Juan Sanabria: Hi. Good morning. Just hoping you could comment on your thoughts on the California health care and minimum wages. I mean, you guys obviously have a big exposure there. If you could maybe give us a sense of where that exposure lies. I know, you have a big exposure to Ensign, obviously, he’s big in the state. If you could just bifurcate where your assets account for who those operators are broadly as well? Thank you.
Dave Sedgwick: Yeah. Juan, thank you for that. We’ve got — I’d say probably our strongest group of operators in our entire portfolio are in California. And we are really not overly concerned with the mandate there. As you may know, the skilled nursing sector was excluded from the mandate generally speaking. And yet there will be some upward pressure just from competition from other health care settings. The reason we’re not terribly concerned about it is because it has quite a long implementation schedule ahead several years of getting to that number. And in the meantime, that’s going to correspond with several years of continued recovery from the occupancy perspective, we think continued recovery on the agency staffing perspective.
And we’ve got increased Medicaid and Medicare rates that I think we would expect also over the course of the next five years that you throw all of that together, and we think it will be definitely manageable by particularly our strong core of operators in California.
Juan Sanabria: And then just curious, if you have any sense of what the level of agency or a lack of staffing still is in the portfolio today? And any way to quantify, how much that’s holding back a further improvement in occupancy at this point?
Dave Sedgwick: Yeah. The last part of that question is a real challenge to figure out. Anecdotally, we know that there are still constraints for some of our operators to admit because of staffing constraints. As far as agency, that actually, as you look at it, provides another bit of tailwind for our operators in terms of their coverage because we’re still quite a ways off of our pre-pandemic agency usage. Portfolio-wide, before the pandemic, we were at about $1.50 on a per patient day basis for agency usage in the portfolio. And we still are a few dollars north of that. So, we have a ways to come down. And we’ve steadily seen that improve from last quarter to this quarter, agency in our portfolio decreased by about 8.5%. And we’re encouraged to see that, and we believe it’s part of the reason why we should expect occupancy and overall recovery to continue.
Juan Sanabria: The 8.5% was it year-over-year or sequential decline?
Dave Sedgwick: Sequential decline from last quarter from Q2 to Q3.
Juan Sanabria: And then just a follow-up, the rent that was booked in the third quarter for the 11 SNF portfolio, was that just to think from a modeling perspective, what — how much rent or NOI goes away?
Bill Wagner: Their annual rent is — their monthly rent is around $400,000.
Juan Sanabria: And all that was captured in the third quarter?
Bill Wagner: No, they did not pay 100% of contractual cash rent in Q3. They make up a small portion of the 2.5% that we did not collect.
Juan Sanabria: Okay.
Dave Sedgwick: Hey Juan, let me make a quick correction. The improvement in agency that I cited of 8.5% was actually from Q1 to Q2. We’re a little bit too early to talk about Q3.
Operator: And we’ll take our next question from Alex [indiscernible] with Baird.
Unidentified Analyst : Hello. Thank you for taking my question today. First one is on the types of the initial yields that CareTrust is seeing in the pipeline right now and then the expected stabilization rate?
Dave Sedgwick: Yes, what’s your question?
Unidentified Analyst : Just what are those yields specifically on the pipeline right now?
