Second-quarter earnings calls continued Thursday with updates from Sabra Health Care REIT, AlerisLife and Diversified Healthcare REIT.
Sabra Health Care REIT
Sabra Health Care REIT closed out the second quarter with senior housing and behavioral health investments, as well as sales of underperforming skilled nursing facilities, as it continued with diversification plans announced last quarter.
The Irvine, CA-based real estate investment trust’s portfolio of managed senior living communities continued to see improvement in the quarter despite worsening labor shortages exacerbated by the omicron version of COVID-19, said Chief Investment Officer, Treasurer and Executive Vice President Talya Nevo-Hacohen.
“Our perspective is that we have moved from the pandemic phase of COVID-19 to endemic,” CEO, President and Chairman Rick Matros said during Thursday’s earnings call. “Occupancy is increasing, albeit still hampered by labor shortages. Hiring has improved, and agency utilization is coming down, but this will take time.”
Occupancy in the portfolio for the second quarter was 80.7%, driven by increases in assisted living and independent living occupancy compared with the first quarter. The company’s senior living communities also successfully implemented rate increases, executives said.
Year-to-date investment activity totals $264.9 million, the REIT reported. The company has acquired 12 Canadian senior housing communities for $147.4 million and closed on the acquisition of two additional managed senior housing communities for $71.1 million.
Newton, MA-based AlerisLife will reduce costs by approximately $14 million and invest approximately $4 million under recommendations made by an outside consultant.
The move will allow the company to “drive efficiencies and standardize processes that will enable us to better serve our residents and customers and stabilize our financial performance,” President and CEO Jeffery Leer said Thursday during a second-quarter earnings call.
The company also shared details of plans from an operations review that followed the departure of its President and CEO Katherine “Katie” Potter in May and the subsequent appointment of Leer as her successor.
In a release issued late Wednesday afternoon, AlerisLife noted that the $14 million in cost reductions will come by streamlining redundant business processes and reducing investments in non-core functions, rationalizing information technology systems to those that directly support core business functions — and ensuring their optimal utilization, and continually assessing general and administrative expenses to identify more opportunities to save money.
The $4 million in investments, meanwhile, will be related to the company’s core business as well as in projects, processes and systems to enhance operations in its residential (Five Star Senior Living) and lifestyle services (Ageility Physical Therapy Solutions and Ageility Fitness) businesses.
To learn more of what was shared on the Thursday call, visit McKnight’s Senior Living.
Diversified Healthcare REIT
Diversified Healthcare Trust’s second-quarter results showed continued and encouraging recovery for the senior living portfolio, President and CEO Jennifer Francis said during Thursday’s earnings call.
DHC is seeing the effects of increased occupancy across the industry, most notably in assisted living, Francis said. The company’s consolidated senior housing operating portfolio occupancy has increased 60 basis points (0.6%).
Average occupancy remained flat compared with the first quarter in DHC’s same-property senior housing operating portfolio segment, at 74.1%. But month-end occupancy increased to 75.4% in June and an additional 40 basis points (0.4%) in July. Rates also rose slightly, she reported.
“Looking ahead, we expect to see concessions that were heavily utilized in this portfolio at the end of 2021 dissipate in the second half of the year, which should continue to improve revenue,” Francis said.
DHC also expects wage and benefits to continue to increase as its operators compete to attract and retain employees. Rate increases at the community level should help it to recover ongoing high labor costs, Francis said.
More details on the company’s projections for revenue, labor and wage inflation, and news on the ongoing turnaround of its portfolio communities transitioned from Five Star Senior Living, can be found at McKnight’s Senior Living.