Early Signs of COVID-19 In Several REIT Earnings Reports
Several publicly traded seniors housing and care companies released their first earnings reports after the COVID-19 crisis, and while most of the results showed signs of the virus’ effect, the worst is most likely yet to come. As a consequence of that, each company pulled their 2020 guidance, but no surprise there. LTC Properties reported on May 4th, and there were some results unfortunately typical for this time. Private pay occupancy fell from 86% at December 31 to 83% by March 31 and 80% on April 23rd. For skilled nursing, average monthly occupancy for December 2019, March 2020 and April to-date respectively was 79%, 78% and 75%. That drop from March to April is roughly in line... Read More »
Irrational Valuations for REIT Shares
What a week it has been. At the market’s close on Wednesday, Ventas was yielding 18.7%, Omega Healthcare Investors 18.0% and Sabra Health Care REIT 30.4%. This assumes they all maintain their current dividend rates. Ventas just announced the payment date for its dividend at the same rate as last year. Of course, Ventas plunged by 19% on Wednesday, Omega by 17% and Sabra by 20%. These drops, on top of the previous weeks’ plunge, caused yields to skyrocket. Obviously, this is irrational, even in these days of the coronavirus/Covid-19 pandemic (CV-19). All of the other healthcare REITs fared poorly as well. But does this represent a buying opportunity?... Read More »
REIT Sale/Leasebacks Are Not Dead
It is very easy to say that sale/leaseback structures with REITs are dead, especially if your leases are dead in the water. But then you have to ask, why are they dead in the water, and why did you enter into long-term leases in the first place? You could have always financed your properties with debt at 70% to 80% loan-to-value, but the odds are you wanted to recapture some of your equity for growth (or your retirement), and there is always a price you pay for essentially leveraging your property 100%. The real benefit of a sale/leaseback, in addition to the cash you take out, is that everything above the lease payment is yours. The REIT gets its fixed lease return,... Read More »
Can We Be Inspired?
High-end urban senior living may be the next big thing, but it will not be cheap. So, I was on a train Monday heading out of New York City and I looked up and saw an ad on the wall with a big “Senior Living” in the middle. Of course, it caught my attention. So I walked up to it and saw that it was an ad for the new Inspīr at Carnegie Hill being developed by Maplewood Senior Living and Omega Healthcare Investors on the Upper East Side of Manhattan. Construction started in June 2017 and it is supposed to open at the end of this quarter. With 23 floors, 212,000 square feet, 215 units and at an initial cost estimate of $285 million, it will be the most expensive assisted living community ever... Read More »