Too early for ‘all-clear flag,’ but Welltower is ‘cautiously optimistic’ about senior living – News | #seniorliving | #elderly | #seniors
Although it is too early to “raise an all-clear flag,” Welltower CEO Shankh Mitra said Thursday that he is “cautiously optimistic” about the senior living business.
During the first-quarter 2021 earnings call for the Toledo, OH-based real estate investment trust, Mitra said that operators are seeing broad momentum continue to build and are sharing their “most optimistic tone” since the beginning of the pandemic.
The REIT’s U.S. properties collectively saw occupancy increase approximately 120 basis points. Senior housing operating portfolio average occupancy declined approximately 310 basis points compared with the fourth quarter of 2020. Move-in activities increased 8% in the first quarter compared with the fourth quarter, but they are down 16% year-over-year. Move-out activity increased 6% in that time, down 8% year-over-year.
Welltower Executive Vice President and Chief Financial Officer Tim McHugh said that REIT executives have been “encouraged” by the past six weeks of recovery, although “significant uncertainty remains with respect to the presence of the virus in the general population, the timing of the reopening of the economy, and the timing of further rollbacks of operating restrictions.”
Therefore, he added, the short-term environment is unpredictable.
Mitra said he expects an approximate 130 basis points increase in occupancy in the REIT’s senior housing portfolio through the second quarter.
Total resident COVID-19 cases in Welltower’s senior housing portfolio declined by 98% since mid-January, the company said. Approximately 99% of the REIT’s communities are accepting new residents.
As of April 23, approximately 97% of the portfolio’s senior housing communities had reported no confirmed COVID-19 cases in the previous two weeks, and 3% reported one to two cases, according to executives. Also, virtually all assisted living and memory care communities have completed their scheduled vaccination clinics. As a result, many of the REIT’s communities “have returned to pre-COVID conditions, in terms of lead generation and resumption of in-person tours, indoor visitation, communal dining and social activities,” Mitra said.
Welltower applied for Phase 2 and 3 Provider Relief Fund monies related to its senior housing portfolio, receiving about $35 million in funds during the first quarter of 2021.
COVID-19 pandemic expenses in the senior housing portfolio totaled about $23 million for the quarter, compared with expenses of approximately $7 million for the first quarter of 2020. Those costs included higher labor expenses, coupled with expenditures related to personal protective equipment and other supplies. Welltower said it expects COVID-related expenses to moderate in the second quarter as COVID-19 cases continue to decline.
$1.8 billion in acquisitions
With acquisitions, Mitra said that patience is a virtue. Since October, the REIT has closed on more than $1.8 billion of acquisitions, he said.
During the first quarter, Welltower acquired a portfolio of eight senior living properties in the Southeast, which Harbor Retirement Associate will operate. The REIT also acquired two senior living properties for $50 million, one of which will be operated by StoryPoint Senior Living and the other by Chelsea Senior Living, both under triple net leases.
Additionally, Welltower closed on the acquisition of a $5 million senior living property operated by Frontier Management as part of the existing joint-venture agreement. The REIT also acquired an assisted living community for $8 million; it is owned in the existing joint venture with ProMedica and included in the existing triple-net master lease.
After the quarter ended, Welltower acquired two senior living properties, one in Philadelphia and one in Quebec, for a total of $68 million; they will be operated by Sunrise Senior Living and Chartwell Retirement Residences, respectively.
Several “attractive” deals under contract, the CEO said, adding that he hopes to executive on “a highly visible pipeline” by year end. Welltower also anticipates funding approximately $320 million of development in 2021, Mitra said.