LTC Properties says they’re not seeing many investment opportunities in the skilled nursing space currently, but their approach hasn’t changed — they remain committed to the space.
Pricing has been surprisingly robust compared to other senior sectors such as private-pay senior living due to financial support provided by the CARES Act Provider Relief Fund.
Total price per bed surged almost 22% year over year for the first quarter of 2021, hitting $90,700 on average according to the JLL Senior Housing & CARE Investor Survey and Trends Outlook report released in May.
LTC Properties (NYSE: LTC) CEO Wendy Simpson said the Westlake Village, Calif.-based real estate investment trust (REIT) is “cautious” when looking to the rest of the year.
“Not everybody’s stressed, but right now [operators] have indicated that they have enough capital to get at least to the end of the year,” Simpson said during a Tuesday webinar with sister publication Senior Housing News, referring to PRF funds.
The sector has received approximately $14 billion of the $178 billion in the fund — the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) publicly urged the federal government again this week to release remaining funds.
Providers expect $10 billion to go to the skilled nursing and senior living sectors, along with $3 billion from a rural fund included in the subsequent American Rescue Plan (ARP) Act introduced by President Joe Biden.
Once those funds run dry, however, market stabilization might not happen until 2022 or 2023, Simpson said.
LTC’s portfolio is comprised of 50% skilled nursing properties and 50% seniors housing across 27 states and 30 operating partners, according to their website.
The sector’s staffing crisis needs priority in order to boost occupancy, which has stagnated at 73%, according to data released earlier this month by the National Investment Center for Seniors Housing & Care (NIC).
Simpson added that, with the Consumer Price Index (CPI) increasing, inflation is going to hit the market too, presenting another challenge to the skilled nursing sector.
“There’s a lot of things that they’re dealing with now. One of the biggest things is the labor force,” explained Simpson. “Do they have enough labor to admit as many people as they would like to have in the properties?”
“We’re not out of the woods,” Simpson added.
Rise of Skilled Nursing at Home
Simpson touched on an incursion of home health and SNF-at-home in the nursing home care model, adding that this trend doesn’t necessarily spell the end of traditional facility services.
‘Not everybody has the ability to stay home and has a network of people who are going to help them manage their care at home. I don’t think the SNF is going to be a thing of the past,” noted Simpson. “Home health is definitely getting a lot of interest these days, everybody would rather convalesce at home.”
Core challenges to long-term and post-acute care, like staffing shortages, exist in all of these settings too.
“The weak link right now in this cycle is people available to do the work. I think our labor force is more stressed than I’ve seen before; in my experience, to find qualified people is a real challenge,” explained Simpson.
Simpson said that historically, SNF operators have had home health lines that they spin out and sell before starting the expansion process over again.
“It’s the same way with [rehabilitation services]. Some [operators] use rehab companies outside and some people have a rehab staff within their facilities, same with pharmacies. I’m sure those analyses are happening at every property, at every operator,” added Simpson.
Companies featured in this article:
