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SBRA Sabra Healthcare REIT

Participants
Michael Costa EVP, Finance
Rick Matros Chairman and CEO
Talya Nevo-Hacohen EVP, Chief Investment Officer and Treasurer
Harold Andrews CFO
Juan Sanabria Bank of America
Jonathan Hughes Raymond James
Chad Vanacore Stifel
Richard Anderson Mizuho Securities
Tayo Okusanya Jefferies
Daniel Bernstein Capital One
Smedes Rose Citi
Todd Stender Wells Fargo
Juan Sanabria Bank of America
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Sabra Health Care REIT Second Quarter 2018 Earnings Conference Call. This call is being recorded. I would now like to turn the call over to Michael Costa, EVP, Finance. Please go ahead, Mr. Costa.

Michael Costa

you. Thank

SEC expectations in I statements you in based our and to your for make results concerning begin, are our financial furnished Exhibit ended filed in circumstances, with be listed XX-K to we response risks events we subsequent X-K XX.X expectations undertake to disposition questions forward-looking in press as acquisition, the XX, making the was We our the our to yesterday, that our cause regarding want we SEC to XXXX, actual earnings are quarter and not as plans, later that differ remind no well or the will to and Before investment statements Form our and Form regarding results forward-looking and current materially, the expectations risks year update assume comments These the forward-looking of uncertainties in today future that management’s operations. and yesterday. to as Form that included including to still and XX-Q statements we the position on our valid. December our release are our subject could reflect and should and you obligation comments

of these of addition, will website financial the reconciliation as to non-GAAP measures of review Investors measures our during www.sabrahealth.com. page and be encouraged this made are call as the In on Investors to references results the these included results. to at non-GAAP comparable financial well Financials GAAP section explanation

that, in to website. the supplement the and release our also Chairman let REIT. Investors with CEO Rick and Sabra Matros, me of section over of Health turn earnings accessed be call And XX-Q, Form Care Our can

Rick Matros

I comments, Q&A go CFO Harold CIO; Nevo-Hacohen, after Thanks, it my Mike. turn us then she'll over call will Talya to and and for to Andrews, make I'll our our the to everybody. After turn thanks joining And over that.

be the probably guidance a a kick the to sales And bit at have quarter just XXXX. that more the of which have further that third to I'll adjusting with little Care increase little into should we it off Xst call skilled I X.X% we call. affirming want the note PDPM Centers point bit for Senior timing October likely the nursing final bit issued in process. The That's the on rule was a as clarity, more on our So update rule their with well little affirmed news everybody is -- that final consistent of obviously October proposed good the the of space. basket in market implementation CMS of rules. call

It’s than is all million, on of side housing a usual that lighter our lot over the housing Moving and is to of acquisition product. point; senior bit stabilized almost we're at $XXX products little the that not a pipeline. on this senior seeing

trends continue to We to these continue seeing are we this rates, that re-traded. to of their leading at -- -- in point, is but None will happen expect hopefully cap they're being an see. until which, expansion also as which

nursing, skilled much skilled seeing we of terms In deals. nursing are in the way not

to currently operate Sabra the obviously they our that on some are at all assets While be good and they selling, operators the buying are, peers of to seem in. assets holding

to-date tunnel, skilled on goes space, in as deals see any seeing But where upside. hold we level The the have takes a going are the is right the and of turnaround we have to to out the unattractive get everybody see work think of I in skilled the assets been do these nursing work our the as some nursing assets well to pretty us. we’re just it And at missed the of we that we seen end willing this hand. perspective. space we way if into do on pipeline, income pipeline, is that to we

market, So see we a dismiss into to of is bit little them out hard tailwind. of hand. which we do That's come said, more expect

to in some think providers changes in with and long-term the is for I reimbursement grow their interest to them. the our and model, all smaller to we’re for operating business that the see us of grow out get best will to going that with determine partners traditional, care provide the opportunities

that that private that to is prices seeing we too see deals, some re-trading housing are continue think are in properties, much we the We the despite high. senior equity also recycle private bid we of on we’re think continue not forecasted to the see the equity We’ve achievable.

of sort today. that environment that's the see we So

metrics. operating to on Moving

is, nursing occupancy skilled given thing. that’s, obviously, in incrementally, two years the has a obviously, obviously, pickup thing. so think occupancy increased up last has good a row, good sequential quarters, quarters I now the where two over few a Our Its only moved decline having but

more Also we're up to mix bottom think Our that much closer we sign here. XX moved the good to dramatically, a points skilled XX.X%. basis getting

the but the every increase almost bottom, minimal to And couple some our go we're and case, slightly see about fact some our that other causes at of that -- any is operators past make not Our trends comments centers, to our than concern. operators. And any minimal all decline along which least over from the bottom. down these to at coverage, few consistent, think that on in quarters, occupancy I be care the the X.XX%, think been perspective with I EBITDA may about but of that. was I we've senior coverage talking we pretty very we of of close don't

years trend getting a team. In huge coverage last Health, the a and is over months the And of think those of terms couple last in conclusion for in guys we're restructuring it the really for couple an Signature of and seeing into upward performance. of a diversion I management was expected

the weeks opportunity, eight to on to the six business. is really nothing long-term of past kind these So first but focus

good that. So we about feel

of there rates the performance Their XX% of of Avemere's the Avemere’s or size State, going but having, have Avemer, their increase state to very operators in been an real rates of And they company. some consistent. strategic operators much a as of to these and Medicaid low has and Washington as company terms didn’t occur. basically wait are State with is will the has very actually buildings they’re the problem are some exceedingly healthy expecting they Medicaid be the the that That strength from troubles In which But other benefit Washington or hoping company. focus facilities They're trouble. and were Washington going this of result strong occur in hopefully of in line. the the as of is the operators. a the given that was that out the in

