Sabra Health Care REIT Inc (SBRA) 2020 Q2 法說會逐字稿

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.

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 impacts 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 Investors Section of the 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. Lilly'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.

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 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 of the wave, so it looks like the continuation of the first wave. And one of the things I just want to note is we talked about this a little bit on the last call.

The staff in our facilities and operating facilities have been just amazing. And this to have -- 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, it doesn't matter what asset class, obviously, skilled nursing, assisted living, independent living, and you have 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 officials and 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 the 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 to what everybody is going through, so I 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 is 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 amongst a number of our operators. It's very market specific. We actually had a little bit more momentum in the middle of July. And then as everybody knows, there have been a lot of breakouts from the Sun Belt 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 NIC data was as of May, I believe, and at that point, that's 2 months 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 down about 700 basis points for the same time period. So it looks like we're pretty much in line there in the aggregate amongst all of our operators, but what we haven't seen anywhere is skilled mix actually up this significantly. We've seen it flat in various reports, but we haven't seen it up this significantly. And that's critical because the Medicare rate, as many of you know, is 2.5x to 3x higher than the Medicaid rate in the majority of facilities. So it does help to mitigate how the occupancy drops.

Our specialty hospitals, even though occupancy was down sequentially in the quarters, is now up and is up 108 basis points -- it's 108 basis points higher as of the end of July than it was at 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, closer to around 200, and then it picked 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 once we get to her talking points.

The managed portfolio is down 393 basis points over that same time period also affected by the geographic areas. And most of 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 amongst 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. Our specialty hospitals, occupancy and coverage is down sequentially but occupancy as I noticed has rebounded quite a bit since then.

The -- we don't get too concerned about occupancy and coverage at the specialty hospitals. One, it's exceedingly healthy over 3x. But beyond that, it's got a much more dynamic population than 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 coverage rather across our specialty hospitals.

Our skilled nursing coverage ticked up slightly on a sequential basis from Q1 due to the continuing execution of PDPM. 5 of our top 7 skilled operators showed improved coverage. It 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 doing the CCP merger despite all the work that we knew we would have ahead of us was the operators fit the profile that we look for when we try to -- when we acquire skilled nursing facilities and for what it's worth, has reflect my own operating orientation in my career prior to Sabra. And that's why you see the improvement in skill mix. And I think that's going to bode well going forward because we believe we're going to continue to see acuity increases.

We've got more and more of our operators that are specializing and taking care of COVID patients, so we think all of that will accrue to our benefit over the longer-term once we get through the pandemic. And obviously, other things that have helped, sequestration still being in effect and the 3-day hospital stay has helped everybody. And those 2 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.

So subsequent to the quarter, we've actually seen improved coverage. And given the lack of abatement of the first wave, this improved coverage will be invaluable going forward, given the continued impact of COVID-related costs and low occupancy.

Supplies and labor continue 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're not seeing as much of the gauging 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 gowns. I think on our prior quarterly call, gowns was the biggest issue. So gowns is still an issue, but gloves is a bigger issue right now. Masks are fine.

On a relative basis, costs within our senior housing operators were impacted in much the same way as our skilled operators. Obviously, not to the same level as skilled operators.

Now moving on to some other COVID-related updates. Through the end of July, we had a total of 202 facilities that, at some point in time, have positive COVID cancer patients, residents and/or employees. Of that total number of 202, 113 facilities have completely recovered. Facilities that are new to the list and as we are 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 because we're not seeing big breakouts in the facility, even the facilities that are testing positive for the first time. The operators have adhered to CDC and local health department protocols and have treated patients and residents as if they were 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 have experienced spikes more employees test positive putting additional stress on staffing. 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 I saw is about 35 years old. So it's getting younger and younger.

And as in 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. While 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 there, 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, but 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 from 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 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 agencies. 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 a 2.2% increase in the Medicare market basket, and no changes to PDPM, so that both of those are really good news. PHE, as you probably all know, is extended through almost the end of October. An additional $5 billion was granted to skilled nurses from 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 4.

And with that, I will turn the call over to Lilly Donohue.

Thanks, Rick, Talya and the Sabra team for inviting me to join your earnings call. While this pandemic has tested all of us, it's also strengthened 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 any 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 are IL, independent living.

I said to 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 in a very highly emotional business. And in these kinds of -- kind of urgent situations, we really need to drive decisions based on facts, not just emotions.

Early on, we set goals on 3 main priorities, and this really has driven our behavior. So the first is keeping our residents and employees safe, which means keeping our infection rate 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 have set the right priorities. So if you look at our infection rate across all of our communities for residents, it's about 0 -- 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 our 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 at 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, 9 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 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 top line 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 -- 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 have 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 late lives are actually changed to the good. We have no reason to panic, and we are already seeing our leads 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 IL 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 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 3 priorities: low infection rate, employees coming to work every day 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 do you shift 100,000 daily meals from dining in to room service. Mobilize 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 infection 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 the communications infrastructure accounting for document management, there's 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 controls 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 our 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 coordinators 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 force some necessary advancements that will benefit our company and the industry as we come out of this.

We also implemented poll surveys during this time to gain insight into satisfaction of our residents and our employees and see comparative kind of comparable 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 team's 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 5 months into 4 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 of 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 a 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 feel privileged to serve our elders every day. This voice message is from a Holiday resident, and sums up why we do what we do.

(presentation)

So thank you for letting me share that message. I will turn it over to Talya.

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 a spreading pandemic whose 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 5 assisted living and memory care communities in the U.S.

The managed portfolio's operating results for the second quarter reflect residents' desire to stay in their community and the costs 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 2 recent acquisitions in one transition community in our wholly owned portfolio, consistent with the 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 nonstabilized assets, barely moved declining by 0.6%, while occupancy also excluding the nonstabilized assets, declined to 82% from 84.5% in the first quarter. Cash net operating income decreased by 19.2% 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 through the 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. In Sabra's managed senior housing portfolio, 77% of the second quarter's cash net operating income came from the Enlivant joint venture and Holiday portfolios, both of which have national footprint.

The Enlivant joint venture portfolio, of which Sabra owns 49%. These are 159 properties after the strategic sale of 9 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, but was 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 $4,302, 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 a 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%. That's 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 rebound in move-ins, 56% higher than in April. This is a scene that we will see throughout the managed portfolio.

The second quarter operating results for Sabra's wholly owned Enlivant portfolio of 11 communities had 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 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, 7 of our wholly owned Enlivant communities have had a resident or staff member test positive for COVID-19. As of earlier this week, only 2 communities had not yet recovered.

We transitioned our Holiday communities from net lease to managed portfolio 5 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 that 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 36.6%, 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 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 but 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 has seen an increase in voluntary move-outs in July, which appear to be a catch-up of the delayed move-out 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 8 retirement homes in Ontario and British Columbia for Sabra. In the second quarter of 2020, the 8 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 decline. 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 the $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 4 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 allowing them to go off-campus. In July, all restrictions on visitors were lifted but indoor and outdoor visiting stations continue to be used. Here too move-outs that have been delayed are increasing as capacity and long-term care, which is government funded, becomes available.

There are 3 themes that run through the financial results we have discussed. First, REVPOR has remained largely flat year-to-date. Second, occupancy declines 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. Enlivant 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 underway and have 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 nonstabilized assets lost 393 basis points in occupancy. The month-over-month change was as follows: 9 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 regions that have had significant outbreaks and by the catch-up of voluntary move-outs, particularly in those areas where the infection rates have subsided. However, our operators are seeing material upswing in tours, leases and move-ins which are offsetting the catch-up of move-outs.

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 settle in at a steadier level as availability becomes consistent.

Our managed portfolio is located mostly in secondary and tertiary markets and targeting a middle market price point, have continued to be more shielded from the pandemic and its impact.

The initial spread of the coronavirus was worse 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 effects that the pandemic is having and 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 industries.

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 in an industry with long-term tailwinds.

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

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 collected all of our forecast rents without the use of deposits or other credit enhancements through the end of July, and we're on track for normal collections in the first few days of August.

As Talya shared in detail, our managed portfolio experienced 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, which 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. We do not currently have insights 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're not providing an outlook for future performance at this time.

