Q2 2020 Sabra Health Care REIT Inc Earnings Call
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Good day, ladies and gentlemen, I'll come to this I bet healthcare <unk> second quarter 2020 earnings conference call I.
I would now like to turn the call Orbitz and Michael Costa Easy P. Finance. Please go ahead mr. cost though.
Thank you.
Before we begin I want to remind you that we will be making forward looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including the expected impacts of the ongoing cobot 19 pandemic our expectations regarding our tenant.
And operators and our expectations regarding our acquisition disposition and investment plans.
These forward looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially.
During the risk listed in our form 10-K for the year ended December 31st 2019.
And in our form 10-Q for the quarter ended March 31st 2020.
Well as in our earnings press release included as exhibit 99.1 to the form 8-K, we furnished to the FCC yesterday.
We undertake no obligation to update our forward looking statements to reflect subsequent events or circumstances and you should not assume later in the quarter that the comments, we make today are still valid.
In addition references will be made on this call to non-GAAP financial results investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to comparable GAAP results included on the financials page of the investors section of our website at www.
Dot Sabra health Dot com.
Our form 10-Q earnings release and supplement.
Can also be accessed in the Investor section of the web site.
Lastly, in addition to sovereigns management Lilly Donahue, Chief Executive Officer of holiday retirement is joining our call to provide her perspective on operating a senior housing community. During the pandemic Lilly's statements are corona and do not necessarily reflect the views and sabra.
And with that let me turn the call over to Rick Matrice, Chairman and CEO Sabra health care REIT.
Thanks, Mike Good morning, and good afternoon, everybody. Thanks for joining the call. After I go through my remarks, I'll turn it over to really and then really we'll turn it over to Talia how old the follow when he was CFO thing and then we'll go to culinary.
First let me comment on a on the pandemic generally so unfortunately in our country, we never saw flattening as a decrease the wave so it looks like the continuation of the first wage and one other things I just want to know is you talked about this little bit on the last call.
Right. After the our facilities operated facilities have been just amazing and this to happen.
Well as it's been going on interest.
Page further morale issues and so the stress on the staff and yet they continue to show up.
You know if any of you know anybody that's in the business that works in facilities doesn't matter what asset class, obviously skilled nursing assisted living independent living and he had the opportunity to pass the current word on line. Please do we are seeing a little bit better media coverage now.
Hopefully that will [laughter] continue we're also seeing better media coverage.
Just in terms of.
Having.
Social leadership, having a better understanding that the industry really didn't get the support.
Got it needed.
Certain second industry still aren't so all that's good and good to see about cases also reflective of a pretty massive PR efforts that along with US are involved with so appreciate all your support.
Well so appreciate.
In the notes that we've seen mattresses time, but last time.
Okay do you have to keen understanding what everybody is going to ensure I appreciate that.
Let me start with occupancy trends from.
End of February which is sort of the demarcation period through the end of July we will talk about the quarter to quarter. It's everybody noted is relatively irrelevant. So.
So I'll spend some time.
Our more recent trends.
Our skilled nursing portfolio was down 811 basis points, but is essentially flat since you have to say across the portfolio. The latter part of July started seeing increases amongst a number of our operators, it's very market specific.
And we had a little bit more momentum argue middle of July and then as everybody knows there's been a lot of breakouts with Sun belt and no other states, you're getting hit as well, but we are seeing some improvements in occupancy.
It's really been great for US is our skilled mix is 176 basis points higher than pre cobot levels.
And as it pertains to 811 basis points, that's pretty much I think where the industry is the Nic data was as of May I believe and at that point, that's two months old older than our data.
Nursing homes are down about 660 basis points.
There is an internal industry report that I had access to which showed a down about 700 basis points for the same time period, so looks like we're pretty much in line there.
The aggregate amongst all of our operators, but we haven't seen anywhere.
His.
Skilled mix actually up this significantly we've seen the slot in various reports, but we haven't seen it up to significantly and that's critical because the Medicare rate as many of you know, it's too and I have to three times higher than the Medicaid rate. The majority of facilities. So it does help to mitigate the occupancy drops.
Occupancy drop.
Our specialty hospitals.
Even though occupancy was down.
Sequentially in the quarters is now up and is up 108 basis point Hot it's 100 basis points higher after the end of July was going into February.
Our triple net senior housing portfolio, it's only going to 136 basis points, which is pretty remarkable it was down a little bit more than that close grew around 200, and then it picked up close to 80 basis points.
At the end of July that's really a function of where our facilities located in probably we'll talk a lot more about that.
Got to her talk importance the managed portfolio.
Yeah, it's 393 basis points over that same time period.
So affected by the geographic areas most of the spikes as you know that we've all seen really short of after memorial day weekend.
Both those numbers are much better than we're seeing amongst our peers.
That's been really helpful. In certainly for the Triple net senior housing portfolio.
Has a lot to do is why we haven't had to do anything on the website for our attendance at this point.
For the quarter, our senior housing Triple net occupancy was slightly impacted by the flu in Q4 2019 in Q1 2020 relatively stable our rent coverage was flat sequentially specialty hospitals occupancy in coverage was down sequentially.
But occupancy as I noted in his rebounded quite a bit since then.
You don't get too concerned about occupancy and coverage at the specialty hospitals want its excuse me very healthy over three times, but beyond that it's got a much more dynamic population.
We have in our skilled nursing or senior housing assets. So we typically see I come up and down quite a bit but again, we are doing well very strong occupancy.
Every store rent coverage rather.
Across our specialty hospitals.
Skilled nursing Kabbage ticked up slightly on a sequential basis from Q1 due to the continuing execution of Pdps five of our top seven skilled operators showed improved coverage. It's clearly position. So I was offered is more strongly going and.
What are the things I want to point out solvers operators are post acute operators you don't have long term traditional long term care operators.
That doesn't mean that we don't have a few Medicaid shops here in there, but our operators are post acute operators. It was one of the things that attracted us to do that CCP merger. Despite all the work that we knew we would have ahead of us with the operators fit the profile that we look for when we try to look when we acquire.
Skilled nursing facilities and for what it's worth has reflect my own operating orientation.
In my career prior to prior to Sabra.
And that's why do you see the improvement in skilled mix and I think that's good bode well going forward because we believe we're going to continue to see acuity increases.
Got more and more operators that have specializing in taking care of coded patients. So we think all that will accrue to our benefit.
Over the longer term that's once we get through once we get through the pandemic and obviously other things that help sequestration still being et cetera.
The three to hospital stay away from this helped everybody.
And those two items plus all the other system that we proceed through the cares Act has actually resulted in coverage that's higher than what has been reported here. So subsequent to the quarter, we've actually seen improved coverage and given the lack of abatement of the first what does this imply.
Coverage will be invaluable going forward given the continued impact of corporate related costs until occupancy.
Supplies and labor continues to run higher than historical norms with labor labor driven by the impact of having primarily one or one activities.
