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Sabra Health Care REIT Inc (NASDAQ:SBRA)
Q1 2020 Earnings Call
May 7, 2020, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Sabra Health Care First Quarter 2020 Earnings Conference Call. And I would now like to turn the call over to Michael Costa, Executive Vice President of Finance. Please go ahead, Mr. Costa.

Michael Costa -- Executive Vice President, Finance

Thank you. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including the expected impact of the ongoing COVID-19 pandemic, our expectations regarding our tenants and operators and our expectations regarding our acquisition, disposition and investment plans. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form 10-K for the year ended December 31, 2019, and and in our Form 10-Q that was filed with the SEC yesterday as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday. We undertake no obligation to update our forward-looking statements to reflect subsequent events or circumstances and you should not assume later in the quarter that the comments we make today are still valid. In addition, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the Financials page of the Investors section of our website at www.sabrahealth.com. Our Form 10-Q, earnings release and supplement can also be accessed in the Investors section of our website.

And with that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health Care REIT.

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Thanks, Mike. On the call with me, Talya and Harold and I soon as I finish my remarks, I'll pass it over to Talya and then Harold and then we'll go to Q&A. First, let me thank you all for joining the call. And I hope you and all your families are safe and doing well during this pretty tough time. So I'd first like to start the call by honoring and recognizing the staff in all of our facilities. I had the honor few years of working in facilities as an operator. I started as an activity director at nursing home. And so I've got to see every day the kind of care that was being delivered and the other services beyond direct care that were being delivered and how the staff in the facilities, whether they are skilled nursing, assisted living, memory care, independent living, become second families to the residents and patients that reside there. And the hospitals have gotten tremendous attention and support and the staff of being cautious, which they are and all that support is well deserved. And they're also being treated with a very high level of understanding relative to this tough staffing issues and the shortage of supplies. Unfortunately, we haven't seen that from the media as it pertains to skilled nursing and senior housing. And early on, the pandemic, it was identified at the elderly were the most vulnerable population. While the elderly that are cared for in our facilities are even more vulnerable. And so we're part of an effort to get some better PR out there because our staff does deserve the same level of support and understanding that the hospital workers have gotten. All facilities have now been prioritized, supplies are still tough, staffing is tough and they deserve the same level of understanding.

And so I'll even go a step further. When you all see things out in the paper, when you see letters and [Indecipherable], if you want to take a moment, as some of us have to respond to those, we'd appreciate that very much. It's also appropriate to honor not just because of the pandemic, but yesterday with National Nurse's Day and the beginning of National Nurses' week. And next week, starting on Monday is National Skilled Care week. And we, as I'm sure all of our peers are doing, are doing things out in the field to provide support and to further honor all the workers out in the field. So with that, let me get on to the direct business at hand. So I'll talk you about the acquisition environment. The acquisition environment has come to a complete stop for all tens and purposes. I do think that for the smaller operators because it's so tough, the smaller operators who don't have good balance sheets or capital partners that can provide them the appropriate support that will create opportunities for us as we move past this pandemic, and we look to get back to growth at some point later on. We did get a number of deals done this year that came from our development pipeline, four senior housing facilities totaling $112.6 million for a blended yield of approximately 7.45%. And we don't expect to do any material acquisitions. Looking forward this year, we'll have a few deals from our direct from our acquisition I'm sorry, from our development pipeline, similar to the ones that we've closed on this year. Moving on to the Enlivant and JV option. We're not doing anything about this. We don't feel pressed to do anything.

Obviously, a very difficult time right now. And even though we saw some really nice uplift in performance in the fourth quarter, the combination of the flu season, which was much tougher than last year, and now the pandemic hitting really in March, particularly on the cost side, which we'll talk more about, there's really no reason to do it. We're not pressed to do it. The fact that the option that we have expires at the end of the year, at this point, isn't meaningful to us. So we'll take time. We'll see how everything goes. We think the space is going to recover really nicely. We'll talk more about that, but we still have to see how that plays out and how that affects valuations. So and I wouldn't expect us to do anything in the foreseeable future on the JV option and whether we do something we actually exercise the auction or come to some other arrangement really remains to be seen. Again, we don't feel pressed. Moving on to first quarter numbers and the PDPM impact. Based on reported results through February, PDPM had an annualized positive impact of 0.14 on our EBITDAR if coverage, of which 75% was rate related and 25% was cost related. Now we excluded the market basket, and we excluded the month of October, so we're talking 12 trailing three months on an annualized basis. In terms of PDPM, we're much better off as a sector, having PDPM in place, and we would still have rugs in place. Rugs incentivized operators to admit short-term rehab patients only.

Since we've had PDPM in place, we've expanded the kinds of patients that have been admitted to the facilities to include a lot of nursing conditions, more complex nursing care. And that is helping us through this one. It positioned us our portfolio to be stronger going into the pandemic because, as you all saw in our stats, our coverage improved. But if you look at our coverage on a stand-alone basis, it improved even more in the first quarter. And tenants that I know some have had concerns about like North America and Avamere, really showed improvement. Avamere's first quarter of this year was the strongest quarter that it's had since we acquired. So that's helped us and helped our operators because they are still admitting. And in terms of facilities that have positive COVID-19 patients, if there's a large outbreak, admissions have stopped. If there hasn't been a large outbreak and working in conjunction with the Department of Health Services, most of our facilities are admitting, particularly if they've got the capacity to isolate quarantine new admits when they come in for a period of time. There are very specific guidelines that our facilities are following that have been issued by the CDC and have been supported by the American Health Care Association in terms of admitting patients. So that said, the cost savings that we saw prior to the pandemic from PDPM have pretty much gone away because much of those cost savings had to do with group and concurrent therapy.

And right now, in the facility, things being done on a one-on-one basis. Not therapy is being done on a one-on-one basis. So activities are being done on one-on-one. Meals are being served one-on-one. So everything is being done on a one-on-one basis. So those cost savings will come back post the pandemic currently do not exist. For the quarter, as reported, our skilled EBITDA and coverage increased as did occupancy and skilled mix. Our senior housing triple net rent coverage and occupancy were essentially flat. Our top 10 tenants showed their best quarter yet with most of our skilled tenants showing improved coverage in all benefiting from PDPM. The McGuire group was down but still had strong coverage over two times and showed improved coverage with PDPM on a more current basis. For our SHOP portfolio, Talya will discuss that in more detail. One of the things I would point out is that it was the flu impact really went into the first quarter. And so in March, we really started seeing the cost increases as a result of the pandemic, with the occupancy hit as a result of the pandemic starting in early April. In terms of COVID-19, specifically, I first want to go over the things that we receive from our operators and how we're monitoring what's going on in the business. On a weekly basis, we received a census tracker for our top occurs operators. Every two weeks, we received expenses for all of our operators at the portfolio level. We don't ask for it at the facility level. Walking a fine line between asking our operators to provide information to us that we think is critical so that we can monitor the business, but not causing an undue burden on them, given everything else that they're dealing with.

