CareTrust REIT (CTRE) 7 May 212021 Q1 Earnings call transcript

Company Profile

Participants

Greg Stapley	Chairman & Chief Executive Officer
Dave Sedgwick	President & Chief Operating Officer
Mark Lamb	Chief Investment Officer
Bill Wagner	Chief Financial Officer
Eric Gillis	Vice President of Portfolio Management & Investments.
Steven Valiquette	Barclays
Michael Carroll	RBC Capital Markets
Connor Siversky	Berenberg
Todd Stender	Wells Fargo
Juan Sanabria	BMO Capital Markets
Jordan Sadler	KeyBanc Capital Markets
Daniel Bernstein	Capital One

Call transcript

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Operator

Welcome to the CareTrust REIT First Quarter 2021 Earnings Conference Call. Participants should be aware that this call is being recorded and listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions and beliefs about CareTrust's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings and other matters and may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond their control, such as natural disasters, pandemics such as COVID-19 and governmental actions. The company's statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein. Listeners should not place undue reliance on forward-looking statements and are encouraged to review CareTrust's SEC filings for a more complete discussion of factors that could impact results as well as any financial or other statistical information required by the SEC Regulation G. result law, publicly and forward-looking for update changes as by not affiliates statements, any required future arise to information, undertake or a other as reason. CareTrust circumstances its REIT do where events, Except changing new or of revise any

provide exclusion During the limited will the GAAP these FAD. and When on to reference together also Relations replay website section with company its reports. more non-GAAP and quarterly call its EBITDA, believes filed such as a FFO the financial at the and for normalized F-A-D, of of should can a but of EBITDA, the supplement, understanding call, this results, CareTrust's the measures Form company Investor website that FFO which CareTrust www.caretrustreit.com. cautions accessed XX-K upon of or each not will A its metrics be accompanying FAD, be release complete GAAP and and viewed on relied press of be business, period. available Yesterday can they

morning Portfolio Bill I now call Officer; this Stapley, Greg Lamb, and turn Eric call Chairman Investment CEO. Dave President Operating Officer; are and Investments. the Wagner, Mark Chief Officer; Chief and Vice over to Gillis, Sedgwick, Management On and President of Financial Chief the will CareTrust REIT's

Greg Stapley

We're long still patterns are normal environments, realities everyone. faring pandemic. changed to proven for to occupancy aversely able discharge have this be good and the them and that tell CareTrust to far and over stable to remarkably have resume confronted it pleased adapting -- task take outstanding of the operating that new Alexander, COVID’s operators is morning, will overall of well, unknown. Thanks, but how Most hospital hard in you thus those of

seniors housing rates the to far that industries remember from and as effects skilled it's the on pandemic’s parts begin of country from emerge over. and the important nursing So vaccination rise lockdowns, to are

the tenants, throughout of having hard year, rents, carefully good problems some others. our remain our pursue great partner we've continue all and beset collect Thankfully, place, we thus But the to to balance and close with the For our on of worked in sheet. first to far our we opportunities be avoid that the report, able past challenges been operators horizon, guard to stay have will vigilant. acquisition

the We pleased in that we the contract are collected report first XXX% to of quarter. rents

We and on to in also to April, appear we be in XXX% track XXX% May. collected collect

in tenants' support, and the optimistic we occupancy about government climb begins cautiously back. headwinds continuing of light the continuing despite remain our So prospects as to

published to see You supplemental and without we EBITDAR increase lease metrics the of you providers the fact, and yesterday our are guidance that XXXX at support. without the are Most funding. in Act nurse particular there in rental to To or coverage than when their been funding. page performing given the many, supports both operators look that six saw out most tenants, And multi-service upper still other account better near skilled the our XX% operators our about government for of in need outliers revenue, industry. among XXXX coverages, who CARES be reflect of critical. we’ve again But acquisitions. our sure, you if with this recent will our government yesterday, EBITDAR campus CARES These

achieve system relief So acute the the come beneficiaries that and funding day extending things in the elderly three landing obvious we it government the and will sufficient who quantity beyond the soft XXXX. need. And such predominantly still will that value to see to additional soon hope healthcare post stay waiver well the need in continue help qualifying that it's those to

here, relationships, positioned individual facility CareTrust plenty part, pursuing transform with our low to to growing with our opportunities the whole mission then great continue operator extension the operators pairing team great remains meaningful of liquidity well great a by leverage, For industry better. of for and a and as

it on mark to will that, what's Q&A. pipeline, the Dave some over there. I'll open with in more we'll Then and will out color finish for happening So jump acquisitions Then, recent turn financials. off Dave? Bill with with the in for

Dave Sedgwick

nursing low, the occupancy. reported In a Thanks of QX, good Greg, moderate In QX, end skilled a bottoming our deaths. nursing of January, and reported error a Great. we morning, operators in but everybody. at our anticipated much hit SNFs recovery XXX skilled pandemic

rate return operators the were has in there mix have around levels question bps nursing quarter still as pre-pandemic the the the that, On revolved well, At our now cases XXX homes skilled about of norm. pre-pandemic materially the front, above to end, mix declined. the skilled COVID

them year housing last how to highlight far. occupancy, our the what start hardest end seniors the to relatively broader of speaking pleased For resilient in housing observed the and hit sector, this and we've operators of have at so we're been year. at COVID seniors

a of As wish at nursing held and occupancy it's just point, speculate. this we recovery. far I early hit But have has thus predict to to could too bottom housing senior skilled steady. appears the slope

again, the of Note some we relevant, is commentary Our are running the levels thesis is pre-pandemic occupancy across portfolio-wide extremely of timing to to be pre-pandemic Needless the return operators time. occupancy quality we since national hyper-local will and sensitive businesses that these for coverage. to portfolio. to remain that rebound the asynchronous question expect to and marginally our will only The in unresolved them. say,

Next, let our me coverage. about talk lease

excluding COVID to the continuation Act as funding and possible ticking by helpful of an and saw of overall X times. as Act up coverage X.XX bps yesterday's Act including them funds, the this hold amortizing funds seen received CARES both and portfolio June you out transparent be reporting CARES year. Stripping on wherein to error coverage through we EBITDAR CARES and these disclosure, EBITDARM noted, try we Greg a enhanced our As supplemental, steady,

who We and remain funds. through these have those the the constructive length As time we back runway next. about their climb to they evaluate into have of needed their that this for operators way year,

XX a new there note, those progress made. billion undistributed has remains The we being roughly Act funds. related on to funds, is CARES of now administration processing and but Lastly, the slowed understand the down transition in

has Additionally, rural allocated been reports, Mark talk Mark? based the qualify. $X.X providers, investments. With pass call I'll about and our billion would for of to facilities on XXX over to preliminary that, approximately

Mark Lamb

Thanks, hello, everyone. Dave, and

mandate active pandemic forefront we and As sellers. still remains decent grow and million potential playing preserved Dave stayed Thanks however, the to mind reminded just a so by not liquidity Joe, that we portfolio Greg at now, and of right nice the feel our to been everyone's buyers in including the entire the at started over us, and XXX here the We marketplace. We've James far. Josh, adding assets to very have XXXX carefully CareTrust. off and we've team

know, in since we in of submarkets a very you million. of nice portfolio most ago. years and portfolio CCRC our Southern As represents was estate March, extremely on some California located X start billion $XXX.X strong the closed purchase, view seven real The for best

little XXX this in acquisition stubbing place eager week, In [ph] deal Bayshire brought that acquired for lease we TechOn sniff COVID sits with enjoys matched That very feel retire. leadership and us. we here in we in with Living Covenant Skilled announced in. importantly, and to and a labor Healthcare Living with owner, that have quality More and sniff the Santa purchased Senior market were these care. building million asset fresh in Southern A as Bayshire Barbara XXX from for earlier $XX.X we is a beds is bed deep a right operators a Care. pool who competition Bayshire to patient we that both with California that single days with commitment few the Aspen weary assets like ready staff pleased We sourced Senior to later, and a

we actionable have like as today, invested few look look what sit the So we and of so next this $XXX.X terms quarters far in million here to seeing opportunities. year, forward we

weeks, operators to toward optimistic increase more continue down speaking coming volume brokerage portfolios more their the opportunities picked current of We coming housing a we COVID. pop and flow the out are seems are the see flow in as towards that be was deal pre-pandemic of and exits the opportunities with to recent seniors In as pare sniff will space, for we the trend the over and deal larger operator back to mom cautiously tilted operators community, head hopefully will quarters, pleased up we know, expect fundamentals levels.