Really everything from feed into therapy. This is improved in certain markets will continue to improve but it does still exists supplies are still in issue. Although operators are beginning to build up some inventory and PPD, which will be invaluable going forward that said, we do have a concern that we may see supplies get tighter in the fall because the supply.
She is still not stabilized.
Pricing is better than it was we're not seeing as much of the gouging with machine, but it is still higher than pre covert levels.
In terms of supplies. The biggest issue is getting close second biggest issue I'm just getting gas I think on the auto product quarterly call gallons of the biggest issue so gone to fill in issue, but clubs are bigger issue.
Right now masks are fine.
On a relative basis cost is our senior housing operators were impacted it much the same way as our skilled operators, obviously not to the same level.
Skilled operators now moving on from some other corporate related updates through the end of July we had a total of 202 facilities that at some point in time at positive Cobra tests for patients resident nor employees.
Total number 200 to 113 facility.
Covered.
Facilities that are new to the list as we are seeing with occupancy our specifically related to the geographic spikes in U.S. and to a lesser extent.
Creased testing I say to a lesser extent.
Because we're not seeing big breakouts in the facility even if it's at the facilities that are testing positive.
For the first time, the operators have adhere to CVC and local health Department protocols.
Due to patients and residents as Mr. Cope with positive all even prior to the CDC guidelines restricting access in screening essential visitors, which helped tremendously the.
The bigger issue now is in those areas that are experienced bikes more employees test positive putting additional stress on staffing universal workers program still exist and that does help but there was more stress on staffing and as I think most people know that are on the call the average age.
Those testing positive for quoted has dropped dramatically the last time.
35 years old so, it's getting younger and younger.
And as a general population, we know we have scores of individuals who have had it has recovered.
Since of widespread and effective anti body testing I don't know, whether we'll ever know the true number what we still don't have as much testing was necessary. We appreciate the point of care testing that CMS has started rolling out to nursing homes testing as a key to getting a handle on the pandemic. In addition to wearing masks and social assistance.
Now moving on to acquisitions, we did get a couple of things done as you also this quarter. So we'll continue to look at things acquisition volume has picked up some it's primarily senior housing, but we're seeing more skilled nursing deals our acquisition pipeline is pretty dynamic right now its ranging from 250 million to 600 million on any given day.
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Sellers are still exists expecting the impact from covidien because regarded by buyers for that clearly issue.
Nevertheless, we continue to do the work, but we don't expect to do anything material and can big in the foreseeable future. We have factors that are.
Thank you very strictly in terms of brought behavior and thats looking in our cost of equity maintaining leverage within our target.
Changing our current ratings with the rating agencies. So we're not going to do anything to disrupt that.
But.
Sure. So one of the one off deals that we do in the quarter. We are starting to see more of those deals and we'll continue to execute what we can so we can start laying the groundwork for getting some growth going again.
On the regulatory front CMS post the 2.2%, increasing the Medicare market basket and no changes to PDP and for the both of those are really good news.
He as you probably will know was extended through.
End of October.
An additional 5 billion was granted skilled nursing from HHS, but the methodology isn't clear yet they're still tens of billions of dollars available for assistance.
We remain optimistic on stimulus for.
And with that I'll turn the call over to there will be done and you really.
Thanks, Rick call yen the soccer team for inviting me to join you are on earnings call.
While this pandemic has tested all of US. It's also strengthened the core of our mission at holiday, which is to help older people live better. We're very fortunate to have partners like you who share the same core beliefs and are committed to transparency, we're living through the biggest challenge, we faced and yet we're experiencing the strongest collaboration.
And I've never seen let me share how holiday has managed first for any on the call who are not fully familiar with our company, we manage and operate 261 communities and 43 states. We have over 8000 employees, helping 28000 resonant lift better and what are predominantly independent living communities. So.
254 of the 261 communities, we operate our eye out independent living I said to team members of holiday that our actions in response to cobot 19 from the on second the pandemic to current day have been characterized by a relentless pursuit of solutions, we've been Dallas and expand.
Are you send data and using the data to measure ourselves on a broad range of outcomes data is particularly important in times of extended distress like this pandemic, because we're really not very highly emotional business and in these kinds of certain kind of urgent situations, we really need to drive decisions based on.
Facts not just emotions early on we set goals on three main priorities and this really has driven our behavior. So the first is keeping our residents and employee safe, which means keeping our infection rate as low as possible second is ensuring our employees felt safe to come to work every day, we need that we rely on them.
Third we make sure our residents feel safe and are happy the results have proven to this point that we set the right priorities. So if you look at our infection rate across all of our communities for residents. It's about zero point, it's not about it's 0.71% so less than 1%. This is 60%.
Below the U.S. average for 75, plus population from employees. The infection rate is 1.2%. These rates really reflect how we are adhering to our protocol in the 43 states, where we have communities.
Throughout the pandemic our employees have continued to show up to work. This is crucial as low absenteeism and high resident satisfaction go hand in hand of our 8100 employees, 99.3% are continuing to work in our communities.
This percentage speaks volumes to their commitment to our residents their families and to each other on average we see probably 70 ish employees on a leave of absence in any given week and our peak temp labor has accounted for no more than 0.7% again less than 1% of our staffing.
When you think about that in our scale back incredible having extensive protocols correlates with high employee retention and engagement to that point when asked in our most recent great place to work survey nine out of 10 employees told us they feel safe coming to work that reassuring data.
The third goal, it's challenging to really manage to competing needs of the isolation safety factor and socialization. So how are we doing on this call more than 93% of our residents tell us that ARPU 19 measures are meeting or exceeding their XP expectation. So this data to is reassuring.
And frankly highly motivating, it's not easy to stay vigilant and disciplined on safety, while finding new ways to be creative and innovative on resident engagement.
And just as we expected when you focus on the writings your financial performance, usually follows making difficult decisions to close communities. Early on we were frankly challenged by some of our owners again have proven to be the right decisive action. While we are private company I do want to share some kind of top line performance metrics.
At holiday, our second quarter year over year, and Hawaii down just under 5%. Our same store NOI includes 258 communities out of our 260 can you 261 excuse me communities that I just mentioned revenues were down about 3% given that softness we were quite diligent manner.
Managing our expenses at the mid market expert and staying ahead of our needs we've been able to efficiently procure pp and other qubic related items dependent mic has impacted all classes of housing ours has not been impacted as drastically that speaks to our value proposition and we have seen it played out first hand as residents move in.
And there late lives are actually change to the good we have no reason to panic and we're already seeing are these leases tick back up the fundamentals of our business are intact. In fact, I believe there is stronger than ever.
One note on the moderate decline and a wine that we achieved our performance does not include any government support mainly as an eye. Operator, we are unlicensed. So there has not been much help or assistance for us on one hand, while I'm disappointed that we have not gotten assistance. This may be a blessing in disguise I believe.
The key reason is successfully managing through a pandemic a cobot 19 situation like ours requires speed and scale, we were able to take decisive actions focusing back on the three priorities low infection rates employees coming to work every day and happy revenue. So early on we moved quickly to source pp and Ken.
