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spk_0: good day and thank you for standing by welcome to the care trust free third quarter twenty twenty one earnings conference call at this time off instance or and and listen only mode after the speakers presentation there will be a question and answer session to ask the questions your decision you will need to press are one on your cellphone oh in the like to hand conference overdressed speaker today lauren bill care trusts senior vice president and controller thank you please go ahead
spk_1: a third quarter
spk_2: participants were called being recorded and with your third by
spk_3: or assumption
spk_4: and the environment in which it operates
spk_5: he stayed with mainly projection for future
spk_2: when woman isn't acquisition investment return or anything and other matters and may or may not reference other matters in the company business or the businesses that it's him including factors that are beyond their control of that natural disaster image that it could be nineteen and governmental action the company thing today and it is generally are subject to risks and uncertainties that can cause actual results which you really differ from those expressed or implied threat listeners up with undue reliance on forward looking statements and are encouraged to read your trip at the be filing for more than think the best factors make an impact result as well as any financial or of for statistical information required by sep directly suzie except it required by law cure for three hundred million three not undertake the publicly update for provide any forward looking statements were take the rise as a result of new information future events changing circumstances for for any of reason during the call the company will record non gaap metrics that he without ever go and at the or bad and normalize with not as fo and as eighties when she together with gap results the company believe be better can provide more complete understanding of a visit the cautions that they should not be relied upon dispersion of gap before earlier this morning her to thousand one and q and accompanying press release and for refinancing supplement each of which can be accessed on the investor relations section of your trip website at www dot your treachery dot com a replay of the called all to be available on the website for a limited period on the public morning or deep met with president and chief operating officer fill lackner chief the as heartland cheated that minister and you're doing the right president of portfolio management and in bed outrun the color over great feebly church or three german and great thanks north and good morning everyone
spk_6: the last quarter we were concerned about the near term effects of the right away with delta variant infections in the possibility of a stall in the census recovery that was just getting underway fortunately those concerns were short lived in week report the occupancy games has steadily continued most markets with a few facilities actually a fully recovered and senses well we still far from prepared demagogues vinci over all the continuing to check three of the census recovery is consistent with our expectation so far these games on the census in revenue front are welcome news but only half of the equation the shores a qualified workers and a surprisingly because is a growing challenge especially as patient and resident senses rises several of our tenants report tourney some patients away simply because they lack the necessary staff to care for more in spite of challenges still facing both the skilled nursing and years has a industries pricey for it's a skilled assets in particular has been unusually strong as mark will explain were fully the moment or disciplined underwriting approach is dictating that we for go some opportunities while we wait for pricing to rationalize that happens and it always does eventually respect to benefit from have a lot to dry powder own hand we believe that the value of that discipline is more evident than ever in our portfolio today with the exception of one small short term before our tenants been able to pay their rent right along this year despite the effects of pandemic while the industry is not yet out of the woods i would be remiss if i did not know for the record that we do see some encouraging indicators of straight emerging are polio independent of the provider relief they we'll talk more about that in this the moment that said we're very pleased with the quarter we posted double digit normalize death about brother thirteen percent of and same quarter last year and normalized f e d growth of fifteen point one percent we collect ninety six point two percent of contract rinsing que three and ninety six point one percent thus far for october with the shortest been the one before all that we disclose last quarter which we still expect like by twelve thirty one to bring us to one hundred percent of rescue thus far this year we grew apart for live with thirty two and a half million into investments in the to been or total capital deployment the over a hundred forty one hundred eighty four million and if these some together as planned will maybe not quite done we pay down a revolver following the acquisition and held leveraged steadier the comfortable net debt the a bit of three point seven times quarter and and is building discuss in a moment we are raising or twenty twenty one times today cap it off we got together with most were operators last month that are a new operator conference which was held in person here lived in a beach i think elect everyone who came really invigorated a better prepared to tackle whatever comes next so we are constructive on the long term future of our portfolio and churches remains well positioned continue pursuing our mission the pairing great operators of meaningful opportunities to transform individual opportunities for the better with that have handed over to date date