lock housing remember quote investigating and is back we larger underwriting pursuing level and to only that As a the one primarily pipe actively I'll standards, million we turn singles sniffs each And our composition relatively makes pipeline, the as we Please that pipe, current deals that assets our when for a usual, senior great portfolios are deal operators that has feel also in to space. easy bench, million. and we're fits that we But greater for few doubles. under provides we are quote our range we here them Bill look sit couple for been have tack is and to of close our Its $XXX a if predominantly today, a it confidence them discuss of reasonable Of intriguing. near-term. we in existing over $XXX can them financials. to the reloaded only earmarked then The sellers. now up our on operator active pipe which on certainty with is historical

Bill Wagner

Mark. Thanks

$X.XX to For $X.XX $XX.X year by prior $XX.X quarter, million or share. by and share, million the grew the over grew FAD quarter normalized X.X% or X.X% normalized per FFO to per

time XX% done This capital. and on our QX FFO and ratio consistent raised X%. the this with is historical again we our pattern. This for year, quarter debt-to-normalized payout we've a FAD. increased X.X by XX% And to course as the at the usual, expected we During our the year, over hopefully as spreads every as on dividend our Leverage of in EBITDA solid of over come average ratio weighted portfolio of to-date. at times grow to be to to all-time at continue net cost lows continues we

we was times. of of value quarter end, and debt-to-enterprise coverage a achieved fixed net X.X ratio XX.X% Our charge as

projected to or and million, of share term met escalations which the $XX This the and This million approximately to includes we of the the are $XX,XXX million investments have $X.X $XX.X Greg no straight-line five, of relating to-date, amortization includes loan. range year, deferred $XXX certain released debt our $X XXX normalize per ends per to of shares investments our assumptions, this the approximately assumed issuances again, our million. million our rent year. for at escalators further over of one, And unsecured less also calculations, roughly up our following interest expense account G&A approximately all inflation-based which $X bps total due XX.X on including for incentive almost additional made four, to-date, average $X.XX LIBOR only on of we X%, of a income short-term dispositions, and hurdles also and revolver released by nor are $XX.X our fees. program. on guidance million. being of of Two, is any an on of all of share normalized Interest margin with than revenues XX approximately to rate XXX mentioned, today, the relies FAD equity financing a range XXXX projecting rental As $X.X or guidance expense both acquisitions made investments to million share we guidance at are dispositions, of previously $X.XX. In of previously $X.XX Three, includes made compensation approximately FFO grid-based rate bps $X.XX count to of raising rent. bps a and interest million,

includes, also roughly comp. projection of million of amortization G&A Our stock $X

approximately average XXX,XXX outstanding million an year, at up cash. $XXX currently liquidity $XX $XXX $XX.X net program balance Our million, Year-to-date approximately we leverage last a and sits under our million. have that remain positions and price of sold million we proceeds The on put for we $XXX million have $XX.XX ATM in strong. shares revolver approximately at of

thing. and in came XXX% same April to to appears In for that, be turn addition, contractual of And Greg. cash back as may the noted, the for I'll quarter With track Greg on collections to rent, it at and do

Greg Stapley

with been appreciate and be you. this Thanks, everyone. questions. continued discussion and your hope to support, We happy has helpful answer Bill. interest We Alexander? to that we'll Thanks,

Operator

first your credit question sir. you, You have Thank [Operator valid Instructions] with Steven from Barclays.

life Your line is open.

Greg Stapley

Steve?

