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Sabra Health Care REIT Inc (NASDAQ:SBRA)
Q2 2020 Earnings Call
Aug 6, 2020, 10:00 a.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 REIT Second Quarter 2020 Earnings Conference Call.

I would now like to turn the call over to Michael Costa, EVP, Finance. Please, go ahead, Mr. Costa.

Michael Costa -- Executive Vice President of 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 in our Form 10-Q for the quarter ended March 31, 2020, 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 on 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 Investor section of our Website. Lastly, in addition to Sabra's management, Lilly Donohue, Chief Executive Officer of Holiday Retirement is joining our call to provide her perspective on operating a senior housing community during the pandemic. Lily's statements are her own and do not necessarily reflect the views of Sabra.

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

Rick Matros -- President and Chief Executive Officer

Thanks, Mike. Good morning and good afternoon, everybody. Thanks for joining the call. After I go through my remarks, I'll turn it over to Lilly and then Lilly will turn it over to Talya. Harold will follow her and do the CFO thing and then we'll go to Q&A. So first, let me comment on the pandemic generally. So, unfortunately, in our country, we never saw a flattening and a decrease in the wave. So it looks like a continuation of the first wave and one of the things I just want to note is and talked about this a little bit on the last call. The staff in our facilities and operating facilities have been just amazing. And this has had -- as long as this has been going on, it just creates further morale issues and further stress on the staff and yet they continue to show up. If any of you know anybody that's in the business that works in facilities, doesn't matter what asset class, obviously, in skilled nursing, assisted living, independent living, and you had the opportunity to pass the kind word on, please do.

We are seeing a little bit better media coverage now and hopefully that will continue. We're also seeing better media coverage, just in terms of folks having an official -- the leadership having a better understanding that the industry really didn't get the support that it needed and certain segments of the industry still aren't. So all that's been good to see and I think it's also reflective of a pretty Massive PR effort that a lot of us are involved with. So appreciate all your support and also appreciate, in the notes that we've seen, not just this time, but last time, the empathy and understanding for what everybody's going through. So appreciate that. Let me start with occupancy trends from the end of February, which is sort of the demarcation period. Through the end of July, we will talk about the quarter. The quarter, as everybody noted is relatively irrelevant. So, we'll spend some time on more recent trends. Our skilled nursing portfolio was down 811 basis points, but it's been essentially flat since the end of May across the portfolio.

The latter part of July, started seeing increases among their mobile operators. It's very market specific. We actually had a little bit more momentum the middle of July. And then, as everybody knows, there have been a lot of breakouts in the Sunbelt and now other states are getting hit as well. But, we are seeing some improvements in occupancy. What's really been great for us is our skilled mix is 176 basis points higher than pre-COVID levels. And as it pertains to the 811 basis points, that's pretty much I think where the industry is. The Nick data was as of May I believe, and at that point that's two months old, older than our data. Nursing homes are down about 650 basis points. There's an internal industry report that I had access to, which showed it down about 700 basis points for the same time period. So, looks like we're pretty much in line there in the aggregate among all of our operators, but we haven't seen anywhere is skilled mix actually up this significantly. We've seen a flat in various reports, but we haven't seen it up too significantly. And that's critical, because the Medicare rate, as many of you know, it's 2.5 to three times higher than the Medicaid rate majority of facilities. So, it does help to mitigate the occupancy drop.

On specialty hospitals, even though occupancy was down sequentially in the quarters is now up. And is that 180 basis points high, it's 180 basis points higher, as of the end of July than it was the end of February. Our triple net senior housing portfolio is only down 136 basis points, which is pretty remarkable. It was down a little bit more than that close to around 200, and then pick up close to 80 basis points at the end of July. And that's really a function of where our facility is located. And Talya will talk a lot more about that, when she can get to her talk importance [Phonetic] 6:48. The managed portfolio down 393 basis points over that same time period, also affected by the geographic areas and most the spikes, as you know, that we've all seen, really started after Memorial Day weekend. And both those numbers are much better than we're seeing among our peers, and so that's been really helpful and certainly for the triple net senior housing portfolio. It has a lot to do with why we haven't had to do anything on the rent side for our tenants at this point. For the quarter, our senior housing triple net occupancy was slightly impacted by the flu in Q4 2019, and Q1 2020, but relatively stable.

Our rent coverage was flat sequentially. Specialty hospitals occupancy and coverage was down sequentially. But occupancy is, I noted, has rebounded quite a bit since then. We don't get too concerned about occupancy and coverage at the specialty hospital. One, it's exceedingly healthy over three times, but beyond that it's got a much more dynamic population that we have in our skilled nursing or senior housing assets. So we typically see that go up and down quite a bit. But again they're doing well, very strong occupancy, very strong rent cover driver across our specialty hospitals. Our skilled nursing coverage picked up slightly on a sequential basis from Q1 due to the continuing execution PDPM 5 of our top 7 skilled operators showed improved coverage is clearly positioned Sabra's operators, more strongly going into the pandemic. One of the things I want to point out is Sabra's operators are post-acute operators. We don't have long-term -- traditional long-term care operators. And that doesn't mean that we don't have a few Medicaid shops here and there, but our operators are post-acute operators.

It was one of the things that attracted us to do the PPP merger, despite all the work that we knew we would have ahead of us. Once the operators fit the profile that we looked for, when we try to acquire -- when we acquire skilled nursing facilities and for what it's worth has reflect my own operating orientation, in my career prior to prior to Sabra. And that's why you see the improvement in skilled mix. And I think that's going to bode well going forward because we believe looking at continue to see acuity increases. We've got more and more of our operators that are specializing in taking care of COVID patients. So we think all of that will accrue to our benefit over the longer term as once we get through -- once we get through the pandemic. And obviously other things of health sequestrations, still being in effect and I the two day hospital stay away that has helped everybody. And those two items, plus all the other assistance that we've received through the Cares Act has actually resulted in coverage, that's higher than what has been reported here. Since subsequent to the quarter, we've actually seen improved coverage and given a lack of a base -- the first way it's improved coverage will be invaluable going forward, given the continued impact of COVID related costs and low occupancy.

Supplies and labor continuing to run higher than historical norms with labor driven by the impact of having primarily one-on-one activities and really everything from feeding to therapy. This has improved in certain markets and will continue to improve, but it does still exist. Supplies are still an issue although operators are beginning to build up some inventory in PPE, which will be invaluable going forward. That said, we do have a concern that we may see supplies get tighter in the fall because the supply chain is still not stabilized. Pricing is better than it was, we are not saying its as much of the gouging as we were seeing, but it is still higher than pre-COVID levels. In terms of supplies, the biggest issue is getting gloves. The second biggest issue is getting gloves -- I think on the -- on our prior quarterly call, gas is the biggest issue. So gas is still an issue, but gloves are a bigger issue right now. Masks are fine. On a relative basis, cost in our senior housing operators were impacted in much the same way as our skilled operators, obviously not at the same level as the skilled operators.

