Good day, ladies and gentlemen, and welcome to the Sabra HealthCare First Quarter 2020 Earnings Conference Call. And I would now like to turn the call over to Michael Costa, Executive Vice President of Finance. Please go ahead, Mr. Costa.
Thank you. Before we begin, I want to remind you that we will be making forward looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including the expected impacts of the ongoing COVID-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 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 with 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 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 Rick Matros, Chairman and CEO of Sabra Health Care REITs.
Thanks, Mike. On the call with me, I've got Talia and Harold. And as soon as I finish my remarks, I'll pass it over to Talia and then to Harold, and then we'll go to Q and A. First, let me thank you all for joining the call, and I hope you and all your families are safe and doing well during this pretty, really tough time. So I'd first like to start the call by honoring and recognizing the staff in all of our facilities.
I had the honor for years of working in facilities as an operator. I started as an activity director in a nursing home. And so I've got to see every day the kind of care that was being delivered, and the other services beyond direct care that were being delivered, and how the staff in the facilities, whether they are skilled nursing, assisted living, memory care, independent living, become second families to the residents and patients that reside there. And the hospitals have gotten tremendous attention and support, and the staff are being touted as heroes, which they are. And all that support is well deserved.
And they're also being treated with a very high level of understanding relative to the tough staffing issues and the shortages of supplies. Unfortunately, we haven't seen that from the media as it pertains to skilled nursing and senior housing. And early on in the pandemic, it was identified that the elderly were the most vulnerable population. Well, the elderly that are cared for in our facilities are even more vulnerable. And so we're part of an effort to get some better PR out there because our staff does deserve the same level of support and understanding that the hospital workers have gotten.
Our facilities have not been prioritized. Supplies are still tough. Staffing is tough. And they deserve the same level of understanding. And so I'll even go a step further.
When you all see things out in the paper or you see letters and op eds. If you want to take a moment as some of us have to respond to those, we'd appreciate that very much. It's also appropriate to honor our staff, not just because of the pandemic, but yesterday was National Nurses Day and the beginning of Skilled Care Week. And we, as I'm sure all of our peers are doing things out in the field to provide support and to further honor all the workers out in the field. So with that, let me get on to the direct business at hand.
So I'm talking about the acquisition environment. The acquisition environment has come to a complete stop for all intents and purposes. I do think that for the smaller operators, because this is so tough, the smaller operators who don't have good balance sheets or capital partners that can provide them the appropriate support that will create opportunities for us as we move past this pandemic and we look to get back to growth at some point later on. We did get a number of deals done this year that came from our development pipeline for senior housing facilities totaling 112,600,000 dollars for a blended yield of approximately 7.45%. We don't expect to do any material acquisitions looking forward this year.
We'll have a few deals from our direct from our acquisition I'm sorry, from our development pipeline, similar to the ones that we've closed on this year. Moving on to the Enlivant JV option. We're not doing anything about this. We don't feel pressed to do anything. Obviously, it's a very difficult time right now.
And even though we saw some really nice uplift in performance in the Q4, the combination of the flu season, which is much tougher than last year, and now the pandemic hitting really in March, particularly on the cost side, which we'll talk more about, there's really no reason to do it. We're not pressed to do it. The fact that the auction that we have expires at the end of the year at this point isn't meaningful to us. So we'll take time. We'll see how everything goes.
We think the space is going to recover really nicely. We'll talk more about that. But we still have to see how that plays out and how that affects valuations. So and I wouldn't expect us to do anything in the foreseeable future on the JV option and whether we do something actually exercise the option or come to some other arrangement really remains to be seen. Again, we don't feel pressed.
Moving on to Q1 numbers and PDPM impact. Based on reported results through February, PDPM had an annualized positive impact of 0.14 percent on our EBITDAR SNF coverage, of which 75% was rate related and 25% was cost related. Now we excluded the market basket and we excluded the month of October, so we're talking trailing 3 months on an annualized basis. In terms of PDPM, we're much better off as a sector having PDPM in place than we would have if we still had RUGS in place. RUGS incentivized operators to admit short term rehab patients only.
Since we've had PDPM in place, we've expanded the kinds of patients that have been admitted to the facilities to include a lot of nursing conditions, more complex nursing care. And that is helping us through this. 1, it positioned us, our portfolio, to be stronger going into the pandemic because as you all saw in our stats, our coverage improved. But if you look at our coverage on a stand alone basis, it improved even more in the Q1. And tenants that I know some have had concerns about like North American and Avamere really showed improvement.
Avamere's Q1 of this year was the strongest quarter that it's had since we acquired it. So that's helped us and helped our operators because they are still admitting. And in terms of facilities that have positive COVID-nineteen patients, if there's a large outbreak, admissions have stopped. If there hasn't been a large outbreak and working in conjunction with the Department of Health Services, most of our facilities are still admitting, particularly if they've got the capacity to isolate, quarantine new admits when they come in for a period of time. There are very specific guidelines that our facilities are following that have been issued by the CDC and have been supported by the American Health Care Association in terms of admitting patients.
So that said, the cost savings that we saw prior to the pandemic from PDPM have pretty much gone away because much of those cost savings have to do with group and concurrent therapy. And right now, in the facilities, everything is being done on a 1 on 1 basis, not therapy is being done on a 1 on 1 basis. So activities are being done 1 on 1, meals are being served 1 on 1. So everything is being done on a 1 on 1 basis. So those cost savings, while they will come back post the pandemic, currently do not exist.
For the quarter, as reported, our skilled EBITDA coverage increased as did occupancy and skilled mix. Our senior housing triple net rent coverage and occupancy were essentially flat. Our top 10 tenants showed their best quarter yet with most of our skilled tenants showed showing improved coverage and all benefiting from PDPM. The Maguire group was down, but still had strong coverage over 2x and showed improved coverage with PDPM on a more current basis. For our SHOP portfolio, Talia will discuss that in more detail.
One of the things I would point out is that it was a flu impact the flu impact really went into the Q1. And so in March, we really started seeing the cost increases as a result of the pandemic, with the occupancy hit as a result of the pandemic starting in early April. In terms of COVID-nineteen specifically, I first want to go over the things that we received from our operators and how we're monitoring what's going on in the business. On a weekly basis, we receive a census tracker for our top customers. Every 2 weeks, we receive census for all of our operators at the portfolio level.
We don't ask for it at the facility level, walking a fine line between asking our operators to provide information to us that we think is critical so that we can monitor the business, but not causing an undue burden on them given everything else that they're dealing with. But we do get every 2 weeks census to the entire portfolio on a tenant by tenant basis. We also receive a weekly report on all facilities with COVID-nineteen positive test results. And weekly, we track every county and province we have facilities in for the number of positive cases that are out there. This has allowed us to get some sense of how things might progress in the counties in which we have operating facilities.
