Invesque (TSE: IVQ.U) announced that a big fourth-quarter push led to a record-breaking year for dispositions and that the firm plans to continue trimming its portfolio in 2022.
Carmel, Indiana-based Invesque sold more than $210 million in assets in 2021, more than $100 million of which came in the fourth quarter, executives said on the company’s Q4 2021 earnings call.
Invesque closed on a series of moves in the fourth quarter. Two moves were announced in November 2021, the largest of which was the sale of a five-property portfolio of communities – four skilled nursing, one assisted living – to The Ensign Group (Nasdaq: ENSG).
Ensign had previously operated the four skilled nursing communities and The Pennant Group (Nasdaq: PNTG) had operated the assisted living community.
“Although we’re sad to lose Ensign and Pennant as operating partners given their strong track record, we’re pleased that we were able to quickly execute the sale at very attractive prices,” Invesque Chairman and CEO Scott White said on the call.
Another move was a sale of a community in Richmond, Virginia which had been previously operated by Invesque subsidiary Commonwealth Senior Living, netting the company more than $3 million.
Invesque also netted about $2.7 million from a portfolio of five skilled nursing communities in Pennsylvania that were previously operated by Saber.
For Invesque, the latest transactions show continued movement away from skilled nursing and toward seniors housing.
Five years ago, more than 75% of the company’s pro forma NOI came from its skilled nursing assets. As of Q4 2021, nearly 60% of pro forma NOI came from private-pay senior housing assets.
“Increasing our exposure to private-pay assets will likely occur in the next 12-24 months as we continue our focus on asset management,” Invesque Chief Investment officer Adlai Chester said during the call.
However, the firm is also willing to trim its senior living assets.
Just this month, Invesque sold an assisted living and memory care community in central Pennsylvania that had been operated by Invesque’s wholly-owned operator, Commonwealth.
The majority of the sale proceeds will be used to pay down debt. But, this sale is another example of the company’s ability and willingness to dispose of assets it doesn’t view as aligning with the long-term strategies of its operating partners.
“This portfolio pruning process will likely continue into 2022,” said Chester.
For the operators, hurdles like staffing and inflation remain prohibitive to the bottom line. To offset some or all of the costs caused by staffing, Invesque reported that its operators — like many across the industry — raised rates aggressively.
“It’s important to note that most of our senior housing operators did increase residential rental rates in 2022 at a higher percentage than what has been done historically,” said White. “We continue to evaluate whether or not those increases were sufficient or [if] additional increases will be needed later this year.”
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