also next they presence this year. in by both have Oregon, X% Medicaid rates year However, and and a unexpectedly Oregon is increasing

of portfolio going that's pre-avenue don't while. to help to they even overall continue issues for some So have though Washington in a

of terms progress we're that making for are other with pleased they struggling the they the facilities and the that transition. they've In to are transitioning Cadia, over us, but taken

quarters could starts be is. to that we expect to another as So several improve strong it activity before coverage with their be

will recovered sort have that are things event-driven flu in no over first rate think acquired their are since of months their with not on flu portfolio. very sequential So months, to look the that that and off quarter good us trends compensate completely are hit regards our year the whole of don’t months any expectations. run that are the first consistent that quarter cause really that meeting best last the they they've they they they with nicely just some operators the terms season. our there in uptick Enlivant, they We couple a but of basis In plan had them case there concern. of of right the for on in of The three of the been too they've course but of achieved they took the

well I her. talk will on more Our over to a I at Talya Senior provide occupancy the as minute. and call to overall XX.X%, is just performing managed for about Centers own want turn when some with Care detail that portfolio

we close confidence to offer So was we an construct we been a We've our of we a assets. relationship of who the largest have started tranches that two assets have buyer a buyer of we with buyer, on And buyer that to moved Genesis deal. have talking them. buyer with. another with Genesis is the the losing in This closed

request. buyer other than about So so path we there the previous as outside is getting in with particular feel down for never who disclosed about been of said their some name time, rather this are buyer Genesis buyer the a That's talking offers buyer. offers some now And we've their equity well. much better we and we've are private logged quite this going the

The event is this parties we buyer this Genesis that us. our assets everybody call to know with all the through been story are private with -- to of -- other equity with will work interested try that that's buyers close parties to on Genesis would

of that. We to want the be the seems before interest Genesis, expect good than to be And there would in So be end although just XXXX had about they call. year this the earnings towards very a other I good more still comment one portfolio. the to event make certainly

former a comment pulled X.XX. out in charge running actually performer X that, X, of our call So see that there with fixed we're that's one to peers to And to that Talya. fixed not And over the sub think coverage. report. of the is that And their improves so to new them. actual we on restructuring everybody the coverage that senior senior for that charge report I were the new and that's with restructuring pleased Holiday, some will We coverage on I the and there deal XXX saw that guarantor the we the for basis turn are coverage their final and

Talya Nevo-Hacohen

for I Rick. our managed the operating some statistics you, and provide will portfolio. about color Thank results

up XX.X% eight Canada, Ontario and in manages from which homes living I and independent which independent owned living of the are properties with decline are British occupancy by XXX Ontario. assisted TPG. offset joint in co-owned pickup a preceding a Canada one communities. in Sabra and the living occupancy communities. occupancy States of compared First focus by attributable in been Enlivant communities two Sienna's the in assisted property's the the eight one the second properties occupancy those to care retaining Sienna in the engaging properties and the nine In Columbia properties the community. location in in will United managed the the solidify position not owns saw then to wholly quarter, by by Senior with XXXX, and on occupancy breaking in primarily eight community each managed fully Sienna was and has fluctuation and XX building, to in XX.X% with Sabra venture address local living properties which of And building Living, other quarter memory

winter achieved quarter However a cash strong reflecting focused in that's to margin and due is higher and summer coming operating out -- marketing of Sienna's the achieved efforts. Sienna slightly to the months the than XX.X% to We budgeted preceding has expenses. spring traffic special and income in compared quarter the manage events months ability XX.X% net increased for

Moving to and surpassed located wholly with in Living. we of Pennsylvania, XX expectations the and Virginia Enlivant portfolio, Senior owned Pathway the two have XX second where XXXX. the communities properties owned quarter Delaware Results U.S Enlivant West operators in at wholly to

and through in owned increases Average XX also JV note. to X.X% revenue. in venture which over with which robust increased than points which solid was states occupancy hold XXX the operating In States, XX.X% quarter, for which is is Average XX% a compared basis Sabra which for properties prior Enlivant quarter and is a forecasted more to occupancy important Enlivant. achieve to We’re but occupancy occupied a with flat the through per is preceding subsequent was unit NOI This rate by United higher X% XXX the than XX.X% to rose for compared budgeted. $X,XXX than basis the margin XXXX. interest properties occupancy preceding portfolio cash managed quarter quarter, points net month, than points the XXX strong with quarter the what higher increase the prior quarter. Revenue XXX end the all acquired basis had and in a to joint in quarter January was higher seeing higher higher preceding income. XX%, a XXXX, itself was a the driving essentially X% quarter across to happened XX.X%, TPG, to

quarter XX%, which outs a the for was drove by end preceding move positions. season quarter, medical month, per momentum the half and heading season Cash the rebounding -- about in NOI dip July, a claims into points As compared to flu slight revenue. from XX.X% increase of pre-flu with in the leasing again is was QX basis after and pickup was of costs margin occupied $X,XXX XXXX. of importantly driven the leadership XXX% Revenue the occupancy comp and prior creating workers new by increased XX.X% that second associated of unit XXX tough nearly

We turn portfolio across communities also as market of the the include see at wage Chief Financial now the experiencing a Enlivant portfolio, has we the continue the to in Officer. more in Sabra’s -- I’ll Enlivant call team challenging Andrews, Harold positive this which sum, operations communities market trends to exposure In to these talent country, over pressures whole. and tactics XXX the the as so oversupply. stronger improve as believe has or well

Harold Andrews

Thanks, Talya.

