Providers can expect $10 billion of remaining CARES Act funds to go to the skilled nursing and senior living sector, according to sources at real estate investment trusts Sabra Health Care REIT (Nasdaq: SBRA) and CareTrust (Nasdaq: CTRE).
About $3 billion of an $8.5 billion rural fund included in President Joe Biden’s American Rescue Plan (ARP) Act of 2021 may be allocated to these sectors too, REIT leadership said.
The influx of cash from the Department of Health and Human Services (HHS) will help SNFs bridge the gap as occupancy recovers, CareTrust COO Dave Sedgwick added during this week’s Nareit conference.
CareTrust REIT has skilled nursing, assisted living, independent living, and memory care facilities in its portfolio.
“Investors in the skilled nursing space often expressed concerns over stroke of the pen risk. And that’s something that we … have had to educate or deal with for going on 20 years now,” explained Sedgwick. “I think the pandemic showed the flip side of that … the government really showed just how important and how too critical this sector is to fail.”
Sedgwick expects roughly 160 of CareTrust’s nursing homes will have access to the $8 billion bucket specifically for rural facilities, separate from the remaining $24.5 billion CARES Act fund.
That’s if criteria and early guidance from March remains the same. The ARP Act currently uses very broad requirements: a facility would need to be located outside of a metropolitan statistical area or serve rural patients.
“I think the combination of that additional assistance in conjunction with the fact that the public health emergency act is extended through year end, the three day hospital stay [waiver] … we’re in pretty good shape,” Sabra CEO Rick Matros said during the Nareit conference, of the REIT’s assets.
The timing and methodology of the coming financial relief payments remain uncertain, he added.
CareTrust’s operating officer echoed those thoughts, pointing to 100% contractual rent adherence for the past five months across its portfolio.
Sedgwick doesn’t expect any new funding announcements from the Biden Administration until more key positions are filled, but doesn’t expect a change in tone or priority from the federal government either once initial funds are depleted.
So far, the Senate has appointed the new administration’s Centers for Medicare &Medicaid Services (CMS) administrator — Chiquita Brooks-LaSure — just last month.
Xavier Becerra was confirmed as secretary of HHS in March.
The administration would also wait for existing funds to be deployed until more posts are filled.
“Until you know those heads of department are in no one’s really gonna stick their necks out and start distributing money,” Sedgwick said.