We do get every two weeks celcus to the entire portfolio on a tenant-by-tenant basis. We also received a weekly report on all facilities with COVID-19 positive test results, and weekly, we track every county and province we have facilities in for the number of positive cases that are out there. And this has allowed us to get some sense of how things might progress in the counties in which we have operating facilities. Our asset management teams talk with our operators continuously, not just to determine status of operations, but where we can be of assistance. When we refer to the impact of COVID-19, we use February as the demarcation point. So we're looking at February month-to-date averages and then looking at March in comparison in February and April and May in comparison to February as well as March and April as well. So since month to day average for February, occupancy for SHOP was down 160 basis points through the last week of April. The first week of April had was still the largest SHOP, and it hasn't been dropping to that degree since then. Our triple-net senior housing occupancy was down 130 basis points from February average through the last week of April. So our senior housing has really held up pretty well. While there while admissions have slowed down, there's been a slowdown in the back door. And really what's happened is a number of our residents who are able to leave or who families might consider taking them out be more secure, having them in the facilities. And from a practical perspective, simply may not be able to provide the care they need outside of the facilities.

So that's mitigated some of the occupancy to a certain extent. The other thing I would note, though, is if you look at it if you look at our occupancy on a year-over-year basis, or triple net senior housing and in SHOP, it's a bigger drop and that bigger drop really reflects the impact of the flu. Sure everybody recalls first quarter of 2019, we had a pretty light flu season had virtually no impact. And this is a tough flu season, not dissimilar to what we saw a couple of years ago, although not as long in duration as what we saw at the end of 2017 and 2018. And so the reality is the facilities have to recover from the combination of the flu hit and the pandemic. But will we just measure how we're doing since the pandemic, and we look at the occupancy trends that we have access to in the senior housing industry, I think we've held up really pretty well. And Talya will be more specific as to the reasons why we believe that's the case. Our skilled nursing occupancy was down 460 basis points from the February month-to-date through the last week of April. Our skilled mix is declining at about 1/3 of the rate that our occupancy was. So skilled mix had been holding up pretty well, and then it went from declining to flat, and we now have an increase in skilled mix. And our skilled mix as of the last week of April is actually higher, just a little bit than it was before the pandemic hit. And so that's helped to mitigate some of the problems as well. The fact that skilled mix has been so healthy. And the reason that skilled mix has been healthy as one, going back to the comment I made earlier about PDPM, we've got a much larger population where we're focused on merchant needs.

Those individuals also have a lot of like of stay. So that's helped. And with the suspension of the three-day, some hospital stay requirement, we're now able to skill in place. So specifically, if someone's conditioned worsed before, and they were on Medicaid, they would have to be discharged to the hospital where they get additional care regardless of whether the care could be treated at the nursing home, and then they'd be sent back to the facility where they would qualify for Medicare. So these folks, even when they're on Medicaid in the facilities, they have their Medicare benefit they just had to go through this discharge and then back to the facility, which is one of the reasons that the industry has always tried to lobby for a permanent retraction of that rule because it really doesn't make a whole lot of sense and it enhances transfer trauma and things like that. So now that is in place, now patients can be skilled in place. So if you have a Medicaid patient, whose acuity has increased for whatever reason, it doesn't even necessarily have to be COVID-19 related, although it may be certainly, then they can be put on Medicare without being discharged back to the hospital for a three-day qualifying stay. And we've seen some important changes in terms of metrics from that perspective. And there are some more extreme examples where there have been bigger drop in occupancies where there's been a big breakout of COVID, but they've been able to care for most of those folks in place and able to convert them from Medicaid to Medicare while they're there. So that's been a positive. And the other factor that's going to help going forward on skilled mix is effective May 1.

Sequestration was suspended. And so we've got a 2% increase in the Medicare rate as well. So all of that does help. The occupancy drop is almost entirely due to the cessation of elective surgeries. When we take the facilities that are positive COVID, exclude them from our census, you see almost no difference because the drop from elective surgeries is such a huge proportion. And given the numbers of buildings that we have, that the impact from COVID, particularly since a lot of the facilities still admit this doesn't really materially impact the overall occupancy at least to this point. Now let me move on to mitigation from the various relief packages that are out there. We're also tracking what each of our operators are accessing from a variety of programs that are out there. And so I'm just going to give aggregate numbers right now. I think some of you may have seen this in our filings, but we have a total of $320 million that our operators have access broken down as follows: $100 million from public healthcare and social emergency fund providers. So PHSSEF, $60 million from that $100 million fund. From sequestration suspension, $10 million. From FMAP, $20 million, and we hope that, that will improve. From the advanced Medicare payment program, $150 million. And the comment I would make there is a number of our operators have chosen not to access that because it has to be paid back, number one, in relatively short order, and secondly, some of the lenders are asking providers to pay down their line when they access that money.

There are some lenders out there who are being flexible on that, and we greatly appreciate flexibility from everybody during the pandemic, but that's limited the number of operators that we have that have access the advanced Medicare payment program. On the employer payroll tax delay, that's 6.2%, there's $50 million there. There's $30 million on PPP. And again, if the way with the three-day hospital stay does provide a benefit, then you really can't quantify what that benefit is. We're hoping for more help, and we are cautiously optimistic that there will be another package that will be specifically to help on the Medicaid side, but it's not done yet. So we don't think this is all there will be. And if this goes on longer, we'll all have to wait and see what else there would be out there. We currently have 80 facilities with positive COVID-19 patients or residents in 22 of our 70 tenants. Of those 22 tenants, two of those tenants are senior housing in Avalere and Holiday. We're seeing different patterns in the asset classes. And as you would expect, in assisted living and even more so independent living, the population is healthy. You've got less employees coming into exposed folks. So that does help somewhat, but we're still experiencing positive cases. In the skilled nursing facilities, there really hasn't been a pattern. Either we've had facilities that have had large breakouts. And we've had facilities that have had a few patients and not much beyond that.

And when a facility has someone that test positive, everybody gets tested in the facility, so but there really hasn't been a pattern there. So some of that may be the efficacy of the testing. And in terms of the 80 facilities, that doesn't mean that we don't have more positive COVID patients in other facilities. But as everybody knows, there continues to be a problem with both the adequacy of the testing and the quantity quantity of the testing. So we are cautiously optimistic, however, because our census decline is slowing in skilled nursing. As I said, our skilled mix held up better than overall occupancy. And now and it's now increasing. A counties with Sopra facilities are now showing as many decreases in cases as increases in cases. Following protocols regardless of the lack of testing has had a positive impact. So in other words, because of the lack of testing and the reliability, in some cases of testing, where you've got a FDA-approved tests out there that still have high false negatives and false positives. But every patient and resident is being treated according to CDC guidelines as if they have COVID-19. So while we know we have more positive cases than we're aware of, we also know that we've had untold numbers of patients and residents that have had that have been treated in place and recovered from it. It has not been ticking up where they need ventilator care, for example, needed to be transferred to a hospital. So we think that's really helped quite a bit.

And live it, which, for example, which has done a lot of testing, it had a 1% positive rate. So and again, that's because of the protocols that they've been following. And a lot of this does come down to the operator, not just the markets they're in and what's occurring and test availability. My initial concern coming into this was on the senior housing side because they I didn't see they didn't have the same level of experience dealing with infections and things like that, that skilled nursing had. And certainly, more so on the independent living side, we it's not a healthcare setting. It's a really memory care has become a needs-based business, obviously. So it's much different than it was during the Great recession. But when you have a provider like Holiday, who regardless of the fact that there now have healthcare workers in place, institutes all the guidelines immediately with all the restrictions in place on visitors and such. It had a very positive impact. So that's been really great to see from an operator perspective that we have operators that regardless of their experience or asset class. Everybody has jumped on it, which sort of same figure. And one of the things that we do, I mentioned our asset managers, is we're trying to provide as much assistance as possible. And that goes from sharing best practices. And so we share with our operators what other operators are doing.

We source supplies in terms of all the relief programs we've disseminated as much information as we can to help them get access and to make referrals on how they can get access if any of them were struggling with it. So we'd like to think all that has helped in terms of the value that we're trying to bring to all of our tenants. All that said, availability of supplies continues to be an issue. Masks are much more available than they were. Gowns are a huge problem. And so there's nothing on the horizon that shows that there'll be some relief there. But at some point, there will be. But that's the biggest problem right now. In terms of costs going forward, and I know that that's on everybody's mind. I think for skilled nursing, a lot of these additional costs will go away. And I think the skilled nursing as well as senior housing, there'll definitely be an uptick in inventory. Skilled nursing facilities typically have a lot of stock, now the stock has to change a little bit now because this is different. The senior housing operators normally don't carry the same kind of inventory for the obvious reason that skilled nursing does. But I think they'll have those on hand.

So they'll be more prepared for something like this happens again. I do think from an infection control perspective, there'll be some increase in supplies on a go-forward basis, that's more material for senior housing on a relative basis just because the cost of labor is the biggest driver in skilled nursing. So on a relative basis, that additional cost, I don't think we'll have that much of an impact. And I think it will be reasonable at the senior housing level. Again, I think it's going to be more a function of building up inventory. So you have what you need in case something should happen on a go-forward basis. And then finally, before I turn it over to Talya, let me comment just briefly on our specialty Hospital portfolio, which is primarily behavioral facilities, but we also have some other facilities and children's, hospitals and others as well. That's 10% of our NOI, and that's been remarkably stable through this period of time so far. And no sense at this point that it's going to be any material impact relative to that 10% of our NOI in those facilities.

And so with that, I will turn the call over to Talya.

Talya Nevo-Hacohen -- Executive Vice President, Chief Investment Officer and Treasurer

Thank you, Rick. In my remarks, I'll provide you with the first quarter operating results of our managed portfolio. The first quarter mostly reflects the pre pandemic environment and sets the stage for the broader impact of the spread of the coronavirus that has followed. I will also provide you with insights into April's results, which will include real-time data on senior housing operations amid the pandemic. In the first quarter of 2020, approximately 17% of Sabra's annualized cash net operating income was generated by our managed senior housing portfolio, approximately 52% of that relates to communities that are managed by Enlivant and 33% relates to our Holiday-managed communities. The balance includes our Canadian portfolio and five assisted living and memory care communities in the U.S. On a same-store year-over-year basis, the managed portfolio, which excludes the holiday portfolio and two recent acquisitions, showed favorable top line results in the first quarter compared with the first quarter of 2019. Revenue increased by 2.1%. Revenue per occupied room, REVPOR, excluding the nonstabilized assets was up 3.8% despite occupancy declining from 85.1% to 83%. However, cash net operating income decreased by 10.1% from $14.9 to $13.4 million, in part related to the impact of COVID-19 preparedness costs incurred in March by our operators.

Occupancy remained fairly consistent during the quarter, but late in the quarter, operators began to incur unbudgeted costs for PPE and changes to the delivery of resident services which together had a negative impact on cash, net operating income and margin. I want to digress briefly and describe what is transpired for operators in senior housing over the last 45 to 60 days and provide context for that within our managed portfolio. In the face of the coronavirus, operators have had to retool nearly everything that they do and get it done quickly and effectively. Virtual tours have to be created since in person tours were not allowed. Rules had to be developed to ensure that incoming residents are infection free. Clinical assessments had to be done virtually. Dining had to be converted to inter-room only, meaning that all meals had to be prepared, packaged and delivered to each resident three times a day at a minimum. Group activities had to be replaced with activities that could be done with residents kept socially distant. Staff had to be screened before every shift and sometimes after, including logging their temperatures. Sufficient masks, gloves, gowns and even face fields had to be stopped to ensure appropriate protection. Enlivant is primarily a national assisted living memory care operator with a portfolio of smaller communities in secondary and tertiary locations with the middle market price point.

Staff in each community includes healthcare professionals who support the day-to-day medical needs of residents. Holiday retirement is primarily an independent living operator, also with a national platform. The operating model centers on providing a social environment, comfort and activities. Staff in each community is limited to residential support such housekeeping dining and activities, and there are no healthcare professionals on staff. And our portfolio managed by Sienna is similar to that of holiday, but located in Canada. And as a company, Sienna Senior living operates nursing homes as well as retirement homes in Canada. So there are significant healthcare resources within the organization, even though it is not a service offered within our communities. Regardless of whether healthcare services were part of their offering to residents, operators are now on the front line of protecting residents from a very real healthcare threat, and they assessed planned and implemented a change immediately. The Enlivant joint venture portfolio, 168 properties, of which Sabra owns 49%, showed top line improvement in the first quarter of 2020 on a same-store year-over-year basis, but was impacted by costs related to preparing for the pandemic late in the quarter. Average occupancy for the quarter was 81.5%, 1.5% lower on a stabilized same-store year-over-year basis coming off with the impact of the flu, which affected occupancy beginning in November and into January. REVPOR was $4,340, 2.7% higher on a stabilized same-store year-over-year basis.

Taken together, revenue was 1% higher on a same-store year-over-year basis. However, cash net operating income margin was 22.1%, 4.2% below the prior year's results on a same-store basis, and this includes $482,000 of Sabra's share of the COVID-19 related costs, primarily medical supplies, raw foods, dining supplies as the community stocked up prepared for and implemented infection control protocols and in-room dining, this additional cost represents 1.3 points of margin. During the month of April, average occupied fewer move-ins at the start of April, although somewhat offset by fewer move-outs than expected. Rates have held and collections have been normal. Enlivant estimates that its Sabra's share of continued expenditures on PPE, labor and employee programs will be about $425,000 per month. In total, 10 of our Enlivant JV properties have had a resident test positive for COVID-19. As of a couple of days ago, only four communities had a resident with a positive test. In the second half of April, Enlivant began to see increases an increase in leads and virtual tours, potential residents have delayed move-ins if they could in order to wait it out, which suggests that there is pent-up demand. Enlivant's ability to manage the safety of its residents and staff through this period caused the backlog of delayed move-ins makes us cautiously optimistic about occupancy levels. Sabra's wholly owned Enlivant portfolio of 11 communities continued to experience strong rate growth. However, as described in last quarter's earnings call, occupancy and margin that had been affected by the early start of the flu season in the fourth quarter did not have a chance to rebound.

