Ventas and CareTrust REIT executives said Friday they are hopeful that senior living operators will receive assistance to battle the coronavirus in the next federal aid package.
“Because of the crucial role senior living care providers play in protecting our vulnerable senior population and the impressive clinical record in our industry, we remain respectfully hopeful that [the Department of Health and Human Services] will provide much-deserved and needed financial support to mitigate the impact of COVID-19,” Ventas Chairman and CEO Debra Cafaro said during the Chicago-based real estate investment trust’s second-quarter earnings call.
Atria Senior Living, Sunrise Senior Living, Brookdale Senior Living and Holiday Retirement are the operators with the largest presence in the REIT’s senior housing portfolio.
“The industry has a very strong case to tell,” Cafaro said, adding that most adults who live in senior living communities have “significant comorbidities.”
“Importantly, the clinical record of the senior care providers and keeping seniors safe has been far superior than in other sectors that have received significant support. So all of the policy predicates for receiving support from HHS to mitigate the financial costs of the COVID pandemic are there,” she said. “Really, it’s just a question of continuing to educate the policymakers on those key points and continuing to respectfully request their financial support. We’re hopeful but remaining cautious around our outreach.”
In addition to stimulus funding, CareTrust REIT President and CEO Gregory K. Stapley said in a separate call on Friday that he hopes senior living providers are able to secure the point-of-care, rapid-results testing that the federal government recently began rolling out to nursing homes across the country.
“Short of having an effective vaccine, point-of-care, rapid-results testing will likely be the biggest advance in the ongoing war against COVID-19. Real-time testing in places where so many of our most susceptible citizens reside should begin saving lives — lots of lives — immediately,” he said on the San Clemente, CA-based REIT’s second-quarter earnings call. “We hope that seniors housing facilities will be next in line for these testing capabilities as well. We also hope that the government will move to protect even more of our vulnerable elderly by including seniors housing providers in the next round of stimulus support.”
Future investments
Carafo said Ventas will “continue to be very selective” when making investment decisions related to senior housing.
“The long-term, demographically driven thesis for healthcare real estate and for Ventas remains in place despite the near-term disruption caused by the pandemic,” however, she said.
CareTrust Chief Investment Officer Mark Lamb said he was thankful that “the current investment environment has begun to show signs of life in recent weeks.”
Investment opportunities appear to be more plentiful in senior housing than in skilled nursing, he said, “but they’re still made up of mostly broken or nonstabilized assets.”
CareTrust’s current pipeline is in the $125 million to $150 million range and “consists of mainly singles and doubles in both the SNF and seniors housing spaces,” Lamb said. The mix is 70% skilled nursing and 30% senior housing, he added.
CareTrust Chief Operating Officer David Sedgwick said he was pleased that occupancy in the REIT’s senior housing portfolio held steady from March to July in comparison with a recent report from the National Investment Center for Seniors Housing & Care, which found occupancy dropping nationally by 280 basis points (2.8%) from the first quarter to the second quarter.
“This reinforces our long-held view that the mid-market positioning of our seniors housing facilities appears to be more needs-based, as prospective residents have not been able to move in with family or wait out the pandemic on their own before moving into assisted living,” he said.
CareTrust’s top two senior housing tenants as far as lease coverage are The Pennant Group, with 11 properties in the REIT’s portfolio, and the Premier Senior Living Group, with eight properties. Overall, CareTrust’s portfolio includes 41 senior housing communities.
Ventas reported that, compared with the first quarter, second-quarter average occupancy in its senior housing operating portfolio declined 470 basis points, from 86.9% to 82.2%. Occupancy loss, however, was most concentrated in April and declined at an improving rate in the quarter through the end of June, according to the REIT.
“In July, leads and move-ins continued to improve sequentially, and point-to-point occupancy declined approximately 50 basis points, or about one third the average rate per month experienced in the second quarter,” Ventas said, noting that 96% of all communities now are accepting move-ins.
The fall
When asked about Ventas’ expectations for the fall, Justin Hutchens, the REIT’s executive vice president, senior housing, North America, noted that the senior living operators in Ventas’ portfolio had been using screenings, cleaning and disinfecting protocols, personal protective equipment and social distancing to keep residents and staff members safe.
“As long as trends persist, we would expect to see communities open and accepting move-ins and allowing for residents to move about safely among in the community and have visitation with relatives,” he said.
With seasonal flu cases expected to ramp up soon, Cafaro said, “It’s also going to be interesting to see whether all of the processes that have been adopted and the heightened sensitivity is really going to have any measurable positive effects on the spread of influenza in the fall. We don’t yet know that.”
Read more about the Ventas earnings call in “Ventas’ diversified portfolio a ‘significant benefit’ amidst pandemic.” Also read more about Ventas’ second-quarter results in this earnings release and this earnings supplement.
Read more about the CareTrust REIT earnings call at our sister publication, McKnight’s Long-Term Care News. Also read more about CareTrust REIT’s second-quarter results in this earnings release and this earnings supplement.
