Q2 2021 Omega Healthcare Investors Inc Earnings Call
Good day and walk of.
The healthcare investors second quarter 2021 earnings call.
All participants will be in a listen only mode.
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At this time I would like to turn the conference over to Michelle Reiber. Please go ahead.
Thank you and good morning with me today are Omega C. E O Taylor Pickett C O O Dam Booth CFO, Bob Stephenson, Chief Corporate development Officer, Steven in soft and Megan Kroll Senior Vice President of operations.
Comments made during this conference call that are not historical facts may be forward looking statements such as statements regarding our financial projections dividend policy portfolio of restructurings rent payments financial condition or prospects of our operators contemplated acquisitions dispositions or transitions and our business and portfolio outlook generally.
These forward looking statements involve risks and uncertainties, which may cause actual results to differ materially. Please see our press releases and our filings with the Securities and Exchange Commission, including without limitation of our most recent report on form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those.
Described in forward looking statements during the call today, we will refer to some non-GAAP financial measures such as NAREIT F. F O adjusted <unk> Fad and EBITDA reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles as well as an explanation of the usefulness of the non-GAAP measures.
Are available under the financial information section of our website at Www Dot Omega healthcare Dot com and in the case of NAREIT <unk> and adjusted <unk> in our recently issued press release. In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been indeed.
Tenant leave verified by Omega I will.
Now I'll turn the call over to Taylor.
Thanks, Michele good morning, and thank you for joining our second quarter 2021, the earnings conference call today, I will discuss our second quarter financial results and the industry occupancy and labor trends.
We continue to post strong quarterly results with second quarter adjusted assets, though of <unk> 85 per share and funds available for distribution of <unk> 81 per share. We have maintained our really dividend of 67 per share and the dividend payout ratio remains conservative at 79% of adjusted <unk> and 83.
The percent of funds available for distribution of our liquidity and debt maturity ladder have never been stronger as our operators face certain timing of occupancy recovery and widespread labor shortages.
As we have discussed in previous calls and investor presentations, the combination of significant occupancy declines in the tight labor market with increasing wages and a shortage of staff has started to create liquidity issues for certain operators.
In June we had an operator, representing 3% of annual revenue in the form of Omega that they would be unable to pay rent due to both occupancy and labor issues. This possible that additional operators could experienced similar cash flow stress.
Turning to occupancy and labor trends since January occupancy has improved every month and it is likely that this trend will continue.
However in general we need occupancy the returned over 80% in order to meaningfully mitigate the cash flow reductions from the pandemic at the same time that occupancy has started to improve the labor shortage has created 2 significant issues first a number of facilities have self imposed the admission bans if they cannot staff at clinically appropriate levels.
Therefore, even though there is an opportunity to increase census, based on demand in the market piece. The saudis have elected to limit new admissions due to staffing limitations second wage rates continue to climb the.
Labor cost increases are particularly difficult to manage in states with limited or no COVID-19 reimbursement release. Additionally, it appears that these wage increases may create a new baseline wage rate going forward with.
We strongly believe in the positive long term prospects for our operating partners as occupancy rebounds in the aging demographics drive increasing demand for skilled nursing facilities, we remain hopeful that the federal government and the states will provide additional near term support to the skilled nursing facility in assisted living industry as we work to overcome the ongoing challenges from the pandemic.
Finally, I again, thank our operating partners and in particular, the frontline caregivers and staff, who have cared for the tens of thousands of residents within our facilities I will now turn the call over to Bob.
Thanks, Taylor and good morning, turning to our financials for the second quarter, our NAREIT F. F O for the quarter was $181 million or <unk> 74 per share on a diluted basis as compared to $186 million or 80 cents per diluted share for the second quarter of 2020, our adjusted <unk> was 200.
$7 million for 85 cents per share for the quarter and excludes several items as outlined in our adjusted assets. A reconciliation to net income found in our earnings release, and our supplemental and also 1 of our website.