Now moving onto some other COVID related updates, through the end of July, we had a total of 202 facilities that at some point in time had positive COVID tests for patients, residents, and our employees of that total number of 202, 113 facilities have completely recovered. Facilities that are new to the list and as you're seeing with occupancy are specifically related to the geographic spikes in the U.S. and to a lesser extent increased testing. I'd say to a lesser extent, it is we're not seeing a big breakouts in the facilities, even the facilities that are testing positive for the first time, the operators have adhere to CDC and local health department protocols and then treat patients and residents as if they're COVID positive all along. Even prior to the CDC guidelines, restricting access and screening essential visitors has helped tremendously. The bigger issue now is in those areas that are experienced by more employees test positive putting additional stress on staffing. The universal workers program still exists. And that does help. But there is more stress on staffing. And as I think most people know, that are on the call, the average age of those testing positive for COVID has dropped dramatically. The last time I saw is about 35 years old. So it's getting younger and younger.

And as of the general population, we know we have scores of individuals who have had it and have recovered. In the absence of widespread and effective antibody testing, I don't know, whether we'll ever know the true number. Well, we still don't have as much testing as necessary. We appreciate the point of care testing that CMS has started rolling out to nursing homes. Testing is the key to getting a handle on the pandemic, in addition to wearing masks and social distancing. Now moving on to acquisitions, we did get a couple of things done, as you all saw this quarter. So we'll continue to look at things. Acquisition volume has picked up some it's primarily senior housing that we're seeing more skilled nursing deals. Our acquisition pipeline is pretty dynamic. Right now, it's ranging from $250 million to $600 million on any given day. Sellers are still expecting the impact and COVID to be disregarded by buyers. So that's clearly an issue. Nevertheless, we continue to do the work. But we don't expect to do anything material, anything big in the foreseeable future. We have factors that are -- we view very strictly in terms of our behavior, and that's looking at our cost of equity, maintaining leverage within our target, and maintaining our current ratings with the rating agency.

So we're not going to do anything to disrupt that. But -- as you saw with one of the one-off deals that we did in the quarter, we are starting to see more of those deals and we'll continue to execute, where we can, so we can start laying the groundwork for getting some growth going again. On the regulatory front, CMS proposed the 2.2% increase in the Medicare market basket, and no changes to PDPM. So the both of those are really good news. PHE, as you probably all know, is extended through the end of October, an additional 5 billion was granted to skilled nursing home HHS, but the methodology isn't clear yet. There's still tens of billions of dollars available for assistance, and we remain optimistic on stimulus four.

And with that, I'll turn the call over to Lilly Donohue. Lilly?

Lilly Donohue -- Chief Executive Officer

Thanks, Rick, Talya Nevo-Hacohen for inviting me to join your earnings call. While this pandemic has tested all of us it's also strengthen the core of our mission at Holiday, which is to help older people live better. We are very fortunate to have partners like you who share the same core beliefs and are committed to transparency. We're living through the biggest challenge we faced, and yet we're experiencing the strongest collaboration I've ever seen. Let me share how Holiday has managed. First, for anyone on the call who are not fully familiar with our company, we manage and operate 261 communities in 43 states. We have over 8,000 employees helping 28,000 residents live better in what are predominantly Independent Living communities. So 254 of the 261 communities, we operate IL, Independent Living. Our center team members of Holiday that our actions in response to COVID-19 from the onset of the pandemic to current day have been characterized by a relentless pursuit of solutions, we've been zealous in expanding our use of data and using the data to measure ourselves on a broad range of outcomes.

Data is particularly important in times of extended distress like this pandemic, because we're really not very highly emotional business and in these kinds of urgent situations, we really need to drive decisions based on facts, not just emotions. Early on, we set goals on three main priorities and this really has driven our behavior. So, the first is keeping our residents and employees safe, which means keeping our infection rates as low as possible. Second is ensuring our employees felt safe to come to work every day. We need them, we rely on them. Third, we make sure our residents feel safe and are happy. The results have proven to this point that we've set the right priorities. So, if you look at our infection rate across all of our communities, for residents, it's about zero point -- it's not about -- it's 0.71%, so less than 1%. This is 60% below the U.S. average for 75-plus population. For employees, the infection rate is 1.2%. These rates really reflect how we are adhering to our protocols in the 43 states where we have communities. Throughout the pandemic, our employees have continued to show up to work.

This is crucial as low absenteeism and high resident satisfaction go hand-in-hand. Of our 8,100 employees 99.3% are continuing to work in our communities. This percentage speaks volumes to their commitment to our residents, their families, and to each other. On average, we see probably 70-ish employees on a leave of absence in any given week and our peak temp labor has accounted for no more than 0.7%, again, less than 1% of our staffing. When you think about that in our scale, that's incredible. Having extensive protocols correlates with high employee retention and engagement. To that point, when asked in our most recent great place to work survey, nine out of 10 employees told us they feel safe coming to work. That's reassuring data. On the third goal, it's challenging to really manage the competing needs of, you know, the isolation, safety factor, and socialization. So, how are we doing on this goal? More than 93% of our residents tell us that our COVID-19 measures are meeting or exceeding their expectations. So, this data too is reassuring, and frankly, highly motivating. It's not easy to stay vigilant and disciplined on safety, while finding new ways to be creative and innovative on resident engagement.

And just as we expected, when you focus on the right things, your financial performance usually follows. Making difficult decisions to close communities early on, we were frankly challenged by some of our owners, again, have proven to be the right decisive action. While we are a private company, I do want to share some kind of topline performance metrics. At Holiday, our second quarter year over year NOI is down just under 5%. Our same-store NOI includes 258 communities out of our 260 community -- 261 excuse me, communities that I just mentioned. Revenues were down about 3%. Given that softness, we were quite diligent managing our expenses. As a mid-market expert and staying ahead of our needs, we've been able to efficiently procure PPE and other COVID-related items. The pandemic has impacted all classes of housing, but ours has not been impacted as drastically. That speaks to our value proposition. And we have seen it played out firsthand as residents move in, and their lives are actually changed for the good. We have no reason to panic and we're already seeing our lease and leases tick back up. The fundamentals of our business are intact.

In fact, I believe they're stronger than ever. One note on the moderate decline in NOI that we achieved, our performance does not include any government support, mainly as an I/O operator, we are unlicensed, so there has not been much help or assistance for us. On one hand, while I'm disappointed, that we've not gotten any assistance, this may be a blessing in disguise. I believe the key reason is success in managing through a pandemic a COVID-19 situation like ours, requires speed and scale. We were able to take decisive actions focusing back on the three priorities. Low infection rate, employees coming to work everyday and happy residents. So early on, we moved quickly to source PPE and transition every element of our community operations, from dining to housekeeping and cleaning, additional cleaning. Thinking back to that, how you shift the hundred thousand daily meals, from dining in to room service, mobilized procurement, inventory management, and associate training on PPE.

And establish real time data capture on infectious disease symptoms and testing across all of our communities. Our pursuit looked like this, in the early days in February. First, we quickly established multistage protocols for different levels of inspection and testing. These protocols standardized our actions across communities, they set up our decision criteria, and they created a playbook for each functional area, within holiday again, from dining services, daily resident activities, to sales to community leadership. Nothing could have prepared us in advance for COVID-19. But we actually had a head start, in the form of pre-existing infectious disease protocols. We rapidly built from that Head Start. Second, we quickly mobilized a communications infrastructure, accounting for document management. There are lots of documents around this, data sharing status trackers, and expanded communication channels. This infrastructure was, key for rapid and frequent communication, for example, supplies and PPE status. It has been critical for us to over communicate. Culture plays a significant role in our communications.

