The pandemic’s effects on senior living and skilled nursing “are far from over,” CareTrust REIT Chairman and CEO Greg Stapley said Friday on the real estate investment trust’s first-quarter 2021 earnings call.
Although he said it is too soon to say when occupancy will return to pre-pandemic levels, company executives “remain cautiously optimistic about our tenants’ prospects as occupancy begins to climb back,” Stapley added.
Senior living operators have been “resilient,” President and Chief Operating Officer Dave Sedgwick said.
“COVID hit them hardest at the end of last year and at the start of this year. As with skilled nursing, seniors housing occupancy appears to have hit bottom and thus far has held steady,” he said.
Portfolio-wide or national commentary about recovery, Sedgwick said, “is only marginally relevant, since these businesses are hyper-local and extremely sensitive to the quality of the operators running them. Needless to say, we expect the rebound in occupancy to pre-pandemic levels to be asynchronous across the portfolio.”
He noted that approximately $24 billion in Coronavirus Aid, Relief, and Economic Security (CARES) Act funds have yet to be distributed.
“The transition to the new administration has slowed down the processing of those funds, but we understand progress is now being made,” Sedgwick said.
$126.1 million for 4 CCRCs
The $126.1 million portfolio of continuing care retirement communities that CareTrust REIT closed on in March “represents some of the best real estate we have purchased since our start seven years ago,” Chief Investment Officer Mark Lamb said.
March 1, CareTrust announced that it had acquired four CCRCs in the upscale Southern California submarkets of Camarillo, Carlsbad, Rancho Mirage (Palm Springs) and San Juan Capistrano. Bayshire Senior Communities, an existing CareTrust tenant, leased and now operates the Rancho Mirage and Carlsbad campuses under an amendment to Bayshire’s existing master lease. Aspen Skilled Healthcare has leased and operates the San Juan Capistrano and Camarillo campuses under a new 15-year master lease.
“We feel like we have matched the right operators with these assets,” Lamb said.
CareTrust’s investment pipeline, he said, “has been reloaded back to our historical range of $125 million to $150 million.” The composition is primarily smaller portfolios of one or two properties, Lamb said, adding, however, that the REIT also is considering a couple of larger portfolios.
“What we’re seeing in terms of deal flow from the market is more senior housing,” he said. The deals that CareTrust is actively pursuing right now, however, consist predominantly of skilled nursing facilities, Lamb said, “with a few senior housing assets that we feel are great fits for our operators in that space.”
As of March 31, CareTrust’s portfolio consisted of 41 senior living properties, 24 multi-service campuses that include senior living and skilled nursing, and 157 skilled nursing facilities, according to a company presentation released in conjunction with the earnings call.