Revenue for the second quarter was approximately $257 million before adjusting for the nonrecurring items as per.
Previously disclosed in June and operator of informed us it would be unable to make its contractual rental payments for the foreseeable future as such we revised our revenue recognition treatment for that of the operator to cash basis, rather than straight line accounting method. As a result, we recorded a $17.4 million dollar reduction.
The rental income related to the write down of the straight line receivables.
We collected over 99 per cent of our contractual rent mortgage and interest payments for the second quarter and 98 per cent for the month of July with the decrease resulting from the 1 operator just referenced our G&A expense was $9 million for the second quarter of 2021 and slightly better than our estimate of quarterly G&A expense of between $9.
Half of 10, and a half million dollars.
Interest expense for the quarter was $56 million.
Our balance sheet remains strong and we've continued to take steps in 2021 to further improve our liquidity capital stack maturity ladder and overall borrowing cost.
The debt side when April 30th the closed on a new 1 for 5 billion dollar unsecured credit facility and the $50 million unsecured term loan debt both mature in April of 2025.
At June 30th we had no outstanding borrowings on our credit facility and had $100 million in cash in March we issued $700 million of 3 to 5 per cent senior notes due April 2033.
Note issuance was leverage neutral as proceeds were used to repurchase the tender offer $350 million of 4.3.75 per cent notes due in 2023 and to repay LIBOR based borrowings we have no bond maturities until August of 2023 when.
On the equity side in May we issued a new $1 billion ATM program in the second quarter, we issued $4.1 million shares of common stock through a combination of all of our ATM and our dividend reinvestment of common stock purchase plan generating $154 million in cash proceeds year to date, we have issued 6 point to me.
The common shares generating $231 million in cash proceeds with the.
Continue to use our equity currency the R. A T M to gradually delever with our funded debt to adjusted annualized EBITDA at approximately 4.9 times and our fixed charge coverage ratio of $4.5 times as of June 30th.
Well, we believe our actions today provide us with flexibility to weather the potential prolonged impact of COVID-19, 1 of our business. It also provides significant liquidity the from potential acquisitions in the second half of 2021, we will continue to evaluate any additional steps that may be needed to further enhance our liquidity.
I will now turn the call over to Dan.
Thanks, Bob and good morning, everyone.
As of June 30th 2021, Omega had an operating asset portfolio of 949 facilities with over 96000 operating beds. These facilities were spread across 65 third party operators and located within 42 states and the United Kingdom trailing 12 month, operator EBIT dorm.
EBITDAR coverage for our core portfolio as of March 31, 2021 decreased of 1.8 and 1 point for 4 times, respectively versus $1.86, and 1.5 times, respectively for the trailing 12 month period ended December 31.2020.
The first quarter of 2021, our operators came a little bit of recorded of approximately $74 million in federal stimulus funds as compared to approximately $115 million recorded during the fourth quarter.
Trailing 12 month, operator, EBIT dorm and EBITDAR coverage would've decreased during the first quarter of 2021 to 1.2 for and 0.9 times, respectively as compared to 1.38, and 1 point O 4 times, respectively for the fourth quarter when excluding the benefit of any federal stimulus.
For those funds.
EBITDAR coverage for the Standalone core ended March 31st 2021 for our core portfolio was 1.17 times, including federal stimulus and 0.83 times, excluding the $74 million of federal stimulus funds. This compares to the Standalone fourth quarter of 1.33 times.
And 0.78 times with and without the $115 million of federal stimulus funds respectively.
Based upon what Omega has received in terms of occupancy reporting for July to date occupancy has continued to improve averaging approximately 75, 7% up from a low of 72.3 per cent in January.
Turning to portfolio matters as tale of previously mentioned in June we had an operator, representing approximately $30 million or 3% of annual revenue and volume I'm eager that the June rent of approximately $2.5 million would not be paid and the future rent payments would not be remitted in the coming months.
