Gradual recovery is evident in three new earning reports.
Although the long-term care industry is “not out of the woods yet,” CareTrust REIT Chairman and CEO Greg Stapley said on Monday’s earnings call that he is “very pleased” with the San Clemente, CA-based real estate investment trust’s third-quarter results.
CareTrust reported normalized funds from operations of $36.7 million, which is a 13% increase over the prior year, and normalized funds from operations per share of $0.38. The REIT reported normalized available funds for distribution of $39 million, a 15.1% increase over the prior year, and normalized funds available for distribution per share of $0.40.
During the quarter, CareTrust acquired the 119-bed Sedona Trace Health & Wellness Center in Austin, TX, and the 122-bed Cedar Pointe Health & Wellness Center in nearby Cedar Park, which the REIT then leased to affiliates of the Ensign Group. CareTrust funded the approximately $32.5 million purchase price from its $600 million unsecured revolving credit facility. The REIT now has $80 million outstanding on its $600 million revolving credit line, with no scheduled debt maturities prior to 2024.
“The occupancy recovery that began earlier this year for our skilled nursing providers has continued though the third quarter,” Stapley said in a press release issued Monday in conjunction with the earnings call.
CareTrust reported that 96.2% of its contractual rents were collected in the third quarter.
“With the exception of one small short-term deferral, our tenants have been able to pay their rents right along this year in spite of the effect of the pandemic,” Stapley said on the call.
Occupancy is strong and would be much further along if not for the tight labor market,” said Dave Sedgwick, CareTrust’s president and chief operating officer.
“Several of our tenants report turning patients away, simply because they lack the necessary staff to care for more,” Stapley said.
National Health Investors
National Health Investors made significant progress in the third quarter, Eric Mendelsohn, NHI president and CEO, said on Monday’s earnings call.
The Murfreesboro, TN-based real estate investment trust sold 19 properties for approximately $216 million, including 16 underperforming senior living properties for approximately $173 million at a low single-digit cap rate. It is working on selling another subset of underperforming senior living properties at similar cap rates. Mendelsohn said the REIT expects the transaction to be finished sometime in the first quarter of 2022.
“We have reduced our tenant concentrations with both Bickford [Senior Living] and Holiday [Retirement] and have established frameworks that we believe greatly improve the coverage and growth profiles of NHI,” Mendelsohn. “Our balance sheet is in great shape as we have reduced leverage despite our tenant deferrals and Holiday’s non-payment of rent. We have full capacity on our revolver and little need to issue new equity as we pivot towards growth.”
In August, NHI sold a portfolio of eight properties that was leased to Holiday. The properties had an aggregate net book value of $113.6 million and went for total cash consideration of $115 million, including transaction costs of $0.9 million. The REIT recognized a gain of approximately $1.9 million.
Rental income was $0.9 million and $5.9 million for the three and nine months ended Sept. 30, 2021, respectively, and $2.5 million and $7.5 million for the three and nine months ended Sept. 30, 2020, respectively, according to a press release issued Monday in conjunction with the earnings call.
Sept. 30, NHI sold a senior living community in Florida for $14 million that was received Oct. 1; the amount included transaction costs of $1.2 million. The REIT recorded a gain of approximately $9.4 million.
Rental income was $0.3 million and $0.8 million, for the three and nine months ended Sept. 30, 2021, respectively, and $0.3 million and $1 million for the three and nine months ended Sept. 30, 2020, respectively, the company said.
NHI collected 85.6% of contractual cash due for the third quarter. NHI granted rent deferrals totaling approximately $5.8 million. Of this total, approximately $3.5 million of deferrals were related to Bickford, $0.6 million were to Holiday, and approximately $1.7 million was related to three other tenants.
NHI collected 85.6% of contractual cash due for the quarter.
The remaining balance is comprised of the following: 4.4% in deferrals related to Bickford, 0.8% in deferrals related to Holiday; 2% in deferrals related to three other operators; 0.5% related to lower forecasted revenue from transitioned properties prior to the start of the pandemic and 6.7% related to Holiday nonpayment of contractual rent.
The rent deferrals amounted to approximately $19.9 million. Of this total, approximately $13.8 million of deferrals were related to Bickford, $1.8 million were to Holiday, and approximately $4.3 million were to four other tenants.
NHI has agreed with Bickford to defer $4.5 million in contractual rent due for the fourth quarter and expects to grant up to $4 million in the first quarter of 2022. The REIT also reached agreement with two other tenants regarding additional rent deferrals of approximately $0.5 million for the fourth quarter.
Read more about the earnings call on the McKnight’s Senior Living website.
National Healthcare Corp.
National Healthcare Corp. reported a third-quarter loss of $3.3 million, compared to a net profit of $12.8 million for the same period a year ago, the Murfreesboro, TN-based company reported in a press release Friday.
“The decrease in our reported [generally accepted accounting principles] earnings for the third quarter of 2021 is due to the unrealized losses in our marketable equity securities portfolio,” the company reported.
Net operating revenues and CARES Act income for the third quarter totaled $276.7 million compared with $250. 6 million for the third quarter of 2020, representing an increase of 10.4%.
NHC’s skilled nursing facilities occupancy increased 90 basis points (0.9%) during the third quarter compared with the second quarter.