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SBRA Sabra Healthcare REIT

Participants
Michael Costa EVP of Finance and CAO
Rick Matros Chairman and CEO
Talya Nevo-Hacohen EVP, Chief Investment Officer and Treasurer
Harold Andrews CFO
Richard Anderson SMBC
Nick Joseph Citi
Juan Sanabria BMO Capital Markets
Amanda Sweitzer Baird
Steven Valiquette Barclays
Omotayo Okusanya Credit Suisse
John Pulaski Green Street
Daniel Bernstein Capital One
Joshua Dennerlein Bank of America
Call transcript
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Operator

Thank you for standing by and welcome to the Sabra Health Care Third Quarter 2021 Earnings Call. [Operator Instructions] As a reminder today's program may be recorded. I would now like to introduce your host for today's program. Michael Costa, Executive Vice President, Finance and Chief Accounting Officer. Please go ahead, sir.

Michael Costa

you. Thank

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

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

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

Rick Matros

workers with which with is General today Mike, that to book, everybody a Users Guide. dedication completely all quiet McChrystal's risk a called there me, health everything, the others. and in us. a themselves to our care things again thanks actually for I'd often with Thanks, they're thank start to other assess workforce effectively new with To sacrifice too respond for and out the day-to-day impossible often to when shared essential is for want quote joining courage of difficult We doing and like and Risk, basis. on once Talya and mitigate,

everybody's Let move on labor now that's foremost me because to minds. I on think obviously

pressures really First, I'll start market. saying by by different are labor

can terms is of there I of So avenues any answer something sort trends. in not or say a simple

an so in also in Florida in on states So difficulty having the shortage increases. operators in the labor Northeast more in with for other is hasn't example, as example better far markets. are southern States, California, just our equity a kept have It's behind states up with wage that and Texas been in states the wage labor for than those other states. bad

the So place. all over really is

of We labor the also see our culture operators. and difference a pressure in

that is trying that. well pertains and culture difference and best So quite it that helpful and practices tenants because our affect does fact the to retention that we're could some good part share as with is recruitment as make actually to

X. news back has creating seen have the spending up have have of know the and environment. a on that improving a today, if everybody start and new the who operators Currently mandated is uptake mandate with vaccination they of COVID do and do receiving effected those the and but I work CDC don't XX% OSHA safer have workforce and our with come level operators environment January Our less some will as stressed optimism not the so for into holidays

be vaccinated health January all and allowance any have testing be others for as being absence vaccinated. going to as to of well by will the in not workers care X, there So is

terms workforce vaccinated. is of under now just of operators, the amongst workforce our XX% the In

since the in nice It's average a above industry the really that's last So average, quarter. improvement above and general. certainly national

have that. haven't a pretty fear that mandated employees So just all for a have would been environment. good actually still that a operators we that recruiting that I do too supported of simply tool going is that use if loss mandate. is employees those But the mandated about there say because that the to as and lose are have hasn't aware to they able really they the a we data many feel many you they're safer

now, do have are not. And issues have going understand they impediment occupancy we think We increases mandate it So, primary the that as much nevertheless tenants in to that's whether That concerns these agency labor recovery. additional the said, the such the as to push of to just but costs a incurring have thing. temporary order they're labor to pace operated for operators like possible. continue in our to good as

and have and not labor we in we're we favor that is something relationships other more that's to So clearly commentators. those have don't they'd Again, going we on they that words, keep spend demand because rather labor revenue tenants admit saying, in just are there. because shortages, the as

effective to been again, sequestration for be with optimism on have In days extended year-end of is funding Public move Medicare the extended XXXX. of extended we investments Emergency terms increase another COVID-XX now. again funding Health through I'll first and quarter to will end has FMAP that Act XX

be pipeline very investment active. Our to continues

date of and that to the addiction We first operators capital closing that's partner. on approximately still cash RCA be There million. have a feel that important trance good a of weighted want XX% really the pipeline, And strong load X.XX%. aren't announce with we've We deal we did average a of not in felt note, the to that billion, million nursing, the our $X yield much the skilled of I $X approximately yet $XXX $XXX investments potential closed we was many about. it excess space. billion To good are in

and there also are was who forward. be relative we that those to So going RCA to intent commitment commitment to our the the sector to want for

how I about both good put of had will offerings striking both debt on us in funding know offering but search and So our really we optionality go-forward balance it the that historically. the did, a more equity two it quick when comment sheet haven't with to balance level and we that comes shape the the sheet. talk a the basis that, acquisitions

is on operations, Moving sequential XXXX quarter but of a specifically was and significant, is rent drop, wasn't which excluding XXXX of down due XX-month being drop the on basis higher to nevertheless a labor costs. quarterly the trailing second second sequentially to skilled on primarily basis, a replaced with PRF coverage due quarter sequential standalone to

recently, occupancy, weeks since COVID which actually then and she'll the will And is turnaround increased forever Avamere, low skilled opening now XXX of throughout to on Avamere has that in Q&A. I turn go long portfolio. units by it be and over their and to and some to the then biggest than showing around on even basis units longer basis Talya a summer, Avamere late XXX invest should work them time with certainly Our we'll it over though Talya? improvement has COVID of the occupancy Harold, points fallen that a term December basis to will up turn getting as but points occupancy we been lost momentum two the lower setting

