Q4 2022 National Health Investors Inc Earnings Call
Greetings and thank you for standing by and welcome to the National Health Investors fourth quarter 2022 conference call. During the presentation. All participants will be in a listen only mode and afterwards, we'll conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone.
At any time during the conference you need to reach an operator, Please press star zero and now I'd like to turn the conference over to Dana Hambly. Please go ahead.
Thank you and welcome to the National Health Investors Conference call to review the company's results for the fourth quarter of 2022 on the call today are Eric Mendelsohn, President and CEO , Kevin Pascoe, Chief Investment Officer, John Spaid, Chief Financial Officer, and David <unk>, Chief Accounting Officer, the results as well as notice of the accessibility of this conference call.
Listen only basis were released after the market closed yesterday in a press release, that's been covered by the financial media as a reminder, any statements in this conference call, which are not historical facts are forward looking statements NHI cautions investors that any forward looking statements may involve risks or uncertainties and are not guarantees.
A future performance.
Forward looking statements represent Nhi's judgment as of the date of this conference call investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in Nhi's Form 10-K for the year ended December.
31 2022.
Copies of these filings are available on the SEC's website at SEC Gov or on Nhi's website at NHI REIT Dot Com. In addition, certain terms used in this call are non-GAAP financial measures reconciliations of which are provided in nhi's earnings release and related tables and schedules, which have been filed on form 8-K.
Scenarios are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release.
I'll turn the call over to our CEO Eric Mendelsohn.
Thank you Dana Hello, and thanks for joining us today.
We're pleased to report that our fourth quarter funds available for distribution or <unk>.
Was in line with our expectations.
As expected fourth quarter <expletive>.
Declined from the third quarter, primarily from lower collections from two need driven tenants, which have now been placed on cash basis accounting and a third tenant whose lease we restructured during the quarter.
We're also pleased to report that we achieved our full year 2022 F guidance. Despite all the moving parts involved in our portfolio optimization. In addition to industry headwinds and capital market disruptions.
While we will continue to make dispositions and provide limited financial assistance to certain operators the execution of our portfolio optimization is largely complete.
We decided in early 2021 to divest a significant portion of underperforming properties. We were fortunate that the market was so accommodating at the time as we sold 32 senior housing properties for $296 million with low single digit implied cash yields and average coverage below.
So <unk> five times.
We also strategically sold seven non core former MHC buildings for $44 million with minimal rent impact this year.
The benefits of our considerable efforts are evident through steady improvements and the need driven senior housing coverage ratios stronger collection rates and declining rent concessions.
The entrance fee in skilled nursing businesses from which we generate over 60% of our NOI have been steady performers throughout the pandemic and we expect that to continue in 2023.
As we transition back to growth, we see several internal and external drivers. We have total deferral balances and notes payable of approximately $53 million, which we expect to collect our creatively used to generate shareholder value.
For example, fourth quarter repayments from four tenants totaled approximately 420000, including 183000 from Bickford.
We also used $3 million of the Bickford deferral balance in lieu of cash.
As part of the acquisition of a newly developed property in Virginia Beach in the fourth quarter, and we just announced a similar transaction using $2 5 million of that deferral balance in lieu of cash for a property in Chesapeake Virginia, both properties are over 90% occupied.
Fair market value rent resets on restructured leases and transition properties are also expected to incrementally enhance organic growth over the next few years as operations stabilize and tenant margins improve.
The largest internal growth opportunity is in our shop portfolio, which was just formed in the second quarter of 2022 and transition to new operators after several years of neglect.
We're not satisfied with our fourth quarter results, but continue to see a path towards significant margin improvements as we get the right personnel in place and invest more substantially in the properties.
Our expectation has not changed on shops upside potential as we continue to target incremental annual NOI from that portfolio of $6 million to $8 million in the next couple of years.
The greatest growth.
Opportunity continues to be externally through acquisitions, and new loan originations throughout the portfolio optimization process. We've been laser focused on maintaining a strong financial profile understanding that disjointed markets typically revert to the mean and that discipline and patients are.
Eventually rewarded.
We believe that we've reached that point and we are well positioned to take advantage of what is increasingly becoming a buyer's market. We have succeeded in keeping our leverage within our stated financial policies. We also repurchased $152 million of our stock, which added approximately <unk> <unk> per share.
Two our 2022, NFO and should have a greater per share impact this year.
We made $101 5 million in 2022 investments and have already announced investments of $54 8 million in the first quarter of 2023.
