Ladies and gentlemen, thank you for standing by, and welcome to the Sabra Health Care Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Michael Costa, Executive Vice President of Finance.
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, 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 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 that we make today are still valid. In addition, references will be made during 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 our website. And with that, let me turn the call over to Mattros, Rick Mattros, Chairman and CEO of Sabra Health Care REIT.
Thanks, Mike, and welcome everybody to our call. Appreciate everybody participating. First, let me just start off by thanking all of our caregivers and all our frontline workers. We're 9 months in now to the pandemic, and they really haven't had any breaks or any relief and continue to show up every day. And it's just we just look at that with awe that they continue to do that.
Their commitment to taking care of our patients and residents is just 1st and foremost in their mind. So we'll never be able to express our gratitude adequately. I also want to thank the government for the stimulus funds for the skilled nursing space and now the assisted living space as well and their partnership on protocols and standards to address the virus. We are in better shape now than we were several months ago. We'll talk about that more as the call goes on.
I also want to note that the majority of the states that we're in made moves to help on FMAP as well. When I finish my remarks, I'll turn it over to Mike Costa, who will take you all through a detailed presentation on everything related to the stimulus and the impact on the facilities and all other related assistance. There is still $30,000,000,000 of CARES Act stimulus left. There's Phase 3 $20,000,000,000 is already is in the process of currently being distributed. We do expect another stimulus package once the election gets settled as well as an additional extension beyond the one recently announced of the PAG Act, which extends skilling in place and the FMAP add on.
I also want to note, and this was an important event for the industry, the deal that the government cut with Walgreens and CVS to provide free vaccines for our patients, residents and employees. We still believe that the path to normalization comes ahead of the vaccine, and that's with more and more testing. Once we have more testing now than we have obviously had in the past, we still don't have enough. But once we get to really adequate and effective rapid testing, we'll begin the path to complete normalization in the facilities. We'll be able to test quickly, screen people better and have a more normal environment within the facilities because the social isolation component of dealing with the pandemic has been extremely tough on our patients, our residents and their families.
I've been skeptical, as a lot of you know, about the vaccine and when it's actually going to be distributed. In the last week, Mark Parkinson, CEO of the American Healthcare Association and Seema Verma, who runs CMS, both commented that they think the vaccine will be ready for distribution in all of our facilities over January February. I don't know if that will be the case. Hopefully, it will be the case. If that does turn out to be true, then it will accelerate the normalization of the business.
One of the questions that I have about that is I think the intent is to mandate it for everybody. And I'm not sure you can mandate that our workers and patients can actually have to take this, because if they don't, what do you do then? If 1 third of these staff decide that they don't want to take the vaccine, they don't want to be first in line, does that mean they can't come to work and you don't have enough folks to take care of patients and residents. So we'll kind of see how we'll see obviously how it plays out. So but I'm cautiously optimistic, but we'll still see.
So I still have some level of skepticism there and still, focus on testing as being the most immediate answer to the challenges that the space is currently facing. I would also note that a lot of the conversation that we've all been having is focused on the top line and occupancy recovery. But it's important to note that we'll start having margin recovery ahead of occupancy recovery. And in fact, we're already seeing that in different areas of the country. As certain areas of the country have been clearer than others with COVID, there are steps being taken by a number of operators to start normalizing the socialization aspects of the facilities and to start having smaller group activities and recall that based on protocols, almost everything, not almost everything, everything is really 101 facilities.
No group dining, no group activities, no group therapy. But as that starts to normalize, we'll see those labor expenses come down. So we will start seeing margin improvement ahead of occupancy improvement. Similarly on supplies and specifically in regard to PPE, our operators are starting to have more success building inventory. And as they continue to build inventory, those costs will no longer be recurring.
And so then that cost comes down as well. We're already seeing that in a number of the operations as well. So, I just want to point that out. So we're not solely focused on occupancy as a means to recovery. In terms of our operational trends, our top skilled operators, as shown in the supplemental, showed occupancy gains from the 1st week of August through the last week of October of 50 basis points.
Skilled mix for those operators at the end of October was 190 basis points higher than pre pandemic levels. From the February average through the month of October averaged, those operators were down approximately 10% with October 100 basis points higher than our low point in June. So in other words, occupancy has been slowly building. It came down a little bit as we started spiking all over the place in the 1st weeks of October and then started picking up again, at the end of October. The aggregate skilled nursing portfolio is down approximately 800 basis points from the February average through the end of October.
Skilled mix is higher in our top operators than in the rest of the portfolio with the smaller operators as a whole, but all the trends are similar regardless of the operators that we're looking at and regardless of what their skilled mix is. So for those operators not in our top ten, they also have higher skilled mix than pre pandemic levels, just not as high as our top 10 operators. EBITDARM coverage is noted in the PR was up sequentially, thanks to government assistance. Excluding the Provider Relief Fund, we are pleased to note that our skilled portfolio for the trailing 3 months would have been above 1 times. Senior Housing Triple Net, which only recently received federal assistance, so coverage lower as expected, but with the anticipated continuation of assistance, we should see some stability, particularly since the lease portfolio occupancy as noted has held up relatively well, all things considered.
The lease senior housing portfolio is down 3.40 basis points from the February average through October. Talia will provide details on the managed portfolio. Through the end of October, we had 3 0 4 communities that had been impacted by COVID, 209 of those have fully recovered. As noted on the last call, rarely do we see large outbreaks at this point and an increasing number of facilities with positive tests are now employees only. So we'll have 1 or 2 employees test positive.