First quarter occupancy was 86.1%, a 3.4% decline compared to the prior quarter, declining from 86.9% in January to 85.5% in March. The recovery from the regular flu was overwhelmed by the impact of the pandemic. REVPOR in the first quarter was $5,799, in line with the prior quarter and 8.1% higher than the prior year. Revenue was 2.5% higher on a year-over-year basis, but 3.9% lower on a quarter-over-quarter basis. However, cash NOI margin was 26.2%, 3.7% below the prior quarter's results. The decline in cash net operating income and margin reflects reduced revenue due to the change in occupancy described above and $80,000 of costs related to COVID-19. During the month of April, occupancy averaged 83.9%, 210 basis points below February's average occupancy. The occupancy decline was mostly in the first half of April as fewer new residents moved in, and this was stabilized by fewer move-outs, resulting in flat occupancy in the second half of the month. Similarly, rates have held steady and collections have been fine. Enlivant estimates the Sabra's share of continued expenditures on PPE, labor and employee programs will be about $100,000 per month in this portfolio. In total, four of our wholly owned Enlivant communities have had a resident test positive for COVID-19. As of a couple of days ago, three communities had a resident with a positive test. We transitioned our Holiday communities from our net lease to managed portfolio at the start of the second quarter of 2019, so we do not yet have year-over-year same-store results to report.

In addition, we transitioned our independent living community in Franklin Ruth Michigan to holiday in the fourth quarter of 2019. The portfolio occupancy, excluding the transitioned community, was 87.2% in the quarter, 0.6% lower than the prior quarter. REVPOR on a same-store basis, excluding the one transition community, was $2,496, slightly higher than $2,486 in the prior quarter. Cash net operating income, including the recently transitioned community, was in line with the prior quarter with a cash NOI margin of 35.2%. A $139,000 of COVID-19 related costs were incurred in late March. During the month of April, occupancy averaged 86.4%, excluding the one transition community, only 40 basis points below February. Rates have held, and there have been no issues with collections. Holiday continues to apply a 4.5% rent increase on lease anniversary dates, and there has been little pushback because of resident's positive experience. COVID-19-related costs for April are expected to total $278,000. So far, only two of our Holiday communities have had a resident test positive for COVID-19. The holiday team has done extraordinary work managing all aspects of the pandemic, particularly because their operating model is not geared to or staffed to handle healthcare adders. In order to further support its residents, Holiday rolled out a free telehealth program, giving residents access to medical providers while protecting them from possible exposure to virus. Sienna Senior Living manages eight retirement homes in Ontario and British Columbia for Sabra.

In the first quarter of 2020, the eight properties managed by Sabra delivered 85.3% occupancy, 3% than the prior quarter and 4.9% lower on a year-over-year basis. REVPOR was $2,227, which was flat to the prior quarter and 2% higher on a year-over-year basis. First quarter NOI was also flat to the prior quarter, but down 3.7% on a year-over-year basis, reflecting the revenue decline. This includes about $20,000 in COVID-19-related costs. Cash NOI margin was 38.9% in the quarter, a 1.1% increase over the prior quarter and 0.5% lower on a year-over-year basis. During the month of April, portfolio occupancy averaged 84%, only 20 basis points below February's average and ended the month at 83.9%. Occupancy increased in several of the properties, but was offset by a decrease in occupancy in two homes in Ontario, both impacted by new competition in the market. To date, there have been no confirmed cases of COVID-19 in our Sienna portfolio. The number of infections is very low in the interior of British Columbia, where four of our retirement homes are located, and there are fewer than 19,000 cases in the entire province of Ontario. Siena has seen some potential residence defer moving in until the pandemic eases, yet many see retirement home living as a safer option at a time when isolation and access to food, services and community threatened so many older adults.

Independent living residents in our Holiday and Sienna portfolios maybe the same age as the residents in assisted living and memory care, but they are healthier and require less care. Lower care means lower care needs means less staff, which means fewer interactions with people coming in from outside the community. We believe that this has helped to support agency during April. There are two themes that run through the results that we have discussed. Occupancy pressure during April and costs incurred to ensure strict adherence to CDC protocols. The occupancy story is simple, more move-outs than move-ins. In April, move-ins were down about 40% year-over-year, while move-outs continued, but at a slower pace than usual. In particular, residents were reluctant to move to higher levels of care, and others didn't have access to the support they needed during the pandemic outside the community. As infection control protocols were implemented and visitors were restricted sales strategies had to be modified and new residents moving in were often required to have a COVID negative test and spend two weeks in South isolation in their new apartment, not very appealing unless the move was truly necessary. Our operators discovered that virtual tourist turned out to be a strong sales tool as it allowed greater access to potential customers and decision makers. All of our operators have now ramped up their digital marketing to generate leads and are seeing strong responses. They believe there is pent-up demand for senior housing. At the same time, rates are holding and collections are normal.

On the cost side, all of our operators have worked to procure and stop materials necessary to continue to deliver services to their residents, such as meals in their room. Our operators are faced with additional lab costs because of the need for additional cleaning and meal packaging and delivery and additional labor to cover for staff impacted by the virus. Our managed community is located mostly in secondary and tertiary markets and targeting a middle market price point have so far shown themselves to be more shielded from the pandemic and its impact. The spread of the coronavirus has been worse in densely populated areas with 70% of cases in primary markets and far fewer cases in secondary and tertiary markets measured both on an absolute and per capita basis. The labor pool is more stable and loyal than competitive urban markets. And in many of these locations, the senior community is an important employer. These communities are part of the fabric of the towns where they are located, they are the place where older adults can live out their years in a place they know with the support they need. During a national crisis, these communities have continued to care for their residents and their workforce, be dependable employers and providers of jobs in a time of uncertainty and job and security and has gendered goodwill that we believe will carry forward.

With that, I will turn over the call to Harold Andrews, Sabra's Chief Financial Officer.

Harold Andrews, Jr. -- Executive Vice President, Chief Financial Officer and Secretary

Thank you, Tom, and thanks, everybody, for joining call. I will begin my comments with an overview of the quarterly results and finish with some discussion around the financial implications of the COVID-19 pandemic going forward. First, I would like to note that the COVID-19 began in March, which, for our financial performance only impacted our managed portfolio. The impact includes cost increases and minimal loss revenues through lower occupancy. The cost increases included certain identified direct costs totaling $0.3 million in our wholly owned managed portfolio and $0.5 million in our share of the joint venture assets operated by Enlivant. These are costs that were directly related to COVID-19, such as incremental personal protection equipment, incentive pay, incremental staffing and incremental operational and cleaning supplies. We have normalized this $0.8 million cost impact out of our FFO and AFFO for the quarter, and we made no normalizing adjustments to revenues. And now for a few comments about the financial performance for the quarter. For the three months ended March 31, 2020, we recorded revenues and NOI of $149.3 million and $125.6 million, respectively, as compared to $155.8 million and $134.8 million for the fourth quarter of 2019, representing declines of $6.5 million and $9.2 million, respectively.

