CareTrust REIT (CTRE) 8 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Lauren Beale	Controller
Greg Stapley	Chairman and CEO
Bill Wagner	CFO
Dave Sedgwick	COO
Mark Lamb	CIO
Eric Gillis	Director, Asset Management
Jordan Sadler	KeyBanc Capital Markets
Chad Vanacore	Stifel
Jonathan Hughes	Raymond James
Michael Carroll	RBC Capital Markets
Daniel Bernstein	Capital One
John Kim	BMO Capital Markets

Call transcript

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Operator

Good day, ladies and gentlemen and welcome to the CareTrust REIT First Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to Lauren Beale, CareTrust Controller, you may begin.

Lauren Beale

Thanks, Michelle. Welcome to CareTrust REIT first quarter 2019 earnings call. call recorded. this that note is being Please

and Before those statements financing other based made please statements be may CareTrust' on operates. regarding matters, which any dividend, forward-looking advised that acquisition, business about all on beliefs financial current include assumptions we environment These and expectations, in it begin, management's and the future today's performance, projections call are to expressed return, investment, risks and implied uncertainties could materially of differ not are could results from are encouraged should on subject to Listeners SEC to which reliance review complete more impact factors forward-looking or discussion a and cause herein. that that undue results. CareTrust's actual place for of filings statements

statistical other information or financial required SEC G. any as well Regulation by As

Investor of changes upon result new not report. update for or the of will available information, Listeners and revise website the publicly reason. quarterly supplement, can Management. replay the events, Officer; GAAP the and undertake exclusion REIT's statements financial to also affiliates non-GAAP and the are the A on believes on EBITDA, Asset the law, Lamb, normalized that be which also as CEO. During GAAP and Bill metrics FAD yesterday this FAD but its call business, Relations Gillis, with will a FFO website these Mark relied be will Sedgwick, they and by and to Except on as this do understanding CareTrust's can advised forward-looking press each the Stapley, release any changing Form circumstances Management or section that Chief for arise Operating Chief CareTrust a Wagner, REIT reference CareTrust should as now Chairman Chief cautions together be www.caretrustreit.com. Greg to period. such results, its or where not viewed the Director call call, required include Officer; more accompanying CareTrust FFO EBITDA, complete of at of provide Investment over filed of of Financial XX-Q I and its its Eric measures Company turn FAD. future When Officer; Dave and limited morning a to any Company call other accessed

Greg Stapley

a against borrowing with exhausted smaller the times acquisitions raising going we and the nearly ATM oversubscribed We We this was in are million $XXX you, forward. extended guidance $XX demand We grow in to we Lauren. Thank operators not we're ready, a credit strategically muted ready, great keep program And and comes growth that that same that and the overnight importantly, million for in buyer's It on and today the two easily intend we the to spurt market, ATM brought most that to facility here term stock, to where the in back we how $XXX in we healthy day almost cost. we made quarter, we can teams today, the down well bit, disciplined revolving to we and In history. when and our that. everyone. at since, Good XXXX in a with share to out me morning to want if in but reducing our years. off overnight ATM swing which X stay an the while the the an million per time, April was interest refreshed But pendulum couple of quarter $XXX rates million welcome a grow is fast when, and Program, expanded next our then outstanding our best and new quarter use our thanks seven-year start Company's way. predicting new to over significantly raised the if the really all, eventful are loan, and excited numbers we positioned in of and we're about. we Especially process. leverage raising ATM we're really use through investments new the while see and continuing toward match-fund did

underwriting Mark finding remain We country. more also we the in to are And operators our very portfolio best than with model. like in management With earnestly that, engaged operator-first and the ever in approach current partnering and over committed I'd to healthcare up our then Dave? sometime pipeline team. a the acquisitions and with discuss Bill the operators. will recent to wrap financials. and will assets the Dave little about turn first talk will