And the issue is that I'm sure many of you are aware is that the median age for those contracting COVID has dropped dramatically into the 30s. That's a lot of our workforce. And even though these folks are screened before they come to work, they're almost always asymptomatic, however, still infectious. And so they come into the buildings, and they'll infect folks. So that said, the operators have done such a good job with isolation and protocols and infection control, adhering to all those guidelines that even when an employee who is asymptomatic and has COVID comes in and they infect other residents or patients, we're still not seeing any big breakouts.
Out of all of our buildings, we've had 3 outbreaks of,
call it 8 or
9 or 10 or more. In almost every other building, it's 3 or less. So they've done a really good job with that. And given the fact that we're seeing all these spikes all over the country and we're still seeing those results, we feel pretty good about minimizing the disruption to the business as compared to what we saw in March April when we were all trying to figure this out. Let me move now to acquisitions.
We've completed $154,000,000 in investments at a blended deal that just under 8%, with the exception of one of those acquisitions, a preferred investment that all came through our development pipeline. Our acquisition pipeline is active at approximately 600,000,000 dollars It's primarily senior housing, although we are seeing interesting skill deals, but there's still a disconnect between buyers and sellers in both asset classes. We do anticipate some shift after year end as banks that have been forgiving defaults and specifically actually in senior housing with the smaller operators, we believe based on what we've heard that after year end they'll start exercising their legal remedies. So there may be some opportunities after the 1st of the year. So it remains to be seen, but that's the way things look right now.
And with that, I will turn it over to Mike Costa, Talia will follow Mike and then Harold will follow Talia and then we'll go to Q and A. Mike?
Thanks, Rick. I'll be giving an overview of the various federal government relief packages enacted in response to COVID-nineteen pandemic as well as providing details and recent developments for the major components of these relief packages. The federal relief packages generally fall into 3 categories direct funding to providers, temporary regulatory suspension, suspensions and administrative waivers and lastly, loans and deferrals. Starting with the direct funding category, these are direct disbursements of funds to operators to help mitigate some of the financial impact of COVID-nineteen and includes the Provider Relief Fund and the temporary increase to the state's Federal Medical Assistance Percentages or FMAP. The temporary regulatory suspensions and administrative waivers include the temporary suspension of the 2% Medicare sequestration cut and the waiver of the 3 day hospital stay requirement for Medicare coverage at a skilled nursing facility.
As the benefits from these two categories are utilized to offset increased costs and lost revenues related to the pandemic, the negative impact to our operators' earnings and coverage will be reduced. These benefits would also help our operators by providing important liquidity. Loans and deferrals include the accelerated and advanced Medicare payments, employer payroll tax delay and Paycheck Protection Program or PPP loans. With these loans and deferrals while these loans and deferrals excuse me provide liquidity to our operators, the first two must be repaid in full, while the PPP loans must be repaid if the borrowers do not meet certain criteria. Therefore, these loans and deferrals largely have no impact on the earnings and coverage of our operators.
A breakdown of how much our operators have received or qualified to receive from the various relief packages is included on Page 7 of our Q3 supplemental as well as in our Q3 earnings release. The most significant of the aforementioned relief packages is the $175,000,000,000 Provider Relief Fund, which was funded by the enactment of the March 27, 2020 CARES Act law. The Provider Relief Fund has given support to our skilled nursing and hospital tenants throughout the pandemic and recently the support has been extended to certain operators in our senior housing portfolios. On September 1, HHS announced that eligible assisted living and memory care facility operators may apply for funding through the CARES Act. We view the inclusion of assisted living and memory care facilities under the CARES Act as an important acknowledgment by the federal government of the sector's contribution to the delivery of health care in this country.
To date, 2 general distributions to health care providers have occurred and a 3rd general distribution has been announced, but has not yet been distributed. The total of these 3 general distributions is $98,000,000,000 Additionally, 2 targeted distributions specifically to skilled nursing operators have been announced totaling $9,900,000,000 Let me break down the targeted SNF distributions made thus far as well as what is left to be distributed. On May 21st, the first targeted distribution of $4,900,000,000 was released to nursing homes using a formula of $50,000 per facility plus $2,500 per bed, resulting in a distribution to our facilities of $97,000,000 or about $330,000 per facility. On July 22, HHS announced an additional $5,000,000,000 of targeted distributions specifically related to nursing home infection control and quality, of which $2,500,000,000 was released on August 27 using a formula of $10,000 per facility plus $14.50 per bed. This resulted in a distribution to our facilities of $50,000,000 or about $170,000 per facility.
The payments were made to nursing homes to help with upfront COVID-nineteen related expenses for testing, staffing and PPE needs. Of the remaining $2,500,000,000 of targeted distributions, dollars 2,000,000,000 will be distributed in 5 installments, with the first four installments being paid out monthly as performance based incentives determined by the nursing home's relative infection and mortality rate and a final payment to be made in 2021 based on these same metrics over the cumulative timeframe. The first of these 5 installments was made over the last week based on September performance. Finally, the remaining $500,000,000 of targeted distributions is expected to be used to address COVID hotspots and educational collaboratives. In total, roughly $145,000,000,000 of the $175,000,000,000 provider relief fund has been announced to date, leaving an estimated $30,000,000,000 in the relief fund to be spent.
As of September 30, 2020, our tenants have received or qualified to receive approximately $210,000,000 in total distributions from the provider release fund and our senior housing managed operators have qualified for approximately $4,000,000 through the 2nd general distribution from the Provider Relief Fund. Operators have taken varied approaches to recognizing these amounts in earnings ranging from some recognizing 100% immediately to others not recognizing any until they are certain that the amounts won't be recouped. This has resulted in only about $50,000,000 of the aforementioned $210,000,000 received by our tenants being reflected in their reported EBITDARM for the trailing 12 month period ended June 30, 2020. Recently, the reporting requirements for the use of monies received from the Provider Relief Fund will revise and clarify and we expect this to result in most, if not all, of the roughly $150,000,000 balance of these funds to be recognized in EBITDARM as they are utilized to offset costs and lost revenues related to the pandemic. Another important source of funds to our skilled nursing tenants is the temporary FMAP increase.
