Sabra Health Care REIT Inc

NASDAQ:SBRA

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the Sabra Health Care REIT Fourth Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Michael Costa, Executive Vice President of Finance and Chief Accounting Officer. Thank you. Please go ahead, sir.

[Michael Costa]

Thank you. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including the expected impacts of the ongoing COVID-19 pandemic, our expectations regarding our tenants and operators and our expectations regarding our acquisition, disposition and investment plans.

These forward-looking statements are based on management's current expectations, and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form 10-K for the year ended December 31, 2020 that was filed with the SEC yesterday, as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday. We undertake no obligation to update our forward-looking statements to reflect subsequent events or circumstances, and you should not assume later in the quarter that the comments we make today are still valid.

In addition, references will be made during the call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures, as well as the explanation and reconciliation of these measures to the comparable GAAP results included in the financials page of the Investors section of our website at www.sabrahealth.com. Our Form 10-K, earnings release, and supplement, can also be accessed in the Investor section of our website.

And with that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health Care REIT.

[Rick Matros, Chairman and Chief Executive Officer]

Thanks, Mike, and good day to everybody and thanks for joining us. I appreciate it. First let me start by once again thanking our operators, who have just done an amazing job on showing resilience and dedication. I mean here we are a year later, who would have thought and then finally they're at a point where we really see the light at the end of the tunnel and have some real positivity, which I'll talk about here in a few more minutes.

I also want to thank the workforce, all the caregivers and other frontline employees in the facilities, who continue to show up every day and execute on the mission of providing care to the elderly. I'd also like to express my continued appreciation to state and federal government for continuing to provide support primarily to the skilled sectors but also to the senior housing sector, the assisted living sector as well.

And then finally, I want to call out the Texas operators, who are top of everything else shouldn't have had to go through what they went through recently with the weather and all the difficulties that cause. And fortunately all the facilities have emergency backup generators. There was minor to moderate damage, if any. So fine from a physical plant perspective, only one of our facilities had to evacuate and that was for a very short period of time. And there were a few facilities that had short block outs, but they didn't last very long.

The bigger problem really was staff just being able to get in and drive on the roads and all that. But we're past most of that right now, but again on top of everything else for them to have dealt with that was really difficult. So I want to express my appreciation to all of our operators and caregivers in Texas. I also want to thank the Sabra staffs, who are still working from home almost a year later and they just don't miss a beat, the productivity has been fantastic. And we've actually onboarded seven new team members during the pandemic, which was challenging working from home, but we all made it happen.

We provided enhanced benefits to our staff and we've done, I think, some interesting things to improve connectivity and just really stay in touch with each other and try to maintain the culture that we work so hard and developing here. And finally a couple of other things that pertain just for the company, and as we've had some significant board changes since December we've had three new board members, Clif Porter, Ann Kono and Katie Cusack. This goes to all of our efforts to enhance the diversity of our board and they bring some really unique and interesting skill sets that we're lacking on the board before in the areas of healthcare policy, investment banking, data analytics, and ESG. And then last but certainly not least, I want to congratulate Mike Costa for being promoted to Chief Accounting Officer.

Mike has been with us since the beginning of the creation of Sabra and has always done an amazing job and developed a great team and we couldn't be more pleased having had the opportunity to work with Michael all these years and now to see him get promoted to Chief Accounting Officer. So, I noted ESG with one of our new board members a second ago. We are going to be releasing in the next few months our inaugural ESG report. We started working on this initiative well before the pandemic. The pandemic certainly throw some things down. By the next few months, we will have our first report released.

Rating agencies, we're really pleased with all the work that we've done through the pandemic and to have Fitch come out and affirm our ratings and remove the negative outlook with the pandemic still something that we're all dealing with was really a fantastic outcome. And S&P also affirmed our ratings as well. So we feel really great about that and Harold will talk more about that. Now onto some of our tenants. Everybody is seeing that there was an announcement on Enlivant that the CEO, Jack Callison of Enlivant is moving over to become the CEO of Sunrise.

Dan Guill is going to be the CEO of Enlivant. He has been the COO. He has been there really since the beginning with Dan with Jack rather. And we have fantastic relationship with Dan. Jack did a great job building a really deep edge. And so we feel more than comfortable. We feel very, very strongly that Dan is going to do a great job as CEO. We don't expect there to be any changes that are noticeable to anybody on the outside. He was instrumental in building a culture there, and that will continue all on the lines that Jack established.

We also expect a potential – we expect a resolution to the JV this year and it's not really in detail to share at this point, other than TPG has let us know they would like to resolve it this year. So we'll be working with TPG and we're making a decision on whether we retain or buy their 51% out, or we exit the portfolio for us to be able to buy out the 51% that's owned by TPG. And I think as everybody knows pandemic notwithstanding, we really liked the portfolio. We liked the assets. The team is great, but it's taken a hit during the pandemic. It's is going to take time to recover. And so, it's just has to work for us economically. We're not going to do it just to do it.

And so whether we can get there with TPG and have a transaction that is beneficial to our shareholders remains to be seen. So stay tuned for more on that. And Harold will talk a little bit more about that as well. In terms of the stimulus, I want to point out that there is still $33 billion left in the HHS fund that hasn't been distributed and that's a GAO number. So that's a very specific accurate number. The 33 billion is actually going to increase because there is quite a number of hospital providers that are in the process of returning funds that were not needed back to HHS. So the 33 billion is actually going to increase we think relatively significantly. So stay tuned on that as well.

There are ongoing discussions, but we don't know what's going to happen with allocation yet on that, but it certainly makes it feel pretty good that the exact level of money sitting there still. As you all probably know, the public health emergency act was extended for another quarter. We're actually optimistic that the public health emergency act will be extended through the year, but technically it can only be extended in quarterly increments. But that's the dialogue that's going on and that of course carries with it sequestration, the continued waiver of the three day stay and FMAP.

I also want to note that we're very pleased with President Biden's nominations of Xavier Becerra for HHS Secretary and Chiquita Brooks-LaSure for CMS Administrator and we look forward to having a productive relationship with those folks, assuming that their nominations are confirmed. Now, moving on to vaccine update stats, since they're started at the end of December, the numbers have improved really dramatically. In the aggregate, we're close to that 80% of our patients and residents having received at least one if not two shots of the vaccine and so they have only received one, obviously they're scheduled to receive the second and the staff, which was 140% in the aggregate is now up to about 60%.