Dave Sedgwick

Greg good morning. Thanks, and

off is acquisitions in great that year and portfolio strengthened have new with expanded a to the So ways. multiple start our

campus footprint for their operators, the First, Illinois current scale, market additional is their we right stable it's new with had sets. a and for investments Management tenants facilities. and PMG outstanding and AL given great our skill With WLC in WLC, acquired, the flow those match the SNF unique cash

are and operated properties these for the buildings a are principles since right original owner PMG's the they perfect in years personally in Louisiana fit, PMG, several For eight ago. their backyard

gone pleased. well know So and couldn't partners we operating far well. more and be and they transitions the operations so markets the our Both unusually both, have

terms current remaining that four tenant, $XX consolidate with The existing to years. the lease. leaseback less facilities, allowed acquired different Covenant existing three our sellers than of been newly us assets had Care from acquired had under million a Second, into assets transaction five leases master standalone we and at single with California different sale lease had four times,

a new win of master double a CareTrust. was all getting them lease for long-term onto So

tenants, us establish outstanding LTC with to operating relationships two two Third, Southwest deals Next the new and Gen. of allowed

Oklahoma. a the led skilled Care long Texas seven facilities XX-year Payne, also Southwest be LTC Ronald operates old Association. to company the current of Chairman operator and who regarded XX currently is The Health nursing and assisted-living across by well Texas time facilities happens

rural like before facilities market carved running them and we by has within small Southwest matched LTC out it proficiently Texas. more niche

Next team respected Sharlyn Their is and part that in operates veteran a five success. operator track an by financial Gen well as made expertise nursing of the facilities - and skill-mix choice model record a other potential for care with larger Dallas led the is in areas. some care a organization excellent well skilled current quality of Houston them and skilled with Their Dallas higher as managed organizations working our the and New acquisitions pipeline. Property Threadgill,

and and sure it tell, At our conference into To we're the for operators, take better prepare about existing the evaluate, the for Next their with time, monitor PDPM and other can relationships new March, future. same productive plan was to support upcoming LTC we our end, the meet and re-evaluating operator continues long-term ways to an is asset standards changes. and them plan and and current at to help conference we to very growth tenants operations. and ongoing go and make the of to the three-day This to annual find, these The we pool in operator part skilled that attended topics we the event. you our deeper and that conference in operator-first well and As be of look and advantage nursing hosted continually and we more and for Southwest continue all each both we our model grow rigorous excited Gen portfolio are expectations.

fiscal care are next industry, of the the but culture the so need labor can still That's very for for the monitor in become part now become and at many for of the they then nothing employers more broader choice for skilled our rate their those a The increase much our of positive than years operators things important Medicare we markets, choice one more first Looking announced efforts. very management in in ever, of that providers as markets. highlighting two foster headwinds X.X% is challenge, to portfolio they the the their is than operations. care screen operators, of

operators echoed the I'll with pipeline. our tenants to are also present optimism. about Mark? over Mark our the to will that opportunities We and optimistic have about And talk for it hand that, PDPM

Mark Lamb

In the hello California. million leaseback million closed a of investments of tack-on in Management and Care Covenant with approximately WLC in we Dave $XX.X Thanks $X in sale million and Illinois QX, everyone. $XX.X composed Southern

Texas Covenant assets anticipate Dave and landlord and operator Next a new million a with soon growing acquired we mortgage a quarter just acquisition portfolio very private picked larger Since loan. immediately aware, about. we operators We is that had million closed also We're of invested asked XX excited before a we we portfolio end, that Louisiana sometimes we with with are then provided partnered $XX replaced you and landlord on building equity portfolio. complete as short-term very the with existing great for up in mentioned. Care our Xst, the deemed can it as the be on undesirable to in with from area in a filed Gen most transaction another $XX.X opposite million in We who bankruptcy. firm Also, in another the $XXX that DFW April we've how are

Our in of under operators the beautifully ones. can that superior assets hands management perform experience languished proves that the troubled of

commitment business their This themselves and with Yes, properties providers in are very to and and part, proven place principle they're in over desirable the architecture, most and seriously can assets take assets has others, to job. tool mortar best CareTrust care. construction hand neither simply expertise over difference not but to nor our operators the do find. brick in some the but are very jobs For of and or the location, we been a bad, inherently the care more people healthcare we the than good, which real lies a

bring acquisition, year-to-date operators reason, This certainly assets acquire we Altogether, operators under the will the that of opportunities. this the new for to we continue in. that landlords we and/or similar we the can with management their brought case say from total to Texas million. these comfortably we healthy acquisitions expect be $XXX will and is investment troubled our Louisiana look the For