The operator has asserted that the COVID-19 pandemic, along with its associated challenges, including census declines and labor shortages were the primary drivers of their liquidity predicting that we are in active ongoing discussions with this operator to determine what we hope will be a consensual restructure of their portfolio the restructure of mirrors.
Old and either re leasing facilities or outright sales of part or all of the portfolio. At this time. It is too early to predict the ultimate outcome of these discussions.
Turning to new investments on June 1.2021, Omega provided $6.4 million of mortgage financing to an existing operator the law.
Loan is secured by 2 nursing facilities located in Ohio, and bears an initial interest rate of 10.5 per cent turning to subsequent events on July 1.2021, Omega provided $66 million of mortgage financing to an existing operator the <unk>.
Loan is secured by mortgages on 6 nursing facilities located in Ohio, and bear an initial interest rate of 10.5 per cent separately on July 14th 2021, Omega completed the $9.5 million dollar purchase lease transaction for 2 care homes in the United Kingdom. The facilities were added to an existing opera.
<unk> Master lease with an initial cash yield of 8% with 2.5 per cent escalators year to date Omega has made new investments totaling $722 million, including $48 million for capital expenditures.
Turning to dispositions during the second quarter of 2021, Omega divested 6 facilities for $12.4 million.
As of June 30th Omega has divested of total of 30 facilities for approximately $200 million.
I will now turn the call over to Megan.
Thanks, Dan and good morning, everyone and positive news last week CMS issued its final payment all of which include the 1.2% rate increase beginning of October 1st, but more importantly, the lays the proposed 5 per cent cut well they did the PD 1 and the proposed rule issued earlier this year T map of the highlight of.
The fact that P. D P M rather than being budget neutral instead lead to unintended 5 per cent payment increase and that of rate cut the need to occur that rate cut in the final rule has been pushed out 1 year, which is welcome news for the industry as a whole, especially as it continues to recover from the pandemic.
Moving on to pull that last quarter, we highlighted the fact that there was approximately $24.5 billion of unallocated funds left in the provider relief fund, which number excludes the monies returned by providers, which we believe could be substantial inc.
None of those funds have been allocate all of them. We are still in a wait and see mode as to what benefits of long term care industry of all receipt.
Thankfully a handful of states.
The new containing or increase in your own for the long term care industry, such as Michigan and Pennsylvania.
However of states work through how they pull spend funds received from the American rescue at its core.
So too soon to tell what the ultimate impact will be on our operators or the industry of the whole.
What we do know is that the industry continues to meet government support, especially in light of the Delta variant of the potential impact that it could have oh what was the.
The expected to be low long term recovery.
All of the overall impact of the vaccine rollout has been strong with cases at the end of June at last for 250 residents and employees across 125 of our building.
Did see an uptick as of last week's lumpy reporting.
Lately last from 500 cases across approximately 153 of our building.
Operators of preparing ourselves to deal with the potential rise in cases that could lead to increased visitation restrictions.
With that station rates for employees still running low at less than 60 per cent at that the staffing shortages and self imposed the admissions banned the Taylor mentioned earlier could be exacerbated for large employee outbreaks of the car.
Both of these have the potential to flow, but hopefully not for the occupancy progress being made.
All of that said the vaccination rate of Roswell at close to 80 per cent is a bright spot occupancy growth may continue to be no more than the slow steady climb the infection risks. The vaccinated resident population appears to be low or very least not fail and therefore, the industry should be able to avoid in large part the devastating click.
A couple of facts and associated expenses, that's like from through 'twenty 'twenty and the early part of 2021.
Day in and day out our operators care for a particularly vulnerable segment of the population. This has never been more evident than during the pandemic and early federal assistance recognize that box for us.
Now, we hope that central government funds, a renewed commitment to the space and the.
The states that haven't stepped up to provide support doing well with the additional funds. They have now received.
I will now turn the call over to Steven.
Thanks, Megan and thanks to everyone on the line for joining today.
Inspire New York, our Alf memory care high rise of second half would you of Ninety-third Street in Manhattan leased to and operated by Maplewood Senior living opened at the end of March and is in the midst of lease up.
