Seniors Housing Owners, Lenders Plan for Uncertain Future Amid Pandemic

by Jeff Shaw

The only thing certain about the COVID-19 pandemic may be its uncertainty.

JP LoMonaco of Valuation & Information Group recalls the start of the outbreak in the United States in March, when he expected the whole incident to be over in a few weeks.

“Since then I’ve stopped guessing when the pandemic will be over,” said LoMonaco.

The comments came during an exclusive webinar titled “Seniors Housing Market Valuation: Is the Pandemic a Disruption or Start of a Fundamental Shift?” hosted by Seniors Housing Business. LoMonaco moderated the panel, which included Joe Weisenburger of Welltower, Talya Nevo-Hacohen of Sabra Health Care REIT and Erik Howard of Capital Funding Group.

LoMonaco posed his first question to the panel: “How is the uncertainty of the pandemic’s duration being considered by your organizations, and the operators and investors you work with?”

Weisenburger said Welltower, the largest REIT in the seniors housing space, helped source a steady supply of personal protective equipment (PPE) for its operators. The company also made sure it has plenty of cash available for however long the pandemic lasts.

“We’ve been able to fortress our balance sheet,” said Weisenburger. “We’re sitting on a couple billion dollars of cash and a credit line of $3 billion, so we have the ability to help our operators and the ability to take advantage of [acquisition] opportunities that arise in the market.”

Nevo-Hacohen said Sabra sees some long-term positive effects from COVID forcing operators to implement stronger infection control protocols. When the pandemic finally eases, she hopes the stronger protocols will help manage the spread of other diseases as well.

“There are things that our operators have learned living through this pandemic, and some of those will remain in place and will be valuable for other infections that arise,” said Nevo-Hacohen. “Every year we talk about the impact of the regular flu season. There will be an impact on that transmission because of the protocols now in place.”

LoMonaco also asked Howard how Capital Funding Group assesses borrowers and their ability to weather the pandemic, “when we don’t know when the storm’s going to be over.”

Howard said the lender looks for companies that have diversified income streams. This includes a variety of types of care offered, as well as communities in multiple states.

“Clearly there’s a question mark in terms of state budgets and what that means for Medicaid funding,” said Howard.

“We’ve taken a longer term perspective on value. We saw how integral the long-term care space and seniors housing space is to the overall economy. It’s important to take care of the most vulnerable in our society.”

To view the full webinar, click here.

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