skilled to busy, a largely kept us that's market. rebuilding strong assets. start Turning After we're pipeline the very the with nursing

with pipe, means, other quote from to and which remember that, time we when have we we only actively are deals and place our quote the in in time actionable coverage standards yield our pursuing, we them. only to We as here Bill $XXX And to then, discuss level back lock and doubles small that have tack-ons deal million new that of seeing that is - we our mostly and we couple for normal $XXX a consists sit of like. compare singles pipeline million opportunities of our It operators and and our Please in operators as and confidence portfolios, range. close can And financials. it as our up the now, operators. of them we over existing if turn reasonable we well today, we are markets the underwriting includes a I'll

Bill Wagner

Thanks Mark.

the Due by some FAD XX% anticipation FFO quarter, million to report was are as dilution, we normalized year consciously we $X.XX. took to grew that also quarter flat to normalized FFO $XX.X to was XX% and of Mark $XX per pleased million. at April Xst grew talked For $X.XX $XXX deal by prior per about, the over normalized FAD share share our at normalized in million the

equates our of the this covered and a in again most share, Given sector. healthcare one which on the recent represents FFO XX% ratio on all per payout XX% of dividend REIT X.XXX FAD, of best dividends to

proceeds. our $XX.X leverage not put under and price $XXX exhausted up essentially under that it. we ATM the in average in largest today. quarter, ATM closing to a net ATM, while $XX.XX, we since To sales strengthen positions, investment our of our any an at million and have issued of new have old million sold our continue shares but X.X We shares resulting million liquidity Those

$XXX.X million And on XXXX. in also following out sold We reducing X.X $XXX Texas term finally, proceeds on April, maturities facility resulting Louisiana, pushing revolver April shares million million. a to revolver, seven-year again the new and borrowing earliest our share, closed pay our proceeds we net in the costs a offering that million an closed overnight debt $XXX loan, and to Xst. acquisition $XX.XX These used in at per XX down of were

in resulted Moody's. from this rating a of All upgrade

Our revolver sits $XX balance currently at million.

normalized This yesterday's press share X today, share includes increased facility the FAD of of escalations, recently normalized in release, count to share almost $X.XX average issuances following no stock $X.XX debt which also made weighted diluted annual X.X%. guidance and the rent the average to For on our dispositions, for of escalators projecting - offering, we credit account our nor per $X.XX. shares $X.XX, per amendments, year. investments XX.X the $X.XX, additional by One, million this guidance assumptions. all any inflation-based completed of XXXX of or or all relies Two, FFO investments recently guidance completed an further equity at and

plus at revenues in grouped as acquisitions do can line the and new roughly seven-year but for have makeup million, million amortization approximately the which to floating for tenant that rental assumed the revolver these million. in a the Three, expense Not G&A of the Interest be $XXX income are in $XX.X reduced rental seen rent. of deferred Five, projecting on previously are million property item taxes. Due LIBOR six, NOI $X.X interest of in the $XX.X $XX.X expense XXX total the grid-based term In standard, to-date again, million. amount, accounted term of our included we margin only under on of fees. our amount including of now projected three projected Our LIBOR million. living newly independent made leasing rate revenues statement. rates of revenues, bps approximately revolver approximately And are this rental approximately are bps expenses straight-line with we are of our to $X.X year. to also facilities reimbursements, we loan. loan, on year, X.X%, on the million and about XXX,XXX calculations, a XXX rates included includes approximately Four, interest financing includes its own which this $X income

million of comp. of also include stock Our G&A projections $X.X roughly amortization

about rate today, net of our credit basis our on and is of X.X is EBITDA fixed ratio a times. as our approximately is As approximately debt leverage to run enterprise stats coverage XX% for charge value times, calculated X.X

of cash turn hand. that, $XX We back to Greg. I on will with also million And have it

Greg Stapley

been questions. your and We Thanks, continued answer discussion thank Michelle? we'll Bill. you be interest to helpful. this And again We with that, hope has happy support. for

