Q1 2024 Sabra Health Care REIT Inc Earnings Call
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Speaker Change: Ladies and gentlemen, this is the operator todays conference is scheduled to begin momentarily until that time your lines will remain on music hold thank you for your patience.
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Kathleen: Good day, everyone. My name is Kathleen and I will be conference operator today at.
Kathleen: At this time I would like to welcome everyone to the Sabra health care REIT first quarter earnings call.
Kathleen: All lines have been placed on mute to prevent any background noise.
Kathleen: After the Speakers' remarks, there will be a question and answer session if.
Kathleen: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Kathleen: If you would like to withdraw your question freshness Star one again and.
Lukas Michael Hartwich: And now I would like to turn the call over to Luka Heart, which SVP Finance. Please go ahead, Mr Harts, which.
Lukas Michael Hartwich: Thank you and good morning, before we begin I want to remind you that we will be making forward looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations.
Lukas Michael Hartwich: Including reiterating our earnings guidance for 2024 expectations regarding our tenants and our readers and our.
Lukas Michael Hartwich: Expectations regarding our acquisition disposition and investment.
Speaker Change: 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, 2023 as long as in our earnings press release included as exhibit 99, one to the form 8-K.
Speaker Change: Refresh the FCC yesterday.
Speaker Change: We undertake no obligation to update our forward looking statements to reflect subsequent events or circumstances and you should not assume later in the quarter that the comments, we make today are still down.
Speaker Change: 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 long as the explanation and reconciliation of these measures to comparable GAAP results.
Speaker Change: Just on the financials page of the investors section of our website at Sabra.
Speaker Change: Yeah.
Speaker Change: Our Form 10-Q earnings release and can also be accessed in the investors section of our website.
Speaker Change: With that let me turn the call over to Rick nature.
Rick: And sure the Sabra health care REIT. Thanks.
Rick: Lucas Thanks, everybody for joining US hope you all have a good day.
Rick: So this quarter is really just a continuation of the last couple of quarters. Our operating performance continues to improve our balance sheet strength and positioning.
Rick: Our skilled nursing EBITDAR coverage continues to nudge up exceeding pre pandemic coverage.
Rick: Our senior housing Triple.
Rick: Lease coverage continues to improve it is near pre pandemic levels are.
Rick: Our top 10 is stronger than it's ever been our skilled occupancy is up 110 basis points sequentially and our skilled mix is higher than it's been in several quarters. Our senior housing triple net occupancy is higher than prepaid debit card can see.
Rick: Our shop growth continues with occupancy higher than it's been since the early months of the pandemic.
Rick: Contract Labor continues to improve dropping to where we were three years ago, well below peak levels, but still higher than we want to see.
Rick: Our deal flow is improving and that was primarily shop. We are finally, starting to see some skilled nursing opportunities in both skilled and shop. So as pricing has moved towards buyers.
Rick: We don't have new investments to announce this quarter based on current activity, we expect to be in a position to announce new deals on our second quarter earnings call.
Rick: We are running better than anticipated at all or for a client or a forecast, including our shop performance, but since it's still very early in the year, we're going to wait until Q2 to reassess our guidance.
Rick: And with that I'll turn the call over to Tom here.
Tom: Thank you Brett.
Tom: Sovereign managed senior housing portfolio.
Tom: Joint Ventures, a chair continues to perform well the portfolio grew by five can be heavy during the quarter and seventh community year over year, which were all property previously leased either operator underscores the.
Speaker Change: While the Ashton you have.
Tom: He has had a limited contribution to the tunnels soundness managed portfolio saw a 16, 5% quarterly revenue growth and just over 26% quarterly cash net operating income growth on a year over year basis. This is driven by the trends that we've been noting for the past several quarters growing demand driving.
Tom: Occupancy and rod for games, and moderating expenses wage growth.
Tom: As open positions or Kelly together, reducing overtime, even eliminating agency usage.
Tom: Same store managed senior housing portfolio.
Tom: He joined Bachelors at share includes 64 properties 43 of which are in the U S and the balance in Canada, excluding non stabilized assets and government stimulus.
Tom: Find numbers are same store portfolio revenue for the quarter grew five 8%.
Tom: With our Canadian 10 year growing revenue by nine 2%.
Tom: Cash NOI for the quarter.
