While some landlords have significantly scaled back or squashed their involvement in skilled care, Welltower said Tuesday it’s taking a different approach.
Other players such as Ventas and Kindred have largely cut ties with the nursing home field, but the Toledo, OH, real estate investment trust said it’s looking to invest. On an earnings call Tuesday, officials said they’ve seen prices for skilled nursing assets tick upward.
Price and return will guide their investments, not segment exposure or a particular operator, said Shankh Mitra, Welltower executive VP and chief investment officer. They have steadily “gained confidence” in the post-acute space, he added.
“While it is unlikely to be a V-shaped recovery, it appears that the industry fundamentals are on the mend,” Shankh told investors, noting that SNF asset prices have “materially increased,” due to the availability of capital in the industry.
Giving one example, he noted that in the first quarter of 2019, Welltower sold 22 properties occupied by Genesis that were below market coverage for $252 million, at an 8.95% yield. That represents $40-plus million in value creation, he told investors. Welltower bought HCR Manorcare properties a few months ago at a “significantly cheaper price” with a materially better credit structure, he added.
However, Shankh stopped short of predicting any dramatic sell-off in the SNF space.
“Within 12 months, we have turned from an opportunistic buyer to an opportunistic seller,” he said. “Every asset this company owns is for sale at a price and total return. That’s no different from skilled nursing and no different from any buildings we own in any other segment.”