On March 18, a 6.2 percent FMAP increase was enacted to assist states with COVID related Medicaid costs. There was no requirement that states pass any portion of this increase on to providers and in fact some states chose not to pass any of it along. In our portfolio, 27 of the 37 states where we own SNFs passed along some of the FMAP increase benefiting 236 of our 287 SNFs or 82%. These states all have varying methods of distributing these funds to SNFs from targeted funding for COVID units in Kentucky to a temporary 10% Medicaid rate add on in California. All in, we estimate that our SNF tenants received approximately $30,000,000 in additional funds through June 30 because of this FMAP increase.
Recently HHS has announced the extension of the public health emergency declaration for COVID-nineteen for another 90 days extending through January 20, 2021. The extension of this declaration is critical as it extends the 3 day hospital stay waiver through January 20, 2021 and ensures the increased FMAP funding provided to states will continue to the end of Q1, 2021. Lastly, operators who received advanced and accelerated Medicare payments earlier this year received some much needed breathing room on the repayment terms. Repayment, which was originally scheduled to occur by the end of this year, was delayed and a more gradual repayment terms were enacted. Specifically, no repayment is due for a year from when the monies were initially distributed and then gradual repayment begins with up to 25% of claims paid for the following 11 months, up to 50% of claims paid over the next 6 months and the remainder being repaid in a lump sum.
In total, the repayment period has been extended to 29 months. The past 8 months have proven to be one of the more challenging times for the long term post acute care industry, both from a clinical and business perspective. Suffice it to say that the tremendous amount of financial support provided to the industry by federal, state and local governments continue to provide our operators with not only a bridge to the other side of this pandemic, but also the resources to protect their employees and patients. We are grateful for the support and the implicit acknowledgment of the long term post acute care industry's importance. And with that, let me turn the call over to Talia Nivohakouan, Sabra's Chief Investment Officer.
Thank you, Mike. This morning, I will provide you with 3rd quarter operating results of our managed portfolio. This is the 2nd consecutive quarter where operating results have been materially affected by the global pandemic and the first where federal government funding through the CARES Act that Mike just described has provided assisted living operators some relief. I will also share some statistics for the month of October in order to provide additional visibility into operating trends as senior housing continues to find its way during these challenging times. As of the end of Q3 of 2020, approximately 15% of Sabra's annualized cash net operating income was generated by our managed senior housing portfolio.
Approximately 51% 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 living and memory care communities in the United States. Senior housing operators have now transitioned into a phase where operating during a pandemic is the new normal. They have operationalized protocols, focused on infection control and prevention and created ways to relax restrictions, which can be flexed as warranted by circumstances and location. At the same time, consumers have transitioned from pandemic fear to pandemic fatigue.
The result has been that while our senior housing operators have data and evidence that living in their communities is safer than staying at home, prospective residents worry that they will never embrace their families again as they move in. To start, I will provide highlights of the operating results of our managed portfolio on a same store quarter over quarter basis to illustrate the trends in the industry. These results will exclude 2 recent acquisitions and 1 transitioned community in our wholly owned portfolio, consistent with the presentation in our supplemental information package. Revenue increased 4.2% in the 3rd quarter compared with the Q2 2020 and included $4,000,000 from the Provider Relief Fund Phase 2 general distribution that was made available to eligible assisted living facilities in the Q3 through the CARES Act. If we exclude this grant, then same store revenue declined 1.5%.
And if we look at revenue for those facilities that were eligible for the grant and exclude those funds, then same store revenue declined 1.4% on a quarter over quarter basis. Revenue per occupied room, RevPOR, excluding the non stabilized asset and the CARES Act grant rose 1.7%, while occupancy, also excluding non stabilized assets, declined 270 basis points to 79.3 percent from 82 percent to $19,700,000 from $16,300,000 Without the federal grant, cash net operating income would have declined by 4.1%. If we look at the cash net operating income for our eligible facilities and exclude those funds, then same store cash net operating income without government funding would have declined 2.2% on a quarter over quarter basis. Cash NOI margins increased to 26.8% from 23.1% in the preceding quarter. Again, excluding the government grant, cash NOI would have been 22.5%.
While RevPAR has remained robust, occupancy has continued to decline during the 3rd quarter. As the pandemic has continued to affect our hemisphere in varying degrees, we have seen changes in the behavior of residents and their families. Pandemic fatigue of both residents and their families is contributing to higher discretionary move outs and deferral of move ins. In contrast to that, rates continue to be strong in our portfolio indicating that residents appreciate the value operators are delivering to them. Senior housing is a high operating leverage business.
Operators have scrutinized their cost structure, but there is a limit to expense cutting given the fixed cost inherent in the business model. For this reason, a decline in revenue attributable to lower occupancy or an increase in revenue from CARES Act funds have a disproportionate impact on cash net operating income and cash NOI margin. The Enlivant joint venture portfolio of which Fabra owns at 49% posted stronger 3rd quarter results bolstered by the receipt of approximately $3,000,000 in CARES Act funds. Average occupancy for the quarter was 75.8%, reflecting a 3.1% decline on a same store quarter over quarter basis and a 5.6% decline on the same store year over year basis. RevPOR, excluding CARES Act funding, was $4,411 compared with $4,302 or 2.5 percent higher on a same store quarter over quarter basis and 2.4% higher on a same store year over year basis.
