Fourth-quarter / full-year 2022 earnings calls continued Wednesday with reports from Brookdale Senior Living, National Health Investors and Sabra Health Care REIT.
Brookdale Senior Living
“Brookdale accomplished a lot in 2022, particularly on the top line, but there were areas of the business where we didn’t meet expectations, which caused 2022 adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] results to fall below guidance, as reported in our January press release,” incoming Executive Vice President and Chief Financial Officer Dawn L. Kussow said on Wednesday’s call.
On a same-community basis, fourth-quarter revenue per available room grew 10% versus the fourth quarter of 2021, “which included strong move-in results at increased rates that began for new residents in October,” Kussow said. “The forward rates helped drive a trend change in RevPOR [revenue per occupied room] from sequential quarterly declines through the third quarter in 2022 to a modest positive uptick in the fourth quarter.”
Brookdale attributed the increase in occupancy to the company’s execution on its initiatives to rebuild occupancy lost due to the COVID-19 pandemic, according to a press release issued in conjunction with the earnings call. On a year-over-year basis, RevPOR increased 4.5%. Weighted average occupancy increased by 370 basis points versus the same quarter in 2021, and December represented the company’s 14th consecutive month of year-over-year occupancy gains.
Operating expenses were higher in the fourth quarter of 2022 compared with the same quarter in 2021, primarily due to higher labor expense resulting from merit and market wage rate adjustments, more hours worked with higher occupancy during the period, and an increase in the use of overtime pay, partially offset by a decrease in the use of contract labor.
Fourth quarter 2022 operating expenses increased 1% from the third quarter, Kussow noted.
“The variance to expectation was driven by two things: first, labor expense improvement below what we had anticipated, and second, the unforeseen expense impact from Winter Storm Elliott,” she said.
Looking at the first quarter of 2023, Brookdale anticipates seeing an 11% to 12% increase in RevPAR (revenue per available room) year-over-year growth and adjusted EBITDA of $70 million to $75 million.
Read more coverage of the Brookdale earnings call in McKnight’s Senior Living.
National Health Investors
“Our portfolio optimization is largely complete following the disposition of 39 underperforming properties with low single-digit yields for $340 million, the restructuring of several tenant leases including the Bickford [Senior Living] lease, and the transitioning of 15 properties in our newly formed [senior housing operator portfolio],” NHI President and CEO Eric Mendelsohn said in a press release issued in conjunction with its Wednesday earnings call. “Our need-driven senior housing [earnings before interest, taxes, depreciation, amortization, rent and management fees] coverage has significantly improved as a result, and we believe we are in a great position to return to growth.”
As of Dec. 31, the Murfreesboro, TN-based real estate investment trust had $1.1 billion in net debt, including $42 million outstanding on its $700 million revolving credit facility. In January, NHI repaid a $125 million private placement note primarily with proceeds from the revolving credit facility. At Jan. 31, the REIT had $202 million outstanding under the $700 million revolving credit facility and approximately $26.4 million in cash and cash equivalents. NHI has approximately $415.7 million available under the at-the-market program.
The board last week approved a stock repurchase plan for up to $160 million of the REIT’s common stock. The plan is effective for one year. The stock repurchase plan does not obligate the company to repurchase any specific number of shares and may be suspended or discontinued at any time, NHI noted.
The REIT announced that it will pay its first-quarter dividend of $0.90 per common share on May 5 to shareholders of record as of March 31.
Read more coverage of the NHI earnings call in McKnight’s Senior Living.
Sabra Health Care REIT
Sabra Health Care REIT CEO and Chair Rick Matros said he expects 2023 to be relatively quiet for the Irvine, CA-based real estate investment trust. The company will focus this year on continued recovery from the pandemic with an “eye on getting back to earnings growth in 2024,” he said.
During the fourth quarter of 2022, Sabra generated $25.9 million of gross proceeds from the disposition of seven skilled nursing facilities. Additionally, the REIT acquired an 85% interest in three Canadian senior housing managed communities through a newly created joint venture for $52.1 million with an estimated stabilized cash yield of 7.6%.
The REIT has completed several transactions since the fourth quarter ended. Feb. 1, Sabra completed the transition of 24 properties formerly leased to North American as part of a previously announced disposition plan. The REIT also after Dec. 31 has acquired a managed senior living community from its proprietary pipeline for $40.8 million, including $4.6 million previously funded through the company’s preferred equity investment in the development.
As previously announced, Sabra renewed and extended its credit facility, which the company said improves its debt maturity profile by pushing the nearest material maturity to August 2026 “while holding pricing in line with our prior credit facility.”
As of Dec. 31, Sabra had approximately $852.3 million of liquidity, consisting of unrestricted cash and cash equivalents of $49.3 million and available borrowings of $803 million under its revolving credit facility.
The REIT’s board of directors declared a quarterly cash dividend of $0.30 per share of common stock on Feb. 1. The dividend will be paid Feb. 28 to common stockholders of record as of the close of business on Feb. 13.
Read more coverage of the Sabra earnings call in McKnight’s Senior Living and McKnight’s Long-Term Care News.
