Q3 2023 Sabra Health Care REIT Inc Earnings Call
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Good day, everyone. My name is Brianna and I will be your conference operator today at this time I would like to welcome everyone to the Sabra third quarter 2023 earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
He would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you go back to what Jan.
One again.
I would now like to turn the call over to Luca Hartwick SVP Finance. Please go ahead Mr. Horowitz.
Thank you and good morning, before you 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 our expectations regarding our tenants and operators and our expectations regarding our acquisition.
<unk> 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 including the risks listed in our Form 10-K for the year ended December 31, 2022, as well as in our earnings press release included as exhibit 99 one.
One to the form 8-K, we furnished at SEC yesterday.
We undertake no obligation to update our forward looking statements disparate 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 during 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 the comparable GAAP results included on the financials page of the investors section of our website at Sabra health Dot com.
Our Form 10-Q earnings release and supplement can also be accessed in the investors section of our website.
And with that let me turn the call over to Rick matrix, CEO, President and share Sabra health care REIT. Thanks.
Lucas.
And so those aren't familiar that song leading into the call.
It's the natural adds to the state of Israel and it means the hope.
Today's one month anniversary of the massacres in the Hartford takeaway.
There is a saying that.
We just have.
Uh huh.
Mr Al Hi, it means that people of Israel live.
And it's never been as important to us as it is today with.
We're here, we're not going anywhere with.
With the levels of anti Semitism in the U S and you're hitting levels that we haven't seen since authorities.
Jewish friends don't feel good they are not okay.
Their kids don't feel safe.
It's really important for all of US that you use your voices that you reach out we all know where solids leads us.
Thank you.
Now onto the quarter.
I'm pleased to report the work, we put into improving our portfolio has positioned it to be stronger than it was pre pandemic, our dispositions and transitions have enhanced the quality of our portfolio and our credit quality. Our EBITDA coverage is up in all asset classes occupancy in our skilled nursing triple net senior housing and shop portfolios continue to improve.
Roof.
Our two significant transitions north American to Ensign and live into spirit continue to show material growth validating our decision to move those portfolios those particular operators.
Our skilled nursing concentration continues to drop and is now at its lowest point since inception, enhancing the diversity diversity of our portfolio. Our balance sheet is exemplary with no near term maturities no floating rate debt outside of our revolver and Leverages ticked down and will continue to improve as our cost of capital continues to show.
<unk>, we look forward to being a net acquirer again in 2020 for focusing on singles and doubles and all of our asset classes.
So we're not providing guidance yet we do plan on providing full year guidance 2020 for early in 2024.
Couple of other comments.
One regarding the mandate.
And the final rule and timing.
The original goal for the industry was to submit 10000 comments with CMS. There now been over 40000 comments submitted the great majority by far against against the rule CMS is required to go through all these comments. So it's going to take quite some time, we believe before there's a final rule and then the actual <unk>.
Impact of the rule if it should come to pass, it's probably a couple or three years down the line.
In terms of.
Our behavioral segment, we saw some concerns in the notes about the behavioral segment is performing well and Youll hear more comments about that as we go through today's discussion and with that I'll turn the call over to Italia.
Rick.
Our wholly owned managed senior housing portfolio has shown strong positive momentum over the past five quarters with a significant increase in cash net operating income as the result of strong revenue growth and expense control the headline numbers for the wholly owned managed portfolio on a same store basis, excluding non stabilized assets in Gulf.
Vernon stimulus are as follows occupancy for the third quarter of 2023 was 81, 9% a sequential increase of 170 basis points the highest occupancy T.
That we've had in the past five quarters.
Quarterly occupancy and our independent living portfolio improved significantly increasing 240 basis points on a sequential basis.
Revpar in the third quarter of 2023 increased by five 8% over the third quarter of 2022 and.
Annual rent increases in our portfolio begin to rollout October 1st and continue from there into early 'twenty 'twenty. Four we expect that ranked increases will be more tempered compared to recent years, probably in the 5% to 7% range.
Excluding government stimulus funds cash NOI for the quarter grew five 3% sequentially and more than 28% over third quarter 2022, all of our larger portfolio saw a substantial increase in cash NOI propelled by revenue growth leveraged by flat to lower expenses.
We transitioned the 11 assisted living properties from alive into in spirit in early July that portfolio's third quarter occupancy increased 70 basis points and cash NOI increased 16.4% both on a sequential basis.