Lease up momentum has been solid and in line with our underwriting and expectations. The COVID-19 pandemic poses certain challenges unique to senior housing operators, including increased costs of the challenges of managing COVID-19 positive patients and meaningful practical limitations on admissions well. They very much appreciate the help they've received private pay senior housing operators if not.
From the level of government support provided to other areas of senior care of.
Along with continued pandemic related challenges, we saw small but measured occupancy improvements to our senior housing portfolio throughout the second quarter.
We have seen evidence of stabilization and strengthening of sensus in certain markets, our maplewood portfolio, which is concentrated in the early affected Metro New York and Boston markets. So a meaningful census erosion early in the pandemic with second quarter 2020 census, hitting a low point of 84% in early June of 2020.
That said their portfolio occupancy level has returned to 87, 6% in June of 'twenty 'twenty 1.
Including the land and CIP at the end of the first quarter Omega Senior housing portfolio of totaled $2.2 billion of investment on our balance sheet. All of our senior housing assets are in Triple net master leases, including our 'twenty for recently acquired Brookdale assets. Our overall senior housing investment comprises 155 assisted living independent.
The living and memory care assets in the U S and U K.
This portfolio, excluding the 20 for Brookdale properties on a standalone basis had its trailing 12 month EBITDAR lease coverage for 6 basis points to 1 point O..2 times at the end of the first quarter with Covid outbreaks, having effect of different markets at various times. This decrease in performance was to be expected.
Rising vaccination rates among residents and staff of a critical step to restoring occupancy of performance.
While we remain constructive about the prospects of senior housing. The COVID-19 outbreak has warranted a far more selective approach to development.
Well, we make further progress on our existing ongoing developments, we continue to work with our operators on strategic reinvestment in our existing assets, we invested $31.1 million in the second quarter in new construction and strategic reinvestment $19.5 million of this investment is predominantly related to our active construction projects the remaining of $11.6.
Millions of this investment was related to our ongoing portfolio of Capex reinvestment program.
I will now open the call for questions.
Okay.
Okay.
We will now begin the question and answer session. As a reminder to ask the question you May Press Star then 1 on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys if at any time of your question has been addressed and you would like to withdraw. It. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
Okay.
Today's first question comes from Jonathan Hughes with Raymond James. Please proceed.
Hi, there and good morning.
Question on kind of operator and news disclosure.
If you do have more operators come to you in the future of saying, they're having issues with paying rent in the state.
Within your top 15 operating or list, how we disclose that going forward, where you kind of wait until the quarterly earnings releases or do you press releases intra quarter like we saw in June ahead of NAREIT I'm, just trying to get a better sense of and I understand how we can monitor operator health of new developments hopefully on the.
The.
More real time basis, Yeah, It's fair enough Jonathan as you know, it's pretty nuanced when you start to have discussions with operators.
And so some of the timing.
Yeah.
Through some of those issues, but I will tell you. The 1 thing we will be certain office that we don't pass selective disclosure so to the extent that.
Looking to investors about.
Any potential issues.
Youll see disclosures before we have those conversations.
We're talking to investors all the time, so I would think it would be relatively timely.
Okay.
Okay.
That's great and then.
Maybe talk about Florida, and Texas. Those are your 2 largest states in terms of exposure and there are also 2 states that have not seen as much I'd say government support is as maybe others during the pandemic and even pre pandemic can you just talk about the reimbursement rate.
And government support outlook for those 2 states and then maybe also update us on the day break transitions in Texas.
So Texas early on in the pandemic actually had an add on to its Medicaid rate of $19 per day.
And it has continued to.
Debt.
Net add on is continued they've recently.
Extended and again I believe it runs through October of this year.
So that's been hugely helpful.
Tracks, the kind of the federal emergency plan. So we would hope for the federal Emergency plan continues.
The Texas Medicaid.
He is well.
The state of Florida has offered no such systems. They have not added anything to the Medicaid rate day of not offered any supplemental payments.