Operator

question Instructions] comes [Operator of KeyBanc Sadler Our Jordan first from Markets. Capital

open. Your line is

Jordan Sadler

in color sort to that predominantly on the it competitive assets little a versus seeing bit on the up of and now, skilled are of of us? appetite terms you're capital wanted environment get what just from is just flow First, frame seeing nursing market for assets the you pipeline of

Mark Lamb

the Sure. to SNF it's continue who Jordan, I would Mark. operators their see on we say continue side, from buildings prune certainly non-strategic to portfolios.

go. even is buildings breaking or and a sense either if region it's for it's whatever to continue we have a opportunities time maybe is to basis also reason that for continue exiting So on side geographically kind in doesn't selective sometimes operators outlier little whether much make more an slowing it's to would even or various on has a the there. I financially more bit or of in the REIT reasons. who we the dispositions. But regulatory to are there There that signaled - region challenging see say, a see then, regulators And mom-and-pops been in

of are terms couple portfolio. the don't we're that who to want made in operators of market pipeline who up composition So dispossessing what that's their fit in assets call a it, of the And mom-and-pops our then what, is kind just seeing of exit. of

Jordan Sadler

are in you And and the chase post-CMS assets optimism of capital assuming of more skilled lease sort seeing given come side? PDPM, sort stabilization increased recommendation skilled on then

Mark Lamb

months. an to I that the to - non-traded it back this opportunities. say private well but XX private they week, call for space. wouldn't you largely back kind in as buyers much from private abundance earlier say I there to look upside equity LTC months XX syndicated from the capital, all I'd And really who XX as have of past last would there of the I chasing, say are private some and buyers months. spots. is seen the XX it's say REITs, - operators really I the as It's months would in there's as continue Florida same the over we've unchanged actually some but The And have that's to what for well-capitalized as as understand XXX was at continue well buyer REITs been in

Jordan Sadler

of sort quick the commentary but moving sort one update just a days, seeing? new portfolio. you're then just in month of early onto Any what And of

Mark Lamb

piece, management what we In good portfolio operator Priority the exactly the in Management Group is terms over the we - as stated of - the and license. this operated over, expected. is news Louisiana past The Priority has a

they to understand so the And back kind where really need of to. buildings you get

months. perspective, But it's think I one the building. ahead buildings. very pace And very, numbers next are was from plan was from the that of is kind and behind. is due into the to skilled handed over $X slightly so going from are rolled the over them it, up XX we next making steady an to give from with to doing - fix They're them new But perspective, all optimistic. couple overall get call reconnecting it of mix the And portfolio all nothing We're an relationships occupancy, exactly occupancy do, largely million would it capital there to physician the they the expect - transition. PMG latest to out operator, the up of to steady, we physician over. days what And when expect

Jordan Sadler

look portfolio? on What the like the are occupancies

Mark Lamb

patient I dollar day. it of a - or a on kind a have don't total I total per

I I get back circle But and it's think it's offline. you - numbers exact say mid-to-high with would the can XXs. I

Jordan Sadler

monthly, [indiscernible]. far of not But needs stabilized just off that sort

Mark Lamb

XXs over It's exact you we I in today. give and No. the just the and percentage. an took within occupancy can't been there stable it's

Greg Stapley

and to want lose, the senior this care because centers senior portfolio it centers of a flowing. reminder, Just the part stable was didn't cash care is the that

ahead it we good got So actually to expected in of it's where shape fairly we and be.

Jordan Sadler

the the portfolio That curious amidst or any fallout if Is et kind piece of similar condition? was Texas amidst lines was I along the bankruptcy, question. of the there the transition more was guess I at of cetera. my

Mark Lamb

- - on through occupancy It's are an of October kind we of really in there from the the of underwrote it kind it is. - numbers It when was perspective, same spot it's that XXXX. using XXXX

Texas bit the independent got living and So, little assisted got portfolio it's living in it's stable, it. of - a is

far we're where got overall senior to of bit so be going at. to of in good, in transferring housing North, it's but terms So a to the addition out days help the so upside is little only XX occupancy

Jordan Sadler

just Can you the Ensign to last on comment see Greg tenant. any maybe news, impact credit the spin-off Then underlying maybe negative on positive on with the and the impact was relationship longer-term? any you or or

