Challenging operating environment requires patience says care operator
NEW YORK: A major care operator argues Covid has taught the sector both patience and an awareness of constant change.
Invesque Chairman and CEO Scott White said despite a continuing challenging operating environment in the face of a global pandemic, the senior living industry is better prepared to navigate a rapidly changing environment.
“From a demand perspective, the occupancy numbers continue to trend positively,” White said Thursday during a second-quarter earnings call. “Commonwealth Senior Living, our captive operating and management company, saw strong move-ins throughout the second quarter and into July of 2021.”
Commonwealth’s spot occupancy was 50 basis points higher on June 30 compared to March 31. Chief Investment Officer Adlai Chester said Commonwealth saw an uptick in census in July, with 120 basis point occupancy gains during the last week of the month. Second-quarter occupancy in the company’s senior housing operating portfolio was 75.9% as of June 30, compared to 82.6% in June 2020.
White said he is cautiously optimistic the industry — and the company’s portfolio — will return to and exceed pre-pandemic occupancy levels.
“Census gains may be lower than anyone would like, but I am optimistic the demand fundamentals will remain strong for seniors housing in the medium and long term,” White added.
White said the pandemic transformed the senior housing industry and continues to impact Invesque’s portfolio, but he said he believes “the worst is behind us.” He acknowledged that labor shortages for frontline caregivers continues to plague the industry, but said real estate investment is a long-term strategy that requires patience.
Chester said the company saw continued decline in performance in its stabilized portfolio due to the ongoing impact of COVID-19. Despite those challenges, he said transaction activity has begun to increase, with transactions well below historic norms for the industry, with attractive per-unit prices.
“These valuations compel us to continue to diligently manage our portfolio and look for opportunities to dispose of non-core assets at attractive pricing when such opportunities present themselves,” Chester said, adding that this could lead to additional dispositions in the second half of 2021.
During the second quarter, Invesque closed on all phases of a series of transactions with Symphony Care Network. This included closing on the final phase of the transaction in June, which included the sale of three skilled nursing facilities to SymCare. The company also entered into an amended lease agreement for the remaining eight properties, which will continue to be operated by SymCare.
The company also closed on the sale of four communities to Inspirit Senior Living in July.
In addition, Invesque broke ground on the development of a 100-unit assisted living / memory care facility in Parker, CO. The project, Terra Bluffs, is a joint venture that will be developed by Ellipsis Partners and will be operated by Health Dimensions Group. With an expected total project cost of about $32 million, completion is anticipated by the end of 2022.