June XXXX. that are For These NOI transactions. a preferred to million was basis our $XXX.X increases NOI we the revenues $XX.X of from months to of the dividend properties exclude X, predominately segment additional This in stock in acquired for XXXX was the $X.XX million respectively compared write-off million our costs equity reflected Merger to stock June CCP due and $XXX.X normalized million, per capitalized for related three in the and redemption. quarter the wrote-off million generated $XXX.X quarter normalized ended and reported and revenues FFO connection as of of million Enlivant XXXX, XX, share. preferred on quarter to $XX.X million $X.X current the with second and the $XXX.X was or was preferred FFO income. we and issuance

acquisition during compares related to million CCP items AFFO, XX.X%. doubtful $X.X $X.X $XX.X the and X.X%. and normalized and a million share. second $XX a merger and recovery in items quarter including normalized attributes per $X.XX $XXX.X or or share FFO and was with This of expenses transition AFFO million, or costs on normalizing normalized was of non-cash excludes share increase of of share loan losses. certain of revenues compares per similar This of a million FFO which basis accounts costs FFO include with as XXXX, quarter second the per and $X.XX Additional quarter per net Merger normalized million $XX.X and million to share $X.XX per of XXXX, increase from

of For the the G&A $X.X the quarter, the million CCP for stock-based were NOI costs cost $XX million cash included related transition and we and X.X% of expense. for recorded Recurring XXXX. for the $X.X quarter net totaled of compensation income million attributable to compared G&A of cost second common following, of $X.X $XXX.X stockholders million million to quarter. quarter

per quarter G&A We expect our $X.X million end of XXXX. cash recurring to quarterly approximately through run be rate the

losses, reserved to hospital former the guarantors accounts the is $X.X by of were, of million million which previously $X we've $X.X receivables doubtful primarily our of the from recovery Frisco collection loan and and Forest reserves and all This quarter, related Park recognized of of During is offset AFFO. a investments. million date loan normalized from losses. Park $X from is million excluded rental our of straight-line $X.X The normalized normalized FFO receivables collected to million income To of Forest collection FFO excluded have we Frisco AFFO. which and general related

$X next million over collect to additional $X an We expect quarters. million several the to

in in $X.X quarter expense to interest quarter the expense XXXX. XXXX. interest quarter compared of interest second million to expense million $X.X the $XX.X Our of $XX.X million of million the for totaled was in second compared Included non-cash

excluding real on the communities. estate the XX senior average unsecured of the including during and interest revolving share of facilities XXXX. result the June facility, rate, sale XXXX, credit and sale June increase quarter credit housing X.XX% venture unsecured of debt million borrowings over at under basis interest XX, second as of the joint of a points an net XXXX, at recognized gain aggregate four of an revolving XXXX, skilled XX Enlivant X.XX%. quarter nursing of under weighted As first of bear the of $XXX.X our We our was Borrowings XX, facility

average During of in million $XX.X yield cash weighted with an million with the quarter a our senior with we held of under borrowings X.X%. made four These investments yield credit initial and including housing communities $XX.X invested of average X.XX%, investments funded were cash cash facility. revolving

under currently liquidity million. of our $XXX.X funds credit equivalents As of of XXXX, total of we of revolving available facility and XX, and comprised $XXX June $XX.X had cash million cash million,

titleholders, Preferred per share we million X.XXx, asset On ventures total debt X.XXx, million. an including fixed EBITDA secured dividends payment for debt of debt X%, all X.XXx, unpaid coverage of the aggregate maintain in June held cash shares of Series at unconsolidated redeemed of debt asset adjusted our to accrued metrics, of used restricted sheet with pro to rent the $XX.X We with to XXXX, June million forma addition, debt and acquisitions. continue reduction. by all $XXX.X real were CCP of June of may a price value $XX XXX%. charge X, among XXXX, balance as stock to aggregate EBITDA reductions adjusted and XX, XX%, joint a net XXXX estate future coverage accommodation of exchange value incorporate unsecured XX, compliance value which as asset included plus covenants $XXX.X strong unencumbered which debt Net credit be redemption to debt Genesis A fund of in X.XX of to In to price interest of million items following other X.XXx, million our and of $XX rent

coming paid A costs the the of stockholders August to Preferred of charge dividend record Directors common per common the stock. its declared that announced incurred X, Dividend August result XX, Board the to XXXX, business quarterly a XX, original a share XXXX. of $X.XX the be of stock. company of write-off of of the of will Series XXXX a On of close cash million redemption, $X.X of on As company issuance on August as

sales. the quick $XXX.X on under Genesis gross quarter generating sales completing sales proceeds which XX a annualized five selling, toward contract the of our Currently, are proceeds This Genesis sale, million year. XX quarter. XX letter this residual of excludes we’re a $XX.X Finally, X.X% from with trigger sales remaining previously Of asset million X.X% property down asset update in Genesis to facilities expected closing great made of These represents of gross We million. completed and per intent is of $XX.X first on Genesis sales under sales NOI. cash for million. progress of total total are together proceeds $XX.X and to with anticipated sales are currently rents gross expected us the

residual rents of provides Our sale to agreement be for to each facility. paid X.XX with Genesis years the following Sabra

We continuing one will up expect process. cash And rents current to from have Genesis, all it NOIs. over one approximately annualized Ultimately, delay sold I or total of of to approval of $XX.X expected we'll Q&A. XXXX. one including expect being sales a residual open The our the due we but rents with generated remainder HUD that from X.X% longer assets the million potentially occur of to of these cash

Operator

Juan from first Sanabria [Operator of Instructions] comes America. line the of question Bank from Our

please. question Your

Juan Sanabria

to about corporate talk your saw could Just a I care. guarantee. senior hoping switched the bit you you little disclosure that

was hoping and if provide maybe you can you the I coverage, had the as well? facility So talent level best if