Average occupancy in September was more than 230 basis points higher than in June while cash NOI increased 88% in those same periods. We are optimistic that we will see continued improvement in operations as the portfolio continues its recovery our.
Our holiday same store portfolio has continued to have positive net occupancy growth a trend that began this past June with 220 basis points of occupancy gains and seven 9% cash net operating income growth on a sequential basis inquiry volume as well as conversion to move in rates have increased meaningfully quarter over.
For the quarter. In addition move outs have declined to their lowest level in a year after trending up since third quarter of 2022 move out levels appear to have peaked in the first quarter of this year and have since trended down with acuity and deaths continuing to drive more than half of the move outs.
Our net lease stabilized senior housing portfolio continues to perform well growing occupancy that is now that that remains at pre pandemic levels and improving rent coverage at the end of the third quarter <unk> investment in behavioral health included 17 properties and two mortgages with a total total investment of just over eight.
$100 million.
RCA Monroeville, a residential treatment center that opened in late 2020 was added to the stabilized pool in the second quarter bumping coverage app for the pool shown in our supplemental by 0.05 times, but nudging occupancy down two 5% on a TTM sequential basis. This reflects that the bra.
<unk> even point of this property types occurs at a much lower occupancy level than in skilled nursing and senior housing.
In late September fabric completed the first phase of the redevelopment of a 132 bed residential treatment center in Greenville, South Carolina, which is pre leased to one of <unk> operators. We continue to spend time on behavioral health, including meeting with established as well as smaller operators to assess the best path for Sabra to continue.
To invest in this underserved sector and with that I will turn the call over to Mike Castor Sabra Chief Financial Officer.
Thanks Tanya.
For the third quarter of 2023 were recognized normalized <unk> per share of <unk> 33.
Normalized <unk> per share of <unk> 34.
In line with our earnings reported for the second quarter of 2023, and consistent with the expected normalized <unk> and normalized <unk> run rate of between 33 and <unk> 34 per share we have communicated in the last several quarters.
In terms of absolute dollars normalized <unk> increased $2 $1 million sequentially, driven primarily by a $700000 increase in NOI from our managed senior housing portfolio, a $600000 increase in cash rental income and a $200000 decrease in cash interest expense.
Also as of September 32023, our annualized cash NOI was $453 5 million and our sniff exposure represented 54, 3% of our annualized cash NOI down 140 basis points from the second quarter and down 570 basis points from a year ago. This annualized cash.
NOI reflects the impact of sales completed during the quarter as well as some of the realized upside from our managed senior housing portfolio property transitions and behavioral conversions.
Like last quarter. We have included a table on page 14 of our supplement which illustrates the upside opportunity in our annualized cash NOI from the recovery in our managed senior housing portfolio as well as from the stabilization of our previously disclosed property transitions and behavioral conversions.
This table has been updated to reflect the impact of sales completed during the quarter, which accounted for the majority of the change in our expected NOI from last quarter with the remaining difference due to quarter to quarter noise in our cash basis tenant pool.
Now turning to the balance sheet, which continues to be a source of strength, especially in the current lending environment.
Our net debt to adjusted EBITDA ratio was 557 times as of September 32023, and is down <unk> four times from the end of the second quarter as a result of improved performance in our triple net in managed portfolios as well as from the impact of asset sales completed during the quarter, we expect leverage to naturally decrease as we.
We realize the upside opportunities in our portfolio that we have outlined in our supplement.
We remain committed to our long term average leverage target of five times and because of the embedded upside in our portfolio together with proceeds from any potential future disposition activity. We are confident we can achieve that target over time without needing to access the capital markets.
Our opportunistic long term debt issuances and proactive hedging together with having a well ladder maturity schedule and no material maturities until 2026 result in a predominantly fixed rate balance sheet that provides us with significant cost certainty for the foreseeable future.
Excluding our revolving credit facility, which makes up just one 4% of our total consolidated debt, we have no floating rate exposure and our cost of permanent debt is 395% as of September 32023. Additionally.
Additionally, through our hedging activities. We are currently saving over $16 million per year in interest expense, which provides a solid foundation to realize earnings growth in future periods.
As of September 32023, we were in compliance with all of our debt covenants and have ample liquidity of $1 billion.
<unk> of unrestricted cash and cash equivalents of $33 million and available borrowings of $967 million under our revolving credit facility.