We still have approximately a $135 million and available capacity to deploy without new equity, while maintaining our target leverage goals.
Of course, we also have additional capacity on our revolver and ATM should the right opportunity presented itself.
Despite the headwinds we faced in 2022, we still felt it was important to signal that we have command of our business, which is why we issued full year guidance early in the second quarter.
We are once again issuing full guidance this year with a view that there is less noise versus last year.
Obviously, we face a more difficult interest rate environment and industry challenges are likely to persist, but overall our visibility has improved.
We believe our fourth quarter 2022 results provide a good baseline from which we can start growing again.
Based on an annualized fourth quarter <unk>.
Our full year guidance implies growth of three 5% to 5% and this excludes any unannounced investments.
I'll now turn the call over to John to discuss our financial results and guidance in more detail John .
Thank you, Eric and Hello, everyone.
As Eric mentioned, we were able to achieve the top end of our funds available for distribution guidance.
For the year ended December 31, 2022, our net income NAREIT <unk> and normalized <unk> per diluted common share were $1 48 $3 55.
And $4 30 per share respectively.
For the fourth quarter and year ended December 31, 2020 to RFID.
<unk> was $44 $7 million and $201 million respectively.
When we reiterated our guidance during the third quarter earnings call. We were confident in our guidance, but we also knew our continuing portfolio optimization optimization efforts. We are likely to result in further fourth quarter impairments write offs and reserves.
Our Chief Accounting Officer, David <unk> will discuss in greater detail.
Significant items affecting our fourth quarter results in a moment.
One item I wish dimension is that our $4 30 per share normalized <unk> includes the fourth quarter $8 7 million or approximately <unk> 20 per share credit loss reserve.
Fourth quarter net operating income for our shop segment was a disappointing $1 $9 million down.
Down from $2 8 million in the third quarter.
Offsetting the lower than expected shop NOI performance in the fourth quarter were fewer than forecasted new rent concessions and the collection of 420000 rent deferrals from four operators.
Kevin will discuss this more in a moment, but our pipeline investment volume has recently increased.
As Eric mentioned for the fourth quarter, plus the recently announced 2023 acquisitions, we have closed over $114 million in investments at an average initial first year yield of seven 6%.
After redeploying the retired mortgage investment capital and the utilization of $5 5 million and Bickford rent deferrals, new capital used in these investments was approximately $88 million.
Since the third quarter through the date of our earnings release, we have not closed any additional dispositions.
Assets held for sale ended the year at $43 3 million or 13 properties.
Kevin will discuss our expectations and timing for future dispositions in a moment.
Last night, we provided you with full year 2023 guidance our guidance includes continuing asset dispositions rent concessions and loan repayments throughout 2023.
Our guidance includes $55 million, and recently announced investments plus the continuing fulfillment of our commitments are.
Our guidance does not include any additional unidentified investments for repayment of outstanding deferral balances.
During the fourth quarter, we did not purchase any of our stock and ended the year with $88 million in available share buyback authorization under our 2022 share repurchase program, which was set to expire in April of this year.
So in light of the pending expiration last night, we announced a replacement $160 million one year share repurchase program.
At the end of January we had $202 million on our revolver. After recent acquisitions and the January retirement of a $125 million private placement loan.
Our next debt maturity is our $240 million term loan due two.
Due in September .
Our leverage ratio was where we expected it to be for the fourth quarter at four seven times net debt to adjusted EBITDA.
Current automatic shelf registration and ATM prospectus supplement expires in March.
So we will be working toward replacing these facilities in the first quarter.
At the end of January we had ample liquidity with over $500 million in cash and revolver availability.
Having said that we continue to evaluate our debt and equity capital market options. So that we're sure to continue to maintain appropriate liquidity levels as our investments rice.
Finally.
Our fourth quarter <unk> payout ratio was in line with our expectations at a well covered 87, 3%.
As we announced last night, our board of directors declared our first quarter dividend at <unk> 90 per share for shareholders of record March 31, 2023 and payable on May five 2023.
With that I'll now turn the call over to David David.
Thank you John our results for the fourth quarter include three discrete items.
Our rental income for the fourth quarter included $3 million for Bickford pandemic related deferrals the purchase price for the Companys acquisition at the Virginia Beach community included the $3 million in reduction of outstanding deferrals.
The fair value of the real estate received necessitated recognition of these deferrals as revenue.
