Sabra and Care Capital Properties Merger Is Passed
After some dissidents tried to torpedo the deal, shareholders decided bigger was better. Well, the vote is in, and it looks like the merger of Sabra Health Care REIT and Care Capital Properties will go through as planned. It wasn’t easy, and Sabra’s CEO Rick Matros had to deal with two dissident shareholders who controlled only about 8% of the shares between them. They came into the stock late in the game and had no intention of staying around for long. But they caused enough of a ruckus to have shareholder advisory service firm, Institutional Shareholder Services, recommend a no vote against the merger. Let’s just say, we suspect ISS knows little about the skilled nursing business, and... Read More »
LTC Properties Deals With A Problem
By now, most everyone has heard of the problems LTC Properties has had with one of its tenants, Anthem Memory Care. The REIT has a master lease covering 11 Anthem memory care properties located in California, Illinois, Colorado and Kansas. Stand-alone memory care communities, at least those developed recently, have come under some fire as not the right way to go. LTC, for one, has decided to take a breather from financing stand-alone MC until the market stabilizes from all the new development. In Colorado and Illinois, that is the right thing to do. What many people are missing, however, is how calmly LTC is going about the problem. Sure, they issued a notice of default, which was... Read More »
Genesis Healthcare Pulls Guidance
A lot of people have been nervous about the skilled nursing sector recently, given the deteriorating finances at HCR ManorCare and other companies. However, that has not seemed to impact acquisition prices in the market, at least for the better facilities and facilities in general in attractive markets. Genesis Healthcare is another company that has had a tough time negotiating through the Medicare Advantage reimbursement changes and declining industry occupancy in general. The company’s earnings announcement from earlier this week came without a typical “pre-notice” of the release date, and the conference call with analysts was a rather early 8:30 am ET, which may have also caught some... Read More »
Missing Out On Bad News
A vacation is a horrible thing when bad news hits the market. It is a horrible thing to go on vacation when all sorts of things are happening in the market, but such was the case last week. What I missed was the roll-out of earnings and the very disappointing occupancy numbers. For some, they were worse than the weak results posted for the second quarter by NIC. The ubiquitous villain was the tail of last winter’s flu season. But it seems the seniors housing sector is surviving on a two steps backward, one step forward cycle, and not making up much ground. What still amazes me is that the warning signs were there in abundance well over a year ago, yet too many people ignored them. Leading... Read More »
The Hyper Focus On Occupancy
Why do investors, lenders and analysts focus so much on occupancy in seniors housing? Operating margin became much less important over the years compared with the absolute level of cash flow earned. This makes sense since a property’s value is derived from the cash flow, not the margin, and increased value from increased cash flow, not a better margin. The one caveat is that as the operating margin increases, the absolute level of cash flow should also increase, but not always. Getting back to occupancy, we follow it closely because trends in occupancy can tell us so much about a company and the markets where it operates. In today’s environment, everyone seems to be blaming consistently... Read More »Schedule a demo
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