Finally on November six 2023, our board of directors declared a quarterly cash dividend of <unk> 30 per share of common stock.
The dividend will be paid on November 32023 to common stockholders of record as of the close of business on November 17th 2023, the dividend represents a payout of 88% of our normalized <unk> per share and with that we'll open up the lines for Q&A.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Okay.
Our first question comes from the line of Joshua <unk> with Bank of America. Your line is open.
Yeah, Hey, guys I appreciate the time, Rick I heard your comment you're opening remarks about being a net acquirer in 2020, Forbes kind of curious on where you are seeing the opportunities and what kind of cap rates, you're seeing out there.
I can take that Italia.
Cap rates is a really really tough question to answer in this environment.
I think we.
We have seen mostly.
Off market.
Opportunities brought to us by operators that have and those have been the deals that have been more interesting.
And.
Less <unk> less.
Less capital, sometimes capital stack issues, which is easy for us to solve.
But the high part of course is if we if we're trying to we're trying to buy deep value add that that's more challenging for us because we can affirm really solve that when you're an operator to solve that and that takes time.
So the off market deals have been most interesting.
But we're actually seeing a pickup in deal flow.
I think a lot's going to trade.
At unit value I think we're already seeing that I think the banks are also going to be.
Addressing some of their.
Load if you will.
So I think there could be opportunities arise that but right now it's it hasn't it hasn't.
Deal flow is still is stronger and it's still more mainstream than I would expect it to be there's not massive distress yet coming through.
Yet.
I appreciate that and then maybe just on sources of capital.
Or maybe a better question would just be like how far away are these like opportunities away from my kind of how you think about your cost of equity cost of capital.
Yes, I mean in terms of cost of capital as you know the last two years any investment activity. We've been doing has been funded by selling off underperforming assets, which provide a really cheap cost of capital, but we're largely done with that.
So that's not necessarily going to be a meaningful source of anything going forward.
It's really going to depend on where our stock starts trading to be completely blunt.
We're trading around <unk> right now, which is great we would like to see our stock price.
B.
A little bit higher than that comfortably above NAV before we start using that as a form of currency.
And at that point I think we have the ability to.
Use a combination of equity through our ATM, our revolving credit facility.
And any potential sales proceeds to Finance Act.
Acquisitions that are going to be in the cap rate ranges that we've seen in the past call. It high single digits at that point that becomes something that we can make accretive.
One thing I would add to that.
Try to emphasize that people really understand outside of our revolver, we have no floating rate debt.
So using our revolver to matches as Mike just talked about.
I would still put us in a very very good position, given where the rest of our debt life.
Thanks, everyone.
Okay.
Your next question comes from the line of Vikram Malhotra with Mizuho. Your line is open.
Hi, This is Joe your Encore Vikram can you just comment on and do you watch a simple small tenants that could be at east and could you. Please provide more color on landmark and what's your exposure there.
Yeah. So we don't have.
Tenants that we really view at risk.
At this particular point in time are.
Tenant base, that's under one times remains in the 5% to 6% level, which is where it's been really throughout the pandemic and before as far as land markets concern there are less than 1% of our NOI and.
We saw the notes there were some issues raised around it but they're staying current on rent and.
This is immaterial to us so but they are staying current on rent. So we just don't see any issues there right now.
Okay, Great. That's helpful and can you just brief walk us through the changes in timing of the long term in way to great growth opportunity.
Yes.
The biggest change that I would focus on is the bottom line number and that number came down sequentially basically because we sold assets during the quarter that's really at the.
The steps between what our actual annualized NOI was in our pro forma number those change quarter over quarter, but thats because again, we sold assets. There is some of that upside that we've already realized that's already in our baseline number. So I think the main thing to focus on is what the change that bottom line number was and thats predominantly.
It related to sales.
Great. Thank you so much for taking the question.
Yes.
Your next question comes from the line of Juan Sanabria with BMO capital markets. Your line is open.
Hi, Good morning, I, just wanted to follow up on Josh his line of questioning.
You mentioned, you could fund accretively with the revolver.
Given the low <unk>.
Leverage and low floating rate exposure. So would you be willing to temporarily lever up to do acquisitions in the current environment and what's more appealing to skilled nursing.
Given the higher yields or seniors housing.
We're still laser focused as we've been trying to keep our leverage low so.
So we don't want to lever up and we're pleased to came down a little bit.
