Q1 2020 Earnings Call
[music].
Good day and welcome to the New Senior investment group first quarter Twentytwenty Conference call, all participants will be and listen only remote should you need assistance. Please signal a conference, especially must by pressing the starkey followed by zero. After today's presentation, there will be an opportune.
Need to ask questions asking a question you may Bright Star then one on your Touchtone phone to withdraw your question. Please press start then to please note today's event is being recorded Oh now like during the conference over to Jane Route. Please chrissie.
Good morning, and welcome to new seniors, earning call for the first quarter of 2020 with me today are season get N.R.C., Yeah for Optiquel, P.D.P., a finance and accounting and worry Marino General counsel.
We're trying to call over to do then I'd like to highlight this morning press release company presentation are quarterly supplement and the reconciliations the gap and non got financial measures can be found on our website I knew senior I envy dot com.
Before we began please note that our discussion basically focus on non got measured unless otherwise indicated.
During a call.
Forward looking statements that defined in the private security, but occasions or format 1995, no forward looking statements can be guaranteed an actual or they'll pay different materially from those projected.
What we're looking statements made on the call she'd be evaluated together with the red and uncertainties that affect our business, particularly the display the risk factors at an other disclosures in our most recent annual quarterly reports filed with the L.P.C. putting in the form 10, q. that that we will be filing later today.
We undertake no obligation to publicly update or any forward looking statements, whether the result of new information feature events or otherwise.
And now I'd like to trying to call over to our Theo you didn't get it.
Right Okay.
Good morning.
Joining new seniors are his call for the first quarter of 2020.
The World is obviously changed pretty significantly and just two months since our last time on February 27.
Well. This is our first <unk>, we know people are focus understanding what's happened since we began to see the impact of the cobin 19 pandemic and how we're thinking about things as we move through these extremely challenging.
Let me start by saying that as we all know this crisis has severely impacted the entire world with population, including the seniors that our communities are being disproportionately impacted.
Or operators have taken several critical steps to protect the health and safety of the residents in and employees within our communities.
Well necessary. We noted these important measures have had and will continue to have an impact on off and a half a result.
It's difficult to predict how long the pandemic well in fact, our communities and whenever I'm really well start what form okay.
As a result today, we announced that our board of directors made it difficult but.
Then to decrease our dividend for the first quarter of 2025, 50% six and a half cents per share.
This was not an easy decision, but then I'm 30 time, we believe that we need to do everything we can to preserve capital and put the company and a solid position.
In 2019, we accomplish accomplish a number of significant achievements transform the company we sold our underperforming assisted living portfolio, we repeat over 360 million of that and we completed nearly 400 million new financing, resulting in lowered that costs and extended that maturity.
As a result of these and other initiatives, we had significantly improve the quality of our overall portfolio and the financial profile the company prior to the onset of the cold in 19 Panda.
Well. These are certainly very difficult time, we believe we are well prepared weather the storm.
Before I go into more detail about the impact of the <unk>, probably 90, our business. Let me remind you that the full year 2020 guidance every provided in February did not factor in any disruption to the company's business from the call the tandem.
Outside today, we are with dry how previously provided for your 2020 guide.
It remains to really to estimate the complete a covert 19 on how many sees a result.
Our focus throughout all of this has been to control the things that we control and to be a transparent as we possibly can be recognizing that we are trying to incorporate new data every day and the situation are named very fluid.
And the onset of the club in 19 pandemic, we have shared periodic updates with our stakeholders in order to provide as much information as we can.
Going forward, we intend to continue to provide those up.
Along the line in addition to issue in our first quarter <unk>. This morning, we posted a presentation on our website.
The presentation cover threepi areas, which <unk>.
Burst. It provides a brief overview <unk> of our company and the composition of our portfolio as well as an observation on the larger demographic trends in your house.
I won't spend a lot of time on that my comments, but I encourage you to review as I think it provide some good perspective on where we sit within the senior housing industry and how compelling the long term fundamentals remain.
Second it provides the memories on how our operators have responded to the pandemic, including what we've seen within our communities and how are operators are preparing to move forward.
And third it provides some initial observation on the financial impact that coping 19 had had on our financial results and some expectation for moving forward.
As a quick reminder, today or portfolios comprised of 102 independent living properties and one CCRC property, which are managed by four different operators.
We have close to 11000 residents across our communities and are neither staff at approximately 3300, if those yet.
For US 2019 was a transformational year and 2020 was off to a strong start.
However in early March as it became clear that open 19 was quickly spreading anyway are operators began to take steps modified and enhance their existing infectious disease protocol.
Things evolve rapidly and by mid March all of our operator had implemented significant measures, including restricting access to non essential does not a pendulum visitors securing additional P.B. and supplies closing all Camille dining services canceling all group activities implementing quarantines, we're all residue.
And performing daily temperature tax for all residents and stuff.
As an owner of independent living properties, it's important to remind everyone that are operators do not provide health care services within our communities.
And as a result, the healthcare needs of the rather than within our communities tend to be slightly lower.
In addition, the average age of our resident is typically slightly younger than N. assisted living.
In general if the residents in our communities are accustomed to having more independent and frequently common go from the communities.
Dynamic created a unique set of challenges for our operators and the measures taken back then while they now seen commenting obvious after the implementation of all the shelter and play it and stay at home ordered across the country in early in mid March they represented a significant shit and the daily life for the residents in our communities.
Are operator, so difficult, but we believe necessary steps to protect the residents in the staffing our communities.
And the restrictions that they implemented are still in place across our portfolio.
We know that these necessary action have already and will continue to result in both lower move and an increase expenses.
At this point all of our communities have remained fully operational the started the club in 19 pandemic.
Did they are operators have reported a total of 141 cases, including 101 resident and 40 associates across 16 properties.
The incidence rates have not been uniform across our portfolio.
Oh, the hundred <unk> more than half 58 are concentrated at our large CCRC located in downtown Philadelphia area has been significantly impacted by the pandemic.
That building has approximately 350 residents and 330 associated with a large community and have a lot of stop moving throughout the building given the levels of care.
On the other hand holiday or largest operating partner, who manages 98 of our hundred three community has reported 33 positive ricin cases today, representing 0.3% uphold rather than.
Since holiday in independent living operator, they don't provide health care services would you gentlemen result in lower staff count by building and fewer people coming and going through their building.
We don't take any of these numbers lightly and we do expect that the numbers will go up as a buyer spread and more testing becomes available.
That's sad are operators are working to implement plans to safely lip certain restrictions that our community.
In a phased approach I think it's important to know that due to the high with nature of the residents in our communities are we expect that many the protocols in place will continue for some time, even at federal state and local stay at home shelter and played and social distancing ordered a relaxed overtime.
Are operator space, a host of challenges that as they begin phillip restriction, including allowing physical two words and increasing the volume of new move n. implementing a measured approach to allow non essential visitors back into the communities.
Allowing residents to enjoy communal dining again, and allowing <unk> <unk> activities to read them.
We know that many of these these services are an essential part of the physical and mental wellbeing of the residents in our communities and we are focused on working with our operators to ensure that the safety of our residents and associates remains a top priority.
Along those lines were actively working with our operators to roll out strategies around testing, including tapping bernie rather than existing rather than an employee.
Now trying to to cope with 19 can't turning to how the club in 19 pandemic has impacted our financial results.
First of all the Scott occupancy and then I'll pack on expenses.
On the on the side due to enlarge card the restrictions on tours and move in that our communities and the second half of March total portfolio occupancy declined to 130 basis point from 88.7% on February 29% to 87.4% on March 31st.
April was the first oh must be impacted by the pandemic.
Ending occupancy decline another hundred and 20 basis points from 87.4% on March 31st% to 86.2% on April 30th.
Importantly, we do have a number of individuals that are scheduled to move into our communities and have pushed out there move in days and we also have new residents that are planning to move in.