Talya Nevo-Hacohen

We see from slowed variant third on labor and infections speed for late In latter rise of the Rick. the to safety. quarter the you, the continue senior signs recovery third clear operators Nationwide of demand Senior the with recovery housing that believe wholly Managed during build Thank coupled the began and will the COVID-XX the first in Sabra's portfolio mitigate compensation, the owned shortages quarter. part the that through on initiatives Housing in culture labor quarter. shortages of Delta

to stable surges XX% assisted and net excluding excluding remained track and by has flat today, point sequentially remains over labor quarter, compared the the XX.X% past third As the the occupancy in independent wholly-owned quarters in recovery part just worry. numbers X,XXX despite declined $XXX,XXX by prior we to with managed as XX.X%, both The basis increase here RevPAR the income are prior X.X% on was quarter, no stand communities operating the quarter. compared decreased XXX Cash because follows; grant to across but the received X,XXX, was with income COVID of of occupancy the essentially the income the second non-stabilized margin shortage over a quarter. grant for pandemic. in solution headline the XXXX portfolio of quarter the non-stabilized RevPAR from living in communities in quarters five prior in third feels

the XX% including September managed picking Operating normalizing in quarter, are during with recover are XXXX move wholly-owned expenses funds, the portfolio velocity Communities cash at The wholly-owned margin rates as net skewed as decreased across September and portfolio contract to memory beginning operating in from grant to conversion Enlivant assisted costs. volume variant in effect income labor the and XX% XXXX. care the declined leads well the living the because variant increased higher moving Delta Sabra's the above properties than seeing up. Across and in delayed X.X%. Excluding of in slightly third quarter and mostly have move-outs. we higher Delta move-outs some levels of X.X% appears only to

at points second June XXX basis September points. July XXXX by From XXXX shortage third increased more living. occupancy was rebuild August to above quarter end increased contract occupancy XX communities occupancy This and driven in began by the XXX occupancy rebuilding therefore, XXXX memory of June September, on our staff, impact increased occupancy increased second X basis half more quarter. From XX.X% and element independent the of the has to utilization have basis the managed than the from the which recovery wholly-owned we acuity occupancy. labor become to in Higher low the August trend of squarely remains higher recovery. cost to to focus XXX to XXXX occupancy XXXX points points. From March economic of XXXX have to portfolio have gaining basis in points. XX.X%. the path the While portfolio seen occupancy July of in critical a had March living order end of care basis in assisted contract through Enlivant assisted labor that to continued points XXX basis wholly-owned living mid-October labor in much Sabra's revenue, From

statistics portfolio occupancy comparison recovery prior that the housing living in communities. supplemental this the distribution periods points in a quarter immediately materials, which in and of continued net Sabra's following quarter. compared show to with to quarter third immediately portfolio shown and prior arrears, senior one the basis leased the XXX we then currently memory assisted vaccine So, information includes the care increasing the has Note

experienced up portfolio move-outs portfolio August basis driven September. with will made, expanded Assisted then of quarter. basis I grew grew has not portfolio offset increase quarter-over-quarter which retirement XXXX income Sabra's catch quarter change XXX NOI Managed our revenue to independent and its incurred compressed excluding is and NOI less Harold the living factor. that more for to of to to points. wholly-owned and was XXXX Andrews, July occupancy the the XXXX quarter-over-quarter to over Sabra's Cash assisted continue While turn call to portfolio June the attributable we occupancy this second margin From margin increased And XXXX Living Officer. X.X% and an see occupancy revenue increased occupancy meaningful half wholly-owned the the About to availability X.X%, pandemic two occupancy the of in that Independent and and of XX.X% higher XX and of in recovery XX% wholly-owned July in by compared X.X% pressure flat, loss quarter-over-quarter. of a labor than excluding deferred Financial the to care Canadian points duration grants gains Cash our seen we by on was cost been from labor at XX.X% Chief gradual. in portfolio income. need cost have in been more our Throughout pandemic, this contract August while September due grew homes Living maintenance with some living X% grant Enlivant from have is in that our