Tom: 5% of its first quarter 2023, skus down by leveraging unusual expense item in the first quarter of 2023 cash NOI for the quarter increased 16, 7% and our Canadian community.
Tom: <unk> first quarter of 2024 decreased by three 4%.
Tom: Nagin portfolio growing by five 1% in the CRE.
Tom: The senior housing recovery in Canada has been lacking in the U S is now catching up drivers of revenue growth in our Canadian agent.
Tom: Outpaced are you asking me introduce this past quarter on Europe your basis, while expense growth.
Speaker Change: So why are you asking me.
Tom: On a sequential quarter basis.
Tom: We stabilized senior housing.
Tom: She used to fried with occupancy for the past four regarding about 90% as Rick said about pre pandemic levels and steadily improving branch coverage.
Tom: Average total investment in behavioral health remained approximately $800 million as we provide time for our assets.
Tom: And the lease up and reach stabilization.
Tom: You will note that we have combined specialty hospitals, and behavioral health and our coverage disclosure in our supplemental because combined these categories represent 21 stabilized properties contributing about 10, 5% with fibers that in Hawaii with only six behavioral properties.
Tom: And with that I will turn the call over to Michael Costa Sovrans Chief Financial Officer.
Michael Lourenco Costa: Thanks Tanya.
Michael Lourenco Costa: For the first quarter of 2024, we recognize normalized <unk> per share of <unk> 34, and normalized <unk> per share of <unk> 35.
Michael Lourenco Costa: Both of <unk> from our fourth quarter 2023 results.
Michael Lourenco Costa: Year over year, both normalized <unk> per share and normalized <unk> per share increased 3%, representing the first year over year increase in both since before the pandemic.
Michael Lourenco Costa: This sequential increase was driven by the following.
Michael Lourenco Costa: A $1 8 million sequential increase in cash rents received with the majority coming from stronger collections from cash basis tenants compared to the fourth quarter.
Michael Lourenco Costa: One $3 million reduction in normalized cash G&A expense, primarily related to performance based compensation true ups that occurred in the fourth quarter.
Michael Lourenco Costa: $900000 of business interruption insurance income related to a property that suffered fire damage last year.
Michael Lourenco Costa: And a 600000 dollar improvement in NOI from our managed senior housing portfolio due to improved performance as well as the transition of five facilities to our managed portfolio that were previously you'd be from triple net basis.
Michael Lourenco Costa: This was partially offset by a $500000 increase in cash interest expense due to higher outstanding borrowings under our revolving credit facility.
Michael Lourenco Costa: As Rick noted earlier, our first quarter performance came in slightly better than what we had forecasted in our 2024 guidance estimate.
Michael Lourenco Costa: While we are pleased with this outperformance given that it's early in the year, we feel it's most prudent to reaffirm our full year 2024 guidance ranges at this time and we will revisit these ranges for our second quarter earnings call.
Michael Lourenco Costa: Our full year 2024 guidance ranges on a diluted per share basis are as follows.
Michael Lourenco Costa: Net income 53 to 57.
Michael Lourenco Costa: SFO $1 33 to $1 37.
Michael Lourenco Costa: Normally that peso.
Michael Lourenco Costa: $1 34 to $1 38.
Michael Lourenco Costa: Adjusted <unk> of $1 38 to $1 42.
Michael Lourenco Costa: Normalized adjusted $1.39 to $1 43.
Michael Lourenco Costa: As a reminder, our guidance does not assume any acquisition or disposition activity.
Michael Lourenco Costa: Now briefly turning to our balance sheet.
Michael Lourenco Costa: Our net debt to adjusted EBITDA ratio was 555 times as of March 31 2024.
Michael Lourenco Costa: As the portfolio continues its recovery from the pandemic. We expect this resulted improvements to both our earnings as well as our leverage.
Michael Lourenco Costa: As of March 31, 2024, we are in compliance with all of our debt covenants and have ample liquidity of $914 million.
Michael Lourenco Costa: Consisting of unrestricted cash and cash equivalents of $60 million.
Michael Lourenco Costa: And available borrowings of $854 million.
Michael Lourenco Costa: Under our revolving credit facility.
Michael Lourenco Costa: Finally on May eight 2004, <unk> board of directors declared a quarterly cash dividend of <unk> 30 per share of common stock.
Michael Lourenco Costa: The dividend will be paid on May 31, 2024 to common stockholders of record as of the close of business on May 20th 2024.
