Brookdale Senior Living, CareTrust REIT and Ventas presented their first-quarter earnings reports to investors on Friday.
Brookdale sees revenue, occupancy increases
Revenue per available bed increased 5% on a sequential basis and 11% year-over-year, and first-quarter consolidated revenue per occupied unit increased 5.3% year-over-year, Brentwood, TN-based Brookdale Senior Living reported Thursday.
“Our first strategic priority, to get every available room in service at the best profitable rate, is directly linked to our financial highlights for the first quarter,” President, CEO and Director Cindy Baier said on a Friday earnings call.
The CEO said that first-quarter sequential occupancy was the best Brookdale has experienced in 10 years. Additionally, first-quarter consolidated weighted average occupancy increased 380 basis points (3.8%) year-over-year. Senior housing average occupancy for April was 73.9%, up from 73.6% in March.
“What is truly remarkable about this first quarter’s positive occupancy news is that it occurred simultaneously with our implementing rate increases necessary to help mitigate higher labor costs and rising inflation,” Baier said.
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Move-in volume increased in February, and March saw more than 2,000 move-ins.
“Our lead model is robust, with first-quarter inquiries exceeding pre-pandemic levels,” Baier said. “We continue to refine our programs to build a strong pipeline to attract residents wherever they are in their decision-making journey.”
Brookdale’s second strategic priority, the CEO said, is “to attract, engage, develop and retain the best associates.” Net hires nearly doubled from the fourth quarter of 2021 to the first quarter of 2022, and Brookdale expanded its workforce by 2.5% during the first quarter, she said.
“These results are a testament to our intense recruiting efforts, competitive compensation packages and where possible, flexible schedule offerings,” Baier said.
Read more coverage of the earnings call in McKnight’s Senior Living.
CareTrust REIT provides update on repositioning of 32 properties
On San Clemente, CA-based CareTrust REIT’s first-quarter earnings Friday, President and CEO Dave Sedgwick provided an update on the progress on the real estate investment trust’s previously stated plan to fortify its portfolio by repositioning 32 properties.
Of those properties, he said, signed leases with Landmark Recovery to repurpose three assisted living properties into substance addiction recovery centers. Twenty-seven other properties are in the early stages of the sales process, he said.
“Interest in the properties appears to be in line with our expectations. We may yet decide to retain and re-tenant select facilities instead of selling them,” Sedgwick said.
The remaining two properties to be repositioned have not been formally put up for sale.
“As deals firm up, we will provide updates along the way, and we should have [a] much more meaningful update for the process next quarter,” Sedgwick said.
The REIT has collected approximately 95% of its rents during the quarter. CareTrust collected 93% in rents in April, and May likely will yield similar results, according to the company.
Skilled nursing occupancy remained stable from the last quarter of 2021 through the first quarter of 2022, Sedgwick said. Occupancy currently at 71.4%, compared with a pre-pandemic occupancy rate of 78% and the January 2021 low of 67%, he said.
Senior housing occupancy ticked up 100 basis points (1%) in the quarter. Occupancy currently at 77%, compared with a pre-pandemic occupancy rate of 84% and a “low watermark” of 75% in November 2021.
“The tight labor market continues to put pressure on occupancy recovery and margins, though our operators currently report the worst appears to be behind them,” Sedgwick said.
CareTrust REIT has partnered with a bridge-to-HUD lender in the skilled nursing space, which is expected to grow both CareTrust and the other lender, he said.
“Lending has always really been a relationship play for us. And since giving this more attention this year, we’ve been happy to see opportunities to build new relationships and put money to work at our historic range of yields,” Sedgwick said.
Mark Lamb, chief investment officer, said that on the skilled nursing side, Care
Trust is seeing more deals, stable and non-cash flow income to market, but pricing in general continues to be “excessively high.”
In February, the REIT closed on a 155-bed skilled nursing facility in Ennis, TX, from Eduro Healthcare. The company purchased the facility for just more than $8.9 million, which added just more than $800,000 in rent to CareTrust’s master lease. The REIT also purchased a skilled nursing and assisted living campus in Decatur, IL, for just less than $13.1 million in March. The facility was added to the existing master lease with affiliates of WLC Management Firm, who took over operations March 1, according to a press release issued in conjunction with Friday’s call.
“We’re encouraged by the pickup in deal flow crossing our desk,” Lamb said in a statement.
“We are excited by the new operators and opportunities that we are currently seeing from our bread and butter skilled nursing and seniors housing acquisitions, potential debt investments from the planned debt partnership we announced last quarter and from the expansion of our investment box to include behavioral health,” he added.
Read more coverage of the earnings call in McKnight’s Senior Living and McKnight’s Long-term Care.
Ventas touts ‘strong start’
Chicago-based Ventas is “off to a strong start in 2022,” Debra A. Cafaro, Ventas chairman and CEO, said Friday.
“We are delighted to deliver on our commitment to grow normalized FFO [funds from operations] and same-site SHOP [senior housing operating portfolio] net operating income [NOI] year over year for the first time since the pandemic began,” she said.
Normalized FFO for the real estate investment trust was per share of $0.79 in the first quarter, including $33 million ($0.08 cents per share) of Department of Health and Human Services grants received during the quarter. Year-over-year same-store cash net operating income grew 5.8%, excluding HHS grants received.
Other highlights:
- First-quarter seniors housing operating portfolio year-over-year same-store cash NOI growth was 14.2%, excluding HHS grants, driven by same-store revenue growth of almost 10%.
- Approximately $500 million in closed or committed new investments have been made year-to-date, mainly in senior housing, life science, and research and innovation.
- The REIT acquired Mangrove Bay, an assisted living community in Juniper, FL, for $107 million. Since the acquisition, Cafaro said, Ventas’ investment yield has grown to 6%.
Cafaro said she expects sustained net operating income growth for the rest of the year, due to “the power of our well-positioned communities, strong demand evidenced by leads that consistently exceed pre-pandemic levels into April, pricing power and advantaged markets.”
Justin Hutchens, Ventas executive vice president of senior housing, said the REIT was “very pleased with the NOI growth in the quarter and the start of what should be sustained improvement in our SHOP portfolio throughout the year.”
Overall, the REIT’s revenue per occupied room increased by 4.2% versus the prior year, “benefiting from strong in-place resident rate increases approximating 8% and improving re-leasing spreads,” he added.
Sunrise agreement revised
In conjunction with its earnings release, Ventas announced a revised management agreement with Sunrise Senior Living. On the earnings call, Cafaro said that the agreement is meant to “align our interest toward profitable growth and value creation.”
“We are confident the new agreement aligns incentives toward profitable growth,” Hutchens said in a statement. The agreement, he added, “represents the latest step to advance our senior housing strategy and position the portfolio to capture the upside from the senior housing growth trajectory.”
See more coverage of the earnings call in McKnight’s Senior Living.
