Company Overview - As of December 31, 2022, the company owned 202 properties across 34 states, totaling 9.1 million rentable square feet with a gross asset value of $2.564 billion[20]. - The company’s investment strategy focuses on maintaining a balanced portfolio of high-quality assets, pursuing opportunistic investments, and maintaining a strong capital structure[22]. - The company’s properties are diversified geographically, with the South region holding the largest number of properties at 70[21]. - The company owns 52 seniors housing properties, including two land parcels, leased to a wholly-owned TRS[53]. Financial Performance - The annualized rental income for the portfolio as of December 31, 2022, was $313.618 million, with the South region contributing the highest at $125.111 million[21]. - As of December 31, 2022, the total debt leverage ratio was approximately 41.5%, with net debt totaling $1.1 billion and gross asset value at $2.6 billion[51]. - The Estimated Per-Share NAV was $15.00 as of December 31, 2021, up from $14.50 as of December 31, 2020[83]. - The company has not paid cash distributions on its common stock since 2020, issuing dividends in the form of common stock instead[93]. Market Trends - The healthcare industry is projected to grow at an average annual rate of 5.1% from 2021 to 2030, leading to increased demand for medical office buildings (MOBs) and senior housing properties[25]. - The U.S. population aged 65 and older is expected to grow to 94.7 million by 2060, increasing the demand for healthcare-related facilities[27]. - The healthcare industry is experiencing rapid regulatory changes that could adversely affect tenants' ability to meet contractual obligations[55]. Operational Challenges - The company has experienced ongoing staffing shortages in the senior housing industry, but reported employment increases for nursing and assisted living facilities in 2022[25]. - The impact of inflation, labor shortages, and supply chain disruptions has adversely affected the company’s operations and may continue to do so[43]. - Operating costs in the SHOP segment rose materially due to inflation, reliance on temporary labor, and increased wages, which may continue to adversely impact revenues and net income[46]. - The company faces risks related to the inability to collect rent from tenants, which could adversely impact cash flow and dividends[114]. Regulatory Environment - The company is subject to various federal, state, and local laws, including environmental regulations, which could incur substantial costs[79]. - Increased enforcement actions related to healthcare regulations have led to a rise in investigations and audits, affecting tenants' financial health[66]. - Compliance with fraud and abuse laws is critical, as violations could jeopardize tenants' ability to make rent payments and result in significant penalties[185]. COVID-19 Impact - The ongoing global COVID-19 pandemic poses risks to tenants and operators, impacting their businesses[87]. - The ongoing COVID-19 pandemic has negatively impacted occupancy rates and lease-ups for assisted and independent living facilities[190]. - The company reported that the long-term impact of COVID-19 on tenants and operators in the SHOP segment remains uncertain[102]. Debt and Financing - The company has substantial indebtedness and may incur additional debt in the future, with potential increases in interest rates affecting debt payments[90]. - The company may experience difficulties in acquiring properties due to limited capital availability and potential disruptions in financial markets[105]. - The company must use net cash proceeds from capital events to repay amounts outstanding under the Revolving Credit Facility until certain conditions are met[211]. Investment Risks - The company may face challenges in renewing leases or re-leasing space as leases expire, potentially leading to reduced cash flow[153]. - The company’s real estate investments are concentrated in healthcare-related facilities, making it vulnerable to downturns in the healthcare industry[163]. - The company may not be able to dispose of properties on favorable terms due to the illiquid nature of real estate investments[156]. Economic Factors - Geopolitical instability, particularly the conflict between Russia and Ukraine, may adversely impact the U.S. and global economies, affecting tenant viability[158]. - Economic downturns may negatively affect state budgets, leading to potential Medicaid spending cuts that could impact tenants' operations[175].
HEALTHCARE(HTIA) - 2022 Q4 - Annual Report