The Pennant Group and National Health Investors held first-quarter earnings calls Tuesday.
The Pennant Group
First-quarter results reflect growing momentum in spite of challenges from the omicron variant, staffing issues and inflationary pressures, Pennant CEO Danny Walker said.
“There is a long and exciting road ahead,” he said.
The Eagle, ID-based Pennant reported that total revenue for the quarter was $113.9 million, an increase of $8.2 million, or 7.8%, over the prior-year quarter, according to a press release issued Monday in conjunction with the earnings call. The senior living segment for the first quarter was $33.4 million, an increase of $2.4 million, or 7.7%, over the prior-year quarter.
Senior living average occupancy for the first quarter was 72.6%, an increase of 50 basis points (0.5%) over the prior-year quarter and 20 basis points (0.2%) over the fourth quarter of 2021. Average monthly revenue per occupied room for the first quarter was $3,371.
“Our senior living segment took another step forward in its ongoing turnaround,” Pennant President Brent Guerisoli said. “We continued to make significant progress in building a stronger leadership foundation, developing market and cluster leaders, expanding our marketing and sales expertise by elevating and recruiting talented professionals and equipping them with better data analytics and tools, and driving rigorous accountability around the key focus areas that will accelerate our segment results.
Since the beginning of the first quarter, Guerisoli said, Pennant has closed on the transfer of five senior living communities to affiliates of The Ensign Group. Ensign had discussed the sales on its late April earnings call.
“This gives us a more streamlined portfolio” heading further into 2022, he said.
Guerisoli echoed Walker’s sentiment that momentum is building at Pennant.
“Overall, we are pleased with the progress made in the first quarter in a challenging operating environment,” Guerisoli said.
See more coverage of the earnings call in McKnight’s Senior Living.
National Health Investors
National Health Investors is making “steady progress” on its portfolio optimization efforts, CEO and President Eric Mendelsohn said on Tuesday’s earnings call. He expects that the majority of the Murfreesboro, TN-based real estate investment trust’s initiatives will be completed in the first half of the year, he said.
“Senior living has experienced the most disruption from the pandemic and has been where most of our portfolio optimization efforts are focused,” Chief Investment Officer Kevin Pasoe said. NHI completed almost $214,000 in senior housing sales in the first quarter, and the REIT restructured some leases, he said.
NHI sold two properties in the first quarter for approximately $13.7 million.
The REIT reported “considerable” activity in April, with the sale of a Washington state independent living facility formerly operated by Holiday Retirement for approximately $3.2 million. NHI also sold two assisted living communities in Texas for approximately $7.8 million. Additionally NHI exercised its purchase option to acquire an assisted living and memory care community operated by Encore Senior Living in Oshkosh, WI. The purchase price was $13.3 million, and the lease has an initial term of 15 years with two five-year renewal options. The acquisition was partially funded with the cancellation of a $9.1 million construction loan that carried a rate of 8.5%.
NHI also transitioned three Illinois memory care communities to Encore Senior Living under a 15-year master lease, expanding the REIT’s relationship with Encore to include 12 properties.
Regarding its disposition of former Holiday Retirement properties, NHI said it sold one property and transitioned a Florida assisted living community to an in-place master lease. The REIT moved the remaining 15 independent living communities previously owned by Holiday into two separate joint ventures “that own the underlying independent living operations and in which NHI has majority interests,” according to a press release. As previously reported, those communities now are operated by two third-party property managers, Merrill Gardens and Discover, in exchange for the receipt of a management fee.
In other action, Bickford Senior Living’s four master lease agreements were restructured and amended during the quarter. Rent for the portfolio will be approximately $28 million per year through April 1, 2024.
The REIT also said it continues to negotiate with Bickford regarding the repayment of $26 million in rent deferrals as of March 31.
“We did not include any rent concessions for Bickford for April [in the press release]. We’re not forecasting any concessions for May,” Pascoe said. “We’re determining the appropriate level of repayment and deferral balance in our targeted minimum repayment of $3 million annually.”
The total to be repaid will be about $6 million, contingent on Bickford meeting specific performance targets “with certain property dispositions,” he said. “We’re still in the process of selling some Bickford buildings, which will improve cash flow to the enterprise and lessen the need for future assistance.”
Pascoe said that the 13 continuing care retirement communities in the REIT’s portfolio, which account for 30% of its annualized cash revenue net of deferrals, “have performed great.”See more coverage of the earnings call in McKnight’s Senior Living.