Steven Valiquette

having was a I guys. company. crisis I work-from-home temporary Sorry with apologies.

solid pretty the these everything ratios look, across to yeah, results. see largest So, as we're looks the coverage increases, studying on congrats whole the strong portfolio. there Good and bank as guidance and far

seems happening more hear to versus across wanted recovery, faster certainly Just occupancy housing. industry, senior sniffs definitely the overall of much in about what's like it pace

still volatility want maybe that You and sniff more think and mentioned some hear and recovery occupancy, choppiness just to Thanks. the side to? the you alluded there’s across operator, sniff I about the

Greg Stapley

color Yeah, thanks for lot whole a to that question. give. of There's not

really that in seeing We’re away you're weeks some early market -- cases in facility depending really on the just bottom, local in about. the the talking from

same I share, Like and different it difficult much would will have about I whole my sector, a very to more whole I less it's you what quarter, markets when state that a have prepared to the we'll within in look occupancy, call operator-by-operator, hope next the think, more from really track record at nursing bottom. So the that. you're paces. portfolio, little some in skilled at really country, the said, remarks, time the do bit across some talking color recover Even we of to

we'll hopefully, you some time. more to color so next have give And

Steven Valiquette

Okay. so many home health and negative. maybe hate Thanks. mean, really as One not to in maybe some I you're And a from thoughts level Is a I share quick here Just recovery positive signs, trend just perhaps there geographies during that that's that well? there follow-up. any going a where seeing? is sniff high around that are any on few or some -- volatility, there's there the the things of focus taking any phase? curious, is on. causing

Greg Stapley

Yeah.

bet. You

operators that COVID something per more insight to a been don't of front. se. occupancy their attributed in by how has their how that real markets impacted issues sure It’s health, it. by do haven't market function that impacted of it, our to with the may have home any been and operators have hospitals from been but have Our I'm on we

Steven Valiquette

it. Got

All Thanks. right. Okay.

Greg Stapley

Yeah.

Operator

Carroll We with Markets. have Capital Michael RBC your next question from

Your line is open.

Michael Carroll

investment you from want deals to Yeah, require or today, underwriting And talk last you a about to activity. bit you transactions? of think can do but about, little these I I safety on a talk Mark, pre-COVID margin guess, you're this you I big bit little quarter, how your hit are a answered operations levels, expecting how

Mark Lamb

occupancy period not expense back what margin I underwriting don't to from what quarter. on the think views the perspective? we the you with perspective, from to need the obviously it's our from to for operators to on is then mean, below? look really, in anybody understand, said at And back on what understand occupancy. last down I come to to And a And then We're get get going too side, rate expecting to dissimilar need what a overall I pre-pandemic overall the understand run you front, numbers it's was on an specifically expense going think getting certainly to time. to pre-pandemic is side? is occupancy levels of back don't occupancy XXXX

each changed where we the hanging and always as asset, Historically, we've can operators. historically, look So, look one is? make? What low the fruit at changes we've we think, I done at

And our the churn front we and so to see knitting expense we we can what to -- stick on that can side. see on continue

far assuming line there historically the physician near-term. As that local we're to should a that not if occupancy, really the it's going run that say, XX%, is levels low particular and group as we're back maybe XX% we're But market. relationships occupancy, understanding I get is why understanding assuming would or in sub overall, a markets to with building get and top in back those hospital pre-pandemic occupancy not

nurse? XX% coverage coverage XX% So like we maybe what does for did does what occupancy? make And What assumption skilled look look or like? with

Michael Carroll

set? were deal are volumes It a ago, going maybe smaller that on able to what just the you're Okay. years from seeing of you expected maybe mean, a operators the that this there's exit the want what sniff the doing just is is opportunities few like to, over because had you then, exceed bigger side I even investment I a of that some your might And completed? time, we grow that those opportunity to few and guess, you business? sounds you activity to recently in find think

Mark Lamb

capital an an sidelines of awful interesting lot That's waiting question. there’s on pounce. mean, I to the

is of competitive front been, today acquisition think lack SNF it’s to supply. just the on as ever I the as due

So down the strategically that think on I the kind Whether mom-and-pops players part that's or your is, first question and pare head fit? the with don’t of hills? kind of will for more super XXX the more guys plus regional do even buildings. of large larger the regional, assets Potentially,

very coming expect to from of we are to lot an of because in buyers, interesting, nursing company, to acquire operators at or would skilled deal buckets. will same see their be with and the we competitive oftentimes and what will mean, are those with estate grab very In time, competition able flow that private, terms assets I be today. to there’s arm So, But nimble us. very a -- sophisticated operating real

do see interesting past years. it'll next them able so, couple think But I And we've to the be add? to over to seen the volumes opportunities fair of as over have share Greg, do we'll you we'll anything few. of have what be our