Harold Andrews

versus below The charge as is now fix fixed We're right, presenting imagine are total think, now. around time. we level And individual the I you're a can did. X.XX, coverage bit coverage coverage. so the is little Yes, one you what coverage the we right charge facility now with

Rick Matros

any of in our words wasn’t you for terms Yes, consistent, and it bit low give just other to bit was so any fall, Juan, better, wasn't that’s execution finally weeks worse, though sort a time, business more it ago, quite they sort our on but is just the operator impacted going hired and of little senior on take that color a lack company. in some was for Even the been five now. of along, month happening. management and They a CEO has of wasn't and last the just plodding though clearly the instability even it's have clearly had coverage

in out. if performance, will of we the so saw our just last months the And resolve further terms what portfolio the to of strengthened move couple you in

the know, that, the You in further hopefully to it's is things around, but experience. their instability into going how CEO's turn shake all CEO new performance it be company always the in least I situations impacting and come to my able new be when given typically and like will that at up, think

and around, with so senior while that too this things as talked we And it CCP we to reducing to the Texas, sales it not portfolio advantages can move to the our out skilled hope many getting care turned about, where way than certainly us wait in to along out we're was willing the just point at before Genesis merger. exposure actually our lower be exposure a point

us for it on to it that doesn't our doesn't change it reinforces just right are begin path, the change, with. we path So

Juan Sanabria

purchase Okay. still financing contemplating acquirer? potential Are for you a the

Rick Matros

coming We've got the to be which sales then a us process to to proceeds that out rate well. proceeds still One, since the see to was able better of some need these us that will the manage to of lot debt on us impact construct seller longer. idea all financing coverage in. operational take still the at but at. to liked our process construct We give buyer, time will manage And we so allowed couple also proceeds The of that previous it’s so dramatically we earnings it and in a the spaces redeploy looking Genesis today. providing for at that allows manage the obviously portfolio reduce much come obviously we be than the are the coverage reasons. the we're that looking many a from otherwise exposure owner new as HUD, Yes, that

Juan Sanabria

[indiscernible] are stabilization to long-term that kind the on on curious those nursing, a at orders. from implications time of PDPM your support PDPM? seemingly with expect to in long-term shake long-term about you distress comments same some change you existing but owners the out two coming saying we positive with how do in skilled were Just of statements some some -- being line How

Rick Matros

most think tenants I of tenants. Well, traditional have the our have we that top peers of level to and on

So I strong that these been the are of think been and most the guys moving for of up tenants there, scale if end-to-end have, the you all have top out other preparing having we the look then acuity smart skilled operators that have mix. future,

very don’t still seasoned of So traditional percentage all overall of you factors. the skilled the have pots, to much overall is visibility model which pretty

just So much there. I have visibility don’t that

So separation at have tenants have there. there HUD in REITs you a visibility the all Genesis, do what the terms to and is of

the opportunity stuff, it good opportunity. guys will have. from will working physical yet. that there have there make from and not and that we’re quite through of terms facilities will Does have traditional then so perspective tenants said, sense? older build modernize that both the way be the that with But that an that modernize to some client operational acquire shouldn't So I perspective all the be a a will here our tenant And in that as be we the all again, of

Juan Sanabria

Avamere facility if at -- one coverage last level? mind, It EBITDAR does. quick And you one. you have for would I'm Do the

Rick Matros

still on those solid. below It's I issues slightly that charge There pretty it's below. coverage. have head. the slightly fixed But top with my don’t there. are of guys It's no

Operator

you. Thank

line Our next from Jonathan of question Hughes comes James. from Raymond the

Your question please.

Jonathan Hughes

piecemeal and be quarters? potential single take that portfolio on touch landscape would did to open would And that the parties the Care investment single those to Senior the buyer several multiple them selling next didn’t you start Rick, one the all? properties So a mentioned at if or buyer, dealer be call XX of you over

Rick Matros

That’s a question. great

break the If we single started interest to of some won’t we it’s for yet that lot haven't So if reason, three would more to run be portfolio. reason to say to it pieces single or get to because Learning is four in a be, showed what be The portfolio allow deal easily happens portfolio in we Genesis. --to did the process much we us done, process single would a our deal. believing that. a process seems reason a portfolio a exactly similar with the whatever

Care. portfolio in that think Clearly about sell entire of Genesis, if in the we then you what we was tranches. Senior done one if get if than we the piece, quickly closing exactly can it that’s greatest selling more with can multiple So certainty happened are with

Jonathan Hughes

of on it Okay. think reasonable way just Is ballpark on the comment sold like say so say that X.Xx at million to suggest that? $XXX to right and about looking $XXX Xx, can or it's proceeds. it the at potential Care, you of so regional about expectations, if Senior implied coverage coverage that you And then that if would level some X.Xx market say at

Rick Matros

mean, the positive. seeing where that we are like and prices were feel I are assets trade also before, in offers think, we about were we very very still Sure. I given talked you Texas, offers have that at looking and attractive

and continuing where we're those are management stabilized to identifying the ultimately we've had value. to that in team I challenge order operations is work determine an be appropriate through think part to that of relative

proper So to. your of working where talking that thinking rate with what is the run identifying had right through in they've buyers to forward? the performance going we're The analysis. operations is new question that's part in are And the their given we that that date is,

Jonathan Hughes

within Talya I'm mentioned, three that get saying I down that the Did didn’t is then years Yes, on were for you JV here Enlivant. that I ahead one okay. you but taking numbers all sorry, just like And underwriting. of occupancy it correctly? sounded

Talya Nevo-Hacohen

is that. Occupancy budgeted the years well for in for we was that joint did what venture. now It’s the wholly ahead as owned not and properties several of

from with flu a emerged has the is hopefully. recovered dip that season So and breath joint has actually had basically the venture and

to So the occupancy subsequent quarter, points there. they've close of the days XXX to actually additional just up XX% moved

Rick Matros

season we flu a and in the portfolios to ahead expecting where where and we longer of So bit basically be. just is be it would the take of thought little owned JV the because

Jonathan Hughes

thinking one up your JV, years. I attached it move then, But then got I'll obviously, with and as hop to up, timeline couple over you've just And proceeds the from ownership that Could of there more next XXX% these off. the Genesis your have coming noted gaining sale, and ownership given coming of upside are makes that views I along and bottoming all Center and industry proceeds kind to sense that Care balancing potential you these mean, earlier maybe catching going Senior more were wouldn't on in? that full

Rick Matros

possibility. if add a for that. would you will that Jonathan what is remember, what thing pay to there can and One in we is I we certainly floor It's that

And some really it so going you until trigger a achieve lower extent, that that to were you if early, higher you're to are -- yield be not you level. to going having be to

immediately to performance there based upside make on is if we're is to consider that that So of today that sense. every fees like going capture bit

Operator

Our Chad next comes Stifel. question Vanacore of the from line from

Your question please.

Chad Vanacore

I’ve Rick. just you got one for

You've shown sorry, or little think Are the the then expecting costs And I’ll not that half some do nursing you senior gain cautious largest nursing operators drive nursing on -- relevant do going 'XX considering? occupancy versus more we’re performance where enthusiasm this managing something year? really say. in with maybe or else second you the half the What skilled see first to or senior housing you is improvement? of operators side, for a skilled skilled improved rates,

Rick Matros

the quarters it could see XXXX. month always at a consistent; I business incremental is XXXX. improvements a you it’s the it to get first and think love We be some a think That’s month effective -- it’s month in saying of in due one basket market and that just that all market going this don’t to because XXXX event the I mean all. in XX-day I the we’re be basket. there’ll along So couple October

So that’s see more of our going you're that the preparing event But an for than favorite all PDPM. other year. to I the improvement to have month that, think next operators the once or year, an transition we’ll it’s

think in yet. to a of as second improvement left half I I think primarily going XXXX to it’s So parts occupancy. The of of be, is lot

that labor really an been job costs. labor a has good industry an issue don't is to hide the and It’s dropped has XXs, the and has done occupancy. no your been XX% so that to Obviously by always always down by good at business that the think low. when did you I a a large It’s fact exacerbated a issue. occupancy job low have and been way controlling to there's

get because as So it And PDPM year expenses, rates, of work XXXX more easier October probably to revenue full make so is mix you that that's manage starts so should the of some next in to of going of quarter and going obviously to see rates a XXXX. of event, start because you fourth into we with. quarter in not a have really that occupancy result XXXX, have labor to improve terms XXXX, X, which simply formal effect and more of in will be XXXX, you’re as could that, will changes that, in impact one then

couple come a think coming things see will in continue we from improvements quarters will the improvement seeing that to XXXX, of point we've we or occupancy. probably as So in XXXX, after been initial stabilize to recap,

PDPM after goes improvement into place rate. will secondary be The mixing on

Operator

you. Thank

the Our from from question Mizuho Securities. Richard next Anderson comes line of

please. question Your

Richard Anderson

find you’ve the comparison your happened X some maybe to close towards Do assets bit nursing with pricing still between and XXXX? a in Senior degree? you're your that you’re yet thinking And and that's past describe gotten Senior what the So space is negotiating Genesis have can How those that at you process more had Care. that if to to into least what draw the how with The you that sentiment are Genesis months. XX sanguine conversations for helping better that over another I would Care? your skilled about people done towards to has relative playing

Rick Matros

working Yes, with, they're are it’s like to affiliated to that that buyers I with on think, are the referred They're because ground sources we’re or are either that other we most entities. you the in business. the fair that operators the that operating of already say buyers finance one

and latter really no was than more it So complex with There to we all RCSX, as of they across we which be going saw really going conversation So idea half business about turned where what well. was an out happen thought but understand to even PDPM improvement, And the had much XXXX, quite that reimbursement. we that it's in bit. compared season, all the down these are slippage you much space that with XXXX. really to is we coverage the this know a now And very of earning some slow was

understand see it. know business, they people so And they the that,

So feel they positive about more it.

business I to attractive more stronger the that that I think if they centers, more would've in than portfolio in of And XXXX. benefit organically terms function makes of happening that positives all you that Then see think a aside, from those it care add management. know, what's positives are senior other even been those then in environment. should you it So,

Richard Anderson

Okay.

mentioned you has that's there make a or some for of is statement been side private extrapolate as there's to be animal aggressive you that senior able towards skilled just similar locked to is to of deals. out equity? a private You sort nursing Would housing, equity them? completely anything of is different to which the relates Or those it

Rick Matros

Yes, I stating it’s I different there. completely animal was that's a think,

Richard Anderson

Okay. the make the And because to that proceeds use in a of of want degree but you a dictating degree solar -- you you That’s line a that want far of sure what had Care, least dragging or up you timing But also, REIT over participant up of buyer financing need idea? I to feet, and I are proceeds. process above here. degree sort of that what as some Senior you have not are use you perhaps understand to To you a all you're your at to as you as sort a place. also are the line