Harold Andrews

I'll activity guidance. balance numbers Talya. the briefly discuss our a and quick recent XXXX QX, Thanks, overview for discuss sheet give

make me about the accounting remarks let couple so, Avamere doing of in Before change for a lease.

in XX, these Washington a Colorado, labor XXXX September and in the cash limitations months As admission in we experienced constraints our from has COVID-XX noted census update, several states, as from with together over result a Avamere past Oregon, increased spike declines business as of in flow pressure. cases as well

credit in rent and obligations a satisfy to XXXX cash these paid. their been due, XXXX rent of constraints. December is due beginning of flow XXXX expected the help We be of letter to full with obligations amounts the rents credit September This the to to to through the letter we amount have expect using cover of their of end portion

with even that of in pickup units lease encouraging high since continue the the concluded have COVID-specific no However, the the we they Oregon, opening census accrual longer accounting for on seen basis. in threshold to meets

XXXX. reminder, straight-line to a we payments the of more accounting not more The basis. life will is or an it XX% XX% must that we the As of conclude lease Avamere mature that collect until due lease all on does probable accrual than continued over

remaining historically the that some operations, adjustment may the necessary. in optimal Given level rent future EBITDA the level term XX-year of stabilized the concluded less future and for performance the for these this of lease uncertainty we than be coverage

made will during expect on rent related wrote $XX.X lease. additional receivable this this We We determination expectations. future off not as begin sometime to XXXX balances of consequently clarity straight-line performance we until be million to stabilized get

$XX.X the this associated assets market acceleration lease have amortization balance. sheet. the or QX the Avamere with of or intangible all results. million balance And lease may to on our Middle in East continue onto of write-off We a amendment above Any now portion result on future

$XX.X revenues, million total months these $XXX.X and Included of XXXX, write-off three of rent $XX.X respectively. straight-line is and amounts ended revenues, XX, previously. the million, in the million we For $XX.X receivables million of noted NOI September rental recorded

as million, a amount, the to of million quarter and total Excluding this NOI XXXX. million compared million, revenues, was rental $XXX.X respectively, $XXX.X $XXX.X million revenues $XXX.X $XXX.X $XXX.X million second and and for

housing was $XXX,XXX we there. were NOI Managed venture our the changes Senior write-off portfolio there to joint than that essentially Avamere in each Housing our due live-in senior us no grant some portfolio million decreased government just higher receive NOI notable that primarily to direction and While in $X.X million in being normalizing flat landed from fact QX, after managed our $X.X the to containing than to impact was $X.X compared the the this million costs quarter, discussed of income $X.X to Talya made the quarter well primarily last labor Enlivant. COVID-XX one-time prepared Enlivant $XXX,XXX as as quarter in NOI $X.X second as NOI higher venture million, higher from joint remarks. and her expenses quarter second is payments joint due which million the support to venture

from the from COVID-XX Revenues the for expenses. venture quarter, by $X.X X.X% of compared decreased XX.X% to NOI amount, this joint quarter increased Excluding higher sequentially by by offset joint second venture, due occupancy the the million to $X.X increased million. in labor to

cash XXXX. the of XXXX. totaled On compared the million non-cash million stock-based AFFO million second compensation $X.XX $X.X cost receivable quarter FFO share in to quarter, million the Sabra, and AFFO the activity Interest compared for $X.X for FFO X.X% write-off. for compares per quarter FFO normalized of $XX.X The NOI were line million normalized expectations. expense cost share. to quarter This million million straight second effectively to totaled the to quarter million expense per Recurring G&A and of exclude XXXX. side from of quarter. AFFO unchanged $XX.X This quarter million of for million was the normalized $XX.X expense line the is in or $XX.X with in $X.XX quarter. $XX.X in and quarter G&A from second the excludes for $X.X of of the cost $X.XX or share. our expenses second the in Avamere or of was share $X.X and or primarily of result the normalized revenues the normalized second which $XX.X per included million this remaining FFO G&A certain to was per of FFO of $X.XX $XX.X compares million $X.X

points For used outstanding $XXX The $X.XX in unsecured quarter were million balance of $XX.X notes cost fund $XXX pro mortgage continue notes loan. X.X% of to Under metrics improve income our basis million common of by subsequent or This XX redemption our occurred XXXX unsecured dollar September maturity a to million $XXX of by all which the loans Again, all to issuance all debt the follows, allowed compliance attributable proceeds repay XX, senior recorded per forma net which XXXX. net the to for X.X%. average with and of strong RCA reduced share. sheet, quarter, issued us portion debt weighted notes, our we X. years senior due X.X% debt XXXX, credit of were in have due on of to we to stockholders we years are seven X.X based October as term of XXXX and the end our to redeem our and to as US and of million our covenants permanent