And I think we're seeing with staff, what we would have expected to see and that is – as they saw residents and patients that they provide care for and their colleagues who got the vaccine when they thought if they were okay and there weren't any side effects it increased their confidence. And so, those numbers were picked up dramatically. And we continue to expect those numbers to improve. We have a number of operators that are actually over 90% on residents, patients and employees. So that's just all good news. As cohort restrictions for facilities are eased due to the vaccine rollout, it will provide additional impetus for occupancy improvement. Due to these restrictions, admissions are limited simply due to the lack of availability of beds and facilities, which so much isolation has been necessary. So we've always focused on surgeries and the hospitals being at capacity and not having regular admits for our admission flow hampering the occupancy.

And certainly those are huge factors, but the cohort restrictions have been equally – made that equally significant, but very significant as well because of the number of rooms that have had two beds, but we can only use one bed for those isolation protocols. So as that normalization starts to accelerate with all those facts, there will be uptake in vaccines then we should see a normalization of the environment and the facilities having more group activities. That's going to also lessen the amount of labor that we have and should automatically start improving the margin even ahead of occupancy improvement.

In terms of communities that have been impacted by COVID that's improved dramatically since early January. And the peak of the recent surge, only two new facilities have had positive COVID tests last week and only two the week before. So, just dramatic improvement for that mortality and cases has come down dramatically as we've seen nationwide and long-term care facilities. We see the same in our portfolio as well, so really all good news there.

Now I just want to mention home health because it's come up a lot on some of the earnings calls and it's been part of the narrative that's out there, one in terms of the home health impact and whether or not home health benefits off at skilled nursing and senior housing. One, I would point out that there is nothing new in this narrative. This is a narrative that's been in existence for well over a couple of decades. It's been impacted by the difference the pandemic has had on home health and sniff occupancy. So clearly home health has benefited during the pandemic particularly with hospitals admitting lightest to care – lightest care patients as they get discharged and go back to home.

And frankly, we think it's a good thing that home health can take more patients because we do have a demographic crisis looming. We have a decline in supplying unskilled and they're already access issues that are going to be exacerbated throughout the country in terms of skilled nursing. So we actually as a society and as a country need home health to be taking more than they've taken historically from the acuity perspective. However that said, the paradigm isn't going to change. There are huge acuity differences between the settings in home health you've got by definition interim visits by nurses and therapists and in skilled nursing facilities it's all 24/7. It's very intense. And we see the same in assisted living but obviously not as intensive skilled nursing, but much more intense than home with the rising acuity over the last 10 years for assisted living, so we've got nurses around the clock therapists in there every day.

So the paradigm doesn't change and we expect to see things normalize more as everything else normalizes and we moved pass through the pandemic. On guidance Harold will talk in detail about guidance, but we determine that it was best only to put our Q1 primarily because it's managed portfolio. And then Genesis is out there. We're not sure how that's going to resolve either, so we can talk more about that. But those were really, really the two issues. We do think that based on the most recent statistics that we are close to bottom on managed occupancy coming down. We configured a $168.4 million in investment activity in 2020 with a blended cash yield of just under 8%. Our acquisition pipeline currently stands at about $1.5 billion to primarily senior housing, but actually some interesting opportunities that we're looking out there. We're seeing more behavioral and additional opportunities. And we are just starting to see some skilled opportunities, not a whole lot there still, but we're starting to see some.

Now moving to some operating statistics, skilled occupancy dropped about 1,200 basis points from February 2020 through the end of 2020. Skilled mix, however, improved 530 basis points during that point – during that time, which was a very important mitigant for our operators. To this point in 2021, the occupancy decline has almost effectively stopped and our top seven operators bottomed out actually at the end of December and they're up 210 basis points through the second week of February from the end of December. The SNF industry in the aggregate was actually down 850 basis points, 250 basis points from February 2020 through year end but they've recovered – the industry in general has recovered 200 basis points in the two months since they hit bottom as well.

So it's kind of too early to really project, but we've got aggregate data points for the industry and for our top operators both improving by about 100 basis points a month. We'd love it actually – obviously, if we can stay on that sort of track because we'd be in really good shape by the end of this year. And as some of you know that we've talked to in the conferences that we've had, we projected that skilled would be back more around the first quarter of 2022 or pretty close to back. So we'll see if we can actually beat that. Our senior housing lease portfolio held up actually really quite well during that period with occupancy dropping to 220 basis points and that's really a function of having small operators in a very specific markets within 65 facilities that are in those – in that leased category.

And so they actually held a pretty well senior housing leased EBITDAR coverage flip from 1.31 to 1.25. And unlike the skilled coverage, EBITDAR coverage, which improved to 1.93 that was obviously in large part due to all the assistance that we've gotten on the senior housing lease side, there wasn't much less assistance than in the skilled space. So we would have expected that to drop some. It's still at 1.25 EBITDAR that portfolio and the aggregate is in pretty good shape as well. None of our operators have required any permanent rent restructurings at this point. And our rent collections have been 99.9% of forecasted rents. Throughout the pandemic, we don't expect that to change. And finally, I want to point out our specialty hospital coverage and occupancy has been unaffected by the pandemic and contribute a meaningful 11% of our NOI.

And with that, I'll turn it over to Talya.

[Talya Nevo-Hacohen]

Thank you, Rick. In the fourth quarter of 2020, our senior housing managed portfolio continue to experience occupancy pressures as a result of the pandemic and the surge that followed the Thanksgiving and Christmas holiday season. While government funding provided some mitigation from the financial pressures adoption of the vaccine is the linchpin to getting the senior housing industry on the road to recovery. All our operators have been intent on implementing vaccine clinics at their buildings, educating and incentivizing both residents and staff to maximize participation and using their clinics and documented safety record to demonstrate the potential residents with the fastest path to a normal lifestyle as to move into a senior housing community. CMS data compiled by Nick shows that COVID cases in skilled nursing closely tracked cases in the general population from June 2020 until the launch of the Pfizer and then the Moderna vaccine in December 2020.

In January 2021, this changed dramatically. Cases in skilled nursing began to decline just as cases in the U.S. spiked from the post holiday surge. By early February, new cases in skilled nursing fell by 83% and cases in the general population fell 47% compared to late December when the Pfizer vaccine was launched. After the launch of the vaccines, deaths in skilled nursing began to decline and have continued to do so dramatically while deaths in the general population spiked and have plateaued since. With skilled nursing as a leading indicator of the impact of the vaccine and congregate living, we have reason to be optimistic.