Rick Matros

we're process. we're preference terms say prefer want, move more deployment That's proceeds of the with coming we said, buyer want us a which allow that certainly have to -- buyer. dictating focusing wouldn't priority. end number to that's I that manage a structure work the does which proceeds. in of the We is to on manage we earnings We that amenable of those to buyer one better the portfolio and out, currently,

if to going for a buyer we going rate And prefer you And -- as is as better. wants I to because, is buy know, dismiss just this sort to And that buyer the of thing turns not to want of we're whole that it managing then to best out it. be because take just stubborn we better. you to cash, about a whole phenomenal. So is we're most going think HUD thing not sort this wouldn't to look we the opportunity have long-term manage an everybody to

So, it with standards. take awhile can unless but live someone's access really cash HUD to process going you of because got could not pay to that take for when, it's months, the HUD only -- if, XX months, that's that a to it cash, kind nine all measured for could when in matter and of

You know dog's extent us the helpful obviously helps way. we which would it that it’s do a can also, that life. be like like To we to

Richard Anderson

to million next rent of for $XX lesser going is, the Is actually value sales residual book work true lesser those And you're to residual if four I'm years, at but that residual for stream from rent from is point think of this that years? the for you proceeds I less the does it get over less you get about a you better and better is the in event. lesser the four next proceeds that income I proceeds you the as out imagine and when a perspective it last proceeds statement? and work question mean, wondering so Harold, proceeds you, XX, the the have in Genesis valued a company plus

Harold Andrews

going because was think we asked with our structured argument knew a it hadn't Genesis rent that felt precisely there's that could we why some of cut but were And we you I they at and the than that they coverage negotiation defiantly to risk cut. coverage. make that’s get Rich, our that to looking there like way ability rent was into asset for, exit

risk And to purchase lower we going what so basically rent we'll you that we said on buyers assets, give get whole that coverage. made prices be many any selling because to in cut return ask we're is we take want going more we're for now, will but

at minimum think So make that yes. to I us a us, was actually is can making the it to positive argument intent but at least neutral, you

Operator

comes Our Okusanya the from next line from Jefferies. Tayo of question

please. question Your

Tayo Okusanya

a of who mix that. have operators at out at kind Question a the are take about lot this look making me you for just not look I SNF and a Rick, like any that just occupancy the And there of West occupancies On mixed assumptions you will mean, things at be just data Coast. some to take if it kind where You that point. you are make SNFs strikes money there with industry-wide?

not of fair a that's a is, trouble pops whoever Do of lot better I that that at it's So when that talking think should statement? who a whether may 'XX, are you a in you make -- me just strikes are take mom guess currently that, you when take kind of there be getting look it but about and I a it mom amount fair things in to numbers, it at look 'XX.

Rick Matros

a Tayo. the is in of of on data a take this senior SNF a Historically, terms only I from little skilled So really the from and flu that couple I nursing benefit with skepticism look gets slammed year things of flu at that because bit flu. housing operators season. the by unusual

would this think as that the I bad, I of be only that now string So worked. XX% receive people everybody so know here vaccinations was think, it actually

control would and their level of And epidemic saw cause of this basically we restricted an because admit rather first patients these so admitting the missions than high for nursing year able concern that with backdoor. to operators time patients skilled

that So we've before. never seen

So I was think it think because decrease they we think that first and in season. the quarter, showed, quarter sequential flu a occupancy, fourth we in decrease of occupancy

bunch could you high I'm of to can But pops, see mom have we'll a be are service, a at debt bankruptcies, see a be that, see most see to of industry. but guys that could continue are yes, facilities amount you're absolutely percentage -- a correct. selling still going It's I obviously. still third the and you. little of with no pops of little but these could sure the or of not because them you the you going I’m sure agree So in terms

the mixed And component that it’s so data And down. those brings of a the making numbers that is see guys anymore. to legitimate hard

you year these getting shops. been because it's primarily are worse think I about if think Medicaid every it,

of XXXX, back were what basis. average you so obviously you time to state. 'XX going rate to talking increases, It's since then. last X% an really anywhere still was an And on different all the and been the of to sort Medicaid inclusive states Medicaid X.X% to But vacancy recession sort kind it's in I'm that it's prior average XX every saw was on over since then of it across X% And flat XXXX place. of or seeing the

a we your we and at like trying are look more you Medicare revenue in the or have costs cost or increasing you to not base much complex get nursing exist anything of are when rates, way on to are than So higher increasing. your that, seeing going we declining

shift, is in about a mean ever. you're got really you you going one to to mix of considerable how operator you're think long much only I anything have it the big way business, about. that's -- and of going they've things they see of of and if of about don’t for So, software lot generation business you think way a so pops, just these time you're PDPM a mom allowed service, to right, make really them that changes, one survive. forever business But I build think its in doing an -- who to lot It’s how change fact shift and really to this debt the vacant -- for it's the talking a to if

-- I the we shouldn't think be going are the So however I said, under, -- guys as I that of opportunity that out when to more be create think more, and that these happens. just will [indiscernible] to going get business but are going that would that's drilling

Operator

Your from Capital from comes One. next of line question Bernstein Daniel the

please. question Your

Daniel Bernstein

kind -- and this good rates assets at out side. lot that backed the -- cap go even your it probably Senior pretty so been point? market a portfolio want more seems of ahead maybe pricing and sell reevaluate you up. looking further Does at me Is on I have Care of You have and buyers some assets the to right to your now, think

Rick Matros

Not the we are [Indiscernible] mean portfolio makes have at is within where operators. process in that the building, another operators Avamere their looking selling their close for got of seller individual actually moving really. some I assets you've assets to

up So may the different wind with re-trading operator. we actually

about talked to to going make about their we as said concerned already that's wait situations we've make those take can long So we've what I as as particular making number whole where sort as beyond any it of of tenants we and a our confuse it. it's don’t -- we guys got a don’t to the or tenant at just them existing But just we're and just haven't tweaking look portfolio. at want looked

