TOLEDO, OHIO—Welltower has made two recent dispositions in the seniors housing and outpatient medical asset classes, for a total of $1 billion.
The REIT reports that the blended cap rate on the seniors housing properties was 5.8% on a trailing 12-month period and the outpatient medical assets sold at a 5.45% on a trailing 12-month NOI.
The seniors housing, or more specifically nursing homes, have been severely affected by the pandemic with more than 40,600 long-term care residents and workers having died of COVID-19—about 40% of the nation's death toll attributed to the coronavirus—according to an analysis of state data gathered by USA Today.
Separate data Centers for Medicare and Medicaid Services found that 25,923 residents have died from COVID-19, but this number did not take into account assisted living facilities.
Senior housing has been hurt not only by the falling occupancies as residents leave these facilities and potential new residents decline to move in, but also by the increased costs of managing COVID-19.
Welltower has been no exception to these trends. The REIT reports that its seniors housing occupancy was 81.1% as of May 29, 2020, a decline of approximately 150 basis points since May 1st and a decline of approximately 240 basis points during the month of April.
Recent move-in activity remains materially below that of the prior year period, it also said, but has modestly improved relative to April 2020. Move-ins during May have declined approximately 79% year-over-year while move-outs during the period have declined by approximately 21% year-over-year.
At the same time Welltower has incurred $18 million in COVID-related property level expenses in April due to higher labor costs and procurement of personal protective equipment. Also, "shelter-in-place orders and labor shortages have impacted the ability to fully staff buildings, requiring operators to pay 1.5 times to two times in hazard and bonus pay in many markets."
Welltower did note that it was beginning to see some slowdown in hazard pay from a peak in April.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