So while there's no doubt this pandemic is having a significant impact on portfolio occupancy there continues to be demand for the product.
Also what we have certainly seen leaves in moving volume trend lower than historical averages. We've also seen voluntary move out come down.
As an example, and eat role move outward on down 9% versus January and February averages, which have help mitigate some of the occupancy declined from you remove and.
All that being said as we move forward, we expect to experience additional occupancy decline do that due to the continuation of the various measures taken to stem the spread of the buyers within our communities.
On the expense side <unk> operating expenses have increased the onset of the pandemic as a result of enhance safety protocol, which include the cost for acquisition of personal protective equipment additional supplies enhance cleaning and the need for additional labor.
And eat wrote the first almost to be impacted operating expenses were approximately 5% versus what we had originally budgeted for the month.
We expect these increase expenses to be partially offset by reduce burial expenses, primarily across marketing and meeting meeting and as a result of lower move and reduce occupancy level.
It's important to know that while we have seen labor expensive increase.
I'll operators do not provide health care services, we have not seen as significant an increase in labor costs as compared to assisted living operators.
As we move forward, we expect that operating expenses will remain elevated other operators continue to implement protective measures within the community.
Importantly, yeah. This is more expensive could vary by community and could be impacted other operators partner to safely lifter restriction.
Well, it's too early to estimate the complete impact of the cobin pandemic on our financial results, we do want to provide as much perspective as we can.
If you look at April alone the first of all month to be impacted by the pandemic. We are currently estimating the N.Y. for the month will be down approximately eight to 10 per cent versus April 2019.
For illustrative purposes. We have also provided some estimates as to what the monthly impact could be while we're managing through the pandemic.
If we assume monthly occupancy is down an additional 100 to 150 basis points. Each month consistent with April that would result in total occupancy decline a 300 400 based at point for the second quarter compared to ending occupancy on March 31st.
And if operating expenses are up five to 10 per cent versus budget, each month, which is slightly higher than operating expenses were up in April that could result in N.Y. being down 10% to 15% and the second quarter of 2020 versus the second quarter 2019.
While these aren't perfect estimate we wanted to provide something what we're seeing and helping could play out in the second quarter.
The ultimate impact of the club in 19 pandemic will depend on a variety factors and it's too soon to say with certainty what will happen, but as we move forward and have better information. We will work to continue to keep you updated.
<unk>.
Want to quickly banks are operating partners and the staff at our communities.
I have been overwhelmed by the commitment and the leadership that are operators have shown during this difficult time.
This is truly an extraordinary time to be serving senior and we can't think them enough for the exceptional care in service. They have provided for the residents in our communities.
I also I think our team at new senior we're a relatively small team. We're also a tight knit group that happens to be headquartered in New York City.
Like many others around the world. This pandemic had set up personally and despite all the stress and uncertainty. They have worked tirelessly over the last couple of month.
I want to thank them for their hard work their dedication and their flexibility as we have worked to navigate our way through that.
And lastly on I think our investors we notice it's been hard on everyone and we want to thank you for sticking with.
We continue to believe that the long term value a senior housing and independent living in particular remains intact.
We also believe in the strength and foundation of our company.
That's the theory measures that we've taken to battle Tobin 19, well no doubt, having your turn impact on our financial results, but we also believe they will highlight the importance of senior housing and will strengthen our position as we move forward.
With that let me turn it over to Rob to discuss the financial results in more detail.
[noise] by Susan advice, everyone for growing up in the call before I would provide an overview of our financial results for the first quarter followed by a brief discussion about recent actions you have taken a life of the disruption called by the code nicely and.
As of the end of the first quarter our portfolio a comprised of 103 private pacey, how the properties across 36 days.
During the quarter, we completed the sale at 28 L.M.C. properties for gross proceeds that 385 million realizing the gain of 20 no.
Me that there are several we identified a discontinued operation on the face for financial statements for the period is that.
As a result with the sale our same store cool not include our entire portfolio behind three problem, which includes 100 to manage I have a problem and a single took no. These problems.