Greg Stapley

public I perspective, Jordan. But few A our Company. their instead us, proposal that to to non-event. reduce guarantor a would it largely become of tell you master lease. rental would of spin-off two capitalized and our income assets companies, won't part The new companies, kind well of have will guaranteeing according from is the one our

concentration - and people all priority really perspective the with for lease be know think largest change frankly high coverage. us visible since has most tenant lately I a our from lately been tenant, our So on reduction for good which would a of not very only with you our you tenant they're most the

with always and to to but goals. accomplish lot work there's So are we're to we a of their work still out, them documents details help them as happy

Jordan Sadler

So of a tenant? will in couple assets sit

Greg Stapley

would There tenant. yeah several be go assets several - will to

Operator

Vanacore of Stifel. from comes next question Chad Our

Your line open. is

Chad Vanacore

its Ensign's that tenant that sense spin-off with ability to made Do sticking to you any question. you? impede Just have

Greg Stapley

We there's very why tenant a good. know going spin them. for know sense be time. this could going suppose and Chad. we is Ensign guys of as mean but just on The Companies - is running certainly a about I and good - are probably believe to highly very as for bit think both would, play, has well. I don't of that for if the been the thing to very, that decline very, we for some every I comes things us. a spin We well any is sense ton we doesn't rent don't actually tenants make tenant it Well, everybody. that think I be see I make really positive think us Tenant I to

that helping it's I even reason And about said, think so, not do all really - them to not a thing. don't bad this see any

Chad Vanacore

just fair thinking you had. say All So that Then about you're to the conference supportive. right. operator

which the are So some the been maybe you've labor What opportunity, from conference? having. was at are that operator pretty about. outside PDPM bandied operators well other and most the expense concerns of what Concerns inflation and discussed

Dave Sedgwick

asset And course, to conference, - PDPM can of for how did share not we operators And talked provider provider can just of about as take to practices the as requirements the with I'll really program changes that into time on This Dave. really labor well. battle is they in employer of PointRight. as position Medicare was but become at as prepare themselves is an that of late the and well, PDPM of choice. to our lot as We we lot a spent talent on - of that. so try important best operator tell did of time locally, part digging of - airtime that the lot topic. choice with for a conference to a our have the we the - to a lot And as efforts, as in management many you five-star

to are hospitals into our trumps and operators information to them take star use already get provider their we'll this information although out ratings that information networks had So that in terms And health before they and anecdotally We themselves we the do more preferred that re-admission relation their them about rating what them viewed not actually can does information and successfully tool. things plans the they in to rolled helps it that diagnosis so these gives help their to just important. is, seen level, see PointRight star operators and to by mode, and rates in present. high we've different but the that markets tool degree it competition them hospital, a had than are how that there even that of gives and

that So the much the pretty conference. covered operator content that summarizes we in

Chad Vanacore

All a that is affected in rating, how star your you portfolio and your there CMS Have change about right, thinking how star that's calculating ratings. operators? gone through well see has been actually

Eric Gillis

Chad, this Eric. is

quite star we now of us with for right anecdotally well. are that have that that know the We a - all ratings we also currently some doing have gathering right as several data a as - the decrease know had increased that

So, - some that they're data for but we're all pulling us on do our of to analysis all portfolio.

Operator

Our next question comes from Jonathan Hughes of Raymond James.

Your line open. is

Jonathan Hughes

you deals give some color the on can Mark, pipeline. the in us for pricing SNF

nursing skilled little lease the trend? Another mentioned has as seeing dropped, have down yield are earlier owner a come today similar a that tenure you

Mark Lamb

coverage and I say. jump cleanup I then the to to willing up for. corresponding can the to additional in we're Greg We've yield in a I'll Yes, say, stated Xs for that it's to X% range for that to X.XX%. I little are coverage the going we whatever give hopeful get happy bit past say, kind and from, would of would low we're be in But

So it, call X.X%, X% that the it pipeline of more in X.XX% to range. is X% to but entire really is,

Greg Stapley

nothing answer, Good cleanup. to

Jonathan Hughes

that And X.X X.X then times. X.X times coverage still times, times, ballpark? in X