You need to come down we'd like to see it under five five times. So it's more a function of the stock price getting a little bit better.
So thats actually currency that we can use and then we can have a balance between.
Using using our stock and using the revolver the leverage doesn't go up in terms of which asset classes are the most appealing we see upside in all of them. We think there's a nice run ahead and skilled nursing. If you look at the demographic combined with the declining supply which.
Talked about has accelerated during the pandemic.
And then senior housing new supply just isn't going to be an issue.
So occupancy occupancy in both those asset classes are going to continue to rise.
On the behavioral side those opportunities just don't come up very often as we've talked about it as a very young space and there are a lot of tried and true operators. So I think any growth there will be incremental so essentially we're not saying one is we're going to go where the opportunity is.
We've done a good job diversifying the portfolio with.
With growth in other spaces through dispositions and transitions and the like.
And.
I think it's an important point to make that even though we've been focused on diversifying and getting that scope exposure data, which is the primary driver of the diversification, we're not going to bypass doing a good skilled deal. So we're not sort of digging our heels in and saying.
Oh, we don't want to go up a point or two on exposure for skills. So we're just not going to do this deal we need to we need to grow earnings again, there's nothing more important to us in growing earnings again, and so we'll take advantage of any of the opportunities that we see out there, but also as we said in.
The press release, we are going to be focused on singles and doubles, we don't need to do anything large anything transformative anything noisy.
Hilton doubles, and just have steady predictable growth.
And then just as a follow up just curious on the shop business had a big sequential improvement in occupancy.
Was any of that driven by discounting or just being a bit more conscious of the price and occupancy trade off.
It looked like the Revpar growth slowed and then if you could just you gave the comments on the rent increases expected for this coming year that have already started what was what was the amount that you got last year, just to think about a year over year comp perspective.
Thank you.
Sure. So last year it was a high single to low double digit.
Growth on an asking rent.
And in place so.
It was operators felt they could justify because and customers are aware of it because labor rates have gone up so much and everyone. Everyone is experiencing that what was going on with inflation and labor. So.
As as inflation has softened.
The view is the I mean.
Five to seven I think I said, something very similar last quarter.
Our operator here some are at five like in Canada of summer some are domestic.
Operators are closer to seven.
That's what their expectation is.
In terms of discounting that's a good question, we have not seen any substantial discounting.
And and outside of normal and standard operating procedure. So I don't think its that I think it was just it was just a seasonal matter.
And just the blend of assets that came together.
You saw nice order growth in all of the other staffing frankly cash net operating income this is.
Is a real important one.
Yes. Thank you.
Sure.
Your next question comes from the line of Rich Anderson with Wedbush. Your line is open.
Thanks, Good morning out there and heartfelt opening comments there Rick thanks for that.
In terms of the.
Going on offense sort of motif that youre talking about here.
Someone said to me rich don't do anything and we'll pay you I'd be like signed me up.
And so.
In this case, you know you've been rewarded for sort of for doing that and I don't mean youre not working of course, but.
Do you think that at the current stock price you would still kind of let this marinate and and perhaps not go on the offensive or do you need.
Sort of extra.
Effervescence of your stock price before you can actually go into this sort of net acquire.
Strategy for next year.
Yes, so we're definitely without going into Aaron judge mode here, Okay. So.
Yeah.
Yes.
I said probably doesn't get that.
Yeah.
Thanks.
We needed to stock price to improve more just being around NAV isn't good enough. So we are going to let it marinate, what we think that we've created a really good story here as I said in the opening remarks, we're much better positioned than we were really at any point in time.
How far you want to go back not just before the pandemic so.
We think as people as we as we.
Let this marinate to use your term.
As we put guidance out for 24 people see earnings growth coming.
Think that our cost of capital will improve and then we will be able to.
Do what we said we're going to do.
Okay.
You said on the.
On the issue with CMS and.
You know the 40000.
Hey responses you said two to three years for implementation does that is that you're saying like a fees in type of phenomenon is that what you think ultimately comes of this I mean can you picture. How this how this gets rolled out to the industry.
So if you if you go back and look at the proposed rule.
There was a two to five year phase in period.
Broken down into different components.
Who is going to take some period of time before the final rule actually came out and then went into effect after that it can take six to 12 months.
For the final rule to actually go into effect. So if you start playing all that out youre really looking at a few year snap before yes.
You start to see the beginning of the impact so that's why.
