Average sales leads per week seen by Five Star Senior Living in April were approximately half of what they typically are, Senior Vice President and Chief Operating Officer Margaret Wigglesworth said Thursday on the company’s first-quarter earnings call.
“Given that the effects of COVID-19 began in earnest in late March, we expect continued deterioration in the near term,” she said. Conversion rates are “relatively stable,” in part because the virus is concentrated in certain geographic areas, she added.
Wigglesworth said that as of May 3, the Newton, MA-based company had 345 confirmed cases of the disease, representing approximately 1.4% of the company’s total resident population. The cases were spread across 43 communities, but “the vast majority” are in 11 communities located in regions that have experienced significant COVID-19 cases, she said.
“We have seen a concentration similar to those which the [Centers for Disease Control and Prevention] has highlighted in mapping the areas significantly impacted by the virus — in the New York City metropolitan region as well as the mid-Atlantic, Florida and certain areas in the Midwest,” Wigglesworth said.
In addition to developing social and other activities for residents to pursue in their apartments, Five Star also has offered free counseling via phone or video conference for independent living and assisted living residents who are feeling anxious or depressed, President and CEO Katie Potter said. “We have also invested in technology to enable video conferencing so that our residents may communicate more effectively with their families and loved ones,” she said.
The management team also has benefited from the investment, Potter said. “While we would normally visit communities in person throughout the year, we have been conducting virtual community visits, which have allowed us to engage with community leadership and frontline team members to better understand the resident and team member experience during this difficult time,” she said.
Five Star reported a net loss of $17.2 million, or 55 cents per share, for the quarter, Executive Vice President, Chief Financial Officer and Treasurer Jeffrey Leer said. The loss, however, compared with $33.2 million, or $6.64 per share in the same quarter of 2019.
Overall revenues were up, and Potter said the company’s Ageility rehabilitation and wellness clinics are a growth area, not only diversifying company’s revenue streams but also serving as “a critical touch point to source new residents.” The division added a net 13 clinics and reported revenues of $21 million in the quarter.
Diversified Healthcare Trust execs discuss Five Star, rent deferrals, future
Earlier in the day, on a separate earnings call, Diversified Healthcare Trust (formerly Senior Housing Properties Trust) President and Chief Executive Officer Jennifer Francis praised Five Star because the company “moved quickly to implement numerous protocols and precautionary measures” to combat the virus.
She said, however, that Five Star is experiencing “significant challenges in attracting new residents,” as are other operators, because of a decrease in in-person tours and limitations on nonessential visitors.
DHC and its shareholders own 85% of Five Star. The REIT’s portfolio also includes communities of Brookdale Senior Living and other companies.
“Additionally, we’re experiencing cost increases as a result of the pandemic,” especially with salaries and benefits, Francis said, adding that expenses are expected to increase further in the second quarter.
The Newton, MA-based real estate investment trust has agreed to defer approximately $360,000 in rent for its triple-net lease senior living tenants and continues to have regular discussions with the operators, she said.
As of April 30, there were 350 confirmed COVID-19 cases among residents across 46 senior living communities in DHC’s portfolio, representing less than 1.5% of all residents and approximately 17% of the communities in the portfolio, Francis said.
The COO said she anticipates occupancy declines of 40 to 50 basis points (0.4% to 0.5%) per week. “How long that lasts is hard to know. It really depends on how long COVID-19 is ranging through the country,” Francis said.
Since the REIT’s last earnings call, $56 million in asset sales have been completed, bringing the 2020 property disposition total to $64.6 million. DHC still has approximately $164 million in assets under agreement to sell, she said. The REIT’s target remains $900 million in property sales, Francis said, although the pandemic has slowed progress.
Social distancing here for foreseeable future
Looking to the future, Francis said she believes senior living operators will continue social distancing and sheltering-in-place measures for the foreseeable future regardless of decisions made by state governments, “just because of the at-risk population.”
As for DHC itself, Chief Financial Officer and Treasurer Richard Siedel said, “We believe DHC is well-positioned to weather the near-term challenges presented by the pandemic, and we expect to meet all of our upcoming capital obligations, including our debt maturities and a number of planned capital projects to improve our portfolio.”
DHC still expects to invest approximately $160 million across all property types, he said, although $150 million in previously budgeted senior housing and medical office capital expenditures are being deferred.
“Many of these deferrals are the result of being realistic about the work that can be completed while we are restricting nonessential visits at our senior living communities and leasing expectations while under shelter-in-place orders,” Siedel said.