Mission every element of our community operations from dining to housekeeping and clean a housekeeping and cleaning additional cleaning thinking back to that how do you shift 100000 daily Neil from dining into room service mobilize procurement inventory management and associate training on Pp and established real time data capture on.
Infectious disease and done and testing across all of our community our pursuit looked like this in the early days in February 1st we quickly established multistage protocols for different levels of infection and testing. These protocol standardized our actions across communities. They set up our decision criteria and it creates.
The playbook for each functional area, we can holiday again from dining services daily resin activities to sales to community leadership nothing could have prepared us in advance for Coca 19, but we actually had a head start in the form of pre existing infectious disease protocol, we rapidly built from the head start.
Second we quickly mobilized to communications infrastructure accounting for document management since lock the documents around that data sharing status trackers and expanded communication channels. This infrastructure with key for rapid and frequent communication for example supplies and pp staff in critical for us to over can you.
Okay culture plays a significant role in our communications, whether its communicating to our current residents potential resonance for our colleagues our culture transparency and accountability underlies our public disclosure of active positive cases, a disclosure we began in April and finally, our culture of collapse.
Operation is also important this is a behavior that shows up early and stays late from early on our employees have stepped out of their normal job descriptions shared ideas proposed solutions and release supported each other as we progressed from the early phase of Cobot 19 to the phase of managing state by state reopening.
We were very focused on balancing the competing needs to safety and socialization. So our pursuit evolve to cover first maintaining strict controls through our protocol. We were strict but we were also very agile with them. We adopted based on CDC updated guidelines and also changing states reopening criteria.
Yeah.
We also implemented creative ways to engage our residents and implement safe activities. We have found new ways to communicate internally and externally through our internal platform, we have visibility into that day to day like at our communities resident experience coordinator share and motivate each other with their positive posting on the platform.
This also gave US an intended benefit views into compliance and social distancing MPP requirements in our communities while some they focus on the challenges in headline we think these times for some necessary and bat advancements that will benefit our company and the industry as we come out and.
We also implemented pull surveys during this time to gain insight into satisfaction of our residents in our employees and see co-operative kind of comparable tip ranking among our communities right. So we're comparing our communities, which ones are doing well and which ones may not be doing as well as expected. We've been quick to collect and act on the five.
Findings and had been open and honest in our teams action plans to improve turn turning to the current phase of our covert 19 response management, we're really aligning all the learnings from the past five months into four areas.
One leveraging more data we continue to make greater use of both internal and external data to reinforce our protocol.
All time data at the local holiday community level and at the appropriate public municipality level informs our protocols you really need both you need that from the community level and what's happening outside of our broader community to this point. When we are asked when our policies are the answer is simple if not a one size fits all to benefiting from.
The initiative of our support center functional resources to continued scaling covitz solution. So just on this point, we've developed some technology solutions for screening sanitation and disinfecting.
We are balancing again this idea of safety in isolation and socialization. So data plays really another key role as we manage the individual preferences of our residents against the need to standardize safety measures across all of our community and finally continue to increase engagement with our employees we have benefited from.
Such a high number who continue to choose to serve in these challenging circumstances on that point I would conclude by sharing that I have never been more encouraged by our industry and our business and I am now I see the commitment of our employees. The gratitude, we hear from our residents and their family members and the close partnering with owners such as Sabra.
This view that I. So lucky to have is cost for confidence the data back set up and the data also points us forward I'm seeing a resiliency in holiday and independent living that does not just indicate we are here to stay at the business in a sector. It also says we have a larger mission seniors have always told us that they want us.
Socialization and SASSA belonging found in our communities now they can also have a sense of safety in peace of mind that this is great great story from half on a final note before I turn this back to US opera I want you all to here why a company like holiday why employees in the senior living business you pretty.
Pledged to serve our elders every day. This voice message is from a holiday resident and sums up why we do what we do.
Like I don't have email I just wanted to.
Thank you know that ours is.
Oh.
Sorry, [laughter] I guess.
Yes.
I would they're doing a great job.
Beyond the color.
And management share and servers.
Thank you so much right.
So thank you really Pete let me share that message I will turn it over to Talya.
Thank you literally that was very moving.
In my remarks, I will provide you with second quarter operating results of our managed portfolio.
Second quarter reflects operations in the context of is spreading pandemic severity has very geographically I will also provide you listen performance statistics for July.
As of the ended the second quarter of Twentytwenty, approximately 16% of sovereign annualized cash net operating income was generated by our managed senior housing portfolio approximately 53% of that relates to communities that are managed by enliven and 34% relates to our holiday managed.
Communities. The balance includes our Canadian portfolio, and five assisted living and memory care communities in the U.S.
The managed portfolios operating results for the second quarter reflect residence desire to stay in their community and the cost that operators incurred to keep residents and employee safe. During this period I will provide highlights the operating results of our managed portfolio on a same store quarter over quarter.
Her basis, excluding two recent acquisitions and one transition community and I'll hop in our wholly owned portfolio consistent with the presentation in our supplemental information package.
While revenue decreased by 3.7% in the second quarter compared with the first quarter of Twentytwenty revenue per occupied room or Rev. Poor, excluding the non stabilized assets barely moved declining by <unk>, 0.6%, while occupancy also excluding the non stabilized assets.
Declined to 82% from 84.5% and the first quarter cash net operating income decreased by 19.2% to $16.3 million from $20.1 million about 69% of this decline is due to lower revenue and the.
Balance due to additional expenses incurred by our operators managing through pandemic.
Cash NOI margins declined to 23.1% from 27.6% in the preceding quarter.
We see no apparent differences in the Pandemics impact on the financial results of our independent living communities compared with our assisted living communities. The only variable. The clearly impacted operators is geographic location in Sabra managed senior housing portfolio, 77% of the second quarters cash.
Net operating income came from the enliven joint venture and holiday portfolios, both of which have national footprint.
The alive in joint venture portfolio of which Sabra owns 49%. This is this these are 159 properties. After the strategic sale of nine properties. During the second quarter showed a small decrease in revenue driven by occupancy loss in the second quarter of Twentytwenty on a same store quite.
Order basis, but was impacted by cost related to the pandemics throughout the quarter.
Average occupancy for the quarter was 78.9%, 2.6% lower on a stabilized same store quarter over quarter basis.
Revpar was.
I have 4300 to slightly lower on a stabilized same store quarter over quarter basis, but slightly higher on a stabilized same store year over year basis, taking together revenue was 3.9% lower on a same store quarter over quarter basis, However, same store.
Cash and on why margin was 18.7 for the quarter, 4.5% lower on a same store quarter over quarter basis.
If we add back 2.2 million of Cobot 19 expenses incurred in the second quarter, the cash NOI margin would have been 24.8%.
Only 1.6% lower and the cash NOI margin for these assets in the second quarter of 29 team before the days of code at 19.
Subsequent to the quarter July occupancy was 77.3% at 440 basis points lower than February occupancy before the impact of Cobot 19.