The declines in revenue and NOI were primarily due to the write-off of straight-line rent receivables and above-market lease intangibles totaling $6.1 million associated with four operators moved to cash basis accounting. These operators represent 3.1% of our total annualized cash NOI. FFO for the quarter was $86.9 million, and on a normalized basis, was $92.1 million or $0.45 per share. FFO was normalized primarily to exclude $5.8 million of the write-off of straight-line rent receivables and above-market lease intangibles mentioned a moment ago and $1.9 million settlement received from the legacy CCP legal case and the $0.8 million of incremental costs associated with COVID-19 also mentioned a moment ago. This compares to normalized FFO of $95.6 million or $0.48 per share in the fourth quarter of 2019. AFFO, which excludes from FFO merger and acquisition costs and certain noncash revenues and expenses, was $91.8 million, and on a normalized basis was $90.5 million or $0.44 per share. AFFO was normalized primarily to exclude the same $1.9 million settlement received from a legacy CCP legal case and $0.8 million of pandemic-related expenses that were normalized out of AFFO. This compares to our normalized AFFO of $93.2 million or $0.47 per share for the fourth quarter 2019.

Approximately 1/2 of this $0.03 per share decline in normalized FFO and normalized AFFO is attributed to the incremental weighted average shares outstanding in the first quarter of 2020 over the fourth quarter of 2019 due to our deleveraging activities. While another primary contributor was higher compensation expense, including $0.7 million of cash compensation and $1.4 million of stock-based compensation, which impacted FFO only. Stock-based compensation was in line with expectations during the quarter, although higher than the fourth quarter of 2019, as that quarter included an accrual true-up to reflect lower payouts than accrued for in earlier quarters. For the quarter, we recorded net income attributable to common stockholders of $35.2 million or $0.17 per share. G&A costs for the quarter totaled $8.8 million, up $2.8 million from the fourth quarter of 2019, which were low due to the annual equity award Rick mentioned a moment ago. First quarter 2020 G&A costs included $2.4 million of stock-based compensation expense. Recurring cash G&A costs of $6.2 million or 4.9% of NOI for the quarter and in line with our expectations. Our interest expense for the quarter totaled $25.7 million compared to $27.4 million in the fourth quarter of 2019. The quarter-over-quarter reduction was primarily driven by a combination of debt paydowns in the fourth quarter of 2019 associated with our deleveraging activities and lower overall borrowing costs.

Our cost of permanent debt declined 12 basis points from the end of 2019 to the end of this quarter to 3.67%, while our revolver borrowing cost declined 82 basis points from the end of 2019 and to the end of the quarter to 2.09%.Interest expense includes $2.2 million of noncash interest for each of the first quarter of 2020 and the fourth quarter of 2019. Other income of $2.3 million for the quarter includes the $1.9 million legal settlement previously mentioned. And the loss from our unconsolidated joint venture includes a $1.7 million loss on the sale of two assets from that portfolio. During the quarter, we completed the acquisition of two senior housing triple net communities and one senior housing managed community from our property proprietary development pipeline for an aggregate purchase price of $83.4 million with a weighted average cash yield of 7.51%. We also completed the sale of three skilled nursing transitional care facilities for an aggregate sales proceeds of $6.8 million, resulting in a $0.2 million loss on sale. During the quarter, we've recorded no revenues from these sold facilities. As of March 31, 2020, the company determined that two skilled nursing transitional care facilities with an aggregate net book value of $11.3 million and a net secured debt balance of $13.8 million met the criteria to be classified as assets, liabilities held for sale.

These balances are included in accounts receivable, prepaid expenses and other assets net and accounts payable and accrued liabilities, respectively. Subsequent to March 31, 2020, we completed the sale of the facilities toward aggregate gross sales price of $14.4 million, inclusive of the assumption by the buyer of an aggregate $14.2 million of HUD-insured mortgage debt encumbering the facilities. During the quarter, we issued 0.2 million shares of common stock under the ATM program at an average price of $20.33, generating $3.9 million of gross proceeds before $58,000 of commissions. While we expected to issue additional equity during the quarter under the ATM program to further lower our debt and positively impact our leverage as we completed the acquisitions previously mentioned, the sharp decline in the equity markets eliminated that opportunity. However, we are very pleased to have maintained our leverage below our target of 5.5 times, including our share of the Enlivant joint venture debt, which stood at 5.47 times and 4.97 times, excluding the joint venture debt. We were in compliance with all of our debt covenants as of March 31, 2020, and continue to have strong credit metrics as follows: Interest coverage 5.28 times; fixed charge coverage, 5.07 times; total debt to asset value, 36%; unencumbered asset value to unsecured debt, 269%; and secured debt to asset value of 1%.On May 6, 2020, the company's Board of Directors declared a quarterly cash dividend of $0.30 per share.

The dividend will be paid on May 29 to common stockholders of record as of May 18. The dividend was reduced this quarter in response to the uncertainty around the impact from COVID-19. We set the dividend this quarter at a level we feel can be sustained in the future even if our operations are disrupted to a level in excess of what we believe is likely to occur. We will continue to evaluate the dividend payout as we get through the pandemic. Shifting gears to the financial implications of the COVID-19 pandemic, I would like to start by noting that we have formally withdrawn our 2020 earnings guidance due to the significant amount of uncertainty around the impact it may have on our triple-net rental revenues and our managed portfolio performance over the balance of 2020. We can, however, provide some insights into the strength of our balance sheet and our fortified liquidity position that will provide a solid foundation as we see our way through this difficult time. As of March 31, 2020, we had over $950 million in liquidity. Our principal payment obligations through the end of 2021 totaled only $19.6 million, and we have significant cushion in our debt covenants. We have suspended all significant investment activity, thereby eliminating any associated material liquidity requirements. We anticipate continuing in this manner until our cost of capital provides a clear path for pursuing accretive investment opportunities that can be matched funded with debt and equity to maintain our leverage targets.

Reduction of our quarterly dividend from $0.45 per share to $0.30 per share will preserve an incremental amount of liquidity equal to approximately $30 million per quarter. Given these factors, we feel confident in our ability to sustain a disruption of cash flows from operations for an extended period of time, even at levels well in excess of what we believe is likely to occur. To date, we have not seen a disruption in the monthly payment of rents associated with the COVID-19 pandemic. For the month of April, we saw rent paid in the normal course, collecting 100% of our forecasted rents. And through the first few businesses of May, we have seen collections slightly above our normal level of collections at this point in the month. We have not used any deposits or other credit enhancements to fund rent payments due to COVID-19 disruption. We do expect that relief will be warranted for some tenants, and all such requests will be evaluated on a case-by-case basis, taking into consideration the following: the operators first avail themselves through government relief programs available and practical access to the operator's business plan and approach to managing through the operational and financial challenges demonstrates a strong commitment quality care and fair and reasonable approach to addressing all of its financial obligations. Rent relief is provided, it will be on the basis of helping the operator navigate through the challenges presented by COVID-19.

