Although COVID-19 has not made for an easy road, the road is getting easier, LTC Properties Chair and CEO Wendy Simpson said Friday during a second-quarter earnings call.
“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,” she said.
LTC can’t quantify the effect of the delta variant on current and future operations, Simpson said, but what real estate investment trust executives are hearing from operators is promising, including reports of occupancy gains. Vaccination rates are high, and operations are beginning to stabilize, with in-person tours and family visits restarting, Simpson added.
Although private-pay senior living to date has not benefited as much as skilled nursing has from federal government relief, the CEO said she is seeing signs that more aid may become available soon.
“”We have come a long way since the start of the pandemic,” she said. “Our industry has learned many lessons through many cycles of significant challenge, and we continue to provide what I believe is the world’s most caring service to the nation’s most vulnerable people.”
Development
Building on the increase seen in the last quarter, deal flow continues to accelerate, and several potential transitions, valued at a total of $130 million, are in the pipeline, Chief Investment Officer Clint Mailin said. Additional long-term opportunities total $90 million, he added.
Since the beginning of the year, LTC has reviewed many transactions, passing on most because properties were not performing well or prices did not reflect market rates, Malin said.
“We are more optimistic than we have been in some time in our ability to begin making long-term strategic investments to position LTC for future growth,” Malin said, adding that LTC continues to seek opportunities with strong regional operators.
Occupancy
Occupancy in LTC’s private-pay senior housing portfolio was 74% on July 15, compared with 72% at March 31.
The REIT collected 96.3% of rent due in the second quarter, excluding rent from Senior Lifestyle and Senior Care, according to CFO Pam Kessler. That number drops to 86% excluding only Senior Lifestyle. LTC also provided $1.1 million in rent deferrals and $1.1 million in rent abatements for the quarter.
So far in the third quarter, LTC has provided $366,000 in deferred rent and $323,000 in rent abatement, and the company already has agreed to provide rent deferrals up to $493,000 and abatements up to $319,000 in both August and September.
2021 rent and mortgage interest escalations were reduced by 50% in the form of rent and interest credits to provide financial support to eligible operating partners.
Simpson said the company is no longer seeing new substantial requests for rent deferrals or abatements, but will review each on a case-by-case basis. “We expect to continue providing some amount of relief in the form of deferrals and abatements until occupancy gains become more permanent,” she said.
Senior Lifestyle
The transition of the Senior Lifestyle portfolio to other operators is virtually complete, Malin said. The portfolio formerly included 23 properties, and 12 had been transitioned through April. Of the remaining 11, four were sold in the second quarter. The moves followed the transition of 11 Senior Lifestyle assisted living communities in Illinois, Ohio and Wisconsin to two operators in the first quarter.
In the second quarter, LTC transitioned a Colorado memory care community previously leased to Senior Lifestyle to a new operator. Also during the second quarter, the REIT sold three Wisconsin communities and a closed Nebraska community previously leased to Senior Lifestyle.
So far in the third quarter, LTC has moved a Wisconsin assisted living community to a regionally based operator. Additionally, LTC entered into two lease agreements covering six communities formerly in the Senior Lifestyle portfolio; two communities in Pennsylvania and one in New Jersey moved to Juniper Communities, and three Nebraska assisted living communities moved to Oxford Senior Living.
Senior Lifestyle has not paid rent or its other obligations in 2021, according to LTC. Additionally, Senior Care did not pay rent during the second quarter. As of June 30, Senior Care’s rent balance was $3.1 million in July.
In March, Senior Care Centers and Abri Health Services failed to pay rent and additional obligations. LTC sent a notice of default and terminated the master lease effective in April. Senior Care Centers filed for Chapter 11 bankruptcy in April, which is pending.