Mark Lamb

put the As and PPDs. underwrite into we then operator our as on and old hats we've - we dig said

business like we executed in it of think them changes have north once on really We’re up to basis. forma then initially got depending operators started their and one and would be plan end able XX X.X. see call We day they've to where the a will months out. on X.X And pro

X.X. like and operators on the down So sometimes it day there for of lot that lot it we maybe writing the execute into we're operator, and call that an of if X.X. bone our one, is down there's a a around meat start ticks part can changes if there's range dip the on will most we at XXX feel inefficient but

Jonathan Hughes

within partner quality And Mark investment with a the about enough out not expand senior that you a XXXX. that announcement I talk operators sector then are as pure sticking maybe housing Can just high on from opportunities on and hasn't they're company? housing, I there grow they just senior new guess, inside, the just that think create been then does with did to acquisition you since there

Mark Lamb

senior so on incentive all day, basis. we are operator And along, and in capping some that coverage kind the manage underwrite an with Sure that it's that and just we of as just the NOI operators. relationships housing an again, us. we've maybe to reality bigger pair with operator. we in we housing fit the conversely operator continue class players but spot I we're of nurture acquisition of and into obviously an continue not we to in then about we the to have as the agnostic just an haven't find and we taking consideration frankly, From mean fit. housing both right senior deals perspective for we'll said asset But senior it's all it space to don’t sometimes assets anything really been just haven't and bringing found like able target AL like geographically a that that is operators every

yield big and coverage for them. bit basis on a a little maybe more more on in would get the can come three much makes where to lot a, lower sense While a

So we able continue look at hit. been haven't we to opportunities, just to

Greg Stapley

Jonathan, to this of on I course, time spin partner. spinoff new the part but is The the Greg. of pick about a whether I'll up question us is, answer it does gives it think your can last and them before that some settle time for digested we to logical would contemplate their dust that. is sort them we that get all the ideally the give of approach

And opportunity with them. came explored along acquirers. sooner the know if we're right we'd us, than However, certainly you opportunistic that,

housing, good pool. the on is it said, So of ton as our everything seen table, make Mark the pricing, a cases as haven’t just a lot far of lately to for we match that was best thought we we seniors just doesn't redline, haven't And sense the operator us.

Jonathan Hughes

we And to your that a possible, more cost I haven't got been little last you any favorable. low color leverage where range. is there? leverage, I target thoughts as maybe I But shifted as that has still of early don't not just want that keep for seems so But think and it down to equity leave to and target to four tapping five then Bill, I keep just range ATM why which given you mean, since year. in out. there hear doing. mean, I one love times you're

Bill Wagner

still Hi, But stated is very Jonathan a four well we portfolio. balance grow while event conservative to to proven sitting transaction larger opportunistic allows it that in that range can range while a having where fits the the sheet. really five like our yes, find times, in into we We've existing threes. us that our is we stretch accretively, maintaining

Operator

Michael Our next RBC question Markets. Carroll comes from Capital of

open. is line Your

Michael Carroll

I type positioned you the or on Dave in how I the touch you that just volatility on conference wanted some majority handle of remarks. prepared And of are you confident that to in expect PDPM Are in his how the October guess, right operators are results? – do mentioned that's well do to coming X, your operators prepared now? the change

Greg Stapley

not And as they're that The And confident of well. hit that Well, spending the Association right At that lot just now level our opportunity. they're State doing Conferences, running. the answer time well our our operators a operators it group high PDPM as we're time of take we just some shift. major prepared capture lot on the are And that at business are consultants to to say a of man, I'd time, is is easy can but same ground it, with be we'll for fully to going Michael. this a that they preparing big point. as thanks, a we about going know conference, think are

of think I we a efficiencies bit pretty there ramp it. a about of are So really change MBS documentation capitalizing of terms be that in suck-in to the little is the and and feel sure available, parts will the focus required of overall good the making that that different of the terms attention and on that in training but

Michael Carroll

guess some I any you for not market see and opportunities in prepared I guess to or How want operators of get portfolio volume? able of I sell transition transition do you the some is to the their not think and to PDPM guess to do for the and acquisition do more you rest make electing being guys coming opportunities some