So that has.
That has produced the situation in Florida, that's becoming increasingly higher I would say because there has been.
No add on and now we're seeing cases.
For the Delta periods.
DAYBREAK.
Finalized re leasing or selling all of those assets.
In the second quarter I believe most of them are 1 of the first quarter.
So there is no more DAYBREAK the sportswear concern those all of those assets have been distributed amongst.
Other operators, either existing or new <unk> sold to third parties.
Okay, and then the day break transitions that was converted.
At similar rents to where maybe they weren't gross before.
No, but they were in line with what we had.
What we have projected.
That's right.
Okay, what's the.
Gonna take for for Florida.
Kind of realize maybe they do need to give some more.
Support from I guess, they could drive the Tallahassee, but.
Just curious if theres been any discussions among the lobbying organization, they're just if the.
There is any progress on that or if it's still a pretty quiet.
No. It hasnt been quiet that's for sure there has been a huge push.
From the operators lobbyists et cetera.
For the portion of the rate relief is Florida.
There is no eminent expectation, but I think debt.
[noise] continues to gain momentum.
We're hopeful that we see something out of the state of Florida.
Okay all of last 1 for me.
There was an announcement you announced the addition of the new director to your Board yesterday can you just provide some additional details around this yes, Jonathan asked Matthew top of that.
Hey, Jonathan.
So.
And local is retiring as the board member at the end of this current.
While we have added the board member for a number of them for months probably.
The good opportunity to publicly thank him for his over 25 years of of exceptional service as the ball.
The member.
While we search the losing are also very happy the Doctor at least 1 of the Davis has agreed to join us.
For those of you didn't see the 8-K filing is a little additional background.
The type of new Davis has low.
The decades of healthcare experience as both the physician and of the healthcare executive where she is primarily focused on patient centric businesses. So as you can imagine her experience in Hudson yards. The understanding of the healthcare continuum will be extremely helpful for Omega as we continue to navigate the evolving landscape.
So we're excited that she's joined the board and we look for too many years of working with them.
Alright, thanks very much appreciate the time.
Thanks, John.
Our next question comes from Connor Seversky with Baron Berg. Please proceed.
Good morning, everybody I appreciate the prepared remarks, and while the rare Matthew of parents on the call today.
First question on acquisitions, I mean, it seems relatively quiet on the sniff REIT funds get some publications some of the industry journals are suggesting even an acceleration of activity maybe from private investors. So I'm wondering is.
From <unk> perspective of the cost of capital issue or Theyre, just not really attractive opportunities in the space or is there a new kind of competitive element of floating around out there that may not have been the present prior.
Yeah, I mean, I hate to sound like a broken record, but the acquisition environment just remains choppy I mean, we're still seeing some deals.
A fair amount of deals, we're actually seeing activity pick up in the UK.
But.
Once again it is.
It's choppy.
We continue to partner with our operators to do transactions.
There hasnt been a lot of.
Distressed situations that have presented themselves that haven't gone at distressed prices theres been sort of discuss real estate out there, but actually.
It's been up.
So.
We're seeing stuff out there, but its not like Theres, a whole land flight of new opportunities at the start.
Okay I appreciate the color there.
The more of a broader question on operations in general So theres some commentary out there that certain operators are looking to take on.
Higher acuity patients. So I'm wondering at a high level, maybe making can jump in here how that affects the cost structure on a per patient basis and the.
Then if this dynamic has to turn into a trend across the whole industry I mean, how could this look.
In terms of the the rate changes in years to come.
I mean.
There's been a push for higher acuity patients, obviously right that's been going on.
Yes.
You know the.
The relatively healthy folks are being treated at home or in the assisted living settings are just not the ones generally other settings.
So that's been ongoing.
I haven't seen any.
Dramatic change in that as of late it's just been a very very very slow evolution.
And.
Zone.
We haven't seen anything material in that respect.
Okay. Thanks for that and last 1 from me.
