As we are coming to the end of the third quarter earnings season, we apologize for sounding a bit like a broken record, but the fact of the matter is that the industry continues to claw its way out of the COVID pandemic pit. While it is taking longer than anyone wants, and longer than most people had expected, census and cash flow are increasing. The lack of new developments certainly has not hurt.
Take National Health Investors as an example. Would CEO Eric Mendelsohn like to see more progress with his tenants? Sure, but the third quarter saw some of their providers post great increases in occupancy. Bickford’s same community results for 38 communities saw a 240-basis point increase in census from June to September, with 110 basis points of that coming in September alone. That put September’s occupancy at 84.8%.
Senior Living Communities (SLC) posted a nice increase in September, jumping by 50 basis points to 82.1%, although that remains lower than it was six months ago. And NHI’s small SHOP portfolio of just 15 communities posted a significant increase in census in the third quarter, rising by 560 basis points to 81.2%. The increase in September alone was 260 basis points, which is unheard of for a single month.
Other good news was that year-over-year trailing 12-month EBITDARM coverage has been increasing across the board. The REIT’s 89 senior housing communities went from 1.14x to 1.33x, with some of that gain maybe coming from a few properties being sold. But Bickford’s 38 communities went from 1.00x to 1.45x, SLC from 1.25x to 1.31x, and the skilled nursing portfolio of 68 properties from 2.47x to 2.62x. Those are nice increases and put NHI in a better financial position.
NHI is in discussions with Discovery Senior Living to modify its existing lease on a portfolio of six properties plus two single property leases. During the third quarter, the REIT sold one community with 29 units for net proceeds of $2.923 million, or $100,800 per unit, and started the fourth quarter with the sale of three assisted living communities in Florida with 90 units for about $7.0 million, or $77,800 per unit. The price included approximately $5.4 million in cash plus $1.6 million of seller financing.