Given the nature of this item we've removed it from the determination of normalized SSO in F. <unk>.
Consistent with our policies for non-GAAP measures, we expect a similar item in the first quarter for the recent acquisition at the Chesapeake, Virginia community, but the accounting for that acquisition is not complete.
As Eric noted in his comments, we converted two tenants to cash basis of accounting for their leasing arrangements.
In aggregate $8 million write off of straight line rents receivable. This item reduced net income and NAREIT defined <unk> by approximately 18.
Make sure fully included as a normalizing adjustment in the determination of normalized SSO and.
Again, consistent with our policies and past practice.
The company also has two loans totaling $24 $5 million with one of the tenants converted to cash basis that were designated as non performing during the fourth quarter. We recorded additional credit loss reserves of $8 $7 million primarily related to these two loans. Our total reserve for these loans is approximately.
The $11 $4 million as of December 31, 2022.
We will continue to evaluate these loans in future periods and make any necessary adjustments to the reserves, whether positive or negative should circumstances change.
The credit loss reserve as adjusted in the determination of that.
Consistent with our policies. Therefore, this additional stance has negatively impacted our net income and SSL metrics by approximately <unk> <unk> per diluted share, but had no effect on F 18.
I will now turn the call over to Kevin.
Thank you David.
Ill concentrate my comments on investment and disposition activity as well as the performance of our major asset classes and operators.
We did not sell any properties in the fourth quarter as the market slowed primarily due to the rapid rise in interest rates, which is making by our financing and more difficult to secure.
We currently have 13 properties and assets held for sale with a net book value of $43 3 million in fourth quarter cash rent of $1 million before any consideration of rent concessions.
We do have a few closing scheduled but beyond that is difficult to predict the timing of future sales in this market.
Fortunately, we completed the majority of our dispositions prior to the recent downturn and have more resources focused on acquisitions again.
As Eric and John described we're in great financial shape and eager to deploy capital at a time when capital is increasingly scarce.
We made investments of approximately $60 million in the fourth quarter at an average yield of seven 5%. We are off to a good start this year with $54 8 million in investments at a weighted average yield of seven 7%.
This includes the $37 5 million acquisition of two newly developed memory care communities operated by Silverado senior living which is a new relationship for NHI.
Pipeline is active with what we believe are more actionable deals than we have seen relative to the last couple of years.
That said, we have learned valuable lessons, which have improved our underwriting process and we are willing to be patient as the market shifts in favor of buyers, creating more shareholder value over the long term.
Shifting to asset management as Eric noted the portfolio optimization is largely complete and we started to see positive results.
Overall fourth quarter collections of contractual cash deal was strong at 98, 1% with deferrals of $1 2 million, which compares to 97, 9% at $1 4 million in the third quarter.
The optimization efforts have been mostly focused on senior housing need driven portfolio, which accounts for approximately 27% of adjusted NOI.
Coverage trends continue to be positive.
Selling 12 month EBITDA coverage through September improved sequentially for the third straight quarter to one two times and is the highest since the third quarter of 2020.
The improvement was driven in large part by Bickford at one nine times for the trailing 12 month period.
<unk> pro forma coverage, which fully accounts for the April one rent reset was 131 times.
As outlined in our earnings press release Bickford occupancy declined in the fourth quarter and again in January .
Leads and sales have actually been strong, but just have not kept pace recently with move outs, which have been predominantly and unfortunately due to that.
Bickford implemented a high single digit price increase in December which is offsetting some of the occupancy decline.
One of our high priority strategic goal has been to strengthen our bickford portfolio to withstand these types of fluctuations.
Beside from Bickford coverage is improving across the other 40 70, driven properties, where we reported coverage at <unk> 96 times, which is a material improvement from a low of <unk> 76 times in 2021.
Covered should benefit in future periods as we complete remaining asset sales and rent restructurings are fully factored in.
During the quarter, we placed two operators on cash basis, accounting and we restructured the lease or another operator.
These three accounted for four 6% of the fourth quarter cash collections, which should decline as we are working on selling several properties associated with the cash based tenants.
Yes.
Continuing with our discretionary senior housing portfolio. This group accounts for 30% of adjusted NOI, including 27% from CRC entrance fee communities.
The entrance fee portfolio continues to perform well as it has throughout the pandemic.
SLC, our largest tenant had EBITDA coverage of one to two times SLC is occupancy improved throughout the fourth quarter and again into January at 84% up 230 basis points year over year.
