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Pennant Buys First Senior Residing Actual Property Asset After Rising Occupancy, Income in 1Q

The Pennant Group (Nasdaq: PNTG) gathered momentum within the first quarter of 2022 as senior dwelling occupancy and income went…

By Staff , in Senior Living , at May 10, 2022


The Pennant Group (Nasdaq: PNTG) gathered momentum within the first quarter of 2022 as senior dwelling occupancy and income went on the upswing.

Senior dwelling providers phase income in 1Q22 registered at $33.4 million, representing a 7.7% enhance over the identical quarter final 12 months. Senior dwelling common occupancy ticked as much as 72.6% within the first quarter, a rise of fifty foundation factors over the identical interval final 12 months and 20 foundation factors over the earlier quarter.

Eagle, Idaho-based Pennant has 52 communities in 14 states, nearly all of that are within the western U.S.

The corporate’s whole income for 1Q22 was $113.9 million, a rise of $8.2 million, or 7.8%, over what the corporate noticed through the first quarter final 12 months. Internet revenue for the quarter was $1 million.

Some operators within the firm’s senior housing portfolio posted notable development within the quarter. Kenosha Senior Residing, which manages a Pennant group in Kenosha, Wisconsin, added 27% to its census within the final 12 months, leaping from 78.1% common occupancy in 1Q21 to 99.3% 1Q22. The soar in occupancy led to a rise in income of 38.9%, based on the corporate’s leaders.

Pennant’s common occupancy has continued to climb for the reason that finish of the primary quarter, with a rise of 80 foundation factors in April, Bunker advised SHN.

Pennant through the quarter additionally acquired two property: an 82-unit assisted dwelling and reminiscence care group in Twin Falls, Idaho; and a house well being company in Bozeman, Montana – a state during which Pennant already gives hospice providers.

“We’ve taken a step ahead … we really feel actually good in regards to the alternative we now have for 2022 and past,” Pennant Chief Funding Officer Derek Bunker advised Senior Housing Information.

The Twin Falls group represents the primary owned actual property asset in Pennant’s senior housing portfolio. Nonetheless, the acquisition doesn’t symbolize an total shift in technique, based on Bunker.

“For us, it’s simply one other lever we will pull,” he mentioned. “By tapping a revolver to fund this small transaction, we improved our financing price and can seize the long run appreciation as we proceed our turnaround [in senior living].”

Nonetheless, actual property acquisitions will play a task within the firm’s senior dwelling development plans as a part of a multipronged technique together with leases and actual property acquisitions.

Wanting forward, Pennant plans to additional construct up its actual property portfolio — though as a smaller firm, “we’ve received to take it one step at a time,” mentioned Bunker.

“We count on to amass actual property, however we additionally count on to work with landlords and actual property funding trusts to lease new operations,” he mentioned.

Pennant’s inventory jumped 14.4% on Tuesday, touchdown at $14.61 per share by the point monetary markets closed.

For Pennant, the newest earnings interval follows a fourth-quarter marked by plenty of challenges in its senior housing portfolio. However with the newest outcomes, President and CEO Danny Walker sees “a brilliant future” forward.

“I’m extra assured than ever, within the slate of leaders that can write that story of Pennant within the years to return,” he mentioned through the earnings name Tuesday.

Pennant confirmed good progress in “ramping up new dwelling well being and hospice businesses, disposing of underperforming senior dwelling operations, and returning to development mode” within the first quarter of this 12 months, based on Stifel Analyst Tao Qiu.

“Whereas price development was sturdy and helped partially offset price will increase, the tempo of occupancy restoration lags [the] trade,” Qiu wrote in a Could 9 be aware to buyers.
Pennant in January transitioned 5 communities to The Ensign Group (Nasdaq: ENSG), the corporate it spun off from in 2019.



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