Now getting into the numbers. In the 3 months ended June 30, 2020, we recorded revenues and 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 are primarily due to prior quarter write-offs of straight-line rent receivables and above-market lease intangibles totaling $6.1 million associated with 4 operators whom we moved to cash basis accounting in the first quarter, partially offset by a $1.4 million decrease in resident fee income during the current quarter due to the decreased 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 was normalized primarily to exclude the $3.9 million of incremental costs associated with COVID-19 mentioned a moment ago, and a $0.4 million write-off of straight-line rent receivables. This compares to normalized FFO of $92.1 million or $0.45 per share in the first quarter of 2020.

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

G&A costs 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 and first quarters of 2020. Recurring cash G&A cost of $6 million, 4.8% of NOI for the quarter and in line with our expectations.

Our interest expense for the quarter totaled $25.3 million compared to $25.7 million in the first quarter of 2020. Our cost of permanent debt declined 16 basis points from the end of the first quarter to the end of the second quarter to 3.51%, while our revolver borrowing costs declined 83 basis points in the end of the first quarter to the end of the second quarter to 1.26%.

Interest expense includes $2.2 million of noncash interest in each of the second and first quarters of 2020. The loss from unconsolidated joint venture of $12.1 million includes a loss on sale of $9.1 million from the strategic disposition of 9 facilities Talya referenced earlier.

During the quarter, we completed the acquisition of one senior housing triple net community from our proprietary pipeline from a purchase price of $30.3 million with estimated initial cash yield of 7.28%.

We also completed the sale of 3 skilled nursing transitional care facilities, 2 of which were leased to Genesis, with aggregate sales proceeds of $17.9 million, inclusive of the assumption by the buyer of an aggregate $14.2 million of HUD insured mortgage debt encumbering 2 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 in a 186 unit senior housing community with an initial cash yield of 10%. And we completed the sale of additional skilled nursing transitional care facility leased 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. As a result of these dispositions, Genesis new annual rental obligation to us is approximately $21.8 million, and our annual interest expense will decrease by approximately $1.1 million. Total rents recorded during the second quarter from these 4 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. Leverage moved up slightly to 5.54x, including our share of the Enlivant joint venture debt and 5x excluding the joint venture debt. We have $336 million available under the ATM program, and we'll continue to monitor the equity markets and utilize the ATM to match fund investment activity and manage leverage as opportunities present.

We are in compliance with all of our debt covenants as of June 30, 2020. We continue to have strong and improving credit metrics as follows: interest coverage 5.36x, fixed charge coverage of 5.17x, low debt to asset value 36%, unencumbered asset value to unsecured debt 272% and secured debt asset value of 1%.

On August 5, 2020, the company's Board of Directors declared a quarterly cash dividend of $0.30 per share. Dividend will be paid on August 31st to common stockholders of record as of August 17. Dividend represents a payout of 68% of our normalized AFFO per share and 71% with 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, with over $950 million of cash and availability on our line. Principal payment obligations through the end of 2021 total 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 any challenges we may face as we work with our operators going forward.

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

(Operator Instructions) Our first question comes from Nick Joseph with Citi.

Rick, appreciate the color on all the government support. How much of that government support are loans that need to be repaid versus how much are grants? 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.

Very little. 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 a number of ABL lenders that -- for those that took advantage of that, just fastened off that money to pay down 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. So for everything else, there's really not much there. You've got sequestration, 3-day hospital stay waiver. You've got the deferred payroll tax piece. Yes, so we don't see much there that's going to have an impact on our operators.

Nick, it's Harold. I would just add. If you look on Page 7 of our supplemental, we do a breakdown of those and we identified those. It may require payback. And as Rick pointed out, it's about $120 million on the advanced Medicare payment and about $40 million from employee payroll tax delay. And then certainly, the PPP from CARES Act may need to be repaid or may not, but that was about $50 million. There are some details and descriptions on Page 7.

That's helpful. And then just on the acquisition pipeline, I think you called it dynamic and completely understand kind of the liquidity desire in the balance sheet and leverage that you've worked hard to achieve and then also the cost of capital. But 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 off of the cost of capital, not from a lack of opportunities. Is that the right way to think about it?