Our senior housing discretionary coverage, excluding SLC, which largely reflects the performance of the entrance fee communities with very comfortable at 169 times.
We are mindful that entrance fee properties are more correlated to the housing market to have been monitoring our CRC geographies and have not experienced any meaningful impact at this point.
Remember that the average length of stay in our entrance fee communities is six to 10 years. So we believe this somewhat insulates the properties from short term housing moves.
Sniff portfolio, which represents 36% of annualized adjusted NOI continues to have solid EBITDAR coverage of 241 times, including 298 times at NFC and two point or three times for other sniff operators in our specialty hospital.
The year over year and sequential decline in the coverage is primarily by NFC who's corporate fixed charge coverage ratio has been impacted by a decline in revenue from federal government stimulus programs.
At the NAC property level coverage benefits from the sale of the seven noncore sniffs.
In the northeast during the third quarter.
NFC remains an excellent credit along with the Ensign group anchors the sniff portfolio.
Arc five other sniff operators have received minimal rent concessions and repayment on this nominal amount began in the fourth quarter.
Lastly, in our shop portfolio, which represents 3% of adjusted NOI occupancy decreased to 110 basis points sequentially to 75, 8%, while Revpar again declined slightly as we continue to use price as one tool to drive lead volumes and move ins.
Operating expenses continued to show significant inflationary pressures, which contributed to the NOI margin to decline to.
The 16, 5% in the fourth quarter.
While the 2022 results were below our expectations, we still see significant NOI upside over the longer term.
Our operating partners have repositioned the management teams of the local communities over the last six to nine months and in conjunction with capital projects planned for 2023, we are expecting fundamentals to improve over the course of 2023.
I'll hand, the call back to Eric for his closing remarks.
Thank you Kevin with.
With the conclusion of our asset dispositions and tenant repositioning activities at hand, NHI is in a great position to capitalize on the significant growth opportunities, both organically and through accretive acquisitions.
Industry fundamentals and capital markets should continue to present challenges this year, but we've demonstrated our ability to anticipate and incorporate these issues into our guidance.
The outlook for 2023 is much more promising in our view and we look forward to demonstrating our progress as we returned to growth.
Operator, please open the line for questions.
Thank you if you'd like to register a question. Please press the one who by the four on your telephone you may three.
<unk> <unk> technology to request.
That's your question has been answered.
I could draw your conclusion and it's the one part by the floor.
Once again to ask a question maybe the one four on your telephone keypad.
One moment please for our first question.
And we'll get to our first question on the line.
John Kim with BMO capital markets. Please go right ahead.
Thank you.
Wanted to ask about shop occupancy you noted the.
Disappointing performance occupancy going down over the last six months.
Can you just provide any more color on why you think thats happening versus your peers benchmark of almond butter.
Hey, John this is Eric.
We're not happy with the shop performance either.
I would just say that we took over these buildings.
In April of last year, you heard about our litigation with well tower, you can imagine that well tower was not treating these buildings.
As well as there are other buildings. So we had a lot of making up to do when we got the buildings, we're making good progress as we do that we're putting a lot of new.
Capex in the buildings, we've hired some new salespeople and we have a lot of confidence in discovery and Merrill Gardens, our two operating partners.
But it's going to take some time.
And so on the $6 million to $8 million with NOI upside that you reiterated what do you think the time frame for that.
Hey, John This is Kevin I mean, what <unk>.
Alluded to in our comments is that it is going to be over the next two years or so it's going to take a little bit of time to continue to stabilize the buildings as Eric mentioned, we're still we're seeing the funnel rebuild in terms of lead volume and move ins.
Had a fair amount of move outs and kind of like what we've experienced elsewhere in the portfolio through the winter.
So some element of seasonality there, but also some frankly some declining length of stay so it's a matter of getting the buildings stabilized getting the teams where we want them. We do think that we are there from a team perspective, and getting them, where we want to be from a rebuilding the funnel lead volume perspective, and we are seeing move ins.
I think the momentum is there, it's really matching and exceeding the move outs, which we believe youll see over the course of this year.
Okay.
You also asked about Bickford, you acquired two assets with them.
Any commentary on your comfort level with growing with them as an operator I realize the coverage has improved over the last few quarters, but you have also given some of the deferrals.
Any comments on how you see growing the book for Bunzl.
The growth will be muted and cautious we look at the portfolio. The size that we have now as the optimal size.