Revenue was 7% higher on a same store quarter over quarter basis and 3.6% higher on a same store year over year basis driven by the federal grant receipt. Excluding those funds, revenue decreased by 1.6% on a same store quarter over quarter basis and 4.7% on a same store year over year basis. Same store cash net operating income was $9,100,000 a 37.3% increase on a sequential basis driven by CARES Act funds. Without those funds, same store cash NOI would have declined 8.7%. Same store cash NOI margin was 24% compared with 18.7% for the prior quarter or 5.3% higher on a same store quarter over quarter basis.
Again, excluding the federal grant, cash NOI margin would have been 17.4% and more in line with the prior quarter's results. Subsequent to the end of the quarter, October occupancy was 72.8 percent, 8.90 basis points lower than February occupancy before the impact of COVID-nineteen. Rate increases occurred on October 1st for eligible residents rather than increase rates by 5% as has been done in the past, Enlivant chose to increase rates by 4%. As a side note, Enlivant was not allowed to increase rates in the state of Washington because of the governor's order. We had 12 enlivened communities in Washington and the impact of this temporary rate freeze on the portfolio is negligible.
Since the pandemic began until start of this week, 98 of our Enlivant JV communities have had a resident or staff member test positive for COVID-nineteen. As of the beginning of this week, 33 communities had a resident or staff member with a positive test. And of those, 20 are located in Texas, Ohio, Indiana and Wisconsin. To put these numbers into context, Enlivant has had approximately 2% of its residents test positive for COVID-nineteen since the start of the pandemic. This compares to an industry average of between 5% 7% in assisted living and memory care communities.
The 3rd quarter operating results for Sabra's wholly owned portfolio of 11 communities had similar theme in its performance. 3rd quarter occupancy was 81.2%, a 2.1% decline compared to the prior quarter and a 7 point 6% decline on a year over year basis. RevPAR in the 3rd quarter, excluding CARES Act funding of $797,000 was $5,761 essentially flat to the prior quarter and 4.2% higher than the prior year. Revenue was 6% higher on a quarter over quarter basis and 3.9% higher on a year over year basis. Excluding the federal grants, revenue declined 2.7% on a quarter over quarter basis and 4.7% on a year over year basis.
Cash net operating income was $2,800,000 a 42.4% increase on a sequential basis driven by CARES Act funds. Without those funds, same store cash NOI would have increased 2.1% for the same period. Cash net operating income margin was 29.2%, 7.5% higher on a quarter over quarter basis. Excluding the federal grant, cash NOI margin would have been 22.8%, 1.1% higher than the prior quarter. More recently, October occupancy was 78.9%, 7 10 basis points below February's pre pandemic occupancy level.
As in the joint venture, rate increases occurred on October 1 for eligible residents at 4%. 7 of our wholly owned Enlivant communities have had a resident or staff member test positive for COVID-nineteen. And as of earlier this week, only 2 communities have not yet recovered. Enlivings made the strategic decision to maintain a 6 to 9 month inventory of personal protective equipment such as gowns, masks and gloves in order to avoid potential shortages in the months ahead. This has given them some latitude and timing of purchases in order to achieve better pricing.
Since occupancy is the key to improving financial results, Enlivant has been focused on lead generation and moving in new residents. Lead generation has rebounded since April and is in line with prior year leads. Moving volume while recovering since April is about 74% of pre pandemic results driven by potential residents and families concern over possible restrictions on visitation, quarantine, etcetera. Regulations on indoor visitation vary by state and may be tied county infection rates and local regulations. These limitations currently impacting half of the states in which Enlivant operates tend to dampen move ins and accelerate move outs.
Enlivant is trying to mitigate these concerns, including offering testing for new residents so that they can avoid 14 day isolation and incentivize move ins and testing employees to prevent the infection from entering the building to mitigate pandemic fatigue. Holiday Retirement operates 22 independent living communities for Sabra, one of which was transitioned to Holiday in the Q4 of 2019. Since healthcare services are not provided in these independent living communities, these properties were not eligible to receive CareStack funds allocated to assisted living providers. All of the following operating results are presented on a same store basis and exclude the transitioned property. Holiday portfolio occupancy was 82.5% in the quarter, 2.5% lower on a sequential basis and 6.1% lower on a year over year basis.
RevPAR was 2,519, slightly higher than both 2,499 on a sequential basis and 2,483 on a year over year basis. On a quarter over quarter basis, the Holiday portfolio experienced a 2.2% decline in revenue and a 5.6% decline on a year over year basis. Cash net operating income was $5,900,000 a 7.4% decline on a sequential basis and 18.6% decline on a year over year basis. Cash net operating income margin was 33.2% compared with 35.1% in the prior quarter and 38.5% in the Q3 of 2019. Nearly the entire difference in margin is a result of lost revenue due to occupancy decline with the balance being an increase in expenses associated with the pandemic.
Subsequent to the end of the quarter, excluding the one transition to community, October occupancy was 80.6% compared to 86.8% in February, a 620 basis point decline. Of the 22 properties that Holiday manages for Sabra, 18 have had a resident, staff member or private home health aide test positive for COVID-nineteen and 12 communities have recovered. 16 properties are now in various stages of lifting restrictions such as dining room use at reduced capacity, limited visitors and reopening of the beauty salon. Holiday has been focused on ensuring that its residents are kept safe, which is made easier because of the lower acuity in independent living and fewer staff. Testing and implementing safety protocols have been the cornerstone of these efforts.