total times, value leverage X.X value just XX%, secured to X.XX asset X%. and to debt asset Our debt asset XXX% coverage charge interest times, times, debt fixed of value X.XX unencumbered coverage unsecured

close public our common availability our per to proceeds have $XXX in very and $XX.XX the XXXX, X.X% continue and of October of approximately we $X.X price liquidity a as shares before cash On of X.X underwritten were at billion had unsecured giving to issued on notes offering million share XX, We million of redemption a newly effect net strong due XXXX, XX, After September stock line. of senior on completed that we declared received XX, of of an $X.XX position. of November a November of were share a used normalized Board portion stock. The loan. $XXX.X dividend quarterly of of the XXXX, a The fund on represents of cash proceeds payout business common of common mortgage Directors the November XX, paid On our as per per record XXXX to be RCA XX% of of These XXXX. will dividend million. to of of AFFO share. expenses our stockholders X, dividend

a $X.XX per guidance per FFO share, couple guidance. issued comments our normalized normalized of Finally, range reaffirm of for $X.XX We previously to on our share. of $X.XX $X.XX AFFO XXXX to

per issued loss AFFO. Our share full-year for our batters and not that previously affected the of common include XXXX net guidance impact FFO did guidance two diluted

loss is The second and on loss share to the straight and the impact back net share The our fourth $X.XX in impact ahead with line on an quarter of related in write-off, note early redemption share to first in receivable debt on have arriving XXXX are per that is we'll per expected transactions we up and extinguishment which the had with and $X.XX FFO, normalized impact costs a the AFFO net in it $X.XX per at FFO, Q&A. normalized and impact resulted FFO the And that, go added numbers. these AFFO. two the open

Operator

Our from first of Instructions] question SMBC. line [Operator Anderson comes the Richard from

please. question, Your

Richard Anderson

and out good last I call, Thanks this sir, and morning there think so that. your congrats Harold, on is

remind mandate of part X senior Not is housing the not just just is a so, skilled is me, that's that, January on Rick right? the on correct? And that

Rick Matros

businesses So health clear workers, it money I'm that's case the original the I because the senior was was with care that says and mandate and care all less news little this clear on that housing. before, on received not federal health a morning

them carved to housing senior but mandate. recover a that really that out, lot want So, of still I'm correct most is housing senior guess can you're our the that of assuming to

we'll that's I So there, correct. housing operators senior see I more anyway think think

Richard Anderson

Okay.

some future with going what I back I mean, but it's occupancy side, to get out good you're to you with happen? basis points it will to a gain, god some hopefully that bounce that sort assuming has you're going longer-term, nothing and declined for time do to you figure scenario reserve some something? COVID get if take of we what cases would there that not Avamere, do have the XXX maybe the know of to willing, happen little will regularity, is terms all on in occupancy of In nice in the things could that

Rick Matros

Yes.

that about year a coverage material think we way had I prior the it and of so think any is Avamere to know I pandemic, you'll Rich the our of lot of recall So, tenants.

so last problematic period to And more for difficult and time this even within made months out much hitting two just starting them. it a just of that coverage of trying

We that, on conversations all we're held - demonstrated would this actually stabilize, did we but all entire to mean, to at the really but with not I that So see well the up have that don't it's I impact had I breathing the is have company game. little issue inclined related going lot something want just we for did I have once think if course an we more pretty to never to as room, that came over a like we could to time them a of that I mean want is them. the only other on do the numbers and just with know, this you those during we or with a material it really for the late the pandemic, to expect merger things you think bit tenants the you in restructuring like think the tenant of anything that we and things

do next more get material. just of land, something things need a to I We yes, of where kind to inclined they be better won't think again for it them. year a we're but bit sense So stabilize

Richard Anderson

on my that Last the question exit and Enlivant time and me floor TPG from from portfolio? Okay. line the update but to and peers, I'll any to yield actual

Rick Matros

there, to make it processes, a portfolio as I want give greater. sort Not think has get and little their before because bit to just I really, will things thought for I a of here pretty that's But want to opportunity thought careful them. to have think recovering blown valuation been process and much been speak the I run better be full the processes, that their rebounding a they were you really TPG really they more nicely because time wants

it's the until several and going year it not a to to really it's going think after to first buyer, find close. long a guess, regulatory about is the earnest way then of for reasons the in takes start get months however it I to to So take

So I summer. a close at in don't sooner we're it could be anything later than mid-year looking later XXXX, think the on

it it now look the us waiting extent better are doesn't make to kind accrues our to For valuation and difference, is extent-- and they that what really by anyway. that is smart a on think of so to the benefit they

Operator

Our next question the Joseph from Citi. Nick of comes from line

question, please. Your

Nick Joseph

Thanks. to the Avamere longer-term level business December decision intermediate happens of assuming Maybe would following lease, kind the credit beginning runs in but things stabilized, of January, question, maybe recovered that frame, pay in on just up a what allow so are to if them in that rent? the of that out you fully that the letter make recognizing time coverage kind maybe once can of and

Rick Matros

to their the negotiated liquidity of able lot Right of we going really the the with of now, THEY access they use expiration will units okay the credit, help. State as in a to are on we sort process which Oregon of well, think some phones, as of were of we're ability for is of think or the months negotiations help they the show and following to which upfront couple these to to COVID

after term runs now, December. the in So the we're Right even letter in out not concerned sometime credit about of short really

Nick Joseph

helpful. that's Thanks,

position. I you've a to obviously in good think balance repositioned the sheet be

may of today? specific pipeline and capital, cost is equity just that acquisition guess How about pipeline are you on trade $X on execute acquisition of cost billion. I the of the mentioned you ability be thinking shares think to your kind I

Rick Matros

Behavioral can are and we on we're is clearly but million in to I a currently have are out that of So players compete there, housing PEs those our smaller that Clearly, large on we difficult with been and about deals executing on addiction. skilled we stands, $XX the on the the down the that issues is particularly deals those earn some that couple the those of where competitive, finding can senior there some be on this and housing good one really difficult And think far, far things, more what on be and portfolios Talya, taking you or that it's year, more side. at that some are senior as things outs radar some can senior creative so and radar the don't on equity of it we to deals things, of get side, the us competitive things deals with deals, given on allows providers have housing whether get doing know like of if the really focus doing as I we're we like that's concerned the got of anything had. small if missed smaller of deals but because of that? kind smaller done things. hit terms I on

Operator

Our from Sanabria next question comes the line Juan of from BMO Markets. Capital

question please. Your

Juan Sanabria

guys rent has to what just to of trended you a and potentially back portfolios how tenant. us gauge on TXX level Is possible sense try of possible how or degradation sense the could given EBITDAR of pre-COVID today, confidence be get flows much and give of to your to you like give in time. in give not to don't having could it kind largest I Avamere. know time little of the a just over is can a a it cash spend you us is material kind bit cut effect, hoping TX to a more Just if that in

Rick Matros

up of reasons. well, were of up, all rest two trending we're operational were There for were our that taking to because of trending Yes, home like actually were and tenants. they just because they they trending just the PDPM, some initiatives well, up COVID prior because trending up

about think through of to December they upswing. really the in improved was pandemic you if in So low XX.X% made their And occupancy going into XXXX they had on - XX the are so and months XX%, of actually it summer. the or point it about they

actually and happening just and So in the and these XX.X% that unrelated that anywhere that of really the they Oregon some to they XX%. seen just this gains was Washington dropped how else restrictions haven't sort and have and things pretty reaction then decent was much really from country XX%, we had to you COVID have severe admission under

lower So points XXX they over in December. basis are than low

a just that until for them really loop. then, So Up holding serve. threw they were

So, time, I in need hopefully to they occupancy think if the these in back. COVID pop and get units the

rely whole to but hold of on through our the focus able sort coverage is So pandemic they events. serve they until recent before, were

because so looking why more serve say bumps go be we're they And to and forward because going final road. in the breathing bit have always to on material a able hold to little going that just make basis a we some when determination be not it's room that's a we they're were to

Juan Sanabria

Any color get QX where do big like I level, a to basis just get keep healthy could can on be coverages and sense the what they rent the at to bad you them cut of bit coverage? is that a kind get is? think healthy how just is it

Rick Matros

I the don't to now. want phone on with right Avamere negotiate

Juan Sanabria

Okay, fair enough.

Okay.

Rick Matros

So we'll get there.

so times, the adjustment that like we're I not not them above around happen. to trending going and they than to bit to one be to before think takes want that, an were little slightly give that with of them time higher the is pandemic not you PDPM X.X and upwards that's before going them just a but sort

Juan Sanabria

cost to differently, how expect or incremental where pressures, to regards flow Okay. housing given overall, back the the NOI about getting with kind occupancy just were And to they the labor through you the of from do to do said think previous business you what then cost margins pandemic? seniors given pressures,

Talya Nevo-Hacohen

a math There's lot goes Well, I into this. of that think.

to the they line, where the we're you've and labor So there is everywhere and But in, manage, really labor that are what came entire half are, coming leasing can substantial. written manage operators cost whom the a I And from residents, Houston were labor got of annual of cover more is occupancy is at stay spoke the other our and on rate and new now sense leases on of in really increases. going have seeing would QE spreads. put to labor that it, just are some can hear there It in which in what the building these level not words what In other length consistently type portion, we costs from hearing NIC the in if expect is what the to they passing back particularly to words, to order for you've increase X% rate got operators portion sense, through of we of rents. rates depend buildings. through place positive thinking revenue the rate be a than we and and Conference rent among costs, the definitely increases, to is higher a and with on being sort something and day those the call of

that. That's to going there but why continued are the to have the now. entire top that line just math lot have ability occupancy be the of there will of function, labor here, news, a increase. rate do is offset by best come an I of the right eat to I not good that's that's cost How So much of said, able to appears That going have a but out operators the not is suggests be be their and margin.

Rick Matros

point deep is some competitors are that other discounts our the of like operators make, are. doing The I would one

tell that they're they They sacrificing -- even that up. in knowing on see up to the that's really held the back actually that feedback and all you build you without able the put we supplemental occupancy So to get occupancy rates well. rates

Juan Sanabria

that in seeing is is versus up kind the or best? that customers to been are that's, rates you're flat So more for moving that because street acute, leaves that's holding mean typically just think new but I confirm that of case, hasn't seeing you historically at that and spreads I positive the new lease place

Talya Nevo-Hacohen

are rates with providing spoke. I'm in sure, asking I are that the discounts up moving There occupancy. are operators pull general, certainly the to whom operators

would. occupancy from XXXX. we're I'd to as can compared good demand but that increases I the as see pre-pandemic increases least our within with on move-ins at increases occupancy pent-up conversions higher well the steady significant period, portfolio characterize You versus we're seeing as seeing, in traction

the positive on everything So, so at indicates there and is that least momentum continuing lease far. is

been rates more into actually So the to than sense, can start of pre-pandemic. typical to like the a is more X% you X% pushed there sort that is push has

can say more. operator seeing do we're they hearing Now

Rick Matros

bit And going back a just change little back Avamere. on

coming X mention funds is other in haven't the I as Phase that forgot The yet thing well. to

all units Phase rent to have that receiving after access to So which done. COVID new is the in were addition the to able goes VLC as well money comfort they of the X funds with through our

Operator

from comes Baird. the question next Amanda Our of Sweitzer from line

please. Your question

Amanda Sweitzer

deferral is September. behind you any outlook you more deferrals looks additional morning. the already amounts? of for then another remind near-term outside on the good there in request rent deferred granted security information tenant Avamere Can Thanks, and small It like

Rick Matros

just buy secured We've is little behind nature. the anticipated really nothing there them just always short-term in bit we've to that other One a time. but of them, done it things long-term only

been it's don't in we and else there right horizon. really nominal anything So see the

Amanda Sweitzer

Okay.

rent expect in wouldn't meaningful So October, in tick? of deferrals you a terms up

Rick Matros

No.

Amanda Sweitzer

terms watching nursing encouraging? any incremental find of skilled there our are support, in you're then And state additional initiatives

Rick Matros

Medicaid There specific aren't are are from the now shape state on pretty states right the a of most perspective. initiative, good flush side, really budget the there in but

because as So, to first money but more start and the increases, directly discussions positive there about part been to of there only little FMAP get is next states it a bit to now we annual into and rate they work operators. more having allocated about has with half skilled year

as states a So to are there that holding a of lot chunk well. on there the is money of

initiatives. specific no So

saw other is The we that Connecticut that we a more Medicaid try negotiations if program use as see thing we in the to some wages anticipate pass-through. increase like may to and though

with it's because negotiations seen of be number easier that none state its directly We've California has employees a easier. say union employees other on such. allow programs pass familiar, to times that of it for the Medicaid but states call, was program in the get industry can are are the to will XX it's as the that's happen the to operators. some and of It increases by all pass-through worked easy of negotiate a for and audited who and negotiation in those don't that. Connecticut I there it in Medicaid have and done the So as wage for most through of state and pocketed rate increase

negotiations as to we would go So more expect be I of into there XXXX. kind those of

Operator

from the line of Steven Barclays. question Our next from Valiquette comes

Your question please.

