The senior housing real estate market for the most part is turning the corner on pandemic setbacks, according to second-quarter earnings reports on Friday.
Welltower
Toledo, OH-based real estate investment trust Welltower closed on $1.4 billion of acquisitions and loan funding transactions and $142 million in development funding in the second quarter of 2021, and the third quarter shows great promise, according to CEO Shankh Mitra.
In the second quarter, the REIT also converted four development projects for an aggregate pro rata amount of $196 million and completed pro rata property dispositions and loan payoffs of $541 million.
“We are looking at a lot of development,” Mitra said during an earnings call. “At the same time, a lot of our strategy, we’re not in this for the next quarter or next month. This is a long-term business.”
The REIT is working on an offensive rather than defensive strategy, he said.
Welltower’s June announcement of a planned $1.58 billion purchase of 86 senior living communities from Holiday Retirement is expected to yield “significant expansion opportunities, which we expect will generate a double-digit return on invested capital,” according to Mitra.
“The transaction is expected to be immediately accretive to normalized funds from operations per diluted share following its anticipated closing in the third quarter,” the REIT stated in a press release issued Thursday ahead of the earnings call.
In the second quarter, Welltower sold 20.1 million shares of common stock under its at-the-market program via forward sale agreements. The sales are expected to generate $1.6 billion of gross proceeds. Additionally, the REIT issued $500 million of 2.05% senior unsecured notes that are due in January 2029.
The company closed on a new $4.7 billion unsecured credit facility, which includes a five basis point improvement in pricing from the previous facility. The transaction includes an expanded $4 billion unsecured revolving line of credit, which replaces existing line of credit of $3 billion.
See more coverage of the earnings call in McKnight’s Senior Living.
LTC Properties
LTC Properties reported a net gain on sales of $5.5 million in the second quarter of 2021, compared with a net gain on sale of $189 million during the same period in 2020.
“We’re seeing a nice pickup in deal flow and activity,” LTC Chair and CEO Wendy Simpson said Friday during a second-quarter earnings call.
The REIT sold three Wisconsin senior living communities and a closed community in Nebraska for a total of $35.9 million, and it recorded a net gain of $5.4 million on the transactions. LTC expects to see $2.6 million in proceeds from the $7.7 million sale of a skilled nursing facility in Washington for $7.7 million.
The REIT transitioned a memory care community in Colorado to an operator new to LTC. The five-year lease provides a purchase option for $5.5 million, which is exercisable after the first year of the lease. In addition, LTC paid down $41 million under its unsecured revolving line of credit.
“We believe the industry is on more solid footing than it has been over the last 18 months, and I’m hopeful that some of the remaining pressures will continue to ease in the coming months,” Simpson said.
LTC provided $366,000 of deferred rent and $323,000 of rent abatement last month and has agreed to provide rent deferrals up to $493,000 and abatements up to $319,000 for each of August and September.
Simpson said the REIT is no longer seeing new requests for rent deferrals and abatements, “and as new ones arise, we will review each on a case-by-case basis.” LTC, she added, will continue to provide deferrals until occupancy gains become permanent.
See more coverage of the earnings call in McKnight’s Senior Living.
New Senior Investment Group
New Senior Investment Group did not host a live earnings call due to its upcoming acquisition by Ventas in an all-stock transaction valued at $2.3 billion, which included $1.5 billion of New Senior debt. Instead, the REIT issued a press release.
New Senior completed the transition of 21 properties to Atria Senior Living in April and the transition of 10 properties to Hawthorn Senior Living and two properties to Grace Management in July.
As of June 3, New Senior’s senior living portfolio included 102 independent living communities and one continuing care retirement community. The 103 properties, which house approximately 10,000 residents, were managed by a total of four different operators and one tenant during the second quarter.
New Senior reported a net loss of $13.3 million in the second quarter, and total operating expenses increased 1.9% versus prior year, according to the press release.
Read more coverage in McKnight’s Senior Living.