Holiday residents have had an infection rate of less than 1%, which is 64% below the infection rate among 75 plus year olds in the U. S. Made all the more impressive because more than 1 third of resident and staff COVID cases have been asymptomatic. After having fewer move outs in the Q2, Holiday saw an increase in voluntary move outs starting in July. Move outs are trending down since quarter end.
The excess move outs, those above normal levels are a result of COVID related restrictions. At the same time, the number of move ins per community rose to near pre pandemic levels in July August before trending down in September due to concerns over a COVID-nineteen surge and resident concerns about restrictions after move in. Holiday continues to be proactive in maintaining its reputation for safe communities. In anticipation of the regular flu season, the Holiday partnered with CVS Health to arrange for flu vaccine clinics on-site with more than 10,000 vaccinations delivered to residents and staff. Sienna Senior Living manages 8 retirement homes in Ontario and British Columbia for Sabra.
In the Q3 of 20 20, the 8 properties managed by Sienna achieved 79.5 percent occupancy, 3.2% lower on a sequential basis and 10.3% lower on a year over year basis. RevPOR was $2,495 flat to the prior quarter and 1.1% higher on a year over year basis. 3rd quarter revenue was $4,500,000 4% lower than the prior quarter and 10.4% lower on a year over year basis driven by occupancy declines. In the Q3, cash net operating income was just over $1,000,000 a 17% decline on a sequential basis and 46.7 percent decline on a year over year basis. As in Holiday's case, nearly the entire difference in cash net operating income is a result of occupancy loss.
Cash net operating income margin was 23.8%, lower than both 27.5% in the prior quarter and 39.9% in the Q3 of 2019. More recently, October occupancy was 80.2%, 400 basis points below February occupancy. There have been no confirmed cases of COVID-nineteen 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 in the province of 777 cases. And there are fewer than 80,000 cases in the entire province of Ontario.
While the more populated provinces in Canada had managed to flatten the curve, a surge in COVID cases triggered by Canadian Thanksgiving is causing the government to tighten restrictions. Sienna has seen similar dynamics in move ins and move outs of Holiday Inn and Enlivant. Seniors have been interested in moving in, but fearing the imposition of restrictions are waiting on the sideline to see what happens. In the second quarter, move outs in Ontario had slowed down because there were no available long term care beds, which are paid for by the provincial health system, by the way. Once beds became available, there was a catch up in move outs from the Sienna portfolio, which now seem to be reverting to normal levels.
Between February October of this year, our total senior housing managed portfolio inclusive of non stabilized assets lost 6.87 basis points in occupancy. That change in occupancy is the key variable driving the operating results of our senior housing managed portfolio. Pandemic related operating costs have become more routine as operators have acquired PPE inventory, operationalize infection prevention protocols and manage delivery of services to residents. Our operators are reporting reduced agency use, hero pay has decreased significantly since the summer and enlivant has even seen an increase in employee retention over the last few months. These expenses are not driving the ongoing pressure on net operating income.
It is the decline in revenue from the erosion in occupancy. In order to be a desirable alternative to home, senior housing has always needed to tasty food, engaging activities, social life and delivery of care. Tasty food, engaging activities, social life and delivery of care. COVID-nineteen has added a significant new facet, infection protection. The challenge has been to do this without infringing on residents' lives.
Our managed communities located mostly in secondary and tertiary markets targeting a middle market price point were somewhat shielded from COVID-nineteen outbreaks during the early months of the pandemic. Now after 7 months, COVID has spread across all markets, infecting people at nearly identical rates per capita from urban to rural markets and everything in between, the advantage of cyber senior housing portfolio market location has now become a time advantage. The operators in our managed portfolio had more time to prepare. They were able to be more tactical in their approach and implement infection control, stockpile PPE and other inventory, develop testing protocols and address staffing concerns. This has allowed them to maintain low infection rates by limiting community spread from entering the building.
Potential residents making a decision about whether to move into a senior housing community today are faced with a difficult choice and that choice is increasingly being skewed by need rather than want. The pent up demand that we talk about are those people still in the want category who will move into the need category and that timeframe is measured in months not years. Enlivant has already noted that they are seeing higher acuity residents moving in. Higher care may result in higher revenue, but it may also result in shortened average length of stay, which will drive greater turnover in the near term. Until an effective vaccine is available and administered to residents and staff, senior housing operators are walking the fine line of keeping residents safe while keeping them engaged and fulfilled.
That is why our operators are so intently focused on creating testing programs that are effective at stopping potentially infected individuals from entering the building regardless of their symptoms or lack thereof. The better our operators can insulate residents from community spread, the freer our residents can be within the building. This gives our operators the opportunity to sway the people who want to move in that now is the time. In prior earnings calls, we have spoken about the importance of our senior housing operators in the healthcare continuum. We saw that recognized by the federal government in September.
We also believe that the pandemic will be seen as a period where operators' reputations will be burnished because they kept their residents and their staff safe and did so with care. I will now turn the call over to Harold Andrews, Sabra's Chief Financial Officer.
Thank you, Talia. Before we get into the numbers, a couple of quick updates. First, no COVID-nineteen related relief has been provided to any of our tenants to date. 2nd, we collected all of our forecasted rents without the use of any deposits or other credit enhancements through the end of October and have seen a normal level of collections through the 1st few days of November. We have concluded that our leases with subsidiaries of Genesis and Signature will no longer be accounted for on an accrual basis, resulting in a write off of straight line rent receivables and above market lease intangibles totaling $14,300,000 The auditors for these 2 tenants concluded that absent additional government stimulus, increased occupancy and or reduced operating expenses, Genesis and Signature would likely have insufficient liquidity to meet their operating needs over the next 12 months.