Greg Stapley

that’s great No, answer. a I think

Michael Carroll

this be these? you type of me, of appreciate about your for Can remarks? be mentioned operator the to going that. in talk you transitioning one mean, to an Last transactions deals is I like It I they? Okay. big are going some prepared that How larger out? are what sounds

Dave Sedgwick

front. I mean, comment affront opportunities. on sniff these opportunities, I the – the on or housing on much mean, I too can't we're both seeing Yeah, and seniors really

a a size size, deal. hit always in on kind chunky, – on good we've range they So of

a the and our larger, investment can And transactions that, look taking kind no potentially help at different. of us the If year. pipeline, year historical you so we're make our larger back always this is at look

that a on premature them tracking we're comment – on to us see what so, that couple are market, for on not point. on a couple are happens, this the I that And we'll but and at it's think are market,

Michael Carroll

I appreciate it. Thanks. Great. Okay.

Operator

have We from Connor your with next Siversky question Berenberg.

Your line is open.

Connor Siversky

on of everybody. population referral bit surgeries get could the maybe wondering, on looking now, print. levels? how maybe close a the those little basis are there's backlog to we more any a if we on sense normalized I'm Hey, of for patterns relevant any metrics? just and color And of how a if pre-pandemic versus Congratulations are

Dave Sedgwick

markets leads not some wearing in normal. life And and for a journey hospital systems understood the a that we've what as to a masks, great precisely the ton expressing actually in some real talking optimism the the really, always form scheduled, close of There's to out And started don't recent recently. that's talk some I and in – earnings a remarks that's terms we about are hospitals in and We – Intel, And health – be from in took nation that's admitted it a coming which Well, those lives actually tried what's hearing pent-up the the living necessarily constraint Connor. a conveniently have elective were and which going think we to what us, they're not saying, are home extent that, – that they're emergency patients through to hospital – and the our note that, that paying public again, back. as to – are surgery. individual their or we something The what hospital is in still lockdown, hospital a their department, from vast nursing some of attention they're hospitals, and happening of the question their on unfortunately, of a systems That's going the And a going of it's misconception, time event that operators of of get about. the being there their bit people little out that elective little bit on well. the is demand since talked about volume. some majority of health to or calls, flow. surgeries living

lead that imagine that to get So to us of the indicator back their key going be recovers lives. related normal fully to for Hard And lifted. kind that, people to happens. is the will before our restrictions are COVID occupancy that – entirely

Connor Siversky

the earlier helpful. skilled know, very in And mix That's the guys Thanks. I you call. had mentioned

sense wondering, end could it the any of maybe the look if there's what or of perhaps like, XXXX? of at this end Just year,

Greg Stapley

Nope.

Connor Siversky

That's fair enough.

Greg Stapley

we but on a Hey, can you color little Connor. That's the correct give more that. answer, probably

for skilled skill has waiver, we're But have because not thing COVID I the for our skilled in you or place great thankfully, a mix place our skilled. qualified think residents the is due patient precipitously, day can seeing portfolio, state payors. to as the needs skilled and operators qualifying the people system been for patients. which in and is just a down was We and for both the COVID able in and so been as operators skilled across opportunities nursing still to to healthcare know many elevated, three as

some occupancy the going drop the like, mix we skilled recovery decline as so occupancy his because normalization. remarks of skilled norm. in time fast of do Dave matches comes And revenue skilled that extra prepared and and expect mix loss over how some pre-pandemic of sort the the between that with will has is question to the the revenue to backfield, is Question to it that that happen. be what And mix a is said to

revenue So continue really skilled we're the occupancy what Does happens least elevated to make sense? that to that see watching at hoping some loss. will mitigate that really, those closely and revenues of

Connor Siversky

stay of Yep, yep. you're Do think any bound the that of you lower there's reductions? to getting length sense

Greg Stapley

I a seen don't -- I you but on length that? Eric, on of know, any stay. have heard I have of think don't I pressure No. haven't -- something do

Eric Gillis

but but has we length No. it's stayed several We consistent. months, And over time. last of fairly is at it look it stay at, consistent pretty look the been do something over

Connor Siversky

a Have good weekend. guys. me for all That's Okay.

