Ladies and gentlemen, thank you for standing by, and welcome to the Sabra Health Care REIT 4th Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I now like to hand the conference over to your speaker today, Michael Costa, Executive Vice President, Finance and Chief Accounting Officer.
Thank you. Please go ahead, sir.
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-nineteen 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 ks for the year ended December 31, 2020, that was filed with the SEC yesterday as well as in our earnings press release included as Exhibit 99.1 to the Form 8 ks we furnished to the SEC yesterday. We undertake no obligation to update our forward looking statements to reflect subsequent events or circumstances and you should not assume later in the quarter that the comments we make today are still valid. In addition, references will be made during the 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 in the Financials page of the Investors section of our website at www.sabrahealth.com. Our Form 10 ks, earnings release and supplement can also be accessed in the Investors section of our website. And with that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra HealthCare REIT.
Thanks, Mike, and good day to everybody. Thanks for joining us. I appreciate it. First, let me start by once again thanking operators who have just done an amazing job showing resilience and dedication. I mean, here we are a year later, who would have thought?
And then finally, they're at a point where we really see the light at the end of the tunnel and have some real positivity, which I'll talk about in a few more minutes. I also want to thank the workforce, all the caregivers and other frontline employees in the facilities who continue to show up every day and execute on the mission of providing care to the elderly. I'd also like to express my continued appreciation to state and federal government for continuing to provide support primarily to the skilled sector, but also to the senior housing sector, the assisted living sector as well. And then finally, I want to call out the Texas operators who, on top of everything else, shouldn't have had to go through what they went through recently with the weather and all the difficulties that, that caused. And fortunately, all the facilities have emergency backup generators.
There was minor to moderate damage, if any. So they're fine from a physical plant perspective. Only one of our facilities had to evacuate, and that was for a very short period of time. And there were a few facilities that had short lockouts, but they didn't last for very long. The bigger problem really was staff just being able to get in and drive on the roads and all that.
But we're past most of that right now. But again, on top of everything else, for them to have dealt with that was really difficult. So I want to express my appreciation to all of our operators and caregivers in Texas. I also want to thank the Sabra staff. We're still working from home almost a year later, and they just don't miss a beat.
Productivity has been fantastic, And we've actually onboarded 7 new team members during the pandemic, which was challenging working from home, but we all made it happen. We provided enhanced benefits to our staff, and we've done, I think, some interesting things to improve connectivity and just really stay in touch with each other and try to maintain the culture that we work so hard in developing here. And finally, a couple of other things that pertain just for the company. That is we've had some significant Board changes. Since December, we've added 3 new Board members, Cliff Porter, Anne Kono and Katie Cusack.
This goes to all of our efforts to enhance the diversity of our Board, and they bring some really unique and interesting skill sets that were lacking on the Board before in the areas of health care policy, investment banking, data analytics and ESG. And then last but certainly not least, I want to congratulate Mike Costa for being promoted to Chief Accounting Officer. Mike has been with us since the beginning of the creation of Sabra and has always done an amazing job and has developed a great team. And we couldn't be more pleased having had the opportunity to work with Mike all these years and now to see him get promoted to Chief Accounting Officer. So I noted ESG with one of our new Board members a second ago.
We are going to be releasing in the next few months our inaugural ESG report. We started working on this initiative well before the pandemic. The pandemic certainly slowed some things down. But in the next few months, we will have our first report released. Rating agencies, we're really pleased with all the work that we've done through the pandemic and to have Fitch come out and affirm our ratings and remove the negative outlook with the pandemic still something that we're all dealing with, was really a fantastic outcome, and S and P also affirmed our ratings as well.
So we feel really great about that, and Howard will talk more about that. Now on to some of our tenants. Everybody has seen that there was an announcement on Enlivant that the CEO, Jack Allison, of Enlivant is moving over to become the CEO of Sunrise. Dan Gill is the new CEO of Enlivant. He's been the COO.
He's been there really since the beginning with Dan with Jack Rudder, and we have fantastic relationship with Dan. Jack did a great job building a really deep bench. And so we feel more than comfortable. We feel very strongly that Dan is going to do a great job as CEO. We don't expect there to be any changes that are noticeable to anybody on the outside.
He was instrumental in building a culture there, and that will continue all over the lines that Jack established. We also expect a potential we expect a resolution to the JV this year, And there's not really details to share at this point other than TPG. They've let us know they'd like to resolve it this year. So we'll be working with TPG and be making a decision on whether we retain or buy their 51% out or we exit the portfolio. For us to be able to buy out the 51% that's owned by TPG, and I think as everybody knows, pandemic notwithstanding, we really like the portfolio.
We like the assets. The team is great. But it's taken a hit during the pandemic. It's going to take time to recover. And so this just has to work for us economically.
We're not going to do it just to do it. And so whether we can get there with PPG and have a transaction that is beneficial to our shareholders remains to be seen. So stay tuned for more on that and how we'll talk a little bit more about that as well. In terms of the stimulus, I want to point out that there's still $33,000,000,000 left in the HHS fund that hasn't been distributed, and that's a GAO number. So that's a very specific accurate number.
The $33,000,000,000 is actually going to increase because there's quite a number of hospital providers that are in the process of returning funds that were not needed back to HHS. So the $33,000,000,000 is actually going to increase, we think, relatively significantly. So stay tuned on that as well. There are ongoing discussions, but we don't know what's going to happen with allocation yet on that. But it certainly makes us feel pretty good that that level of money is sitting there still.
As you all probably know, the Public Health Emergency Act was extended for another quarter. We're actually optimistic that the Public Health Emergency Act will be extended for the year. But technically, it can only be extended in quarterly increments. But that's the dialogue that's going on. And that, of course, carries with it sequestration, the continued wave of the 3 day stay and FMAC.
Also want to note that we're very pleased with President Biden's Xavier Becerra for HHS Secretary and Chiquita Brooks LaSure for CMS Administrator, and we look forward to having a productive relationship with those folks assuming that their nominations are confirmed. Now moving on to VACTRIM update stats. Since this started at the end of December, the numbers have improved really dramatically. In the aggregate, we're close to about 80% of our patients and residents having received at least 1, if not 2, shots of the vaccine. And so if they've only received 1, obviously, they're scheduled to receive the second.
And staph, which was under 40% in the aggregate, is now up to about 60%. And I think we're seeing with staph what we would have expected to see, and that is as they saw residents and patients that they provide care for and their colleagues who got the vaccine when they thought they were okay and there weren't any side effects, it increased their confidence. And so those numbers have picked up dramatically. And we continue to expect those numbers to improve. We have a number of operators that are actually over 90% on residents, patients and employees.
So, that's just all good news. As cohort restrictions for facilities are eased due to the vaccine rollout, this will provide additional impetus for occupancy improvement. Due to these restrictions, admissions are limited simply due to the lack of availability of beds in facilities with so much isolation that's been necessary. So we've always focused on surgeries and the hospitals being at capacity and not having regular admits for our admission flow, hampering occupancy, and certainly those are huge factors. But the cohort restrictions have been equally maybe not equally significant, but very significant as well because of the number of rooms that have had 2 beds, but we can only use 1 bed for those isolation protocols.
So as that normalization starts to accelerate with all this VAX will be uptake in vaccines, then we should see a normalization of the environment and facilities having more group activities. That's going to also lessen the amount of labor that we have and should automatically start improving the margin even ahead of occupancy improvement. In terms of communities that have been impacted by COVID, that's improved dramatically since early January and the peak of the recent surge. Only 2 new facilities have had positive COVID tests last week and only 2 the week before. So just dramatic improvement for that mortality and cases have come down dramatically as we've seen nationwide in long term care facilities.
We see the same in our portfolio as well. So really all good news there. Now I just want to mention home health because it's come up a lot on some of the earnings calls and it's been part of the narrative that's out there. 1, in terms of the home health impact and whether or not home health benefits, well, that's skilled nursing and senior housing. 1, I would point out that there's nothing new in this narrative.
This is a narrative that's been in existence for well over a couple of decades. It's been impacted by the difference the pandemic has had on home health and SNF occupancy. So clearly, home health has benefited during the pandemic, particularly with hospitals admitting the lightest to care patients, get discharged and go back to home. And frankly, we think it's a good thing if home health can take more patients because we do have a demographic crisis looming. We have a decline in supplying on skilled, and there are already access issues that are going to be exacerbated throughout the country in terms of skilled nursing.
So we actually, as a society and as a country, need home health to be taking more than they've taken historically from an acuity perspective. However, that said, the paradigm isn't going to change. There are huge acuity differences between the settings. In home health, you've got, by definition, interim visits by nurses and therapists. And in skilled nursing facilities, it's all 20 fourseven.
It's very intense. And we see the same in assisted living, obviously, not as intense as skilled nursing, but much more intense than home with the rise in acuity over the last 10 years for assisted living. So you've got nurses around the clock, nurses in there every day. So the paradigm doesn't change, and we expect to see things normalize more as everything else normalizes when we move past the pandemic. On guidance, Howard will talk in detail about guidance, but we determined that it was best only to pay out Q1 primarily because of the managed portfolio.
And then Genesis is out there. We're not sure how that's going to resolve either. So we could talk more about that. But those were really, really the 2 issues. We do think that based on the most recent statistics that we are close to bottom on managed occupancy coming down.
We completed $168,400,000 in investment activity in 2020 with a blended cash yield of just under 8%. Our acquisition pipeline currently stands at about $1,500,000,000 primarily senior housing, but actually some interesting opportunities that we're looking at there. We're seeing more behavioral and addiction opportunities, and we are just starting to see some skilled opportunities. Not a whole lot there still, but we're starting to see some. Now moving to some operating statistics.
Skilled occupancy dropped about 1200 basis points from February 2020 through the end of 2020. Skilled mix, however, improved 5 30 basis points during that point during that time, which was a very important mitigant for our operators. To this point in 2021, the occupancy decline has almost effectively stopped, and our top 7 operators bottomed out actually at the end of December and are up 2 10 basis points through the 2nd week of February from the end of December. The snip industry in the aggregate was actually down 8 50 basis points, 18 50 basis points from February 2020 through year end, but they've recovered the industry in general has recovered 200 basis points in the 2 months since they hit bottom as well. So it's kind of too early to really project, but we've got aggregate data points for the industry and for our top operators, both improving by about 100 basis points a month.
We'd love it, obviously, if you can stay on that sort of track because we'd be in really good shape by the end of this year. And as some of you know that we've talked to in the conferences that we've had, we projected that the SKILLS would be back more around the Q1 of 2022 or pretty close to back. So we'll see if we can actually beat that. Our senior housing lease portfolio held up actually really quite well during that period with occupancy dropping 16 to 20 basis points, And that's really a function of having small operators in very specific markets within the 65 facilities that are in those in that leased category. And so they actually held up pretty well.
Senior housing leased EBITDARM coverage slipped from 1.31 to 1.25. And unlike the skilled coverage, EBITDA coverage, which improved to 1.93%, that was obviously in large part due to all the assistance that we've gotten on the senior housing lease side.
There was much less assistance
than in the skilled space. So we would have expected that to drop some, but still at 1.25 EBITDA. That portfolio in the aggregate is in pretty good shape as well. None of our operators have required any permanent rent restructurings at this point. And our rent collections have been 99.9 percent of forecasted rents throughout the pandemic, and we don't expect that to change.
And finally, I want to point out our specialty hospital coverage and occupancy have been unaffected by the pandemic and contribute a meaningful 11% of our NOI. And with that, I'll turn it over to Talia.
Thank you, Rick. In the Q4 of 2020, our senior housing managed portfolio continued to experience occupancy pressures as a result of the pandemic and the surge that followed the Thanksgiving and Christmas holiday season. While government funding provided some mitigation from the financial pressures, adoption of the vaccine is the linchpin to getting the senior housing industry on the road to recovery. All our operators have been intent on implementing vaccine clinics at their buildings, educating and incentivizing both residents and staff to maximize participation and using their clinics and documented safety record to demonstrate to potential residents that the fastest path to a normal lifestyle is to move into a senior housing community. CMS data compiled by Nick shows that COVID cases in skilled nursing closely tracked cases in the general population Pfizer and then the Moderna vaccine in December 2020.
In January 2021, this changed dramatically. Cases in skilled nursing began to decline just as cases in the U. S. Spiked from the post holiday surge. By early February, new cases in skilled nursing fell by 83% and cases in the general population fell 47% compared to late December when the Pfizer vaccine was launched.
After the launch of the vaccines, deaths in skilled nursing began to decline and have continued to do so dramatically, while deaths in the general population spiked and have plateaued since. With skilled nursing as a leading indicator of the impact of the vaccine in congregate living, we have reason to be optimistic. As of the end of Q4 of 2020, approximately 14% of Sabra's annual cash net operating income was generated by our senior housing managed portfolio. Approximately 49% of that relates to the communities that are managed by Enlivant and 37% relates to our holiday managed communities. The balance includes our Canadian portfolio and 5 assisted living and memory care communities in the U.
S. To start, I will provide highlights of the operating results of the managed portfolio, which includes both the wholly owned portfolio and Sabra's share of the unconsolidated joint venture on a same store sequential book quarter basis to illustrate the trends in the industry. These results will exclude 2 recent acquisitions and 1 transition community in our wholly owned portfolio consistent with the presentation in the supplemental information package. IPPC declined 280 basis points to 76.4 percent in the Q4 of 2020, in line with the 270 basis point decline experienced in the Q3 over the prior quarter. Revenue per occupied room, RevPOR, excluding government grants received, rose 1.6% this quarter compared with an increase of 1.7% in the previous quarter.
Revenue decreased 5.8% in the Q4 of 2020 compared to the Q3, inclusive of $1,100,000 and dollars 4,000,000 respectively of government funds received by eligible assisted living facilities. If we exclude the grant revenue, then same store revenue declined 1.9%. Cash net operating income for the quarter decreased sequentially by 24.9 percent to $14,800,000 from $19,700,000 Excluding the government grants, cash net operating income would have declined by 12.5% on a sequential basis. Cash NOI Margins Decreased TO 21.3 Percent From 26.8 Percent in the preceding quarter. Excluding government grants, cash NOI margin would have been 20.1% in the 4th quarter and 22.5% in the preceding quarter.
In the Q4, we saw the same occupancy and rate dynamic as we saw in the Q3, rising rates and continued decline in occupancy resulting in a decline in revenue. In a business with high operating leverage, government funds received by eligible operators have had a disproportionate impact on cash net operating income depending on the amount and the timing of receipts. The Enlivant joint venture portfolio of which Sabra owns 49% had a challenging 4th quarter as a result of lower occupancy and operating revenue that was only slightly offset by the receipt of approximately $484,000 in government grants. Average occupancy for the quarter was 71.6%, reflecting a 4.2% decline on a same store sequential quarter basis and a 10.6% decline on a same store basis compared with the Q4 of 2019. RevPOR, excluding government funding, was 4,576 compared with 4,411 or 3.8% higher on a same store sequential basis and 3.6% higher on a same store basis compared with Q4 of 2019.
Revenue was 8.6% lower on a same store sequential quarter basis and 8.5% lower on a same store basis compared with the Q4 of 2019. Excluding government funds, revenue decreased by 1.9% on a same store sequential basis and 9.8% on a same store basis compared with the Q4 of 2019. Same store cash net operating income was $5,200,000 a 43% decrease on a sequential quarter basis driven by lower government funds in the 4th quarter. Without those funds, same store cash NOI would have declined 22.3%. Subsequent to the end of the quarter, January 2021 occupancy was 68.9%, 140 basis points lower than December 2020 occupancy.
Since the pandemic began, nearly all of our Enlivant Joint Venture communities have had a resident or staff member test positive for COVID-nineteen. By late February, only 10 communities had a resident or staff member with a positive test compared with 35 at the end of January. That's a 70% decline. All the communities in the joint venture have completed their first vaccine clinic and 50% have had their second clinic. Data so far shows that 94% of residents and 64% of staff received the vaccine, a significantly higher rate than industry average.
January 2021 saw a rise in move ins compared to the prior month, while move outs remained at a reduced level similar to move outs before the holiday surge. The gap between move ins and move outs started to narrow in January and that momentum has continued into this month. The 4th quarter operating results for Sabra's wholly owned Enlivant portfolio of 11 communities had similar scenes in its performance. 4th quarter occupancy was 77%, a 4.2% decline compared to the prior quarter and a 12.5% decline compared with the Q4 of 2019. RevPOR in the 4th quarter, excluding government funding of $549,000 was $6,029 4.7 percent higher than the prior quarter and 3.8% higher compared with the Q4 2019.
Revenue was 3.3% lower on a sequential quarter basis and 5.1% lower compared with the Q4 of 2019. Excluding government funds, revenue was nearly flat on a sequential quarter basis and 10.7 percent lower compared with the Q4 of 2019. Cash net operating income was $1,900,000 a 32.2% decrease on a sequential quarter basis, helped slightly by the government grants. Without those funds, same store cash NOI would have decreased 32.6% for the same period. More recently, January occupancy was 68.4%, 5 10 basis points below the prior month, while only 2 of our wholly owned Enlivant Communities currently have a resident or staff member who is positive for COVID-nineteen, that's down from 6 at the end of January, all 11 communities were touched by COVID during the post holiday surge.
The combination of an increase in resident deaths and move in restrictions resulting from the surge had an outsized impact on occupancy. Enlivant also incurred higher costs associated with the surge, including labor costs as well as increased PPE needs. By mid February, all these communities have their first vaccine clinic and half had already completed their second clinic with 94% of residents and 64% of employees receiving the vaccine. While it will take time to rebuild occupancy back to the pre pandemic levels of 90 plus percent, in January, we saw a reduction of about 25% in move outs in tandem with an increase in move ins of about 150% compared with the prior month. This momentum along with vaccine clinics driving a rapid reduction in infection lays the groundwork for occupancy to rebuild.
Holiday Retirement operates 22 independent living communities for Sabra, one of which was transitioned to Holiday in the Q4 of 2019. Note that these properties were not eligible to receive government support distributed to assisted living providers. All the following operating results are presented on a same store basis and excludes the transition property. Holiday portfolio occupancy was 80.8% in the quarter, 1.7% lower on a sequential basis and 7% lower compared with the Q4 of 2019. RevPAR was $2,518 flat to the prior quarter and 1.3% higher compared with 4th quarter 2019.
Revenue declined 2.2% compared to the prior quarter and 6.9% compared with the Q4 of 2019. And cash net operating income was $6,100,000 a 3.4% increase on a sequential basis and 10.1% decline compared with Q4 of 2019. Subsequent to the end of the quarter, excluding the 1 transitioned community, January occupancy was 79.8% compared to 80.7% in December 2020, a 90 basis point decline. Over the last year, all 22 properties that Holiday managers for Sabra have had a resident, staff member or private home health aide test positive for COVID-nineteen. As of mid February, 17 communities have recovered and are in various stages of lifting restrictions such as dining or news that reduced capacity, limited visits and reopening of the beauty salon.
Independent living communities were not eligible for government aid and prioritized on premises vaccine clinics. In order to continue to keep its residents safe, Holiday is needed to be created in organizing and negotiating vaccination strategies. Holiday currently has 13 of our communities with confirmed vaccination partners. 5 of those communities have already held 5 initial clinics for residents and associates with 78% and 37% vaccinated respectively. In the Q4 of 2020, Holiday saw a rebound in sales activity with leads, move ins and move outs tracking between 95% 99% of Q4 of 2019.
We are now seeing a gap between move outs and move ins narrow significantly on the heels of vaccine distribution, reflecting the same trends that we spoke about at Enlivant. Sienna Senior Living manages 8 retirement homes in Ontario and British Columbia for Sabra. In the 4th quarter, the Sienna portfolio had 79.5 percent occupancy, flat on a sequential basis and 8.8% lower compared with the Q4 of 2019. RevPOR was $2,488 2.5 percent lower than the prior quarter and 2.2% lower compared with 4th quarter 2019. 4th quarter revenue was $4,500,000 2.5% lower than the prior quarter and 11.9 percent lower compared with Q4 2019 driven by occupancy declines.
In the Q4, cash net operating income was just over $1,000,000 a 1.3% decline on a sequential basis and a 44% decline compared with Q4 2019. More recently, January occupancy was 78.5%, a 30 basis point decline compared with the prior month. Only one of our retirement homes has had a confirmed case of COVID-nineteen. And while Canada experienced a surge in COVID cases after Canadian Thanksgiving in October, the impact on our portfolio has remained minimal. Both British Columbia and Ontario are in the early stages of rolling out vaccine clinics to retirement homes after having prioritized I'm sorry, after prioritizing long term care residents and staff.
It is not yet clear when retirement homes will be receiving vaccines, although at least one of our Sienna Homes in Ontario has already had 80% of staff vaccinated. Leads have ramped up to nearly double what they were in the fall. Even without the catalyst of vaccine distribution, move ins are increasing to NASH move outs, which remain driven by death and the need for higher level of care. We have noted in prior quarters that senior housing rates appear in Elastic. Our operators have consistently maintained rates because the prospective residents' decision to move in is being driven by qualitative rather than quantitative factors.
They are seeking a change in lifestyle whether out of need or desire. While we speak about pent up demand and higher lead volume, the fact is that converting leads to move ins is more challenging when potential residents are concerned about the lifestyle that they will have when they move in. Between February 2020 January 2021, our senior housing managed portfolio inclusive of non stabilized assets lost 10.1 percentage points in occupancy. Occupancy remains the largest variable driving the operating results of our senior housing managed portfolio. But what our results in the Q4 point to is that the holiday surge in COVID cases has not had a uniform effect on our managed portfolio.
The largest occupancy declines were in assisted living, particularly in December 2020 January 2021. Lower move in rates during the holidays and higher death rates among more vulnerable residents drove that outcome. COVID infections that surged in the general community impacted our assisted living communities and the people who work there resulting in increased labor, PPE and related costs, particularly in those months. While our Assisted Living operators did receive some government support, it was significantly lower in the Q4 and didn't offset the simultaneous higher costs and lower revenue experienced in December 2020. Cash net operating income margins, which are lower in assisted versus independent living were even further compressed.
The first step in reversing this trend is to maximize vaccinations, which is underway. Both our portfolio as well as broader statistics indicate that residents are eager adopters. If skilled nursing is a reasonable precedent, we have visibility on stemming occupancy losses. COVID cases should decline within a month following the vaccine clinics. And in fact, we have shared that we are seeing a steep decline in cases.
With fewer cases will come fewer move outs, again, something we have discussed, which will begin the return to pre pandemic levels and extend length of stay. Achieving high vaccine adoption rates among staff will help reduce labor costs, which spike during an outbreak. These, along with normalized PPE expenditures, will help stabilize expenses and support net operating income. Rebuilding occupancy will take more time. It requires converting leads to leases and convincing potential residents of the value that senior housing brings to their life.
A vaccinated population will allow for fewer and fewer restrictions within the community, which will allow residents to gradually resume the lifestyle that brought them to independent or assisted living in the 1st place. Operators will now have evidence to show that living in their community is not only enjoyable, but also safer whether it is in the face of a pandemic or a natural disaster. I will now turn over the call to Harold Andrews, Sabra's Chief Financial Officer.
Thanks, Talia. I'll give an overview of the numbers for Q4 and then provide additional color on our guidance for the Q1 of 2021. For the 3 months ended December 31, 2020, we recorded total revenues, rental revenues and NOI of $152,100,000
110,700,000
$124,000,000 respectively. These amounts represent increases from the 3rd quarter, primarily due to a 3rd quarter $14,300,000 write off of straight line rent receivables and above market lease intangibles for Genesis and Signature as we move those tenants to a cash basis for revenue recognition. Excluding this write off, total revenues declined $5,500,000 rental revenues declined $4,200,000 and NOI declined $9,600,000 in Q4 compared to Q3. These declines were due to a $3,700,000 decrease in collections related to leases accounted for on a cash basis. Note that the Q3 of 2020 had a $2,200,000 increase over the 2nd quarter in rents collected from cash basis tenants.