Both tenants are current on all rental obligations to us and neither have requested rent relief during this pandemic. After moving these two tenants to a cash basis of accounting and assuming we collect all contractual rents due, our AFFO will not be impacted and our FFO will increase by $3,200,000 over the next 4 quarters. Now for the numbers for the quarter. For the 3 months ended September 30, 2020, we recorded total revenues, rental revenues and NOI of $143,300,000 $100,600,000 and $119,300,000 respectively. These amounts represent decreases from the Q2 of 2020 of $10,600,000 $12,100,000 $7,600,000 respectively.
The decreases in rental revenues was primarily due to the $14,300,000 Genesis and Signature write offs noted earlier, offset by a $2,200,000 increase in collections related to leases accounted for on a cash basis. In addition, we recognized a total of $4,200,000 of CARES Act government grants during the quarter related to our senior housing managed portfolio and a $1,400,000 decrease in COVID-nineteen related expenses compared to the 2nd quarter, positively impacting our NOI during the quarter. Of the $4,200,000 of CARES Act government grants received, dollars 1,200,000 related to our wholly owned portfolio and recorded in revenues, while $3,000,000 related to the Livent joint venture and recorded as part of income from unconsolidated joint venture. FFO for the quarter was $84,000,000 and on a normalized basis was $98,800,000 or $0.48 per share. The primary normalizing item being the $14,500,000 write offs related to Genesis and Signature.
AFFO, which excludes from FFO merger and acquisition costs and certain non cash revenues and expenses, was $94,800,000 and on a normalized basis was $95,100,000 or $0.46 per share. This quarter, we revised our policy on normalizing items to no longer normalize out the impact of pandemic related expenses or grant income. When applying this normalization policy to the 2nd quarter results, our 3rd quarter normalized FFO and normalized AFFO increased from the 2nd quarter by $9,400,000 $7,500,000 respectively, or $0.04 per share for both normalized FFO and normalized AFFO. For the quarter, we recorded net income attributable to common stockholders of $36,500,000 or $0.18 per share. G and A cost for the quarter totaled $7,200,000 compared to $8,700,000 in the Q2 of 2020.
G and A costs included $900,000 of stock based compensation expense for the quarter compared to $2,400,000 in the Q2 of 2020. This decrease is due to a change in performance based vesting assumptions on management's equity compensation. Recurring cash G and A costs totaled $6,300,000 or 5.3 percent of NOI for the quarter and in line with our expectations. Our interest expense for the quarter totaled $24,900,000 compared to $25,300,000 in the Q2 of 2020. Our cost of permanent debt increased 2 basis points from the end of the second quarter to the end of this quarter to 3.53 percent, while our revolver borrowing costs declined 1 basis points from the end of the second quarter to the end of the quarter to 1.25 percent.
Interest expense includes $2,100,000 of non cash interest for the quarter compared to $2,200,000 for the Q2 of 2020. The income from consolidated joint venture of 2 point to dispose of 14 senior housing communities, partially offset by loss on sale of $500,000 and the strategic disposition of 1 facility. In addition, income from unconsolidated joint venture includes the $3,000,000 of government grant income recognized under the CARES Act as previously noted. During the quarter, we made $27,500,000 of investments, including a $20,000,000 preferred equity investment in a 186 unit senior housing community with initial cash yield of 10%. We were able to match fund most of this investment through the issuance of equity under our ATM program.
Our year to date investment activity totaled $154,000,000 at a blended initial yield of 7.88 percent with $112,600,000 coming from our proprietary development pipeline. During the quarter, we also completed the sale of 1 skilled nursing transitional care facility, which was leased to Genesis for an aggregate sales proceeds of $18,400,000 inclusive of the assumption by the buyer of an aggregate $17,600,000 of HUD insured mortgage debt encumbering the facility and resulted in an aggregate $2,700,000 net gain on sale. This sale marks the completion of our strategic program to reduce our exposure to Genesis through the sales and facility transition. Subsequent to quarter end, we completed the sale of an additional skilled nursing transitional care facility for gross sales proceeds of $9,000,000 We issued 1,400,000 shares of common stock under the ATM program during the quarter at an average price of $15.70 per share, generating gross proceeds of $21,400,000 to $4,300,000 of commissions. Our leverage moved down slightly to 4.91 times from 5 times excluding the JV debt and the 5.48 times from 5.54 times including our share of new license joint venture debt.
We have $315,000,000 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 were in compliance with all of our debt covenants as of September 30, 2020 and continue to have very strong and improving credit metrics compared to the prior quarter as follows. Interest coverage 5.41 times, up from 5.36 times fixed charge coverage of 5.22x, up from 5.17x total debt to asset value 35%, down from 36% and then our unencumbered asset value to unsecured debt is 2.75%. Secured debt to asset value just 1%. On November 5, 2020, the company's Board of Directors declared a quarterly cash dividend of $0.30 per share.
The dividend will be paid on November 30 to common stockholders of record as of November 16. The dividend represents a payout of approximately 65% of our AFFO and normalized AFFO per share. We are very pleased with the high dividend coverage ratio and we'll continue to evaluate the dividend payout going forward with a target in the range of 80% of AFFO once we are past the impact of the COVID-nineteen pandemic. We continue to have a very strong liquidity position as of September 30, 2020 with over $975,000,000 of cash and availability on our line. Principal payments obligations through the end of 2021 totaled only $300,000 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 that we may face as we work with operators going forward. And with that, I will open up to Q and A.
Our first question comes from the line of Nick Yulico from Scotiabank. Your question please.