This means providing temporary relief to the level that the cash flows can support and not a permanent reduction that provides a level of rent coverage one would expect to provide under a long-term lease renegotiation. Finally, we expect rental to take the form of a rent deferral and not a permanent forgiveness. Level of stress and other factors will dictate the time frame we will consider for repayment and any deferrals and each will be determined on a case-by-case basis. A couple of comments on our analysis of the available government assistance for our operators. In our supplemental on Page 70 provide a COVID-19 mitigation summary, which identifies the estimated funds available to our tenants from these various programs. three of the programs can have a direct positive impact on EBITDAR, two can provide short to medium-term cash flow relief and one has the potential to be a permanent cash injection through the forgiveness of an SBA loan, if certain criteria are met. While the total amount of approximately $320 million is informative when evaluating potential mitigation at a macro level, it must be noted that certain limitations on the benefit may also come into play. For instance, estimated $150 million of liquidity available to our operators who may benefit from the accelerated and advanced Medicare payment or AANP plan may be limited in its desired effect on liquidity as some working capital lenders may require any funds received under this program to be fully reserved.

In addition, the amounts available for relief must be evaluated on an operator by operator basis, and therefore, broad-based conclusions about mitigation across the portfolio cannot be made based on these estimates. Certain of these mitigation funds will be provided to operators who would not have otherwise required rent relief, while some operators may need rent relief in addition to obtain the funds available to them. Finally, relative to our debt ratings, we have been and we continue to be in close contact with the three rating agencies during this pandemic. We believe we have good visibility into the drivers of our ratings and currently have cushion in those financial drivers. Notably, we believe our net debt to adjusted EBITDA level for each of the rating agencies drivers have cushion that will drive its roots to sustain a sizable disruption in our EBITDA before tripping any downgrade drivers. Furthermore, we understand that the health of the operators in our portfolio is a key rating driver for the agencies, and we will continue to provide them with information they request to make informed assessments that may impact our ratings. And while we cannot predict at this time the final impact on EBITDA from the financial scripts created by COVID-19, we do believe that excluding any set stress, our net debt to adjusted EBITDA can be maintained through 2020 in the area of 5.50 times without accessing the equity and debt markets to further reduce debt.

And with that, I will turn the call back over to Rick Matros.

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Thanks, Harold. Why don't we go to Q&A now.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from Nick Yulico with Scotiabank.

Josh -- Scotiabank -- Analyst

Hi, this is Josh [Phonetic] for Nick. So I was hoping to dig into the $320 million of state and federal assistance available for your operators. I know you said not all operators plan to use the accelerated and advanced Medicare payment program. I mean, could you give some sort of estimate on like the average amount of funds that each skilled nursing facility could receive like stripping out the funds that they don't plan to use? And then secondly, how many months do you think that relief could buy operators before they would otherwise need to request rent deferrals?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Yes. So I know and I still wanted to note someone made an attempt to do that, but that doesn't make any sense to us because every operator not every operator is accessing all the programs. So it's affecting every operator differently, depending on what's happening with their operations, depending on how COVID-19 has affected the business. So if you just look at averages, I don't think there's anything about that. That's helpful. Looking at that and trying to say, OK, is this going to help there for two months, depending on how much occupancy drops or whatever. I just don't think it works that way because the decisions the operators made were specific to their own needs. And that's going to determine what they accessed or attempted to access and how much time that will give them. So the only thing I would really say is, if you had told me two months ago that we'd be sitting here today, not having granted any rent relief, I would be surprised and particularly on the senior housing side because the senior housing operates don't have these programs to access. And to my sort of opening comments about how our operators haven't been prioritized within the healthcare system, even less so for senior housing than for skilled nursing, right? So and I think in our case, because the pandemic for all the reasons that Talya talked about had an impacted our senior housing portfolio, triple net or SHOP, as we've seen in some other places. It enabled to continue to move forward without any additional assistance. So I just don't buy the metric. I mean, I get why people try to do it, just don't buy it.

Josh -- Scotiabank -- Analyst

Okay. That's helpful. And then just looking at the skilled nursing occupancy, it looks like it declined 460 basis points since February from just all the wholesome elective surgeries. Have you got any indication of how quickly elective surgeries can bounce back in some of those states that have started to relax restrictions?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Yes. So it's a little bit hard to predict because well, one thing I'd say, just generally speaking, there will be a lot of pent-up demand. So when it starts, I think the recovery will be much more much quicker than, say, look, you bought a facility today that had a 20% vacancy rate, there's probably a lot of reasons for that. It's going to take you a long time to rebuild that. This is different. There's going to be a lot of pent-up demand. The reason it's hard to predict because there are a number of states that have said they're strong elective electric surgeries. But if you actually drill down, you're starting electric surgeries for certain conditions. It's not necessarily blanket in all these places. So I think what we're going to see is it's going to be a very market-specific issue where we start seeing things ramp up. I will tell you that all of our operators have been in continual communication with hospitals that are normally their primary referral sources. And so they know specifically when they're going to be ready to go and who they can take. Now there may be some facilities that maybe had a big COVID code breakdown, and they're just not ready to do that yet. But for the majority of the facilities, they will be ready. And I think in some of the geographic areas that really got hit.

So Washington state was kind of ground zero, and we had a couple of North American and Avenir buildings that got with pretty decent-sized breakouts. But since then, it didn't continue and it didn't spread to the other facilities that we have in the state. So there's been a lot of recovery earlier on, when we have larger breakouts, that's going to enable these operators to start admitting again. And some people have asked why would you admit at all? Well, one, the hospitals and the physician groups need our operators to admit. They have people that just have to be taken care of. And so that's helped somewhat, and that's where you see some of the benefits that we're seeing in our numbers with the skilled mix. So it's impossible to predict, but I would say when it starts, it be a lot of pent-up demand. The only the other point I'd make, and I think it's pent-up demand applies to assisted living in memory care, not just skilled nursing, is to the extent that people needed surgeries and it's been deferred, given the age of the population, I still believe that we're going to be admitting patients that are sicker than they aware would have been.

Because by delaying surgeries, it can exacerbate other issues they have as well. So we may wind up getting patients that are sicker than if we had been able to admit them in a timely manner because it wasn't a cessation at surgeries. During the Great Recession, we saw a situation we saw a pullback of electric surgeries for very different reasons. Everybody was it was a financial situation. People couldn't pay out of pocket. And we saw less of a delay with our age group and with the younger age group with about 45 to 60 days. But this is this may we've already passed 60 days really. So I do think we may see some sicker patients. I know that's a long answer to your question without specifically answering it, but it's that we got right now.

Josh -- Scotiabank -- Analyst

Thank you.

