluded that the design and operation of the internal control over financial reporting were effective as at December 31, in providing reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS.

Changes in internal control over financial reporting

During the year ended December 31, 2022 there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Forward-Looking Statements

This MD&A, and the documents incorporated by reference herein, contain forward-looking information that reflects management's current expectations, estimates and projections about the future results, performance, achievements, prospects or opportunities for the Company, the seniors' living sector and government funding as of the date of this MD&A. Forward-looking statements are based upon a number of assumptions and involve significant known and unknown risks and uncertainties, many of which are beyond our control, including the impact of the COVID-19 pandemic on Sienna's operations and financial condition, the seniors' living sector, the potential efficacy and availability of COVID-19 vaccines, the completion of acquisitions, dispositions and financing activities relating thereto, and statements with respect to the Company's ability to refinance debt maturities, that could cause actual results to differ from those that are disclosed in or implied by such forward-looking statements. The words "plan", "expect", "schedule", "estimates", "intends", "budgets", "anticipate", "projects", "forecasts", "believes", "continue", or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "should", "would", "might" occur and other similar expressions, identify forward-looking statements. While we anticipate that subsequent events and developments may cause our views to change, we do not intend to update this forward-looking information, except as required by applicable securities laws. This forward-looking information represents our views as of the date of this MD&A and such information should not be relied upon as representing our views as of any date subsequent to the date of this document. We have based the forward-looking statements in this MD&A on information currently available to us and that we currently believe are based on reasonable assumptions. However, there may be factors that cause results, performance or achievements not to be as expected or estimated and that could

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking information. These factors are not intended to represent a complete list of the factors that could affect the Company. See risk factors highlighted in materials filed with the securities regulators in Canada from time to time, including the Company's latest AIF.

Sienna Senior Living Inc. – Q4 2022 Management’s Discussion and Analysis

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Reeflex Solutions — Management Reports 2023

48104_rns_2023-02-23_9d861b0a-9ed7-48b9-b037-a4ec57ee1a7f.pdf

Management’s Discussion and Analysis

MANAGEMENT'S DISCUSSION AND ANALYSIS

Basis of Presentation

Additional Information

Review and Approval by the Board of Directors

Company Profile

Notes:

Non-IFRS Performance Measures

Key Performance Indicators

Notes:

Fourth Quarter 2022 Summary

Business Update

Growth and Diversification Initiatives

Integration of Acquired Portfolio into the Aspira Platform

Acquisition of Woods Park Care Centre, Barrie, Ontario

Development of a Joint Venture Retirement Residence in Ontario

Development and Redevelopment of Long-Term Care Portfolio in Ontario

Retirement Operations Update

Successful marketing and sales initiatives generating strong interest in Company's retirement residences

Long-term Care Operations Update

Implementation of New LTC Platform

Focus on Residents’ Quality of Life and Care

Update on Closing of LTC Residence in Ontario

COVID-19 Update

Staffing Update

Staffing Strategy

Centralized scheduling and call-out system

Talent Acquisition

SPARK

Sienna Ownership and Reward Program

Resident, Family and Team Member Satisfaction

Resident & Family Satisfaction Surveys

Team Member Engagement Surveys

Cost Pressures in Current Market Conditions

Outlook

Retirement Operations

Long-Term Care Operations

Developments

Redevelopment of Long-Term Care Portfolio

Development of Retirement Residences

Capitalizing on long-term demographic fundamentals despite headwinds

Significant Events

Financing Update

DBRS Rating Renewal

Acquisition of Woods Park, Barrie, Ontario

Our Purpose, Vision and Values

Our Purpose:

Cultivating Happiness in Daily Life .

Our Vision is to be:

Canada's most trusted and most loved seniors' living provider.

Our Values:

Company Strategy and Objectives

Strengthening Team Engagement

Offering a compelling team experience

Elevating Quality of Life of Residents

Achieving Growth & Enhanced Performance

Outperforming the market

Growing the Company's footprint

Environmental, Social and Governance (ESG) Responsibility

Diversity, Equity and Inclusion

A Diverse and Inclusive Workforce

Fair Compensation and Gender Pay Equity

Sienna Ownership and Reward Program

Indigenous Relations and Reconciliation

Labour Relations and Union Representation

Giving Back to the Community

Sienna for Seniors Foundation (" Foundation ")

Sienna Senior Living Dino Chiesa Scholarship

CaRES Fund

Improving Sienna's Environmental Footprint

Addressing Climate Change through Development

Committing to Waste Reduction by Going Paperless

Industry Update

Demand driven by Rapid Growth in Target Demographic

Slowing Supply of Retirement Residences

Robust Fundamentals in Sienna’s Key LTC Markets

High barriers to entry

Reeflex Solutions Management Reports 2023