Thanks. This is Josh Brown with Nick. Could you just talk about where you're hearing from your operators about why we really haven't seen occupancy start to increase yet given elective surgeries are picking up?
Well, elective surgeries are picking up in some areas more than others. We're, 100 basis points higher on skilled occupancy than we were at our low point. So we have seen increases, but you see the numbers, we're having spikes in COVID all over the country. So there's a direct relationship there. We have, what, 95 facilities currently that still have some level of COVID positive.
So they're restricted in what they can do. Most of the rest of the facilities are admitting. So the majority of the facilities are admitting. But because of all the spikes in COVID around the country, hospitals are keeping beds open for COVID patients. And in some cases, we've got they've already hit or exceeded capacity.
So there's just a direct relationship there. So it's not as if we're not seeing the occupancy increases on the skill side, we are, but it's definitely mitigated by the impact of our inability to control the virus. And are you seeing I don't know if that answers your question, are you seeing something different in numbers out there on COVID?
No. And then just you mentioned in your prepared remarks that the pandemic fatigue and kind of pick up in discretionary move outs, I guess how much of an impact is that having on your operator occupancy?
Tanya?
It's quite significant because you heard what the occupancy trends are across the portfolio irrespective of assisted living and memory care, I mean independent living and assisted living and memory care, I guess. You're seeing just a longer tail to getting residents to move in. And it really is a function, I think, of getting people at higher acuity when they have to move in, as opposed to when it's more of a choice. So the challenge is your move outs are happening as they always there's the move outs that you always have, whether it's higher acuity or people pass or whatever that might be. But then you're also having people move out.
There's a whole tranche of people that are moving out because after leaving a community that is at various times had to maintain social distancing, sometimes there has been food delivery to the rooms because they've wanted people not to socialize because it's just a concern and that's the regulations in that location that people feel limited. And so they're reluctant to move from their home, let's say, to, a senior housing community where they may be in a 14 day quarantine and then maybe then they're going to be able to be out of their room much anyhow. And so the whole aspect of socialization, which is the want part of the equation for moving in is really, really
limited. Let me clarify. The fatigue in terms of staff, in case you were referring to that, yes, they are fatigued and it's been very stressful. But that isn't impacting admissions. Everybody is within the facilities, everybody is working just as hard to admit as they always have.
You just got those other factors that Talia articulated that create some issues. And in terms of acuity, we've been saying pretty consistently, and I think our peers are seeing it too, because folks have been staying at home longer, whether it was delays on the skilled side or the reasons that Tali articulates on the senior housing side, they are coming in sicker now. But I just want to make sure that it's clear that, the stress and fatigue is not impacting the desire or the execution on the part of facility management or staff to admit. Got it. Okay.
Thanks.
Thank you. Our next question comes from the line of Nick Joseph from Citi. Your question please.
Thanks. You talked about
the external growth pipeline. I think you mentioned $600,000,000 What would be a good assumption for a hit rate on that?
Well, most of that's already come in. I think we've got about only about $80,000,000 left for 2021 coming in and then a small amount in 2022. So if you look at the schedules that we've always published, most of that we exercised those options and brought that in. This has been the last sort of big year left of the $600,000,000 and then it starts declining.
Okay. And then how do you think about the ability to backfill that pipeline then?
Holly, do you want to talk about that? It's pretty tough right now.
Sure. So it's actually a really interesting question because there's some dynamics obviously in the marketplace. So all operators are not unique in the pressure on occupancy. And there's quite a bit of new construction you may have heard that's been going been underway for the last 3 years or so in senior housing. You may have heard about it.
And my guess is, in fact, I can say with certainty that those properties are also having pressure on their occupancy and they're in lease up mode. We think that there's going to be some interesting opportunities within that segment. So assets that, as Rick had mentioned earlier have not had pressure from their lenders, but probably will eventually if they're not really not getting on back on track, if you will, to hit their numbers under their covenant. So we think that there are assets out there that are going to be come to market at an odd time, right, during a pandemic, but where liquidity is or recapitalization is really important. So we think that's an interesting opportunity.
Thank you.
Thank you. Our next question comes from the line of Rich Anderson from SMBC Group. Your question please.
Thanks. So, Harold, you mentioned that you're not going to normalize out stimulus income going forward. I think I heard that right. Then do you have an assumption about how we should assume going forward? What kind of stimulus money will be in the numbers?
Or is it still sort of a choppy thing yet you're still not going to normalize it out?
Well, I think the numbers that
are coming in from the revenue side, obviously our managed portfolio got to 2%. So it's going to require incremental stimulus to be coming in for there to be incremental revenues coming in. And we're hopeful that, that will happen, but it's impossible to predict the timing or the scale of that. And I would just say on the operating cost side, things are have come down this quarter compared to last quarter as they built up inventories and we've seen things become more operationalized. And so as we start moving through the pandemic, obviously, we'll see we would expect to see labor costs that are impacted from COVID to normalize as well.
But again, that's very difficult to predict the timing. So I think we'll see what we saw this quarter, and I'm not going to predict because it's hard to, but I think it's kind of indicative of the level of cost that we're going to see for a while as the pandemic is ongoing and then it should start to moderate as we get closer to a vaccine and we start to see less cases in the buildings.
Okay. And then Rick, does this environment inform you more about the choice between RIDEA and triple net? Is it sort of like maybe it exposed some vulnerabilities, so you want to go more triple net? Or is it like an opportunity in the future with all the fundamental shifts that may happen positively after COVID that you might want to spend more time thinking about an operating model? I'm just curious how
it works. Thanks, Rich. It doesn't really affect our thinking. Part of the answer to that is it's just practical. There's hardly anybody out there when you do a deal that wants to do triple net anymore.