No, I think the former is correct. We're looking at everything. I think from a pricing perspective, we definitely see ourselves getting some skilled nursing done. Even at current stock prices, we can do accretive 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 realistic pricing out there for the most part at this point. So that's unlike skilled nursing, that's really going to be a function of our cost of capital improving and also expectations becoming a little bit more realistic. Talya, is there anything that you want to add to that?

I guess I'll say one thing. We are seeing some decent quality assets on the senior housing side, and they tend to 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 because we didn't like them last year or the year before and assets being sold by other REITs because they are cleaning out their bottom drawer. And many of those are not of interest. Sometimes, there could be opportunities, so we look at them, but often not.

Our next question comes from Rich Anderson with SMBC.

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 time frame of that comment?

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

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

I’m sorry, let me correct that. That was the end of May. And then my current numbers are in -- as of end of July.

Okay. So the 20 in secondary and 24 in tertiary in July, end of July, is that right?

Yes. End of July, yes.

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 the spread now to some of the markets that you traffic in. So what level of risk or what concern do you have on a risk that you could start to see sort of, I don't know, a second wave to use that term of occupancy loss in your senior housing, which is, to this point, been somewhat a relative success?

So I'll take that, Rich. So we don't have a high level of concern. And the reason is that people have been getting treated as if they had COVID in the facilities. And so really all the comments you heard from Lilly has been happening across our operator base. So where we're seeing some increased testing, for example. Kentucky mandated increased testing. And so as you know, Signature Health is a big operator for us in Kentucky. And so they had a number of buildings that tested positive because of all their increased testing, but very few residents in the buildings that tested positive because they've 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 facility that have had breakout, these numbers have been so small. They've been able to isolate people and still have admission. So I think and really kind of 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 can have more breakouts, you're going to 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 Enlivant, and this is actually an interesting statistic. About 8% of the assisted living industry has had breakouts that have been defined as larger breakouts. So more than 10 residents per building. Enlivant, it's been 3. And everything that you heard Lilly talk about relative to how they just jumped on everything from a protocol to minimize the impact and the low infection rate was mirrored at Enlivant as well. So I think the combination of all those factors give us a comfort level, Rich.

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.

Yes, 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 with people that are asymptomatic with employees obviously as well as residents and patients. But I don't have -- I haven't seen any good statistics out there that allow us to say x percent of the positive tests are people that are symptomatic and x percent aren't. And certainly, nothing that tells us the degree of which people are feeling symptoms.

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

Well, in skilled nursing, it's all going to be covered by Medicare. And 1 of the benefits of the 3-day hospital stay waiver is that if a person's condition changes, whether it's COVID or not, under normal circumstances, they would have to be shipped back to the hospital in order to qualify for that Medicare benefit that they already had. Now you can skill them in place. So let's say they've been in the facility for 90 days. The first 25 days, they were covered on Medicare. The remainder of the time they're converted to their secondary payer status, which is typically Medicaid with Medicare Part D support. And then on day 90, they spiked the fever or 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 it's actually been one of the benefits, and that's for COVID.

I'm just thinking more broadly about the portfolio, how much -- I mean breaking down skilled and senior housing and...

So on the senior housing side, the care is just -- is insurance coverage for testing plus for the actual care. Most people don't -- haven't shared if they'd go to senior housing, it's just -- it's out of pocket.

Our next question comes from John Kim with BMO Capital Markets.

I was wondering if I'd ask Lilly a question or two, if that's okay. I was wondering if the pandemic has 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.

Well, home health, I mean that's not a physical asset. So we're not going to get into the whole health business. Home Health has 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 kind of have mixed feelings about it in terms of how the pandemic could affect it, and whether that's a negative or positive, so I actually don't really have a firm opinion on that. What was your other question?

The home health goes to Lilly. I realize it's not going to fit into a REIT. Micro homes, active adults if that was something that you're looking at as well?

Yes. Talya, 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...

