Seniors Housing Weekly Update-- Third Quarter Earnings News
November 6, 2012
Third Quarter Earnings News
Most of the public companies have now reported their third quarter earnings, and while not too bad, we have certainly not been bowled over. The seniors housing companies have mostly been posting small occupancy gains, which was expected, with the exception of Assisted Living Concepts, which was also expected. ALC did surprise the market by stating they were looking at corporate “alternatives” to enhance shareholder value, sending its shares up 20%. On the skilled nursing front, the third quarter is somewhat meaningless for comparison purposes because the third quarter last year was the last quarter of the higher Medicare rates, so lower earnings were expected. One interesting tidbit did come out of the sector with Skilled Healthcare Group. The company disclosed that HUD has approved it for up to $460 million of funding on 78 properties, or all the properties they own. With HUD interest rates now below 3% in many cases, not only will the company save a lot of money, but it will set up a capital structure that could be enticing for a REIT, which even today can’t borrow below HUD’s rate for 30 years. Stay tuned.