And move so we the portfolio. want out of to them

other happening. and as see else -- much as which it [Audio So I than to think, just don’t do tweaking is much here operator is Gap] the there, things don’t wanted again I

Daniel Bernstein

of kind type we and housing to the the sound some you operating RIDEA expect those should would housing toe structure too And were, the consider side, or turnaround venture senior pipeline, space? for of then you mostly structure, type it’s like if that from sounds add didn’t properties RIDEA the maybe in in you -- maybe on value it moving in do it more of But like assets. senior you’re the to of interested joint

Talya Nevo-Hacohen

you achievable because going So but around situation-specific. robust turnarounds that our properties fairly could revenue turnaround time reached that and And and -- turning lot looked a of the RIDEA is not structure, there’s nothing we’ve seen is have occupancy that would called that very and to resolve and take over supply time the Talya. that A level to opportunity an sell believe to because from have so that we very and issues reasonable of value-add are that that of level is RIDEA in horizon. there’s and a this out. at was perspective of suggest -- be into risk this so worst far I we

Rick Matros

the comment, skilled why the outside behind that a my doesn’t in housing, factors which we in exist you press the issue, just nursing have That’s think, upside release lags supply made think in I skilled stated over senior of nursing. I of quota because do

it’s and should take So that probably going to in just longer role.

to maybe, they have to to increase going to facilities. occupancy continue see The taking as these nursing going other lot out existing operators the dynamic, modernize facilities; mom in be they’re is and facilities, to service. I of business. not those supply of and liked Tayo's a those get to the those in skilled we beds think, they’re decline going And some other out system, And buy have that really of you’re but of pops the modernize reimbursement when just dynamic the question continuing we’ve that

you have that may XX-year it building beds. modernize So the XX private buy you common time XXX-bed more XXX-bed -old facility and more by maybe XX or semi-private space and and

so of more years. next over few to And lot that going the you’re see a

the well think for space. trend I So demographic decline really supply the combined skilled bodes nursing in with

Daniel Bernstein

via right get within other to fund take of the heavy assets lease a and it buy a maybe to or it, put medicated then kind assets to you Are on. into loans right then some be place assets the to to upfront money may willing think capital operators buy risk you help mom-and-pop be going later those or those you’ll and

that consolidation about might of that work? over couple a Just thinking years

Rick Matros

-- be pretty for at come going it’s enough take to we’ll if But old right I of has not willing think lessons and down market skilled in us the list. really operator. it’s we're even at right to facility, the it’s that think risk. good the assessing I factored One, nursing to

an to in go higher it rent with and rent things watch the like of you I think earn-out assuming something we a may Funding as go around. the and see you business and don't we're and then that operator have that have improves. there those then sometimes you turn lower kind them earn-out or operator a at buying or what in into an a for get the not But an its structure can So operator today. on, I later it here opportunity

and time, a my some the operating world built for in for I other experience who been team turnaround. long So and my the -- think folks in me and of was for in our certainly whole on career have

really kind those So we liked of opportunities.

haven't I but assume opportunities recently, we seen forward. think fair to those going good more very may it's many like that We see that of

Operator

from Smedes next Our of Rose the line comes from question instructions] [Operator Citi.

Your question please.

Smedes Rose

think, point? Earlier due year think, to conversations postponed, in agencies? thinking you about rating to refinancing, opportunities just conversations you're just this the upcoming it And the you any at refinancing if a recent potentially got how had could about talked wondering, million, or talk And split I about kind rating. I'm and of up with $XXX I maybe

Rick Matros

Yes, sure.

being on refinance we us eye situations of is really to of existing on we nice answer such once really Since the back bonds able macro you time, were some rates tenant also that yeah, around looking back basis some interest interest coverages and put So had in haven't and some given burner. around specific And time, rates kind we with in our on forced both the completed had transaction some that of it transaction. was definitely more to recently. were. the a But of market in where Care it November improves back some cooperated peers -- our our at things That November. and that things the they Capital accretion that that from have

wasn't pulled So back. we to specific it being split that weighted

us it at some which was we're exposure REIT, as think is made. that about the we where our skilled skilled to hard that should we XX%, nursing pretty a where to going from over was think was argue further differentiate I again, today be nursing comparison expectations that when of what's a

hurdle rated is company. we not go rating agency grade So will divest so this that of we we're looking an some it who’ve as I with think rated have getting recent investment assets skilled thereby that on continue being way SNF that issue become REIT. think Today execution grade, investment we're as long a our of the no does ourselves currently investors could differentiate longer the conversations that better now from thing nursing a us based and at one to and we for to such further removed and kind have over split

now conversations given educating So be will the grade that have is with story And the opportunity continue agencies we've and as to going then right the the those to and we're do do look because opportunistic of in before investors making. that position our for onto high we're to progress the to well anything as a term do. we'll the years here couple we're compelled again, not so, got dogs short come Sabra

be And think catalysts us of something enough get done our we allow will peer so spreads to there to in our comparisons that and companies. our And strategy some that’ll further improve our accretive. are

Operator

you. Thank

of Our [indiscernible] question from from comes next Advisors. Green Street line

Your question please.

