Rick Matros headshot
Rick Matros

Sabra Health Care REIT has yet to reach a decision about its joint venture with private equity firm TPG Real Estate, through which it has a 49% stake in a portfolio of dozens of Enlivant senior living communities, CEO Rick Matros said yesterday at Nareit’s REITweek 2021 Investor Conference.

“In all likelihood,” however, he said, “our preference is going to be to exit the portfolio. The pandemic changed everything.”

In February, Matros said that Sabra likes the people and the properties of Enlivant, but that the portfolio has “taken a hit during the pandemic.” Noting that recovery would take time, he said of the potential continuation of the joint venture then, “[I]t just has to work for us economically. We’re not going to do it just to do it.”

Overall for the real estate investment trust, Matros said, rent collections have been strong. Since the beginning of the pandemic through May 2021, Sabra has collected 99.8% of its forecasted rents, he said. The REIT agreed to some pandemic-related deferrals for a few tenants but did not agree to any permanent pandemic related deferrals or concessions.

“We’ve had a very stable tenant base,” he said. “Things look good for the remainder of the year.”
The timing of additional funding from federal sources, along with the extension of the public health emergency and other factors, leave the company “in pretty good shape,” according to the CEO.

“The cost of de-levering has become much higher [than 2019],” said Harold Andrews, executive vice president, chief financial officer and secretary at Sabra. “It’s probably a two-year recovery to get that portfolio back to pre-pandemic levels.”

In another presentation, Tom Herzog, CEO of Healthpeak Properties, said his company is going to continue with its plan to largely exit the senior housing market other than continuing care retirement communities.

“We do have one remaining joint venture with a sovereign investor. It’s not a huge amount of money for us, but we’re working with the sovereignty to determine, should we liquidate that possession or should we do something different?” he said. “We want to make sure we do right by them. More to come on that.”Meanwhile, Debra Cafaro, chairman and CEO of Ventas, said the REIT plans to prioritize its senior housing portfolio over other property types.

Ventas “follow[s] a diversification strategy,” she said. “We believe that benefits our stakeholders. It’s both an offense and a defense.”

Cafaro said she is “imbued with both optimism and gratitude” for the post-pandemic economy.

“We believe in the recovery story, and we’re prepared to put our money where our mouth is,” she said. “We believe in the sustainability of the senior housing recovery.