So you've got some of that practical consideration if you want to stay in the space and grow in the space, you're going to do manage deals. And I think there's lessons to be learned. And I've said this before, we've all been complicit in this. The coverage that we put in place when we do acquisitions on the senior housing side are pretty thin, certainly extremely thin on the independent living side because they're not viewed as really healthcare facilities. And so when you hit any sort of headwinds or hard times or pre pandemic, the supply demand equation creating issues, as we've seen, it really depresses the amount of breathing room those folks have on coverage, which led to not just more managed deals being done, but the conversion of existing triple net deals to managed deals.
Long as we continue to partner with good operators,
the managed deals are fine. And we're happy to buy the upside. The initial diligence and analysis is critical to determine that there is upside because as we all know with a managed deal, you're buying both upside and downside. And so you don't want to do any transaction where you're buying that particular operator at a peak level. Now it's possible that over the next couple of years, as the demographic really starts making its way into the occupancy of senior housing facilities, that folks might be interested in doing triple nets again.
And if that's the case, hopefully everybody's learned their lesson and instead of underwriting it 1.2 times for assisted living or 1.1 times for independent living, you're going to go in there with a higher level, whether it's 1.3, whatever it happens to be. So that when there are inevitable headwinds and headwinds are always inevitable at some point for whatever reason, that you've got cushion there. So it's possible that the triple net could come back, but I think that that's a function of the demographic really impacting occupancy and then sort of the state of the dynamic between supply and demand. And obviously, all that's interconnected.
Great. Thanks very much. Appreciate it.
Yes.
Thank you. Our next question comes from the line of Lukas Hartwich from Green Street. Your question please.
Hi, this is John Gee on for Lukas. Thank you for your time and congrats on the quarter. Just a quick one for me. I was just hoping to get some insight into, as you look to take advantage of the deals that are kind of manifest over 2021, if you look over your own portfolio, there are areas where you can see yourself selling into the strong bid out there for senior housing assets as you look to recycle capital to take advantage of the deal in the future? Taly, do you want to take that?
Sure. So potentially, yes. There's always something in the bottom of the barrel that we're looking to sell. That's inevitable. Everyone does that.
It's funny you asked the question because we probably get almost weekly, a call from somebody who wants to buy an asset, is looking to buy an asset. They're not even asking about specific assets. They just want to buy. And can they buy something from us? Oftentimes, it's multifamily guys looking at senior housing, particularly independent living, but it's really quite general.
So there's a lot of capital there, looking to find a home. And we frankly haven't tested the market to see whether something that we bought at a 7, we can sell it up 5.5. And then you have to make a judgment as to whether long term that makes sense because we'd have to measure what we how we redeploy that capital and how we think about the long term improvement in the sturdiness of the returns that we can get over time.
Awesome. Thank you.
Thank you. And our next question comes from the line of Steven Valiquette from Barclays. Your question please.
Great.
I'm just hoping to
get a little more color regarding the Genesis and Signature going concern opinions. The cyber press release from September 25 said that you guys have not received any rent relief request from either operator as of that date.
I'm not sure if
that was still the case today. And I'm not sure if you can even talk about this, but what do you expect to be the likely scenarios from here to how this might play out? Or is this more just really an accounting protocol? I just want to get more flavor for kind of this whole situation. Thanks.
Let me make a couple of comments and then turn it over to Harold. I think that, 1, we have not gotten any rent requests. And when you make when you're forecasting and you exclude fall assistance and include a relatively high level of supply expenses related to the pandemic with really no relief in sight. If you apply that kind of analysis to any operator, you may come to the same conclusion. So we think it was as much about that as anything else, but let me just kick it over to
Harold. Yes. Thanks, Rick. We don't have any detailed insights into more than that from their auditors. We have conversations obviously with the operators and obviously Genesis will be having their call here at some point for this quarter.
And they're clearly under pressure. They've told us that this is not an imminent issue for them as far as having problems, but they've got to see relief continue to come in and they've got to see occupancies improve over time or it would be a problem for them. So we're just kind of in a wait and see mode with Genesis. Signature has been one that we restructured that lease a while back. We've been very pleased with the progress that they've made and what they've done.
But as Rick said, their conclusion was they could not provide a forecast that showed things being able to be funded absent increased occupancy or more relief given the occupancy level they're at today. But similarly, given all the relief that has been received by Signature, we feel like their cash flow position in the short term is fine. So we're basically in a wait and see mode. And I think there's not a whole lot more I can say about it than that.
Okay. That's helpful. I appreciate the color. Thanks.
I want to just real quickly do that we have gotten Genesis down to such a small percentage to and those we've got it's about $10,000,000 of recurring rent and the $10,000,000 a year for the next couple of years. So whatever happens there, it's not going to be a significant impact for us if something negative happens. Hopefully, that won't be the case. But I think the fact that we've gotten them down so dramatically, this just really obviously is indication that that was the right move for
us to do. And we've also had internal conversations that if it came to that, we've had internal conversations relative to who we can move those facilities to. They're all in one region. So it would be not a difficult move. And it's in a state that we really like, New Hampshire.
Perfect. Okay. I appreciate the color. Thanks.
Thank you. And this does conclude the question and answer session of today's program. I'd like to hand the program back to Rick Metros for any further remarks.
Thanks for joining us today. We're available if you all have any follow-up questions. We're going to have additional conversations. For a lot of people, we won't be talking to you for a while. So I hope you find ways in this environment to enjoy the holidays.
And please stay safe out there. Take care.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.