When it comes to portfolio diversification, Invesque Chairman and CEO Scott White said he never anticipated that something like the COVID-19 pandemic would figure into its strengths in geographic diversification.
During the healthcare real estate company’s first-quarter earning call, White talked about the company’s regional diversification of properties.
“I never imagined something like this [COVID-19] would have a geographic impact on facilities,” White said, adding that areas that had lower impacts of coronavirus cases will reopen at a faster pace than hot spots. “We’re starting to see that already on a daily basis. There is a little bit of political nuance and fighting in how rapidly some states are opening. And there is a phased approach.”
White added these phases are not consistent across regions, and there is speculation that a spike in cases may disrupt that “return to normalcy.”
As of May 8, 40 of the company’s 108 senior living and skilled nursing properties reported positive cases of COVID-19, for a total of 560 cases among residents and staff. Five communities have only seen employees test positive for COVID-19.
Only one community operated by Commonwealth Senior Living, which operates 20 private-pay independent living, assisted living and memory care communities in Virginia and Pennsylvania, reported a positive resident test. White said Commonwealth implemented a COVID-19 task force that secured sufficient stockpiles of personal protective equipment that can be delivered to any communities with positive cases. Commonwealth invested $600,000 to date in COVID-related expenditures, including PPE, infection control and employee recognition, he said.
“The global COVID-19 pandemic has created a challenging operating environment for our partners,” White said. “Our operating partners have had to adapt to constantly changing protocols around personal protective equipment, resident admission and family communication and visitation.”
Occupancy levels in Invesque’s senior living portfolio fell from 79% in the first quarter to 77% as of May 8. Adlai Chester, director and chief investment officer, said a lot of that has to do with protocols put in place to contain transmission of the novel coronavirus, so building tours by potential residents are down.
“Seniors housing generally requires a tour of a facility, or multiple tours, and in the current environment, no one is touring,” White said. “Once restrictions are lifted — and it’s anyone’s guess as to when those will be lifted — we will start to rebuild lost occupancy.”
Scott Higgs, chief financial officer, said April rent revenue collections stood at about 88% across its portfolio, with senior living portfolio collections at about 99%. He anticipated May rental revenues to be in line with April. Invesque granted only one 25% rent deferral in May and is in discussions with another operator to find a mutually beneficial solution.
White said he expects that expenses and occupancy levels will continue to be affected temporarily by COVID-19.
The company also announced the transition of a majority of its communities previously operated by Royal Senior Living to Phoenix Senior Living, which includes four properties in South Carolina. Additionally, Invesque announced the sale of two assets in the Royal portfolio. These actions effectively end Invesque’s relationship with Royal.
Phoenix is one of the fastest-growing seniors housing operators in the industry and operates 45 seniors housing communities in Georgia, South Carolina, Virginia, Alabama, Florida, Louisiana and North Carolina, Chester said.
“The transition of the South Carolina properties previously operated by Royal to Phoenix further highlights our commitment to optimize our portfolio performance with our strategic operating partners,” he said. “The transition expands Phoenix’s operating footprint in South Carolina to 13 communities under management and positions them as one of the largest providers in the state. We expect the South Carolina communities to capitalize on efficiencies from other Phoenix-operated assets by leveraging referral sources, marketing strategies and staff.”