These fluctuations in collections stem from a handful of cash basis tenants that are in some phase of transition or stabilization period and pay rent based on cash flow available for payment, which can fluctuate quarter to quarter due to fluctuations in cash flows at the operator level. Payments with this type of arrangement represent just 2% of our total revenues during the 4th quarter, and we do not see the reduction of cash collections this quarter as a new trend. Total revenues in NOI were also impacted by a 1 point $2,000,000 reduction in revenues from our wholly owned senior housing management portfolio compared to the 3rd quarter, including a $600,000 reduction in government grants income. NOI was further impacted by the results of the Enlighten joint venture, which was lower compared to the 3rd quarter by $4,000,000 including a reduction in government grant income of $2,500,000 We recognized $1,100,000 of government grant income during the 4th quarter, dollars 600,000 related to our wholly owned portfolio that was recorded in revenues and $500,000 related to the Enlivant joint venture that was recorded as part of loss from unconsolidated joint venture. Finally, COVID-nineteen related costs in our senior housing managed portfolio totaled $3,000,000 for the quarter, a $500,000 increase compared to the 3rd quarter, lowering our NOI in the 4th quarter compared to the 3rd quarter.
Of the current quarter expense, dollars 2,000,000 related to the Enlivant joint venture, while $1,000,000 was incurred in our wholly owned portfolio.
FFO for the quarter was
$87,500,000 and on a normalized basis was $88,400,000 or $0.42 per share. This compared to normalized FFO of $98,800,000 or $0.48 per share in the Q3 of 2020. AFFO, which excludes from FFO certain non cash revenues and expenses, was $87,200,000 and on a normalized basis was $86,900,000 or $0.41 per share. This compares to normalized AFFO of $95,100,000 or $0.46 per share in the Q3 of 2020. These declines in normalized FFO and normalized AFFO are primarily related to reduction in NOI of $9,600,000 previously discussed.
For the quarter, we reported net income attributable to common stockholders of $37,100,000 or $0.18 per share. G and A costs for the quarter totaled $8,100,000 compared to $7,200,000 in the 3rd quarter. G and A costs included $2,300,000 of stock based compensation expense for the quarter compared to just $900,000 in the 3rd quarter. This increase is due to updating our performance based investing assumptions on management's equity compensation in the 3rd quarter, which resulted in lower expense in that quarter. Recurring cash G and A cost of $5,800,000 were 4.7 percent of NOI for the quarter and in line with our expectations.
We continue to have a strong liquidity position as of December 31, 2020, with over $1,000,000,000 of cash and availability on our line. This puts us in an excellent position to take advantage of acquisition opportunities that present in 2021 and beyond. As we have consistently reported, maintaining our target leverage of below 5.5 times continues to be a key priority for us. We are very pleased to see that the recent changes in our Fitch rating going from a negative outlook to stable as well as the reaffirmation of our ratings in S and P. Maintaining leverage is a critical component of our current ratings.
We have continued to manage this through the pandemic induced declines in earnings on our managed portfolio during 2020. To that end, we issued 3,600,000,000 shares of common stock under our ATM program during the quarter at an average price of $16.81 per share, generating gross proceeds of $60,100,000 to $4,900,000 of commissions. Additionally, we utilized the forward feature of the ATM program in preparation to fund certain upcoming investments. At 1,100,000 shares with an initial weighted average price of $17.44 net of commissions remained outstanding under the forward sale agreements. Our leverage remains below our target at 4.88x, excluding the JV debt and increased slightly to 5.49x from 5.48x, including our share of the Enlightened joint venture debt.
At the end of 2020, we have $235,000,000 available under the ATM program. We were in compliance with all of our debt covenants as of the end of the year and continue to have strong credit metrics as follows: our interest coverage is 5.32x fixed charge coverage 5.14x total debt to asset value 35% and unencumbered asset value to unsecured debt 2 82 percent secured debt to asset value just 1%. On February 2, 2021, the company's Board of Directors declared a quarterly cash dividend of $0.30 per share. Dividend will be paid on February 26 to common stockholders of record as of February 12. The dividend represents a payout of approximately 71% of our AFFO and 73% of our normalized AFFO per share.
Now for a couple of comments on Q1 2021 guidance. As noted in our press release issued yesterday, the financial effects of the COVID-nineteen pandemic has made it more difficult to accurately forecast our future earnings, primarily within our senior housing managed portfolio. As a result, we have limited our guidance to the Q1 of 2021. We expect the following amounts per diluted common share for the quarter ended March 31, 2021: net income $0.16 to $0.17 FFO $0.39 to 0 point 4 0 dollars and AFFO $0.38 to $0.39 The above estimates are based on certain key assumptions spelled out in our supplemental. I would like to bring attention to just a few.
The estimates above do not include any anticipated funds from the Provider Relief Fund for our senior housing managed communities. While we expect to receive some meaningful amounts, predicting the amount and timing is very difficult. As we have seen continued pressure in the early part of the Q1, we expect our senior housing managed portfolio average quarterly occupancy to fall within the following ranges: wholly owned 75.4 percent to 77.4 percent and unconsolidated joint venture 66% to 68%. We expect to close investments totaling $39,000,000 with an weighted average initial cash yield of 8.2%. We anticipate funding investments using the revolver along with match funding the equity component using the ATM program.
In the aggregate, we expect to issue approximately $100,000,000 of equity under our ATM program to fund acquisitions and meet our goals of maintaining leverage at 5.5 times, which would include the unconsolidated joint venture. Based on expected annualized adjusted EBITDA of approximately $480,000,000 as of March 31, 2020.