Our asset management teams talk with our operators continuously, not just to determine status of operations, but where we can be of assistance. When we refer to the impact of COVID-nineteen, we use February as a demarcation point. So we're looking at February month to date averages and then looking at March in comparison to February and April May in comparison to February as well as March April as well. So since these months today average for February, occupancy for SHOP was down 160 basis points through the last week of April. The 1st week of April, however, saw the largest drop, and it hasn't been dropping to that degree since then.
Our triple net senior housing occupancy was down 130 basis points from the February average through the last week of April. So our senior housing has really held up pretty well. While admissions have slowed down, there's been a slowdown in the back door. And really what's happened is the number of our residents who are able to leave or whose families might consider taking them out feel more secure having them in the facilities and from a practical perspective, simply may not be able to provide the care they need outside of the facilities. So that's mitigated some of the occupancy to a certain extent.
The other thing I would note though is if you look at it on a if you look at our occupancy on a year over year basis, both triple net senior housing and in SHOP, it's a bigger drop, and that bigger drop really reflects the impact of the flu. I'm sure everybody recalls Q1 of 2019, we had a pretty light flu season. We had virtually no impact. And this is a tough flu season, not dissimilar to what we saw a couple of years ago, although not as long in duration as we saw at the end of 2017 2018. So the reality is the facilities have to recover from the combination of the flu hit and the pandemic.
But when we just measure how we're doing since the pandemic and we look at the occupancy trends that we have access to in the senior housing industry, I think we've held up really pretty well, and Tali will be more specific as to the reasons why we believe that's the case. Our skilled nursing occupancy was down 4 60 basis points from the February month to date through the last week of April. Our skilled mix is declining at about onethree of the rate that our occupancy was. So skilled mix has been holding up pretty well, and then it went from declining to flat, and we now have an increase in skilled mix. And our skill mix as of the last week of April is actually higher, just a little bit, than it was before the pandemic hit.
And so that's helped to mitigate some of the problems as well the fact that skilled mix has been so healthy. And the reason that skilled mix has been healthy is, 1, going back to the comment I made earlier about PDPM, we've got a much larger population who are focused on nursing needs. Those individuals also have a long length of stay, so that's helped. And with the suspension of the 3 day hospital stay requirement, we're now able to skill in place. So specifically, if someone's condition worsened before and they were on Medicaid, they would have to be discharged to the hospital where they get additional care, regardless of whether the care could be treated at the nursing home, and then they'd be sent back to the facility where they would qualify for Medicare.
So these folks, even when they're on Medicaid in the facility, they have their Medicare benefit. They just had to go through this discharge and then back to the facility, which is one of the reasons that the industry has always tried to lobby for a permanent retraction of that rule because it really doesn't make a whole lot of sense and it enhances transfer trauma and things like that. So now that that isn't in place, patients can be skilled in place. So if you have a Medicaid patient whose acuity has increased for whatever reason, it doesn't even necessarily have to be COVID-nineteen related, although it may be certainly, then they can be put on Medicare without being discharged back to the hospital for a 3 day qualifying stay. And we've seen some important changes in terms of metrics from that perspective.
And there are some more extreme examples where there have been bigger drop in occupancies, where there's been a big breakout of COVID, but they've been able to care for most of those folks in place and able to convert them from Medicaid to Medicare while they're there. So that's been a positive. And the other factor that's going to help going forward on skilled mix is effective May 1. Sequestration was suspended, and so it was about a 2% increase in the Medicare rate as well. So all of that does help.
The occupancy drop is almost entirely due to the cessation of elective surgeries. When we take the facilities that are positive COVID, exclude them from our census, you see almost no difference because the drop from elective surgeries is such a huge proportion and given the numbers of buildings that we have that the impact from COVID, particularly since a lot of the facilities still admit, this doesn't really materially impact the overall occupancy, at least to this point. Now we move on to mitigation from the various relief packages that are out there. We're also tracking what each of our operators are accessing from the variety of programs that are out there. And so I'm just going to give aggregate numbers right now.
I think some of you may have seen this in our filings, but we have a total of 320,000,000 dollars that our operators have access broken down as follows, dollars 100,000,000,000 from public health care and social emergency fund providers, so PHSES, dollars 60,000,000 from that $100,000,000,000 fund from sequestration suspension, dollars 10,000,000 from SMAP, dollars 20,000,000 and we hope that, that will improve From the Advanced Medicare Payment Program, dollars 150,000,000 And the comment I would make there is, number of our operators have chosen not to access that because it has to be paid back, number 1, in relatively short order. And secondly, some of the lenders are asking providers to pay down their line when they access that money. There are some lenders out there who have been flexible on that, and we greatly appreciate flexibility from everybody during the pandemic. But that's limited the number of operators that we have that have accessed the Advanced Medicare payment program. On the employer payroll tax delay, that's 6.2%, there's $50,000,000 there.
There's $30,000,000 on PPP. And again, the waiver of the 3 day hospital stay does provide a benefit, but you really can't quantify what that benefit is. We're hoping for more help, and we are cautiously optimistic that there will be another package that will be specifically to help on the Medicaid side, but it's not done yet. So we don't think this is all there will be. And if this goes on longer, we'll have to wait and see what else there would be out there.
We currently have 80 facilities with positive COVID-nineteen patients or residents and 22 of our 70 tenants. Of those 22 tenants, 2 of those tenants are senior housing, Enlivant and Holiday. We're seeing different patterns in the asset classes. And as you would expect, in assisted living and even more so independent living, the population is healthy, you've got less employees coming in to expose folks. So that does help somewhat, but we're still experiencing positive cases.
In the skilled nursing facilities, there really hasn't been a pattern either. We've had facilities that have had large breakouts and we've had facilities that have had a few patients and not much beyond that. And when a facility has someone that tests positive, everybody gets tested in the facility. So but there really hasn't been a pattern there. So some of that may be the efficacy of the testing.
And in terms of the AD facilities, that doesn't mean that we don't have more positive COVID patients in other facilities. But as everybody knows, there continues to be a problem with both the adequacy of the testing and the quantity of the testing. So we are cautiously optimistic, however, because our census decline is slowing in skilled nursing. As I said, our skilled mix held up better than overall occupancy is now increasing. The counties with cyber facilities are now showing as many decreases in cases as increases in cases.
Following protocols, regardless of the lack of testing, has had a positive impact. So in other words, because of the lack of testing and the reliability in some cases of testing, where you've got FDA some FDA approved tests out there that still have high false negatives and false positives. But every patient resident is being treated according to CDC guidelines as if they have COVID-nineteen. So while we know we have more positive cases than we're aware of, we also know that we've had untold numbers of patients and residents that have had it, that have been treated in place and recovered from it, and have not been sick enough where they needed ventilator care, for example, and needed to be transferred to a hospital. So we think that's really helped quite a bit.