Mark Lamb

Yeah, Michael, Mark. is this

personally the quickly volume I of in and but are we're I rather just kind ramping mom that and up We bunch or it's and pops of hills. coming throwing necessarily operators for the on for are it. the sophisticated no, But towel maybe operators it more seen exactly heading a haven't call seen think the not that is expected, answer

Michael Carroll

on just wanted that's question senior last going something result. it in that ratio? bit pools guess there I is pools different talk difference about then be dropped housing And senior housing the the quarter. know to Was but little a great. the a like the within comparison I might or Okay, this coverage looked coverage comparison

Greg Stapley

of couple his and portfolio how changes needed local a alluded the we'd is and for levels the housing of temporary are seniors made business in to challenges Yeah What to ultimately leadership. its down so down post-acute of that tick in our that observers, sensitive see piece recovery here second to those management usually of a be fact well dip is tends expect occupancy at to also remarks the half magnify the and much did seniors and in super as so, There to the outside slightly the year. a operators. is regional and small turnover coverage this appear leadership but results explains as our when Mark ticked bit. principally housing The management

Michael Carroll

and So those transitions they on those right transitions have a that now? good handle think got you already occurred

Greg Stapley

Yes.

Operator

comes from of One. question Bernstein next Daniel Capital Our

Your open. line is

Daniel Bernstein

nursing bit picked little those a this of Ensign kind all once I'll – transitioning? of and skilled that based been of quarter was it that or more coverages go up then some you've broad the that assets the opposite or it just was kind

Greg Stapley

upticks in have as operators Daniel seen We our of some Ensign outside great well.

our sorry senior this the some to great especially seem the operators there nursing or our fourth year skilled we've So in some upticks and in seeing half things a quarter doing majority last quarter. of of the are actually largest last

Daniel Bernstein

they costs situation the there all their out kind operationally doing operators helping are are manage mix for or what's current and that [indiscernible]? what managing challenging Is better them that are those of labor

Greg Stapley

I Yes, little everything. it's think bit a of

earlier newer that with their buildings plans giving health – I leadership had are think we started the securing some and done markets really And and hospital with we that relationships in operators had that that that we've with transitions have networks. built the a in those mature. to

in starting And and really them have on labors see early acquisitions. success those the they we’re markets. to so you're tick seeing of those And the fruits now when that

of that best So that and areas. then those are leadership get those largely, care, with their an on really coverage in able with effect development. to best to are census the the leading buildings And employees having seeing great we're

stuff a great of aspect. seeing we're in our So operators some lot that from

Daniel Bernstein

acquisitions for in specifically is Are you've more you Texas Texas thoughts Texas. related reimbursement? targeting then that made to and kind any outcomes maybe positive of And some potential

Mark Lamb

Mark. got we've, out opportunities markets. are a couple just in know result of as Dan, Texas go to the of We the it's transaction kind a and the operators where big different

prime a we operator owner example on is on a a right like properties involved the NextGen – she's` so very there, are basis. focused visitor very, very, regular things daily very Chalonda is And Threadgill, they're they the great

partner great in there's with her an so really asset and up there that is opportunity She team and to excited operator, Dallas a as And picked an and a an her and there fit to grow. as about. we operating we're match

more little a say opportunistic. would I bit it's So

as in think I information think tax have week question. last you any of don't know this of bed we updated I week. wasn't that the terms available

will sure it anything it couple or or I committee. Haven't trying through get it heard not. happen not days that if over still I'm will won't. think that the they're last suggest to

- are to great Texas from show there. struggling doesn't step from we So that there strategically And we perspective, willing sense. that continues asset operator are that that to because an just make have to was happen operators just to in two, a or who off chop - have or

Operator

from Kim of next John Instructions] Markets. Capital BMO comes question Our [Operator

Your line is open.