spk_7: a rag and good morning everybody let me begin this quarter by thanking oliver skilled nursing operators for joining us at our recent annual operator conference the greg just mentioned speaking for all of a secure trust bumpy fists very real time updates from our parkinson of the american health care association and syrian best practices for of few days was incredibly energizing and informative we're so proud of our association with a group of operators that we consider to be among the best in the country in a conference we spent a lot of time sharing what's working best to address the current covered and labor challenges virtually all of our operators agreed that their occupancy recovery has slowed because of time labor the flip side of that is that is that are operators and the quite is for us in our operators that a question at the beginning of the year about sniffed demand has been answered demanded high and the recovery would be much further along if not for the tight labor market nevertheless were seen some operators and some facilities hitting either record occupancy numbers are close to them we continue to be impressed by those who are managing this latest challenge well let me share with you just a few examples of the progress we're seeing and hearing in a portfolio were greg just refer to some encouraging indicators the strength
spk_6: and sign or largest tenant reported for sequential quarters of occupancy growth and enjoys least coverage north of three times we cannot overstate how exceptionally well they perform through this pandemic
spk_7: priority management group has grown it's occupancy six point seven percentage points since it's low in december
spk_6: it darrelle has improved it's coverage during coded excluding all provider really fans
spk_7: trillium has slashed agency caused by over four hundred thousand dollars a month since the summer and staff turnover from sixty percent down to twenty percent
spk_6: trio health care has vaccinated one hundred percent of its employees and is nearing record high occupancy and skilled next
spk_7: covenant care slashed agency is his from a february high at around and million dollars a month to under a hundred dollars a month right now and momentum created a special secure unit to accepting care for the large county hospital's difficult the playstation growing occupancy and earning some valuable good will that the referral sources along the way occupancy as thirteen point five points higher than last summer
spk_8: i could go on
spk_7: these are the types of success that we don't get to read about in the news that are happening throughout the portfolio
spk_6: again and me say thank you all of our operators and their teams for the extremely heavy lifting they've been doing these last twenty one month
spk_7: he's positive don't mean that many of them won't need or benefit from the next round of provider really funny we believe all of our operators have a plan for face for except for and sign and tenant did not needed or accepted really funds from the beginning we'll find out how much the fees for our fans extend the runway for each operator is funding amounts are determined and checks or received in late november and december
spk_6: but it's great news for operators skilled an assisted living a life to have needed those phone so far
spk_7: occupancy growth will also be critical into three are skilled nursing operators reported continued occupancy recovery from the prior quarter resulting in a projected return to pretend damage levels sometime next summer while just under twenty percent of are skilled nursing facilities are still operating below eighty percent of their pretend in nyc occupancy the majority almost sixty percent are back above ninety percent of pretend like occupancy
spk_6: and under skilled mix from the delta surge appears to have actually given a bounce to some of our operators in the region's most affected overall for folio skilled next remains about three hundred that's higher than the pretend an iq levels that the higher reimbursement rates than offset some of the overall occupancy loss
spk_7: this projection assumes that qualified labor's available and that known you had when such as a new variant or wave of sections intervenes
spk_6: for as housing occupancy overall occupancy
spk_7: and are relatively small ale portfolio remains unchanged from que to in spite of the fact that missions are significantly up the treadmill here with ale occupancy is really a result of one of our operators electing to discharge a host of residence for various reasons other that's largely done we expect to see our seniors housing occupancy begin to recover more quickly from here on turning out a least coverage with few exceptions overall covered remains very healthy close with and without provide a really fun a couple of her operators have really needed those funds to extend their ability to survive and ultimately recover from the impact is called it
spk_6: or top ten operators coverage which accounts for over eighty percent of revenue continues to be strong at two point two times for property level either dar and two point seven six times as either darn are relatively transparent coverage disclosure will prompt questions around individual operators to let me go ahead and address three of them right here first last quarter we talked about noticing of services one of our seniors housing operators and the request for some flexibility in pain a few months around
spk_7: you will have noticed both the investment total and rent numbers increase for noble since last quarter
spk_6: that as a result of transitioning the second of to premier facilities to noble in wisconsin around this time last year we began talking to premier about transitioning their to wisconsin facility which were outliers for premier
spk_7: nobles top performing facility was nearby and at the time again last year noble as a whole was performing a little bit ahead of their expectations in spite of conan we saw this transition as a win win for both operators
spk_6: the two buildings transition this year the first in march and the second in july as regulatory approvals were required and took some time
spk_7: are happy to report that nobles admission rates of really picked up lately but as i noted a moment ago they're just tried rate has also been unusually high primarily due to an internal review that led to discharging a number residents that we're not best served in their settings
spk_6: these is represented twelve and a half percentage points of their overall occupancy we think that's essentially done now but of course it's lead to significant hold in their nurtured near term ravenous they hadn't received provide a really fans previously but they have applied for and expect face for assistance