We've been saying to investors at conferences is really show about this it's not today's issue.
Industry has to deal with it our lobbies have to deal with it.
But today's issue is dealing with the shortage that we have the actual mandate if it happens.
Because the industry also listening to sit by if the final rule is something that we don't believe we can live with.
And then.
Ways way down a lot so.
That's really that's really what I was.
Okay. Okay I just wanted to know what you meant by the two to three years I get it now.
And so.
Last question for me.
You've had some nice numbers out of Medicaid in terms of growth Medicare, 4% for the coming year.
Tal you said inflation has softened.
Degree of course, Youre correct, but do.
Do you have concern that if inflation continues to improve that we could be looking at some sort of Medicaid <unk> Medicare hangover event for the following year, where you don't quite keep up with what Youre getting this year and then suddenly.
Your external growth.
Underwriting process becomes more difficult.
And we go back to more like nominal 2% ish type growth going forward is that the expectation that youll be sort of underwriting into your your external growth process or do you see.
Medicare Medicaid sort of keeping up.
<unk> plus type of number for a period of couple of years going forward.
Yes, so I get the question rich, but theres, a lag time for Medicare and Medicaid, particularly Medicaid with the cost of poor process. So we fully expect.
Next year's Medicaid rates will be higher than the five plus percent aggregate, we got this year.
And we expect Medicare to be higher also as it will capture current inflation more so.
You remember there was a component of the Medicare rate increase.
That was a takeaway right it.
It happened over two years without that takeaway the 4% would have been I believe six 2%.
So.
We think that numbers I'm not going to sit here and tell you today that it's going to be six 2% next year, but we believe it is probably better than 4%. So we think we have at least another year of robust rate increases from both Medicare and Medicaid, which also.
As you that much more time for occupancy to start exceeding.
Prepaid emmick levels. The industry is about 200 basis points below pre pandemic level now if you look at the Nic report.
82%, but the Nic report.
Data when it comes to sniff isn't really very good it's a small subset.
Nick is really good for senior housing Doctor Smith so.
So we're getting pretty close and as I said in my opening remarks, given the decline in supply and obviously it's market driven.
We fully expect occupancy to go beyond pre pandemic levels on the skilled side as well as senior housing and that that combined with these outside rate increases will compensate for the increase in labor and get it back.
Back to margins that are where they were pre pandemic, but we believe margins that will be better and the other point I would make just specific to our portfolio is.
We were able to take advantage of a lot of the opportunities.
Presented to us during the pandemic to sell.
Sell assets and transition assets. So we've got a much stronger group of operators.
Now that we did.
What we did before the pandemic, so I think that helps as well.
Before the pandemic.
You had operators that were good they did a nice job.
Great operators, and you had weaker operators, but the operators that we're okay.
It wasn't good enough anymore with the pandemic. So it really separated operators out even more and and again, we were able to take advantage of some of those opportunities. So we feel pretty good about where we are the only thing I'll add to that rich you alluded to underwriting and in this environment, where inflation has been where it that it's not like we're underwriting annual increase.
This is a five 6% going forward into the future and in fact, our existing portfolio and most everything we underwrite has largely fixed rate increases that are going to be two 2% and 3%.
Which again would insulate.
Our operators in the event.
<unk> comes down there knocking those rate increases are getting now while they're there fixed cost is only going up by a smaller amount as well.
Great. Thanks for the color.
Yes.
Yes.
Your next question comes from the line of Wes Golladay with Baird. Your line is open.
Hey, yes, good morning to everyone or we talked a lot about the revenues and the managed care just can we talk about the expenses a little bit do you expect any normalization next year and the easy comps, whether it's having more open positions.
Axes anything.
That needs to be called out.
I think.
On the operating expenses.
It's really been labor, that's a big driver.
The rest of the operating expenses held in pretty reasonably.
And labor.
It's still going to be tough going for a while the level of wage increase has come down.
Registry is come down temporary agency that is so.
But youre still going to.
You still have some inflation on the wage wage side I think.
Because labor is the only impediment to growing occupancy even more quickly you guys operators are willing to pay a little bit more.
Two.
Fill those spots so they can increase their admission rates.
Because that's going to more than compensate for the difference.
Got it and then on the labor you're still seeing some shortages, where maybe it's been a governor on occupancy gains.
Oh absolutely.
We've gotten.
Pretty decent chunk of.
