Seniors Housing Weekly Update -- Five Star Quality Care Reports Q2 Earnings

July 30, 2013

July 30, 2013. 60 Seconds with Steve Monroe. While cash flow and occupancy numbers were of concern, the company is divesting 11 properties with an annualized loss of $7.2 million.

Five Star Quality Care Reports Q2 Earnings

As usual, Five Star Quality Care was the first operating company to report quarterly earnings, and this time they added some additional news. Initially, we thought the results were not so good, with adjusted quarterly EBITDA declining by $1.2 million from a year ago, seniors housing occupancy dropping by 50 basis points to 85.5% from a year ago, and skilled nursing occupancy plunging by 320 basis points, dropping in each of the past four quarters. This is obviously not the direction the company wants to go in, but at least revenues increased by 9% from the year-ago quarter. As far as we are concerned, the real good news is that seven of Five Star’s skilled nursing facilities are going to be sold. These are leased from Senior Housing Properties Trust, and three small leased assisted living communities will also be sold. These 10 properties, combined with a 32-unit owned property, produced $7.2 million in annualized losses in the second quarter. It looks like investors focused on the future and not the past, as the share price didn’t drop like we expected.



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