Rates have held and collection had to continue to be normal.
Enlivened estimate that sabra share of continued expenditures on pp labor and employee programs in the third quarter will be about $533000 per month.
Since the pandemic began until the started this week 60 of our enlivened JV communities have had a resident or staff member test positive for covert Nike as isn't as at the beginning of this week 27 communities had a resident or staff member with a positive test and 16 of those community.
These are located in Texas, Indiana and Arizona.
Well the portfolio has recently seen a modest increase in move outs. There has been a rebound in move in 56% higher than in April. This is the scene that we will seek out the managed portfolio.
The second quarter operating results for Sabra wholly owned in lighting portfolio of 11 communities have similar themes in its performance second quarter occupancy was 83.3%, a 2.8% decline compared to the prior quarter the occupancy decline occurred actually.
April with May and June occupancy flat at 83.1%.
Rev pour in the second quarter was 5776 flat to the prior quarter and 6.4% higher than the prior year.
Revenue was 3% lower on a quarter over quarter basis, but only 1.9% lower on a year over year basis again, the decline in revenue was a function of occupancy and not have rate.
Cash NOI margin was 21.7%, 4.5% lower on a quarter over quarter basis, and if we add back 562000 of Covance 19 expenses incurred in the second quarter, the cash and NOI margin would've been 27.9% which is higher.
Then the cash NOI margin of 26.7% for the same properties and the second quarter of 29 team.
More recently July occupancy was 83% 300 basis points below February occupancy and only 10 basis points below may and June occupancy as in the joint venture rates have held and collections has continued to be normal enliven estimate that sovereigns continued expenditures on.
He labor and employee programs will be about $125000 per month.
In total seven of our wholly owned enlivened communities communities have had a resident or staff member test positive for quite a bit 19 as the earlier. This week only two communities had not yet recovered.
We transitioned our holiday communities from net lease to managed portfolio five quarters ago. In addition, we transitioned and independent living community in Franken, Liz Michigan to holiday in the fourth quarter of 2019.
All the operating results to follow are presented on a same store basis and exclude.
The recently transition property.
Holiday portfolio occupancy was 85% in the quarter, 2.2% lower on a sequential basis Rev. Par was 2499 virtually unchanged from $2496 in the prior quarter and slightly higher than 2000.
$459 on our year over year basis on a quarter over quarter basis, the holiday portfolio experienced a 2.4% decline in revenue cash net operating income was 35.1% compared with 35.6 in the prior quarter, if we add back 273000.
And dollars of Cobot 19 expenses incurred in the second quarter. The cash NOI margin would have been 36.8% close to 36.9% cash and a wide margin for the same portfolio and the second quarter of 2019.
Subsequent to the ended the quarter.
Excluding the one transition community July occupancy was 83.1% compared to 86.8 in February eight 370 basis point decline.
Holiday estimate that pandemic related expenses totaled $250000 for the third quarter.
The 22 properties that holiday manages for Sabra 12 have had a resident or staff member test positive for covered 19, and all but one community has recovered.
It was 22 properties 19 are in various stages of lifting restrictions such as dining on views at reduced capacity limited visited visitors and reopening of the beauty Salon.
Holiday has seen an increase in voluntary move outs in July which appear to be a catch up of the delayed move outs scene in the second quarter at the same time the number of new leases is trending up and the number of move in is increasing on a month over month basis.
Fianna senior living manages eight retirement homes in Ontario in British Columbia for Sabra and the second quarter of Twentytwenty. The eight properties managed by Sienna delivered 82.7% occupancy, 2.6% lower on a sequential basis, while revpar was 2400 and.
$3 slightly higher than the prior quarter and 2.9% higher on a year over year basis.
Second quarter revenue was 2.3% lower than the prior quarter here again, driven by occupancy decline.
Cash net operating income margin was 27.3% significantly lower than both in 39% in the prior quarter and 39.2% in the second quarter of 2019, if we were to add back the 300 about $318000 of cobot 19 related costs.
Incurred cash and ally margin would have been 34.4%.
Sabra elected to match, a pandemic wage premium being paid in Ontario to support single site employment. This item represents just over half of the 318000 of Covance 19 related costs in the quarter.
More recently July occupancy occupancy was 80.2% 400 basis points below February occupancy. There has been no confirmed cases of covet 19, NRC Anna portfolio and number of cases is very low in the interior British Columbia, where four of our retirement homes.
Located with a total of 377 cases.
And there are fewer than 40000 cases in the entire province of Ontario, Cnf began reopening its communities in British Columbia in mid May and in Ontario in mid June visiting station were built to allow for clean protected and safe outdoor visits with family members and residents were permitted limited.
Leave of absence, allowing them to go off campus in July all restrictions on visitors were lifted but indoor and outdoor visiting stations continue to be used here to move outs that has been delayed or increasing as cause as capacity and long term care, which is government funded becomes available.
There are three themes that runs through the financial results. We've discussed first Revpar has remained largely flat year to date.
Again occupancy declines began in April and particularly in our higher acuity properties have decelerated subsequently.
Third cost related to the pandemic continue.
On Revpar, our communities had a fairly stable rate resident base in terms of rent and acuity.
Enlivened still intends to increase rat and levels of and level of care rates in October as it has historically done while the increases in the past within 5% to 5.5%. This year. The plan is for a more modest 4% to 4.5% rate increase the communication regarding those increases are all growth.
Well underway and have been met with little resistant. This illustrates the perception of value offered by senior housing and the lack of price sensitivity for offerings safety and care in the current environment.
On the occupancy between February and July our total senior housing managed portfolio inclusive of non stabilized assets was 393 basis points in occupancy the month over month change was as follows nine basis points in March compared to February 147.
One basis points in April 107 basis points in May.
The eight basis points in June and 73 basis points in July what is notable is the slowing of the occupancy decline over the course of the second quarter.
<unk> occupancy was negatively impacted in regions that have had significant outbreaks and by the catch up a voluntary move outs, particularly in those areas, where the fact infection rates have subsided.
However, our operators are seeing material upswing in tours leases and move ins, which are offsetting the catch up of move out.
Deneke expenses.
It is impossible to predict what normalized pandemic expenses will look like as it as infections had spread on evenly and somewhat unpredictably across the country. When we look forward, we expect to see casting and and hopefully rapid testing become a key component of these costs and PE expenses settling at a steadier level as availability.
He becomes consistent.
Our managed portfolios located mostly in secondary and tertiary markets and targeting a middle market price point have continued to be more shielded from the pandemic and its impact the initial spread of the Corona virus was worse in densely populated areas with 70% of cases in primary markets were 46.
Percent of the population lives.
The end of July that 70% has declined to 56% of all cases.
Since the beginning of May the virus is spread across the country and penetrated less densely populated lesion set at 20% of cases are in secondary markets with 20% to the population and 24% of cases are in tertiary markets with 33% of the population.