Steve Valiquette

everyone. Thanks. Hello,

just guess, ERS, for for the really models not get a labor pandemic, just the whether at also labor post-acute versus hospital or question when skilled same around found where competition or any competition be on on may different that health which SNF home overall is gotten mixed the there provider for also and skilled the your is stages across on So I'm for in sector business or of to facilities in acute of skilled I the care skilled curious sector Thanks post-acute type that. particular overlap same not of type care we've labor entire labor versus think spectrum, thoughts the part competing the home the environment. signals that thoughts across rehab that. health of some about you it I inpatient nursing SNFs

Rick Matros

high most is I space. think competition Yes, of acuity on post-acute the the

handful skilled this competitive So because home think labor. we health, and home housing competitive LTACs It or isn't about assistants with skilled states are, IRS simply but about labor, certified not states. senior are on IRFs requirement kind have talk I in health It's the not presence. and nursing only more they the LTACs always a level is as the when but on in looking it staffing as that you're they even thinking of IRS big is presence, big have on at the same a in of LTACs, a lot

are States. they in think best Northern I

left the that how and to the the for I think concern I just care that workforce and larger people haven't the because So workers benefits, there back and shortages think really the back think larger it come concern come is pandemic that related a health many and workforce. and before, back we we've even like that. workforce much seen that's ever seen because whether and will in there's have just lot that the where a laundry and housekeeping areas time, AL. folks optimism dietary I of shortages That's in schooling skilled that having that's is of career that employees more that break, particularly time the taking other home after things like there of and out so the in of and something skilled or affects about versus it there any come everybody affects will obviously they'll people facility those It's since his been you have number tell settings has a

Steve Valiquette

Thank Okay. you. That's definitely the helpful. color. Appreciate

Rick Matros

Yes.

the but the the it was out, and better workforce would there the because have of peak again, that's place optimism look vaccinated may really lot because of the the they a I end the at at trends, that out point thing people employees burn than percentage so get things going get if of a burn through then with of like the trends, turned just within peak vaccine really out you other and was was the of it to and the why lot at got worse you will started XXXX look seen that. of these that several out everybody now The worse some chose peaked but prior not months, on the starts last get issues of of with all part it as better, to

to think that I will that hopeful people why and the at folks time facility. once back that's to least vaccinated somewhat So in was are is have facilities once off some take work chance that come particularly the a they everybody

Operator

next Our Omotayo comes from the Suisse. of Okusanya question Credit line from

question Your please.

Omotayo Okusanya

any very FMAP could sequestration but and give to smooth hearing you in also really Could the following PDPM good three the also things on things and is place, side, anything that the mean is question curious what you color regards to from get left of end, the guys of in reimbursement the guys and Head about $XX CMS? billion some new of emergency by you're My gelling regards into Act, that? from I'm money CARES one some more the potential in I fund suddenly those review

Rick Matros

to try skilling to hopefully it's on discussions so that as that already the trade the in some that not place, place a an making make at skilling and got good and permanent. else it think will of and given been think space the represents association thought that Yes, the initiative absence there saw acute certainly be on benefit big they've in mean hopefully, part it, the I with everything in sort everybody impact issue, And with we've margins well. of of the I financial clearly helps but a permanent. shot margins I

definitely will So on that. focus a be keen

quite that's if that is $X side the there X, think money as I left after there everything would And didn't need Phase that. acute fund going nothing there's in money less believes that providers, there optimism in into the those they're there, particularly going negotiate one is given if that's there the it been stretches after a it on that funds, was the fund, been optimism it. I new think in some so be because that happen, from out wouldn't funds no returned billion much about the but money traditional and bit all is and there On fund in longer, a

less, just maybe something a but your So I one? little $XX like think that, what on, it's third decent million a be somewhere it could pretty and it's then was rounding, million, somewhere I'm or around number $XX around, bit

Omotayo Okusanya

PDPM.

Rick Matros

think Okay. PDPM, any being review right discussed to has yes, now I nothing to about PDPM. change

good use really PDPM things is XXXX, to assess we peaked to it not. would given with don't out looked like here to to base recovering a try to XXXX because but felt that's I or everybody I good try fell if expectations, think relative here in to base how know be tough assess like was if a December everybody the maybe be initially surge, to going

us be to the So just to head really new going any getting CMS than who believe We PDPM leadership. stay supported with that industry have that don't any is tuned the reason less that one. the reasonable position on previous on

Omotayo Okusanya

Thank you.

Operator

Green of the from Street. Pulaski next Our line comes from John question

please. question Your

John Pulaski

details American time. for trended deterioration the care down months? or thanks Great, it occupancy there provide you recent North today? in has the up Could where some Health sequential And in around coverage,

Rick Matros

operators Their picked of occupancy just one recovering. in falling the quarter in best doing two well. up. They skilled off our getting that's quarter is of actually blend of of Yes, a another mix the matter business. They're any have

North America. have feel we We issues. yes, So about don't any good

don't were there been I equity there there there quarters say dropping coming quarter of to in want issue has California. pretty on. aren't off just got So California new with wage less, the and labor has are, And timing but good some pressures State

as I are mentioned in than my in less of there remarks issues opening So a states. other number the

John Pulaski

geography other Is just on changes some levels, point. increasing. these decline operators in list. diverging and your but Genesis I'm are kind outcomes top looking just down XX maybe and Okay, that coverage sequentially, of or you see the biggest operator the North driver divergent Avamere stable American

factors are the what So that one two divergence biggest are or driving this operators? across

Rick Matros

Right.

