Invesque plans to “opportunistically divest non-core assets and redeploy capital with our preferred partners” in 2020, Chairman and CEO Scott White said Thursday.
The healthcare real estate company continues to analyze opportunities to create efficiencies within its portfolio, he added on the company’s fourth-quarter and full-year 2019 earnings call, during which company executives also shared operators’ responses to the coronavirus.
Senior housing supply and construction start trends identified by the National Investment Center for Seniors Housing and Care — assisted living units under construction declined for the eighth consecutive quarter in the fourth quarter, and assisted living construction starts trailed independent living starts for the first time in more than 10 years — bode well for Invesque, White said, because the real estate company’s senior housing portfolio is more than 80% concentrated in assisted living and memory care.
So far this year, Invesque has sold the last remaining Greenfield Senior Living-operated property in its portfolio, located in Arlington, TX, on Feb. 28.
“Ultimately, we determined the community was not a fit with our preferred operating partners and decided that sale was the best alternative,” Chief Investment Officer Adlai Chester said. “We were able to quickly identify several interested buyers and execute on an efficient sale. The sale proceeds will allow us to redeploy capital into core ore assets with our existing operators in an accretive fashion or potentially deliver.”
Invesque previously transitioned 12 of 13 former Greenfield communities in its portfolio to Charlottesville, VA-based Commonwealth Senior Living and Blue Bell, PA-based Heritage Senior Living. Commonwealth now represents Invesque’s largest source of net operating income, at more than 25%, and Heritage accounts for more than 8% of NOI, Chester said.
Also in the first quarter of this year, the company agreed to acquire a 32-unit (36-bed) stand-alone memory care community operated by ConstantCare Management Co. in Rogers, AR, for approximately $8.2 million. The community is close to 100% occupied, Chester said.
Upon closing of the acquisition, the community will be added to the existing master lease and expand Invesque’s relationship with ConstantCare from seven to eight communities. ConstantCare then will represent almost 4% of Invesque’s net operating income, Chester said.
Taking coronavirus ‘very seriously’
Invesque and the companies in its portfolio are taking coronavirus disease 2019 (COVID-19) “very seriously,” Senior Vice President of Investments Bryan Hickman said.
“We talk with our operators a lot about this,” he said. “It is top of mind for the entire industry.”
As of Wednesday, there were no confirmed or suspected cases of coronavirus in any community, and nobody was being tested for the disease, Hickman said.
“We are very aware of the potential risks associated with it,” he said, “but our operators have been very proactive in terms of determining the best course of action to mitigate and minimize the risk of spread in the communities.”
Responses have varied by type of property, Hickman said, noting that Invesque’s portfolio includes buildings ranging from seniors housing for older adults with few health needs to skilled nursing facilities serving residents with many healthcare needs.
“Some have gone to the extent of embracing the [American Health Care Association / National Center for Assisted Living] guidance of restricting all visitors to their communities,” Hickman said. “Others have taken not quite as severe an approach but have still required that all visitors respond to a questionnaire regarding travel history, regarding potential symptoms.”
Operators also are ordering supplies — “food and typical day-to-day needs but also personal protective equipment, i.e. hand sanitizers, masks, etc.” with an eye toward ensuring that buildings are sufficiently equipped but also not over-ordering, he added.
Communities are following Centers for Disease Control and Prevention guidelines to reduce the possibility of infection, White said. “We are in communication with our operating partners to monitor the situation on a day-to-day basis and make sure that best practices are implemented,” he said.
Coronavirus concerns could affect the company’s assessment of its dividend policy, White said.
“There is no doubt that what’s going on broadly in the market — and by that I mean the uncertainty associated with coronavirus — certainly can, should and will play into our ongoing and regular assessment of the dividend,” he said. The company will not adjust the dividend based solely on where the stock is trading at any specific point in time, however, he said.