New York City-based real estate investment trust Healthcare Trust continues to see significant growth in its senior living portfolio as it continues to move toward self-management, according to a Thursday earnings report.
In a second-quarter earnings call with investors and analysts, company executives reported that net operating income in its senior housing operating portfolio, or SHOP, improved year-over-year by 10.1%, going from $8.1 million in the second quarter of 2023 to $8.9 million in the second quarter of 2024, because of increased rental rates and higher occupancy. Meanwhile, overall occupancy in the SHOP increased by 3.1%, year-over-year, going from 73.3% to 76.4%.
During the second quarter, Healthcare Trust closed on the disposition of one SHOP asset for a sale price of $3.3 million and, after the quarter ended, closed on the disposition of a seven-property skilled nursing facility portfolio in Illinois for $50.5 million, according to a transcript of the call filed with the Securities and Exchange Commission.
The dispositions are part of a “strategic disposition initiative that we believe will enhance our portfolio composition, improve the company’s operating metrics and realize liquidity to fund, along with cash on hand, if necessary, the completion of the internalization” of management functions, Healthcare Trust CEO Michael Anderson said on the call, according to the transcript.
The company reported that it currently has one SHOP asset in its disposition pipeline.
Healthcare Trust’s total portfolio includes 207 properties, 26.2% of which are senior housing properties. The REIT has 45 senior housing properties with a total of 4,069 units across 12 states. The gross asset value of those senior housing properties is $1.13 billion, according to a presentation filed with the SEC in conjunction with the call. Operators in the SHOP include Senior Lifestyle and Discovery Senior Living.
Healthcare Trust announced July 1 that it planned to bring its management in-house and rebrand as National Healthcare Properties.
The self-management agreement is expected to close Sept. 27, Anderson said. “The internalization will terminate the Company’s existing arrangement for advisory and property management services currently provided by affiliates of AR Global and shift those responsibilities to employees of HTI,” he added, noting that the name change will occur with the finalization of the self-management agreement.
“By internalizing the management functions of the company, we expect to save more than $25 million in annual operating fees that were previously being to related parties, as well as potentially realizing additional [general and administrative expense] savings in the future,” Anderson said. “We believe additional benefits of the internalization include enhanced corporate governance and a more favorable market opinion of internally managed REITs if the company ultimately completes a listing on a national exchange, which we have announced is our intention in 2025.”