spk_7: so in september we agree to differ approximately ninety days of ran under an arrangement for them to pay it all back plus the rest of their twenty twenty one rent by the end of this month their obligations under the agreement will be funded from their proceeds of are pending acquisition of their to memory care facilities in new jersey that arrangement which is only dependent now on the imminent receipt of regulatory approvals appears to be on track after that is totally to go to get a positive least coverage that the face for provider really phones and other government assistance will be immensely helpful in the meantime and perhaps more importantly for the long term as i noted we believe that the discharges are over now and with the increasing pace of admissions their occupancy number said fine get some traction second covenant care is a sniff operator who's month over month occupancy and coverage is actually trend in really positively in recent months wearing a minority pete were a minority piece of their over up her folio and a corporate credit is very good as or other facilities are reportedly performing well we're optimistic that their recovery trend will continue finally let me talk about be shy or seeing a communities a senior housing and skilled nursing operator that took over to of the for beautiful large campuses in california we acquired early in the year plus another in el central california they say our team as a positive momentum in those three assets and we expect them to near stabilization soon so we remain very constructive on both the near and especially the long term prospects for are skilled nursing and seniors housing for phone the combination of steadily recovering census and continuing really funding especially for the ale operators bodes well for them even though it's no guarantee of success for the most talented we will continue to monitor and reports
spk_9: without i'll pass call over to mark to talk about investments mark
spk_10: extended morning honestly we execute on on a starting to and a half million dollar acquisition of to skilled nursing facilities in austin texas seven concurrently stop stop selling means angry the to assets oh well located and practically brand new and it'll be exciting to watch enzyme lamp awful coming months yeah position pilots whole and vastness and twenty twenty once in a high noon fourth one sunday the market perspective on stilts i will continue to see one after yells of muslim non strategic and struggling for science as you would guess deal for stabilized assets has been very light a stabilized assets or understand harder to come by for the moment and where it's respective i glad assets ongoing government support and the sniff industry is kept some on a flow owners that we would have normally seen selling their assets as province our economic tone negative of a deal at challenges of reduced occupancy and our labor costs so much stronger than usual demand for fewer than usual assets on the market pricing for skilled nursing has surprisingly spite just when you thought there might be a discount in fact on a price for that basis sinister been trained at all times hot all time sides including any assets to know casilla and other words yes virginia there as a santa claus for snus dollars isn't it seems housing is it's own story there's a large range of assets on the market some class a the classes and everything in between a lot of those aspects of his name is priced as well although we have seen a few more reasonable numbers from the mid march deprived and we typically pursue we're lucky we are looking hard and some opportunities worms think we can get mr jessica turns your custom the scenes helps
spk_6: i'll remind everyone that we've consent consistently reassume the market that at any point in a real estate cycle where pricing becomes unsustainable it's alarm underwriting discipline to ensure that we have to keep our portfolio healthy well positioned some long term covered grass
spk_10: so we continue to tap our extensive industry contacts for offered be priced opportunists which is why we've been able to close attorney for four million in me off martin deals for today in his great mentions there may be more the years down the we will not she's misplaced assets eating for place our tenants an untenable situation other lands and was collector's items killers totally unsustainable looking at twenty twenty two or twenty total investment sales community continues to express an expectation that a wave of deals east on the record number of broken or in attending the value or be of use their being asked to issue by prospectus sounds we can protect exactly when we expect a pricing will eventually settle as the him and subsides supplying supply chain issues are resolved interest rates rise credit standards not environment will be ready to use arts and system and conservative balance sheets of rum aggressively with quality assets and that markets and above all with past and class operators in the meantime we continue to i every deal out there are opportunities and minds that us and our partners and we believe will get our fair share of on our current pied since in the hundred and twenty five two hundred and fifty million dollars or five is made up of singles and doubles little couples solid smallpox opportunities i admit said sovereigns the pipe split roughly evenly between sniffs and senior housing for sounds please remember that for applied for deal that we're actively person other on right it and then only if we have a reasonable level of confidence that we don't want them off of them
spk_11: top and now turn around and fell to discuss with thanks mark with a quarter normalized effort though grew by thirteen percent of the prior quarter to thirty six point seven million normalized dad grew by fifteen point one percent to thirty nine
spk_10: on a per share basis normalized f about grew by eleven point eight percent for the prior quarter to thirty eight cents per share for normalized at i do grew by eleven point one percent to forty cents per share the on the guidance we plan on issuing guidance for twenty twenty two when we release twenty twenty one year and results
spk_11: the remainder of twenty twenty one we are raising our previously released guidance by one penny on the low end of the reins to normalize that apple per share of a dollar forty nine to a dollar fifty a normalized epa good per share of a dollar fifty out to a dollar fifty nine this guidance includes all investments dispositions made today
