Welltower (NYSE: WELL) and Brookdale Senior Living (NYSE: BKD) continue to report solid gains in occupancy, despite a surge in Covid-19 delta variant cases.
That is according to business updates released by the two companies on Thursday.
Welltower, the Toledo, Ohio-based health care REIT, reported spot occupancy across its senior housing operating portfolio (SHO) of 76.1% as of Sept. 3, 2021. Total segment occupancy has increased by 150 basis points to date in the third quarter of 2021, and has improved on a sequential basis throughout the quarter, from 60 basis points in July to 80 basis points in August.
Total SHO portfolio spot occupancy increased nearly 380 basis points from the pandemic low point of March 12, 2021, led by a 520 basis point improvement in Welltower’s U.S. portfolio, and a 480 basis point jump in its U.K. segment.
The spot occupancy rate is on track to exceed Welltower’s Q3 2021 target of 190 basis points, RBC Capital Markets Analyst Michael Carroll wrote in a note to investors.
Moreover, all communities are allowing visitations, in-person tours, and communal dining, and trailing two-week Covid-19 cases remain below prior peaks, despite the delta variant’s surge in the U.S. and U.K.: 94% of communities have no reported resident cases.
Breaking down the occupancy trends by country, both Welltower’s U.S. and U.K. senior housing cohorts reported strong occupancy gains throughout the third quarter. To date, Welltower’s U.S. senior housing portfolio spot occupancy improved by 180 basis points, while its UK holdings improved by 190 basis points.
The REIT’s Canadian senior housing segment, which reported occupancy decreases as recently as May, is also on the rebound, reporting a 50 basis point improvement from July to August.
Brookdale, the Brentwood, Tennessee-based senior living operator, reported a weighted average occupancy of 72.5% for August, and 73.7% at month-end. Occupancy improved 50 basis points from July to August – the sixth consecutive month of occupancy gains for the company.
The sequential occupancy increase is notable, as Brookdale President and CEO Cindy Baier said during the company’s Q3 2021 earnings call. The company saw nearly as much growth in July as in the entire second quarter of 2021.
The pace of growth slowed slightly from the gains reported in May, June, and July, but analysts remain impressed by the forward momentum.
“[This] should alleviate fear of the delta variant given the recent stock underperformance,” Stifel Analysts Tao Qiu and Stephen Manaker wrote in a note to investors. “As new cases and hospital admissions have peaked in the last two weeks, we expect BKD to continue to build occupancy in September at a similar or better rate.”
Brookdale will continue to publish monthly occupancy reports until it returns to providing financial guidance.
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