I apologize if I missed the detail here, but on the dividend. It seems like the payout ratio remains relatively comfortable even with the degree of ball strength. So I'm wondering how you guys feel about it at a high level of maybe what are the.
Payout ratio of bands Youre looking to working in the near future and whether or not you'd be willing to let that climb above 100 per cent for the short term if necessary.
Fortunately counter we've never had the deal with the above 100%.
From a board perspective.
Several years ago, we got into the 90%.
The range.
And we're comfortable with that because we can look forward and know we were going to get back into a more normalized range as we transition properties like DAYBREAK.
Earlier, so I think for us.
It really comes down to what's what's the outlook.
Ed.
A good example would be the operator, we're talking about the.
Stop paying us rent at June.
Part of the issue for them is the payback of that.
Medicare advanced payments.
Which has created liquidity concerns for those assets really desire so as we look long term.
We don't think.
There'll be any meaningful impact on our cash flow stream. So that's an example of.
The type of thing we look at say on a 4 basis.
Do we need to do anything for the dividend.
Ultimately, we're going to be in good shape.
Hopefully that's enough color.
Yeah, that's very helpful. I'll leave it there thank you.
For you.
Okay.
The next question comes from Josh Joshua Dinner line with Bank of America. Please proceed.
Yeah morning, everyone hope everyone's doing well.
I guess just curious on the the operator, who came to you in June about.
Having trouble paying the red.
Just any kind of additional color you can provide on like many of what was going out the operationally.
Wasn't unique to that tenant for many of something within that broader reason that up for.
Well, we should be watching.
No I don't think there is anything specific I think it's the the general items of the Taylor mentioned it's.
The stress on the occupancy.
And.
Huge stress on labor, which is <unk> com.
The occupancy issue if I can.
The staff and facility up adequately to come on the clinical needs of the residents.
The combination of those 2.
Events, and then NAND also seen them.
Through Covid, they had seen a fairly high rate of.
Folks taken.
So that compounded the situation but beyond.
Beyond that there was nothing else specific.
Okay and by taking the whole you mean, the staff of the residents.
It's both of.
Okay, and then speaking of staff I guess, just kind of curious are our operators starting to kind of incentivize their employees to get vaccinated.
The percent uptake seems pretty disappointing and then how are you guys thinking about.
Exploration of the ex.
Yeah extended the <unk> benefits I think it rolls off everywhere in September.
Should that be of help at all.
Yeah, I mean from the vaccination standpoint, the employees. It is still relatively low and our operators have been trying to incentivize them from the beginning some of that.
Monetary incentivizing and also trying to educate them with local leaders within the community.
So we are starting to see some uptick but I don't know that we're going to see anything substantial that's sad with the.
A delta of area. We are hearing that for staff are interested in taking the vaccines for that might help it pick up a bit as well.
In terms of the unemployment benefits the I think that'll be a big health of the unemployment benefits go away and then we can get people back to the breadth of that'll help of the staffing shortages definitely.
Okay awesome, thanks for the color.
Yes.
The next question comes from Nick Joseph with Citi. Please proceed.
Thanks, I was hoping to get more color on the potential watch list for any other tenants that are getting close to having issues paying rent.
So I mean.
I don't think our watch list has changed much.
You know we've got those operators, who are under 1 times coverage.
Usually there is a secondary source of repayment associated with those operators. So.
Mitigated.
The federal stimulus money certainly is running out.
So I think it's it's a little bit of operator, but it's a little bit of the geography too in the states that are.
They of another.
The huge rebound of the Delta variance.
Those are the ones that are kind of get hit.
Hardest of the ones that are probably most susceptible the liquidity issues. So we're keeping an eye on.
On that.
Yes.
The.
The incidence rates of the the viruses followed the incidence rates in the.
Counties are the communities in which they are and so.
I haven't necessarily transpiring over into the nursing home side, yet, but we're watching those communities, particularly in Florida in the south where the where we're seeing pretty quick upward trends in the in.