Mmm through cash in life work, a little before we have 103 asset for the first quarter of 2020 was up your 0.1% compared to the first work when 90.
Or cash in life with a quarter includes approximately 500000 incremental good related expenses incurred towards the end of the court.
Excluding those expenses are cash at all I was at 1.5% you every year, which is generally line with the recitation for the poor.
Average occupancy for a man is I.O. properties increased 87.1% attendees. His point increase worked for the first quarter of 2019.
Occupancy growth was accompanied by including the 0.9% <unk>.
Expect growth Joe trend in line with expectations with a quarter until the second half of March when we started encouraging incremental expenses I mentioned earlier with respect to supplies a personal protective equipment and other items required to implement it has protocol, whose that'd be contain the spur coated in our product.
Oh, that's got their financial results balance sheet and highlights certain actions, we kept distressed noticed great position.
Yeah before for the first quarter was 14.1 million or 17th that for the the chip.
And why for the first order it was 35.5.
Both in a lot and episode approximately 500000 with additional expenses incurred in connection with who would related protocol tutor in March.
The six than for the first quarter was 17 point, you know or about 4% lower compared to depart court.
This is driven by a lower average that both as a result up there who payments and it's like <unk>.
Oh. So please note that the interest expense exclude interest related to 260 million of that directly attributable to to so that that those amounts are included in this computer operations in the financial state.
Turned into the balance sheet, you ended the quarter with growth assets of 2.3 billion in cash in touch equivalent of 135 no.
We had 1.6, though in total debt outstanding at the end of the first quarter with weighted average 4%.
Out of maturity of six years.
A majority profile improve significantly as a result of refinancing be completed in conjunction with <unk> portfolio and you know have no significant maturities until 2024.
You mean, the sharp decline light or the end of the quarter or weighted average coupon is approximately 2.4% at the curb sparkly of approximately 20 basis.
This is important because approximately 50% of our code that updating subjects elaborate fluctuations.
Reference every 10 basis points <unk> impacts annual interest expense by approximately $800000 or just under a paper shit.
In addition, or 90% of our total that outstanding secure agency that not subject to financial <unk> allow us to navigate to potential near term disruptions monopoly performance as a result to cope with Nike.
Now let me outline a few money you have taken recently just certain about on the street and the clay.
Burst open abundance of caution you don't know the log on credit facility for the chewed up $100 million marshes, they'd go to ourselves against consequences for more than volatility that existed in the market you already own days independent.
We expect do we pay the gone in in the near term has to be gained more visibility the operating impact and the level of uncertainties and stuff.
Second given the current environment and restrictions on access it temporarily suspended all not essential capital expenditure across projects and the revalued as the restrictions on that.
Alright car expectations is that our code thankfully or will likely be at least 25 per cent of 30% below the initial projected span of approximately 20 million.
That's me in an environment native uncertainties, a board has prudently decided to reduce the dividend payout for the current quarterback 50% to 6.5 censorship.
Well, we have taken several measures to put ourselves in the best positioned she's out of the current crisis, it's too early to be able to accurately project the impact of current banking on our financial results.
Accordingly, you have made the decisions regard previously issue for your guidance as it did not come complete the impact of the Cold American pandemic on I bet.
<unk> as Susan described earlier, we have tried to friend arrange a potential outcomes based on friends you have observed.
And then again mid March.
As we have done for the initial stages of the pandemic, we expect to keep me informed that'd be classified information in the finer assessment of the potential back a bit.
But that I would start over to the operator to over the line question.
Thank you.
Well now begin the question and answer session.
The question you may prints far that one on your Touchtone phone.
If you're using a speaker phone please pick up your headset before pressing the keys. If your question it's been answered and you wish to withdraw your question. Please Chris <unk> then too.
At this time, we will pause for one moment to assemble roster.
[noise]. Our first question today will come from Daniel Bernstein with capital. One. Please proceed with your question.
Oh. Thank you hope you don't mind, if ask a few extra questions and it's one too.
<unk>.
