The senior living industry faces COVID-19 headwinds that are expected to continue into 2021, but Invesque Chairman and CEO Scott White said he is confident the industry has “figured out how to handle and contain” the virus and is better prepared for future outbreaks.
Thursday during the healthcare real estate company’s third-quarter earnings call, White said he is optimistic about the senior housing industry.
“While our partners continue to navigate the challenging operating environment under the current public health pandemic, I am pleased with our results and steady rental collections over the past quarter,” he said.
Invesque reported that, as of Nov. 6, 77 of its 105 senior housing and skilled nursing properties had been affected by COVID-19. The current positivity rate — 28 positive patient or resident cases across the portfolio as of Nov. 6 — is “significantly” below peak activity seen across the portfolio in mid-May, when the company had 700 positive resident cases. Cases in its skilled nursing facilities are primarily due to admissions from hospitals to dedicated COViD-19 units to improve capacity in local health systems, according to Invesque.
“The COVID-19 pandemic has impacted every operator within our portfolio in one way or another,” Chief Investment Officer Adlai Chester said, adding that most of its communities are allowing visitation, communal dining, small-group activities and tours. “While a vaccine will provide the greatest level of confidence to completely reopen all of our communities, we are encouraged by the steps our operators have taken to resume activities that create some semblance of normalcy.”
Most of the portfolio’s senior housing operators have received Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Funds, as well as state and local grant funding, to offset a portion of lost revenue and increased operating expenses due to the pandemic, White said.
Much of the initial damage and rapid spread of the virus was because no one was prepared for a pandemic, he said. “I believe even if there is a major uptick, the industry is better prepared,” White said.
The Commonwealth Senior Living portfolio, which Invesque acquired in 2019 and which represents 24% of the company’s operator exposure, according to an August presentation, saw a 370 basis point (3.7%) improvement in net operating income from the second quarter to the third quarter due to pent-up demand in June, July and August. The portfolio only experienced a 10 basis point dip in occupancy in that time, White said.
Commonwealth reconstituted its rate structure pre-pandemic and was able to hold that rate, unlike competitors that had to cut rates, he said.
Invesque reported that it has seen occupancy reductions across its senior housing portfolio similar to industry declines, noting decreases in inquiries, tours and move-ins, which White said he expects to continue industry-wide into 2021. Occupancy in the company’s senior housing portfolio and triple-net lease portfolio was 81% and 83%, respectively.
Rent collections were at 99% for its senior housing portfolio and 84% for its triple-net portfolio.
The senior housing industry, White said, is facing headwinds with occupancy levels at all-time historical lows, but he said he is “cautiously optimistic” that occupancy declines have “bottomed out.”
“Despite the challenges that continue to face our sector, I remain very optimistic about the future of the seniors housing industry, as well as our company,” White said. “During 2020, we have executed on several strategic management transitions and asset sales to strengthen our portfolio, continued to integrate the Commonwealth platform and prioritize our company culture while continuing to work remotely.”
In other news, Invesque executed an interest rate reduction on a U.S. Department of Housing and Urban Development loan on Keepsake Village at Greenpoint, a memory care community in Liverpool, NY, with a 110 basis point reduction on the interest rate.
The company also refinanced a loan with a 300 basis points reduction on the interest rate for Commonwealth Senior Living at Christiansburg, an assisted living and memory care community in Christiansburg, VA, through Fannie Mae’s structured adjustable rate mortgage program.