And the virus and.
I'm looking to see whether that.
In fact equates to the nursing homes have enough.
Pick up of the virus.
Those kind of things of what we keep a close eye on.
Thanks, I appreciate it and then as you think about the pressures on labor, obviously COVID-19 has the kind of a rectangle on margins.
But you know.
When you think about pre COVID-19, how much your ability what's there for labor costs to rise.
For the they would really causing the issue from a margin perspective.
Theres, a fair amount of room there.
I think.
The the best way to think about it is.
2 or 3% wage inflation would move coverage of few basis points.
We are seeing.
Areas, where the wage inflation is far greater than that.
7.8%.
So thats, obviously, some additional basis points, but.
In terms of general coverage out of 1.3.
We're not going to see a scenario where labor it takes that top line.
1.1.
That would be really meaningful changes in labor.
<unk>.
That being said the big drivers we've talked about in the past is getting occupancy duck because.
Each of each incremental resident I'll provide pretty substantial cash flow and that's really where the focus needs to be so.
Operators.
Find labor and they'll pay what the market needs to clear labor and that will impact coverages, but evolve.
The change the viability of the vast majority of operators the per room.
Thanks.
The next question comes from Daniel Bernstein with capital 1. Please proceed.
Hey, good morning.
Just wanted to go back to Florida, I mean is there are there any occupancy trends.
Debt, you've seen so far with the surge in the Covid virus down there I mean, you're about 6 weeks into.
The Delta virus, I guess surge in Florida, I mean, it sounded like.
Cases have gone up a little bit within facilities, but.
Has there been any kind of occupancy trend impacts.
Thus far.
I think we've seen anything from the state perspective, but certainly you know buildings that have smaller outbreaks are gonna have occupancy trending down from you.
Haven't seen anything yet.
Overall in the state.
Okay.
And then the labor shortages and wage pressures that are across the spectrum within the the labor pool for facility as it is at all.
Nursing care takers, just all levels of.
Of the you know labor within the facility or core.
Concentrated more in the.
Caretaker side of our concentrated more on the labor shortage on the nursing side, just trying to understand where the.
The nuance.
The of where the labor issues are.
You know it's interesting we've had operators point out in particular.
Nursing assistance and dietary staff so.
Do they tend to point out.
That that level of worker, where it's 14 of $15 an hour wage rates versus nursing necessarily.
I think that's 1 of the big pressure points right now workers, who have the ability into other other jobs.
Healthcare type jobs.
Okay.
And then you know going back to the tenant.
That's not paying rent is it is that tenant within the.
Pool, that's under 1 O EBITDAR instead of in addition to the.
The disclosure you have them.
The yourself momentum.
It would be in addition to what's in the supplement okay.
Okay, I just wanted to make sure that debt.
1 last question for me here.
Just on the the acquisition side of it.
Is there a I just wanted to understand the comments.
I guess.
None of way inside of opportunities is it more of a pricing issue where you have you know there is this just distressed the operators, but the pricing of the real estate is not really distressed at.
At this point.
Just want to understand where the.
The disconnect between the stress we've seen in the industry versus.
Maybe consolidation opportunities that you you would think would arise from this kind of distressed situations.
I think the buyer universe is still very aggressive in terms of picking up real estate.
So they've been willing to pay up for it. Despite the fact that the operations might be distressed.
Okay.
Alright, I'll hop off thanks.
Yeah.
Our next question comes from Rich Anderson with S. N B C. Nikko. Please proceed.
Thanks, Good morning team so on the back.
Back to the the tenant that gave you the noticed they did is there a can you can you quantify all of kind of a watch list of percentage of revenue that Youre looking at you said, 3% here, but is there a number out there that youre kind of keeping an eye on debt you can share.
Not specifically no I mean, the listen it's.
Since the since the virus came out we've been.
Austin contact with the virtually all of our operators.
That's the best way to keep an eye out is just what the communication with our operators of <unk>.
Done that and continue to do that.
