On April 28, 2022, Ben Swett, Editor of The SeniorCare Investor, spoke with three expert panelists on REITs, their strategies and their positive impact on the senior care market, post-pandemic. Those panelists included Mark Lamb, Chief Investment Officer of CareTrust REIT, Alex Florea, Head of Capital Markets at Blueprint Healthcare Real Estate Advisors and Kevin Pascoe, Chief Investment Officer of National Health Investors. They discussed a wide range of topics, including how to improve REITs’ relationships with their tenants, considerations for acquiring amid high valuations, and when to expect a return to “good” occupancy.
Mr. Swett kicked off the webinar by asking the panelists how they’d respond to a Biden Administration official who critiqued their involvement (or motives) in the skilled nursing industry. That prompted answers from all three panelists, first making sure the aforementioned official understands REITs’ distinction from private equity and their ownership structures. They also touched on how REITs support the growth of good operators, and thus good care to patients across the country. Their capital injection also keeps many facilities and beds up to code and in operation, which many facilities relying on mostly Medicaid reimbursement can find difficult to do.
On tenant relationships, Mr. Pascoe spoke about the need for more direct involvement with tenants. Since the start of the pandemic, he and his team have gotten into the weeds with their tenants more so than usual, in order to make sure that the tenants have the required resources to take care of their residents through the pandemic and to grow census afterwards. Mr. Florea agreed, stating that more conversations need to be had with tenants in order to build stronger relationships and better understand what the tenant is going through.
The panelists were also asked about their projections on a return to good occupancy, and what “good occupancy” even means. Mr. Lamb spoke about how one must look at occupancy on an asset-by-asset basis. What’s good for the goose isn’t necessarily always good for the gander, and while occupancy rates can reach upwards of 95% in some states like California, 60% may still be considered a good occupancy level in some rural communities due to the labor strain in those areas.
The conversation eventually shifted towards the panelists’ thoughts on M&A strategy going forward and where they hope to invest their time and money. Mr. Pascoe discussed the importance of remaining diversified and targeting several different segments of healthcare, mostly senior housing, as well as skilled nursing behavioral health and some medical office investments. For Mr. Lamb, the answer lies in the local (retiring) mom-and-pop businesses, as well as finding good opportunities on the seniors housing side and rehabilitation. For Mr. Florea, the answer is a little more complicated and differs group-by-group. However, according to Mr. Florea, the best way to manage uncertainty in the expense market is to go to the top of the market where you have top-tier experience and can pay higher prices.
To learn more about the proactive solutions proposed by our moderator and panelists and their predictions for the future of REITs in a post-pandemic era, you can view the webinar on the LevinPro LTC platform. And keep an eye out for our next webinar in June covering the active adult market. https://proltc.levinassociates.com/news/detail?id=16605