John Kim

On the the percentage senior portfolio housing of housing represents, coverage, the expense X.XX. transition Can you this side just what really? remind and senior the us

Bill Wagner

a revenue? as percent John, of

John Kim

Either this facilities. X.XX of percentage revenue does senior the is guess at what our percentage represent? I housing, XX%

Bill Wagner

XX%. below Well

John Kim

of the it like this of either this expect So is assets commentary don't to that like it leases. terms that, address something sounds need sounds you restructured from of Dave year some transition or you - will in

Dave Sedgwick

Dave. you little So a operator sometimes that's Again, watching one this excited or you, with than closely. acquire when about two, less bit And is others. portfolios, you the along take on

it to we're point to strategic a there like our or is we'll in So wants And about. always talk operators. looking facility nothing operator, really an remarks, this I said whether change, facilities take make particular and at prepared it's always a re-examining case-by-case. who we're my and But

John Kim

the the Turning discussed wondering that you'll They of likelihood unlocking call what's yesterday. in was be I again estate. on value the real sign just their that? the involved

Greg Stapley

is Greg. this John,

involved value. I be what at haven't about the with that will point. of any likelihood this that like not unlocking is I'm sure But that. low do think them conversation terms to exactly they're planning in in relatively had we that anything

John Kim

BlueMountain you as anything we there can think what is remaining portfolio share the is care that finally, you and far that as strategy retain? then for And in the

Mark Lamb

Yeah, John, this Mark. is

exactly think kept probably half. of XX and then think assets and other And some they I so transitioned I think up picked many the know of the head, to how picked we they they and they half. number a and help sold they think XX many of probably or transitioned how the assets, up that don't my they off top off I then I I they kept they,

I operating the So down assets in in and said an that again Regency so Austin their believe footprint. could Antonio have markets. they Regency and Texas they kept company some expand

Operator

Our of comes next question Fargo. Brown from Duncan Wells

open. Your line is

Duncan Brown

did this, of missed SpinCo events What going to over y Greg. and and say answered deal? have Most been number of are you them facilities I may but have

Bill Wagner

I But us didn't. XX. We to tell have asked you can move

Duncan Brown

unusual there anything that be there? anything about should those we that's about or know should we Is just thinking

Bill Wagner

plan No, be well It's, understand will I enzyme is new company we us capitalized, well so. think don't led while guarantees. and that have tenants their the key we for there's still certainly the is

will profile standing So rent that at that all. that behind not the lease note credit change net

Duncan Brown

much are operators like pretty as to color like to And ramp, miss-prepared guess can sounds they're the concerns just be some a then across or appreciate going most board. sounds think on there I where your how operators portfolio, there's have respond the within PDPM you it I generalization are be, all they a some it going is

goes is hiccups not good that going this pretty So live? there is be to big

Bill Wagner

line our to to stay comes that the they're and on really even feel we operators presentation of front when and giving with of training it a this. this preparing way that I - for staff. touch We in PDPM operators that are all about And a the they're their way our comfortable attacking said

the number again to them - prepare. they're so with them optimistic of it's train of be conference that nice to was are be mind with for fairly have And to, now to feel comfortable all and be to comfortable We're ready at and preparation. like And that and they their October And what it –see about it able presentations and the X. prepared there get we're with that staff our front front-line about starting doing really PDPM. and

Duncan Brown

I target five. that the the it? not on of to there in question much strategic now, obviously was guess, I leverage and that threes the out suggests - in percolating now, there options are asked below am keeping it's of this reading potentials sort bigger or are low that four The that pipeline even are some that previously does too though into

Greg Stapley

portfolios. mostly couple at normal XXX, little a Probably of down said one-offs reading remarks, plus of now pipeline Mark kind is much and as the right our a his too of XXX level small prepared into, consists in

So this seen last well there the would for being And deals gone. chunkier us. We've become some that larger how ready possibility there them has out for be remains. a one high-priority is

fairly we priority we high a a for - we're to where really within already if said, always five, understand willing period that it get now. would really want you the makes was up go to But - But reasonable like of right if to And we to we like it gets everything the did down are right us. back Bill right four sense. deal it do be that. we understanding agenda living our that - time, So that with as

Operator

closing further for to over no back turn questions. Stapley remarks. the like I'd are There any call to Greg

Greg Stapley

for Well, call if anytime today. Michelle. everybody, And have again call additional being any on that us the at questions. can you Thanks, you thanks always know

Operator

You're you welcome. today's participating Everyone, disconnect. the thank in all great may and day for program, Ladies you does a conclude gentlemen, have and conference. This

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