So I think we're.
And we look at everybody and we have to gauge the level of risk of each every each and every operator.
You know, what's the what's your own I guess.
What's what's the over under on the.
At this time next quarter, you'll have another C. C. C is the high probability or.
Or nothing nothing is jumping out at you right now.
I think part of the answer to that question is.
We've been waiting on the last tranche of <unk>.
Federal money right.
Some of it is going to be timing related to that.
I remember there was $24.5 billion.
Megan mentioned in her prepared comments.
And we've heard I don't know of this is this came from offshore.
Debt.
There is another 20 billion of the I'm, sorry, $1 billion, probably for about $1 billion and another $20 billion has been pushed back into that fund principally from the hospitals. So the.
There might be $44.5 billion to be distributed and its going to be need space. So.
What happens to the reasonably timely way.
I think the handicap any of the quarters.
Pos.
And another good example would be Florida, there has been a big push of the logging side to get some money released for the state of Florida that that happens.
The dials down the risk that we see a lot of the last comment I'd make and again I'm just trying to give you as much colors of the cat as well.
We haven't had the type of conversations with any operator that we have of the 1 that we talk to a true as debt.
So that's the early indicators from <unk>.
Watch list of perspective for us, we just have that hasn't happened.
If there's no money forthcoming for the government or it's not timely sooner or later the occupancy rebound is going.
Is it going to be quick enough to prevent some other liquidity issues of what is half the tackle them when they arise.
Yeah, Okay, so what what.
Maybe a broader question anything about the what you've been through that's informing you about the future of OE Jai I know you've spent some time expanding into senior housing.
Withheld peaks deal, but do you see yourself as a more diversified story and in the years to come.
And the hanging your hat as much as you are in skilled nursing or do you sort of continue the course.
Muscle through whatever is to come.
Well we.
We the franchise of operators that are our partners are fantastic and we'll continue to deploy capital there, but the trend that you've seen in terms of the senior housing and other assets.
Now of about 1 fifth of the portfolio I think that continues.
Part of that's just supporting the operators of those property types, whether its maplewood R. R U K operators or otherwise I think youll.
Youll see that percentage climb over time.
Just as it has over the last 5 years.
Okay, and then lastly for me I think Steve said Maplewood, specifically occupancy.
The trough at 80.
Go May and is now at 87 did I get that right.
Yeah, that's correct.
That's really good right I mean is there anything about that 87 per cent number of youre seeing today that is as the app.
Apples to oranges to what other people reporting or is there something special going on that you're kind of already back into the high Eighty's occupancy wise.
So David you want to make sure. The 1 thing that we noted the the case, although it may not account for all of the difference between Maplewood and other operators is maplewood made of committed effort never to let off the marketing.
Investments during the Covid pandemic can still isn't it.
And I think in certain local markets they were rewarded for that.
Okay, great well, thanks, very much I appreciate it.
Again, if you do have a question. Please press Star then 1 on your Touchtone phone.
The next question comes from the Lucas Heart Heart, which with Green Street. Please proceed.
Hey, good morning.
So I suppose the inflation fears of receding, but on lease escalators I think most of those are fixed but are any are there any inflation protections built in or the purely fixed for.
The length of at least.
Hey, Lucas.
About 90, 798% of our of our leases are fixed escalators.
Okay, and then can you provide some color on the 3 and a half million dollar credit loss provision during the quarter.
Yes, so as you know theres a lot of components that go into the C sort of credit loss of <unk>.
So we have to go look at each 1 of our loans and Youre required regardless of debt you have to add some reserves for those loans. So it's kind of normal.
When I look at the kind of normal of current were going to have something every quarter from a loss standpoint.
Got it alright, and all my other questions were answered thank you.
You.
Okay.
At this time, we're showing no further questioners in the queue and this concludes our question and answer session I would now like to turn the conference back over to Taylor Pickett for any closing remarks.
Thank you all for joining us this morning as always we'll be available for any follow ups you may have.
Good day.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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