Even in late July cases per capita in primary markets or 26% higher than in secondary markets and 64% hires in tertiary markets.
We all read about the broader effects at the pandemic is having in the longer term implication people working from home migration away from gateway cities and dense urban areas to to suburban an extra been locations for safety space and lower cost of living and the large scale prominent massive jobs that are coming.
Good fundamental changes, particularly in the retail and lodging industry.
We believe that these forces will create the setting for our operators to recruit talent with relevant skills in locations where cost of living as more reasonable for those interested in a career in an industry with long term tailwind.
I will now turn over the call to Harold Hamm degrees, Sabra Chief investment Financial Officer.
Thank you Taleo.
Pleased to announce that we have not mute to provide covered 19 related rent relief to any of our tenants to date.
Collected all of our forecast for is developing use of deposits or other credit enhancements.
The into July we're on track with normal collections through the first few days of August.
Oh you share.
Our managed portfolio experienced declines in occupancy increased costs related to cope with 19, which negatively impacted and financial results for our men's portfolio.
We provide normalized FFO normalized FFO numbers, which excludes just under $4 million cope with 19 related expenses.
Folio.
Paul You noted we expect these incremental costs to continue for the near term do not currently of insights into the ultimately time were met the to the such costs for the long term.
Nor do we have enough information to assess future occupancy expectations women's portfolio, one of the potential need for women in the triple net portfolio become quarters as such we're not providing an outlook for future performance at this time.
Now getting into the numbers the three month in the June Thirtyth Twentytwenty recorded revenues in July of $153.9 million and $126.9 million, respectively, as compared to $149.3 million and $125.6 million for the first quarter of 2020.
Representing increases of 4.6 million.
$3 million respectively.
Increases in revenue in mid July primarily due to prior quarter write offs straight line receivables and above market lease intangibles totaling $6.1 million associated with for operators.
The cash pieces accounting in the first quarter.
Partially offset by $1.4 million decrease in a resident fee income driven.
Quarter due to the decrease occupancy in our wholly owned or managed portfolio.
No I was further impacted by the 3.1 billion dollar increase cope with 19 related costs were the first quarter of the year.
Bulk of the corner with $88.1 million and on a normalized basis was $93.3 million.45 per share.
FFO was normalized primarily to exclude the $3.9 million of incremental costs associated with cope with us He mentioned a moment ago.
As a point $4 million write off of straight line receivables.
Pairs to normalized FFO of $92.1 million.45 per share in the first quarter of 2020.
Yes, AFFO, which excludes from lack of a merger and acquisition costs and certain non cash revenues and expenses.
$7.3 million normalized basis, $91.5 million or 44 cents per share.
FFO was normalized primarily to exclude the same $3.9 million and that glaze expenses when normalized AFFO. This compares to normalized FFO of $90.5 million.
Since per share in the first quarter 2020.
For the quarter, we recorded net income attributable to common stockholders.
The $9.6 million or 14 cents per share.
Good day cost for the quarter totaled $8.7 billion in line with a first quarter of 2020.
<unk> costs included $2.4 million and stock based compensation expense due to the second first quarters of 2020.
Current cash DNA costs of $6 million were 0.8% of the NOI for the quarter and in line with our expectations.
Our interest expense for the quarter totaled $25.3 million compared to $25.7 million in the first quarter 2020.
Our cost of permanent debt declined 16 basis points ended the first quarter ended the second quarter, two 3.51%, while our revolver borrowing costs declined 83 basis points.
First quarter, two the second quarter, 1.26%.
Just expense includes $2.2 million of non cash interest due to the second hand first quarters of 2020.
Loss from unconsolidated joint venture of $12.1 million includes a loss on sale $9.1 billion from the strategic disposition of non personal loans taleo referenced earlier.
During the quarter, we completed the acquisition of one senior housing Triple net community from our proprietary pipeline or purchase price of $30.3 million.
Maybe just initial cash yield of 7.28%.
Also completed the sale of three skilled nursing transitional care facilities, two of which were leased to Genesis.
Net sales proceeds $17.9 million inclusive of the assumption by the buyer of an aggregate were $2.2 million odd insured mortgage debt covering two of those facilities.
Sales resulted in aggregate, we $3 million net gain on sale.
The quarter RIN responded $20 million, new preferred equity investments.
186 unit senior housing community for the initial cash yield 10% and we completed the sale additional skilled nursing transitional care facility moves to Genesis gross proceeds of 18.
In dollars inclusive of the assumption by the buyer $17.6 million of how does insured mortgage debt coming with this morning.
This sale marks the completion of the dispositions identified in our 2017 memorandum of understanding the Genesis.
As a result and dispositions to this is new annual rental obligation to us is approximately $21.8 million.
Annual interest expense decreased by approximately $1.1 million.
Total rins recorded during the second quarter.
For solar facilities totaled $2.5 million.
As Colin has impacted our equity value in our acquisition opportunities you did not issue any shares of common stock under the ATM program during the quarter.
Leverage moved up slightly to 5.54 times.
Our share of the license joint venture debt.
Five times, excluding the joint venture debt.
We have $336 million available under the ATM program and will continue to monitor the equity markets utilize GTN match fund investment activity and manage leverage.
For 200 its present.
You're in compliance with all of our debt covenants as at June Thirtyth, maybe 20.
Can you just have strong and improving Kevin credit metrics as follows interest coverage 5.36 times fixed charge coverage 5.17 times.
Well that asset values, 36%.
Covered asset value unsecured debt, 272%.
Sure asset value.
<unk> percent.
On August 15, 2020 companies Board of directors declared a quarterly cash dividend of 30 cents per share.
And then when we paid on August 31st.
Stockholders of record.
17.
Even represents a payout.
80% or normalized FFO per share and 71%.
Hey.
Sure.
We will continue to evaluate the dividend payout.
[music].
You'd have very strong liquidity position as of June 32020, with over $950 million of cash and availability on our lives.
Principal payment obligations through the end of 2021 only $20.2 million.
Significant cushion and our debt covenants.
Accordingly.
Very positive about our current financial position and our ability appropriately addressed.
Well as as we make face.
With our operators.
And with that.
Open the lines up for acumen.
Thank you to ask a question you will need to press star one on your telephone to withdraw your question comes to Pankey.
Please standby when we compare the kinda roster.
Our first question comes from Nick Joseph with Citi. Your line is now open.
Thanks.
Rick appreciate the color on all the government support.
How much that government support or loans that need to be repaid versus how much are Korea I'm, just trying to get a better understanding of what operators balance sheets may look like at the end of year once the government support diminishes.
Very little we.
The big alone was for those that took advantage of the advance Medicare payment.
And we only had a handful of operators that took advantage of that.
For a couple of reasons one.
The number Badiola news.
Those that took advantage of actress.
So I figure off that money to pay down there a our Lloyd's.
But I would also note that there are some ABL lenders because or show will secure chose not to the so but most of our operators on chose not to take advantage of that that would have been the biggest so for everything else.
There's really not much there.
We've got sequestration, who they hospital stay waiver.
Got to deferred payroll tax piece.
So we go too much there that's going to have an impact for operators.
Apparel to I would just add if you look on page seven of our supplemental we do a breakdown of those and we identify those as may require payback and as Rick pointed out to about $120 million on gas Medicare payments and about 40 million an employee payroll payroll tax delay.
And that's certainly the PPP.
From carriers that they need to be repaid or made up but that was about 50 million.
Some detailed descriptions on page seven.
Thanks, that's helpful. Not just on the acquisition pipeline I think you called it dynamic and completely understand kind of liquidity desire in the balance sheet and leverage that you've worked hard to achieve and then I'll also the cost of capital.
Think about the pipeline today, if your cost of capital changes.
Sounds like you're ready to execute it will be plenty of opportunity. So it's solely right now based off of the cost to capital not from a lack of opportunities.
Great way to think about it now.
No I think a former is correct. We're looking at everything I think from a pricing perspective, we definitely see ourselves getting from skilled nursing done even occurrence.
Stock prices, we can do accretive skilled nursing hills, whether we wouldn't be the ATM to raise money at those prices is a different issue. So that we can maintain leverage.
So that's really the primary consideration on on the senior housing side, we're just not seeing real is the pricing out there for the most part at this point so.
Unlike skilled nursing thats really going to be a function.
Cost to capital improving but also expectation is becoming a little bit more realistic target is there anything you want to add to that.
I guess I'll say one thing we are seeing some decent quality assets on the senior housing side and they tend they fall in the basket of that Rick just described.
We continue to see.
What I call the retread add the deals that seem to never get done and that we still don't like has been like them last year, where the year before and assets being sold by other leads because they are cleaning out their bottom drawer.
And.
Many of those are not of interest sometimes that there's there could be opportunity. So we look at them, but often not.
Thank you.
Thank you.
Our next question comes from Rich Anderson with SMBC. Your line is now open.
Hi, good morning.
[music].
So probably I want to go back to us.
I might have mixed up the numbers, but you said, 70% of cases in primary markets what was the timeframe of that comment.
That was in.
That was in June.
I think that was in July.
Okay, and then you said 20 secondary and 24 our Sherry.
That's correct that that was the end of May and then my current numbers are in as of end of July.
Okay. So the 20 and secondary 20 for sure sure July and the dries out right.
Yes, Okay, that's what I need to know to ask the question. So.
You had some pretty good success from an occupancy standpoint on your senior housing portfolio.
Right.
Point, but.
So you know you're seeing this spread now just some of the markets that you traffic and so.
What level of risk Royal concerned you have a risk that you could start to see sort of a I don't know second wave to use that term of occupancy loss and your senior housing which has to this point been somewhat.
Relative success.
So I'll take that rich so we will have a high level or concern and the reason is.
People have been getting treated as if this has.
Colin and the facilities.
So really all the comments you heard from really.
What's happening there have been happening across our operators, so where we're seeing so increase testing for example.
Kentucky mandate and increase testing and so as you know signature health is a big operator for us in Kentucky, and so they had a number of buildings that tested positive because of all the increase testing, but very few residents in the buildings that took the positive because there is already.
Refused to care and as I stated sort of in my opening remarks, probably a lot of folks have had gotten through but we just don't know there hasn't been the.
Anybody testing so.
So I think.
Certainly there are some risk that we're going to have more facilities.
Test positive, but we're not concerned with having facilities.
Take outs.
To the point, where you're going to have to shut down in occupancy and things like that.
The facilities that have had breakout numbers have been so small if they've been able to obviously people and still have still have admissions. So.
I think.
And Lilly curb made comments similar to this we just wanted to see some normalization in terms of visitation for our residents in patients and so if you've got more breakout she's gonna have to hold off on that kind of stuff, but generally we don't have.
Doug.
The high level of concern I'll also point out.
License.
This is actually an interesting statistic.
About 8%.
That's the assisted living industry has had great great catheter that have been defined as larger break out some more than 10 residents per building.
Libin, it's been three.
Everything that you heard Lilly talk about relative to how they just jumped on everything.
Protocol to minimize the impact of the lowest production rate was mirrored Adam lives and as well so.
The combination of all those factors gives us a corporate level risk.
Okay.
No.
To what degree you get not no symptom positive cases in a skilled nursing or sooner or senior housing facility does it usually come with symptoms.
I'm just curious.
I don't.
I don't have good stats on that we know that a lot of the positive tests that we've had been facilities have been with people that are asymptomatic.
With employers, obviously as well as Reza some patients rather hub.
I haven't seen any good statistics out there that allow us to say.
X percent of the positive cash for people that are symptomatic and X percent or.
And certainly not.
Nothing that tells us.
Disagree of which people are feeling systems.
[music].
Last question for me.
Covert care, how much of it falls into Medicare coverage versus.
Private insurance Medicaid or whatever.
Well in skilled nursing, it's all going to be covered by Medicare and one of the benefits of crude or hospital stay waiver is.
Persons condition changes, whether its covert or not.
Under normal circumstances.
I would have to be shift back to the hospital in order to qualify for that Medicare benefits that they already had.
You might scope of in place so.
Let's say they've been in that facility for for 90 days. The first 25 days they recovered our Medicare remainder of the time.
Converted to bear secondary payer status, which is typically Medicaid Medicare part B support has been on very 90.
They spiked the sooner or how to monetize the symptoms and maybe it was quoted.
Well that the facility and be able to provide the care. There then they're able to reclassify the patient for Medicaid back on Medicare cuts charge.
Yes.
She has been one of the benefits.
Okay.
Just killing play I'm, just thinking more broadly about the portfolio how much I mean.
Breaking down skilled in senior housing and.
So on the housing side Theres just.
As insurance coverage for testing.
The actual repair.
Most people don't have have insurance that go to senior housing, which just it's out of pocket.
Okay.
That's all I got thanks.
Yes.
Thank you Sir our next question comes from John Kim with BMO capital markets. Your line is now open.
Good morning I.
I was wondering if thats really the question too.
Okay.
Bob.
Was wondering if the pandemic a change your views at all on how you think your communities are senior care should look like whether you're looking at micro homes are active adults or may be doing okay.
Well.
Hello Hello.
It's not a physical assets, so we're not going to get into the home health business.
Home health has already been a player and independent living.
Most every independent living facilities has arranged for their residents to.
Have access to home health, So I think that kind of that kind of is whether it is.
Micro fell apart on though.
Kind of mixed feelings about it in terms of how the pandemic.
Credit sector, where to go to negative or positive for actually don't really have.
Affirm opinion on that what was your other question.
The whole milk for Lilly I realize it's not going for them to a rate.
Microphones active adult because that was something that you're looking at as well.
Yeah.
While you may have different point of view, we've never seen that as the particularly good margin margin business.
So I don't see.
I just don't see that changing targets you were.
So we haven't looked a little bit because we're trying to figure out if there was an upper there was a way to play in that sector.
