Executives for healthcare real estate investment trust Invesque expect occupancy levels at its skilled nursing facilities to rebound following the height of the coronavirus pandemic.
Chairman and CEO Scott White explained that its skilled nursing operators have largely seen changes in occupancy for short-stay residents, as opposed to longer-term residents, due to the halt in elective surgeries. However, he noted that elective surgeries “tend not go away,” and he expects the pause on procedures to create a “pent-up demand,” which should lead to an uptick in occupancy on the skilled side.
“We actually fundamentally believe that later in the year, although it’s very difficult to pick a quarter or a month, that we’re going to see a reasonable increase maybe well above where we were before this started in occupancies to make up for the lost demand associated with elective surgeries,” White said during a first-quarter earnings call Thursday.
Executives noted that coronavirus cases among residents and staff members have been reported in 40 of its 108 senior housing and skilled nursing properties. As of May 8, the Carmel, IN-based REIT has had 560 total residents — out of approximately 11,000 beds — test positive for COVID-19. The residents are being treated and quarantined.
“While one case is too many, we are pleased with the ability of operators to contain the spread of this highly contagious coronavirus,” White said.
White added that the company has not seen any meaningful impacts to its cash flow following the pandemic, but it’s focusing on preserving as much as possible given the market’s uncertainty, paired with declining occupancy levels and increased costs for labor and personal protective equipment.
To save money, the company has taken several steps, which include: suspending its dividend for all common shareholders, reducing its corporate workforce by more than 25%, and deferring non-essential capital expenditures.
“These are all difficult decisions we do not take lightly. The ones that we believe are in the best long-term interest of our shareholders. I am confident that we have the appropriate liquidity and balance sheet strength for the current uncertainty,” White said.
“While sentiments towards seniors housing and skilled nursing is expected to remain challenging in the short-term, our management team has an eye toward the long-term effects that the current environment may have on the industry,” he added.