spk_7: sheriff can't count of ninety six point five million shares and relies on the following assumptions one no additional investments dispositions or rent deferrals cuts or reserves nor any further death or equity issuance as they share
spk_11: the question based rent escalations which count almost all of our escalators at an average of two percent a total rental revenues for the year again including only acquisitions made today are projected at approximately one hundred navy six million which includes less than forty thousand dollars a straight line that three interesting come up approximately two million for interest expense of approximately twenty three point eight million in our calculations we have assumed alive or rate of fifteen deaths and a grid based marginal rate of one hundred and twenty five vips on the revolver and one hundred and fifty bucks on the unsecured turmoil interest expense also includes roughly two million of amortization of dunford financing not include an and and interest expense was at ten point eight million dollar charge that we recorded and que three related to are cute to bond refinancing the ten point eight million was made up of seven point nine million of redemption fees
spk_10: and a two point nine million dollar right off of deferred financing feats
spk_7: and five we're projecting genie of approximately nineteen point six million to twenty one point five know this range is consistent with what we discussed last quarter a gene a projection also includes roughly seven million of amortization of stop
spk_11: or liquidity remains extremely strong with approximately twenty three million in cash five hundred and twenty million available under our revolver and we products produce roughly twelve been in cash per quarter after paying the devil
spk_7: leverage also continues to be strong had a net debt to normalized even bondar ratio of three point seven times today and let that the enterprise value was twenty five point one percent as a quarter and and we achieved a fix charge covered ratio of a point five shots
spk_10: lastly task elections for the quarter came and ninety six point two percent of contractual less and october came and and ninety six point one percent i would expect november to be much like october based on the color given today on this call
spk_6: as greg mention we do however expect a collector shortfall before euro with us altar of actively thanks bill
spk_0: every we hope this discusses been helpful for you he certainly appreciate your continued interest in support and with that we're happy to open up for questions city
spk_12: yes sir and ladies and gentlemen if he would like to ask questions please press star and the number one on the telephone then if you would like to ask us and pressed i have one on your telephone or posture just a moment to compile the q and a roster
spk_0: for our first question we have
spk_13: who and that yeah from bm capital market one airlines have been
spk_10: hi thanks for the time to stop enough to spend a lot of bit more time on a noble family the to assets that you guys are moving just curious on if those were i either or negative and door and packers it has for noble and and or is the rent that staying with those assets staying in place with noble or just just curious how we should think about that and are the risks for rent on us to assets being lower they've always had scrap to it hundred a pro
spk_7: wireless just a little more color on that piece of be helpful yeah the buildings were not covering to their under one times coverage i'm good a chronic underperformers for of premier and when the things we really liked about putting them into nobles hands last year when we were looking at it was that nobles said their their top performing facility is in wisconsin nearby to these two premier asset the strongest local leaders and was consistent operator service created the opportunity for them to build on that strength form a nice little cluster and and and we feel like he gave those two buildings a better chance to get back to stabilization than than they were in premier agreed so the rent came over at the same amount to noble
spk_13: but there is there some work to do their to get those astra in you know to to be performing and since the transition happened
spk_10: the house and your nobles care improves slightly on a coverage perspective but they still have some ways to go to get turned north of one times coverage
spk_7: cook and and just to clarify there's not as it's being taken out from noble to be given to a new operator i was just reading over the tank and as a little confused about maybe another to help of assets are those are sent to assets acid cities there's two groups of to assets so i understand why when there's some confusion the reason the reason i talked about these to wisconsin buildings that were added to noble is to address to the question of why noble has actually increased an investment size and rant in terms of our relationship with them i ads because of that because they took over this to assets from premier that we started negotiating last year and and has finally and took place this year
spk_10: the other two assets that we've been talking about from for noble one is a building in fort meyers florida which has been off line since they stepped in to the least back in twenty nineteen for a major renovations and and getting attacked ready to go
spk_14: that's still a ways out from been ready and and licensed at the other one is a building in baltimore maryland it's actually been actively marketed right now for sale
spk_7: so those are does it have probably the other two buildings that you're thinking about from the que
spk_6: it's so once those buildings are are carved out it is that coverage and had you have a sense of what the performer coverage or pages to
spk_15: to give us have a pro forma tag number
spk_13: i don't have a pro forma number of the at my fingertips today that absolutely when fort myers is removed and baltimore's remove those will be significantly coverage improving for noble
spk_7: a for and then just than switching gears to the pipeline
spk_13: and
spk_10: what could see the confidence i guess that that prices fall stay where they are capital our or price for us high and that we've seen significant capric impression and other asset classes with low rates will who's to know where interest rates cause i'm just curious if
