Richard Anderson: Okay, that’s good to know for modeling purposes. And then just so I can recall correctly you mentioned the $34 million outstanding deferred balance that remains after everything that’s happened this past quarter. I recall when you guys were going through this that you were not recognizing deferred rent in current period quarterly results and leaving the opportunities that you might actually have like a doubling up scenario when you start to get deferred rents paid back in say third quarter of this year on top of what present tense rent payments. Is that what’s going on? Or did you flip that accounting treatment at some point along the way where you’re not going to have a doubling up scenario on a go-forward basis?
John Spaid: So, we transitioned from the pandemic relief provisions provided to us to typical lease amendment under 842. And so during 2022 at the very beginning of the year we started talking about how some of those modifications to the leases would mean that the deferrals are going to be brought on to our balance sheet through straight-line revenues. Now, we had a lot of things happened at the very beginning of 2022 including the transition of Bickford to cash basis. So we didn’t get an opportunity to more publicly sort of pronounced what was happening there. But I think given the results today we wanted to come back and talk about that again and basically make sure you understand that we have two groups of deferrals. We have deferrals that we collect from our cash basis tenants the ones that are sort of variable in nature.
Those flow through everything from net income to FAD. But we have the deferrals that are a part of our GAAP revenues that are being brought into our straight-line revenues that when we early received them have no impact on net income or FFO metrics. So we felt like given our results this is a great time to come back and readdress this situation and highlight it.
Richard Anderson: And so that’s the $1 million that you got early, right?
John Spaid: That’s right.
Richard Anderson: Okay. And then finally for anyone in the room just a broad question. You’ve had some success about occupancy lift in senior housing. But if you were to recall, how you were feeling 1.5 years ago, would you agree that the low-hanging fruit of occupancy recovery has happened, but it’s been really difficult to sort of get back to where we were pre pandemic. I know everyone talks about this high 80s occupancy level for senior housing. I don’t know if there’s anything magical about that except for the fact that it happened to be the number pre-pandemic. But do you think that the path to get back to some sort of stabilized number whatever it is, is taking longer than you thought or any one thought? Or is it sort of tracking the way you expected it was going to track a year or two ago? Thanks.
Eric Mendelsohn: Hey Rick, this is Eric. Good question. I agree there was kind of a head fake last December. When we were talking to our operators, they were sure that there would be a steady drumbeat of increased occupancy all year. And if you recall, there was another variant, more flu and the occupancy kind of lost steam. However, this past quarter has made me a believer that there is pent-up demand. If you would have told me that we would have over 300 basis points of improvement in our SHOP portfolio and four or five points of improvement in Bickford in one quarter, I would have bet against that. So I would urge you to suspend your disbelief for another quarter and see what happens if this is a trend.
Richard Anderson: Okay. Suspend it. Thanks very much.
Eric Mendelsohn: You’re welcome.
Operator: Our next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed.
Austin Wurschmidt: Great. Thanks. Good morning everyone. On the $34 million deferral balance, does that include the balance from tenants on a cash and GAAP basis or just on a cash basis?
John Spaid: So it was Austin, right? Yes. Austin, this is John again. It’s everything.
Austin Wurschmidt: That’s everything. Can you give us the breakdown of what percentage that is between cash and GAAP-based tenants?
John Spaid: Let’s work on that. We’ve been talking about doing just exactly that. But I’m not prepared yet to do that on the call.
Austin Wurschmidt: That’s fair. And then just wanted to check the math. So the 10% to 12% decrease in adjusted rent — in the rent for discovery, is that about a $1 million decrease and then offset by any future deferral repayments? And then can you also share, what the contractual increase was on the master lease with Discovery that you intend to push out to a later period?
Kevin Pascoe: Sure. Hey Austin, this is Kevin. Your math is in the right ballpark there. And then the step-up was significantly more, hence why we’re having to push it out for a period of time. Their original lease payment on the master lease portfolio was around I believe is about $3 million more. So, I mean there’s a step-up that would have to — that was looming that frankly the properties just weren’t ready for and we want to make sure that they get healed and we’re working with our operating partners in an appropriate fashion to get there. So, we’re looking to move that out for a period of time and let these continue to move on the occupancy front.
Austin Wurschmidt: No, that’s helpful. And then just Eric you highlighted the SHOP segment kind of serves as a platform for external opportunities and you’re now a believer. And I guess, I’m just curious as you talk with the Board I guess, how close do you think you are to executing on SHOP acquisitions? And do you feel like you’re able to compete in the market for senior housing deals as kind of your existing cost of capital?
Eric Mendelsohn: I think if we can have one more quarter of positive momentum like we’ve demonstrated that we can get the Board there. They’re very, very excited about what’s been happening and some of them have even been visiting buildings. So there’s an intense level of interest in this as a new growth avenue.
Austin Wurschmidt: And then can you just kind of comment on your ability to compete today? And then also would you look at new operators to the platform or just expanding with your existing partners?