So the dropping two consistent in factor XXXX on. off QX as were dropping XXXX QX

PRS a consistent quarter. being the second decrease current was in The recorded in factor

very don't they've geography, The their absolutely facilities facilities third Genesis built so real but just coverage. and have factor a facilities, labor we those buildings, really pressures that in impacted was the that with we had X and left many Genesis is

coverage. labor comes when everything, to the yes, labor So now, geography kind at is degree which of experiencing it are you to right least to pressures,

John Pulaski

I last estimate, to you just one but from some hold maybe a won't Yes. And me. point thoughts.

portfolio. of like these So now, across is of just concept through what look occupancy if I'm kind XX-month finally lagged EBITDAR with improve, flow right impact struggling from but a resets now. to of trailing numbers the continue recent labor such full a coverage year the

Rick Matros

coverage extent the before of new to normal could be X.X to like like EBITDA if season labor would to abate much unskilled. we EBITDAR but coverage pressures around the in aggregate we aggregate a there were the XXX north see and our that the pandemic, the pretty in date, the we So

you that anything beds seen. one to number to mean, dynamics the fully the to that, of, going like space that it about occupied demographics, are that right going get that's got So continues which all remains I to We accelerate just we're work pandemic too The just be decade. the there of would prior push of pandemic don't down skilled to yes, primarily that was you've is because to aware up. occupancy decline. it's the to middle projected by or The now believe actually be and times a basically have that, many

so occupancy perspective. the And industry in been to from decades the it's really that's going place hasn't an put

bit I labor going side So, well. more going issue to the because labor the it's labor help that's be pay able and that's to help pressure people to as quite think a to going on are for

yes. So,

call to to maybe long-haul the is significant some to and little to of of be reductions. as dangerous that long-term it's restructurings point rent but going the bit do a wider, all going to get over coverage was us not So a

Operator

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

question Your please.

Daniel Bernstein

wanted But to the morning employees or say good I any are to mandate. West afternoon the potentially go number Coast. you I I question back only guess a the to or the lose. vaccinated your, When good I you of guess could like vaccine large had, percent that it, I you operators are it's of seems guess XX% it

any So standpoint, actually if wage what or to in employee operator retain other that conjunction vaccine and mechanisms you some maybe they put have mandate, did a from in the with increases employees. was your where specific examples the attrition

is what we Just of grasp that a risk lot see will trying within of a attrition get the nursing. employee to better skilled

Rick Matros

Right.

they some to a didn't it. have and digit number they are members smaller Atria, Board our low Genesis, saw Holiday, of wages attrition raise Enlivant, have single do we of So operators, Juniper to

the all some which issue from So it's that a we've be the pretty it other talked operators but that consistent of of going was operators of hasn't bigger been. jumping is the just all operators feel smaller on Literally you holding to those you. and like really to with back some sort mandate,

what So the we've operators. that's really consistently amongst seen

So, attrition. it. digit That's call it to low mid-single

Daniel Bernstein

real pipeline acquisitions the or Okay. loans the $X of are mortgages, a RCA more doing said, you like then and the kind billion short quick you looking structured. real estate on And of more at term

Talya Nevo-Hacohen

somewhat RCA unique. loan was The

typical know past not hold not that we've in a it's As to going the is you be and done like that us. we transaction for really, something

Operator

Dennerlein Joshua from for from of Bank line America. of question the comes final today Our

please. Your question

Joshua Dennerlein

question in senior talked On about and nursing. the Rick. skilled occupancy housing past In the you've recovery the

you're curious, about your and of pre-pandemic how when back we days? get thoughts factor any kind Just latest to on these and labor level play that thinking does

Rick Matros

of by we the Yes, senior in that side. housing should be so on end the pretty been saying have good XXXX, shape. I

we I on we like end not the by going happen surge, prior Senior first be and feel pressures obviously the XXXX I felt still is skilled quarter that the that and of think put on the way. to Delta there that. more housing, labor to stress have

of end on So about days, right skilled the our now, year. also best it's guess the

So more demand, even in they think because place other though good same factors, there at up maybe all a time. the both turns the as I out, about up skilled it a of pent-up side on wind is these relatively lot

Operator

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

Rick Matros

and up know at you know Thanks there. we're joining for follow-up of for We're much. today. all all very I available Thanks as folks seeing bunch at virtually NAREIT. us always least a

forward those having safe. we a to having great So to meetings Have discussions. and and look stay day additional

Operator

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

disconnect. now day. You may Good