So we haven't looked at it a little bit because we were trying to figure out if 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 get that to work. It pretty much trades at a pretty darn close to multifamily, it's not on top of the multifamily. And there's really -- there's no way for us to figure out a way to do something accretive in there, at least not right now.

Yes. For what it's worth, I've been in the adult 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 updating me a little bit, so maybe it's gotten somewhat better. But just not that attractive.

That's interesting, okay. And then the 73 basis points of occupancy launch you had in July in your senior housing, I was wondering if that was a good run rate for monthly net attrition for the third quarter or the remainder of the year.

Talya?

I was going to let you be the prognosticator.

Yes. I mean there's no way to know. I mean everything's flattened out. Per Richard's question, maybe you have a little bit more deterioration depending on what happens with what breakouts. As I said, we don't think there'd be much there. So it feels like we've kind of been through the worst of it, but there could be a little bit more, but we don't think that it's going to be material. And it's pretty hard to prognosticate. No one's going to be right, no matter what they say.

Our next question comes from Daniel Bernstein with Capital One.

I guess it's interesting to me we're coming up on flu season at some point here, and the symptoms are very similar to COVID. So 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 that? I mean 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?

Sure. I think I'm going to take advantage of having Lilly on the call, and then I may add a couple of comments. Lilly?

Yes, sure. So on the IL side, I don't think it's going to complicate things at Holiday. We're actually tracking all infectious disease symptoms now. So have it on a real-time basis, I think there was an earlier question about asymptomatic-symptomatic. This is just Holiday's 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, their physicians will recommend that they get COVID testing. So my guess is that, that will increase. And it's okay if it increases because we have a great process to go through someone who's been tested for COVID, what happens in a community, and then obviously, what happens when they test positive. So I don't think it's -- 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.

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 the flu season. So intuitively, it sounded like it made sense to me, but let us see what happens, obviously, it was interesting.

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

Much more. I mean you don't have -- everything that's driving a lot of the expenses in the facilities roll the one-on-one activities. You don't normally see that happen during a regular flu season.

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, say, skilled nursing, you would see maybe more opportunities on the senior side, but doesn't sound like that's quite materialized yet. That's the way -- right way to put it.

Talya?

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 may be a decline in value or an impairment to value on a mark-to-market is still out there. So we haven't seen -- 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 pay off existing debt and refi. And we think that that's an opportunity for us to play in an interesting way in a structured deal. But that's like the opportunity. I mean you got all the lenders, they're all talking forbearance, right? This is not a product that's financed generally in the CMBS world, so it's not part of what's going on there on with special servicing.

Our next question comes from Lukas Hartwich with Green Street Advisors.

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

It's a really good question. So on senior housing, we're actually looking at how Brook's are doing right now. And there are definitely buildings that are -- have performed well and are 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 noise in terms -- on the revenue side. Skilled nursing is harder. It's much harder. You kind of -- you have to peel out and it becomes really challenging to do this. 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 in occupancy. And you have to make an assessment of the fundamentals of what we have -- of the fundamentals of the -- 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 skilled side.

I think part of it is how well you know the operator, how you're going to look at their other facilities, and see how they've handled that. So a lot of that helps. It's just -- it's a good data point to have in terms of they're 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've handled all their other buildings thus factoring.

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 IL versus AL versus memory care on the senior housing side?

It doesn't. I think, look, the long-term benefits still exist, I think generally, and we've talked about this a little bit before. I think the spaces there that we are in have always been neglected by the health care systems generally. And certainly, the government, we were all called that of Obamacare. And I think all that's going to change. I think that from skilled nursing, senior independent living everything else in between, we are now going to be recognized, and I think the recognition has been happening, an integral part of the health care system. There's an awful lot of conversation now about the inadequacy of Medicaid rates.