Michael Lourenco Costa: The dividend is adequately covered and represents a payout of 86% of our first quarter normalized <unk> per share and this payout percentage is expected to improve over the course of 2024.
Speaker Change: That will open up the lines for Q&A.
Michael Lourenco Costa: Okay.
Speaker Change: At this time I would like to remind everyone.
Speaker Change: To ask a question. Please press Star then the number one on your telephone keypad, well pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Austin <unk> from Keybanc. Please go ahead.
Austin: Hey, good morning, everybody just wanted to hit on the shop, and just respect to that I wanted to clarify the low to mid teens that you said kind of felt right last quarter. I know you didn't provide explicit guidance, but kind of pointed towards that low to mid teens growth does that include the contribution from the consolidated joint venture portfolio.
Austin: And is that a same store figure.
Speaker Change: It does include the contribution from the joint ventures.
Speaker Change: And it's it's not a same store number its a year over year number on a comparative basis.
Speaker Change: Got it. So this includes the benefit from the transition of these five facilities that are now move from a triple net lease to a the RIDEA structure.
Speaker Change: That's right.
Speaker Change: So.
Austin: Think about it these were triple net assets before that would be transition they werent performing as triple net assets they weren't contributing anything for NOI in 2023.
Speaker Change: Got it that's helpful. And then just another one for me clarification. So has there been any change to the cash NOI contribution from signature healthcare it looked like the quarterly cash NOI number came down a bit. So just curious if there's anything there.
Speaker Change: Yes, It was just a timing issue really.
Speaker Change: Excuse me.
Speaker Change: Timing issue first.
Austin: <unk> first quarter.
Austin: On a cash basis, we record revenues when the cash comes in the door and part of the March payment came in shortly.
Austin: Shortly after March 31, that's simply it.
Austin: So there'll be a catch up payment that gets them on par with the prior kind of quarterly run rate in the second quarter that we should expect.
Speaker Change: Yes, we would expect on balance second quarter to be a little bit higher because of the fact that you have that catch up payment plus the regular payments second quarter.
Speaker Change: Got it thank you.
Speaker Change: Your next question comes from the line of Joshua <unk> of Bank of America. Your line is open.
Joshua: Yeah, Hey, guys. Thanks for the time, Rick just wanted to kind of get your take on the final minimum staffing ruling from CMS. How do you think this plays out from from here and then just.
Joshua: Curious like how we should I know, it's a couple of years out with the phase I and just like how should we think about potential impact on your portfolio.
Speaker Change: I think to say that's the same as we've been saying all along is that as well.
Speaker Change: The rule is ludacris on space simply because the labor isn't available.
Speaker Change: I mean as I think I've stated in the past, but now it's been publicly stated by the industry Trade Association.
Speaker Change: We expect to see both legal and legislative action to overturn this.
Speaker Change: Okay and if if.
Speaker Change: If it doesn't get overturned or like stays as is like.
Speaker Change: Yeah.
Speaker Change: Is there any kind of.
Speaker Change: Thought process on how it might impact.
Speaker Change: Your portfolio your operators.
Speaker Change: You're just saying they just like wouldn't be able to even find the labor.
Speaker Change: Well it depends on the market.
Speaker Change: Most of our buildings are actually in pretty good shape relative to it.
Speaker Change: I think.
Speaker Change: Higher than national average from a staffing perspective.
Speaker Change: But as you noted even if this were to stay in place.
Speaker Change: Phasing.
Speaker Change: Phase in process, that's not good start for two years.
Speaker Change: It's Robert another couple of years.
Speaker Change: Labor has been improving certainly contract labor as I know this is <unk>.
Speaker Change: Improved dramatically.
Speaker Change: So.
Speaker Change: So presumably things will improve more so it's a little bit hard to anticipate but it isn't just about.
Speaker Change: Of.
Speaker Change: Putting a number out there that's going to be a lot of operators in certain markets completely unable to fill positions and so it's really.
Speaker Change: Got nothing to do with quality of care, it's got everything to do with punishing nursing groups. That's that's really what it's about so.
Speaker Change: Yes.
Speaker Change: That's really critical here is it's a one size fits all.
Speaker Change: And even in the final rule, they really didn't address the criticisms about the lack of inclusion of Lps, which are a backbone.