In a manner that actually made economic sense to sabra and the reality is that we couldn't we couldn't get that to work.
It is.
Pretty much.
Trades at a.
Pretty darn close multifamily not on top of multifamily.
And then Theres really theres no way for us to figure out away from accretive and in there or at least not right now.
Yes, we will afford us work that's been in the adult day care business before and aside from valuation.
It's a tough business to to make work.
The profitability perspective.
Thats a little bit.
The me a little bit so maybe Scott somewhat better, but the fact that attractive.
That's interesting okay.
And then.
73 basis point of occupancy loss you had in July in your senior housing I'm wondering if that was a good run rate for monthly that attrition.
For the third quarter, there may be made over the year.
Harder.
I'm going to let you would be the prognosticator.
I mean, there's really no there's no way to no I mean, everything flattened out per Rich's question.
Maybe you have a little bit more deterioration, depending on what happens with well breakouts.
So if we don't think as much there so.
No it feels like we've kind of improve the worst.
But there could be there could be a little bit more but we don't think that it's going to be material.
It's pretty hard to prognosticate.
No it's going to be right.
Right.
Okay.
[laughter].
Thanks.
Thank you. Our next question comes from Daniel Bernstein with capital One your line is now open.
Hi.
[music].
I guess.
No.
Interesting to me is we're coming up on flu season tune.
Some point here.
And the symptoms are very similar to two coatings, so how our operators.
Caring for flu season, do you think for some.
Additional expenses.
Maybe worse than normal seasonality.
Thats going to be associated with that I mean seems like it's going to be difficult.
Maybe there's some benefits as well, but how our operators preparing for flu season. In addition called.
Sure I think I'm going to take advantage of how it will be on the call and and I may add a couple of comments really.
Yes, sure. So on the I'll side I don't think it's going to complicate things the holiday, we're actually tracking all infectious disease symptoms now so we havent on a real time basis I think there was an earlier question about asymptomatic symptomatic. This is just holidays experience, but our.
To be positive residents tend to be more symptomatic so over 60%, while our employee base is about.
30%, so more asymptomatic among employees then our customers. So we do track it we're going to continue to track. It I think one of the issues that will come up and we have protocols in place for this is to the extent that that symptoms are similar their physicians will recommend that they get covert.
Testing. So my guess is that will increase and it's okay to increases because we have a great process to go through someone who is being tested for kind of it what happens in a community and then obviously what happens when they test positive.
So I don't think at that for us, it's not going to be any additional cost. Its the same thing and again, we're tracking this on a day to day real time basis. Among all of our residents. It gets put into a portal and I can tell you how many symptoms are in.
Our winter village community right now.
Okay approaches.
Is there is or whatever.
The other thing I would say as I read a really interesting analysis the other day.
Not talk about.
Thanks for your milder flu season, because of all the adherence protocols as it relates to program.
For a lot of people that actually care about wearing masks and social distancing, but that's actually going to help.
Has an impact on the severity of the flu season. So.
Conservatively.
Makes sense can lead to happens obviously it was interesting.
Yes, so it's going to kind of ask us to the.
Section protocols for cobot are very different.
To that infection protocols generally right now are very different than what they would be for.
The flu season normally for seniors housing and skilled nursing right I mean, there just more robust.
Much more I mean, you don't have all every everything that's driving a lot of expenses into facilities will the one or what activities you don't normally see that.
Happened during the regular season.
Okay.
And then I just want to go back to the acquisitions real quick.
So it's like for higher quality.
Starting to send sector some more distress out there I mean, obviously the fundamentals have not been great theres not a lot of government support so I would think relative to say skilled nursing.
Yes, you would see maybe more opportunities on the senior site, but doesn't sound like that's quite materialize.
Right way to put it.
Yes sure so.
I think we will eventually see distress.
I will tell you that so far the amount of forbearance and.
And denial of of acknowledging what may be a decline in value earned impairment to value on a mark to market is still still fill out there.
So we haven't seen.
We haven't seen a sense of distress, what we have seen.
What we're starting to really seen and we think will be inc. really interesting opportunity is.
Issues on refinancing.
And whether there will be enough to pay off existing debt and we fight and that's an opportunity for us to claim interesting way on structured deal but.
That's that's like the opportunity, yes, I mean.
You got all the lenders there all talking forbearance right now.
Mhm.
This is not a product its finance Jain CMBS world. So it's not part of part of what's what's going on there on a special servicing.
Okay.
Thats all I have thank you.
Thanks.
Thank you.
Next question comes from Lukas Hartwich with Green Street Advisors. Your line is now open.
Thanks morning.
One of.
Good morning.
So it wasn't really challenging underwriting acquisitions today I'm just curious how are you factoring cobot into the underwriting.
No I forecast and whatnot.
It's a really good question on.
So on senior housing, we're actually looking at how groups are doing.
Right now and.
There are.
Definitely buildings that are has performed well and are not top and deeply affected and we're not looking at large portfolios, who were not having to juggle dealing with assets that are deeply affected and assets are largely unaffected so that kind of isolates it and they're not getting any stimulus.
Yes.
So theres no. There's some noise in terms of on the on the revenue side.
Skilled nursing, it's harder it's much harder you kind of you have to Peel out in this is it becomes really challenging to do this.
You have to Peel out the stimulus money. So that you can see what the real underlying economics are as opposed to numbers that are offsetting losses and occupancy.
You have to make an assessment of the fundamentals of what we how of the fundamentals of the of the.
Of the location and that particular building or build those particular buildings, how they'll recoup occupancy and normalized.
It's it's hard so you look back historically and you try to projects forward, but it but it's it's definitely definitely more challenging in the skilled side.
I think part of the and then it is how well you know the operator.
How you're going to look up there are other facilities.
And see how they've handled that so a lot of that helps.
It's a good data point to have in terms of.
Enrolled at a project somewhat of a hockey stick recovery so.
Drilling enough diligence to make sure you understand his our operator is made over that operators and how this handle or there are other built buildings.
That's factoring.
That's helpful. And then my other question is just going through this experience does it change your view at all of the relative attractiveness of.
Hi, L. Hurst ill verse memory care on the senior housing side.
It does that I think the long term benefits.
I think generally talk for a little bit before.
I think the spaces. There were that we are in has always been neglected by the healthcare systems generally that's certainly the government. We roll we were all carved out of Obama care and I think all that's going to change. Thanks.
From skilled nursing.
With and everything else in between we're now going to be recognized and I think the recognition has been happening integral part of the healthcare system. There's an awful lot of conversation there how about being adequacy of Medicaid rates.
And so the whole narrative has shifted from.
For the heart of all these headlines of how many people are dying.
Facilities to Hey, wait a second.
Which will with assistance well because the system do differently.
And what could we do differently, because we weren't there to support these facilities.
Begin with.
The last call. It was almost nine to 10 weeks into the pandemic before even said ppt to their shiho.
And maybe as much as half of it was flawed.
So so I actually think Nick we value equation gets better.