Whether it's communicating to our current residents, potential residents or our colleagues, our culture of transparency and accountability underlies our public disclosure of active positive cases, a disclosure we began in April. And finally, our culture of collaboration is also important. This is a behavior that shows up early and stays late. From early on, our employees have stepped out of their normal job descriptions, shared ideas, proposed solutions and really supported each other. As we progress from the early phase of COVID-19, to the phase of managing state-by-state reopenings. We were very focused on balancing the competing needs of safety and socialization. So our pursuit evolved to cover, first maintaining strict control through our protocols. We were strict, but we were also very agile with them. We adapted based on CDC updated guidelines and also changing states reopening criteria. We also implemented creative ways to engage residents. And implement safe activities. We have found new ways to communicate internally and externally.

Through our internal platform, we have visibility into the day-to-day life at our community, resident experience coordinator share and motivate each other, with their positive postings, on the platform. This also gave us an intended benefit, views into compliance and social distancing and PPE requirements in our communities. While some may focus on the challenges and headlines, we think these times for some necessary and balanced advancement that will benefit our company and the industry, as we come out of this. We also implement a poll surveys during this time, to gain insight into satisfaction of our residents and our employees. And see cooperatives kind of comparable to rankings among our communities, right. So we're comparing our communities, which ones are doing well, and which ones may not be doing as well, as expected. We've been quick to collect and act on the findings and have been open and honest in our teams action plans to improve. Turning to the current phase of our COVID-19 response management. We're really aligning all the learnings from the past five months into four areas.

One leveraging more data, we continue to make greater use of both internal and external data to reinforce our protocols, real-time data at the local holiday community level and at the appropriate public municipality level informs our protocols. You really need both, you need that from the community level and what's happening outside of our broader community. To this point, when we are asked what our policies are? The answer is simple. It's not a one size fits all; two, benefiting from the initiative, while our support center functional resources to continue scaling COVID solutions. So just on this point, we've developed some technology solutions for screening, sanitation and disinfecting; third, we are balancing, again this idea of safety and isolation and socialization. So data plays really another key role as we manage the individual preferences of our residents against the need to standardize safety measures across all of our communities; and finally, continue to increase engagement with our employees. We have benefited from such a high number who continue to choose to serve in these challenging circumstances.

On that point, I would conclude by sharing that, I have never been more encouraged by our industry and our business than I am now. I see the commitment of our employees, the gratitude we hear from our residents and their family members, and the close partnering with owners such as Sabra. This view that I'm so lucky to have is cause for confidence. The data backs that up and the data also points us forward. I'm seeing a resiliency in holiday and independent living that does not just indicate we are here to stay as a business and a sector. It also says, we have a larger mission now. Seniors have always told us that they want the socialization and sense of belonging found in our communities, now they can also have a sense of safety and peace of mind. That's just great, great story for us to have. On a final note, before I turn this back to Sabra, I want you all to hear why a company like Holiday? Why employees in the senior living business view privileged to serve our elders every day? This voice message is from a Holiday resident and sums up why we do what we do.

I'm calling you because I don't have just wanted to let you know that our staff is wonderful. So I, I guess, Marshall. They're doing a great job over above and beyond the call of duty and management, the share as a servers. Oh, it's a wonderful. Thank you so much and have a great day. So thank you really letting me share that message.

I will turn it over to Talya.

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

Thank you, Lilly. That was very moving. In my remarks, I will provide you with second quarter operating results of our managed portfolio. The second quarter reflects operations in the context of the spreading pandemic. The severity has varied geographically. I will also provide you with some performance statistics for July. As of the end of the second quarter of 2020, approximately 16% of Sabra's annualized cash net operating income was generated by our managed senior housing portfolio. Approximately 53% of that relates to communities that are managed by Enlivant, and 34% relates to our Holiday managed communities. The balance includes our Canadian portfolio and five assisted living and memory care communities in the U.S.

The managed portfolios, operating results for the second quarter reflect, residents desire to stay in their community and across that operators incurred to keep residents and employees safe during this period, I will provide highlights of the operating results of our managed portfolio on a same store quarter over quarter basis, excluding two recent acquisitions in one transition community in our wholly owned portfolio, consistent with a presentation in our supplemental information package. While revenue decreased by 3.7% in the second quarter compared with the first quarter of 2020, revenue per occupied room or RevPOR excluding the non stabilized assets barely moved, declining by 0.6%, while occupancy also excluding the non stabilized assets declined to 82% from 84.5% in the first quarter. Cash net operating income decreased by 90.2% to $16.3 million from $20.1 million, about 69% of this decline is due to lower revenue and the balance due to additional expenses incurred by our operators managing switch pandemic.

Cash NOI margins declined to 23.1% from 27.6% in the preceding quarter. We see no apparent differences in the pandemic's impact on the financial results of our independent living communities compared with our assisted living communities. The only variable that clearly impacted operators is geographic location and Sabra's managed senior housing portfolio, 77% of the second quarter cash net operating income came from the Enlivant joint venture and holiday portfolios, both of which have national footprints. The Enlivant joint venture portfolio of which Sabra owns 49%, these are 159 properties after the strategic sale of nine properties during the second quarter showed a small decrease in revenue driven by occupancy loss in the second quarter of 2020 on a same store, quarter over quarter basis, those impacted by costs related to the pandemic throughout the quarter.

Average occupancy for the quarter was 78.9%, 2.6% lower on a stabilized same store quarter over quarter basis. RevPOR was $4302, slightly lower on a stabilized same store quarter over quarter basis, but slightly higher on a stabilized same store year over year basis. Taken together, revenue was 3.9% lower on a same store quarter over quarter basis. However, same store cash NOI margin was 18.7% for the quarter, 4.5% lower on the same store quarter over quarter basis. If we add back 2.2 million of COVID-19 expenses incurred in the second quarter, the cash NOI margin would have been 24.8%, only 1.6% lower than the cash NOI margin for these assets in the second quarter of 2019 before the days of COVID-19. Subsequent to the quarter, July occupancy was 77.3%, as 440 basis points lower than February occupancy before the impact of COVID-19. Rates have held and collections have continued to be normal. Enlivant estimates that Sabra's share of continued expenditures on PPE, labor and employee programs in the third quarter will be about $533,000 per month.

Since the pandemic began until the start of this week, 60 of our Enlivant JV communities have had a resident or staff member test positive for COVID-19. As of the beginning of this week, 27 communities had a resident or staff member with a positive test, and 16 of those communities are located in Texas, Indiana and Arizona. While the portfolio has recently seen a modest increase in move outs, there has been a rebounded move in, 56% higher than in April. This is the scene that we will see throughout the managed portfolio. The second quarter operating results for Sabra's wholly owned Enlivant portfolio of 11 communities have similar themes in its performance. Second quarter occupancy was 83.3%, a 2.8% decline compared to the prior quarter. The occupancy decline occurred largely in April, with May and June occupancy flat at 83.1%. RevPOR in the second quarter was 5,776, flat to the prior quarter and 6.4% higher than the prior year. Revenue was 3% lower on a quarter-over-quarter basis but only 1.9% lower on a year-over-year basis. Again, the decline in revenue was a function of occupancy and not of rate.

Cash NOI margin was 21.7%, 4.5% lower on a quarter-over-quarter basis. And if we add back 562,000 of COVID-19 expenses incurred in the second quarter, the cash NOI margin would have been 27.9%, which is higher than the cash NOI margin of 26.7% for the same properties in the second quarter of 2019. More recently, July occupancy was at 83%, 300 basis points below February occupancy and only 10 basis points below May and June occupancy. As in the joint venture rates have held and collections have continued to be normal. Enlivant estimates that Sabra's continued expenditures on PPE, labor and employee programs will be about $125,000 per month. In total, seven of our wholly owned Enlivant communities have had a resident or staff member test positive for COVID-19. As of earlier this week, only two communities had not yet recovered. We transitioned our holiday communities from net lease to manage portfolio five quarters ago. In addition, we transitioned an independent living community in Frankenmuth, Michigan to Holiday in the fourth quarter of 2019.

All the operating results of follow are presented on a same store basis and exclude the recently transitioned property. Holiday portfolio occupancy was 85% in the quarter, 2.2% lower on a sequential basis. RevPOR was 2,499, virtually unchanged from $2,496 in the prior quarter and slightly higher than $2,459 on a year over year basis. On a quarter-over-quarter basis, the Holiday portfolio experienced a 2.4% decline in revenue. Cash net operating income was 35.1% compared with 35.6 in the prior quarter. If we add back $273,000 of COVID-19 expenses incurred in the second quarter, the cash NOI margin would have been 36.2%. Close to the 36.9% cash NOI margin for the same portfolio in the second quarter of 2019 subsequent to the end of the quarter. Excluding the one transitioned community, July occupancy was at 83.1% compared to 86.8 in February, a 370 basis point decline. Holiday estimates that pandemic related expenses will total $250,000 for the third quarter. Of the 22 properties that holiday manages for Sabra, 12 have had a resident or staff member test positive for COVID-19 and all about one community has recovered. Of those 22 properties, 19 are in various stages of lifting restrictions such as dining room use at reduced capacity, limited visitors and reopening of the beauty salon.

Holiday have seen an increase in voluntary move outs in July, which appear to be a catch up of the delayed move outs seen in the second quarter. At the same time, the number of new leases is trending up, and the number of move ins is increasing on a month-over-month basis. Sienna Senior Living manages eight retirement homes in Ontario and British Columbia for Sabra. In the second quarter of 2020, the eight properties managed by Sienna delivered 82.7% occupancy, 2.6% lower on a sequential basis, while RevPOR was $2,403 slightly higher than the prior quarter and 2.9% higher on a year-over-year basis. Second quarter revenue was 2.3% lower than the prior quarter here again, driven by occupancy declined. Cash net operating income margin was 27.3%, significantly lower than both in 39% in the prior quarter and 39.2% in the second quarter of 2019. If we were to add back to $318,000 of COVID-19 related costs incurred cash NOI margin would have been 34.4%. Sabra elected to match a pandemic wage premium being paid in Ontario to support single site employment. This item represents just over half of the $318,000 of COVID-19 related costs in the quarter.

More recently, July occupancy was 80.2%, 400 basis points below February occupancy. There have been no confirmed cases of COVID-19 in our Sienna portfolio. The number of cases is very low in the Interior of British Columbia, where four of our retirement homes are located, with a total of 377 cases. And there are fewer than 40,000 cases in the entire province of Ontario. Sienna began reopening its communities in British Columbia in mid May, and in Ontario in mid June. Visiting stations were built to allow for clean, protected and safe outdoor visits with family members and residents were permitted limited leaves of absence allows them to go off campus. In July, all restrictions on visitors were lifted, but indoor and outdoor visiting stations continue to be used. Hereto move outs that have been delayed or increasing as capacity and long-term care, which is government funded, becomes available. There are three themes that run through the financial results we've discussed. First, RevPOR for has remained largely flat year today. Second, occupancy decline began in April and particularly in our higher acuity properties have decelerated subsequently. Third, costs related to the pandemic continue.

On RevPOR, our communities had a fairly stable resident base in terms of rent and acuity and my event still intends to increase rent and level of care rates in October as it has historically done. While the increases in the past have been 5% to 5.5% this year the plan is for a more modest 4% to 4.5% rate increase. The communication regarding those increases are already well-under way and has been met with little resistance. This illustrates the perception of value offered by senior housing and the lack of price sensitivity for offering safety and care in the current environment. On occupancy, between February and July, our total senior housing managed portfolio inclusive of non-stabilized assets lost 393 basis points in occupancy. The month-over-month change was as follows; nine basis points in March compared to February, 147 basis points in April, 107 basis points in May, 58 basis points in June, and 73 basis points in July. What is notable is the slowing of the occupancy decline over the course of the second quarter. July occupancy was negatively impacted in lesions that have had significant outbreaks, and by the catch up of voluntary move out, particularly in those areas where the fact -- infection rates have subsided.

However, our operators are seeing material up between swing in tours, leases and movements, which are offsetting the catch up of move up Pandemic expenses. It is impossible to predict what normalized pandemic expenses will look like as infections have spread unevenly and somewhat unpredictably across the country. When we look forward, we expect to see testing and hopefully rapid testing become a key component of these costs, and PPE expenses settling at a steadier level as availability becomes consistent. Our managed portfolios located mostly in secondary and tertiary markets, and targeting a middle end market price point, have continued to be more shielded from the pandemic and its impact. The initial spread of coronavirus was worst in densely populated areas with 70% of cases in primary markets where 46% of the population lives. At the end of July that 70% has declined to 56% of all cases. Since the beginning of May, the virus has spread across the country and penetrated less densely populated regions. So that 20% of cases are in secondary markets with 20% of the population and 24% of cases are in tertiary markets with 33% of the population.

Even in late July, cases per capita in primary markets are 26% higher than in secondary markets, and 64% higher than in tertiary markets. We all read about the broader effect of the pandemic is having in the longer term implications, people working from home, migration away from gateway cities and dense urban areas to suburban and ex-urban locations for safety, space and lower cost of living. And the large scale, permanent loss of jobs that are coming with fundamental changes, particularly in the retail and lodging industry. We believe that these forces will create the setting for our operators to recruit talent with relevant skills in locations where cost of living is more reasonable for those interested in the career and an industry with long term tailwind.

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

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

Thank you, Talya. We are pleased to announce that we have not needed to provide COVID-19 related rent relief to any of our tenants to-date. We you collected all of our forecast rent, without the use of deposits or other credit enhancements through the end of July. We're on track for normal collections to the first few days of August. As Talya shared detail, our managed portfolio experience declines in occupancy and increased costs related to COVID-19, which negatively impacted the financial results for our managed portfolio. We provided normalized FFO and normalized AFFO numbers, we excluded just under $4 million of COVID-19 related expenses in the managed portfolio. As Talya noted, we expect these incremental costs to continue for the near-term do not currently have insight into the ultimate length of time or magnitude of such costs for the long-term. Nor do we have enough information to assess future occupancy expectations in the managed portfolio or the potential need for rent relief in the triple net portfolio in the coming quarters. As such, we are not providing an outlook for future performance at this time.

Now getting into the numbers. In the three months ended June 30 2020, recorded revenues in NOI of $153.9 million and $126.9 million respectively, as compared to $149.3 million and $125.6 million for the first quarter of 2020, representing increases of $4.6 million and $1.3 million respectively. Increases in revenue and NOI, primarily due to prior quarter write offs of, straight line rent receivables and above market lease intangibles totaling $6.1 million associated with four operators, who removed the cash basis accounting in the first quarter, partially offset by $1.4 million decrease in residency income during the current quarter due to the decrease occupancy in our wholly owned managed portfolio. NOI was further impacted by the $3.1 million increase in COVID-19. related costs over the first quarter of the year. FFO for the quarter was $88.1 million, and on a normalized basis was $93.3 million or$0. 45 per share. FFO is normalized primarily to exclude the $3.9 million of incremental costs associated with COVID-19 mentioned a moment ago and $24 million write off of straight line receivables.

This compares to normalized FFO of $92.1 million or $0.45 cents per share in the first quarter of 2020. AFFO was excluded from FFO merger and acquisition costs and certain non-cash revenues and expenses $87.3 million and on a normalized basis $91.5 million or $0.44 cents per share. FFO was normalized primarily excludes the same $3.9 million of pandemic related expense from normalized FFO. This compares to normalize AFFO of $90.5 million or $0.44 cents per share in the first quarter 2020. For the quarter, we recorded net income attributable to common stockholders $29.6 million or $0.14

Per share. G&A cost for the quarter totaled $8.7 million, in line with the first quarter of 2020. G&A costs included $2.4 million of stock-based compensation expense for each of the second in first quarter of 2020. The current cash G&A cost of $6 million 4.8% have been alive for the quarter and in line with our expectations.

Our interest expense for the quarter total $25.3 million compared to $25.7 million in the first quarter of 2020. Our cost of permanent debt declined 16 basis points in the end of the first quarter into the second quarter to 3.51%. While our revolver borrowing costs declined at 83 basis points in the end of the first quarter to the end of the second quarter to 1.26%. Interest expense equals $2.2 million of non-cash interest each of the second and first quarter of 2020. Loss from our unconsolidated joint venture of $12.1 million includes a loss on sale of $9.1 million from the strategic disposition of nine facilities Talya referenced earlier. During the quarter we completed the acquisition of one senior housing triple net community from our proprietary pipeline with a purchase price of $30.3 million with estimated initial cash yield of 7.28%. We also completed the sale of three skilled nursing transitional care facilities, two of which release to Genesis with aggregate sales proceeds $17.9 million, inclusive of the assumption by the buyer of an aggregate $14.2 million of HUD-insured mortgage debt, encumbering two of those facilities.

These sales resulted in an aggregate $0.3 million net gain on sale. Subsequent to quarter end, we funded $20 million in the new preferred equity investments, and a 186 senior housing community, it's an initial cash inflow of 10%. And we complete the sale of an additional skilled nursing transitional care facility leads to Genesis with gross proceeds of $18.4 million, inclusive of the assumption by the buyer $17.6 million of HUD-insured mortgage debt, encumbering the facility. This sale marks the completion of the dispositions identified in our 2017 Memorandum of Understanding with Genesis new annual rental obligation to us is approximately $21.8 million. Annual interest expense was increased by approximately $1.1 million. Total rents recorded during the second quarter to these four sold facilities totaled $0.5 million. As COVID has impacted our equity value and our acquisition opportunities, we did not issue any shares of common stock under the ATM program during the quarter. Numbers moved up slightly to 5.4 times, including our share of the Enlivant joint venture debt and five times excluding the joint venture debt. We have $336 million available under the ATM program, then we'll continue to monitor the equity markets and utilize the ATM to match fund investment activity and manage leverage and opportunities present. We were in compliance with all of our debt covenants as of June 30, 2020.

We continue to have a strong and improving credit metrics as follows. Interest coverage 5.36 times, fixed charge coverage 5.17 times, total debt asset value 36%, unencumbered asset value, unsecured debt 272%, unsecured debt asset value 1%. On August 5, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.30 per share. The dividend will be paid on August 31st to common stockholders of record as of August 17th. Dividend represents the payout of 68% on normalized AFFO per share and 71% of AFFO per share. We will continue to evaluate the dividend payout going forward. We continue to have very strong liquidity position as of June 30, 2020 2ith over $950 million of cash and availability on our like. Principal payment obligations to the end of 2021 totaled only $20.2 million, and we have significant cushion in our debt covenants. Accordingly, we continue to be very positive about our current financial position, and our ability to appropriately address these challenges we may face as we work with our operators going forward.

And with that, I will open the lines up for Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Nick Joseph with Citi. Your line is now open.

Nick Joseph -- Citi -- Analyst

Thanks. Rick, I appreciate the color on all the government support. How much that government support or loans that need to be repaid versus how much is Korea. I'm just trying to get a better understanding of what operators balance sheets may look like at the end of the year, once the government support diminishes.

Rick Matros -- President and Chief Executive Officer

Very little, Nick. The big loan was for those that took advantage of the advanced Medicare payment. And we only had a handful of operators that took advantage of that. And for a couple of reasons, one, there are number of ABL lenders that for those that took advantage of that just started off that money to paydown their AR lines. But I would also note that there are some ABL lenders because they're so well secured, chose not to do that.

So most of our operators chose not to take advantage of that and that would have been the biggest seller for everything else. There's really not much there. You've got sequestration, three day hospital stay waiver, you've got the defer Harold tax piece. So we don't see much there. That's going to have an impact on our operators.

Michael Costa -- Executive Vice President of Finance

Nick to tell, I would just add, if you look on page seven of our supplemental, we do a breakdown of those and we identify those. It may require payback. And as Rick pointed out, it's about $120 million on your gas, Medicare payment. And about 40 million from the employee payroll tax delay. And then certainly, the PPP from Cares Act mainly to be repaid or may not, but that was about 50 million. These are some details and descriptions on page seven.

Nick Joseph -- Citi -- Analyst

Thanks. That's helpful. And then just on the acquisition pipeline, I think you called it dynamic and completely understand kind of the liquidity, desire and the balance sheet and Michael also stated you've worked hard to achieve and then also the cost of capital. So when you think about the pipeline today if, your cost of capital changes, it sounds like you're ready to execute. And there'll be plenty of opportunities. So it's solely right now, based on the cost of capital, not from a lack of opportunities. Is it fair way to think about it?

Michael Costa -- Executive Vice President of Finance

I think correctly where I'm looking at everything, I think from a pricing perspective, we definitely see ourselves getting some skilled nursing done, even a current stock prices. We can do recruited skilled nursing deals. Whether we want to use the ATM to raise money at those prices is a different issue, so that we can maintain leverage.

So that's really the primary consideration. On the senior housing side, we're just not seeing real pricing out there for the most part at this point. So, that's a nice skilled nursing that's really going to be functioning on our cost to capital improving and also expectations becoming, a little bit more realistic. Talya, is there anything that you want to add to that?

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

I guess hopefully one thing we are seeing some decent quality assets on the senior housing side. And they tend, they fall in the basket of that Rick, just described. And then we continue to see, what I call, the retreads and the deals that seem to never get done.

And that we still don't like has been like the last year or the year before and assets being sold by other REITs, because they're cleaning out their bottom drawer. And many of those are not of interest, sometimes there could be opportunity. So we look at them, but often not.

Nick Joseph -- Citi -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Rich Anderson with SMBC. Your line is now open.

Michael Costa -- Executive Vice President of Finance

Hi Rich.

Rich Anderson -- SMBC -- Analyst

Hi Good morning. How are you doing? So, sorry, I want to go back to -- I might have mixed up your numbers, but you said 70% of cases in primary markets, what was the timeframe of comment?

Lilly Donohue -- Chief Executive Officer

That was in -- I think that was in July.

Rich Anderson -- SMBC -- Analyst

Okay. But then you said 20 in secondary and 24 in tertiary.

Lilly Donohue -- Chief Executive Officer

I'm sorry, let me correct that. That was the end of May and then my current numbers are as of end of July.

Rich Anderson -- SMBC -- Analyst

Okay, so the 20 in secondary, 24, tertiary, July -- end of July. Is that right?

Lilly Donohue -- Chief Executive Officer

End of July. Yes.

Rich Anderson -- SMBC -- Analyst

Okay. That's what I need to know to ask the question. So, you've had some pretty good success from an occupancy standpoint on your senior housing portfolio, as you described up to this point, but it seems as though you're seeing a spread now to some of the markets that you traffic in.

So, what level of risk -- or what concerned you have a risk that you could start to see sort of a second way to use that term of occupancy loss in your senior housing, which is to this point been someone a relative success.

Michael Costa -- Executive Vice President of Finance

So, I'll take that Rich. We don't have a high level of concern and the reason is that people have been getting treated as if they have had COVID in the facilities. So, really all the comments you heard from Lily is happening -- has been happening across our operator base. So, where we're seeing -- so increased testing, for example, Kentucky mandated increase testing. And so as you know, signature health is a big operator for us and Kentucky. And so they had a number of buildings that tested positive because of all the increased testing but very few residents in the buildings have tested positive, because they'd already received the care, and as I stated sort of in my opening remarks, probably a lot of folks have had it and gotten through it. But we just don't know because there hasn't been enough antibody testing.

So, I think certainly there's some risk that we're going to have more facilities test positive, but we're not concerned with having facilities at big breakouts to the point where you're going to have to shut down occupancy and things like that. The facilities that have had breakouts, the numbers have been so small, they've been able to isolate people and still have admission. So, I think Lily could have -- made comments similar to this. We just want to see some normalization in terms of visitation for our residents and patients. And so if you've got more breakouts, you can have to hold off on that kind of stuff. But generally, we don't have a high level of concern. I'll also point out in livens, and this is actually an interesting statistic. About 8% of the assisted-living industry has had breakouts that are -- that have been defined as larger breakouts, more than 10 residents per building and live in it's been three.

And everything that you heard Lily talk about relative to how they just jumped on everything onto a protocol to minimize the impact of the low infection rate was mirrored atomizing as well. So, I think combination of all those factors gives us a comfort level, Rich.

Rich Anderson -- SMBC -- Analyst

Okay. Do you know to what degree you get no symptom positive cases in a skilled nursing or senior housing facility? Does it usually come with symptoms? I'm just curious.

Michael Costa -- Executive Vice President of Finance

I don't have good stats on that. We know that a lot of the positive tests that we've had in facilities have been the people that are a asymptomatic with employees, obviously, as well as residents and patients. But I don't have -- I haven't seen any good statistics that out there that allow us to say, times percent of the positive tests for people that are symptomatic and times percent aren't. And certainly, nothing that tells us the degree of which people are feeling symptoms.

Rich Anderson -- SMBC -- Analyst

Right. Last question for me, is COVID care how much of it falls into Medicare coverage, versus private insurance and Medicaid or whatever?

Rick Matros -- President and Chief Executive Officer

Well, in skilled nursing, it's all going to be covered by Medicare. And one of the benefits including a hospital stay waiver is that, if a person conditions condition changes, whether it's COVID or not, under normal circumstances, they would have to be shift back to the hospital in order to qualify for that Medicare benefit that they already had. Now you can skip it in place. So let's say they've been in a facility for 90 days, the first 25 days they were covered on Medicare, the remainder of the time they converted to their secondary payer status, which is typically Medicaid with Medicare Part B support. And then on day 90, they spoke 61:32 had some other kinds of symptoms, and maybe it was COVID. As long as the facility is able to provide the care there, then they're able to reclassify that patient for Medicaid back to Medicare without discharging them. So that's actually been one of the benefits of COVID.

Rich Anderson -- SMBC -- Analyst

Yes. Just thinking more broadly about the portfolio. How -- I meaning breaking down skills and senior housing?

Rick Matros -- President and Chief Executive Officer

Yeah. So on the housing sides the care is just -- insurance coverage for testing. That's the actual care. Most people don't have insurance that go to senior housing. No, it's just, it's out of pocket.

Rich Anderson -- SMBC -- Analyst

Yeah. Okay. All right. That's all I got. Thanks.

Operator

Thank you. Our next question comes from John Kim with BMO Capital Markets. Your line is open.

John Kim -- BMO Capital Markets -- Analyst

Good morning. So I am just going to read that slowly the question if that's OK. I was wondering if the pandemic had changed your views at all on how you think your communities or senior care should look like. Whether you're looking at micro homes or active adults or maybe doing home health?

Rick Matros -- President and Chief Executive Officer

Well, home health, that's not a physical asset, so we're not going to get into the home health visit. Home Health is already been a player in Independent Living. Most every independent living facility has arranged for their residents to have access to home health. So I think that kind of is what it is. Micro stuff I don't know, I've kind of mixed feelings about it in terms of how the pandemic could affect it whether that's a negative or positive, so actually don't really have a firm opinion on that. What was your other question?

John Kim -- BMO Capital Markets -- Analyst

The home outlook, I realized it's not going to fit in to leagues -- microphones, adults, active adults, if that was something that you're looking at as well?

Rick Matros -- President and Chief Executive Officer

Yeah. I thought you may have a different point of view. We've never seen that as a particularly good margin business. And so I don't see I just don't see that changing. Talya, do you want to.

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

So we haven't looked at it a little bit because we were trying to figure out there was an -- there was a way to play in that sector in a manner that actually made economic sense to Sabra. And the reality is that we couldn't, we couldn't get that to work. It is pretty much -- trades at a pretty darn close to multi-families its not -- on top of multifamily. And there's really -- there's no way for us to figure out a way to do something creative in there, at least not right now.

Rick Matros -- President and Chief Executive Officer

Yeah. So with the adult day care business, before and aside from valuation, it's just a tough business to make work from a profitability perspective, that's a little bit dating me a little bit, so maybe it's gotten somewhat better, but just not that attractive.

John Kim -- BMO Capital Markets -- Analyst

That's interesting. Okay. And then the 73 basis points documents you lost, you had in July and your senior housing. We don't know if that was a good runway for monthly net attrition for the third quarter, or the year?

Michael Costa -- Executive Vice President of Finance

Talya?

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

Moving in a way, you be think prognosticator.

Michael Costa -- Executive Vice President of Finance

Yeah. I mean, there's really no -- there's no way to know. I mean, everything's flattened out after Rich's question you're maybe you have a little bit more deterioration depending on what happens with what breakouts, as I said, we don't think it'd be much there. So it feels like we've kind of been through the worst of it. But there could be, there could be a little bit more, but we don't think that it's going to be a material. That's pretty hard to prognosticate. No, one's going to be right.

John Kim -- BMO Capital Markets -- Analyst

Thanks.

Operator

Thank you. Our next question comes from Daniel Bernstein with Capital One. Your line is now open.

Daniel Bernstein -- Capital One -- Analyst

Hi. I guess it's interesting to me is, you know, we're coming up on flu season and some point here and the symptoms are very similar to COVID. So how, how are operators preparing for flu season? Do you think there's some additional expenses, maybe worse than normal seasonality that's going to be associated with Amie. It seems like it's going to be difficult. Maybe there's some benefits as well, but how are operators preparing for flu season in addition to COVID?

Michael Costa -- Executive Vice President of Finance

Got it. Sure. I'm going to take advantage of having Lily on the call. And then I may add a couple of comments, Lily.

Lilly Donohue -- Chief Executive Officer

Yeah, sure. So on the aisle side, I don't think it's going to complicate things at holiday. We're actually tracking all infectious disease symptoms now. So we have it on a realtime basis. I think there was an earlier question about asymptomatic, symptomatic. This is just holidays experience, but our COVID positive residents tend to be more symptomatic. So over 60%, while our employee base is about 30%. So more asymptomatic among employees than our customers.

So we do track it. We're going to continue to track it. I think one of the issues that will come up and we have protocols in place for this is to the extent that the symptoms are similar. There are physicians will recommend that they get COVID testing. So my guess is that will increase and it's OK if it increases because we have a great process to go through someone who's being tested for COVID, what happens in a community. And then obviously what happens when they test positive.

So I don't think for us, it's not going to be any additional cost. It's the same thing. And again we're tracking this on a day to day, real time basis among all of our residents, it gets put into a portal and I can tell you how many symptoms are in our winter village community right now

Daniel Bernstein -- Capital One -- Analyst

Okay.

Michael Costa -- Executive Vice President of Finance

I'm sorry. Go ahead, Rick

Rick Matros -- President and Chief Executive Officer

The other thing I would say is, I read a really interesting analysis the other day that talked about potentially a milder flu season, because of all the adherence to protocols as it relates to COVID, including at least for a lot of people that actually care about wearing masks and social distancing, that that's actually going to help, have an impact on the severity of flu season. So, I intuitively found that that made sense to me. We'll see what happens out there that was interesting.

Daniel Bernstein -- Capital One -- Analyst

I was going to kind of ask the infection protocols for COVID are very different. Today, the infection protocols generally right now are very different than what they would be for the flu season normally, for seniors housing and school nursing, right. I mean, they're just more robust.

Rick Matros -- President and Chief Executive Officer

Yeah, much more. You don't have all -- everything that's driving a lot of the expenses in the facilities roll over one activity. You don't normally see that happen during a regular flu season.

Daniel Bernstein -- Capital One -- Analyst

Okay. And then, I just want to go back to the acquisitions real quick. It sounds like for higher quality, seniors housing assets, pricing hasn't moved that much. But are you starting to sense that there's some more distress out there? I mean, obviously, the fundamentals have not been great. There's not a lot of government support. So, I would think relative to a skilled nursing, you would see maybe more opportunities on the senior side, but doesn't sound like that's quite materialize. That's the right way to put it.

Michael Costa -- Executive Vice President of Finance

Yeah, Talya.

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

Sure. So, I think we will eventually see distress. I will tell you that so far, the amount of forbearance and denial of acknowledging what maybe a decline in value or, an impairment to value on a market-to-market is still out there. So, we haven't seen a sense of distress. What we have seen and what we're starting to -- we've seen and we think will be a really interesting opportunity is issues on refinancing, and whether there'll be enough to payoff existing debt and refi, and we think that's an opportunity for us to play in interesting way in structure deal.

But that is the opportunity. I mean, you know all the lenders. They're all talking for Barron's right. This is not a product finance galleon CMBS world, so it's not part of what's going on there on with special servicing?

Daniel Bernstein -- Capital One -- Analyst

Okay. That's all I have. Thank you.

Michael Costa -- Executive Vice President of Finance

Thanks, Dan.

Operator

Thank you. Our next question comes from Lukas Hartwich with Green Street Advisors. Your line is now open.

Lukas Hartwich -- Green Street Advisors -- Analyst

Thanks. Good morning.

Michael Costa -- Executive Vice President of Finance

Good morning, Lukas.

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

Good morning.

Lukas Hartwich -- Green Street Advisors -- Analyst

Good morning. So it must be really challenging underwriting acquisition today. I'm just curious, how are you factoring COVID into the underwriting into NOI forecast and whatnot?

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

It's a really good question on. So on senior housing we're actually looking at how groups are doing right now. And there are definitely buildings that are -- have performed well and are not -- have not been deeply affected, and we're not looking at large portfolios. So, we're not having, to juggle dealing with assets that are deeply affected and assets that are largely unaffected. So that kind of isolates it, and they're not getting any stimulus funds. So there's no -- there's some noise in terms of on the revenue side. Still nursing it's harder, it's much harder, you kind of have -- you have to peel out and this, it becomes really challenging to do this.

You have to, you have to peel out the stimulus money, so that you can see what the real underlying economics are as opposed to numbers that are offsetting losses and occupancy and you have to make an assessment of the fundamentals of what we have -- of the fundamentals of the location and that particular building or build those particular buildings, of how they'll recoup occupancy and normalize, it's hard. So you look back historically, and you try to project forward, but it's definitely more challenging in the skill side.

Rick Matros -- President and Chief Executive Officer

I think part of it -- another way is how well you know the operator, how you're going to look at other facilities and see how they handle that. So a lot of that helps. It's just, it's a good data point to have, in terms of -- they are all going to project somewhat of a hockey stick recovery So doing enough diligence to make sure you understand who that operator is. And you may know who that operator is and how they handle all their other buildings on those factoring.

Lukas Hartwich -- Green Street Advisors -- Analyst

That's helpful. And then my other question is just going through this experience, does it change your view at all the relative attractiveness of IO versus AL verses Memory Care on the senior housing side?

Rick Matros -- President and Chief Executive Officer

It doesn't I think, look the long term benefits still exist. I think generally and profit that just a little bit before, I think the space is there that we are in have always been neglected by the healthcare systems generally. And certainly the government, we we're all caught out of Obamacare and I think all that's going to change. I think that from skilled nursing to independent living, and everything else in between, we are now going to be recognized. And I think the recognition has been happening in integral part of the healthcare system. There's an awful lot of conversation now about the inadequacy of Medicaid rates. And, and so the whole narrative is shifting from sort of the far of all these headlines and how many people are dying facilities to hey, wait a second.

What's wrong with the system and look at the system do differently and what could we do differently because we weren't there to support these facilities to begin with. You know, I think I mentioned in the last call, it was almost, it was nine to 10 weeks into the pandemic before PPE to nursing homes, and maybe as much as half of it was flawed, you know, so I actually think -- I think the value equation gets better as a result of this. And obviously, the demographics don't change. And you heard from Lilly and we've been seeing throughout the pandemic with the backdoor slowing down, the operators have done a really good job has made their residents feel safe. And so when it comes out to all the individual communities and markets, which is where these decisions are made, I think just like a lot of other businesses, how things were handled during the pandemic a lot later reputation.

And look, the fact of the matter is, people don't have the support systems and infrastructure just not to go in. And then finally, you know, as you know, because assisted living becomes such a news based model that changes the equation anyway and that has been acuity creeping Independent Living as well. And I think some of the things that we've seen Independent Living and Holidays been a leader in that it is introducing access to healthcare that they didn't have before, through telehealth, for example, and with Holidays, down there, they were -- they were, a company that sort of forging new paths with that. And I think that's going to help to continue to entice people to come into the communities. Lilly, I don't know, if there's anything that you want to add to that.