Speaker Change: Every operator in the business. This maybe left at one number out there that you can fill with Lps, but that's not the same thing but operators staff buildings. They start acuity. Both in terms of total hours in terms of the mix of those hours between rns Lpns nursing assistance.
Speaker Change: You've got facilities that bring in PS.
Speaker Change: No.
Speaker Change: Any evidence that you look at what we'll tell you pretty clearly that one size fits all does not work and does not lead to better quality outcomes.
Speaker Change: In addition to that putting an arbitrary number with staffing should be there's not there's no correlation between that and quality.
Speaker Change: <unk> as well, so it's probably more than you needed to hear.
Speaker Change: What is there to make sure I cover all aspects of it.
Speaker Change: Yes.
Speaker Change: I appreciate the time I'll jump back in the queue. Thanks.
Speaker Change: Your next question comes from the line of Michael Griffin of Citigroup. Your line is open.
Michael Anderson Griffin: Great. Thanks, I wanted to touch a bit on the acquisition pipeline and sort of what you're seeing out. There. Obviously you are not giving any speculative acquisitions in guidance, but if you annualize the mid point of.
Michael Anderson Griffin: Earnings this quarter. It gets you to kind of that low end. So how are you thinking about acquisitions, whether from a yield perspective, and how much do you think they contribute to earnings on a stabilized basis. This year.
Michael Anderson Griffin:
Speaker Change: Well I'll tell you what we're seeing I just elaborate on what Richard said earlier.
Speaker Change: Jill flow is as backup because we've seen a lot.
Speaker Change: I think we said this in the past that the best deals. We're seeing are the ones that are coming to us off market and I suspect that's true for our peers as well.
Speaker Change: We are focused more on the app.
Speaker Change: Acquiring assets, although we're open to doing some loans.
Speaker Change: That's that's not that's not where we're focused.
Speaker Change: So where we're seeing quite a bit and we're seeing quite a bit from operators that we'd like to do repeat business and that's that's that's really the key piece.
Speaker Change: Much we get done and.
Speaker Change: The weights to be seen and we'll keep everyone apprised of that but were but the contribution to the 2024 is really going to be dependent on when we close and anything else Rick mentioned that buyers and sellers are pricing expectations has.
Speaker Change: How much closer that's generally true.
Speaker Change: And so the opportunity to do deals.
Speaker Change: <unk> and.
Speaker Change: Managing our balance sheet carefully, but we see opportunities that are worthwhile.
Speaker Change: Oh, sorry, sorry go ahead Rick.
Rick: The only at this point of emphasis I would make is that.
Rick: Our guidance as you know it doesn't include any assumptions about acquisitions in my statement in my opening remarks about revisiting guidance.
Speaker Change: Second quarter <unk>.
Rick: We're ahead of where we thought we'd be already.
Speaker Change: Has nothing to do with any assumptions about.
Speaker Change: About acquisitions. This year, so that would just be Greg on top of that but the reality is if you're closing most of your stuff.
Speaker Change: The last five or six months of the year, it's going to have more of a muted impact in just Sears boards to fuel growth going into 2025.
Greg: Great. That's helpful. And then just a quick follow up and that's all you are you seeing any more appetite for in the financing environment for Snips is there any bridge to HUD or HUD financing thats out there at favorable terms.
Speaker Change: Okay.
Speaker Change: We are seeing non bank lenders interested in lending on a bridge to HUD basis in theories great Scott.
Speaker Change: We've not been targeting that segment, we've looked at it quite a bit in the past.
Speaker Change: Yeah, It takes and it's.
Speaker Change: <unk>.
Speaker Change: It's not cheap.
Speaker Change: Challenge that what's different now than it was call it a year and a half ago is that a year and a half ago people were doing bridge to HUD lending based on forward valuation.
Speaker Change: That's pretty much gone now cost of capitals everyone's cost of capital do you expect to do.
Speaker Change: Yes, and also to reiterate our philosophy.
Speaker Change: Hasnt changed is that as we go.
Speaker Change: Loans really specifically in relation to the <unk>.
Speaker Change: <unk>, we have with operators so.
Speaker Change: How is it helpful Curt relationship where operators trying to grow.
Speaker Change: Is there a loan to own opportunity here. So we really don't have interest even though we know there are opportunities our peers.
Speaker Change: And building a building a portfolio of loans.
