Brookdale Senior Living, Omega Healthcare Investors, Ventas and Welltower held third-quarter earnings calls Friday.

Welltower

Shankh Mitra headshot
Welltower CEO Shankh Mitra

“Despite mediocre bottom-line results, we cannot be happier with the overall results of the quarter,” CEO and Chief Investment Officer Shankh Mitra said Friday during the Toledo, OH-based real estate investment trust’s third-quarter earnings call. 

“And despite witnessing a significant surge of the delta variant after we spoke three months ago, we still posted the strongest sequential revenue growth in the company’s history,” he added.

Year-over-year revenue growth inflected positively among the U.S. portfolio for the first time since the beginning of pandemic, Mitra said.

“Despite this great top-line performance, our bottom-line performance was mediocre and impacted by a perfect storm across the expense stack. We had a confluence of extraordinary costs,” the CEO said. “There was also an extra day in the quarter, which resulted in a mismatch of revenue and expenses as the majority of our operators charge rent on a monthly basis.”

In conjunction with reporting its third-quarter results, Welltower also announced Thursday that it has entered into a long-term strategic partnership with Kisco Senior Living. 

“The exclusive partnership, which brings together Kisco’s next-generation senior housing and care model with Welltower’s unparalleled data analytics platform, has broken ground this year on two premium seniors housing communities, The Carnegie at Washingtonian Center and Phase Two of The Cardinal at North Hills, both of which are located in super prime U.S. micro markets,” according to REIT said.

“Kisco is one of our best operators in our portfolio, occupancy incredibly bouncing already back to high 90s. I cannot be more proud to be partnering with Andy Colberg and his team to find a few more A++ micro markets where a Cardinal model will be fantastically successful,” Mitra said. “We signed a long-term exclusive development contract with Kisco and look forward to grow[ing] this partnership over the next decade.”

John Burkart, chief operating officer, reported that Welltower’s year-over-year revenue growth in its senior housing operating portfolio turned positive in September, marking the first monthly increase since the onset of COVID-19. 

“The strong demand-based recovery in seniors housing was led by our U.S. portfolio, which year-over-year revenue turned positive in August, and our U.K. portfolio, which turned positive in September,” he said.

“The occupancy recovery, an improvement in RevPAR [Revenue Per Available Rooms], which began in Q1 [the first quarter] reflect the need-based nature of senior housing and a recognition that these communities are active, safe and social, three key elements to quality senior living. The U.S. continues to lead the recovery, growing occupancy 600 basis points from the trough in mid-March through Sept. 30,” Burkart added.

Welltower’s collection rate remained high in the third quarter, according to Chief Financial Officer Tim Lordan.

“As these recovery trends have strengthened, the solvency risk for our operators has decreased in tandem. And our continued strong cash rent collection, along with the value of the collateral that sits behind many of our lease agreements, continues to provide us confidence that Welltower’s real estate position remains strong,” Lordan said.

Read more about the earnings call in McKnight’s Senior Living

Brookdale Senior Living

Cindy Baier
Lucinda “Cindy” Baier

Occupancy for Brookdale Senior Living’s properties increased sequentially 200 basis points (2%) and more than doubled the second-quarter sequential increase of 90 basis points, Cindy Baier, Brookdale’s president and CEO, said Friday during the company’s third-quarter earnings call.

She said the company’s third-quarter growth is the largest average occupancy increase in at least the last six years. As of the end of October, Brentwood, TN-based Brookdale has experienced eight consecutive months of occupancy growth. For the third quarter, revenue per occupied room was within 1% of the prior-year quarter, Baier added.

“With our strong occupancy growth, we continue to win the recovery. Even with the wax and wane of the pandemic, we continue to see strong momentum of top-line growth,” she said.

In addition, Baier said that Brookdale continues to strengthen its liquidity from “several recent and significant transactions.” The company increased its liquidity in July by $300 million with the 80% sale of its home health, hospice and outpatient business to HCA Healthcare.

Senior living community operating expenses increased $4.2 million, or 0.9%, in the quarter, primarily due to an increase in labor expense arising from increased contract labor and overtime costs, which was partially offset by a decrease in incremental costs to respond to the COVID-19 pandemic, according to a press release issued Wednesday in conjunction with the earnings call.

The disposition of communities resulted in $7.7 million less in facility operating expenses during the third quarter of 2021 compared with the third quarter of 2020.

Read more about the earnings call in McKnight’s Senior Living.

Omega Healthcare Investors 

Taylor Pickett headshot
Omega CEO Taylor Pickett

Omega Healthcare Investors’ liquidity and balance sheet have “never been stronger as we work with our operators to navigate through what is hopefully the tail end of the pandemic,” CEO Taylor Pickett said during the third-quarter earnings call.

Occupancy has continued to trend upward and is now at 76% for Omega’s skilled nursing portfolio, he said, and 20% of its facilities are at or above pre-COVID occupancy levels.

Negatives for the sector include labor and the continuing labor shortage and related increasing wages, and “we are several months into the recruitment cycle for those operators that took Medicare advance payments when the pandemic started.”

As of Sept. 30, Omega had an operating asset portfolio of 787 skilled nursing/transitional care facilities and 157 senior housing communities with a combined total of more than 96,000 operating beds spread across 63 third-party operators in 42 states and the United Kingdom. For the third quarter, the percentage of rent and interest collected, including the application of security deposits, letters of credit and other offsets, was 99%, according to Chief Operations Officer Daniel Booth. 

Read more about the earnings call from McKnight’s Senior Living and McKnight’s Long-Term Care News.

Ventas

Debra Cafaro headshot
Debra Cafaro

“Ventas delivered positive results in the third quarter, saw sequential [senior housing operating portfolio] average occupancy growth, benefitted from growth in our life science, medical office and healthcare triple net portfolios and executed on its investment priorities,” Chairman and CEO Debra A. Cafaro stated Friday on the real estate investment trust’s third-quarter earnings call.

Occupancy grew at record levels, she said. The portfolio has seen eight consecutive months of consecutive growth, rising 750 basis points (7.5%) since mid-March.

Average senior housing operating portfolio occupancy grew 230 basis (2.3%) points to 82.2% in the third quarter versus the second quarter in the U.S. and Canada. Approximate spot occupancy increased 183 basis points from June 30 to Sept. 30, led by U.S. senior housing operating portfolio communities.

Revenue increased 3.1% in the third quarter due to higher occupancy and stronger pricing versus the second quarter, with revenue per occupied room improving sequentially by 0.3%. Expenses increased 5.4% in the third quarter, principally as a result of higher labor costs, which represented approximately half of the increase. Other cost increases included the additional day in the quarter and seasonal repair and maintenance expenses. Senior housing operating portfolio sequential same-store cash net operating income decreased 3.4% in the third quarter. 

“A robust senior housing recovery is underway,” Cafaro said. “We expect to see meaningful revenue increases in the first quarter of 2022 and improving pricing power.”

Read more about the earnings call in McKnight’s Senior Living.

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