spk_16: our what you see changing or
spk_10: a or what are what you think you're not the and willing to match for cincinnati other buyers out there comes a right underwriting it's just a speed and the recover years at the underlying guy of the assets that that may or may not change disc curious if he could provide a little bit more car on that why think this is mods on you know i think just just talking to the investment sales community in understands that eventually speak it's going to get turned off so me feel like you know place in at some point you know will rationalize and so i think over products while bottles like to see more and more opportunities so it my my answering a question is a question why we think pricing will though will go south yeah yeah why will at normalized and or where your different i guess and the underwriting vs that the people who are willing to bet that it's just they're more aggressive on the time i'd ever have a recovery are just have that replace a greater value on the underlying we'll stand ups united fucking the folks at of winning bids i think
spk_17: i'm making some assumptions on certain states specifically states at c yeah my days to medicaid rates and are as pretty addresses increases in in medicaid raids and that's not something that weren't necessarily long winter time right
spk_10: dawn in the door what offerings do day one when it is certainly insurance costs or or in noted
spk_18: very often
spk_19: much consideration for getting on and off day
spk_20: increase know see if i snagged countries twenty scotland's
spk_21: was like that
spk_0: zones
spk_13: live happily in the opposite
spk_17: a lot of as assumptions
spk_22: thank you
spk_7: and for our next class and we have jordan said no from keybank kept on markets and start a new line is open thanks and i in one guy so i'm do to go get a little bit more on ball
spk_23: go because like there's a third group of to to a kid into africa it be purchasing a new jersey democrat back to make marriage work of using a repair ah
spk_7: can you give it a little bit more color on those two assets and how's that transaction going to come into the cold it you haven't sold so maybe how much you'll be playing with evaluation obey
spk_24: yeah so just to assets are on by noble and they're just regulatory one last regulatory hurdles to pass and then we can execute that that purchase which with people do the in in the smartest all goes according to plan
spk_7: and those are two my about forty forty size bad facilities for memory care in new jersey that have been empty for quite some time has been renovated they have been renovated will probably once we acquire them foot a little bit more into it
spk_6: diggin really beautiful and ready to go
spk_7: and did process in new jersey takes a little bit longer than other states to get license once you once you have and certificate of needed so we're likely gonna start ah collecting rent on that some time and first half of next year hopefully first quarter but sometime in the first half the next year
spk_22: and we are likely going to have a different operator vendors and noble
spk_25: and we are currently marketing the facilities having really good conversations with a as a host of interested operators we can be touring the facilities with them soon and we have some time because of licensing to get that lined up at there's been a lot of interest in them for for
spk_26: operators that are already in and around new jersey
spk_7: the purchase price on that is around twelve million dollars for those two buildings
spk_27: and then we'll put in how much additional
spk_28: tbd but probably
spk_13: ha
spk_29: under quarter million
spk_7: how smaller and then those are the least the somebody else at out
spk_22: a job that we would expect
spk_30: at it again you guys
spk_11: that's right most likely
spk_7: i'm away but that the kids are empty there's gonna be a bit of a ramp and that rent so once once they get stabilized and move on land and sort of that normal yelled at you expect from us
spk_31: ah and then just clarifying on the to that are well a baltimore for my as it's any but while the sold i'm curious their what that sale price may be and and how they get credit like that the right credit with the one i yelled bases relative value
spk_7: you back to noble and then maybe to clarify what capital at fort myers yeah so with baltimore we will find out what the market says not the price for ah for baltimore i don't wanna i don't want a whisper a number to the market while it's it's been actively marketed at this time that we will take that those proceeds and hit it with kind of a
spk_29: and expect what what you might expect to a rant yield to be for that and adjust the ran accordingly in fort myers
spk_7: there have been some insistent that building went through a full renovation
spk_13: ah as it's gone through lights and seen with the fired authority they've they've discovered some
spk_22: some my shortcomings that they'd like us to shore up before we we reopen it and they're pretty extensive and so that's what caused the delay there
spk_10: that we have that our director construction services has been boots on the ground they're very recently talking face to face with their fire authority in our collaboration with noble to time move that along the park hotel for a last one maybe get martin accommodation the air on the gonna close the door unlocked two hundred fifty that three hundred million of acquisitions against on historically on a little bit of a way to go that that the right cadence what should be it away with
spk_16: you know yeah i it's also getting late and here and and i think i think what we have padded seat up in the pipeline i don't think it it he gets quieter
spk_32: a historical number that you saw was tell that
spk_0: but what we do have a pipeline
spk_33: we're pretty excited about and so just be a function as to how quickly
spk_7: diligence and governor signed up okay thank you
spk_6: by our next person we have a man that sweet sour from bear monday line happen
spk_2: great thanks again christian help out last fall by now yeah putting up now but currently have any that i can pick you out at but york wiring to partially really think about that purchase price for that that at than one for one caching teach him for now both