Finally, I'd like to point out
that our calculation of net debt to annualized adjusted EBITDA is based on a trailing 12 month adjusted EBITDA. March 2021 will be the 12th month impacted by the pandemic. This is important to our management of leverage because each quarter as each quarter passes since the start of the pandemic, we're dropping off a quarter of higher pre pandemic EBITDA generated by our managed portfolio and replacing it with a significant reduced EBITDA that has been negatively impacted by the pandemic. In order to keep our net debt to annualized adjusted EBITDA below our target of 5.5 times, we expect to issue additional equity during the Q1 of 2021 to again account for the lower trailing 12 month adjusted EBITDA we expect as we enter the quarter. To summarize this impact, this since had on our equity issuance, based on our Q1 2021 guidance, we will have issued approximately $150,000,000 of equity since the beginning of the pandemic to offset the loss of EBITDA from our managed portfolio as compared to the $1,000,000,000,000 month adjusted EBITDA 1 year earlier or as of March 31, 2020.
However, on a very positive note, while we move through the trough in occupancy and begin to rebound, the expected increase in EBITDA from our managed portfolio will begin to naturally further delever the company and provide us with even stronger balance sheet and the potential for outsized growth in earnings per share as we continue to manage leverage in a prudent fashion going forward. And with that, I will open it up to Q and A.
Our first question comes from Josh Burrow with Scotiabank. Your line is open.
Hey, thanks. So could you provide some more insight into the current acquisition pipeline and what investment opportunities you saw in proceeds today? If we're just looking at Q1 guidance, it looks like you guys are going to raise over $100,000,000 from the ATM program, have some availability under a lot of credit and $40,000,000 will be used for investments. So is that remaining capital being raised just meant to delever and kind of keep leverage levels where you want them?
Yes. Most of the raise is to maintain our balance sheet what we want it to be, but it also prefunds potential acquisitions as well. So you have to think of it sort of in both ways. So we don't have if there's an opportunity now to raise money on the ATM, then that's going to keep our leverage down and give us room for leverage to go up slightly and still be below our target as we match fund acquisitions that come in. Tali, did you want to note some of the specific kinds of things we're looking at in the pipeline?
Sure. We're looking at senior housing assets that we can buy at reasonable prices at this time. We've spoken in the past about the population of assets out there that have been have their lease up projections delayed, if you will, because of COVID. And so there's an opportunity to acquire newer assets that have some upside to them. And so that's a lot of what we're seeing because people need liquidity at various times for various reasons.
So we're seeing that kind of opportunity where as Rick said earlier, we're seeing opportunities in other sectors as well, including behavioral and a little bit in skills nursing.
Got it. That's helpful. And then how are you guys comparing the Enlivant JV, buying up the other portions compared to just traditional acquisitions? I know it looked like that portfolio had some more occupancy challenges in Q4 and you guys are also factoring in some more occupancy loss in Q1 versus the wholly owned portfolio. So how are you guys underwriting that occupancy NOI recovery and comparing that with other acquisition opportunities?
Yes. So one really has nothing to do with the other. We're already in the JV. So that's just going to be a negotiation with TPG. And as I mentioned in my opening remarks, it's going to have to be something that works for us economically.
We're not going to do a deal just to do it. That's going to be diluted to our earnings. So it's just a completely separate thing than how we look at others. We know that portfolio really well. We have a lot of confidence in the team and everything that they have in place from an infrastructure perspective to rebound.
And what's been unfortunate for them is, unlike all of our other operators, they really have a national footprint. And so the surge was so bad, they just couldn't catch a break every time you have one area that started getting a little bit better, they'd get hit within another geographic area. And over half their states hadn't lifted any restrictions, the cohort restrictions either. So it's completely separate thing how we look at it. When we look at the individual senior housing opportunities that we're currently looking at, we just look at where they're at, what the current NOI is and their lease up looks like.
And we underwrite everything on a balance sheet neutral basis, and then we just see if it works.
Thank you. Our next question comes from Juan Sanabria with BMO Capital Markets. Your line is open.
Hi, good morning and thanks for the time. Just hoping you could talk a little bit, Rick, about the occupancy recovery, both in skilled nursing and seniors housing. You seem to imply maybe a longer recovery in seniors housing for the TPG stake at least. You seem to be a little bit more optimistic about skilled nursing, but if you could just give us some benchmarks and how long you think you can get back to pre COVID levels for those 2 major food groups,
that would be great. Yes. So my thinking has been that by the Q1 of 'twenty two, you'd be back on skilled nursing to where we were pre COVID or pretty close, close enough that you feel comfortable you're going to get there. And I think it's probably not before the middle of 'twenty two that you're there on the senior housing piece. Obviously, it's going to take a little bit longer, particularly with the Enlivant portfolio because of what happened during the surge.
But their pent up demand is still their pent up demand. And a lot of the same dynamics that help the skilled space should help the senior housing space, including Enlivant as well with easing of restrictions and all the isolation protocols and such and being able to have real tours and group activities and all those kinds of things. So I do think it will take longer. If you've got on the skill side, it's intensely need based. We also expect that as occupancy picks up, people will be sicker than they would have otherwise have been because they've had a delay going into hospitals first.
And that goes to senior housing as well. But AL and certainly the operators that we have seen their acuity tick up pretty dramatically over the past number of years. So it's much more needs based model than it ever did, which is why we have the confidence that it's going to rebound. It's just going to take time. And I'd also point out, I know we think we've talked about this before, we think the safety factor for senior housing is going to be a big deciding factor in terms of admissions coming back in at a pace that we'd like to see.
And in the case of a couple of our tenants, just by way of example, Enlivant and Holiday, they've done really an incredible job from a safety perspective. Enlivant's infection rate is 2% and the cohort in assisted living is 4% to 7%. And in independent living, which you would expect to be lower because they're healthier, it's less than 1% at holidays. So I think those statistics are going to be really critical from a marketing perspective and help those portfolios to recover. Is that the year with your quick follow-up?
It did. Thank you, Rick.
Maybe just a quick modeling question for Harold. Your cash rent payments from those few tenants that on a cash basis, what's the assumption in the Q1 guidance relative to the 4th quarter payment? Yes. This should be pretty consistent with Q4 for the vast majority of our cash flow. I'd say all of them, but 1 or 2.
