Omega Healthcare Investors (OHI) 2 Aug 242024 Q2 Earnings call transcript

Greetings and welcome to the Omega Healthcare Investors Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Michele Reber. Thank you, you may begin.

morning. good and you, Thank With me Booth; Vice Pickett; Dan CEO, of is Bob Stephenson; Omega's CFO, Senior Taylor and Operations. COO, today Megan President Krull,

filings may that Comments materially our regarding from the to forward-looking that potential with and the not conference could during prospects projections, statements statements call those operator in generally. made historical as in this financial the facts are differ outlook be transactions, statements cause forward-looking such results company's are SEC. detailed Factors actual

call today, supplement. measures, accepted of generally most the and adjusted we During the some will under quarterly Reconciliations non-GAAP such FFO, accounting refer principles financial these EBITDA. FFO, to measure to non-GAAP are measures as available NAREIT comparable the FAD in

financial been independently by certain we provided coverage that data on addition, discuss verified not our based operator operators has by and information Omega. that is In

to will call now Taylor. over the turn I

morning, earnings and Good operating Michele. financial and results our certain for Today, joining our quarter discuss call. Thanks, will trends. conference quarter second you XXXX key thank second I

distribution will FAD, upside the as $X.XX in available next process are quarters. several for transitioned to than of should FAD quarter Second better portfolios per share improve being of the result expected and in funds which was continue few over

XXX% Our quarters. should dividend the continue is in now the upcoming and mid-XX% ratio below to range drop into

increased our and guidance of portfolio share we AFFO year-to-date narrowed transitions XXXX result a and a acquisitions, As share. $X.XX range and to per $X.XX per of have

further our helped equity amount a pipeline, robust which delever significant balance to issued the have fund sheet. of We has to

metrics key discuss, tenant coverage continue improve. to will Dan occupancy and As rent

at rent. balance buckets. Operators EBITDAR to metric dropped the operators, break below representing the X.X% Xx Xx X of And total under of X.X% into can we operator X.X%. X.X% X.X% coverage of The looking

the we as relationships. of interest. not a the acquisition XX, estate the of an venture joint real the Our therefore, partner in previously facilities joint remaining included repay intention will in significant leaves X consisting $XXX secured interest of small owned and million debt We issue. strong minority XXX% the representing by prepayment On XX% X.X% a venture. U.K. be own That our is should credits November in The of XXXX joint assumption rent on now July payment secured operators closed of in to November in XX% venture to the as the XXXX of debt the debt prepayment penalties. result acquisition prior XX

on Omega the is debt above rates. interest rate debt assumed of significantly XX.XX% market The

of use accounting the capitalized the same GAAP purposes, adjusted the FFO We For above-market portion interest this intend acquisition. of venture calculations. for treatment to our FFO, accounting is as and FAD GAAP expense joint part

industry metrics. of more new should recovered operating has pre-COVID combination the industry than and to bode after of X our issues, The for related Lastly, partners. or strong no supply operating well demographics COVID years generally limited

I over will to turn call Bob. the now

good Taylor, Thanks, and morning.

quarter quarter. Turning quarter million of to the for XXXX. for compared million second time timing the our the second completed $XXX transitions year-over-year was new restructurings, for and primarily offset by $XXX partially XXXX impact and of result second that completed asset the investments financials to is of The and throughout increase Revenue revenue during from XXXX, same operator sales the period.

compared was for quarter million Our $XXX $X.XX as per or of XXXX. $XXX $X.XX second million the per to share NAREIT or FFO for the second share quarter

and found FAD posted as as FFO, quarter net quarter $X.XX adjusted items website. million and $X.XX Our second well adjusted release reconciliations per outlined share in and was supplemental our per to NAREIT in was the $XXX FAD financial FFO share income for several million our both FFO $XXX or or to exclude earnings our our

$X.XXX was first FAD quarter FAD. quarter greater second than our Our

revenue. As outlined QX annual $X.X rent operator the rental the rent up was operator's April, transitioned did new new a income additional new of to base incremental second the the million on Guardian annual base with portfolio consisted million we from minimum in in press and $X.X our received pay in $X.X and In of quarter, to operator an $X.X release, $X.X of based rent. million rent not of million, an million of which

$X.X Turning Maplewood million $X.X million rent in month million June. versus paid quarter in million quarter first million lastly, $X And to in second $X the increased payment to rent They the paid the per quarter. starting per million paid an second additional in Levi. as the in $XX.X in month Maplewood July, $XX.X from In rent.