Speaker Change: Got you that's helpful Wick, Rick and then one last one if I may I know you touched on the implications of the minimum staffing mandate question earlier, but can you give any you know maybe concrete initiatives that the industry is looking at whether it's lobbying certain committees.
Speaker Change: Trying to take litigation into different courts.
Speaker Change: I'm, just kind of hard things that you're seeing on the ground as the industry gears up to fight this thing.
Speaker Change: Yes, so I really can't talk about that too much other than to say that.
Speaker Change: Everything is in place there is a bill hill its broad bipartisan support in terms of legal action much of the groundwork syndrome, there as well so but beyond that.
Speaker Change: I can't really talk publicly about.
Speaker Change: About anything else than most of our focus or most of the industry has focused the trade association specifically is going to be on the legislative strategy.
Speaker Change: Great. That's it for me thanks for the time.
Speaker Change: Your next question comes from the line of Vikram Malhotra from Mizuho. Your line is now open.
Vikram L. Malhotra: Afternoon. Thanks for taking the questions just maybe going back to the first just the quarter results.
Vikram L. Malhotra: I just wanted to understand kind of how the shop growth cadence trended I think last call. You mentioned January you saw a 20 plus percent year over year growth.
Vikram L. Malhotra: It ended up at night, and so I'm, just wondering like what what happened.
Vikram L. Malhotra: In.
Vikram L. Malhotra: February March and in.
Vikram L. Malhotra: And if you could could you just give us a sense of how that's trended.
Speaker Change: Well I can I have some spinal occupancies on April.
Speaker Change: And they are and spot occupancy for the end of April or.
Speaker Change: Versus versus first quarter are probably about 1% to one 5% higher so occupancies continuing to grow.
Speaker Change: <unk> is I don't know I don't have spot now for Revpar that we see continued growth there.
Speaker Change: And I think the big piece that we're seeing finally happened is expenses specifically labor.
Speaker Change: And accelerate its growth so while we're still seeing some incremental growth largely its the filling of vacant positions as opposed to labor right.
Speaker Change:
Speaker Change: So I don't have a.
Speaker Change: In April not a cash NOI number for you to share at this point.
Speaker Change: And the other the other.
Speaker Change: Thanks.
Speaker Change: As we mentioned earlier and.
Speaker Change: I noticed in the press release.
Speaker Change: There was it wasn't as if there was a big drop off in the quarter.
Speaker Change: Simply a comp issue to the prior year quarter repairs and maintenance were exceedingly low.
Speaker Change: And they are running at a normal run rate right now.
Speaker Change: Normalizing for that comp.
Speaker Change: And those lower expenses, we would have been mid teens for our.
Speaker Change: Our group number fifth quarter I also wanted to underscore another another thing just to just clarify the same store.
Speaker Change: Our managed portfolio.
Speaker Change: Did that.
Speaker Change: I spoke about a few minutes ago is have 64 assets minute. Okay. Because it also includes the joint venture.
Speaker Change: Holiday joint ventures at sure.
Speaker Change: The portfolio, we talked about last quarter as same store has 51 assets. So we're also talking about different pools here.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: So would it be fair to say that given your.
Speaker Change: Dean's comment about adjusted themes comment.
Speaker Change: For the balance of the year I'm not asking for a specific number but that Dean's comment like should hold true as we go through the year, whether it's the weighted about 18, I don't know, but like a.
Speaker Change: Do you see an accelerating trajectory decelerating how should we just think about the cadence of growth for the balance of the year.
Speaker Change: Yes.
Speaker Change: Dependent on occupancy recovery, but I think what we have to continue to give it back to you vikram as we reaffirmed guidance.
Speaker Change: And what we reported for first quarter is in line with what we had forecast for guidance.
Speaker Change: I think that that provides all of these initiatives.
Speaker Change: I don't see any trends any trends that are going to get in the way.
Speaker Change:
Speaker Change: Meeting or exceeding guidance.
Speaker Change: Yeah, I mean, it just sounded like you had earlier mentioned you exceeded kind of your expectations, but you were being conservative I guess its early on and then it seems like the shop com should get easier through the year, given what you mentioned about expenses.
Speaker Change: So it sounds like you're you're I mean, I'm I'm not putting words in your mouth, but it sounds like if you take those components.
Speaker Change: You could you know numbers could go higher but that's just the way I was thinking about it.
Speaker Change: Just to clarify on the acquisitions.