spk_7: they have some debt that will be paid off from from the proceeds and that that it the largest amount of the proceeds will go toward paying off the deferral and free paying rent and other obligations for us a proper and then i'm tapping for the operator that you mention why you are seen as large agency cause i also feel like occupant the restriction by that operators generally trading agency labor for full time staff and are scale than taking startled frank are all so thanks for asking because i think it gives me a chance to correct something with when i was talking about covenant care
spk_25: i have somebody out next year the table with said i i said that their costs went from a million a month down to one hundred dollars a month but it's really a hundred thousand a month for kevin care
spk_7: so as it relates to our operators in general most of them are saying that there's some limitation on how much they for the skilled side not much for the scenes of inside the for the skilled side how much the man because of tight labor there's really two ways to approach that you can continue to admit and staff with agency
spk_33: which takes a big a big cut to you to your margin
spk_7: or you can stay with lower occupancy and and keep agency out we have operators vitter basically approaching it in both of those those wins
spk_34: and there's there's pros and cons to both of those approaches
spk_0: so i'm not sure that answers your question but that's that's how they're approaching it now
spk_35: yeah tapa and then last question kind of on your senior housing portfolio and can improve track your steam their can quantify how big the atkins the at k k that you think what are date
spk_36: unfortunately i can seniors housing occupancy quarter to quarter really his remained flat
spk_7: i said the handle and for our next question we have my cat how from are you mean he kept on my kids my county line seven yeah thanks i'm taking you go back and and talk with about the internal review that you are highlighting am about noble boy i guess what drove that internal review and and where were those residents where did they knew to what with a better setting
spk_25: well i think it a
spk_7: this the the overall quest the overall concern was appropriateness and as care so in other words there's really kind of two things that that let it to pools of concern one was appropriateness of care and the second was pair source so it's one thing to admit residents but if they
spk_37: aren't able to pay overtime than eat you have a problem and he can have phantom revenue there
spk_7: so that was an issue and the other was just the appropriateness of care most common around either acuity or behavior things like that so there is
spk_38: what prompted it was management finally
spk_7: coming to grips with some lingering issues
spk_35: and taken a hard look at what they had and there in a in a handful of their facilities really couple of buildings where they had a persistent problems and as they dug into it
spk_7: they realize that there are collecting issues in the does collection this is were not unrelated to some of these behavioral issues as well and
spk_39: finally just made some policy decisions around the types of residents that they can really of properly take care of
spk_7: so that call that a half percent drop that at how many communities with the are and it gets out of have money within their portfolio and where they move to what behavioral health facilities are skilled nursing facilities are are those types of of assets
spk_35: they would be hi i didn't we we didn't really keep track of where they went so i can give you specifics on what percent went where of that you're right that's that's where people would go or other assisted living facilities that specialize in behavioral type health as well so with innocent singers housing
spk_40: you have all sorts of specialties and the buildings then that they had would just and have that capability to take care of that population
spk_35: am
spk_41: the there was concentrated at a couple of the buildings
spk_42: and i call the half percent occupancy drop that will that the whole portfolio are just a slight delay
spk_35: their whole portfolio
spk_43: the whereas occupancy africa album arm for their portfolio today
spk_7: ah i'm when knew that i might have you back on that one might on that the help of and then can you talk about a bit more about premier a me i know their coverage ratio has been i'm pretty low over the past the a few years mean moving those to add that to noble out of our portfolio out where does coverage ratio go with a closer to two one time yeah it is it's it's creeping up in a we've been receiving we just saw premier at a conference as last week had a really good conversation with them had a good relationship with those guys they're starting to see some traffic pick up in their michigan portfolio
spk_44: they expect more move ends net net increases by the end of this year
spk_35: and they've applied for the face for funding and rural funds as well so
spk_43: and things are are actually little bit better and stronger a premier today than they have been in a long time and
spk_45: removing the to wisconsin facilities
spk_7: as help them the when he say and moved up a little that he goes around point a times last quarter an article in a felony or top ten i don't believe it's in it's most recent report but it it back up the point nine times i'm or how much is though that removing as to assets really help them and can we take them off the watch less does it help on that much no one of the i don't think regard i'll take premier of the watch list until their comfortably north of one time and the server ways to go and i think in other their coverage in the order
spk_35: ah was was fairly consistent with what it was the the quarter before making a little bit down what i was referring to is more real time information that we have
spk_46: thank you for just looking at their occupancy and talking to them about their their costs
spk_47: we expect that it's it's hurting to clean up right now
spk_11: i am and into my last question for for bell key talk a lot of that about their c p i run escalators within the company leases i believe you have two percent and guidance i'm and city i has been on well ahead of that am i guess what c p i c we typically look out for those and and in a it above two percent or that really going to be at one point to of and vs twenty twenty one yeah hey mike
