Maplewood Senior Living’s most recently opened property, Maplewood at Princeton in Plainsboro, NJ, opened in August “with very strong pre-leasing momentum and a strong early move-in pace,” according to Omega Healthcare Investors Chief Corporate Development Officer Steven Insoft. (Photo courtesy of Maplewood Senior Living)
The rollout of COVID-19 vaccines has helped stem the spread and adverse effects of the coronavirus pandemic, but senior living operators continue to battle with increasing costs driven by the scarcity of labor, Omega Healthcare Investors Chief Corporate Development Officer Steven Insoft said Friday during the Hunt Valley, MD-based real estate investment trust’s third-quarter earnings call.
“Rising vaccination rates among residents and staff as well as availability of labor are critical to restoring occupancy and performance,” he noted.
The COVID-19 vaccine mandates announced Thursday by the Occupational Health and Safety Administration and the Centers for Medicare & Medicaid Services, which require all affected individuals to be vaccinated against COVID-19 by Jan. 4 (the OSHA rule has an allowance for testing and masks as an alternative), could have a more pronounced effect on labor in long-term care — and, therefore, Omega’s portfolio — in certain parts of the country compared with others, Chief Financial Officer Bob Stephenson said.
“There are areas of the country which have lower vaccination rates than others. Those particular states are going to feel the vaccination mandate harder than those with higher vaccination rates,” Stephenson said. “That’s just a fact. So we could see some of that come through when the mandate kicks in January.”
Senior living operators, unlike their skilled nursing provider peers, are affected by “unique” challenges in addition to labor issues, Insoft said.
“Private-pay senior housing operators have not seen the level of government support provided to other areas of senior care,” he said.
Argentum estimates that senior living operators have incurred approximately $30 billion in expenses and losses during the pandemic yet have received only about $1 billion, or less than 1%, of Provider Relief Fund monies that have been disbursed to date.
At least for now, however, occupancy in Omega-owned communities is showing signs of improvement, although those signs are “more evident in certain markets than others,” Insoft said.
Occupancy at Maplewood Senior Living, for instance, was 88.6% in August after hitting a low point of 80.4% in early June 2020, he said, noting that the portfolio’s communities are concentrated in the early affected metro New York and Boston markets.
$96 million in investments
Insoft said that the REIT invested $96 million in new construction and strategic reinvestment in the third quarter; $80.1 million of that dollar amount was predominantly related to active construction projects, and the remaining $15.9 million was related to the REIT’s ongoing portfolio capital expenditure reinvestment program.
Although Omega remains “constructive” about the prospect of private-pay senior housing, the pandemic and its inflationary backdraft have “warranted a far more selective approach,” he said. Labor and construction cost increases, along with supply chain issues, are “making attractive projects more elusive,” Insoft added.
“While we make further progress on our existing ongoing developments, we continue to work with our operators on strategic reinvestment in our existing assets,” he said.
New lease, new community
During the third quarter, Omega purchased for $68 million a Washington, D.C., property that it plans to redevelop into a 174-bed assisted living community. The REIT has entered into a single-facility lease for the property with Maplewood Senior Living through Aug. 31, 2045. Substantial construction of the community is expected to be completed in the first quarter of 2025, the REIT said.
Meanwhile, lease-up at Inspir Carnegie Hill, the Manhattan high-rise operated by Maplewood, has been “solid and in line with our underwriting and expectations,” Insoft said. The assisted living and memory care community opened at the end of March.
Maplewood’s most recently opened property, Maplewood at Princeton in Plainsboro, NJ, opened in August “with very strong pre-leasing momentum and a strong early move-in pace,” he said. The community offers assisted living, memory care and respite care.