And so the whole narrative has shifted from sort of the heart of all these headlines and how many people are dying in facilities to, hey, wait a second, let's roll with the system and what could the system do differently? And what could we do differently because we weren't there to support these facilities to begin with. I think I mentioned on the last call, it was almost -- it was 9 to 10 weeks into the pandemic before they even sent PPE to nursing homes. And maybe as much as half of it was flawed. So I actually think -- I think the value equation gets better as a result of this. And obviously, the demographics don't change. And as you heard from Lilly, we've been seeing throughout the pandemic with the back doors closing down. The operators that have done a really good job have made their residents feel safe. And so when it comes down 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 go along lay the 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, as you know, because assisted living has become such a needs-based model that changes the equation anyway, and there's been acuity creep in independent living as well. And I think some of the things that we've seen with independent living and Holiday has been a leader in that is by introducing access to health care that they can have before through telehealth, for example, and what Holiday has done there. They were -- they were a company that sort of forge a new path with that. And I think that's going to help to continue to entice people to come into the communities. Really, I don't know if there's anything that you want to add to that?

No. I think that's exactly right. I mean all of those things are made to provide more access. I think just even talking about the flu, we're not just focused on COVID. We know that there's an end date. There may be 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, like 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 at 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 are certainly things that we could do from a preventative side.

Our next question comes from Tayo Okusanya from Mizuho.

Our next question comes from Steve Valiquette with Barclays.

This is Morgan McCarthy on for Steve. Sorry if I missed this earlier, but I guess I was just wondering if you could talk a little bit more about the impact of the resurgence of COVID cases in states like California, Florida, on SHOP operators. Are you actually seeing those facilities be forced to reshut 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 tours or move-ins?

The impact on SHOP has been pretty minimal. And for 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. I don't want to make light of even a foreign person as COVID. But we're just not having a big breakout because so much care has already been provided. And all the one-on-one activities and the restricting of nonessential visitors and the screening of the central visitors has really helped so that occupancy through this time period has actually been pretty flat. Folks can still admit. They isolate people and they get admitted. It just means that some of the normalization that we want to get back to 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 nearly tough. So it's just so that kind of step down. But in terms of having any sort of material impact on occupancy and therefore, the bottom line, we're not really seeing that.

Okay. And then just one more question on the SHOP portfolio, I guess, not necessarily related to occupancy, but how are you thinking about move-in 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 are just choosing to delay the move-ins? Or does -- well, even though there's been an improvement in move-ins, is it down just because of an overall function of leads and tours being down as well.

Talya?

Sure, so move-ins are trending up so that the whole sequence of leads towards leases and move-ins is trending up, and we're seeing that uniformly in the SHOP portfolio, it is not yet at the level of what 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 and 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. There are processes, people in communities and the leadership and our -- our operators 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 a municipality has determined that no admissions are allowed, then that's one thing because all of our operators have to comply with the local health department and other regulatory bodies.

But to the extent that they are able to have someone test before move-in and if they test negative move-in without any issues or come aboard or self-isolate once they moved in, they figured out ways, protocols for people -- to allow people to move-in and have the kind of safety and eventually the socialization that they desire.

Our next question comes from Tayo Okusanya with Mizuho.

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 budgets. How you -- what are you kind of seeing from a Medicaid perspective just kind of given that a lot of big budgets are actually challenged right now because of COVID?

We're not really seeing much difference 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 figure it 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 despite the stress on the state budgets, I don't think that piece of it kind of gets worse just because, in large part, because of the federal match, they don't want to risk that federal match. And one of our main data points there always titled as great recession, which obviously was much different, but that was, in 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 sectors but for nursing homes. So I think the federal match is important to keep things in place.

And then just 1 other question in regards to just for stimulus 4, are there specific things that the industry is lobbying for in similar sport, for example, kind of -- having a kind of blanket limited liability because of COVID? I'm just kind of curious what the industry is lobbying for kind of getting some of those requests?

That's the big issue, is the liability issue. And despite what opposing can say, we have -- the industry has no issue and is not lobbying for blanket immunity regardless of real negligence and things like that. Those people should always be taken to task. But just the mere fact that you have COVID in the facility doesn't mean that you should get sued. So that's really what the focus is. There's also been a lot of state lobbying, and I think -- I actually haven't seen an update entirely a little bit over a week. I think there are about 31 states. Actually, maybe -- I think it's more than that. I think 39 -- we take 25, 21 and 50, yes, 29 states had some form of limitations on liability. So that's going to be helpful going forward, but having it done at the federal level is 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.

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

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

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.