Operator

Our Next question is from Nick Joseph with Citi.

Michael Griffin -- Citi -- Analyst

Hey, this is Michael Griffin on for Nick. Just circling back to those government assistance programs for your operators. Do you have a sense of the time frame of when these loans have to be paid back on average and how will your operators come up with the capital sources to pay them back?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Well, it's different for every program, right? It's not all payback. So the sequestration suspension that will get lifted next year, it looks like. SNF isn't a payback. The imported tax delay, they're going to retain their employees. And the same thing and with PPP, those aren't necessarily paybacks, but the pay back is with the advanced Medicare payment program. And that's why very few of our operators have accessed it. They work with their lenders to see if they actually could use it and not use all it to pay down the line. And so the operators that have avail themselves of that one piece did so because there's enough else going on in there companies if they have a very high level of confidence that over the next year, which is when they'll have to pay it back, they'll be able to pay it back. And in all likelihood, what will happen is Medicare may just take pieces of it over a period of time. So there'll be some negotiations. So it's really just the one piece. And most of our operators haven't availed themselves of that piece. It's just for a decent-sized operator getting three months of Medicare in advance of the age number. So that $150 million looks larger than it is in terms of the number of operators that's really impacting. Does that make sense?

Michael Griffin -- Citi -- Analyst

Yes. I appreciate that. And then just...

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

And just to add to that real quick, you can look on slide seven, there's a lot of details on the description of how each one of these work. So as you have more questions, you can look there and certainly give me a call if you still have questions about that.

Michael Griffin -- Citi -- Analyst

Okay. And just one more for me. You've obviously done a good job lowering leverage recently. But should you see good external growth opportunities? Are you comfortable increasing your leverage in the near term?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Harold, do you want to take that?

Harold Andrews, Jr. -- Executive Vice President, Chief Financial Officer and Secretary

Yes. As I said in my opening remarks, we're actually not prepared to increase leverage beyond the levels that we've identified. There's going to be certainly, if there's some disruption, and we see some rent relief that we'll have to provide, there's a chance that our EBITDA numbers will go down, which would naturally increase our leverage to some extent. So we had to be very mindful of that. I would just add that we're extremely focused on maintaining our credit rating. And certainly, given what's going on in this environment, there is some risk that the rating agencies could look across the portfolio, or I should say, look across the whole space think about downgrading. So we're just being very mindful of that. So as I said in my remarks, we're really going to be very cautious in our acquisition activity until we can continue to fund it, matching funds with both debt and equity. So we maintain leverage at that below that level that we've identified as our target.

Michael Griffin -- Citi -- Analyst

Okay. That's it for me.

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Yes. The only thing I would add to that, I think from an asset class perspective, it looks like it would be quite some time other than our development pipeline that we would be doing deals on the senior housing side. But in terms of skilled nursing and behavioral and addiction, those yields that we can see ourselves doing and work within our weighted average cost of capital.

Michael Griffin -- Citi -- Analyst

Got it, thanks.

Operator

Our next question is from Steven Valiquette with Barclays.

Steven Valiquette -- Barclays -- Analyst

Hey, thanks, good morning and afternoon everybody, hope everyone staying safe. A couple of questions. First of all, I do want to circle back quickly and I comment from a minute ago, I am a little surprised around the comment that the SNF operators would not be accessing the advanced payment program. As really every company is just going to be paying that back out of their future Medicare receivables and future revenue that they would have received from CMS down the road. So it's really not even alone. It's just getting revenue early with really no penalty for doing so. The hospital we spoken to said they're tapping that whether they needed to or not. So I am surprised that some of the SNFs are not having that. It's kind of more of a comment than a question, but if you want to comment on that. And then the other question I really wanted to ask about was has to do with the accounting for your operators when they're reporting their EBITDAR back to you, some companies are excluding COVID-19 operating expenses, some are not. It seems like the stimulus federal grants, in my mind, probably should be counted as EBITDAR. But again, these advanced payments probably not counted as EBITDAR. But just curious how you're thinking about any sort of standards for reporting this back to you from your operators quarterly when you're talking about EBITDAR coverage ratios down the road.

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

I'll comment on the first and then kick it over to Harold for the second. So on the first, I'd say a couple of things. One, determining what they actually need. And if they're getting enough assistance from these other programs, then they don't have to access the advanced Medicare program, we're not doing it. Secondly, depending on who their lender is, if that lender is requiring a complete paydown on the line, which they do, for every dollar they get, why would you do that, right? So that's really right. They're just looking at individually. If they don't need to put themselves in that situation, if they want to if they try to be a little bit more cautious on when Medicare occupancy is going to come back or build up to a level that they think is more normalized, they just don't want to be in a position where they're having to sort of pay that back or have those deducts later on if the other assistance programs that they've accessed seem to be meeting their needs, which is the case.

Steven Valiquette -- Barclays -- Analyst

Okay. One other real quick one, if I missed this. The the $0.8 million of COVID operating expenses that you stripped out of FFO for your managed properties, any sense for how much larger that number might be in 2Q and the remainder of 2020, if you're still going to exclude that from FFO, just approximation?

Harold Andrews, Jr. -- Executive Vice President, Chief Financial Officer and Secretary

Yes, I think Talya had it in her comments, kind of what we were expecting. I think on an annualized basis for Enlivant, it was about $425,000 per month for Enlivant. Now that's so that's our share. That would be our share, so it's about $5 million on an annualized basis. And then the others will be much smaller than that. I think Holiday was quite a bit smaller. But I think it was reported at let's see, $80,000, $80,000 for the month of April in our Enlivant wholly owned portfolio. And then for Holiday, it was, I think, about $1.2 million on an annualized basis, about $100,000 a month. Look, we'll scrub that, and we would intend to pull it out on a normalizing basis most likely and report that so people can get a sense for what it is without those costs. And specific to reporting coverages, to follow-up finish up on your first question, if you look on our supplemental on Page seven, we identified the three that have implications for our EBITDAR, which would improve coverage going forward, which is basically, the $100 billion program, of which we had $60 million available.

Obviously, the suspension of sequestration would have an effect on EBITDAR and then FMAP, which is the Federal medicaid medical assistance program that the federal government is giving to the states. And that number is about $20 million, and that's a number that's going to continue, hopefully, to go up. We only were able to identify 15 states that have made determinations of how they're going to utilize those funds and how they're going to impact skilled nursing. And so there's a potential for that piece to go up higher, but those three areas do have a positive impact on coverages. While as you point out, the accelerated payment program, the employee payroll tax delay, those two items would not be reported in coverage. These are just short to medium-term cash flow. So they would not affect our coverage going forward. And then PPP, there's not a lot of our operators who can access that program given the limitations, but it will depend on whether or not those loans are forgiven, whether they will be impacting coverage. So initially, we would just notice dose in coverage until that impact is known to impact EBITDAR.

Steven Valiquette -- Barclays -- Analyst

Okay, perfect. I appreciate the color. Thanks.

Operator

Our next question is from Tayo Okusanya with Mizuho.