As of the end of the fourth quarter of 2020, approximately 14% of Sabra's annual cash net operating income was generated by our senior housing managed portfolio, approximately 49% of that relates to the communities that are managed by Enlivant and 37% relates to our holiday managed communities. The balance includes our Canadian portfolio and five assisted living and memory care communities in the U.S.

To start I will provide highlights of the operating results of the managed portfolio, which includes both the wholly-owned portfolio and Sabra's share of the unconsolidated joint venture on a same-store sequential quarter basis to illustrate the trends in the industry. These results will exclude two recent acquisitions and one transition community and our wholly owned portfolio consistent with a presentation and the supplemental information package.

Occupancy declined 280 basis points to 76.4% in the fourth quarter of 2020 in line with the 270 basis point decline experienced in the third quarter over the prior quarter. Revenue per occupied room, REVPOR, excluding government grants received rose 1.6% this quarter compared with an increase of 1.7% in the previous quarter. Revenues decreased 5.8% in the fourth quarter of 2020, compared to the third quarter, inclusive of $1.1 million and $4 million respectively of government funds received by eligible assisted living facilities. If we exclude the grant revenue then same-store revenue declined 1.9%.

Cash net operating income for the quarter decreased sequentially by 24.9% to $14.8 million from $19.7 million. Excluding the government grants cash net operating income would have declined by 12.5% on a sequential basis. Cash NOI margin decreased to 21.3% from 26.8% in the preceding quarter, excluding government grants cash NOI margin would have been 20.1% in the fourth quarter and 22.5% in the preceding quarter.

In the fourth quarter, we saw the same occupancy and rate dynamic as we saw in the third quarter, rising rates and continued decline in occupancy resulting in a decline in revenue and in business with high operating leverage government funds received by eligible operators have had a disproportionate impact on cash net operating income depending on the amount and the timing of receipt. The Enlivant joint venture portfolio of which Sabra owned 49% had a challenging fourth quarter as a result of lower occupancy and operating revenue that was only slightly offset by the receipt of approximately $484,000 in government grants.

Average occupancy for the quarter was 71.6% reflecting a 4.2% decline on a same store sequential quarter basis, and a 10.6% decline on a same store basis compared with the fourth quarter of 2019. REVPOR excluding government funding was 4,576 compared with 4,411 or 3.8% higher on a same store sequential basis, and 3.6% higher on a same store basis compared with the fourth quarter of 2019. Revenue was 8.6% lower on a same store sequential quarter basis and 8.5% lower on a same store basis compared with the fourth quarter of 2019. Excluding government funds, revenue decreased by 1.9% on a same store sequential basis and 9.8% on a same store basis compared to the fourth quarter of 2019.

Same store cash net operating income was $5.2 million, a 43% decrease on a sequential quarter basis driven by lower government funds in the fourth quarter. Without those funds, same store cash NOI would have declined 22.3%. Subsequent to the end of the quarter, January 2021 occupancy was 68.9%, 140 basis points lower than December 2020 occupancy. Since the pandemic began nearly all of our Enlivant Joint Venture communities have had a resident or staff member test positive for COVID-19. By late February, only 10 communities had a resident or staff member with a positive test compared with 35 at the end of January, it's a 70% decline.

All the communities in the joint venture have completed their first vaccine clinic and 50% have had their second clinic. Data so far shows that 94% of residents and 64% of staff received the vaccine in significantly higher rate than industry average. January 2021 saw a rise in move-ins compared to the prior month, while move-outs remained at a reduced level similar to move-out before the holiday surge. The gap between move-in and move-out started to narrow in January and that momentum has continued into this month.

The fourth quarter operating results for Sabra's wholly owned Enlivant portfolio of 11 communities had similar themes in its performance. Fourth quarter occupancy was 77%, a 4.2% decline compared to the prior quarter and a 12.5% decline compared with the fourth quarter of 2019. REVPOR in the fourth quarter excluding government funding of $549,000 was $6,029, 4.7% higher than the prior quarter, and 3.8% higher compared with the fourth quarter of 2019. Revenue was 3.3% lower on a sequential quarter basis and 5.1% lower compared with the fourth quarter of 2019.

Excluding government funds, revenue was nearly flat on a sequential quarter basis and 10.7% lower compared with the fourth quarter of 2019. Cash net operating income was $1.9 million; a 32.2% decrease on a sequential quarter basis helps slightly by the government grants. Without those funds, same store cash NOI would have decreased 32.6% for the same period. More recently, January occupancy was 68.4%, 510 basis points below the prior month, while only two of our wholly-owned Enlivant communities currently have a resident or staff member who was positive for COVID-19 that's down from 6 at the end of January, all 11 communities were touched by COVID during a post holiday surge. The combination of an increase in resident deaths and move-in restrictions resulting from the surge had an outsized impact on occupancy.

Enlivant also incurred higher costs associated with the surge, including labor costs as well as increased PPE needs. By mid-February all these communities have their first vaccine clinic and have had already completed their second clinic with 94% of residents and 64% of employees receiving vaccine. While it will take time to rebuild occupancy back to the pre pandemic levels of 90 plus percent. In January, we saw a reduction of about 25% in move out in tandem with an increase in move-ins of about 150% compared with the prior month. This momentum along with vaccine clinics, driving a rapid reduction in infection lays the groundwork for occupancy to rebuild.

Holiday retirement operates 22 independent living communities for Sabra, one of which was transitioned to holiday in the fourth quarter of 2019. Note that these properties were not eligible to receive government support distributed to assisted living providers. All the following operating results are presented on a same-store basis and excludes the transition property. Holiday portfolio occupancy was 80.8% in the quarter, 1.7% lower on a sequential basis and 7% lower compared with the fourth quarter of 2019. REVPOR with $2,518 flat to the prior quarter, and 1.3% higher compared with fourth quarter 2019.

Revenue declined 2.2% compared to the prior quarter and 6.9% compared with the fourth quarter of 2019 and cash net operating income was $6.1 million, a 3.4% increase on a sequential basis, and 10.1% decline compared with fourth quarter of 2019. Subsequent to the end of the quarter, excluding the one transition community, January occupancy was 79.8% compared to 80.7% in December 2020, a 90 basis point decline. Over the last year, all 22 properties that Holiday manages for Sabra have had a resident staff member or private home health aid test positive for COVID-19.