And ENLIVIT, which for example, which has done a lot of testing, has had a 1% positive rate. So and again, that's because of the protocols that they've been following. And a lot of this does come down to the operator, not just the markets they're in and what's occurring in test availability. My initial concern coming into this was on the senior housing side because they didn't have the same level of experience dealing with infections and things like that, that skilled nursing had and certainly even more so on the independent living side, it's not a healthcare setting. Living and memory care has become a needs based business, obviously.
So it's much different than it was during the Great Recession. But when you have a provider like Holiday, who regardless of the fact that they do not have healthcare workers in place, institute all the guidelines immediately with all the restrictions in place on visitors and such, it's had a very positive impact. So that's been really great to see from an operator perspective that we have operators that regardless of their experience or asset class, everybody's jumped on it with sort of the same vigor. And one of the things that we do, I mentioned our asset managers is, we're trying to provide as much assistance as possible. And that goes from sharing best practices, and so we share with our operators what other operators are doing.
We source supplies. In terms of all the relief programs. We disseminated as much information as we can to help them get access and to make referrals on how they can get access if any of them were struggling with it. So we'd like to think all that has helped in terms of the value that we're trying to bring to all of our tenants. All that said, availability of a there's nothing on the horizon that shows that there'll be some relief there, but at some point, there will be.
But that's the biggest problem right now. In terms of cost going forward, and I know that that's on everybody's mind, I think for skilled nursing, a lot of these additional costs will go away. And I think for skilled nursing as well as senior housing, there'll definitely be an uptick in inventory. Skilled nursing facilities typically have a lot of stock. Now the stock has to change a little bit now because this is different.
The senior housing operators normally don't carry the same kind of inventory for the obvious reasons that skilled nursing does, but I think they'll have those on hand. So they'll be more prepared, to where something like this happens again. I do think from an infection control perspective, there'll be some increase in supplies on a go forward basis. That's more material for senior housing on a relative basis just because the cost of labor is the biggest driver in skilled nursing. So on a relative basis, that additional cost, I don't think will have that much of an impact.
And I think it will be reasonable, at the senior housing level. Again, I think it's going to be more a function of building up inventory, so you have what you need in case something should happen on a go forward basis. And then finally, before I turn it over to Talia, let me comment just briefly on our specialty hospital portfolio, which is primarily behavioral facilities, but we also have some other facilities in children's hospitals and others as well. That's 10% of our NOI, and that's been remarkably stable through this period of time so far. And no sense at this point that there's going to be any material impact relative to that 10% of our NOI in those facilities.
And so with that, I will turn the call over to Talia.
Thank you, Rick. In my remarks, I'll provide you with the Q1 operating results of our managed portfolio. The Q1 mostly reflects the pre pandemic environment and sets the stage for the broader impact of the spread of the coronavirus that has followed. I will also provide you with insights into April's results, which will include real time data on senior housing operations amid the pandemic. In the Q1 of 2020, approximately 17% of Sabra's annualized cash net operating income was generated by our managed senior housing portfolio.
Approximately 52% of that relates to communities that are managed by Enlivant and 33% relates to our holiday managed communities. The balance includes our Canadian portfolio and 5 assisted living and memory care communities in the U. S. On a same store year over year basis, the managed portfolio, which excludes the Holiday portfolio and 2 recent acquisitions, showed favorable top line results in the Q1 compared with the Q1 of 2019. Revenue increased by 2.1 percent, revenue per occupied room, RevPOR, excluding the non stabilized assets was up 3.8% despite occupancy declining from 85.1% to 83%.
However, cash net operating income decreased by 10.1 percent from $14,900,000 to $13,400,000 in part related to the impact of COVID-nineteen preparedness costs incurred in March by our operators. Occupancy remained fairly consistent during the quarter, but late in the quarter, operators began to incur unbudgeted costs for PPE and changes to the delivery of resident services, which together had a negative impact on cash net operating income and margin. I want to digress briefly and describe what has transpired for operators in senior housing over the last 45 to 60 days and provide context for that within our managed portfolio. In the face of the coronavirus, operators have had to retool nearly everything that they do and get it done quickly and effectively. Virtual tours had to be created since in person tours were not allowed.
Rules had to be developed to ensure that incoming residents were infection free. Clinical assessments had to be done virtually. Dining had to be converted to interim only, meaning that all meals had to be prepared, packaged and delivered to each resident 3 times a day at a minimum. Group activities had to be replaced with activities that could be done with residents kept socially distant. Staff had to be screened before every shift and sometimes after, including logging their temperatures.
Sufficient masks, gloves, gowns and even face shields had to be stocked to ensure appropriate protection. Enlivant is primarily a national assisted living and memory care operator with a portfolio of smaller communities in secondary and tertiary locations with a middle market price point. Staff in each community includes healthcare professionals who support the day to day medical needs of residents. Holiday Retirement is primarily an independent living operator also with a national platform. The operating model centers on providing a social environment, comfort and activities.
Staff in each community is limited to residential support such as housekeeping, dining and activities and there are no healthcare professionals on staff. And our portfolio managed by Ciena is similar to that of Holiday, but located in Canada. And as a company, Ciena Senior Living operates nursing homes as well as retirement homes in Canada. So there are significant healthcare resources within the organization, even though it is not a service offered within our communities. Regardless of whether healthcare services were part of their offering to residents, operators were now on the frontline of protecting residents from a very real healthcare threat and they assessed, planned and implemented change immediately.
The Enlivant joint venture portfolio, 168 properties of which Sabra owns 49%, show top line improvement in the Q1 of 2020 on a same store year over year basis, but was impacted by costs related to preparing for the pandemic late in the quarter. Average occupancy for the quarter was 81.5%, 1.5% lower on a stabilized same store year over year basis coming off of the impact of the flu, which impacted occupancy beginning in November and into January. RevPOR was $4,340 2.7 percent higher on a stabilized same store year over year basis. Taken together, revenue was 1% higher on a same store year over year basis. However, cash net operating income margin was 22.1%, 4.2% below the prior year's results on a same store basis.
And this includes $482,000 of Sabra's share of the COVID-nineteen related costs, primarily medical supplies, raw foods, dining supplies as the communities stocked up, prepared for and implemented infection control During the month of April, average occupancy in April declined about 130 basis points compared to February's average, impacted primarily by fewer move ins at the start of April, although somewhat offset by fewer move outs than expected. Rates have held and collections have been normal. Enlivant estimates that Sabra's share of continued expenditures on PPE, labor and employee programs will be about $425,000 per month. In total, 10 of our Enlivant JV properties have had a resident test positive for COVID-nineteen. As of a couple of days ago, only 4 communities had a resident with a positive test.
The second half of April, OMIVA began to see increases an increase in leads and virtual tours. Potential residents have delayed move ins if they could in order to wait it out, which suggests that there is pent up demand. Enlivant's ability to manage the safety of its residents and staff through this period plus the backlog of delayed move ins makes us cautiously optimistic about occupancy levels. Sabra's wholly owned Enlivant portfolio of 11 communities continue to experience strong rate growth. However, as described in last quarter's earnings call, occupancy and margin that had been affected by the early start of the flu season in the 4th quarter did not have a chance to rebound.
1st quarter occupancy was 86.1%, a 3.4% decline compared to the prior quarter, declining from 86.9% in January to 85.5% in March. The recovery from the regular flu was overwhelmed by the impact of the pandemic. RevPOR in the Q1 was 5,799, in line with the prior quarter and 8 0.1% higher than the prior year. Revenue was 2.5% higher on a year over year basis, but 3.9% lower on a quarter over quarter basis. However, cash NOI margin was 26.2%, 3.7% below the prior quarter's results.
The decline in cash net operating income and margin reflects reduced revenue due to the change in occupancy described above and $80,000 of costs related to COVID-nineteen. During the month of April, occupancy averaged 83.9%, 210 basis points below February's average occupancy. The occupancy decline was mostly in the first half of April as fewer new residents moved in and this was stabilized by fewer move outs resulting in flat occupancy in the second half of the month. Similarly, rates have held steady and collections have been fine. Enlivant estimates that Sabra's share of continued expenditures on PPE, labor and employee programs will be about $100,000 per month in this portfolio.
In total, 4 of our wholly owned and live in communities have had a resident test positive for COVID-nineteen. As of a couple of days ago, 3 communities had a resident with a positive test. We transitioned our holiday communities from our net lease to managed portfolio at the start of the Q2 of 2019, so we do not yet have year over year same store results to report. In addition, we transitioned our independent living community in Frankenmuth, Michigan to Holiday in the Q4 of 2019. Portfolio occupancy, excluding the transitioned community, was 87.2% in the quarter, 0.6% lower than the prior quarter.
RevPOR on a same store basis excluding the 1 transition community was $2,496 slightly higher than $2,486 in the prior quarter. Cash net operating income including the recently transitioned community was in line with the prior quarter with a cash NOI margin of 35.2%. $139,000 of COVID-nineteen related costs were incurred in late March. During the month of April, occupancy averaged 86 0.4% excluding the one transition community, only 40 basis points below February. Rates have held and there have been no issues with collections.
Holiday continues to apply a 4.5% rent increase on lease anniversary dates and there has been little pushback because of residents' positive experience. COVID-nineteen related costs for April are expected to total $278,000 So far, only 2 of our Holiday communities have had a resident test positive for COVID-nineteen. The Holiday team has done extraordinary work managing all aspects of the pandemic, particularly because their operating model is not geared to or staffed to handle healthcare matters. In order to further support its residents, Holiday rolled out a free telehealth program, giving residents access to medical providers while protecting them from possible exposure to the virus. Sienna Senior Living manages 8 retirement homes in Ontario and British Columbia for Sabra.
In the Q1 of 2020, the 8 properties managed by Sabra delivered 85.3 percent occupancy, 3% lower than the prior quarter and 4.9% lower on a year over year basis. RevPOR was $2,227 which was flat to the prior quarter and 2% higher on a year over year basis. First quarter NOI was also flat to the prior quarter, but down 3.7% on a year over year basis, reflecting the revenue decline. This includes about $20,000 in COVID-nineteen related costs. Cash NOI margin was 38.9 percent for the quarter, a 1.1% increase over the prior quarter and 0.5% lower on a year over year basis.
During the month of April, portfolio occupancy averaged 84%, only 20 basis points below February's average and ended the month at 83.9%. Occupancy increased in several of the properties, but was offset by a decrease in occupancy in 2 homes in Ontario, both impacted by new competition in the market. To date, there have been no confirmed cases of COVID-nineteen in our Sienna portfolio. The number of infections is very low in the interior of British Columbia, where 4 of our retirement homes are located, and there are fewer than 19,000 cases in the entire province of Ontario. Sienna has seen some potential residents defer moving in until the pandemic eases, yet many see retirement home living as a safer option at a time when isolation and access to food, services and community threaten so many older adults.
Independent living residents in our Holiday and Sienna portfolios may be the same age as the residents in assisted living and memory care, but they are healthier and require less care. Lower care means lower care needs means less staff, which means fewer interactions with people coming in from outside the community. We believe that this has helped to support occupancy during April. There are two themes that run through the results that we have discussed. Occupancy pressure during April and costs incurred to ensure strict adherence to CDC protocols.
The occupancy story is simple, more move outs than move ins. In April, move ins were down about 40% year over year, while move outs continued, but at a slower pace than usual. In particular, residents were reluctant to move to higher levels of care and others didn't have access to the support they needed during the pandemic outside the community. As infection control protocols were implemented and visitors were restricted, sales strategies had to be modified and new residents moving in were often required to have a COVID negative test and spend 2 weeks in self isolation in their new apartment, not very appealing unless the move was truly necessary. Our operators discovered that virtual tours turned out to be a strong sales tool as it allowed greater access to potential customers and decision makers.
All of our operators have now ramped up their digital marketing to generate leads and are seeing strong responses. They believe there is pent up demand for senior housing. At the same time, rates are holding and collections are normal. On the cost side, all of our operators have worked to procure and stock materials necessary to continue to deliver services to their residents, such as meals in their rooms. Our operators are faced with additional labor costs because of the need for additional cleaning and meal packaging and delivery and additional labor to cover for staff impacted by the virus.
Our managed communities located mostly in secondary and tertiary markets and targeting a middle market price point have so far shown themselves to be more shielded from the pandemic and its impact. The spread of the coronavirus has been worse in densely populated areas with 70% of cases in primary markets and far fewer cases in secondary and tertiary markets measured both on an absolute and per capita basis. The labor pool is more stable and loyal than competitive urban markets and in many of these locations, the senior community is an important employer. These communities are part of the fabric of the towns where they are located. They are the place where older adults can live out their years in a place they know with the support they need.
During a national crisis, these communities have continued to care for their residents and their workforce, be dependable employers and providers of jobs in a time of uncertainty and job insecurity and has gendered goodwill that we believe will carry forward. With that, I will turn over the call to Harold Andrews, Sabra's Chief Financial Officer.
Thank you, Talya, and thanks everybody for joining the call. I will begin my comments with an overview of the quarterly results and finish with some discussion around the financial implications of the COVID-nineteen pandemic going forward. First, I would like to note that the COVID-nineteen began in March, which for our financial performance only impacted our managed portfolio. The impact included cost increases and minimal loss revenues through lower occupancy. The cost increases included certain identified direct costs totaling $300,000 in our wholly owned managed portfolio and $500,000 in our share of the joint venture assets operated by Enlivant.
These are costs that were directly related to COVID-nineteen such as incremental personal protection equipment, incentive pay, incremental staffing and incremental operational and cleaning supplies. We have normalized this $800,000 cost impact out of our FFO and AFFO for the quarter and we made no normalizing adjustments to revenues. And now for a few comments about the financial performance for the quarter. For the 3 months ended March 31, 2020, we recorded revenues and NOI of 1 $149,300,000 $125,600,000 respectively, as compared to $155,800,000 $134,800,000 for the Q4 of 2019, representing declines of $6,500,000 $9,200,000 respectively. The declines in revenue and NOI were primarily due to the write off of straight line rent receivables and above market lease intangibles totaling $6,100,000 associated with 4 operators moved to cash basis accounting.
These operators represent 3.1 percent of our total annualized cash NOI. FFO for the quarter was $86,900,000 and on a normalized basis was $92,100,000 or $0.45 per share. FFO was normalized primarily to exclude $5,800,000 of the write off of straight line rent receivables and above market lease intangibles mentioned a moment ago, and $1,900,000 settlement received from a legacy CCP legal case and the $800,000 of incremental costs associated with COVID-nineteen also mentioned a moment ago. This compares to normalized FFO of $95,600,000 or
$0.48 per share in
the Q4 of 2019. AFFO, which excludes from FFO, merger FFO, merger and acquisition costs and certain non cash revenues and expenses was $91,800,000 and on a normalized basis was $90,500,000 or $0.44 per share. AFFO was normalized primarily to exclude the same $1,900,000 settlement received from a legacy CCP legal case and $800,000 of pandemic related expenses that were normalized out of FFO. This compares to our normalized AFFO of $93,200,000 or $0.47 per share for the Q4 2019. Approximately 1 half of this $0.03 per share decline in normalized FFO and normalized AFFO is attributed to the incremental weighted average shares outstanding in the Q1 of 2020 over the Q4 of 2019 due to our deleveraging activities, while another primary contributor was higher compensation expense, including $700,000 of cash compensation and $1,400,000 of stock based compensation, which impacted FFO only.
Stock based compensation was in line with expectations during the quarter, although higher than the Q4 of 2019 as that quarter included an accrual true up to reflect lower payouts than accrued for in earlier quarters. For the quarter, we recorded net income attributable to common stockholders of $35,200,000 or $0.17 per share. G and A cost for the quarter totaled $8,800,000 up $2,800,000 from the Q4 of 2019, which were low due to the annual equity award trips mentioned a moment ago. Q1 2020 G and A costs included $2,400,000 of stock based compensation expense. Recurring cash G and A costs of $6,200,000 were 4.9 percent of NOI for the quarter and in line with our expectations.
Our
interest expense for the quarter totaled $25,700,000 compared to $27,400,000 in Q4 of 2019. This quarter over quarter reduction was primarily driven by a combination of debt pay downs in the Q4 of 2019 associated with our deleveraging activities and lower overall borrowing costs. Our cost of permanent debt declined 12 basis points from the end of 2019 to the end of this quarter to 3.67%, while our revolver borrowing costs declined 82 basis points from the end of 2019 to the end of the quarter to 2.09%. Interest expense includes $2,200,000 of non cash interest for each of the Q1 of 2020 and the Q4 of 2019. Other income of $2,300,000 for the quarter includes the $1,900,000 legal settlement previously mentioned and the loss from our unconsolidated joint venture includes a $1,700,000 loss on the sale of 2 assets from that portfolio.
During the quarter, we completed the acquisition of 2 senior housing triple net communities and 1 senior housing managed community from our property proprietary development pipeline for an aggregate purchase price of $83,400,000 with a weighted average cash yield of 7.51 percent. We also completed the sale of 3 skilled nursing transitional care facilities for an aggregate sales proceeds of $6,800,000 resulting in a $200,000 loss on sale. During the quarter, we recorded no revenues from these sold facilities. As of March 31, 2020, the company determined that 2 skilled nursing transitional care facilities with an aggregate net book value of $11,300,000 and a net secured debt balance of $13,800,000 met the criteria to be classified as assets, liabilities held for sale. These balances are included in accounts receivable, prepaid expenses and other assets net and accounts payable and accrued liabilities respectively.
Subsequent to March 31, 2020, we completed the sale of the facilities for an aggregate gross sales price of $14,400,000 inclusive of the assumption by the buyer of an aggregate $14,200,000 of HUD insured mortgage debt encumbering the facilities. During the quarter, we issued 200,000 shares of common stock under the ATM program at an average price of $20.33 generating $3,900,000 of gross proceeds before $58,000 of commissions. While we expected to issue additional equity during the quarter under the ATM program to further lower our debt and positively impact our leverage as we completed the acquisitions previously mentioned, the sharp decline in the equity markets eliminated that opportunity. However, we are very pleased to have maintained our leverage below our target of 5.5x, including our share of the Enlightent joint venture debt, which stood at 5.47x and 4.97x excluding the joint venture debt. We were in compliance with all of our debt covenants as of March 31, 2020 and continue to have a strong credit metrics as follows.
Interest coverage 5.28 times fixed charge coverage 5.07 times total debt asset value 36 percent unencumbered asset value to unsecured debt 2 69% and secured debt asset value 1%. On May 6, 2020, the company's Board of Directors declared a quarterly cash dividend of $0.30 per share.
The dividend
will be paid on May 29 to common stockholders of record as of May 18. The dividend was reduced this quarter in response to the uncertainty around the impact from COVID-nineteen. We set the dividend this quarter at a level we feel can be sustained in the future even if our operations are disrupted to a level in excess of what we believe is likely to occur. We will continue to evaluate the dividend payout as we get through the pandemic. Shifting gears to the financial implications of the COVID-nineteen pandemic, I would like to start by noting that we have formally withdrawn our 2020 earning guidance due to the significant amount of uncertainty around the impact it may have on our triple net rail revenues and our managed portfolio performance over the balance of 2020.
We can, however, provide some insights into the strength of our balance sheets and our fortified liquidity position that will provide a solid foundation as we see our way through this difficult time. As of March 31, 2020, we had over $950,000,000 of liquidity. Our principal payment obligations through the end of 2021 totaled only $19,600,000 and we have significant cushion in our debt covenants. We have suspended all significant investment activity, thereby eliminating any associated material liquidity requirements. We anticipate continuing in this manner until our cost of capital provides a clear path for pursuing accretive investment opportunities that can be matched funded with debt and equity to maintain our leverage targets.
Reduction of our quarterly dividend from $0.45 per share to $0.30 per share will preserve an incremental amount of liquidity equal to approximately $30,000,000 per quarter. Given these factors, we feel confident in our ability to sustain a disruption of cash flows from operations for an extended period of time, even at levels well in excess of what we believe is likely to occur. To date, we have not seen a disruption in the monthly payment of rent associated with the COVID-nineteen pandemic. For the month of April, we saw rent paid in the normal course, collecting 100% of our forecasted rents. And through the 1st few business days of May, we have seen collections slightly above our normal level of collections at this point in the month.
We have not used any deposits or other credit enhancements to fund rent payments due to COVID-nineteen disruptions. We do expect that relief will be warranted for some tenants and all such requests will be evaluated on a case by case basis. Taking into consideration the following, The operators first avail themselves to the government relief programs available and practical to access and the operators business plan and approach to managing through the operational and financial challenges demonstrates a strong commitment to quality care and fair and reasonable approach to addressing all of its financial obligations. When rent relief is provided, it will be on the basis of helping the operator navigate through the challenges presented by COVID-nineteen. This means providing temporary relief to the level that the cash flows can support and not a permanent reduction that provides a level of rent coverage one would expect to provide under a long term lease renegotiation.
Finally, we expect rent relief to take the form of a rent deferral and not a permanent forgiveness. Level of distress and other factors will dictate the timeframe we will consider for repayment and any deferrals and each will be determined on a case by case basis. A couple of comments on our analysis of the available government assistance for our operators. In our supplemental on Page 7, we provide a COVID-nineteen mitigation summary, which identifies the estimated funds available to our tenants from these various programs. 3 of the programs can have a direct positive impact on EBITDARM, 2 can provide short to medium term cash flow relief and one has the potential to be a permanent cash injection through the forgiveness of an SBA loan, if certain criteria are met.
While the total amount of approximately $320,000,000 is informative when evaluating potential mitigation at a macro level, it must be noted that certain limitations on the benefit may also come into play. For instance, estimated $150,000,000 of liquidity available to our operators who may benefit from the accelerated and advanced Medicare payment or AAMP plan may be limited in its desired effect on liquidity as some working capital lenders may require any funds received under this program to be fully reserved. In addition, the amounts available for relief must be evaluated on an operator by operator basis and therefore broad based conclusions about mitigation across the portfolio cannot be made based on these estimates. Certain of these mitigation funds will be provided to operators who would not have otherwise required rent relief, while some operators may need rent relief in addition to obtain the funds available to them. Finally, relative to our debt ratings, we have been and will continue to be in close contact with the 3 rating agencies during this pandemic.
We believe we have good visibility into the drivers of our ratings and currently have cushion in those financial drivers. Notably, we believe our net debt to adjusted EBITDA level for each of the rating agencies drivers have cushion that will provide us room to sustain a sizable disruption in our EBITDA before tripping any downgrade drivers. Furthermore, we understand that the health of the operators in our portfolio is a key rating driver for the agencies, and we will continue to provide them with information they request to make informed assessments that may impact our ratings. And while we cannot predict at this time the final impact on EBITDA from the financial stress created by COVID-nineteen, we do believe that excluding any such stress, our net debt to adjusted EBITDA can be maintained through 2020 in the area of 5.50x without accessing the equity and debt markets to further reduce debt. And with that, I will turn the call back over to Rick Matros.
Thanks, Harold. Why don't we go to Q and A now?
Thank you. Our first question is from Nick Yulico with Scotiabank.
Hi, this is Josh Burrow on
for Nick. I was hoping to dig into the $320,000,000 of state and federal assistance available for your operators. I know you said not all operators plan to use the accelerated and advanced Medicare payment program.
I mean, could you give some sort of estimate
on like the average amount of funds that each skilled nursing facility could receive like stripping out the funds that they don't plan to use? And then secondly, how many months do you think that relief could buy operators before they would otherwise need to request rent deferrals?
Yes. So I know and I saw one of the notes someone made an attempt to do that, but that doesn't make any sense to us because every operator not every operator is accessing all the programs. So it's affecting every operator differently depending on what's happening with their operations, depending on how COVID-nineteen has affected the business. So if you just look at averages, I don't think there's anything about that, that's helpful looking at that and trying to say, okay, this is going to help them for 2 months depending on how much occupancy drops or whatever. I just don't think it works that way because the decisions the operators made were specific to their own needs, and that's going to determine what they accessed or attempted to access and how much time that will give them.
So the only thing I would really say is, if you had told me 2 months ago that we'd be sitting here today, not having granted any rent relief, I would be surprised, and particularly on the senior housing side because the senior housing operators don't have these programs to access. And to my sort of opening comments about how our operators haven't been prioritized within the health care system, even less so for senior housing than for skilled nursing, right? So and I think in our case, because the pandemic, for all the reasons that Talia talked about, hasn't impacted our senior housing portfolio, triple net or SHOP, as we've seen in some other places. It's enabled them to continue to move forward without any additional assistance. So I just don't buy the metric.
I mean, I get why people try to do it. I just don't buy it.
Okay. That's helpful. And then just looking at
the skilled nursing occupancy, it looks like it declined 4 60 basis points since February from just all the halt on elective surgeries. Have you gotten any indication of how quickly elective surgeries can bounce back in some of those states that have started to relax restrictions?
Yes. So it's a little bit hard to predict because one thing I'd say, just generally speaking, there'll be a lot of pent up demand. So when it starts, I think the recovery will be much more much quicker than say, like if you bought a facility today that had a 20% vacancy rate, there's probably a lot of reasons for that. It's going to take you a long time to rebuild that. This is different.
There's going to be a lot of pent up demand. The reason it's hard to predict because there are a number of states that have said they're starting elective surgeries. But if you actually drill down, they're starting elective surgeries for certain conditions. It's not necessarily blanket in all these places. So I think what we're going to see is, it's going to be a very market specific issue where we start seeing things ramp up.
But I will tell you that all of our operators have been in continual communication with the hospitals that are normally their primary referral sources. And so they know specifically when they're going to be ready to go and who they can take. Now there may be some facilities that maybe had a big COVID breakdown and they're just not ready to do that yet. But for the majority of the facilities, they will be ready. And I think in some of the geographic areas that really got hit.
So Washington State was kind of ground 0 and we had a couple of North American and Avenir buildings that got hit with pretty decent sized breakouts. But since then, it didn't continue and it didn't spread to the other facilities that we have in the state. So there's been a lot of recovery earlier on when we have larger breakouts that's going to enable these operators to start admitting again. And some people have asked, why would you admit at all? Well, 1, the hospitals and the physician groups need our operators to admit.
They have people that just have to be taken care of. And so that's helped somewhat and that's where you see some of the benefit that we're seeing in our numbers with the skilled mix. So it's impossible to predict, but I would say when it starts there's going to be a lot of pent up demand. The only the other point I'd make, and I think it's pent up demand applies to assisted living and memory care and not just skilled nursing, is to the extent that people needed surgeries and it's been deferred, given the age of the population, I believe that we're going to be admitting patients that are sicker than they otherwise would have been because by the delaying surgeries, it can exacerbate other issues they have as well. So we may wind up getting patients that are sicker than if we had been able to admit them in a timely manner because there wasn't a cessation at surgeries.
During the great recession, we saw a cessation we saw a pullback of elective surgeries for very different reasons. It was a financial situation and people couldn't pay out of pocket. And we saw less of a delay with our age group than with the younger age group, without 45 to 60 days. But this is this may we've already passed 60 days, really. So I do think we may see some sicker patients.
So I know that's a long answer to your question without specifically answering it, but that's what we got
right now.
Great, thanks.
Thank you. Our next question is from Nick Joseph with Citi.
Hey, this is Michael Griffin on for Nick. Just circling back to those government assistance programs for your operators, do you have a sense of the timeframe of when these loans have to be paid back on average? And how will your operators come up with the capital sources to pay them back?
Well, it's different for every program, right? It's not all payback. So the sequestration suspension that will get lifted next year, it looks like. FMAP isn't a payback. The employer tax delay, they're going to retain their employers.
And the same thing and with PPP, those aren't necessarily paybacks. The payback is with the advanced Medicare payment program, and that's why very few of our operators have accessed it. They work with their lenders to see if they actually could use it and not use all of it to pay down the line. And so the operators that have availed themselves of that one piece did so because there's enough else going on in their companies that they have a very high level of confidence that over the next year, which is when they'll have to pay it back, they'll be able to pay it back. And in all likelihood, what will happen is Medicare may just take pieces of it over a period of time.
So there'll be some negotiation. So it's really just the one piece. And most of our operators haven't availed themselves of that piece. It's just for a decent sized operator, getting 3 months of Medicare in advance is a huge number. So that 150,000,000 dollars looks larger than it is in terms of the number of operators it's really impacting.
Does that make sense?
Yes. No, thanks. I appreciate that. And then just
Just to add to that real quick, you can look on Slide 7, there's a lot of details and of description of how each one of these works. So as you have more questions, you can look
there and certainly give me
a call if you still have questions about that.
Okay. Thanks. And just one more for me. You've obviously done a good job lowering leverage recently, but should you see good external growth opportunities? Are you comfortable increasing your leverage in the near term?
Harold, do you want to take that?
Yes. As I said in my opening remarks, we're actually not prepared to increase leverage beyond the levels that we've identified. There's going to be certainly if there's some disruption and we see some rent relief that we have to provide, there's a chance that our EBITDA numbers will go down, which would naturally increase our leverage to some extent. So we have to be very mindful of that. I would just add that we're extremely focused on maintaining our credit rating.
And certainly given what's going on in this environment, there is some risk that the rating agencies could look across the portfolio or I should say look across the whole space and think about downgrading. So we're just being very mindful of that. So as I said in my remarks, we're really going to be very cautious in our acquisition activity until we can continue to fund it, matching funds with both debt and equity, So we maintain leverage below that level that we've identified as our target.
Okay. That's it for me. Thanks guys.
Yes. The only thing I would add to that, I think from an asset class perspective, it looks like it would be quite some time other than our development pipeline that we would be doing deals on the senior housing side. But in terms of skilled nursing and behavioral and addiction, those are the yields that we can see ourselves doing and work within our weighted average cost of capital.
Got it. Thanks.
Yes.
Thank you. Our next question is from Steven Valiquette with Barclays.
Hey, thanks. Good morning and afternoon everybody. Hope everyone is staying safe. A couple of questions. First of all, I do want to circle back quickly on that comment from a minute ago that I'm a little surprised around the comment that the SNF operators would not be accessing the advanced payment program.
It's really every company is just going to be paying that back out of their future Medicare receivables and future revenue that they would receive from CMS down the road.
So it's really not even
a loan. It's just getting revenue early with really no penalty for doing so. I think every hospital we spoke to said they're tapping that whether they need to or not. So I'm surprised that some of the SNPs are not tapping that.
That's kind of more
of a comment than a question, but if you want to comment on that. And the other question I really wanted to ask about was, has to do with the accounting for your operators when they're reporting their EBITDAR back to you, some companies are excluding COVID-nineteen operating expenses, some are not. It seems like the stimulus federal grants in my mind probably should be counted as EBITDAR. But again, these advanced payments probably not counted as EBITDAR. But just curious how you're thinking about any sort of standards for reporting this back to you from your operators quarterly when you're talking about EBITDAR coverage ratios down the road?
Thanks.
I'll comment on the first and kick it over to Harold for the second. So on the first, I'd say a couple of things. One, they're determining what they actually need. And if they're getting enough assistance from these other programs and they don't have to access the advanced Medicare program, they're not doing it. Secondly, depending on who their lender is, if that lender is requiring a complete pay down on the line, which some do, for every dollar they get, why would you do that, right?
So that's really why. They're just looking at it individually. If they don't want to if they don't need to put themselves in that situation, if they want to if they're trying to be a little bit more cautious on when Medicare occupancy is going to come back or build up to a level that they think is more normalized, They just don't want to be in a position where they're having to sort of pay that back or have those deducts later on if the other assistance programs that they've accessed seem to be meeting their needs, which is the case.
Okay. One other real quick one if I missed this. $800,000 of COVID operating expenses that you stripped out of FFO for your managed properties. Any sense for how much larger that number might be in and the remainder of 2020, if you're still going to exclude that from FFO, just approximation?
Yes. I think Tanya had it in her comments, kind of what we were expecting. I think on an annualized basis for Enlivant, it was about $425,000 per month for Enlivant. Now that's so that's our share. Yes, that would be our share.
So that's about $5,000,000 on an annualized basis. And then the others would be much smaller than that. I think Holiday was quite a bit smaller, but I think it was reported on
let's see,
dollars 80,000 for the month of April in our Live and wholly owned portfolio. And then for holiday, it looks like it's about $1,200,000 on an annualized basis, about $100,000 a month. And look, we'll scrub that and we would intend to pull it out on a normalizing basis most likely and report that so people can get a sense for what it is without those costs. And specific to reporting coverages to follow-up, finish up on your first question. If you look on our supplemental on Page 7, we identified the 3 that have implications for our EBITDARM, which would improve coverage going forward, which is basically the $100,000,000,000 program of which we had $60,000,000 available.
Obviously, the suspension of sequestration would have an effect on EBITDARM and then FVAP, which is the Federal Medicaid Medical Assistance Program that the federal government is giving to the states. And that number is about $20,000,000 and that's a number that's going to continue hopefully to go up. We only were able to identify 15 states that have made determinations of how they're going to utilize those funds and how they're going to impact skilled nursing. And so there's a potential for that piece to go up higher, but those three areas do have a positive impact on coverages, while as you point out, the accelerated payment program, the employee payroll tax delay, those two items would not be reported in coverage. Those are just short to medium term cash flow, so they would not affect our coverage going forward.