Speaker Change: Could you, let's just say you do see.
Speaker Change: In the U S portfolio as you like.
Speaker Change: More real estate portfolios as opposed to loans can.
Speaker Change: Can you just talk about how you're thinking about funding these going forward.
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: I think it's going to be dependent on a couple of things I think.
Speaker Change: First off if we're looking at sniff deals given where our stock is trading.
Speaker Change: Currently.
Speaker Change: Relative to our NAV.
Speaker Change: Just on a yield basis that is a source of capital we could use to fund snip deals you'll use that to match fund with our line of credit.
Speaker Change: To the extent there is any.
Speaker Change: Sales proceeds that come in there's not a ton out there still but there's always some sales proceeds in the normal course of business that also be capital is available for us to.
Speaker Change: To redeploy them into other assets and if we see shop deals or we see senior housing deals that we can pair up with skilled nursing deals. When we look at that on a blended basis is that they would have to make sense on a blended basis on a blended yield basis for us to use the ATM, but we think theres opportunities there as well when you look at the totality of our investment pipeline.
Speaker Change: Got it Okay, and then just sorry, one just to clarify any sense of the final.
Speaker Change: The Medicare ruling that I think it.
Speaker Change: It comes out when in June or July from the initial proposal any sensitive.
Speaker Change: Comments are the kind of push to get a number higher.
Speaker Change: That plays out.
Speaker Change: We're still in the comment period and it won't come out until August.
Speaker Change: Children around the first week of August so.
Speaker Change: Well.
Speaker Change: We will see but I would anticipate it to be.
Speaker Change: Where it is now.
Speaker Change: Being lower right.
Speaker Change: The odds are greater that it stays where it is as opposed to going higher.
Speaker Change: Lower.
Speaker Change: Got it okay. Thank you.
Speaker Change: Your next question comes from the line of Rich Anderson Anderson of Wedbush. Please go ahead, hey, thanks, Good morning, everyone. So.
Speaker Change: Got to minimum staffing.
Richard Anderson: 46000 comments CMS said, thanks for that and went ahead with it anyway.
Richard Anderson: I know a lot of your peers in the Reits and operators are saying, we hope that they'll come to their senses and we can all agree it's crazy what what the requests are here what they what the mandate would be.
Richard Anderson: But what could possibly change cms's direction now another thousand comments I mean, I don't I don't understand what more the industry can do to change the direction or does it is it more of a political thing where if we have a change of administration maybe that insights.
Richard Anderson: Insights a change but separate from that how does not go through as it stands today.
Speaker Change: We believe we can successfully address the issue legislatively.
Speaker Change: Because you're right.
Speaker Change: Essentially ignored.
Speaker Change: And they rush to get this out because theres no way given 40% to 50000 comments that they could thoughtfully reviewed all of those is not in this final rule out where they did so it's left the industry with no position with no auction rather than to take legislative action.
Speaker Change: Potentially.
Speaker Change: Legal action as well okay.
Speaker Change: And then as it relates to your portfolio have you done any work to say well this.
Speaker Change: This.
Speaker Change: Percentage is subject to the three year phase in this is five years and this one ex the percentage might actually be exempt.
Speaker Change: From the legislation as it currently stands.
Speaker Change: Have you done that work yet do you have an idea of what it might be from a geographic standpoint.
Speaker Change: No I think it's premature to do that work rich.
Speaker Change: Not just because people are still recovering but the.
Speaker Change: The impact of this is it doesn't always two to five years out. So we've got some time right now to see if the remedies. If you will that the industry is going to undertake to.
Speaker Change: To get rid of this mandate.
Speaker Change: So I think there'll be plenty of time.
Speaker Change: Great. If we don't succeed in that effort, we will still have plenty of time to do as you suggest.
Speaker Change: Okay.
Speaker Change: And then last for me switching to shop same store.
Speaker Change: I understand comps in February and March and all of that but you said off to a good start in the first quarter are going to take a look at guidance next quarter at the shop figure into that as well is that outperforming.
Speaker Change: He says.
Speaker Change: Our shops are.
Speaker Change: Our shop is somewhat ahead of our internal forecast guidelines.
Speaker Change: Okay and your internal forecast guidance are for what on a same store. If you can remind me I don't I just don't remember.
Speaker Change: Sorry, you are asking what our same store NOI.
