Rick Matros headshot
The availability of adequate, effective rapid testing for COVID-19 “will begin the path to complete normalization in the facilities,” Sabra President and CEO Rick Matros says.

Operating during the coronavirus pandemic has become the “new normal” for senior housing providers, with infection control protocols and restrictions that can be adapted based on local and state regulations and virus levels. Prospective residents and their families, however, have “transitioned from pandemic fear to pandemic fatigue,” with “quite significant” effects on occupancy, Sabra Health Care REIT Executive Vice President, Chief Investment Officer and Treasurer Talya Nevo-Hacohen said Friday.

“The results have been that, while our senior housing operators have data and evidence that living in their communities is safer than staying at home, prospective residents worry that they will never embrace their families again if they move in,” she said on the real estate investment trust’s third-quarter earnings call.

Operators are seeing higher discretionary move-outs and deferred move-ins, Nevo-Hacohen said. “In contrast to that, rates continue to be strong in our portfolio, indicating that residents appreciate the value operators are delivering to them,” she added.

In a portfolio of 158 Enlivant assisted living communities that are part of a joint venture in which Sabra owns 49%, average occupancy for the quarter was 75.8%, a 3.1% decline on a same-store quarter-over-quarter basis and a 5.6% decline on the same-store year-over-year basis. Communities in this portfolio received a total of approximately $3 million in monies from the Provider Relief Fund of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

In a portfolio of 11 Enlivant assisted living communities wholly owned by Sabra, third-quarter occupancy was 81.2%, a 2.1% decline compared with the second quarter and a 7.6% decline on a year-over-year basis. Communities in this portfolio received a total of approximately $1.2 million in monies from the Provider Relief Fund of the CARES Act.

After the quarter ended, October occupancy in the wholly owned portfolio was 78.9%, which is 710 basis points below the February pre-pandemic occupancy level, Nevo-Hacohen said. “Move-in volume, while recovering since April, is about 74% of pre-pandemic results, driven by potential residents and families concern over possible restrictions on visitation, quarantine, etc.,” she added.

The other large senior housing operator in Sabra’s portfolio, Holiday Retirement, which operates 22 independent living communities for the REIT, saw occupancy of 82.5% in the third quarter, 2.5% lower than in the second quarter and 6.1% lower than the same quarter in 2019.

After seeing fewer move-outs in the second quarter, Holiday saw an increase in voluntary move-outs in the third quarter, starting in July, but since the quarter ended, move-ous are trending downward, Nevo-Hacohen said. “The excess move-outs, those above normal levels, are the result of COVID-related restrictions,” she said. “At the same time, the number of move-ins per community rose to near pre-pandemic levels in July and August, before trending down in September due to concerns over a COVID-19 surge and resident concerns about restrictions after move-in.”

Testing important

The availability of adequate, effective rapid testing for COVID-19 “will begin the path to complete normalization in the facilities,” Sabra President and CEO Rick Matros said.

“We will be able to test quickly, screen people better and have a more normal environment within the facilities, because the social isolation component of dealing with the pandemic has been extremely tough on our patients, our residents and their families,” he said.

Matros also characterized the recently announced federal government partnership with CVS Health and Walgreens, which will enable long-term care residents and staff members to be vaccinated against COVID-19 free of charge to them when a vaccine becomes available, as “an important event for the industry.” He added that he hopes federal government and industry predictions of vaccine availability by January or February are accurate.

“If that does turn out to be true, then it will accelerate the normalization of the business,” Matros said.

Until an effective vaccine is available and administered, however, senior housing operators are “walking the fine line of keeping residents safe while keeping them engaged and fulfilled,” Nevo-Hacohen said.

“That is why our operators are so intently focused on creating testing programs that are effective at stopping potentially infected individuals from entering the building regardless of their symptoms or lack thereof,” she said. “The better our operators can insulate residents from community spread, the freer our residents can be within the building. This gives our operators the opportunity to sway the people who want to move in that now is the time.”

Enlivant, which operates a total of 169 communities in Sabra portfolios, is trying to mitigate consumer concerns and encourage move-ins by offering COVID testing for new residents so that they can avoid 14-day isolation as well as testing employees to prevent the coronavirus from entering buildings, Nevo-Hacohen said.

Pipeline at $600 million

Matros said the REIT’s $600 million acquisition pipeline consists primarily of senior housing properties, “although we are seeing interest in skilled [nursing] deals, but there is still a disconnect between buyers and sellers in both asset classes.”

The CEO said he expects additional senior housing opportunities in the new year as banks that have been forgiving loan defaults, particularly with smaller operators, “start exercising legal remedies.”

Nevo-Hacohen indicated that such opportunities could involve new properties that have experienced difficulties leasing up.

“We think that there are assets out there that are going to come to market at an odd time, during the pandemic, but where liquidity or recapitalization is really important,” she said. “So we think that’s an interesting opportunity.”

See additional coverage of Sabra’s third-quarter earnings call from the McKnight’s Business Daily e-newsletter and from sister brand McKnight’s Long-Term Care News.