And I'm actually expecting an uptick in collections in the Q1 over the Q4 for those 2. So my expectation is going to be slightly up, not dramatically, but slightly up over Q4. And maybe just one last one for Rick. What's the view on these dual capacity rooms you referenced in skilled nursing coming back? And do you sense any hesitancy by the regulators or whatnot to kind of do away with those given some of the lessons learned from the pandemic?
No. I think, well, a couple of different things in terms of the point you're making. 1, there's a difference between the semi private rooms and the wards that have 3 beds and 4 beds. I think over time, you're going to see states want to see what they're going to see those go away. And that's actually already happened in Massachusetts.
So I think we'll see that elsewhere as well. And there's there'll be corresponding reimbursement changes as well to go along with those so that the operator can continue to run a viable business. In terms of what's happening current, so that's sort of something to think about and look forward to going forward, which is also going to exacerbate the access issue that we're starting to see in different markets. Before the pandemic, the industry was projected to be essentially full by somewhere around the middle of the decade. So that's going to exacerbate that problem.
But in terms of what's happening today in the pandemic, no, I think that the vaccine changed everything in terms of the concern regulators had about easing restrictions. So and I also think it's fair to say that when you see the numbers in terms of cases and mortality dropping so dramatically so quickly, Natalia pointed out, it's the vaccine, but it's more than the vaccine. We still have a lot of patients that stay in skilled nursing facilities under Medicaid for long periods of time. We think about short stay because of Medicare. But we've got a lot of longer term patients in there and a lot of the patients and residents in these facilities, both skilled and senior housing, have already had COVID and were aware of it, or they've had it and were unaware of it because there was so little testing in the first number of months, and there's still not enough testing as far as antibody testing in facilities.
So the buildup of those antibodies with the existing population combined with the vaccine, I think, is why we saw such a dramatic improvement in cases of mortality dropping. I think it was just the vaccine that would have happened that quickly. And there are conversations ongoing more specifically to your point, 1, with CDC about having national guidelines for restrictions easing once a certain percentage of the population has been vaccinated. So there are discussions so that hopefully it can be addressed on a more uniform basis because right now, as you can imagine, it's quite different from state to state and even within states different regulatory localities. Thanks, Rick.
Thank you. Our next question comes from Nick Joseph with Citi. Your line is open.
Just wondering what the timing is on a decision in terms of Enlivant, at least current expectations for any timing?
I'm guessing here a little bit, Nick, because TPG is really driving the process. If I was going to guess, I would say we arrive at a decision in the next several months. And then in terms of closing the deal, whether you're out or you're in, it's usually 180 day period because of all the regulatory approval. Thanks. And then
if you just think about more broadly, I guess, pricing for senior housing, particularly like a national portfolio like that, how do you think about it versus pre COVID values?
Well, we all know how PEs have driven pricing over the past few years. But I think for us and certainly, if you're going to buy something before it's recovered, it's going to have a much higher yield than the 6 handles that everybody got used to. So I think for us, it's going to be a very specific exercise in looking at their current NOI, being as conservative as possible in terms of recovery. And there may be some other mechanisms that can be built into a transaction that gives the portfolio more time to recover without us being out of pocket. But I don't want to get ahead of myself here because those are negotiations that we have to have with TPG.
Thank you.
Thank you. Our next question comes from Rich Anderson with SMBC. Your line is open.
Thanks. So on Enlivant, how binary is the decision? Is it in or out? Or is there a rainbow of opportunities within being in or completely out? Could it involve 3rd parties?
What's on the table? Or is it pretty straightforward? Buyer?
Harold, do
you want to take that? Sure. Rich, I would say, if the decision is going to be made to do something, it's pretty binary between buying or not buying. But that's not to say that you couldn't structure a deal that provided some level of earn out or some other mechanism to kind of bridge the gap, if you will, between where NOI is today and where NOI is expected to be in the future. So all those things you count on the table, who knows where it might land.
And I don't think that there's an opportunity from our perspective to bring in another investor alongside us. And I also think that it's just going to come down to DPG gives the price that they require for it and what we're not. And that's us or somebody else to be seen and how we can structure it to bridge the gap is something we'll be working on in other things.
Okay. And then, when you compare the occupancy level of the JV, which is a lot more than the 11 wholly owned assets. Is there any reason why there shouldn't ultimately be a full recovery? And or are the 11 assets that you own on a wholly owned basis sort of outlier positive assets and that a real occupancy number kind of steady state for the JV is something below those 11?
Paula, do you want to take that? Sure.
So it's a couple of things. I'd start with big picture. The 11 wholly owned are in a very small geographic area. They're kind of Pennsylvania, Delaware. And so that already changes the profile versus a portfolio of 158 that are spread from East Coast to and all across the country to the West Coast.
So that's the first thing. The second thing is there is much more memory care in the wholly owned than there is in the joint venture. And that also affects it will it affected COVID spread within the buildings, because I'm sure others have spoken at greater length than we have about memory care and how it's much harder to manage COVID spread in memory care. But also far fewer people are moving out just because of the lifestyle, out of memory care. So that also changed the bias.
Given that the 11 wholly owned had performed at such a high level in terms of occupancy 90 plus, in fact, we even had 95% occupancy several quarters ago. I expect that that rebound will I think that 90 ish area is probably going to be where it heads back, because the loss was quite specific and quite specific in timeframe. I think the joint venture,
there's
I think it's just different and it's going to be a balance of the local markets and the environment and, what's happening with respect to COVID and vaccines, etcetera, and the competitive landscape in those areas across the country.
Okay. Yes. So it's really it's a matter of time, Rich. It's not a matter of the end result. We don't see any reason that the JV is not going to be back to where it was.
Yes. Okay. And then quick for you, Harold, the $100,000,000 of equity for the Q1, I'm getting like an implied cap rate on your stock around 8 ish or so. And I see you're comfortable with that and the interest could be deleveraging. But are you kind of be kind of quick to get into that ATM to capture that pricing and take the off the table?
What happens if, God forbid, some disruption in the stock and now you have to rethink the equity raise component of the story for Q1?
Yes, look, we'll get into it when it makes sense for us. But I would point out, Rich, that it is our intent to do that. But we do have cushion. We've got cushion in our leverage metrics. So while we'd like to get it done and keep it right where we're at, if we're a little bit behind on that, it's not going to be a big deal relative to our raise with Stitch and SMP.