Those folks have burned out back, but we still have a ways to go so it's not normal yet.
And it's going to it's still going to take some time so.
I Hope you are not hearing that everything is hunky dory from anybody else on labor because.
It's just better than it was and it keeps improving.
Wage increases in 2023.
Not nearly as high as they were in 2022.
And then when you bring temporary agency down because that is so expensive, particularly with the price gouging that occurred during the pandemic that.
Net net even when you're raising wages on time your employees, you're in better shape from a margin perspective, because of the cost of that temporary agency.
Yes, I guess, maybe just a quick follow up on that I was trying to get at them, yet obviously flat expenses this quarter, because amazing, but when we look out to next year I mean, how much of that is just burning off an easy comp on these temp workers, who are potentially gouging and then next year, we get to a more normal environment would that be a more of a I guess normalized growth year next year.
Yes, I think on the senior I think Youre talking about senior housing correct correct, yes. The managed side, yes, yes, I mean in our senior housing.
The agency labor and the temp labor was predominantly sniff side, we didnt I think in the comps that we're looking at there wasn't that much if any agency labor in those comps.
And we also talked about sequential comparisons so yes. So.
Expenses have come down if you look year over year, but on a sequential basis is basically holding people are holding tight.
Okay. Thanks, so much.
Okay.
Okay.
Your next question comes from the line of Michael Griffin with Citi. Your line is open.
Great. Thanks on the recently transitioned assets I'm curious if you can give us any color Steve.
You are already doing deferred relative to ly that in order to get that occupancy uplift and we continue to get the occupancy increases it by getting into a more seasonal time of the year.
So some of it is just basic blocking and tackling within live. It you had a company that was being sold that were losing people and management basically every week and so the portfolio was floundering.
Bringing in an operated one that it happens to be very good who we knew but secondly, they're laser focused and they are supporting the business and putting the initiatives and that are necessary to grow occupancy, it's really kind of as simple as that.
There is there is still plenty of room for occupancy to grow that portfolio was in the mid 90 percentile before the pandemic.
That's helpful. And then just on the asset sales this quarter I'm curious if you can comment on maybe by your appetite for those theyre kind of the.
I argue or anything that they're underwriting to on those type.
Debit transactions.
I would say that.
Sure.
There continues to be strong appetite for skilled nursing facilities.
<unk>.
And we certainly continue to get reverse inquiries on various.
Sure.
Parts of our portfolio geography geographic parts of our portfolio that's one.
Pricing.
<unk> is more.
Unit or bed based as opposed to cap rate base for the most part.
Because most of the buyers that we are seeing our owner operator or owners with capital partners with affiliated operators.
So they are capturing 100% of NOI lets say in skilled nursing, where whereas we would capture a rent stream, which would be certainly less than 100% of NOI.
Thank you.
Your next question comes from the line of John Pawlowski with Green Street. Your line is open.
Okay.
Hey, good morning, Thanks for the time I just have one question related to senior housing Triple net business.
Curious, what you think sustainable EBITDAR coverage level ratio search today, given potential deferred capex in that portfolio and probably some higher interest expense on kind of short term working capital lines for operators.
Yes.
Senior housing.
We don't see ABL lines as prevalent mode skilled nursing, where you're paid essentially you have to bill and then get paid.
You see ABL lines.
Being prevalent in senior housing because people pay their rent the first of the month, which is an advance.
It's not really a factor.
Okay.
Yeah.
Now do I think we're going to get back to 100 513, Yes, I don't think Thats I think thats within reason.
On Capex.
There is.
There is room for Capex and that coverage number for sort of usual maintenance capex any sizable capital projects.
We would we would as the landlord consider participating that and essentially financing that.
For an operator because it.
In Europe to the landlords benefit because.
We're improving our fixed assets.
That makes sense okay.
Yes, maybe just one follow up to the one to five the one three that is a level, where you sit back and.
Really not losing any sleep at night in terms of ability.
Tenants to pay rent.
That's what we use at what we underwrote to.
Back pre pandemic.
Okay. Thank you.
Ken if you would like to ask a question. Please press Star then the number one on your telephone keypad.
There are no further questions at this time.
Turn the call back over to Rick May Trust.
Thank you all for joining us today I appreciate your time and appreciate your support.
Are you a bunch of you at NAREIT.
We look forward to that.
Hi.
This concludes today's conference call you may now disconnect.
Right.
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