Senior living and skilled nursing communities in Omega Healthcare Investors’ portfolio are weathering the effects of COVID-19 through declining occupancy and significantly elevated costs, the real estate investment trust’s executives said Tuesday on a first quarter earnings call.
“The COVID-19 pandemic poses certain challenges unique to senior housing operators, including increased costs, the challenges of managing COVID-positive patients, and meaningful practical limitations on admissions,” Omega Chief Development Officer Steven J. Insoft said.
Although occupancy was strong in Omega’s senior housing portfolio through most of the first quarter, the REIT observed a 1% to 3% per month occupancy reduction once touring and visitation bans were imposed at buildings. Additionally, Insoft said, senior housing operators, “to the extent that they are private-pay and large employers, were offered little help from federal fiscal stimulus programs.”
Megan Krull, Omega’s senior vice president of operations, said federal and state support is “key to operator success.” Although the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act included a variety of programs available for the nursing home industry, assisted living operators have not received any payouts under the fund, she said.
“To date, assisted living facilities have not received any payouts under this fund, and as of now, we believe only those with some level of Medicaid revenue will get a payout in the future,” Krull predicted.
Personal protective equipment costs have increased considerably across the board.
“A lot of PPE wasn’t used in-house before this pandemic and was only used sparingly in skilled nursing facilities,” said Taylor Pickett, president and CEO. “On the backside of this pandemic, I’m pretty sure that you’re going to still have a fair amount of PPE being utilized for some time in the future; so I think part of that cost will remain in place”
Pickett also anticipates partial increases in labor costs into the future, as “hero pay,” bonuses and overtime for permanent staff has increased.
Omega Chief Operating Officer Daniel J. Booth said the impact of COVID-19 on operators, residents and frontline employees is “unprecedented.” Omega reported 4,136 confirmed cases among residents and employees across 250 of its senior living and skilled nursing facilities in its portfolio, with at least 350 deaths, he said. Those numbers are expected to climb as the virus continues to spread and test kits become available, Booth added.
Meanwhile, work is continuing on Maplewood Senior Living’s Inspir Carnegie Hill assisted living / memory care high-rise in Manhattan, Insoft said. The pandemic in New York City has posed challenges to the schedule and cost of the project, which now stands at $310 million, he added. A slowdown of construction, combined with certain supply chain challenges and the need for innovative enhanced infection control protocols to create a safe work environment, will delay the opening to the third quarter at the earliest and will increase project costs, Insoft said.