Greg Stapley

too, You Connor.

Operator

Fargo. Stender from next We Wells have question with your Todd

Your lines open. is

Todd Stender

Mark, for for appetite to sense risk Thanks. and skilled get now a of just both right assisted living your deals. Probably

coverage, losing what and As there the think rightfully. maybe underwriting you're far that as some on is deals, Assuming, growth, you're being is can you stuff do you share on on out conservative anything out there? maybe

on you're losing? So comments any that deals maybe

Mark Lamb

Yeah.

X.XX% I are as these little start want of talked X%, of years, in coverage. think around yield going we yield, we've over to and always kind for a about in bit up and the we give

out, So cases, high private eighth, just that they're there in go of is have the in terms because, the in to and think losing XXX some ability spread into I groups the are overhead basis the some being, XXX instances, Xs maybe to guys points.

down I it's to think we're of that groups the Xs shave high willing So kind those too. into missing to that are out go

kicking sort they from going what floor. the, of a t of thing. terms terms in maybe sort the of more transactional perspective And little So in free guarantees need in in and are terms a that of

sure and make right is on the sure So the structurally, it's And and and got economics, both get to and get to for landlord make want to transactions, us you right. for that then the also if tenant. got the right it's we and you operator. transaction not a But the for structure sometimes underwriting is we're that, our it's -- right obviously,

Todd Stender

to borrowers, build shifting off the right growth, you debt low in your Okay, with solely speak targeted you thanks. is funding low Mark's maybe Certainly fund of And maybe below now? think the willingness terms pricing about thinking now? financing unsecured can leverage range, the for tap pretty then just deals to to with through favor HUD its debt cost your the of coupons. right markets you're -- how -- comments probably remain build Can

Dave Sedgwick

under that it of Mark is in going source us. now, for lot upon rates a is still investment prepared we how remarks, right up and invest of low. the financing attractive of just take wonderful his singles is of just to a across said it is pipe doubles, a size bit dictate finance made flow tool Yeah, of it. where maybe which We those would -- ATM, revolver. as Depending those and some as We back our extremely issue I doubles match And think remain an to us. lot like -- leverage helped we line that finance fund they it to little below the and the a and to like to shares singles for use finish come we is, a

of So of quarters. couple is of financing the next that's how think for I kind

Todd Stender

lot. a thanks Okay,

Operator

have your from Sanabria Markets. BMO Juan with question next Capital We

is open. line Your

Juan Sanabria

morning. good time. the Hi, Thanks for

Just operators hoping the noble you And premier, changes covered in sub things now could a fluid, about about talk could Watchlist. those feel appreciated. how there about very little particular? are if color two talk particularly be bit any you and but have would tenant Any Xx, you housing

Greg Stapley

Yeah, you bet.

they was have on the by that funding And government buoyed still I have has before the On made the the previous is And they an runway still think largely in pandemic, of with watchlist -- place close on up is, that the we've watchlist them. front. as and liquidity the far encouraged certainly as or that operator new comments the that on by nothing guys. are. to And goes, true quarters stands those which been helped pressing there's are that if they in now do operators. they relationships the our got them, of we very great that That all really have. stay is, right We

a them start pandemic they And time timing. here -- by start terms and the COVID started hit portfolio really the bit the of the bit year to of and They, stronger get premiering of the facility And in claw hard to of a end weathered related back this hardest, their hit that to of as terms year, on at at. their noble, little we're last little relatively climb occupancy there beginning there. of record storm facility seeing still and in terms broken strong they've well. In where is a them to

So good they've still pandemic. about during operators, two been been And good we're them. have this really they feel fortunate that where

Juan Sanabria

were facilities could distribution could And reimbursement just other benefit the that any X help mean? could sense I actually, side that support, for that should of rural Do runway say government on about or -- Okay. any much of us just or is amount said guys, the what a you You -- mean CareTrust? you keep provide know what that to how eligible. think then