Tayo Okusanya -- Mizuho -- Analyst

Yes, good afternoon. Quick question around just the state of affairs in various states. I think again, you're going to hear more and more about states being their financials are in disarray as a result of COVID-19, and they need bail out money or whatever you want to call it from the federal government. I mean if that doesn't end up happening, how does one kind of start to think about the ability of states to kind of meet their medicine budget? So how do we kind of stating about Medicaid payments in the next fiscal year?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Yes. It's a good question. I don't really have a good answer, but I think that the question you pose is one of the reasons that when the 6.2% FMAP increase happened, we actually saw a relatively small number of states pass that on is they should have to the providers. They're just keeping it for themselves, right? So I think maybe for all the reasons that you talked about. Sort of having some money for a rainy day or just padding things a little bit on the Medicaid side. In the long term, I don't have a good answer for that. I mean, you've got a real safety net issue here. And I think sort of on the positive side, really is going to get readdressed after we get through this, because it really it really hasn't been adequate. So how they juggle all those priorities and what role the Feds play because the Feds play a critical role on the Medicaid piece, because even though, as you point out, it's a state-by-state issue. The federal match is a huge piece of how they meet those obligations. I think that I think we've talked a little bit about this before because some of it came up in the conversation away back about block grants and capital limits on Medicaid spending.

When you think about what Medicaid was put in place for the blind does a disabled. And since then it's been expanded, right? To home community-based programs and all these waiver programs, I think those are vulnerable. And I think that's going to be something that's more vulnerable than, say, the Medicaid rates and skilled facilities because Medicaid program was really never set up to do that. And when a lot of those things were put in place, I'll date myself going back into the mid-80s, the policy long thought that people don't need to be in nursing homes. So if we put all these other programs in place, occupancy of nursing homes, it will pick up in these community-based programs of Medicaid and we'll actually save money. Well, that never happened because acuity keeps going up in skilled nursing facilities. It turned out to be just a huge additional expense than we had been in place before they did that. So so yes. So I'll have a good answer, but that's where I think it can be more lower out ability.

Tayo Okusanya -- Mizuho -- Analyst

But all these states basically have to address it before the new fiscal year starts July one price. So some decision has to be made in the next few months around this?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Yes. Yes, because that's usually what we hear about our state-by-state Medicaid rate increases and things like that. So I have no sense of whether they're going to try to do what they normally do or make some larger adjustments now. But we should have some sense of that or whether they think they're going to have more time on their side in terms are going to help them more who knows Tayo.

Tayo Okusanya -- Mizuho -- Analyst

Got you. Okay. And then I may have missed this earlier on, but could you just talk specifically about Avalere. Again, second largest tenant. The rent coverage seems to be stabilizing now, with kind of flat quarter-over-quarter. But could you talk a little bit about what's kind of happening there and kind of what you kind of see for the outlook for that particular tenant?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Yes. So they're on a quarterly stand-alone basis, they're they bottomed out in the third quarter. They started improving in the fourth quarter. They started improving even more in the first quarter. They really benefited from PDPM. The whole big IT transition that they went through, which hurt their earnings mid- to late last year, is now behind them, and it's proven to be really effective for them. So for instance, the home health vesrion of PDPM and PDGM, which has been largely viewed as you probably know, is a negative for the home health industry, with that Avalere invested in is going to be actually a slight positive for them on their rates. So we actually feel pretty good about the trajectory that Avalere has now, and they've weathered they've weathered the outbreak in Washington. They did get some help because despite my earlier comment about not enough states got the help from net that they got, we got it where we needed it the most. So Washington state was a state where we've been talking about how bad Medicaid rates have been. They already determined a $29 rate increase effective July 1, they put an additional $29 rate increase effective March 1. And if COVID extends into July, they'll keep that. So they'll have double the rate for a while. But that really helped quite a bit, not just Avalere, but we've got North American up there as well. And then Oregon was another state where some help was needed, and they had a rate increase coming, but they gave a 10% Medicaid rate increase effective March 1. So just as it turns out and maybe because the problems were so bad in northwest even before COVID, there have been so many facility closures and things like that, that the states really stepped up there. So I think for Avalere, it's a combination of their own initiatives, how well they're executing on PDPM and the help they out on the Medicaid side in Washington and Oregon.

Tayo Okusanya -- Mizuho -- Analyst

Got you. That's helpful. Thank you.

Operator

[Operator Instructions] And our next question is from Daniel Bernstein with Capital One.

Daniel Bernstein -- Capital One -- Analyst

Hi. Again, my best wishes to everybody at your company at your facilities and your family. So I'll have just one question. I just wanted to understand what the how much Medicaid is in your seniors housing and whether you think maybe any Medicaid aid from the federal government to the states could filter into senior housing?

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

We are hoping for that Medicaid package believes. Talya, why don't you jump in, we're virtually nothing there?

Talya Nevo-Hacohen -- Executive Vice President, Chief Investment Officer and Treasurer

That's right, Dan. It's so minimal that there's I think it's only one operator that has a little bit and it's an operator with three buildings. So not at all meaningful.

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

We actually view telehealth as a positive. And Talya mentioned what Holiday was doing, which I think is really going to serve them well in the long run because for those that folks are going to be concerned about entering into facilities like that because of the what's happened with COVID-19. And so anything that the operators can do to provide a greater sense of security is going to is going to go a long way and the fact that Holiday did that from the get-go, I think we'll work out really well from them in the long run. But beyond that, a number of our operators have been employing telehealth initiatives for quite some time. Signature health had one for several initiatives for several years, Avalere is doing it, a number of our operators are doing it because they look at it as a way of providing more comfort, providing greater connection because physicians don't visit facilities that often even on the skilled nursing side, providing greater connectivity and to individual healthcare workers outside and will help to provide care in place for a longer period of time, particularly on the senior housing side. So and look, assistance living memory care and obviously, skilled or needs-based businesses and acuity is just going to continue to increase for all of them. And so they're not individuals that could be cared for at home and less and less so on a go-forward basis relative to assisted living and memory care. So we view that as a positive. So I just want to make a note of that since we had a question on it.

And with that, I appreciate everybody's time today. Again, very healthy. I hope nothing but the best for you and your families. Please think about all of our workers and keeping your prayers. Take care. And thank you, ladies and gentlemen.

Operator

[Operator Closing Remarks]

Duration: 85 minutes

Call participants:

Michael Costa -- Executive Vice President, Finance

Rick Matros -- Chairman of the Board, President and Chief Executive Officer

Talya Nevo-Hacohen -- Executive Vice President, Chief Investment Officer and Treasurer

Harold Andrews, Jr. -- Executive Vice President, Chief Financial Officer and Secretary

Josh -- Scotiabank -- Analyst

Michael Griffin -- Citi -- Analyst

Steven Valiquette -- Barclays -- Analyst

Tayo Okusanya -- Mizuho -- Analyst

Daniel Bernstein -- Capital One -- Analyst

More SBRA analysis

All earnings call transcripts

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