I hope everybody as well to the company and then wish all your residence in operators well. So in addition, thank.
You too.
Yep.
So I I just wanted to understand the the expense side of the equation.
Are you assuming that variable costs completely offset.
Increasing kobe costs or or is there some.
Differential between those two in other words of Kobe costs are up 5%.
And you decrease variable, there's some kind of net like one or two I just wanted to make sure I'm clear on that.
Yeah, I know you you got it exactly so we do think that variable expenses will offset some of the increased covert expenses, but we don't expect them to completely off that if you look at a brawl, which you know that's not you know 12 month of data is one month of data, but it's it's pretty much all we have at that point.
There we saw that are variable expenses and the decline there did almost entirely off that the code that expensive, but we don't think that that isn't necessarily going to continue to 2% as we as we move to restore assumption is that we will have an.
Offset on the variable side, but it won't completely off that'd be increased as we kind of are still in the in hunker down mode.
Okay any assumption is that.
There'll be some increasing costs.
Continue beyond restrictions local restrictions. So just just the infection control that we'll we'll just stay in place until I guess, maybe the pandemic <unk>.
Yeah, that's a really tricky thing I think all of US are having a hard <unk> right I think that what we have done is we've assumed that there will be some level of expend even after they're the restrictions have have lifted if you will have certain properties and I know you're hearing this from everyone, but I think.
Does it play that we'd hope to be able to give you know kind of cool revised guide and send to really be able to kind of male something down but as we're seeing kind of play out across the board different states different counties different you know jurisdictions are going to have a different approach and so we think we may have you know certain assets were restrictions are lifted sooner than.
Others and the restriction lifting may vary by asset themselves gloves. An example, you know we may have some return to a form of communal dining so call. It 10 residence at a time and in one community, whereas another community we may say actually.
We want to continue to keep the communal dining room clothes, and so does expenses will vary depending on what you know what's happening in a specific property, but for our purposes and for the purposes of.
Thinking about how we can kind of got model that we are assuming that there will be some expenses that continue not for the levels that we're seeing kind of right now and the full restrict access you know time period, but not expensive even add property come out kind of the full restrictions.
Okay, and then the occupancy did you see any.
But yeah, where where the weekly trends in April consistent week to week or did you see any moderation dark celebration.
April progressed, and where I'm going with this I'm trying to understand I get may probably will look the same as April but.
You know is there an opportunity maybe for some stabilization and occupancy in June based on maybe the levels of inquiry used to levels of virtual tours.
Yep, just trying to see if there's a trend where we might bottom and then it may and then come back off.
Yeah, it's it's been pretty consistent from our experience. So we've seen kinda weekly trends have not fluctuated to dramatically I mean, if you look at kind of the first you'll get you know February March every stated occupancy there was down 130 <unk> poison in March April of it down 120 basis points. So.
You know those two months pretty you know pretty consistent I will comment. So we are seeing is that leads are growing and so <unk> and encouraging trend that while we haven't seen necessarily in through the week week I get to see numbers, we we do see.
Lead volume is starting to increase after it went pretty pretty quiet and turned he'll play significantly negative there for a while and observation that I. If we wanted to be able to careful about showing here, but we have had tour volume go up significantly as a result of increase usage of up kind of virtual.
Words, we're not really at this stage, you know kind of competent and what that means you as you can imagine with virtual tours write a lotta people to click on thing, but luck. So if you just look at those raw numbers are virtual tours have gone up over 30%, but you know that's not something we want to necessarily 0.2 in in kind of you know drive any decisions.
Occupancy so a couple of comments there, but point is that we seem pretty you know consistent weekly occupancy decline. However, very recently, we started to see lead volume go up which you know we didn't want to you know we don't want to make any sort of assessment at this point, but obviously in light of everything going on it.
That's that's a favorable things or anything.
Mhm mhm.
And I guess, one last question I guess <unk> kind of confirm that you're fully paying your G.S.A.U. debt.
Mortgage payments or or or you haven't asked for any forbearances there.
We have not know so we're we're fully paying intend to fully pay and you're not intend to ask for any forbearance there.
I I'll I'll hop off I'm sure there are others, who want to ask you questions. Thanks. Thanks, Dan.
[noise] for next question woke up from <unk> Morgan Stanley. Please proceed what's your question.
Okay Who's that I know you were you were sort of trying to come up with the more narrowed guidance Ranger then there's a lot of variance until dawn, but maybe if you can give us some color on how you sort of C.D. occupancy trends, we don't blame out yeah. The next few months and then maybe what <unk> what are you.
What what are you watching or in terms of any any inflection or divergence in some of the property the market that you record.
[noise] sure. So in terms of Ah you know kind of.
Guidance, you well, yeah, we we try our best to sort of take a look it kind of what we've seen in April and I think that information is coming in daily and exchanging pretty pretty quickly and you know holding as we all know, but as we sort of laid out <unk>.
Change if you well for kind of what we could paper to to our expectation is that you know may and June look pretty similar to to April and I think that'd be sit here today.
You know that that kind of a a decent enough assumption I think as we start to see more active restriction being lifted and kind of thing opening up we can refine that but I think that you know we tried to <unk>. We see the same sort of activity in May and June we saw in April like we think that you know the the numbers.
In the range, we gave it's pretty kind of accurate we aren't at this point being kind of major divergent in terms of a market. It's I think of an observation holiday in particular happen to really be and kind of secondary and tertiary market.
You know we have seen <unk> you know <unk> have been kind of lower you know in our properties I I'm careful I want to be careful not to glean too much for now I think that there are lots of you know questions. A lotta people how does that because you know the virus hadn't gotten into some of these markets yet.
Because the testing isn't isn't quite what it is so I you know, we we can't really draw too many conclusions and and the point is we can look at the cases in the absence of like great data like that is data and that's what we will kind of look at and as I mentioned it we do the the one you know asset that we have that the very low.
Large complex CCRC in a very large market, we have seen a disproportionate number of cases in in that property versus the rest of our portfolio. So you know many other you know that senior housing based have you know a new more diversified portfolio, the P.C.R.C.'s and assisted living but they would have better perspective on.
That I can only comment on you know that one out that versus are independent living assets, but but I think you know when you look at our independent living portfolio time, there after appearing there where we've seen some different things playing out, but there's no patterns that sort of gleaned from that.
Oh, what thank you that that's a that's fair enough.
Maybe just on from from sort of further.
Expense reduction can you talk a little bit more about you know specifically you know what could've got picked so you'd occurring what sort of needed. What are you referring out 50, what savings can you achieve from a G.N.A. perspective.
Sure absolutely so on the on the Cat backside right now for the most part unless it's a central maintenance callback very little cap axes.
You know going into the properties right now given the fact that the you know the facilities are kind of restricting all not essential people. So.
What we you know first looked at in terms of our overall callback plan, we had in place some plans to do some upgrades across a portfolio and 2020. So we have put those plan for those assets on hold and we'll revisit and what kind of continued to evaluate it they moved through the year, but if you look at kind of I love.
Numbers, we we're projecting about you know kind of 20 to 22 million S. about cat back for this year and I think that depending on how things play out that number could be you know down anywhere between kind of you know $10 million to $15 million, depending on sort of what we do we what we decided to do it could even be lower if we you know.
Side to kind of push out project, but first and foremost the the cap acts, but we focused on our kind of the the non essential upgrades that we had just been sort of planning other part of you know God ongoing business. So so that on outside and if you put it in kind of a per unit.
You know kind of number we had been projecting about $1700 per unit, including kind of regular maintenance and then you know upgrade we're now looking at somewhere closer to a thousand am over find that you know as we go go through on the D.N.A. aside and our numbers were assuming that G.N.A. comes down you know that is a number that were.
Very focused on I think right now we're looking at about a 10% of 15% kind of reduction. So that's something that will kind of you know a ball as we go through the year, but you know, we're obviously focus on it and we know that you know that's an area that everyone needs to be taking a look at where during that same thing.