We're still planning to sell two or three buildings in the portfolio you can see those in our properties held for sale. The buildings that were buying are ones that we funded using construction loans and were very happy with the markets, we're very happy with the quad.
<unk> of the build.
<unk>.
For example, the one in Virginia Beach filled up during the pandemic to 95% occupancy so.
These these new buildings are doing a lot better than the ones that we're selling.
I appreciate it thank you.
Thank you John .
And once again as a reminder, if you'd like to ask any questions or comments you may do so now by pressing the one oh by the four on your telephone keypad.
Yes, the one floor for any questions or comments.
And we'll get to our next question on the line.
Is from Tayo Okusanya with credit Suisse. Please go right ahead.
Hi, yes, good afternoon, everyone.
The two tenants that you move to cash basis could you talk a little bit about what the contractual rents were for those tenants actually how much task.
Got it.
<unk> fourth quarter, and what kind of cross wins deeper built into your 2020 guidance.
So.
Tayo, we did end up deferring some of that.
I think youll see in the deferral section right.
So we might have to get back to you on your question on the cash rent on those two tenants.
What we did in our.
Guidance, though was we did several things one is we looked at.
Some of the assets held for sale when they would be disposed of.
We took a look at what they are able to pay on cash basis and then.
Filter into the guidance.
Some concession needs.
For those tenants and.
We haven't really been able to give you a lot of in depth detail on what we're going to do there for a lot of reasons. One is we don't want to give you too much detail on that particular tenant that you might be able to drill down on and identify we're always very very sensitive to that and very careful.
But let us let us look at that your question a little bit more detail and see if we can't get you a better answer offline.
Okay. That's helpful and then.
Hi, Tayo.
Hi.
I can help you out a little bit Kevin mentioned in his prepared remarks.
Was.
It was the two that were non cash based accounting and then another lease that we restructured it was about four 6% in the fourth quarter that was about $2 $7 million between those three and then we can we can follow up his view on the two cash based accounting tenants.
Okay. That's helpful.
The nonperforming loan in the quarter as well could you talk a little bit about did you actually record any interest income on those loans in <unk> and what's the expectation going forward.
Hi, Tayo this is David Travis.
We would have recorded the interest that they would have paid so I think there was to potentially a timing issue since they were delayed and some of the payment of interest but for the most part we will recognize those as they pay it. So there can be a little bit of timing issues quarter to quarter since they are now.
And effectively cash basis or nonperforming status as well.
Gotcha Okay.
That's helpful on that last one for Kevin.
In regards to again some of these potential rent reset.
That could happen going forward and create upside to your numbers.
Kind of walk us through like the two biggest with central.
Ranked <unk> in the portfolio and when.
So the ramp themselves are eligible for <unk>.
Sure.
Three customers really that have that feature that would probably be more of a meaningful impact to the business. The biggest of course being bickford that would not happen until April of 2004. So we've got another.
Year and a few months before we would see that happen that is a minimum of a yield on our invested capital believe thats, 8%. So youll see some sort of step up from where we were the $28 million that we have in place currently represents about a 7% yield so theirs.
Reasonably sized pickup on it.
Theres another portfolio that we have not really talked about the specific customer, but that was a sizable number as well it's probably.
If a rent reset to the baseline of where we were as another $2 million to $3 million I think what we need to do is just proactive.
Asset managers here is to make sure that we continue to monitor the portfolio and cultivated decide if theres going to be others that we would look to sell or move away from so there is some potential step ups that we would expect in the portfolio, but that said, if we're not seeing the potential out of them.
The good stewards that we would need to be is to try and move away from some of those properties, which may impact the rent that we would collect off of them.
Okay. That's helpful. Thank you.
Thank you very much we will now proceed with our next question on the line.
Rich Anderson from Smbs go.
Go right ahead.
I'm sorry about that was on mute.
Good morning, everybody down there. So if we can sort of get sort of into the cadence of how things may go.
Your guidance has come in.
Well below street consensus.
I think it's.
$4 52, or thereabouts, I think there might be a few fraudulent estimates in there, but still kind of below expectations. So if we could sort of reset if we did 85 in the fourth quarter, what would be kind of if you move all the things around that happened in the fourth quarter, what would be kind of the run rate.
There isn't like a dollar and change and then you kind of multiply it by four you get to something like 420 ish or something like that Thats. The way to think about it and then anything more that you might do from acquisitions and so on is the way to sort of formulate our thought process for this year.