As of mid-February, 17 communities have recovered and are in various stages of lifting restrictions, such as dining or reduced capacity, limited visitors and reopening of the beauty salon. Independent living communities were not eligible for government aid and prioritized on premises, vaccine clinics in order to continue to keep its residents safe, Holiday is needed to be creative in organizing and negotiating vaccination strategies. Holiday currently has 13 of our communities with confirmed vaccination partners. Five of those communities have already held five initial clinics for residents and associates with 78% and 37% vaccinated respectively.

In the fourth quarter of 2020 Holiday saw a rebound in sales activity with leads, move-in and move-outs tracking between 95% and 99% of the fourth quarter of 2019. We are now seeing a gap between move-outs and move-ins narrow significantly on the heels of vaccine distribution, reflecting the same trend that we spoke about an Enlivant.

Sienna Senior Living manages eight retirement homes in Ontario and British Columbia for Sabra. In the fourth quarter, the Sienna portfolio had 79.5% occupancy flat on a sequential basis, and 8.8% lower compared with the fourth quarter of 2019. REVPOR was $2,488, 2.5% lower than the prior quarter and 2.2% lower compared with fourth quarter 2019. Fourth quarter revenue was $4.5 million, 2.5% lower than the prior quarter and 11.9% lower compared with fourth quarter 2019 driven by occupancy declines. In the fourth quarter, cash net operating income was just over $1 million, a 1.3% decline on a sequential basis and a 44% decline compared with fourth quarter 2019.

More recently January occupancy was 78.5%, a 30 basis point decline compared with the prior month. Only one of our retirement homes have had a confirmed case of COVID-19, and while Canada experience a surge in COVID cases after Canadian Thanksgiving in October, the impact on our portfolio has remained minimal. Both British Columbia and Ontario are in the early stages of rolling out vaccine clinics to retirement homes after having prioritized – I'm sorry, after prioritizing long-term care residents and staff. It is not yet clear when retirement homes will be receiving vaccines, although at least one of our Sienna homes in Ontario has already had 80% of staff vaccinated.

Leads have ramped up to nearly double what they were on the fall, even without the catalyst of vaccine distribution move-in are increasing to match move-out, which remain driven by death and the need for higher level of care. We have noted in prior quarters that senior housing rates appear in elastic. Our operators have consistently maintained rates because the perspective resident's decision to move in has being driven by qualitative, rather than quantitative factors. They're seeking a change in lifestyle, whether out of need or desire. While we speak about pent-up demand and higher lead volumes, the fact is that converting leads to move-in is more challenging when potential residents are concerned about the lifestyle that they will have when they move-in.

Between February 2020 and January 2021, our Senior Housing Managed portfolio, inclusive of non-stabilized assets lost 10.1 percentage points in occupancy. Occupancy remains the largest variable driving operating results of our Senior Housing Managed portfolio. But what our results in the fourth quarter 0.2 is that the Holiday surgeon COVID cases has not had a uniform effect on our managed portfolio. The largest occupancy declines were in assisted living, particularly in December 2020 and January 2021.

Lower move-in rates during the holidays and higher death rates among more vulnerable residents drove that outcome. COVID infections that surged in the general community impacted our assisted living communities and the people who work there resulting in increased labor, PPE and related costs particularly in those months. While our assisted living operators did receive some government support, it was significantly lower in the fourth quarter and didn't offset the simultaneous higher costs and lower revenue experienced in December 2020.

Cash net operating income margins, which are lower in assistance versus independent living, were even further compressed. The first step in reversing this trend is to maximize vaccinations, which is underway. Both our portfolio as well as broader statistics indicate that residents are eager adopters, a skilled nursing is a reasonable precedent we have visibility on stemming occupancy losses. COVID cases should decline within a month following the vaccine clinics and in fact, we have shared that we're seeing a steep decline in cases. With fewer cases, we'll come fewer move-outs. Again, something we had discussed, which will begin the return to pre-pandemic levels and extend length of stay.

Achieving high vaccine adoption rates among staff will help reduce labor costs, which spiked during an outbreak. These along with normalized PPE expenditures will help stabilize expenses and support net operating income. Rebuilding occupancy will take more time. It requires converting leads to leases and convincing potential residents of the value that senior housing brings to their life.

A vaccinated population will allow for fewer and fewer restrictions within the community, which will allow residents to gradually resume the lifestyle that brought them to independent or assisted living in the first place. Operators will now have evidence to show that living in their community is not only enjoyable, but also safer whether it is in the face of a pandemic or a natural disaster.

I will now turn over the call to Harold Andrews, Sabra's Chief Financial Officer.

[Harold Andrews, Chief Financial Officer]

Thanks, Talya.

I'll give an overview of the numbers for Q4 and then provide additional color on our guidance for the first quarter of 2021.

For the three months ended December 31, 2020 we recorded total revenues, rental revenues and NOI of $152.1 million, $110.7 million and $124 million respective. These amounts represent increases from the third quarter, primarily due to a third quarter $14.3 million write-off of straight-line rent receivables and above market lease in-tangibles for Genesis and Signature as we move those tenants to a cash basis for revenue recognition. Excluding this write-off, total revenues declined $5.5 million. Rental revenue declined $4.2 million and NOI declined $9.6 million in Q4 compared to Q3. This decline was due to a $3.7 million decrease in collections related to leases accounted for on a cash basis.

Note that the third quarter of 2020 had a $2.2 million increase over the second quarter in rates collected from cash basis tenants. These fluctuations in collections stem from a handful of cash basis tenants that are in some Phase of transition or stabilization period and pay rent based on cash flow available for payment, which can fluctuate quarter-to-quarter due to fluctuations in cash flows at the operator level. Tenants with this type of arrangement represent just 2% of total revenues during the fourth quarter. And we do not see the reduction of cash collections this quarter as a new trend.

Total revenues with NOI were also impacted by a $1.2 million reduction in revenues from our wholly owned senior housing management portfolio compared to the third quarter, including a $0.6 million reduction in government grant income. Why? Which further impacted by the results of the Enlivant joint venture, which was lower compared to the third quarter by $4 million, including a reduction in government grant income of $2.5 million. We recognized $1.1 million of government grant income during the fourth quarter $0.6 million relate to our wholly-owned portfolio that was recorded in revenues and $0.5 million related to the Enlivant joint venture that recorded as part of loss from unconsolidated joint venture.

Finally, COVID-19-related costs in our senior housing managed portfolio totaled $3 million for the quarter, the $0.5 million increase compared to the third quarter, lowering our NOI in the fourth quarter compared to the third quarter. Of the current quarter expense, $2 million related to the Enlivant joint venture, while $1 million is incurred in our wholly owned portfolio.

FFO for the quarter was $87.5 million and our normalized basis was $88.4 million or $0.42 per share. This compared to normalized FFO of $98.8 million or $0.48 per share in the third quarter of 2020. AFO, which excludes from FFO and certain non-cash revenues and expenses was $87.2 million, and our normalized basis with $86.9 million or $0.41 per share, which compares to normally AFFO of $95.1 million or $0.46 per share in the third quarter of 2020. These declines in normalized FFO and normalize AFFO are primarily related to reduction in NOI from $9.6 million previously discussed.

In the quarter, we recorded net income attributed to common stock holders of $37.1 million or $0.18 per share. G&A cost for the quarter, totaled $8.1 million compared to $7.2 million in the third quarter. G&A cost included $2.3 million of stock based compensation expense for the quarter compared to just $0.9 million in the third quarter, it increased due to updating our performance-based investing assumptions, a management equity compensation in the third quarter, which resulted in lower expense in that quarter. The current cash G&A cost at $5.88 were 4.7% of NOI for the quarter in line with our expectations; we continue to have a strong liquidity position as of December 31, 2020, with over $1 billion of cash and availability on our line. This puts us in an excellent position to take advantage of acquisition opportunities that present in 2021 and beyond.

As we have consistently reported, maintaining our target leverage of below 5.5 times continues to be a key priority for us. We're very pleased to see that the recent changes in our Fitch rating going from a negative outlook to stable, as well as the reaffirmation about ratings in S&P. Maintain leverage is a critical component of our current ratings. We have continued to manage this through the pandemic and this decline in earnings on a managed portfolio during 2020.

To that end, we issued 3.6 million shares of common stock under our ATM Program during the quarter, and an average price of $16.81 per share, generating gross proceeds of $60.1 million, a $4.9 million of commissions.

Additionally, we utilize the forward feature of the ATM Program in preparation to fund certain upcoming investments. And 1.1 million shares with an initial weighted average price of $17.44 net of commissions remain outstanding under the foreword sale agreements. Our leverage remained below our target at 4.8 times excluding the JV debt and increased slightly to 5.49 times from 5.48 times, including our share of the Enlivant Joint Venture debt.

At the end of 2020, we have $235 million available under the ATM Program. We were in compliance with all of our debt covenants as of the end of the year, and continued to have strong credit metrics as follows. Our interest coverage is 5.32 times, fixed charge coverage 5.14 times, total debt-to-asset value 35% and unencumbered assets values on secured debt 283%; secured debt to asset value just 1%. In February 2, 2021, the company's Board of Directors declared a quarterly cash dividend of $0.30 per share. Dividend we paid on February 26 to common stockholders of record as of February 12. The dividend represents a payout of approximately 71% of our AFFO, and 73% of our normalized AFFO per share.

And after a couple of comments on Q1 2021 guidance, we noted in our press release issued yesterday, a financial effects, the COVID-19 pandemic has made it more difficult to accurately forecast our future earnings, primarily within our Senior Housing Managed portfolio. As a result, we have limited our guidance to the first quarter of 2021. We expect the following amounts for the diluted common share in the quarter ended March 31, 2021.

Net income $0.16 to $0.17; FFO $0.39 to $0.40 and AFFO $0.38 to $0.39. The above estimates are based on certain key assumptions spelled out in our supplemental. I would like to bring attention to just a few. The estimates above do not include any anticipated funds from the provider relief fund for our Senior Housing Manage communities. While we expect to receive some meaningful amounts, predicting the amount and timing is very difficult. As we see continued pressure in the early part of the first quarter, we expect our Senior Housing Managed portfolio average quarterly occupancy to fall within the following ranges, wholly owned 75.4% to 77.4%, and unconsolidated joint venture $0.66 to $0.68%.

We expect to close investments totaling $39 million with a weighted average initial cash yield of 8.2%. We anticipate funding investments using the revolver along with match funding the equity component in the ATM Program. In the aggregate, we expect to issue approximately $100 million of equity under our ATM Program to fund acquisitions and meet our goals of maintaining leverage at 5.5 times, which would include the unconsolidated joint venture. Based on expected annualized adjusted EBITDA of approximately $480 million as of March 31, 2020.

Finally, I'd like to point out that our calculation of net debt to annualize adjusted EBITDA is based on a trailing 12 month adjusted EBITDA. March 2021 will be the 12th month impacted by the pandemic. This is important to our management of leverage each quarter, average quarter passes since the start of the pandemic, we are dropping off a quarter of higher pre-pandemic EBITDA generated by our managed portfolio and replacing it with a significant reduced EBITDA, so that has been negatively impacted by the pandemic.

In order to keep our net debt-to-annualized adjusted EBITDA below our target of 5.5 times. We expect to issue additional equity during the first quarter of 2021 to again account for the lower trailing 12-month adjusted EBITDA. We expect as we renew the quarter.

To summarize this impact this has had on our equity issuance based on our Q1 2021 guidance. We will have issued approximately $150 million of equity since the beginning of the pandemic to offset the loss of EBITDA from our managed portfolio thus compared to the chilling with adjusted EBITDA one-year earlier or as of March 31, 2020. However, on a very positive note, while we moved further trough in occupancy and begin to rebound, the expected increase in EBITDA from our managed portfolio will begin to naturally further delever the company and provide us with even stronger balance sheet and the potential for outsized growth in earnings per share as we continue to manage leverage in a pretty fashion going forward.

And with that, I will open it up to Q&A.

[Operator]

Our first question comes from Josh Brown with Scotiabank. Your line is open.

[Josh Brown, Scotiabank]

Hey, thanks. So could you provide some more insight into the current acquisition pipeline and what investment opportunity Sabra sees today? Just looking at Q1 guidance, it looks like you guys are going to raise over $100 million from the ATM program, has some availability under line of credit and $40 million will be used for investment. So is that remaining capital being raised just meant to delever and kind of keep leverage levels where you want them?

[Rick Matros, Chairman and Chief Executive Officer]

Yes. Most of the raise is to maintain our balance sheet where we want it to be. But it also pre-funds potential acquisitions as well. So, you have to think of it sort in both ways. If there’s an opportunity now to raise money on the ATM then that’s going to keep our leverage down and give us room for leverage to go up slightly and still will be below our target as we match for an acquisitions that come in. Talya, do you want to note some of the specific kinds of things we’re looking at in the pipeline?

[Talya Nevo-Hacohen]

Sure. We’re looking at senior housing assets that we can buy at reasonable prices. At this time we’ve spoken in the past about the population of assets out there that have been had their lease up projections delayed if you will because of COVID. And so there’s an opportunity to acquire newer assets that have some upside to them. And so that’s a lot of what we’re seeing because people need liquidity at various time for various reasons. So we’re seeing that kind of opportunity where, as Rick said earlier, we’re seeing opportunities in other sectors as well, including behavioral and a little bit in skilled nursing.

[Josh Brown, Scotiabank]

Got it. That’s helpful. And then how are you guys comparing the Enlivant JV, buying up the other portion compared to just traditional acquisitions? I know it looked like that portfolio had some more occupancy challenges in Q4, and you guys are also factoring in some more occupancy loss in Q1 versus the wholly-owned portfolio. So how are you guys underwriting that occupancy NOI recovery and comparing that with other acquisition opportunities?

[Rick Matros, Chairman and Chief Executive Officer]

Yes. So, one really has nothing to do with the other, we’re already in the JV. So that’s just going to be a negotiation with TPG. And as I mentioned in my opening remarks, it’s going to have to be something that works for us economically. We’re not going to do a deal just to do it. That’s going to be dilutive to our earnings. So it’s just a completely separate thing that how we look at others and we know that portfolio really well. We have a lot of confidence in the team. And everything that they have in place from an infrastructure perspective to rebound. And what’s been unfortunate for them is, unlike all of our other operators, they really have a national footprint.

And so the surgeries so that they just couldn’t catch a break every time you have one area that started getting a little bit better, they’d get hit with in another geographic area and over half their states hadn’t lifted any restrictions, the cohort restrictions either. So it’s completely separate thing how we look at it. When we look at the individual senior housing opportunities that we’re currently looking at, we just look at where we’re at with the current NOI is and what their lease up looks like. And we underwrite everything on it on a balance sheet mutual basis. And then we just see if it works. That answers your question.

[Josh Brown, Scotiabank]

Thank you.

[Operator]

Thank you. Our next question comes from Juan Sanabria with BMO Capital Markets. Your line is open.

[Juan Sanabria, BMO Capital Markets]

Hi. Good morning and thanks for the time. I was just hoping you could talk a little bit Rick about the occupancy recovery, both in skilled nursing and seniors housing, you seem to imply maybe a longer recovery in seniors housing for the TPG stake at least they seem to be a little bit more optimistic about skilled nursing. But if you could just give us some benchmarks in how long you think you can get back to pre-COVID levels for those two major groups. That’d be great.

[Rick Matros, Chairman and Chief Executive Officer]

Yes. So my thinking has been that by the first quarter of 2022, we’d be back on skilled nursing to a pre-COVID or pretty close, close enough that you feel comfortable, you’re going to get there. And I think it’s probably not before the middle of 2022, on the senior housing piece. Obviously, it can take a little bit longer particularly with the Enlivant portfolio because what happened during the surge, but their pent up demand is still their pent up demands. And a lot of the same dynamics that help the skilled space should help the senior housing space, including Enlivant as well with easing of restrictions on the isolation protocols and such and being able to have real tours and group activities and all those kinds of things. So I do think it’ll take longer, if you’ve got on the skill side, it’s intensely need based. We also expect that as occupancy picks up, people will be sicker than they would’ve otherwise have been because they’ve had a delay going into hospitals first. And then that goes to senior housing as well.

But AL, and certainly the operators that we have, have seen their acuity tick up pretty dramatically over the past number of years. So it’s much more need based model than it ever did, which is why we have the confidence that it’s going to rebound. It’s just going to take time. And I’d also point out, I think we talked about this before, we think the safety factor for senior housing is going to be a big deciding factor in terms of admissions coming back in at a pace that we’d like to see. And in the case of a couple of our tenants, just by way of example, Enlivant and Holidays, they’ve done really an incredible job from a safety perspective. Enlivant’s infection rate is 2% and the cohort and assisted living is 47% and in independent living, which you would expect to be lower because they’re healthier less than 1% at Holidays. So I think those statistics are going to be really critical from a marketing perspective and help our portfolios to recover.

[Juan Sanabria, BMO Capital Markets]

Thank you, Rick. But maybe just a quick modeling question for Harold, cash rent payments from those few tenants that on a cash basis. What’s the assumption in the first quarter guidance relative to the fourth quarter payments?

[Harold Andrews, Chief Financial Officer]

Yes. It should be pretty consistent with fourth quarter for a vast majority of our cash flow. I’d say all of them, but one or two. And I’m actually expecting an uptick in collections in the first quarter over the fourth quarter for those two. So my expectations would be slightly up, not dramatically, but slightly up over fourth quarter.

[Juan Sanabria, BMO Capital Markets]

And maybe just one last one for Rick. What’s the view on these dual capacity rooms you referenced in skilled nursing coming back. And do you sense any hesitancy by the regulators or whatnot to kind of do away with those given some of the lessons learned from the pandemic?

[Rick Matros, Chairman and Chief Executive Officer]

No. I think – well, a couple of interest things in terms of the point you’re making. One, there’s a difference between the semi private rooms and the wards that had three beds and four beds. I think over time, you’re going to see – states want to see – they’re going to want to see those go away. And that's what actually already happened in Massachusetts. So I think we'll see that elsewhere as well. And there's – there'll be corresponding reimbursement changes as well to go along with those so that the operator can continue metro and a viable business in terms of what's happening – that's sort of something to think about and look forward to going forward, which is also going to exacerbate the access issue that we're starting to see in different markets.

Before the pandemic, the industry was projected to be essentially full on virus, somewhere around the middle of the decade. So that's going to exacerbate that problem, but in terms of what's happening today in the pandemic, I think that the vaccine changed everything in terms of the concern regulators had about easing restrictions. So and I also think it's fair to say that when you feed the numbers in terms of cases of mortality dropping so dramatically, so quickly, as Talya pointed out it's the vaccine, but it's more than the vaccine.

We still have a lot of patients that stay in skilled nursing facilities under Medicaid for long periods of time. You think about short stay because the Medicare, but we've got a lot of longer-term patients in there. And a lot of the patients and residents in these facilities both skilled and senior housing have already had COVID and we're aware of it or they've had it and we're unaware of it, because there was so little testing for the first number of months, and they're still not in the testing as far as antibody testing facilities.

So the buildup of those antibodies with the existing population combined with the vaccine, I think is why we saw such a dramatic improvements in case there's a mortality dropping. I think it was just a vaccine that would have happened that quickly. And there were conversations ongoing more specifically to your point one with CDC about not having national guidelines or restrictions easing once a certain percentage of the population has been vaccinated. So there were discussion, so that hopefully it can be addressed on a more uniform basis, because right now as you can imagine, it's quite different from state to state and even within States different regulatory localities.

[Juan Sanabria, BMO Capital Markets]

Thanks, Rick.

[Operator]

Thank you. Our next question comes from Nick Joseph with Citi. Your line is open.

[Nick Joseph, Citi]

Thanks. Just wondering what the timing is on a decision in terms of Enlivant at least current expectations for any timing.

[Rick Matros, Chairman and Chief Executive Officer]

I'm guessing here a little bit Nick, because TPG is really driving the process. If I was going to guess, I would say we arrive at a decision in the next several months. And then in terms of closing the deal, whether you're out or you're in, it's usually 180-day period because of the regulatory approval.

[Nick Joseph, Citi]

Thanks, Rick. If you just think about more broadly, I guess, pricing for senior housing particularly like a national portfolio like that. How do you think about it versus pre-COVID values?

[Rick Matros, Chairman and Chief Executive Officer]

Well, we all know how PEs has driven pricing over the past few years, but I think for us and certainly if you're going to buy something before its recovered. It's got to have a much higher yield than the six handles that everybody got used to. But so I think for us, it's going to be a very specific exercise and looking at their current NOI being as conservative as possible in terms of recovery and there may be some other mechanism that can be built into a transaction that gives the portfolio more time to recover without us being out of pocket. But I don't want to get ahead of myself here, because I was in negotiations that we have to have with TPG.

[Nick Joseph, Citi]

Thank you.

[Operator]

Thank you. Our next question comes from Rich Anderson with SMBC. Your line is open.

[Rich Anderson, SMBC]

Thanks. So on Enlivant, how binary is the decision? Is it in or out? Or is there a rainbow of opportunities within being in or completely out? Could it involve third parties? What's on the table or is it pretty straightforward?

[Rick Matros, Chairman and Chief Executive Officer]

Harold, you want to take that?

[Harold Andrews, Chief Financial Officer]

Sure, Rick. I would say the decision is going to be made to do something, it's pretty binary between buying or not buying, but that's not to say that you couldn't structure a deal that provided some level of earn-out or some other mechanism to kind of bridge the gap if you will, between where NOI is today and where NOI is expected to be in the future. So all those things you kind of on the table, who knows where it might land, and I don't think that there's an opportunity from our perspective to have bringing in another investor alongside us. And I also think that it's just going to come down to TPG, the price that they require for it or not, and let us or somebody else to be seen and how we can structure to bridge the gap is something we'll be working on within.

[Rich Anderson, SMBC]

Okay. And then when you compare the occupancy level, the JV, which is a lot more than the 11 wholly owned assets. Is there any reason why there shouldn't ultimately be a full recovery and/or the 11 assets that you own on a wholly-owned basis, sort of outlier positive assets in that, the real occupancy number kind of steady state for the JV is something below those 11?

[Rick Matros, Chairman and Chief Executive Officer]

Talya, you want to take that.

[Talya Nevo-Hacohen]

Sure. So it's a couple of things I'd start with big picture. The 11 wholly owned are in a very small geographic area. They're kind of Pennsylvania, Delaware, and so that already changes the profile versus a portfolio of 158 that are spread from East coast to and all across the country, to the West coast. So that's the first thing.

The second thing is there is much more memory care in the wholly owned than there is in the joint venture. And that also affects – well, it affected COVID spread within the building because I'm sure others have spoken at greater length than we have about memory care and how it's much harder to manage COVID spread and memory care. But also people far fewer people are moving out just, just because of a lifestyle on a memory care. So that also changed the bias.

Given that the 11 wholly owned have performed at such a high level in terms of occupancy 90 plus in fact, we even had 95% occupancy. Several quarters ago, I expected that rebound will – I think that 90-ish area is probably going to be where it has back because the loss was quite specific and quite specific in timeframe. I think the joint venture there's – I think it's just different and it's going to be a balance of the local markets and the environment, and what's happening with respect to COVID vaccines, et cetera, and the competitive landscape in those areas across the country.

[Rick Matros, Chairman and Chief Executive Officer]

So it's Rick. It's a matter of time, Rich; it's not a matter of the end result. We don't see any reason that the JV is not going to be back to where it was.

[Rich Anderson, SMBC]

Yes. Okay. And then quick for you, Harold, the $100 million of equity for the first quarter, I'm getting like an implied cap rate and your stock around 80-ish or so. And I see you're comfortable with that in the interest of deliberating, but are you kind of be kind of quick to get into that ATM to capture that pricing, and take the risk off the table. What happens if, God forbid some disruption in the stock and now you have to rethink the equity raise component of the story for first quarter?

[Harold Andrews, Chief Financial Officer]

We'll get into it when it makes sense for us, but I would point out Rick than it is our intent to do that. But we do have cushion. We've got cushion in our leverage metrics. So while we'd like to get it done and keep it right where we're at it. We're a little bit behind on that, it's not going to be a big deal relative to our range of sketch and S&P. But we're going to get in there and do it as quickly as we can. Also keep in mind that we want to monitor the performance of the managed portfolio because performance starts to pick-up and we can see a pathway to improve EBITDA more quickly than we might be thinking today. Then we can temper that as well.

[Rich Anderson, SMBC]

Okay. That's perfect. Thanks everyone.

[Rick Matros, Chairman and Chief Executive Officer]

Thanks Rich.

[Operator]

Next question is from Steven Valiquette with Barclays. Your line is open.

[Steven Valiquette, Barclays]

Great. Thanks. Hello, everyone. Maybe just a question here for Rick, just on the COVID in the skilled nursing setting. So you guys did mention the dramatic drop in COVID patients in SNF in early 2021? I mean, that generally should be net positive in the big picture. I guess I'm curious if you can provide a little bit more qualitative color just around the notion that some SNF's actually do want to treat COVID patients in the SNF setting, maybe just to help us frame this better quantitatively as well. Do you know, just roughly what percent of the SNF in your portfolio are actively seeking to treat COVID patients presumably on a post acute basis versus what percent of the SNF's where they want nothing to do with COVID patients at all and are either isolating or discharging these patients to other care settings?

[Rick Matros, Chairman and Chief Executive Officer]

Yes. So it's a relatively small percentage that are actively pursuing COVID patients and trying to set up units and things like that. It's definitely not higher than 20%. But I would say we have very few operators that just want nothing to do with it. So the majority are comfortable with taking care of COVID patients. It's just that it's only a small percentage of those folks that are actively working with hospital partners.

And a lot of that was also driven by the hospitals in particular markets seeking out – actively seeking out partners. And – but hopefully that's along with piece of the business. And I think for operators to do that on a longer-term basis, just under the assumption that you may always have a little bit of it from time to time, it's going to just depend on facility configuration and not prevent them from hitting their overall occupancy goals because of the isolation requirements.

[Steven Valiquette, Barclays]

Okay. Okay. That's definitely helpful. Appreciate the extra color. Thanks.

[Operator]

Thank you. Our next question comes from Lukas Hartwich with Green Street. Your line is open.

[Lukas Hartwich, Green Street]

Thanks. I'm just curious on the acquisition pipeline. Are those concentrated in any markets or are they kind of distributed?

[Rick Matros, Chairman and Chief Executive Officer]

Yes. All over the place?

[Lukas Hartwich, Green Street]

Okay. And then the coverage metrics on Page 5 of your stuff. I know the unstabilized assets are not in that. I'm just curious; do you have a rough number of percentage of total NOI or rent that's not reflected in those coverage metrics?

[Rick Matros, Chairman and Chief Executive Officer]

Yes. It's less than 10%. Its non-stabilized, maybe it's excluded from those figures.

[Lukas Hartwich, Green Street]

Okay. And then last one for me is the specialty hospitals looks like occupancy's taking a nice uptake over the last few quarters. Is there anything kind of COVID related driving that or is it just unique issues at the properties? I'm just curious, what's driving that?

[Rick Matros, Chairman and Chief Executive Officer]

No, there's really – there's nothing COVID driving it. They're relatively unaffected by COVID. They have very dynamic populations that we've always seen a lot of fluctuation up and down with those assets a little bit different and we've got the behavioral assets and now we've got children's hospital in there. And so there's a couple of different things, but a lot of its driven by the behavioral facilities. So it's just the dynamic population that unaffected, so...

[Lukas Hartwich, Green Street]

Great. That's it for me. Thank you.

[Operator]

Thank you. Our next question comes from Joshua Dennerlein with Bank of America. Your line is open.

[Joshua Dennerlein, Bank of America]

Yes. Hey guys, I'm just curious on the Enlivant JV. Have you guys also considered maybe selling your stake when TPG kind of looks to exit. Is that something you thought of?

[Rick Matros, Chairman and Chief Executive Officer]

I can take part of it. They have drag along rights with us and so they have more control over the cell. I mean, we've looked at obviously selling our interests before. You don’t see that is being a potential outcome here?

[Joshua Dennerlein, Bank of America]

Okay.

[Rick Matros, Chairman and Chief Executive Officer]

Josh, you may not recall, but because it seems like a decade ago now, that in December early fall of 2019, we took a look at other potential JV partners to take out TPG and really nothing really came of that. So we thought about it and actually pursued it a while back.

[Joshua Dennerlein, Bank of America]

Okay. So you thought about selling your stake in the past and it just hasn't worked. I wasn't sure if it don't seem like on the shop side, like there is pretty good pricing, and maybe you guys will trading again. I don't know, maybe it's potentially accretive but okay...

[Rick Matros, Chairman and Chief Executive Officer]

With this is – but at this that they have, yes, you just can't see somebody buy our interest and then how TPG sells them out and not be able to...

[Joshua Dennerlein, Bank of America]

Well, I thought maybe it would be easier if like someone could take the whole portfolio, right? Like if, instead of just like someone getting a TPG stake?

[Rick Matros, Chairman and Chief Executive Officer]

Well, it's a problem is it isn't just a matter of the whole portfolio because TPG has a management company as well. And a lot of the parties that you would expect to come to the table or a new JV weren't necessarily interested in OpCo; so just complicated.

[Joshua Dennerlein, Bank of America]

Okay. And then I wanted to find some of your comments earlier about the recovery to pre-COVID occupancy levels. What was your, sorry if I missed it, what was your expectation for kind of the trough on senior housing occupancy? Like not so much the level, but I guess timing, I'm just, I'm just trying to get a sense of like how quickly like the recovery comes back to that draw to get the kind of the pre-COVID levels that you mentioned that you thought they would pursue?

[Rick Matros, Chairman and Chief Executive Officer]

I think we're close to bottom on senior housing now, primarily because of the vaccine roll allowed. So I think going into March, we pretty much should be a bottom and maybe you just similar to what we've seen on the skill side had set. We've had some period of time where we just should have stayed flat before we started picking up. So, maybe things are relatively flat in the month of March and in April we start to see some pickups I'm obviously I'm guessing no better or worse than anybody else's, but that's kind of what it feels like right now, because we do think that the impact of the vaccine roll out senior housing excluding independent living should follow somewhat the same pattern that we're seeing on the skilled side.

[Joshua Dennerlein, Bank of America]

Okay. Okay. And do you think it's kind of a steady marks higher or do you kind of see like a big surge in the summer that the seasonal dynamic?

[Rick Matros, Chairman and Chief Executive Officer]

I think it's more of a steady march. I think skilled picks-up a little bit more quickly now skills drop more than senior housing as well. But skilled, I think picks up more quickly just because of the nature of the individuals that get admitted to skilled facilities. And so many of them are in worse shape now because of the delays. So I think for that reason, and you've got – and even though you've got a needs based model in assisted living there is some choice there still as well, depending on who the operator is and how high the acuity is. So yes, I think it's more of a steady march on senior housing.

[Joshua Dennerlein, Bank of America]

Okay. Appreciate that. Thanks guys.

[Operator]

Thank you. This concludes the question-and-answer session. I will now like to hand the call back over to Rick Matros for closing remarks.

[Rick Matros, Chairman and Chief Executive Officer]

Thank you all for joining us today. I know it went a little bit long. We'll do our best to shorten up the front end after Q1, as we start moving past this. We just want to provide as much detail as possible. I appreciate everybody hanging in there, and we're available to have some offline conversations. If there were some additional follow-up questions or modeling or anything else that you all have in your mind. So have a great day. Thanks very much.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.