spk_35: cp i most of our leases contain cp i w and i you it is for the last few ah and as you know our are on
spk_11: lisa's contain floors of zero and caps most of them have cats and zines kept a two and a half percent ah see the i came in for them above two and a half percent on june first but we still raised them by two and a half percent
spk_0: the other camps go up to like i think it's three and a half and see guy as than well above two and a half so they
spk_48: so our assumption of two percent in guidance for the rest of the year which we only have a few tenants with bumps in queue for isn't really material if it goes from two percent if i use to percent or two and a half percent or three percent i had so far look into two thousand and twenty two it's safe to assume that we're probably closer to that to have range given wealthy guy has trended correct yes thank you fair enough personally has given sally quick from partly stephen your line is open hello everybody thinks her taken a question as a couple questions here really on the
spk_6: in a decision by and sign group and an answer from week or two ago about starting a captive read within their company yeah i guess for the near term and long term maybe the spring of the question that wagon i'm curious and the short term and with a slow down the pipeline of the other jews as you've done with them yeah name and a lot of positive comments on on their call about the are continuing to do it transactions with existing
spk_49: are we partnered that rather maybe out of the on pause for thing it or i'll have a thoughts and ask if you follow us on this topic of alameda targets are your thoughts are on any applications you guys short term or long term animal ago from our governor thanks
spk_6: sure that this is greg i don't think it changes things very much for us we have the we have a good relationship with them and he saw it in the arm or a deal with them in the quarter to didn't to austin facilities that case we brought those facilities to them having tie them up previously and i really think that's probably the only way that we would be
spk_48: we would have we would be doing deals with enzyme in the future it's really the only way we've done deals with them their cost of capital has always been a good of the availability helpless be good enough as it did they found a deal they could finance the deal and they've done their own deals and they've done i'm very very very well that said you know with their with their captive breeding not sex sure what they're going to be looking at
spk_6: if they continue the look at the same kind of distressed assets that that are have been their bread and butter historically i don't think there's gonna be a ton of overlap but to us the they really does represent a you know another another player and them in a in a large in the marketplace with lots and lots and lots of players that we compete again it's in an old the were too worried about whether we will get our fair share of the deal that that it's your question yes yes off or maybe to to quit follow ups on the same thought at one of them is or to have answered already better if we look at and sanger been and penang combine an acre total number of properties
spk_24: combine back and twenty four team with ninety four and i would be our hundred and six per between the two that you've added a couple of properties per year and i combine or less ship it sounds like
spk_42: you are bring in those properties and transactions to them at about the other way around that other guy for that that will still be the case
spk_6: a that ways as want to confirm that yeah as he actually what happened was a we bought a for building portfolio with an enzyme least in place last year
spk_48: and and then we did this deal with them destruction thing like be done in the fields with them oh would be but that would we did a covenant your attack on with a building with them and again a building we brought to them and and they grew a little bit when they acquired by boat so to the smaller operator of mars that's right the but they bought one of our operators
spk_6: and just stepped into the least it was already there so so those are the kind of feels that we that we do with them again they they have either they're great operator they have superior cost capital and and if they source a deal they're going to do that deal themselves every time i would a cast in just the family check an ad the expiration date of your masher me for then sign group right now and then menu on the real estate on get the really no risk of losing and in you're currently property arrangements with them but maybe to long term in there have been to assume that saw him with them place or
spk_48: on timer as or the rescan a long term as other changes as far as the yeah
spk_6: the side of the relationship and atheist yeah agree yeah the is at it that's a good question i'm glad you brought it up gives us a chance to remind everyone that to when we said those leases up in two thousand and fourteen is a master leases and they are all the all have staggered maturities with various a new two three five year extension op's incident as i can exercise and they are all well diversified in terms of geography asset class and asset quality in and are that was done so that term we would be able to have the expectation that
spk_48: the is very high likelihood that those would be renewed as those we do lots and come up
spk_50: again one that's real quick one the i did you know that a strategy was coming from them for a while or us maybe you're getting you by surprise element of hard their decision around this game and high level off that
spk_0: no i don't think anybody should have been surprised and his lands i'm has been telegraph into the market literally for years that they wanted to do something like this without saying exactly what it was going to be that i think everybody's known that they have a sizable real estate portfolio today have built since the
spk_13: the to do done for day care trust spin off they done a terrific job with it and down and i think it's a i think it's a good solid logical step from them i in terms of just making sure that they get credit for for the value of the and scares me the real said equity that that they can
spk_6: need to create and build up in that portfolio just as they did with the portfolio the week started with that they're doing a great job