Unidentified Analyst

skilled gap going guess, I like EBITDA quarters. talk something fees Is EBITDAR over I The are that there looks exchanging couple a you just there? one. structural or Can between about and up. the that? past has management had coverage quick widened just noise is it

Rick Matros

there. much There No, structural there be noise shouldn’t is all. nothing at

what take really comment and has off-line it's So you're changed. at look as we nothing take a that so looking,

Operator

line next Stender comes question Wells from the of from Our Fargo. Todd

question please. Your

Todd Stender

down you CapEx and the in. know the you care to You a like thoughts? addressed Just estate getting might with portfolio? you've opportunities. that about if on this. strategy a should real a senior what don't Rick, taking if sell swap be you I comment What’s sense made there maybe the put you if does your you is got but But or operator? turnaround write-down, some work it,

Rick Matros

good is We it. tougher skilled thought the about one Texas question. really actually That’s But nursing state. No. of

their And buildings other continued [indiscernible] -- but they own, have We in have and think, holding which Texas. in I there. care they're don't actually centers, they're is many operators contract,

don’t operator successful the think that us Texas So this in going for of goes to want Texas. effort the But and turns to a look, continues know the big on some us, lobbying us, buildings everybody attitude. there. for I be and happen Medicaid We powerful, I see -- having our huge even there think, failed in new is kind in to efforts time, be a really last change to XXXX. to new going good. is so fall on business. for more think going system It of thought even though, what’s We There and around resell in state there I

state our to you we and really if -- we those that some look I go there too do those we is, lot had operators it and XX% just to back so without some all the though a got there a look deals even exposure. up again XX% little benefit how is or we So exposure question some just Senior we to like because us there gives skilled us we in of Centers. operators over staying traded transactions, benefits a more bit back of it's lot of go maybe better we see sales we we of terms that's but that much XX% and the exposure lot doing the us on think we I have that whatever Care at differently. a mix our can better give to stage if it’s kinds if lot really impacting we you more play for get just of Texas that's opportunities into than challenges, path. at to staff and out in even But XX%, But if fair down well got think think before one kick mid-XXs, a skilled off

Todd Stender

of. have just equity brings to like disposition see and What beyond? REITs have far? back the get What of of to pushes cost other with equity that you. through a a private of the disposing been back out? question, private and advantage especially equity the a the operator year be in so longer equity the the and distress are in within the maybe get better buyer going kind the Is REITs And primary that private portfolios senior REITs into Do It proven you a it just high work cycle? next seems REITs what has level -- housing, changes Thank market? of

Talya Nevo-Hacohen

outgoing at IRR it's behind that Talya, two, one One private starting lot a their been debt difference happen. significant equity out a waiting but is exists of leverage to it's need them least prove think tell the And that is initiatives. out I'll effect This And When then significant you, is pushes see think the two chilling expectations the on private going make think going that by a of -- things. on cost private I to really is on equity. the have a side development what fashion? to starts that, still I We're change in to outcomes. think I the in is I to don’t investments equity has

have for REITs and on been better forward move play and think to waiting ready this I sidelines to out poised prudent the watching more the portfolios cost. with a collectively strategically at

Rick Matros

were are paying that don’t not on cost going your REIT, really as equity that the because comment would assets ever That's really all determining in even reference up, up and up factor of terms equal the look occur. most don’t these as around guys see earnings And made I've revenue the are is these some that if think assets not see the believe paying private the to cost businesses hockey think I that equity way the I we to -- leasing just that for you that and issue. to realistic. don’t of other you on of it, valuing I stick way them there see a improvement just things and equity future of reason that of REITs is at stabilized the no Todd,

are just lot think So disciplined. I think -- more REITs I

think equity have private just that I to they work. ton put has of as money to

us I peers. it's mater our but think of discipline and So more more the focused of in part --

Operator

Our Sanabria America. of line final question is Juan a Bank follow-up the from of from

please. question Your

Juan Sanabria

just nursing the skilled or from driven two the that something have occupancy that ones. expect quick I just in this improvement shift back you the is mix flu fundamental more in Rick year? lost that calling 'XX, coverage is

Rick Matros

back -- last occupancy It's -- The been since XXXX. from occupancy not the flu. not its calling dropping necessarily necessarily has

occupancy and we're sooner you back to comes finally see to you're of it skilled demographic. when think a some a because I just big senior incremental the currently And in in as to big in admissions, your -- And if the thing are of the when to issue. in And the deal sort go just space, be going born to it's start boomers incremental. going that a it I of housing because be run fixe. the exist health going really bit benefit think we becoming terms forward, But got in space you've little starts is incremental space to currently were as -- XXXX. well wave. it and apparent think not the a of costs the It’s

left straight well have no line. the that's no just execute you and to You've place call, the you to extra patient bottom when through -- that pull levers to left that hide, patient, get

is a anticipating big not in we demographic starting sometime on That we're move incremental there be So going a the XXXX. regular to think improvements demographic but in then basis. ways, continue will

Juan Sanabria

deduct then CapEx what give curious perspective question just you is Okay. AFFO? to you’re just portfolio? And if sense don’t arrive for why lastly you budgeting from could the a CapEx And for to us a at the of a RIDEA guys Harold, just maybe

Harold Andrews

Historically not have CapEx. we significant just any

CapEx. a another So somewhere becomes it’s of and and AFFO. the we’re to know material. somewhere I our take budget lot look -- the is it is CapEx around million Enlivant think I of of the going portfolio a include -- definition It year, around kind for people between because more $XX as

one. just it’s of circumstance a So matter

Juan Sanabria

$XX that rata the for pro your joint And venture? share million --

Harold Andrews

full that’s the No amount.

of share be that. Our pro half would rat

Operator

session conclude question-and-answer the Matros, Rick of does remarks. CEO to This program you. back Chairman any to further for like Thank program. the and today's I’d hand

Rick Matros

And appreciate joining today. us We you. thanks for Thank it.

term, talk in to don’t And we’re enjoys accessible. for we near you we’re we everybody if of conversations, available As Thanks. remainder the hope summer. very follow-up always the

Operator

your you, conference. Thank and in gentlemen the This participation conclude does for today’s program. ladies

Good You may now disconnect. day.