Eric Gillis

Eric. is This Yes.

they're with a back and a and You that more them of regarding some to-date provider the being the we've where a gets consultants qualify lot it'll pre-pandemic. billion funds. know percentage qualify? would have anticipated runway on CARES and know, the hope many that what's -- that close what's announcement be we up of act really will from for that worked be the facilities, at because up where be And perspective landing, -- operators we that announcement $XX their even given of made our going still -- and to It's the we would a said to facilities in to that It's that, us our which an really stay on will after largely of funds. Where funding, that. funds. use large But soft our we it be the those that was nice. remaining obviously, relief looked will occupancy that the work after keep revenue, believe funds. and possibly lot of those with details the know budgeted that rural to how We don't We against we to it with able

Juan Sanabria

Thanks.

much view defer on more thoughts CMS see PDPM? a data we'll far? it more so gather or October up thing likely do comments fully and there's they'll the on a ended more you me. chance last Any of being neutral, anything this one to And above how for have think revenue formed So that

Eric Gillis

chance. But a in comments of this calculated that to is impact there what is whether is certainly how going and on they far open or we're that captured lot that is comment PDPMs about a fully so CMS period There they back hearing number not Yes. increase.

conciliatory on bit it be recalibration. it, determined in -- even lot -- -- or comments of of like deal draconian going they there's the that do likely And of terms that a front, staged think tone there. reduced with based be for there's go still I whether that to their regardless most them But it's of implementation of overtime seems with forward quite if phased would be or to a on recalibration to overtime.

the math also in our it the just particularly we've portfolio, highest fine, have at done because our the coverage. operator operators most As risk think the as going be highest skilled has to names are we is to happened

Juan Sanabria

you. Thank

Operator

with We Markets. Capital Sadler have next Jordan KeyBanc your from question

line Your is open.

Jordan Sadler

good you. Thank out And morning there.

way weighted some sort the towards follow-up of and I one with first maybe up of the on it guys. when about on that a housing, to the to other I it teed XXX, of So, he mix pipeline, in here But think I of next the market, there. sort around. was Mark, step XXX the seniors talked the the more hand, flow funnel want or sounded

nursing imminently heavy? about what think seniors is more greater what housing, so waiting, -- seeing skilled that and like us, seeing center maybe I he you can for talked Is underwriting just we're having and a correct? clarify front you're

Mark Lamb

let just me me let clarify. So,

So, of the what flow is housing. market in terms seeing senior more deal we're from

more heavy. what on under Our Smith is pipeline LSI we're and and focused

that expected. seeing may we're those but we're So, continuing fact the be sniff we're still just and side, still flip to But the heavier And volumes seeing pursuing. not we we're comfortable we're of opportunities, that housing deal flow despite see that's side opportunities. those seeing what in on the stuff seniors that the on we're the we

Jordan Sadler

on Okay, underwriting sort right. and then a follow-up of

news that relatively the new just that is you've we due PDPM a So, that lie. the under diligence saying, extent discussion were about, assets one are to talking been

how underwriting, doing? you this impacting or what So, is are your

Greg Stapley

a think that's you've got rate out extent the Medicare looked the you to look run to kind back the I Medicare. at out rate, there's can certainly couple for we've of obviously I think I the waiver figure really think is survey at things what qualifying Well, we a to

you oftentimes, look of little capture and to I think able at to rate. often at a the be specific look on got safety asset, to a as be think each we rate can going there's is each of bit that operator their margin But individual individual what's I little rate, bit Medicare -- differently.