As as a result business and obviously the demographics. So changes you've heard from Lilly and we've seen throughout the pandemic with the backlog burn down the operators that have done a really good job has made their resins feel safe.
And so when you when it comes out to all the individual communities as markets, which is where these decisions are made.
Okay, just like a lot of other businesses, how things were handled the petrochemical along the way the reputation.
And with the fact of the rather is people don't have to support systems and infrastructure just not to go in and then finally.
Nursing, though in terms.
Moving to become such a needs based model that changes the equation little right.
It's been acuity creeping independent living as well.
Some of the things that we seem to be living in holidays or either in there how does.
Introducing.
Access to healthcare that they didn't have before to tell the health for example, what holidays gotten there.
They were.
They were.
The company that sort of 14, new path with that.
Thats going to.
Helped to continue to entice people to come into the community is really other knows if theres anything you would add to that.
No that Doug I think Thats exactly right I mean, all of those things are made to provide more access I think you know just even talking about.
The flu.
We're not just focused on Kogut, we know that there is an end date, there may be a new co bid and so we are trying to think about kind of the business and the new normal sense and when we have tele health like just prevention is so important and the telehealth will give us opportunities to provide vaccine flu vaccines to.
Residents and we are actually having all of our employees.
Hi, flu vaccines that at the company's cost again, making sure that what we know is going to be potentially challenging as we go through the flu season and cobot together. There is certainly things that we can do from a preventative side.
Great. Thank you.
Okay.
Thank you.
Our next question comes from Tayo Okusanya with Mizuho. Your line is now open.
Retail.
Yeah.
If your line is committed to some yet.
And our next question comes from Steve adequate with Barclays. Your line is now open.
Hi, This is Morgan.
Yes.
Sorry, I missed this earlier by.
I guess I'm just wondering if you could talk a little bit more about the impact of the resurgence of.
Well the cases in states like California, Florida on shop operators are you actually keynotes facilities. The force to re shut their doors to new admissions or maybe even delay lifting any of the admission bands already in place or other more strict regulations that might be preventing.
Floors or move in.
Yes, the impact on shop has been pretty minimal.
Some of the reason that we talked about earlier, we have more facilities.
On the oil side that have tested positive.
The breakout smoothness facilities are pretty or minor.
Or to make quite a bit even afford person appropriate, but we're just not having big breakouts, because so much cares or you can provide and.
Well the one on one activities and new stripping as noted central visitors in the screening with a central visitors has really helped so that.
So occupancy through.
Hi period has actually been pretty flat.
Folks can still admit.
Islay people when they get admitted.
That just means that.
Some of the normalization that we want to get back to in some of these markets in terms of.
Having visit this comment because the whole social component.
Isolation for patients in residence has been really tough so it's a slow that kind of stuff down but in terms of having any sort of material impact on occupancy and therefore, the bottom line, we're not really seeing that.
Okay, and then just one more question.
Shop portfolio.
I guess not necessarily related occupancy, but how are you thinking about moving trends moving into the second half the year.
Are you seeing any pent up demands are receiving any actual deposit.
New residents and they're just choosing to delay the move and or is.
Jim.
Well, even though theres, an improvement and moving into that down just because of an overall function.
We've been towards being down as well.
Carlos.
Sure. So move ins are trending up and so that.
The whole sequence of.
Leads tours.
Leases.
And move into is trending up and we're seeing that uniformly.
In the shop portfolio.
It is not yet at the level that was on a year.
Year over year comparison, so it's not yet normal quote unquote, but.
Nothing right now is quite normal and so the good news is in the trajectory is headed the right way I think a big factor in this kind of want to go back to what Rick was saying a big factor.
Today is that.
We know a lot more the protocols are in place their processes people.
In communities and the leadership and our at our operators have.
Have had months now to figure out how to how to manage through this the current environment. So it's one thing to have had a big drop in April.
When this is all very fresh.
And even though the pandemic continues to affect a tremendous number of people in this country and and and its inescapable.
No.
The good news is.
Really described big.
They have worked very hard to figure out how to run their business model in an environment, where this is happening so to your comments about moving to the extent that municipality has determined that no admissions are allowed to and then that's one thing because you do the Oh.
All of our operators have to comply with the local health department on and other regulatory bodies, but to be extended they're able to.
Perhaps a win at Tas net at test before moving and if they test negative move and without any issues or comp board at or self isolate once they've moved in the figured out ways protocols for people to allow people to move in.
And and and have the kind of safety and eventually the socialization that that they did they desire.
Okay. Thank you.
Thank you.
Next question comes from Tayo Okusanya with Mizuho. Your line is now open.
Hi, I know everyone 11 last transco.
[laughter] voice it may kick out.
The commentary I, just about the regulatory environment helpful.
I was hoping could you comment.
Equally on what's happening at the state level that kind of in in August now states of setting their budget.
How is just what are you kind of see if a Medicaid perspective, just kind of getting a lot of state budgets atrophy challenge because it feels good.
Yes, we're not really seeing much different out of state level be the states that have provided temporary increases which are still in place because of covert of kind of less than one place for now.
So I guess, they try to try to figure it out I think.
I don't see things being any different than they normally our which is pretty low Medicaid rate increases per state anywhere wanting to have to 2%.
So just quite the stress on the state budgets I don't think that pieces, it's going to get worse, just because a large part because the federal match that were risk federal badge and what about 5 million out according to their already style is great reception.
Which obviously was much different but that was in a lot of ways a much bigger deal financially.
In some respects resistance and and our Medicaid rates in the aggregate were held steady there for nursing homes knock for other sectors, but for nursing homes.
At the federal matches important Q things in place.
Great that's helpful.
Then.
One of the question in regards to just.
You know for stimulus for this specific things that the industry lobby for.
Seamless for for example, the kind of the other income blanket limited liability because of who did I'm just kind of curious what was being this in loving from what the pattern getting some of those.
Request.
That's the big issue is the liability issue and.
Despite what you know opposing can say we have the industry has no issue. It is not lobbying for like it immunity regardless.
No real negligence and things like that those people should always be taken to task.
But just the mere fact that you have colder than the facility doesn't mean, you should get to that so thats really with the focusing.
There's also been a lot of state logging and I think actually haven't seen pretty tight on a little bit over a week Victor about 31 states.
Or actually maybe it's more in the third inroads.
Victoria.
Sure.
Oh, Yes, 29 states.
Had some form of limitations on liability, so thats going to be helpful.
Going forward, but having having.
Turning to federal level as what we really work so that's the big issue.
Isn't that I think that.
Dialogue has always been really productive.
So I think we feel pretty comfortable.
I'm getting stimulus dollars.
Otherwise.
Great. Thank you.
Thank you.
I'm not showing any further question at this time I'd now like to turn the call back over to Rick natures for closing remarks.
Thank you all for calling in we appreciated as always were available for any additional questions shout out to early diamond. Thank you really for being on the call. Thank it really provided some valuable input to tour investors.
And.
Everyone do phase out there.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].