And then PPP,
there's not
a lot of our operators who can access that program given the limitations, but it will depend on whether or not those loans impact EBITDA.
Okay, perfect. Appreciate the color. Thanks.
Thank you. Our next question is from Tayo Okusanya with Mizuho.
Yes, good afternoon. Hi, Tyler.
Hi, guys. Quick question around just the state of affairs at in various states. I think again, you kind of hear more and more about state thing. Their financials are in disarray as a result of COVID-nineteen, they need bailout money or whatever you want to call it from the federal government. I mean, if that doesn't end up happening, how does one kind of start to think about the ability of states to kind of meet their Medicaid budget?
So how does one kind of start thinking about Medicaid payments in the next fiscal year?
Yes, it's a good question. I don't really have a good answer, but I think that the question you pose is one of the reasons that when the 6.2% FMAP increase happened, we actually saw a relatively small number of states pass that on, frankly, as they should have to the providers. They're just keeping it for themselves, right? So I think and maybe for all the reasons that you talked about, having some money for a rainy day or just padding things a little bit on the Medicaid side. In the long term, I don't have a good answer for that.
I mean, you've got a real safety net issue here that I think, sort of on the positive side, really is going to get readdressed after we get through this because it really hasn't been adequate. So how they juggle all those parties and what role the feds play because the feds play a critical role on the Medicaid piece because even though, as you point out, it's a state by state issue, the federal matches a huge piece of how they meet those obligations. I think that I think we've talked a little bit about this before because some of it came up in the conversations a ways back about block grants and capital limits on Medicaid spending that when you think about what Medicaid was put in place for the blind, elderly and disabled And since then, it's been expanded, right, to the home and community based programs and all these waiver programs. I think those are vulnerable. And I think that's going to be something that's more vulnerable than, say, Medicaid rates in skilled facilities because Medicaid program was really never set up to do that.
And when a lot of those things were put in place, I'll date myself, going back into the mid-80s, the policy wonks thought that, well, people don't need to be in nursing homes. So if we put all these other programs in place, occupancy will go down in nursing home, it will pick up in these community based programs with Medicaid and will actually save money. Well, that never happened because acuity keeps going up in skilled nursing facilities. It turned out to be just a huge additional expense than what had been in place before they did that. So yes, I don't have a great answer, but that's where I think there's more vulnerability.
But all these states basically have to address it before their new fiscal year starts July 1, right? So some decision has to be made in the next 2 months around this?
Yes. Yes, because that's usually when we hear about our state by state Medicaid rate increases and things like that. So I have no sense of whether they're going to try to do what they normally do or make some larger adjustments now. But yes, we'll not we should have some sense of that, whether they think they're going to have more time on their side that says they're going to help them more, who knows, Tyler.
Got you. Okay. And then I may have missed this earlier on, but could you just talk specifically about Avenir, again, your 2nd largest tenant. The rent coverage seems to be stabilizing now with kind of flat quarter over quarter. Could you just talk a little bit about what's kind of happening there and kind of what you kind of see from the outlook for that particular tenant?
Yes. So, there on a quarterly standalone basis, they're they bottomed out in the 3rd quarter. They started improving in the 4th quarter. They started improving even more in the Q1. They really benefited from PDPM.
The whole big IT transition that they went through, which hurt their earnings mid to late last year is now behind them, and it's proven to be really effective for them. So for instance, the home health version of PDPM, PDGM, which has been largely viewed, as you probably know, is a negative for the home health industry with the new system that Avamere invested in is going to be actually a slight positive for them on their rates. So we actually feel pretty good about the trajectory that Avamere has now. And they've weathered the outbreak in Washington. They did get some help because despite my earlier comments about not enough states got the help from ESNAP that they got, we got it where we needed it the most.
So Washington State was a state where we've been talking about how bad Medicaid rates have been. They had already determined a $29 rate increase effective July 1. They put an additional $29 rate increase effective March 1. And if COVID extends into July, they'll keep that. So they'll have double the rate for a while.
So that really helped quite a bit, not just Avamere, but we've got North American up there as well. And then Oregon was another state where some help was needed and they had a rate increase coming, but they gave a 10% Medicaid rate increase effective March 1. So just as it turns out and maybe because the problems were so bad in the Northwest even before COVID, there have been so many facility closures and things like that, that the states really stepped up there. So I think for Avamere, it's a combination of their own initiatives while they're executing on PDPM and the help they got on the Medicaid side in Washington and Oregon.
Got you. That's helpful. Thank you.
And our next question is from Daniel Bernstein with
Capital One. Hi. Again, my best wishes to everybody at your company, at your facilities and your families. So I'll have just one question. I just wanted to understand what the how much Medicaid is in your seniors housing and whether you think maybe any Medicaid aid from the federal government to the states could filter into seniors' housing?
We are hoping for that Medicaid package, but we have, Natalia, why don't you jump in, we have virtually nothing there.
That's right, Dan. It's so minimal that there's I can think of one operator that has a little bit and it's an operator with 3 buildings. So it's not at all meaningful.
Okay. Okay. Trying to see if there was a backwards way of getting some aid to the seniors housing folks. But that's all I'll ask. Then we'll chat later.
Thanks.
Thanks, Dan.
Thank you. And I'm not showing any further questions in the queue, sir.
All right. One other topic I did want to address because one of the analysts had jump off and shot us a note. So there have been questions about telehealth, and I would say that we actually view telehealth as a positive. Talya mentioned what Holiday was doing, which I think is really going to serve them well in the long run because for those that think folks are going to be concerned about entering into facilities like that because of the which happened with COVID-nineteen, I think anything that the operators can do to provide a greater sense of security, is going to go a long way. And the fact that Holiday did that from the get go, I think, will work out really well for them in the long run.
But beyond that, a number of our operators have been employing telehealth initiatives for quite some time. Signature Health had one for several had initiated for several years. Avamere is doing it, a number of our operators are doing it because they look at it as a way of providing more comfort, providing greater connection because physicians don't visit facilities that often even on the skilled nursing side, providing greater connectivity to individual health care workers outside and will help to provide care in place for a longer period of time, particularly on the senior housing side. So and look, it's just a living memory, Karen, obviously, skilled needs based businesses and acuity is just going to continue to increase for all of them. And so they're not individuals that can be cared for at home and less and less so on a go forward basis relative to assisted living and memory care.
So we view that as a positive. So I just wanted to make a note of that since we had a question on it. And with that, I appreciate everybody's time today. Again, stay healthy. I hope nothing but the best for you and your families.
Please think about all of our workers and keep giving your prayers. Take care.