the and should adjust resident, be we the of on where an on of have individual MDS understanding based and we diagnoses off benchmark then based of that. of the each sort So,

to while in and acuity. communities, lockstep you're Medicare have type pockets same, understand to diagnoses, laundry So, have you it's markets goes very doing a it's extremely to come that Not have different basically the MDS, the some going patients certain very, patients in going healthy, of other the all, is clean, of with specific operators patients in list of assets don't a and to get that which buildings very are are our that multiple and Medicare certain the the can very to can look they for a have stroke information that going in they're are maybe into that come under input patients. comorbidities, have

building, in skilled it's and right getting of our out patients. And kind based Medicare on terms the really figuring that with sharp of operators get they kind based number shooting and then expect to the on really in flow that of dial So on is. what

right that to in or just that to too, does states Medicaid happens There's of their the mean see coverage at coverage. of looks by kind or try sizing with what change we before -- I X% rate Do stabilize that you step -- look continuing to terms And terms of take rates. factors to to X%. looking are Medicaid. other the like have at of that what what PPM. X% say down a instead cut figure thing out kind In of in

fixed more going You have to acuity. of some from states rate a that CMI are based

what the what rate. for gap can their the being -- what they projected. the -- then equal, that get an sure assumptions, bridge making making for important and daily shoulder-to-shoulder I and can are with looking really we at the So, there's things think And the into is factor walking all understanding through it. they're getting using that rate, Medicare they're their using several why operators. But go things bridge that operator where Medicaid And building's the doing to existing perspective, from sure

Jordan Sadler

one Okay. That's quick Bill. for Maybe helpful. you

capacity you're and you five. need to ATM, XXX,XXX your leverage, now still guess order shares below XX, XX Clearly, the stay it’s because four to issued little vis-à-vis On I But right, under the didn't sort be your in tolerance, we should How yourself. about, you think within it’s to four actually to for want do medium-term target, a more where to be bit to adding you four? of five XXX,XXX. want you're short

Bill Wagner

like We four. under for operating

Greg Stapley

Hey, running what we Xtack like just Jordan, we down didn't really XX February. And already that. XX did, I'll at ratcheting we on just spent look just range. it’s you break And and million to you $XXX liked that and Greg. were in back we the that, if tell for it's to

the stay are four to ready are range million be and five that the do it we'll came in going for the do for be we place target along? a to kind come deal. where the intend have going very $XXX capability $XXX we to to so that were so million, dollar us, million $XXX $XXX the it We we do could times much. we really very like if million, do we deal threes. not spoken along, with seems that. And next of This to good the Should lower for And to our of investors while

Jordan Sadler

guys. helpful. Thank That's Okay. you

Operator

have Bernstein your from next Daniel We with One. Capital question

open. is line Your

Daniel Bernstein

I went CPI In the bonds. those question call. from guidance you senior I guess X.X taking for the Thanks X.X. have to on a

I better So idea what they I they're that? maybe within those reset just bumps CPI the better want of to understand just set get those guess to a little idea, a want how linked to are, about leases quarterly, or we bit

Bill Wagner

it's Hey, renewal annual The CPI on bumps Sure. Dan, date. Bill. occur the

have last a once CPI quarters north to last guidance, it's now. the seeing because right -- X.XX% of mainly charge, a those of We caps So and floor on the increases from from X% year, moved it we're the CPI zero. leases some on of X% from

Daniel Bernstein

right. All

Okay. question want I I'm and was And if operator, away. not might inflation, would looking a I based then at CPI an related maybe be, a

had you you're of deal have new So and pushback bump? a maybe and at? people a more tenants CPI that sector any from And fist looking bump want potential

Greg Stapley

like predict labor with their out everything overall there. their it what be Greg. to because it's to the exact the just it they and businesses No, in we like economy operators to of really And expenses, as haven't. Most opposed months, costs really seems more predictable it's CPI terms number, of feel our seems you fare. to be can't seems and better how tracks Dan, it else fixed

can it So give on go get raise we a as lot that them bumps pushback don't a of CPI we as won't over. long

semi at and also for a leases. half. capped arms two of them three leases to Other the are are a which said, They were Ensign at of most half. leases, kind somewhere and Bill like As capped between have

So long can there there. economy cap like, on go That's as the and they what just the they with got actually. they

Daniel Bernstein

Appreciate had. I all time That's guys. Okay. the

Greg Stapley

Operator bet. [Operator Instructions] You

Bill Wagner

being Okay, looks well we're at like for We NAREIT. see Take done. everybody to Thanks, hope on. care.

Operator

conference Ladies you and gentlemen, concludes participation. call. today's your this for Thank

disconnect. may now You

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