LTC Properties’ Skilled Nursing Occupancy Slips to 71%, But Rent Deferrals Minimal

Occupancy at LTC Properties’ (NYSE: LTC) skilled nursing facilities slid from 80% at the end of March to 71% by mid-July, but the impact on operators’ ability to pay rent without deferrals has so far been minimal, leaders at the real estate investment trust (REIT) disclosed Friday.

Those occupancy figures represent voluntarily submitted data covering about 93% of the skilled nursing beds under LTC’s ownership, chief investment officer and co-president Clint Malin said on the company’s second-quarter earnings call with investors and analysts.

For comparison, LTC’s private-pay senior living portfolio saw an occupancy decline from 83% to 77% over that same span.

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Across LTC’s entire portfolio of senior living and care properties, the REIT granted less than $1 million in rent deferrals for the second quarter of 2020, or 2% of overall quarterly rent revenue, chief financial officer and co-president Pam Kessler said.

Of that total, $277,000 had already been repaid, leaving $653,000 in deferrals outstanding as of June 30, or 1.5% of total rent.

Since the close of the quarter, LTC granted a pair of rent deferrals — one for $80,000 for the month of July, and a second for $280,000 for August and October, Kessler said.

The Westlake Village, Calif.-based REIT had 92 skilled nursing facilities with a total of 11,397 beds in its portfolio as of this past December 31, representing about 48.9% of its total investments.

As the first publicly traded REIT with skilled nursing holdings to report second-quarter earnings, LTC’s results provided a small window into the impact of a full quarter of the COVID-19 pandemic on operations.

The release tracks with the overall assessment that Rick Matros, CEO of fellow senior housing and care landlord Sabra Health Care REIT (Nasdaq: SBRA), made to SNN in an interview this week: Given the significant amount of federal support provided to skilled nursing facilities, operators have largely been able to remain afloat despite the operational and financial strains.

“Even though this thing is going longer than I think any of us would have liked, because we haven’t had to do much yet, we’re still in the same position we were in February or March,” Matros said. “If they start really hurting in October, then fine — that’s the new day one that we started giving rent deferrals, which is probably the most likely form that things will take. We have some time on that.”

LTC reported $1.8 million in net income for the second quarter, a significant drop from the $20.4 million seen during the same span in 2019; management attributed the substantial decline to a one-time $17.7 million write-off associated with senior living tenant Senior Lifestyle, which had fallen behind on rent.

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