Welltower Continues to Post Senior Housing Occupancy Declines
Meanwhile, costs as labor gets more expensive and the REIT buys personal protection equipment and other supplies.
TOLEDO, OHIO—The occupancy rate at buildings in Welltower’s senior housing portfolio continues to decline this month as stay-home orders to slow the spread of the coronavirus impact the number of new tenants.
Welltower, a REIT that invests in seniors housing and medical properties, reported in a business update on Friday that occupancy since the company’s last update on April 1 has declined further as move-in criteria and screening requirements have “intensified” in states more heavily impacted by the coronavirus, including New York, New Jersey, Massachusetts and Washington.
Occupancy at Welltower’s entire senior housing portfolio declined by 0.6% in the week ended on April 3, to 84.8%. By the end of the next week on April 10, occupancy declined by a further 0.6% to 84.2%, according to the business update.
The locally-based REIT expects that trendline to decline further “as the number of communities with comprehensive move-in restrictions will likely expand” in more markets.
Costs are also increasing, Welltower reports, as unanticipated expenses at individual properties rise due to higher labor costs and procurement of personal protective equipment and other supplies.
Welltower reported that senior housing portfolio operating expenses trended slightly before expectations through February, but the portfolio was hit with about $7 million in anticipated expenses.
“While the anticipated decline in future SHO portfolio occupancy may result in some commensurate variable cost savings, we expect total [senior housing] portfolio expenses during the pandemic to rise by approximately 5% relative to our original budget,” the company wrote in the update.
In the update, Welltower Chairman and CEO Thomas J. DeRosa wrote that the company’s primary focus is support of its operating partners through the coronavirus pandemic. He noted the company has procured and distributed some critical supplies, including PPE, and will continue to do so to support operators.
The company, he wrote, will continue to make “informed decisions” that will lead to long-term success of the company
Despite the issues created by the COVID-19 pandemic, the company said in the business update that it maintains a strong balance sheet with about $3.5 billion of near-term available liquidity and no material unsecured debt maturities until 2023.
Due to the unanticipated impact of the coronavirus on its SHO portfolio and recent revisions to the company’s investment outlook and capital plans, Welltower has withdrawn all components of the full-year earnings guidance for 2020 that it had provided in February. . To date in 2020, Welltower has completed nearly $400 million in pro rata acquisitions and joint ventures.
The REIT owns interests in properties in the US, Canada and the UK..