<unk> and then just maybe lost one in terms of the dividend.
Just sort of you know two questions on that what what what sort of where you're baking in or or or or metrics, where you're looking at that site sort of 50 per cent is the right level and how did you think about just suspending the dividend versus like you know cutting it by 50 per cent you know the decision between the two.
Yeah.
<unk> is is obviously a a focal point always in terms of how we we looked at it and came up with it for the corridor you know it'd be mentioned there. We don't have perfect visibility in terms of kind of what the final impact on our caseloads will be so I think if you had to get through a bifurcated we.
Assume that you know there will be an impact for cash flows. So part of the dividend cut his incorporating kind of the reduction in our caseloads and then the other part of the dividend cut is preservation of capital kind of in a time of uncertainty and so you know the approach. We took was that we wanted to give ourselves.
You know some some room into two kind of have some flexibility and that as we move forward and have more information the dividend will be something that you know the board will continue to evaluate and address but really a portion of it is too you know account for kind of declining cash flows in a portion of it is just to preserve capital and kind of uncertain uncertain time.
So that you know that with with your first but when the second question.
[noise] <unk>.
I put up a bit about mute. It was it was just really between how you call. It about the magnitude of the dividend God and then secondarily <unk> dividends God plus a good bit suspension <unk>, sorry about that and then on the on this dispensers I mean, we we we looked at it we were aware of the fact that you know people out there have done that I think from from my family.
Point and aboard standpoint, we are still generating positive free cash flow and we think that we have an obligation to our shareholders to you know to pay a dividend. If we can end to have that dividend you know be prudent and so that was the the rationale behind it and so you know we looked.
That what we thought were you know a number of you know potential scenarios, knowing that we can't know model perfectly right now and we felt like that level, you know kind of address the the the kind of two points I just talked about in terms of you know cash flow and preservation of capital and we also recognize that we did have a strong first order and.
Wanted to make sure that you know we were you know, we we're addressing kind of the dividend in light of that.
Great. Thanks, so much.
<unk>.
[noise] or next question will come from Michael Gorman V.T.I.G. Please proceed with your question.
[noise] it thanks good morning.
Hi, Mike.
Susan just wanting to go back to the comments on on the Cat backside and obviously differing topics here I imagine there'll be a <unk> a catch up on the other side, but.
You know, maybe it's too early but if you had any discussions with the operators about.
And he may be long-term capital investments that are going to need to be made to to bring the the properties and to kind of this new world and whether it's changing the layouts or changing the common dining spaces or any kind of incremental capital expenditures that would aid reopening. These these properties going for beyond just the typical maintenance or even beyond the upgrade.
But you had previously contemplated before the pandemic hit.
Yeah. It looks like it's it's a great question I think that you know it's it's too soon to have complete you know kind of you know reconfiguration Outback you know conversation given everything that that's going on I do think that you know I'd be pocket their number are operators, including.
You know holiday, which is far away our largest the complexity of the holiday building, meaning the lack of complexity really isn't advantage as we start thinking about some things that you know we might want to look out over a longer period of time, but I mean by that and holidays only independent living.
You don't have different levels of care you don't have you know kind of different parts of the building that cater to independent living versus assisted living thing you don't need multiple dining facilities. So what they pretty I'm pretty basic building and we don't think that.
You need to do kind of an acid reconfiguration to make sure that the residents are safe and are actually adhering to kinda distancing into kind of protection. So I don't think there's any kind of massive you know reconfiguring that needs to be done I think as I mentioned in in my comment through the biggest you know <unk>.
Islands, if you will but I think that holiday an I.L. have here is that the residents bayes very much you know wants to be independent and they want to come and go from the building.
You know, it's not an environment where people you know are are kind of you know in a nursing home. If you will and so I think insuring that the right people are coming in and out of the building. Those are things that you know they've had to focus on so making sure that you know certain doors can't be open to everyone going through the main entrance to.
