National Health Investors is continuing its steady census progress, but the rent deferrals for Bickford Senior Living just will not end. The silver lining is that the deferral amounts are decreasing, from $3 million in both March and April of this year and $2 million in June. Now, the two parties have agreed to $1.5 million in rent deferrals per month in June and July. That will bring Bickford’s total deferred rents with NHI to $11.75 million for the year, so far, which is expected to be repaid over a period of 18 months commencing on October 1, 2021, at an interest rate of 8% from the date of the deferral. That is on top of the $3.75 million of Bickford deferred rent from Q4:20 and $750,000 pertaining to January 2021 that also bears interest at 8% per annum, with repayments over 12 months beginning in June 2021. So, the repayment already begins for Bickford.
Rent deferrals may have fallen, but NHI is working with a smaller portfolio of Bickford properties, having sold six Bickford properties back to the provider in the second quarter for $52.9 million, including $13 million of seller financing. That brings its Bickford portfolio to 42 properties. Also, upon completion of this transaction, NHI forgave $2.1 million of rent for the third quarter of 2020. Annualized rental income was $5.2 million on those six properties, and the book value of the assets was $34.6 million. Three additional properties were part of the discussions, and they may be sold to a third party, leased to another tenant or kept in the lease with Bickford. So, the reduction in monthly rent deferrals from $2 million in May to $1.5 million in June could be partially the result of the sale of those six properties.
Other tenants have also deferred a portion of rent in June, with Holiday Retirement’s deferral accounting for 2.2% of NHI’s contractual cash rent for the month, and three additional tenants taking deferrals worth 2.8% (either agreed to or pending) of June rent. But Bickford’s deferrals total 5.5% of NHI’s contractual cash due in June.
The good news is that occupancy is improving steadily for NHI’s three largest tenants. From a low of 76.2% in December 2020, Senior Living Communities’ occupancy at its nine properties leased from NHI has increased by 240 basis points to 78.6% in May, including a 70-basis point jump from April. Holiday Retirement’s 26 properties say occupancy increase by 40 basis points to 73.9%, from April’s 73.5%, which was the pandemic-low. Lastly, Bickford’s occupancy, which was restated retroactively to March 2020 for the 42 properties left in the portfolio, jumped from a low of 74.6% in March 2021 to 77.3% in May 2021, a 270-basis point increase. There is still a long way to go, especially since SLC, Holiday and Bickford reported occupancy of 80.5%, 86.7% and 84.2% in March 2020, respectively. But, improvements of that magnitude are encouraging.
