REIT Roundup: Omega to Repurchase $200M in Stock, Welltower Receives $1B Loan, SNR Reports COVID-19 at Two Communities

As seniors housing REITs make quick moves to respond to the COVID-19 pandemic, several have announced changes to both protect shareholders and residents. For example, Omega Healthcare Investors (NYSE: OHI) has authorized a stock repurchase program totaling up to $200 million; Welltower (NYSE: WELL) has taken on a new $1 billion term loan; and New Senior Investment Trust (NYSE: SNR) has updated plans to contain the outbreak in two of its communities.

OHI describes its move as a way to “enhance stockholder value and balance sheet,” as the company’s stock price has plunged along with nearly all other companies on the market during the pandemic. The company is also suspending its dividend reinvestment program during this time, and will draw on its credit facility for liquidity.

“As a primary capital source to our operators, a vital segment of the healthcare continuum, we have undertaken these actions today in order to provide optimal flexibility to our business,” says Taylor Pickett, Omega’s CEO. “Our responsibility is to both preserve and prudently allocate capital and, with the impact of COVID-19 continuing to rapidly evolve, we are seeking to protect our liquidity while having the opportunity to judiciously capitalize on any material mispricing in our equity.”

“While we have not seen any material change in the financial performance of our operators, by drawing down on a portion of our credit facility, we are bolstering our liquidity to weather a potential significant and prolonged impact to our business and are better positioned to creatively support our operators if necessary,” adds Pickett.

The suspension of dividend reinvestment is to reduce the dilution of stock value during this time of unusually low prices, OHI notes. The draw on the credit facility will total $300 million of the company’s total $1.25 billion available.

Welltower clearly also saw the need for liquidity, taking on a new term loan totaling $1 billion. The company now says its near-term liquidity is $3.5 billion.

The two-year, unstructured loan will bear interest at a rate of 30-day LIBOR plus 1.2 percent. Welltower will also have the right to increase the amount by an additional $200 million.

Proceeds will be used to repay borrowings under the company’s credit facility, fund future investment opportunities and for general corporate purposes.

Welltower continues to close on recently announced dispositions, as outlined in its fourth quarter 2019 earnings release. Through March 20, Welltower has received net proceeds totaling $694 million from dispositions this year.

“While we maintain unwavering confidence in our balance sheet, we believe it is prudent to take further steps to enhance our liquidity profile given current capital market conditions and the uncertain impact of the COVID-19 pandemic,” says Tim McHugh, CFO.

Meanwhile, SNR for its part, updated its shareholders on COVID-19 outbreaks at two of its communities. Other REITs such as Welltower and Sabra Health Care REIT also confirmed cases within their community last week.

“As of March 20, 2020, we had two communities with reported confirmed cases for COVID-19,” the company stated in an investor presentation. “We expect this number to increase as testing for the virus becomes more widely available.”

SNR focuses on independent living, meaning there’s minimal medical staff on site compared to assisted living, memory care or skilled nursing communities. The properties largely work like a standard apartment building, but with an older population that’s particularly at risk for COVID-19.

“Our operators have all taken significant steps to reduce the risk of the virus entering and spreading within our communities,” the presentation continued.

For the company’s largest operator, Holiday Retirement, some of the more significant steps taken include:

  • Establishing a 24/7 Task Force to coordinate all COVID-19 efforts and to serve as a resource for community-level employees.
  • Implementing enhanced cleaning protocols and expanding supply chain partners to mitigate shortages, as well as instituting systematic drop shipments of key supplies to communities based on need.
  • Implementing an enhanced infectious disease tracking system across all communities.
  • Restricting access at all communities to essential visitors only.
  • Implementing temperature checks for all visitors on an ongoing basis, as clinical thermometers become available.
  • Closing communal dining and instituting in-room meal delivery.
  • Limiting transportation services to critical care appointments only.
  • Rolling out a telehealth service that provides convenient access to healthcare providers without the need to leave the community.
Tagged under