CareTrust REIT(US:CTRE)2020-11-07 06:30Financial Data and Key Metrics Changes - For Q3 2020, normalized FFO was $32.5 million or $0.34 per share, and normalized FAD was $33.9 million or $0.36 per share [31] - The payout ratio remains low at approximately 74% on normalized FFO and 69% on normalized FAD [31] - Leverage is at an all-time low with a net debt to normalized EBITDA ratio of 3.1x and net debt to enterprise value at 22% [32] Business Line Data and Key Metrics Changes - Rent collections from April through October exceeded 98%, with November collections on track [13] - Skilled nursing occupancy has dropped 710 basis points or roughly 9% from March through October, while higher-margin skilled occupancy increased 480 basis points or almost 31% over the same period [21] - Overall portfolio EBITDAR lease coverage on a trailing twelve-month basis, stripping out HHS funds, is 1.94x [23] Market Data and Key Metrics Changes - Seniors housing occupancy held steady from March through October, with a minor 100 basis points drop compared to June [20] - The skilled nursing sector is experiencing a decline in occupancy, but some operators have performed better during the pandemic than before [21] Company Strategy and Development Direction - The company is focused on advocating for healthcare providers and providing transparency about their operations [12] - There is a cautious optimism regarding larger acquisition opportunities expected to come to market over the next several quarters [28] - The company plans to continue pursuing opportunities that align with existing operator relationships and expand into new markets [29] Management's Comments on Operating Environment and Future Outlook - Management believes that the skilled nursing and seniors housing industries are better prepared to handle ongoing challenges compared to six months ago [8] - The company expects several more quarters of predictable and manageable operating performance, especially with the rollout of effective vaccines [12] - Management remains committed to maintaining a balance between dividend payouts and reinvesting in the company for growth [56] Other Important Information - The company has $25 million in cash on hand and no debt maturities before 2024, providing a strong liquidity position [14] - The company has raised and narrowed its guidance for the year, projecting normalized FFO per share of $1.36 to $1.37 and normalized FAD per share of $1.42 to $1.43 [15] Q&A Session Summary Question: What is the composition of the pipeline and pricing? - The pipeline is primarily composed of skilled nursing facilities, with larger opportunities expected to range from $50 million to $150 million [38] Question: How is the company addressing occupancy challenges? - The company is focusing on pre-COVID numbers and understanding the skilled mix to address occupancy declines [41] Question: Is the company looking at opportunities from smaller operators exiting the business? - Yes, the company continues to seek opportunities to acquire properties from smaller operators and retenant them with existing operators [45] Question: What is the competitive landscape like currently? - The competitive landscape remains similar, with well-capitalized buyers actively seeking opportunities in the skilled nursing space [50] Question: How does management view the potential shift to home health care? - Management believes that while some patients may shift to home health care, skilled nursing will continue to be a necessary option for many patients [69][72]