Griffin-American Healthcare REIT IV Inc., a publicly registered non-traded real estate investment trust co-sponsored by American Healthcare Investors and Griffin Capital Company, recently filed its second quarter 2020 financials and provided a letter to its shareholders outlining the results.
“More than 50 percent of our medical office building tenants have been deemed ‘non-essential’ during the COVID-19 pandemic, resulting in unprecedented pressure on their revenue streams,” said Jeff Hanson, chairman and chief executive officer. “Additionally, both our senior housing and skilled nursing facilities have encountered significant downward pressure on revenues as the pandemic has disrupted the admission of new residents to our senior housing properties and dramatically reduced the number of patients that require post-acute stays in our skilled nursing facilities following the temporary halts to elective surgical procedures imposed by most states.”
The company also stated that many of its senior housing and skilled nursing facilities were experiencing significantly higher operating expenses due to the greater reliance on personal protective equipment and expanded labor costs associated with providing care for residents while contending with increased safety and sanitation protocols.
“We believe that long-term stability will return once the virus has been controlled,” Hanson added.
Despite the pressures the company cited as a result of the pandemic, Griffin-American Healthcare REIT IV reported significant year-over-year growth in a number of financial metrics.
Modified funds from operations, or MFFO, equaled $10.6 million for the second quarter of 2020, representing year-over-year growth of 29.8 percent compared to MFFO of $8.2 million during the second quarter 2019.
Funds from operations, or FFO, equaled $12.4 million for the second quarter of 2020, representing year-over-year growth of 153.8 percent compared to FFO of $4.9 million during the second quarter 2019.
Net loss during the quarter was $1.2 million compared to net loss of $5.9 million during the second quarter 2019. The company said that net loss was due largely to depreciation and amortization expense of its properties.
Net operating income, or NOI, totaled $18.2 million for the second quarter of 2020, representing an increase of approximately 20 percent over second quarter 2019 NOI of $15.2 million.
As of June 30, 2020, the company’s non-RIDEA property portfolio achieved a leased percentage of 95.5 percent and weighted average remaining lease term of 8.6 years. The company’s portfolio of senior housing — RIDEA facilities achieved a leased percentage of 79.8 percent. Portfolio leverage was 39.3 percent.
The company declared and paid daily distributions equal to $0.40 per share annualized to its stockholders of record for the second quarter 2020.
On April 2, 2020, the board determined to maintain the estimated per share net asset value of the company’s common stock at $9.54 per share as of December 31, 2019.
In the early days of the pandemic, the REIT reduced monthly distributions to investors from an annualized rate of $0.60 per share to $0.40 per share beginning with the April 2020 distribution. It also suspended its share repurchase plan except for requests resulting from the death or qualifying disability of stockholders, and postponed non-essential capital expenditures.
“Although these were difficult decisions, in hindsight, we are very proud of the decisive actions taken, as our balance sheet remains healthy with more than $50 million available on our corporate line of credit and low portfolio leverage of 39.3 percent,” Hanson said.
Griffin-American Healthcare REIT IV commenced its initial public offering in February 2016 and raised $754.1 million in investor equity prior to closing the offering in February 2019. As of the second quarter of 2020, the company’s portfolio was comprised of 89 healthcare properties (94 buildings), including an interest in a joint venture, purchased for roughly $1.1 billion.
Griffin-American Healthcare REIT IV invests in healthcare real estate assets, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities.