Welcome to CareTrust REIT’s first-quarter 2020 earnings call. Participants should be aware that this call is being recorded, and listeners are advised that any forward-looking statements made on today’s call are based on management’s current expectations, assumptions, and beliefs about CareTrust's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and other matters, and may or may not refer to other matters affecting the company’s business or the businesses of its tenants, including factors that are beyond their control, such as natural disasters, pandemics like COVID-19, and governmental actions. The company’s statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein. Listeners should not place undue reliance on forward-looking statements and are encouraged to review CareTrust’s SEC filings for a more complete discussion of factors that could impact results, as well as any financial or other statistical information required by SEC Regulation G, except as required by law. CareTrust REIT and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances, or for any other reason. During the call, the company will reference non-GAAP metrics, such as EBITDA, FFO, and FAD or normalized EBITDA, FFO, and FAD. When viewed together with GAAP results, the company believes these measures can provide a more complete understanding of its business but cautions that they should not be relied upon to the exclusion of GAAP reports. CareTrust yesterday filed its Form 10-Q, and a company press release and its quarterly financial supplement, each of which can be accessed on the Investor Relations section of the CareTrust website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period. Management on the call this morning includes Bill Wagner, Chief Financial Officer; Dave Sedgwick, Chief Operating Officer; Mark Lamb, Chief Investment Officer; and Eric Gillis, Vice President of Portfolio Management and Investments. I will now turn the call over to Greg Stapley, CareTrust REIT’s Chairman and CEO.

Thank you, Sylvia. Good morning and welcome, everyone. We’d be remiss if we didn’t start today’s call by attributing our gratitude to the nation’s healthcare providers, particularly the frontline staff who are working tirelessly to protect and care for individuals affected by COVID-19. We’re especially mindful of the caregivers in our nation’s skilled nursing and assisted living facilities, who are doing their utmost to protect our most vulnerable segments of society. We’re gratified by the outpouring of support we have lately seen for them for the great job they’re doing under extraordinarily difficult circumstances. We would also caution the few critics who have not walked in their shoes to become much better informed before forming or expressing opinions on what should or should not be expected in these care environments during the current pandemic. With the exception of a few isolated cases that get all the media attention, our nation’s skilled nursing and assisted living providers, from senior management to the front lines, are doing a remarkable and praiseworthy job. We’re also grateful for our federal and some state governments who worked quickly to provide financial support and regulatory relief. These common-sense adjustments are helping providers deliver the best care possible while dealing with a highly transmissible and initially poorly understood contagion. We applaud the supplemental payments made to date and urge policymakers everywhere to increase their focus and to direct their ongoing funding decisions toward skilled nursing and senior housing providers who are protecting our most vulnerable elderly populations. We believe that until an effective vaccine is widely available, focusing on rigorous testing and prevention in these places – the very places where a large percentage of the virus's target demographic lives – will do more to stop the spread and reduce the mortality rate than almost any other effort we can make. Knowing who is contagious has been the missing puzzle piece from the beginning, and when it comes to actually saving lives, the value of immediate result, point-of-care molecular testing cannot be overstated. I also want to acknowledge the efforts of our outstanding portfolio management team in helping our operators and other colleagues across the industry as they continue to battle through the pandemic. Dave and Eric, in particular, have stayed close to our tenants, and through these frequent conversations and their own deep backgrounds in healthcare operations, they understand the unique challenges our operators are facing in a very personal and insightful way. Dave will tell you more about it in a moment, but let me just say how proud I am of the way they leveraged our resources to quickly help our tenants get ahead of the curve as worldwide PPE shortages began to spiral out of control. And we will continue to look for ways to help and support these tenants. As for CareTrust, I’m pleased to report that the company is in good shape today, with rents coming in as expected, low leverage, and no debt maturities on the horizon before 2024, over $0.5 billion in availability on our revolver, around $45 million in cash on hand, and a payout ratio of only 71% of normalized distributions, notwithstanding the 11% increase in our dividend recently. We are very liquid and well-positioned to weather the present storm. While we intend to retain ample liquidity to see us through should the current environment persist longer than expected, it is exactly for times like these that we keep some dry powder on hand, and as Mark will outline in a moment, we are in a position to continue pursuing compelling opportunities to grow. Bill will talk about it in greater detail, but let me just say a word about guidance. With much related to the pandemic still unresolved, we acknowledge that any annual earnings guidance offered at this time would seem speculative at best. However, with the support our tenants are receiving, it appears possible that our previously issued guidance could be achieved, although we caution that the unknowns still loom large and will continue to do so for some time. Believing that the act of withdrawing guidance could be regarded as a form of guidance in and of itself, we are accordingly neither updating nor withdrawing our prior guidance, but we’re adding the caveat that significant changes in economic and other factors related to the COVID-19 pandemic and the government’s responses could alter our outlook in the future. Of course, you knew that already, and it probably feels like we’ve given with one hand and taken away with the other, but we simply want to convey that despite all the uncertainty, there is a possible path through this for us and our tenants, and Dave and Eric are working very hard to make that happen. With that, I’d like to turn the call over to Dave to expand upon COVID-19’s impact on the industry and our portfolio. Then Mark will discuss recent acquisitions in the pipeline, and Bill will wrap up with the financials. Dave?

Thanks, Greg, and good morning. I want to spend my time with you addressing the common questions we’ve been receiving related to the pandemic's impact on operations. It wasn’t too long ago that several of us were operating facilities. I hope that our experience, plus the constant communication we’ve maintained with our tenants since March, will help us provide you with a clearer sense of what’s happening. As of this week, we have 29 facilities across eight operators reporting at least one positive COVID patient case. While we recognize that those figures are of some interest to you, we have generally viewed the running COVID counts as a bit of a red herring due to the inconsistency in testing practices industry-wide. Early on, our thesis was that any report of COVID cases would be grossly inaccurate and lower than the true numbers. Our expectation has been that most facilities, including some of the very best ones, would deal with COVID at some level. We believe those expectations are being borne out. Although today, we see significant variances from market to market, and we’d be happy to expand on that. Skilled nursing facilities have the protocols and staffs for isolation precautions and routinely treat and contain highly infectious patients with contagions like C. diff, MRSA, or norovirus. They’re good at it. What has made COVID-19 different and particularly challenging are the asymptomatic contagious carriers, who can escape detection by even the best clinicians and protocols. Without readily available testing for the virus, identifying infected individuals has been extremely difficult. Add to that the sudden scarcity of personal protective equipment, and even the best providers have been working with one arm tied behind their backs with only limited and delayed testing options when a suspected COVID infection is identified. Wider testing at the facility often leads to the surprising discovery of dozens of other residents and staff also infected. In a minority of cases, we’ve seen the virus spread like wildfire, resulting in multiple COVID-related fatalities. Those relatively few cases are the ones that make the news. However, in most cases, operators are able to contain and isolate and successfully care for the COVID patients in the facilities, only sending out to hospitals the most critical patients, usually only those requiring ventilators. For our part, very early on, we saw that PPE and testing were critically important to our operators' ability to contain the virus and treat COVID patients in a controlled fashion, but our operators reported that their relatively small PPE orders were unable to get the attention of the big medical suppliers. We began an accelerated dialogue with all of our operators and discovered a reliable source for reasonably priced PPE. We leveraged our portfolio size to get the attention of the supplier and placed a seven-figure order on behalf of our operators. Not only did they get more PPE and get it sooner, we estimate that our bulk order resulted in roughly $2 million of combined savings for our smaller tenants. This week, we’re working on another order of PPE for them. In addition to PPE, testing is the other problem that needs to be solved. We believe that the Abbott-style molecular test, which will tell you in minutes at the point-of-care, is what our facilities need now. Unfortunately, sales are currently restricted to hospitals, clinics, and laboratories. We need the White House to raise skilled nursing to that same priority as soon as possible. With good information, skilled nursing providers will be able to be instrumental in helping turn the corner on the spread of the virus. Next, let me address occupancy. First, overall occupancy for senior housing in April compared to March held steady. These residents, generally speaking, are in much better health to begin with than those in nursing homes. In April, we saw more move-ins than expected. We believe this is largely due to the positioning of our midmarket facilities as more needs-based than the more expensive private-pay assisted living options. Our senior housing operators report that prospective residents and their children, after being in quarantine for several weeks and often together, are coming to the realization that they cannot get the assistance needed in their homes and they cannot afford to wait to move into assisted living. On the skilled nursing front, occupancy has declined. Outside of the COVID hotspots, hospitals have been in a hurry-up-and-wait mode, running incredibly low occupancies. They have largely stopped non-critical and elective procedures, and emergency department volumes have reportedly dropped significantly. Therefore, the skilled nursing facilities that depend most on short-term rehab patients coming from hospitals are being hardest hit. By contrast, the facilities that primarily care for the long-term Medicaid residents are less sensitive to the sharp decline in hospital census. Our skilled nursing facility portfolio consists of approximately 75% Medicaid residents and 16% short-term Medicare or managed care patients, also referred to as skilled patients. Not including Ensign, who will report for themselves next week, our overall skilled nursing portfolio occupancy dropped 370 basis points in April, but the higher-margin skilled occupancy increased in April by 240 basis points, providing additional revenue to offset the occupancy loss. Now, on the surface, any drop in census may be a concern. However, I want to make sure you understand an important lever that the current state of emergency grants to operators to help mitigate transfers to hospitals. It’s called skilling in place. Before the state of emergency, a long-term Medicaid resident would have to have a serious change of condition requiring hospitalization for at least three days to qualify for Medicare skilled services. Today, because the government has waived the three-day qualifying stay rule, patients who have a change of condition, including, but not limited to those who test positive or are suspected to be positive for COVID, may be billed immediately at the much higher skilled patient or Medicare rate without going to the hospital. Let me give you a little illustration. Today, a hypothetical Medicaid resident has a serious change of condition, but it’s stable enough to be cared for in a facility. A new care plan is formulated, appropriate care is rendered. Now, Medicaid and Medicare rates vary widely by geography and patient, but say that yesterday, Medicaid was paying about $200 a day for that resident. Today, Medicare begins paying $800 a day for that patient. So, while we have seen parts of our portfolio experience drops in overall occupancy, the increase we’ve seen in the skilled mix can offset the financial hit from census declines. This emergency measure is one of several ways the government is helping operators bridge this difficult, high-risk phase of the pandemic, and no doubt, you’re already familiar with some of the others. For example, the Families First Coronavirus Response Act. Under the Families First Act, a temporary 6.2% increase in federal medical assistance percentages or FMAP was approved retroactive to January 1, 2020, and several states have directed FMAP funds to SNFs, which has included some of our tenants. A couple of examples: the State of Washington raised the Medicaid daily rate by $29, and the State of Louisiana raised the Medicaid daily rate by $12. Our estimated impact to our portfolio is approximately $5 million. There’s also the Coronavirus Aid, Relief, and Economic Security Act, and its several components – under the CARES Act, a substantial number of our tenants have received or are expected to receive assistance from a $100 billion fund provided for eligible healthcare providers, which includes operators of SNFs. Additionally, a payroll protection program was established under the CARES Act to provide forgivable small business administration loans to eligible businesses, and many of our tenants qualify. The CARES Act also includes a temporary suspension from May 1, 2020, through December 31, 2020, of a 2% Medicare sequestration cut and a deferral of employers’ social security remittances through December 31, 2020. The combined estimated benefit for our portfolio from the CARES Act is approximately $60 million. Looking forward, as we weigh the several headwinds along with the support provided today, we see a path for our operators to continue to care for their residents, keep their caregivers fully employed, and pay their rent as they fulfill their role as a critical part of the solution to this crisis. Thanks to the emergency measures taken by state and federal officials, liquidity has actually improved for most of our operators, including those who have been on our watch list in recent quarters. In April, we collected 99.3% of contract rents, and as we sit here today, we’ve collected 99.8% of May rents. With that, I’ll pass the call over to Mark to talk about investments. Mark?

Thanks, Dave, and hello everyone. We kicked off the year with two previously announced transactions totaling $25 million in investments. In mid-January, we acquired Cascadia of Boise for $18.5 million. Cascadia of Boise is a brand new, state-of-the-art, 99-bed skilled nursing facility located across the street from Saint Alphonsus Medical Center in Boise, Idaho, adding $1.67 million in new rent to our master lease with Cascadia Healthcare. A month later, in mid-February, we acquired Barton Creek Assisted Living, a 62-unit memory care facility located on the campus of Lakeview Hospital in Bountiful, Utah. We tacked this acquisition onto our lease with Bayshire Senior Communities, which added about $600,000 in rental revenue to their master lease with us. The numbers quoted for these deals were inclusive of transaction costs, and the initial yields are all disclosed in our supplemental. As we assessed the current investment market, we’ve seen volumes drop off significantly as operators pivot from actively selling to taking an all-hands-on-deck approach to battle COVID-19 in their buildings and portfolios. In our deals currently on the market, there is a significant delta between sellers’ expectations and buyers’ ability to underwrite and value deals with a number of unknowns to forward-looking run rate revenues as well as expenses. The ability to underwrite deal side-by-side with our operators has never been more important than it is in this current environment. Speaking of underwriting, we continue to look for mismanaged assets that are moderately performing, where operators can come in and make day-one changes to both revenue and expense items. How we account for COVID-19 changes to revenue and expenses is facility-dependent, and we are closely working with our operators to incorporate necessary adjustments to account for potential challenges going forward. Finding operators who are both interested in and capable of growing during these difficult times is extremely challenging, as you can understand. Different spots in our portfolio have been less impacted by COVID-19, and some of those operators are interested in growing despite the prevailing challenges. As many banks and traditional buyers have headed to the sidelines, both voluntarily and involuntarily, we feel like our balance sheet, which was built for times like this, combined with our execution ability and closing certainty, provides us with a competitive advantage as we continue to work to grow our portfolio. The current pipeline sits in a $100 million to $125 million range. It consists of our bread-and-butter singles and doubles, but also includes some portfolio opportunities that we are really excited about. We intend to leverage our existing lease coverage for a majority of the opportunities while continuing to look for opportunities to add a new relationship or two as we match assets with operator skill sets. Please remember that when we quote our files, we only quote deals that we are actively pursuing, which means the yield coverage and the other underwriting standards haven’t been placed from time to time. And then now, I’ll turn it over to Bill to discuss the financials.

Thanks, Mark. For the quarter, normalized FFO grew by 16% over the prior-year quarter to $32.3 million or $0.34 per share, and normalized FAD also grew by 16% to $33.7 million or $0.35 per share. Our payout ratio remains at or among the lowest of our peers at approximately 74% on normalized FFO and 71% on normalized FAD. Leverage continues to be at all-time lows at a net debt-to-normalized EBITDA ratio of 3.5 times and a net debt to enterprise value of 28% as of quarter-end. Our fixed charge coverage ratio is approximately 6.4 times. During the quarter, we put in place a new $500 million ATM and $150 million stock buyback plan, neither of which has been utilized to date. Our liquidity remains strong with more than $45 million of cash on hand, $525 million of availability under our revolver, and we produced roughly $10 million of cash per quarter even after our recent 11% increase in our dividend. Cash collections for contractual cash rent in May were 99.3% and are up so far in May at 99.8%. While we aren’t withdrawing our previously issued guidance for 2020, given where we stand today, let me give you some additional color on some of those assumptions that were used in that guidance that have us forecasting normalized FFO per share of $1.32 to $1.34 and normalized FAD per share of $1.38 to $1.40 based on a diluted weighted average share count of 95.6 million shares. Total contractual cash rents were projected at approximately $167 million for the year, which included $100,000 of straight-line rent and assumed CPI at 1.75%. No additional investments were made since our last call, so no material adjustments to this number. Interest income was projected to be around $1.3 million. I expect this to be a bit bigger given the $32 million mortgage loan payoff is now expected to be one month later than previously expected, as well as the recently redone short-term seller financing that we made on the Michigan assets. These expected payoffs will further strengthen our liquidity, together with cash on hand and should we decide to enable us to fully pay down our outstanding borrowings under our revolver. Interest expense was projected to be approximately $26 million. This assumed a LIBOR rate of 1.75%, which is significantly higher than it is today. Given the LIBOR rate and assuming we paid down the line a bit with our excess cash on hand, I would expect interest expense to come in a bit lower. Interest expense also included roughly $2 million of amortization of deferred financing fees, and I don’t think there will be any change there. We projected G&A of approximately $13.9 million to $15.8 million, which includes roughly $3.7 million of amortization of stock compensation. This range is still reasonable. As Greg noted in yesterday’s press release and again in his remarks today, although there is a lot of uncertainty around what comes next in the pandemic, our tenants are performing, and we expect they will be able to continue doing so for the foreseeable future. So, to withdraw guidance for us seems premature at best right now. We simply point out the obvious that significant developments in the COVID-19 pandemic and the government’s responses could alter our outlook in the future. Exactly how it might be altered depends on whose crystal ball you prefer to look at. As for us, we’ll be staying close to our tenants and working hard to help them, and by extension us, to navigate our way through the remainder of this situation. And with that, I’ll turn it back to Greg.

Thanks, Bill. We hope this discussion has been helpful. We thank you again for your continued interest and support. And with that, we’ll be happy to answer questions. Sylvia?

[Operator Instructions] Your first question comes from Jordan Sadler from KeyBanc Capital Markets.

Thanks and good morning out there. Hope you guys are all doing well. My first question relates to skilling in place. Dave, I appreciate the insights and all the details there. Can all of your operators, do all of your operators have the potential to access these programs in Medicare billing?

Yes. So, the ability to skill in place is available to all skilled nursing Medicare providers today. And it is – like I said, it’s not limited to those who test positive or those suspected of having COVID. It’s really in the, in the lingo of the operators or the clinicians, it’s the change of condition that’s observed. So that could be a fever. It could be a host of new symptoms that result in the – has resulted in the past of needing to send a patient to the hospital to then be treated in the hospital for a few days and come back and then when the patient comes back, they come back as skilled or Medicare. Now, you identified the symptoms, you get a doctor’s order for some skilled services, and immediately you’ve converted that Medicaid resident to a Medicare or skilled patient.

That’s interesting. You mentioned, I think in maybe some of the prepared remarks, but also in the press release last night, maybe in Greg’s comments that the ability to sort of share best practices, does this sort of fall under that umbrella? In other words, are some doing this more effectively in late March and into April?

Yes, I think everybody’s, yes, it does fall into that category of best practices. We’ve also been sharing best practices around responding to a positive case of COVID. There’s – it’s been pretty remarkable to see how open and sharing our operators have been, not just with us and each other, but throughout the whole industry. There’s been a lot of sharing of case studies, of what to do and what not to do when you get a positive case. So, we share that. We share leads on PPE. We shared a ton of information as we’ve gotten into the weeds early on the testing front, on the differences between the serological and the molecular tests. We’ve shared that widely with our operators as well. And we’ve pushed as far as we could with Abbott in particular to get those tests for our operators until we hit a bit of a wall there. So there’s a lot of, we’re doing everything we can do as a landlord to help.

Can you maybe elaborate there also just on the, yes, the lab test? I mean, you did mention what you need out of the White House in order to get those, but so where do you stand on terms of testing? What are your operators doing right now in terms of testing either employees versus residents, and what does availability look like of tests?

Yes. I’d say that the common approach to testing is still fairly dictated by local availability of tests and directions from local authorities. Generally speaking, testing is not done proactively on our residents and employees and patients. Although that does vary by geography. There have been some places, like not in our portfolio, but just as an example, like Detroit, where the city of Detroit mandated that all nursing home patients get tested regardless of signs or symptoms. But that’s, that’s uncommon. What’s more common is that once a patient presents signs or symptoms, that patient gets tested and the result of a positive case then requires the rest of the facility to get tested, including staff. It can be frustrating to wait for those results to come in. Even though they’re doing that molecular test, which tests for the active virus in your system, it can take two to four days sometimes to get those test results back. And that’s why we have been pushing as hard as we can to get the point of care testing available to our operators. It’s our understanding based on conversations both with Abbott and with our industry representatives and lobbyists that Abbott’s been restricted to only sell those point-of-care tests to labs, hospitals, and clinics. We need the White House to raise skilled nursing to that same priority as soon as possible. With good information, skilled nursing providers will be able to be instrumental in helping turn the corner on the spread of the virus.

Okay. That’s helpful color. One last one in terms of the conversations with tenants, I mean, it looks like there’s been quite a bit of success and Greg, you had a comment about deferrals being a solution looking for a problem. Can you maybe elaborate a little bit there in terms of what the dialogue is like with your tenants? Does everybody seem to have adequate resources and liquidity to be able to function through this? What’s your sense?

Yes. Our sense is that the relief that’s come from the – from CMS and from the states with how they’ve responded has provided adequate liquidity to get through the phase that we’re in right now. In fact, perversely, some of our operators who have been maybe operating more at the margins in recent quarters from a liquidity standpoint are stronger than they had been in the past because of the assistance, the relief that they’ve gotten. And so that’ll be part of any deferral type of conversation. It won’t be, we wouldn’t take a deferral request at face value. We’d really dig in deep and look at the fundamentals and layer in all of the relief that’s available and being received. As you go through that exercise, you see fairly quickly that our operators are actually in a pretty strong position right now.

Your next question comes from Steven Valiquette from Barclays.

Great. Thanks. Hello everybody. Thanks for taking the question. So the federal government stimulus to the skilled nursing industry has been fairly visible and transparent to investors so far. But in your press release, you also made some references to relief and or support from some of the state governments to this SNF industry as well. So, I guess, I’m curious to be able just to give a little more color on some of the state level help. Is it just Medicaid rate increases or other components, and which states in particular are noteworthy from your perspective?

This is Eric. We have several states that received the FMAP funds. Well, all the states received the FMAP funds from the government, but we have several that have pushed those funds to skilled nursing facilities. And so, Washington is one, Louisiana is another, Montana, and a couple others where our facilities reside. We’ve seen most of those have been retroactive back to March and will continue through this pandemic. So, like they said earlier in his comments, we estimate that impact to the portfolio to be around $5 million.

Okay. One other quick follow-up. So, while the liquidity has improved for your operators, which is certainly good news and arguably the most important variable at the end of the day from a REIT perspective, I guess, is there any color on exactly which components of the federal stimulus will be included versus excluded in the EBITDA that’s going to be reported back to you from your operators when you’re calculating coverage ratios going – is that something you’re worried about, or is that something you think will sort itself out, and there shouldn’t be too much mystery or, let’s just say different variations of EBITDA being reported back to you from your operators?

Yes. We’re still kind of waiting through that right now, and it’s probably a better color on that next quarter.

The good news is that Eric and his team follow these tenants facility by facility, operation by operation, at a very granular level, and I think we'll be really well-equipped to understand exactly how the stimulus or supplemental payment money has impacted them as well as how their operations have had to necessarily change in response to the pandemic. We’ll be able to match those up pretty well. So, again, it’s an ongoing process. We’re far from over, and we hope to have more clarity on that in the near term.

Okay. All right. I appreciate the color. Thanks.

Your next question comes from Daniel Bernstein from Capital One.

Hi. Hope everybody’s well. Sounding well. I’m going to see – where do you think the opportunities will be from an acquisition investment side coming out of COVID? Obviously this has some implicit support from the government. Maybe cap rates don’t move there, but some senior operators are certainly struggling and maybe we see cap rates go up. So just want to kind of pick your brain on where those opportunities might be in the next three, six, nine months, maybe even longer.

Hey, Dan, it’s Mark. I’ll give it a crack, and then Greg can jump in. I think the most opportunities on the forefront, potentially in the short run, should be the small mom-and-pop operators that have incurred additional expenses both on the labor and the supply side, particularly facilities that are largely Medicaid, maybe didn’t get as much of a boost, aren’t taking advantage of skilling in place, and have experienced major increases to labor costs. We had a facility here in Southern California that was a mom-and-pop owner, and they sort of lost their way, and the building was fully evacuated about three weeks ago, as was pretty widely reported. So, I’d say opportunities like that, where they don’t have multiple facilities to pull resources and frankly just aren’t sophisticated enough to take advantage of what’s in front of them. So, I’d say mom-and-pops first and foremost on the SNF side, maybe a little more medium- or longer-term is the bigger operators may start to look at non-strategic assets or potentially prudently outline assets that are harder to get to in markets that just aren’t necessarily in their footprint, so I’d say that on the skilled side. And then on the assisted living side or the seniors housing side, I think we’ll have to wait and see. Obviously, we have most of our facilities in secondary and tertiary markets. I think once potential new regulations come out there, I think the seniors housing side is going to be interesting to watch over the next three or four quarters to see what operators view as the right operating expense run rate and to really understand how occupancy impacts will take place, particularly on the assisted living side that may or may not be needs-based. Do potential residents stay home? Does unemployment stay high? Does the adult child all of a sudden care for mom or dad? We saw that in the downturn in 2008, the impact of the adult child taking on more responsibility for their parents. As we get a better glimpse into occupancy over the next three or four quarters, I think that will help us determine where we think pricing will go on the seniors housing side.

And then it’s really great color. The other questions I had here are the upper end of your range on the debt side is 50 net debt-to-EBITDA. How willing are you to go up to that level? I mean, you could – by my calculations, you could do about $250 million of acquisitions without raising equity, but do you really want to go back up to 50 or keep the leverage a little bit lower? I mean, maybe it depends on the opportunities, but just kind of judge your inclinations for that.

Your instincts on that are good, Dan; it would be entirely opportunity-dependent. We are willing to go there; we don’t want to. But that’s why we keep the dry powder that we keep. If there were a super compelling opportunity — of size or series of them with size — we would have no problem going there. My expectation is that as we started to go there, that possibly the equity capital markets would come back a little better for us. Seeing an accretive deal like that could be advantageous, and that we probably wouldn’t have to go there. So, what we say that we’re willing to go there and we are — now when we say that we don’t want to go there, and we don’t; our expectation is that we could do a lot without ever having to get there.

Okay. And then the last question I had is really maybe more theoretical on the regulatory side. The three-day rule has kind of always temporarily gone away, but could that permanently go away? I mean, it seems like it’s fairly cost-efficient. Should save Medicare money if you don’t have hospitalizations and the SNFs can take care of those residents. So, kind of, I don’t know if you want to put odds on it, but what are your thoughts on some of these regulations that are temporary helping SNFs becoming more permanent?

Well, SNFs have been pushing for the elimination of the three-day qualifying stay rule for years. Suddenly, into the pandemic, we have that. My hope is that the powers that be will look at the result of that and how much money it has saved the system. I mean, Dave gave you the example of a patient going from $200 to $800 a day by under skilling in place. You might look at that and go, wow, that’s a ton of increased costs, but in truth, it’s a ton of decreased costs, because the hospital that you wouldn’t previously have to send them to was going to charge far more than $800 for those two, three, or four days that the patient was going to be there before they came back to the SNF. So, the three-day qualifying stay is really a softener to the acute care lobby, and its elimination would not only save the system money but would provide much-needed help and support to the skilled nursing industry, which is a critical component in the healthcare continuum and really, the lowest-cost environment in which a lot of services can be delivered, some of which have not been delivered there now simply because of regulatory limitations like the three-day qualifying rule.

I mean, you said it better than I could with that. That’s kind of where my boss worried about it and wanted to hear it from you guys. That’s all I have. I’ll call you before as well. Thank you.

Thanks, Dan.

Your next question comes from Michael Carroll from RBC Capital Markets.

Yes, thanks. Greg or Dave, I guess, I wanted to kind of touch on the amount of liquidity that your tenants have gotten from all these packages is how long can they survive this? I’m assuming that there’s been some type of operational deterioration. Correct me if I’m wrong there, by the way, related to this COVID impact and maybe that will improve as elective surgeries start back up. But how much longer do these tenants have before issues arise? I mean, is it a couple of quarters, or is it a couple of months, or how would you quantify that?

Well, Mike, I’m not going to show off our crystal ball for that, because that’s really a tough one to answer. It’s really tough to predict the future. All we can feel really confident about saying is that right now, they’re fine. But to predict how long this is going to last and how long it’s going to take for hospitals to recover their occupancy and kind of get back to normal would be a risky bet to make on a call like this.

Mike? It’s Greg. There are a ton of variables involved in answering a question like that. There are just too many to predict. What’s going to happen on the other end of this? Are all nursing homes – is there going to be a waiver of the three-day qualifying stay that’s permanent? That would be helpful. Is PPE going to be used in more different ways or stocked in more different ways? Is it going to become more affordable? Will more manufacturers come online? What is going to be the expectation for infection control coming out of this? Are our facilities going to be mandated to have a high percentage of isolation rooms or to provide negative pressure environments that are? What are they going to do? Nobody knows. The answers to those things – we’re busy dealing with the present, and I’m sorry, it’s – we can’t give you a better visibility into how long our tenants will go on the current stimulus. But right now, they’re in pretty good shape, and we think they will be, as Bill said, in good shape for the foreseeable future.

Okay. And Greg, can you talk a little bit about your seniors housing operators? I guess how are they being impacted by this? I know you recently transitioned a few assets, and I know there’s been, what premier has had some tight coverage that you’ve been comfortable with, because of their corporate guarantees? I mean, I’m assuming they’re going to see some pretty big impacts related to COVID, given what we’ve heard from the rest of the seniors housing space. I guess what’s your thoughts on those tenants and what gives you confidence that they’re still well-positioned?

Well, a couple of things there. This is Dave. Like I said in my remarks, occupancy stayed flat in the month of April, which was really encouraging. I think part of the reason for that, as we talked to our operators about the somewhat surprising level of new admissions that they had. What I think it relates to, Mike, is the fact that these are kind of the midmarket positions, secondary market offerings, and as prospective residents have been sheltering in place on their own or with their children, they’ve realized that they need care and they can’t afford to wait for it. Maybe, that high-end private pay only prospective resident could afford to wait a little bit longer, but it’s been our experience thus far that many of our prospective residents could not wait for assisted living, so they went ahead and moved in. That’s been helpful. Another thing that is maybe a little bit unique to our seniors housing portfolio compared to our peers is the amount of Medicaid that we have. It needs roughly something like 30%-ish of our seniors housing residents are under Medicaid. If there’s another round of stimulus that’s been talked about, but hasn’t really crystallized yet, related to Medicaid providers as opposed to the first tranches related to Medicare providers, then conceptually, those Medicaid senior housing providers would benefit from that as well. So, just based on the information we have so far, we feel like those guys are weathering the storm pretty well.

Your next question comes from Todd Stender from Wells Fargo.

Hi, thanks. And Dave, I appreciate your information and really context around that three-day qualifying stay rule. Is there an expiration on that? I know you guys kind of fleshed that out a little bit, but at this point, it’s truly open-ended?

I believe that that stays in place as long as the state of emergency is in place. My understanding, Todd, is that as soon as the president resumes the state of emergency, then those regulations will stay in place until the end of the quarter, where President Trump removes that emergency status.

So, it’s a national issue, maybe not state-by-state, it sounds like.

That’s right.

Okay, that’s helpful. And then how are you – and then maybe, I guess we’ll see what the next piece, my next question has to do, if this is national or is this state-by-state, for operators to even maybe, have installation from any litigation cost liability coming out of this, as tenants and patients have contracted COVID. What do you know as of this point? And then maybe also for yourself, if you have any exposure or potential exposure?

Yes. We wouldn’t expect any exposure for us as the landlord. What we understand is that it’s a work in progress both on the national and state levels. We’ve seen some states enact legislation to address it, which we’re happy to see. But there’s also talk in D.C. about something on a national basis, but nothing has been settled at that level yet.

Okay, thanks. And last one maybe for Bill, the revised Metron loan. I know the bulk has been paid back, but there’s still a portion outstanding. The original coupon was 7.5%, but the new coupon drifts quite a bit lower. I just wanted to see how you determine the new rate? I guess we are used to seeing loans at north of 7%, maybe 9%, but this one is on the lower side. How did you get there?

We got there as a partner to a lender, who is bridging the Metron assets to HUD. So, we’re in it on a temporary basis. We looked at it as just a little upside for another month or two.

Hey, Todd. It’s Greg. I would also add that we got a nice loan fee on the front of that to really actually, depending on how long it takes them to pay that off, which we don’t expect to take very long, actually juices that return quite nicely.

All right, that’s helpful. So, you’re not in this for 18 months…

No.

This is just, you’re closer to the bridge financing and then they’ll have to ride that out separately.

Yes, a very short-term bridge.

All right. I understand. Thank you.

You bet.

And I show no further questions at this time. I will now turn it back to management for any closing remarks.

Thanks, Sylvia, and thanks everybody for being on the call. We appreciate this, and if any of you have questions in addition to the ones that have been asked today, we’re happy to take them; just give us a call. Take care.

Ladies and gentlemen, this does conclude today’s conference. We thank you for your participation and ask that you please disconnect at this time.