Speaker Change: NOI growth assumption in our guidance says yeah for shop.
Speaker Change: Yes, I mean, if I can.
Speaker Change: I answered earlier on the call rich, what we have talked about on previous calls.
Speaker Change: Was we didnt put that number out right, but what other folks are saying is.
Speaker Change: Mid teens growth on an NOI basis year over year and that feels reasonable given our portfolio.
Speaker Change: I'm, sorry, I missed I missed that part of it okay. That's all right. Thanks, Thanks very much.
Speaker Change: Your next question comes from the line of Alex <unk> of Baird. Your line is now open.
Alex: Hello, and thank you for taking my question.
Alex: First one for me can you talk a little bit give some color on maybe the NOI growth between IL al and where that's been trending.
Alex: Well.
Alex: We're not going to give the specific numbers, but I would say as we've talked about in the past, they're fundamentally different businesses. So the ADR growth.
Alex: It's going to be stronger than the IL growth simply because you've got more tools to impacted revenue volume than you do in Ohio, which effectively is really a health care facility, even though there is an acuity create which is why we got the PLO letter back in 2020.
Alex: So.
Alex: And the other point I would make is that the.
Alex: Oh portfolio never got hit hard during the pandemic.
Alex: So theres less recovery to be had there.
Speaker Change: Got it and we noticed you combine the two that occupancy was down quarter over quarter was that driven by any one of them more or less.
Speaker Change: No I think that was really just.
Alex: We go through all of our disclosures periodically and especially in our supplement and what we saw was that we were an outlier and given that level of granular detail. So we basically meet our disclosures confirms what our peer show.
Speaker Change: Got it.
Speaker Change: That's it for me thank you.
Speaker Change: Your next question comes from the line of Mike <unk> of Green Street. Please go ahead.
Mike: Thanks, and good morning.
Mike: Can you just share where spot occupancy and coverage levels for the sniff portfolio sit today and then just assuming the company can get spot occupancy back to pre COVID-19 levels in that call. It 82% range, how sizable of an impact would you expect for that to have on coverages.
Speaker Change: It's going to it's going to be pretty sizable on the last call our year end call Rich Anderson.
Speaker Change: Assets.
Speaker Change: Given that dynamic that youre talking about is it possible you guys get your concern.
Speaker Change: Holiday to two times coverage.
Speaker Change:
Speaker Change: I'm not going to say a definitive yes fair, but it's clearly going to have.
Speaker Change: A material impact on coverage with coverage higher now than prepaid debit golf you can see our margins are back to where they were pre pandemic occupancy which means the pull through on that operational leverage is actually.
Speaker Change: Settled in at a lower occupancy level.
Speaker Change: That is all positive for us so it's hard to.
Speaker Change: Just sit here and say this is what the exact impact is going to be on coverage. Two years from now if occupancy is 300 basis points higher, but it's clearly going to have.
Speaker Change: Material impact.
Speaker Change: Got it okay.
Speaker Change: And then maybe just one more on the shop portfolio.
Speaker Change: How much labor vacancy is there in that portfolio or maybe said differently is there still quite a bit of staffing in terms of head count needed in order to be able to achieve the occupancy upside there.
Speaker Change: I think the answer is no.
Speaker Change: And I think that the.
Speaker Change: The opportunity to actually hire flavor full time.
Speaker Change: He has over time and when the agency has been very important and it's been very actionable.
Speaker Change: So I would say that based on what I've seen our operators are already yeah.
Speaker Change: 80% to 90% occupancy range.
Speaker Change: Our range.
Speaker Change: Stabilized assets and so you're right.
Speaker Change: All positioned to take advantage of operating leverage has alluding to what Ralph just said because they staffed up to actually be able to sell.
Speaker Change: Yeah, So that was holding back on admissions because of labor issues in the shop portfolio.
Speaker Change: Okay, great. Thanks for the time.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Okay.
Joey Mattress: There are no further questions at this time I'll turn the call back over to Joey mattress.
Joey Mattress: Thank you all for joining us as always we're available for additional conversations if you want to talk offline.
Joey Mattress: In the meantime don't have great day. Thank you.
Speaker Change: This concludes today's conference call you may now disconnect.
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Speaker Change: And Oh.
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Speaker Change: Uh huh.
Speaker Change: Yeah.
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Speaker Change: And then.
Speaker Change: Uh huh.
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