spk_7: got a got at honor help ah thanks you bet that firing a crush on harm bang bang seen from capital why upon hearing a line is open i expert taken my answer my questions am i to go back to the a skilled next or that you know in increasing i want to can understand of a bit more about how you think about the sustainability of that increase in skilled makes ah i'm and maybe how much of that was related to maybe to pt
spk_51: yeah i'm vs on the uptake of it and three kids
spk_42: it and not a measure that we could attribute the skill next i increase or decrease or any minute their activity pdp and necessarily we we've always compared the numbers free pandemic to to we had about six months of pt am
spk_52: in those pretend i'm at numbers
spk_7: roughly where at about fifteen and a half percent for skilled next on are skilled nursing portfolio ah for free pandemic we've seen it go as high as twenty five and a half percent in december as our last year a a kind of came down to in june
spk_53: hi sixteen percent and slowly it back up to known as september number of eighteen and a half percent
spk_6: the think that's largely because of the and the delta very and we'll see you know it of a lot depends on how long the at three day qualifying stay waiver stays in place with think that is a key element of course to these numbers and whether or not that is a permanent change
spk_53: you know very well as is anybody's guess that probably not something that is worth pin lot of money on so am i think as the when the dust settles uncovered and and we could say that it's it's foreign the rearview mirror we probably get back down somewhere closer to those pre pandemic skill next level's
spk_54: i am and then on the the pipeline
spk_53: ah a obviously with with with some your operators and the highways coverage and they anti given that he are have finds that they don't need that but it seems like maybe from an industry level
spk_10: the industry he continues needs continued prf funds or other federal state supports and was that
spk_16: can applying into the idea that you're gonna get to pick up in
spk_10: and acquisitions and better pricing down the road that in this that that funding maybe goes away next year and then will maybe we'll see some like to stress or have to stress the right word but you'll see more assets come to market where
spk_21: operators me
spk_10: financing or way out financially is marked down at exactly that and i didn't blame it on your we've already seen some smaller operators have withheld
spk_6: currently working on a transaction right now aware that that case closed that the on al central issue with desire for the same same type situation so yeah i think when window when the prs finds get turned off when the public health emergency eventually expires matt sunday and stops flowing
spk_55: that i will start
spk_7: a significant amount of transactions to market i at that point supplies coins to avoid outstrip demand desmond price for that will start to fall and one last question the labour side i think he noted
spk_56: and maybe some easing up in labour pressures at some your operators that's that
spk_7: a matter of increasing wages are they actually seeing ah increase job applications more people more people come back to the market that to work and just trying to understand maybe the dynamic their that's giving some green shoots in am labor then it's really a combination of both reduce c
spk_25: higher wages across the board tipped to very varying degrees
spk_7: on the other hand with the
spk_56: unemployment benefit last scene and people and burning through their their savings from covered and and
spk_7: near the people coming back to work as well
spk_55: louis seen as in in the operators that have had the most success it's those who
spk_57: bring that same tenacity and follow up and prompt response that they have around admissions from the hospital to applications
spk_53: are you combine that
spk_0: tenacity and intensity with am and focus on culture in providing a great place to work any and we do see operators that are able to move the dial in a significant way in in the face of and otherwise difficult macro environment in a subset of better operators are
spk_13: kevin get a better it better performance against are better less issues on labor side of things being eaten yeah i'll never up
spk_22: gonna
spk_7: i'll get the that i att ta the questions i had that
spk_58: that's
spk_13: i don't paint spencer fever like to ask consent thief by far one on you can sign
spk_59: for the next question we have from jordan had no from keep on then you vines happen
spk_13: hi guys hypocrite follow up on
spk_60: ah
spk_13: the yeah repurchase option then long maybe looting and it is a reminder
spk_7: we didn't then for i new any any the and kind properties have repurchase options are a those nasty races rather
spk_28: just know just the just the texas for that we acquired but none of the original
spk_13: properties
spk_7: q my it what are my this when the texas for out and that
spk_42: twenty twenty seven
spk_61: and then coming back to add purchase options and the disclosures on pace thirteen and adapt and and looks like the first group of purchase options are probably with noble and guessing discussing flour old says why that happened
spk_7: help for sale at the the thirtieth ah is a for that for the right the samson and could i would assume an authenticator and that will be unlikely with lots of cyber warfare
spk_6: that's fair yeah with to be think it's pretty unlikely this point as well
spk_10: that alone that the nuts clap all ah
spk_62: down on that left their snaps i'm one opened that january first and that sat on have a bigger chunk key lab share who who that is and or the expectation dark brown law
spk_42: so jordan the money route the correct what i said about the texas for with and at sexually
spk_63: that option opens the end of twenty twenty four
spk_64: and then the next i in line
spk_0: his sniff operator in the mid west and we also based on their current performance which would say that it's pretty unlikely that they are in a position to x exercise but we can we we can know for sure until we get closer
spk_65: they share what they kept rate is on that that to fix capri them at least revenue we share with that is
spk_66: i don't
spk_0: yeah the city
spk_67: thanks
spk_6: let me get back on that jordan
spk_0: no worries
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