Lilly Donohue -- Chief Executive Officer

Yeah, I think that's exactly right. I mean, all of those things are made to provide more access. I think, you know, just even talking about the flu. We're not just focused on COVID. We know that there's an end date, there maybe a new COVID. And so we are trying to think about kind of the business in the new normal sense. And when we have telehealth, just prevention is so important and the telehealth will give us opportunities to provide vaccines, flu vaccines to our residents, and we are actually having all of our employees have flu vaccines that the company's cost again, making sure that what we know is going to be potentially challenging as we go through the flu season and COVID together, there's certainly things that we can do from a preventative side.

Lukas Hartwich -- Green Street Advisors -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from Omotayo Okusanya with Mizuho. Your line is now open.

Rick Matros -- President and Chief Executive Officer

Hey, Omotayo. Are you there Omotayo?

Operator

[Operator Instructions] And our next question comes from Steve Valiquette with Barclays. Your line is now open.

Morgan McCarthy -- Barclays -- Analyst

Hi. This is Morgan McCarthy on for Steve. Sorry, if I missed this earlier. But I guess I was wondering, if you could talk a little bit more about the impact of the resurgence of COVID cases and states like California or Florida on shot operators? Are you actually seeing those facilities be forced to reshot their doors to new admissions, or maybe even delay lifting any of the admission bans already in place or other, more strict regulations that might be preventing, you know, tours or move-in?

Rick Matros -- President and Chief Executive Officer

Yeah. The impact on shop has been pretty minimal. And, you know, some of the reasons that we talked about earlier, we have more facilities on the AL side that have tested positive, but the breakouts with the facilities are pretty -- are minor or to make light of it even if one person has COVID. But we're just not having big breakouts because so much cares already been provided and all the one on one activities and the restricting of non-essential visitors and the screening of essential visitors has really helped, so that so occupancy through time period has actually been pretty flat.

Folks can still admit it, people when they get admitted, that just means that some of the normalization that we want to get back to you in some of these markets, in terms of having visitors come in because the whole social component of isolation for our patients and residents has been really tough. So it just slow that kind of stuff down, but in terms of having any sort of material impact on occupancy and therefore the bottom line, we're not really seeing that.

Morgan McCarthy -- Barclays -- Analyst

Okay. And then just one more question on the shop portfolio, I guess, not necessarily related to occupancy, but how are you thinking about moving trends moving into the second half of the year? Are you seeing any pent up demand or receiving any actual deposits from new residents and they're just choosing to delay to move in? Or is this -- while even though there's been an improvement in move ins, it is down just because of an overall function of leads and toward the end down as well?

Rick Matros -- President and Chief Executive Officer

Talya?

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

Sure. So move ins are trending up, so that the whole sequence of leads toward leases and move ins is trending up and we're seeing that uniformly in the shop portfolio. It is not yet at the level it was on a year-over-year comparison. So it's not yet "normal", but nothing right now is quite normal. And so the good news is the trajectory is headed the right way. I think a big factor in this kind of want to go back to what Rick was saying, a big factor today is that we know a lot more the protocols are in place, they're their processes, people in communities and the leadership and at our operators have -- have had months now to figure out how to manage through this the current environment. So it's one thing to have had a big drop in April when this was all very fresh.

And even though the pandemic continues to affect a tremendous number of people in this country and it's inescapable. The good news is as Lilly described, they have worked very hard to figure out how to run their business model in an environment where this is happening. So to your comments about move in, to the extent that municipality has determined that no admissions are allowed, then that's one thing, because you -- the all of our operators have to comply with the local health department and other regulatory bodies, but to the extent that they're able to have to win test before move in, and if they test negative move in without any issues or comfort or self isolate once they've moved in, they figured out ways protocols for -- to allow people to move in. And have the kind of safety and eventually the socialization that they desire.

Morgan McCarthy -- Barclays -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from Tayo Okusanya with Mizuho. Your line is open.

Tayo Okusanya -- Mizuho -- Analyst

Hi. Hello everyone. Can you hear me?

Rick Matros -- President and Chief Executive Officer

This is your last chance Tayo.

Tayo Okusanya -- Mizuho -- Analyst

I'm going to be kick out. The commentary just about the regulatory environment was helpful. I was hoping could you comment specifically on what's happening at the state level, we're kind of in August now, states are setting their budget. How are -- what are you kind of seeing from a Medicaid perspective, just kind of giving a lot of state budgets are to be challenged right now, because the COVID?

Rick Matros -- President and Chief Executive Officer

Yes. We're not really seeing much different at a state level. The states that have provided temporary increases, which are still in place because of COVID have kind of left them in place for now. So I think they're trying to try to figure out, I think -- I don't see things being any different than they normally are which is pretty low Medicaid rate increases per state anyway, 1.5% to 2%. So, just fight the stress on the state budgets. I don't think that piece of its going to get worse just because in large part because the federal match. They don't reverse that federal match. And one of my main data points, they're always tile is great recession, which obviously was much different, but that was a lot of ways a much bigger deal financially in some respects for the state and our Medicaid rates in the aggregate were held steady there for nursing homes, not for other seconds, but for nursing homes. So I think the federal matches important to keep things in place.

Tayo Okusanya -- Mizuho -- Analyst

Great. That's helpful. And then just one other question in regards to just for stimulus four, are there specific things that the industries lobby for in stimulus four for example, kind of having a blanket limited liability because of COVID? I'm just kind of curious, what was the industry lobbying from getting some of those requests?

Rick Matros -- President and Chief Executive Officer

That's the big issue. It's the liability issue. And despite what, a person can say, we have industry is no issue and is not lobbying for blanket immunity, recall this real negligence and things like that those people should always be taken to task. But just the mere fact that you have COVID in a facility doesn't mean that you should get sued. And so that's really what the focus is.

There's also been a lot of state logging and I think actually haven't seen an FDA trial in a little bit over a week. I think there were about 31 states. Or actually, maybe I think it's more than -- yeah, 29 states have some form of limitations on liability. So, that's going to be helpful going forward. But having started at the federal levels, what we really want. So that's the big issue. Other than that, I think that the dialogue has always been really productive. And so, I think we feel pretty comfortable with getting stimulus dollars otherwise.

Tayo Okusanya -- Mizuho -- Analyst

Great. Thank you.

Operator

Thank you. I'm not showing any further questions at this time. And I like to turn the call back over to Rick Matros for closing remarks.

Rick Matros -- President and Chief Executive Officer

Thank you all for calling in. We appreciate it. As always, we're available for any additional questions. Thank you really for being on the call. I think it really provided some value input to our investors and everyone be safe out there.

Operator

[Operator Closing Remarks]

Duration: 88 minutes

Call participants:

Michael Costa -- Executive Vice President of Finance

Rick Matros -- President and Chief Executive Officer

Lilly Donohue -- Chief Executive Officer

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

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

Nick Joseph -- Citi -- Analyst

Rich Anderson -- SMBC -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Daniel Bernstein -- Capital One -- Analyst

Lukas Hartwich -- Green Street Advisors -- Analyst

Morgan McCarthy -- Barclays -- Analyst

Tayo Okusanya -- Mizuho -- Analyst

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