headshot - Invesque Chairman and CEO Scott White
Invesque Chairman and CEO Scott White

Invesque is “all about simplicity” this year as the investment company continues to angle its portfolio toward private-pay senior housing, CEO Scott White said Thursday.

“Our strategy, which we’ve been clear about, is to simplify our portfolio, simplify our story and simplify our balance sheets,” White said during a first-quarter earnings call. “Step one is simplifying the story and the portfolio.”

Following “extremely busy” third and fourth quarters in 2021, White said, Invesque opened 2022 with a flurry of transactions to further its strategic focus and streamline its portfolio.

To date, the company has completed several sales to meet its goal of ridding its portfolio of non-strategic properties and focusing on building its portfolio of private-pay senior living communities

Feb. 1, the company closed on the purchase of a 38-unit memory care community in Grand Rapids, MI, expanding its relationships with Constant Care Management Co. 

Between March 1 and April 1, the company closed on four separate deals to sell eight senior living and skilled nursing facilities for almost $80 million. White said that the company completed almost $300 million of asset sales in the past 10 months.

March 1, the company sold a Harrisburg, PA, assisted living and memory care community for $5.5 million. March 31, the company sold a vacant Port Royal, SC, stand-alone memory care community for $3.5 million. The community previously was managed by Phoenix Senior Living and will be repurposed as a drug and alcohol rehabilitation facility by its new owner, according to Invesque. April 1, the company sold two New York senior living communities for $19.2 million.  

White said that the company is not done with sales transactions yet and plans to continue to identify properties and network with potential buyers. Invesque’s strategy is to sell non-core assets, he said.

Pandemic challenges continue

Chief Financial Officer Scott Higgs said that during the past quarter, he saw a greater emphasis by investors on restructuring relationships with tenants as the industry grapples with operational headwinds. Although he said the direct effects of COVID-19 on Invesque’s portfolio are waning, effects will linger for months and years. 

“I’m optimistic the pandemic is mostly in the rearview mirror, and our operators can refocus on growing census and improving overall financial performance,” White said. 

Staffing, Higgs said, will continue to place unprecedented pressures on wages and salary, and other costs, ranging from food to energy to building supplies, are placing inflationary pressures on the industry “unseen in decades.” 

“These factors combined to create a difficult environment to control costs, and building back revenue has also been a challenge,” Higgs said. 

Commonwealth is rebuilding

Highlighting the Commonwealth Senior Living portfolio in Invesque’s senior housing operating segment, White said that the investment company is seeing positive trends despite low move-ins early in the quarter due to the omicron variant of COVID-19. 

Census in the entire senior housing portfolio rebounded in March to end the quarter with solid growth, White said, which continues into April. Occupancy in the 20-community Commonwealth portfolio that Invesque acquired in 2019 ended April 120 basis points (1.2%) higher than it started the year.

Occupancy gains followed a 6.5% resident rental rate implemented on March 1 to offset increased labor and operating costs.

Higgs said that senior living operators have increased resident rental rates over the past 18 months, with larger-than-normal increases in the first quarter. As of Dec. 31, average monthly rates in Invesque’s senior housing portfolio were up 4.4% compared with rates on Dec. 31, 2020. Pushback on rate increases from residents have been minimal, Higgs said, as operators contend with substantial increases in staff, food and insurance costs. 

“We expect margins to continue to be compressed for the foreseeable future,” he said.

Trailing 12-month occupancy as of Dec. 31 for Invesque’s triple-net leased facilities was 74%, and occupancy for its senior housing portfolio was 76%, Higgs said.