From the beginning of the COVID-19 pandemic through last month, Sabra Health Care REIT has collected 99.8% of its forecasted rents, the company reported in a business update Monday.
Citing the effects of the delta variant of COVID-19, the real estate investment trust has agreed to defer rents from the Avamere Family of Companies for September and October, using Avamere’s $11.9 million letter of credit.
Avamere, which operates in Oregon, Colorado and Washington, comprised 8% of the Irvine, CA-based REIT’s total revenue for the first half of 2021. The company leases 27 skilled nursing facilities and one continuing care retirement community from Sabra.
The region where Avamere operates has been hit hard by the delta variant, according to the update, and labor shortages continue to be problematic. Occupancy growth has decreased from previous months.
Sabra said it will take the next couple of months to evaluate Avamere’s financial performance and, if necessary, will offer a one-time write off of approximately $44 million of straight-line rent receivables and above-market lease intangible assets and cease booking non-cash rental revenue related to Avamere’s leases.
“As part of its mitigation plan, Avamere is in the process of opening COVID-specific units to assist the state of Oregon, which should help local hospitals, the state and Avamere manage through this challenging environment,” Sabra Chairman and CEO Rick Matros said. “Avamere is also working on opening COVID-specific units in the state of Washington. Avamere is a very good operator with solid state relationships and we look forward to a strong continuing relationship with them.”