Yes, rich this is John .
Right you are absolutely right, we had a lot of.
Onetime irregular events impact <unk> in the fourth quarter, so <unk> would've been closer to say.
Well mid single digit one.
5% or somewhere in that range had we not had those adjustments.
So we're starting from that base roughly.
We worked hard.
I wanted to just remind everyone that in the third quarter when we.
Gave you some information about what how we thought about guidance.
I identified.
We couldnt narrow our guidance going into the fourth quarter, because we knew there was some more work that needed to be done around.
Asset held for sale and some other things I just had no idea how big an impact those are going to affect us in the fourth quarter.
So those are noncash items, David can talk a little bit more about what what.
The seasonal reserve.
Means I mean, it's a reserve.
But from there moving forward, we do expect the shop portfolio to improve we have organic.
Cash flows that will materialize in 2023 from normal escalators, we've made a number of recent investments.
Which will.
Impact are.
Earnings as we move forward.
<unk>.
We will continue to kind of execute around.
And the things that we see is organic opportunities.
Because our guidance does not include any deferrals.
It also does not include any additional unidentified investments and I think thats, where the average analyst.
Numbers are sort of differing from our numbers.
We're making some assumptions about what might happen in terms of improvements.
That could show up in our <unk>.
And our numbers later this year I, just don't have a lot of visibility to be able to incorporate those into guidance today.
Okay.
So this is curt.
Base.
Based performance for the year that should hopefully trend up you're not saying that now, but hopefully it will trend up as the.
As time passes.
So the other thing of course.
That's exactly right.
We've moved to FAA D.
And I want to reemphasize that <unk> came in at the top end of our guidance for the year. So we've given you guidance regarding our credibility carefully we want to under.
Promise and over deliver like we did last year. So we're really working on that we know we have work to do on the shop portfolio.
We have work to do on some of these other things including dispositions.
Our guidance does continue to include some level of concessions for the year. So youll see that as we move forward.
But we feel good about where we are at.
At the end of the fourth quarter and the improvements we will see.
You could call it sort of the baseline.
Moving forward and then any upside that we can.
We can uncover through the year will just be accretive and help us allow us to move that guidance upward that's our goal.
Okay second question for me is.
The $53 million of sort of the deferred balance that you have right now today.
Is the sort of the timeline to.
Sort of recording that back into income.
Through to sort of 2025 ish is that what youre thinking or is it quicker or longer than that in your mind.
This is Kevin I would tell you that.
The way we have restructured the leases is to give the next <unk>.
<unk> to 24 months, the best opportunity for them to get there.
You see legs, so to speak and start to repay those balances and then after the reset it doesn't mean the rent goes away, but the base rent does go up so the ability to repay on those balances.
Is going to be lower amounts after that so as we would probably look at it it would be over the next two years or so so I think youre right to kind of the 2025, Mark is where we should see the most.
Inflow from some of those deferred balances, but again that doesn't mean, they necessarily would go to zero after that.
Right. So what do you think 53 is a bigger or smaller number of halfway through this year in other words, you mentioned something like might be more in the way of deferrals, but maybe.
Maybe you get some payback to do.
Do you see it trending up or down from here that $53 million number dollar number.
Well. So this is Kevin again, I would say that.
Sure.
Allowed for a certain amount.
<unk> process as we approach the year, knowing that we're not 100% beyond some of our.
Sales processes and whatnot that we mentioned.
That said <unk> also seen a run rate of deferrals go down over time.
So I think we're on a much better path I think youre going to continue to see some level of payments towards those deferred amounts.
So while we're not expecting at least.
Huge dollars over the next few months, but you are starting to see some progress there and we should start to see that pick up as the operators continue to heal.
I would like to think that the balance would go down over time.
We do need to get some of these sales completed.
And finish with a couple of these customers just from a.
Some minor restructurings, we mentioned that a couple of cash based.
Tenants that we have but again as Dana pointed out those represent less than 5%. So we're kind of back to where it used to talk about 5% of the portfolio as always.
Has some work to do.
Okay sounds good thanks.
Thanks Rich.
Thank you very much.
Mr. Mendelsohn there are no further questions at this time I will now turn the call back to you for any closing remarks.
Alright, Thank you and I'll look forward to seeing many view at the.
Nick Conference week. After next thank you.
Thank you very much and thank you everyone.
That does conclude the conference call for today.
We thank you for your participation and ask please disconnect your lines.
Have a good day everyone.
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