Temperatures tax some of those things are things, we spent more time talking about versus kinda reconfiguring on the cat backside and obviously you know it there's not a lot of differed cat back here to begin with so yeah. I think it's too soon to talk about whether we would reconfigure building, but I think holiday and we feel pretty good about.
Of the format that's in place now.
Okay, Great and then also you know maybe is still a little too soon but I guess as you've seen some of the changes in the properties over late March and April <unk> have you had any situations or conversations with residents, where there's been reductions in rates or any changes to to rates are suspension.
Rate increases for and place penance, just as a result of the situation or as a result of the reduction in services or is it mostly just an impact on the occupancy inexpensive.
Yeah. So so far we have not meaning you know April ran collection were completely in line with what they normally are may we're still you know getting that information will come in in the next day or so but so far is exactly in line with you know kind of what it what it typically is so that's something we're watching I think that you know it.
It's wise to be focusing on that I think that we all are but so far we haven't we haven't seen that and we have seen the impact and more on the occupancy side and we'll get anecdotal and I think that I never you know love pointing to to kind of these kinds of things, but I think what we've heard out of the communities that there's overwhelming gratitude.
And support for how the operators have handled this pandemic and.
Everyone that lives within the community his nose in his aware that they are in the vulnerable code or they are overwhelmingly appreciative of the measures that people have taken to protect their health and safety and no. One wants to be told they have to be quarantined in their room and take all their meals in their room, but we have been and I have been overwhelmingly.
You know kind of pleased with the reaction and a response that we've seen from residents into communities and so I think that we don't know are watching it but I that tells us that you know, having a lotta people kind of showing up and asking for massive reductions and rent it's harder and these types of environments where people see.
See that there are people taking care of them and are looking out for them and are have their best interest in mind versus maybe what you see on the multi family aside and I'm not you know tried to drop comparison, but but we haven't I'm seeing that yet, but it's something we're kind of carefully watching.
Okay, Great and then maybe last one for me I'm just trying to triangulate. The obviously the the increase in traffic to the virtual towards is great, but right you don't another conversion rates and the move and being down do you have a sensor as as you're talking to the operators. How much of this is going to result in Penn tough demands at once.
Facilities start to relax will result in higher than average move ends or is this a situation where you'll get back to normalize to move ends and it's just going to be a normal building process versus just a flood of 10, instead of been waiting and differing and and looking to move and at a at a later date.
Yeah look I think that's that's the question we wouldn't be would love to now yeah. We we know that there is some pent up demand. We know that we have had people that have wanted to move in and wants to move and I think that what we have been focused with our you know or.
Or operators, we have said, let's let's get the right and taste as good tear up the residents as we can and we think that will then sell the product and that will lead to more people viewing this environment as a good place to live and you know the fact that are.
Operators truly holiday provides three meal there are some oversight their activities. We are hearing again as anecdotal, but a lot of people are calling and saying I I want my parents to be in an environment, where I at least know they're getting fat. They don't have to go to grocery store. They don't have to go out and you know go to warm I I want people to.
Kind of looked after so we hope that translates into you know kind of demand beyond the normal demand, but I think it's it's hard to say and we we do know is that you know we still have people that want to move into the properties. We still have people you know wanting to two or into kind of move family member then and you know the inquiry.
Is that we've been receiving in the last couple of weeks have actually been you know much higher than what we've seen historically, so does that translate into to move and don't know, but I think that it tells us that there is a real view about those values at this product offers it's important and that people.
Oh look at it and and you know wants to be able to move their loved ones into the property.
[noise] great. Thanks for time, Susan help you all say well.
Things like appreciated you too.
Thank you. This concludes our question and answer session Oh dial like you turn the conference back over to Susan Gibbons for any closing remarks.
Thank you I think everyone for joining up today and very importantly, everyone. These days and we will update you with the newborn thing.
[noise] conferences now concluded. Thank you very much for attending today's presentation you by now disconnect.
[noise] Oh.
[noise] Oh.
[music].
[noise] Oh.
[music].