But we're going to get in there and do it as quick
as we can. But also keep in mind
that we want to monitor the performance of the managed portfolio because performance starts to pick up and we can see a pathway to improve EBITDA more quickly than we might be thinking today, then we can temper that as well.
Our next question is from Steven Valiquette with Barclays. Your line is open.
Great, thanks. Hello, everyone. Maybe just a question here for Rick, just on COVID in the skilled nursing setting. So you guys did mention the dramatic drop in COVID patients in SNFs in early 2021. I mean that generally should be net positive in the big picture.
I guess I'm curious if you can provide a little bit more qualitative color just around the notion portfolio as well, do you know just roughly what percent of the SNFs in your portfolio are actively seeking to treat COVID patients presumably on a post acute basis versus what percent of the SNPs really want nothing to do with COVID patients at all and are either isolating or discharging these patients to other care settings? Thanks.
Yes. So it's a relatively small percentage that are actively pursuing COVID patients and trying to set up units and things like that. It's definitely not higher than 20%. But I would say we have very few operators that just want nothing to do with it. So the majority are comfortable with taking care of COVID patients.
It's just that it's only a small percentage of those folks that are actively working with hospital partners. And a lot of that was also driven by the hospitals in particular markets seeking out actively seeking out partners. And but hopefully, that's not a long lived use of the business. And I think for operators to do that on a longer term basis, just under the assumption that you may always have a little bit of this from time to time. It's going to just depend on facilities configuration and not prevent them from hitting their overall occupancy occupancy goals because of the isolation requirements.
Thank you. Our next question comes from Lukas Hartwich with Green Street. Your line is open.
Thanks. I'm just curious on
the acquisition pipeline. Are those concentrated in any markets or are they kind of distributed?
They're all over the place.
Okay. And then the coverage metrics on Page 5 of your stuff, I know the unstabilized assets are not in that. I'm just curious, do you have a rough number of percentage of total NOI or rent that's not reflected in those coverage metrics?
Yes. It's less than 10%. It's non stabilized. It's excluded from those figures.
Okay.
And then last one for me is the specialty hospitals, it looks like occupancy has taken a nice uptick over the last few quarters. Is there anything kind of COVID related driving that? Or is it just unique issues at the properties? I'm just curious what's driving that?
No, there's really there's nothing COVID driving it. They're relatively unaffected by COVID. They have very dynamic populations. So we've always seen a lot of fluctuation, up and down, with that with those assets, a little bit different. We've got the behavioral assets in there.
We've got Children's Hospital in there. And so there's a couple of different things, but a lot of it's driven by the behavioral facility. So it's just a dynamic population, but unaffected, so.
Great. That's it for me. Thank you.
Thank you. Our next question comes from Joshua Dennerlein with Bank of America. Your line is open.
Yes. Hey, guys. Hey. Rick, just curious on the Aliven JV. Have you guys also considered maybe selling your stake when TPG kind of looks to exit?
Is that something you thought of? I can take part
of that. They have drag along rights with us, and so they have more control over going to sell. I mean, we've looked at obviously selling our interest before, but I just don't see that as being a potential outcome here.
Okay.
We have looked at Josh, you may not recall, but it seems like a decade ago now, But in the summer, early fall of 2019, we took a look at other potential JV partners to take out TPG and really nothing really came with that. So we thought about it and actually pursued it a while back.
Okay. So you've thought about selling your stake in the past. It just hasn't worked. I wasn't sure because it does seem like on the shop side, like there is pretty good pricing and
then maybe where you guys are trading it. I don't know.
I mean, maybe it's potentially accretive. But okay. With this backlog right
that they have, yes, you just can't see somebody buying our interest and then having TPG sell without and not be able to.
Well, I thought maybe it would be easier if like someone could take the whole portfolio, right? Like if instead of just like someone getting TPG stake?
Well, the problem is it isn't just a matter of the whole portfolio because TPG has a management company as well. And a lot of the parties that you would expect to come to the table for a new JV weren't necessarily interested in OpCo. So just complicated.
Okay. And then I wanted to follow-up on some of your comments earlier about the recovery to pre COVID occupancy levels. What was your sorry if I missed it. What was your expectation for kind of the trough on senior housing occupancy, like not so much the level, but I guess timing? I'm just trying to get a sense of like how quickly like the recovery comes after that draw to get to kind of the pre COVID levels that you mentioned that you thought they would get to?
I think we're close to bottom on senior housing now, primarily because of the vaccine rollout. So I think going into March, we pretty much should be at bottom. And maybe you just similar to what we've seen on the skill side, we've had some period of time where we just sort of stayed flat before we started picking up. So maybe things are relatively flat in the month of March. And in April, we start to see some pickups.
Obviously, I'm guessing, and I guess it's no better or worse than anybody else's. But that's kind of what it feels like right now because we do think that the impact of the vaccine rollout in our senior housing, excluding independent living, should follow somewhat the same pattern that we're seeing on the skilled side.
Okay. Okay. And then do you think it's kind of a steady March higher or do you kind of see like a big surge in the summer that seasonal dynamic play out?
I think it's more of a steady March. I think skilled picks up a little bit more quickly. Now skilled dropped more than senior housing as well. But skilled, I think, picks up more quickly just because of the nature of the individuals that get admitted into skilled facilities. And so many of them are in worse shape now because of the delays.
So I think for that reason and you've got and even though you've got a needs based model in assisted living, there is some choice there still as well depending on who the operator is and how high the acuity is. So yes, I think it's more of a steady march on senior housing.
Okay. Appreciate that. Thanks, guys.
Thank you. This concludes the question and answer session. I would now like to hand the call back over to Rick Matros for closing remarks.
Thank you all for joining us today. I know it went a little bit long. We'll do our best to shorten up the front end for Q1 as we start moving past this. We just wanted to provide as much detail as possible. I appreciate everybody hanging in there.
And we're available to have some offline conversations if there are some additional follow-up questions or modeling or anything else that you all have in your mind. So have a great day. Thanks very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.