April investments sheet the In X.X million continues and ATM unsecured the On of sheet million strong. X, stock and million through the equity under second the of to common proceeds senior new balance $XXX shares April balance of repaid we facility. $XXX maturing quarter, X issuance million credit our completed remain CapEx bond of collections we borrowed in investments, balance million using our cash, $XXX or funded in the rent program. Our excluding $XXX

XX, coverage adjusted quarter quarter, over and on billion in million at down in XX% was of fixed was X.XXx, net funded $XX was the in billion with in EBITDA from $X.X our the ratio credit facility charge X.Xx. annualized capacity. cash to over the borrowing and At debt X.Xx our debt our fixed ended balance We sheet rates, June $X.X first

guidance. to Turning

change the borrowings. interest in end We expense we're on the million run sale asset per XX balance $XX to our the we the as $X.XX market guidance revenue of assuming assuming the assuming the press the to release. per continue rates which month recognition. revenue impact million to of changes to million annual second transition the Maplewood's pay $X the at pay half accrual rent quarter. We've second our We contractual facilities of the basis XXXX in to consistent mentioned, facilities quarter, sheet project in quarter. G&A no continues and million outlined in recorded second sales our quarterly an with year million rent increased cash We're on share. $XX.X to of to existing a included per Guardian FFO ability or material the in relate per to as of between interest Taylor rate pay new credit year of range the quarter. no to $X.X assumptions facility operator We're A quarter, few continues charge to improve. We're of second $X.XX operators debt adjusted our between they assuming will either held in earned continue or classified As expense full interest assumed Levi related to key $XX.X million through assume completed as investments of related July revenue for $X.X the assets to in at and we are, for

second $XXX in proceeds were equity the issued in million through Additionally, ATM predominantly our June. quarter in raised

As of adjusted diluted in such, second average been shares million diluted all the quarter, only FFO shares weighted impact by $X.XX. the the the X.X million had shares would been had X.X issued average, weighted have approximately within a included

impact additional new with third Our equity weighted maintaining of for fund under the plus while leverage to accretively we shares quarter as average any X.X include the shares full investments the will Xx. million continue shares issued

is $X.XX our FFO As million back per a in is reminder, the approximately cash to until for impacted new quarterly by issued, share put adjusted every negatively shares X investments. work

well been adjusted not FFO investments XXXX mentioned. as has any other additional guidance does asset or transactions include capital additional already Our any sales what as than

to Dan. call the over will turn I now

Thanks, and Bob, good everyone. morning,

core approximately As operating coverage of Kingdom. XXXX. states operator upon XXXX, increased period in operating our our were versus based XX,XXX to XX, XXXX with of asset a X.XXx to EBITDAR spread beds. an facilities of portfolio XX, located These preliminary portfolio facilities our June for as across core third-party Omega XX.X% ended of and XX for from XX.X% within of XX XX, recover Trailing reporting December March trailing from XXXX, XXX operators the low operators. United the XX-month has as had in of X.XXx continued portfolio XX-month January XXXX mid-July Occupancy to overall for

protection Omega is District to a Levi, previously matters. and core an filed was rate necessary solvent a creating XX sheet. in announced, Turning enhanced June and sustainable the and portfolio Georgia. filing strengthened in operationally bankruptcy on Chapter that entity this for XXXX, step Northern of the believes important as balance Levi X, with

We continue Levi there believe current portfolio is that to meaningful in of value assets. our

assets, provide to Omega million, have is been strong current exposure current year the rent cash sustainable our on working has Levi with retaining of alleviated sufficient within business cash flow will turn Levi it remaining financial generated We and assist in in care. Levi annualized clinical which long-term its burdens over support $XX portfolio a the some believe the reducing underperforming also of to the portfolio. while for continued approximately by for to

in the in million months $X and June, approximately rent paid of of August XXXX. Levi July

Although are concluded the in the will of that to anticipates bankruptcy be process, final prior proceedings resolution Omega XXXX. still year-end

several the small operators with In addition working restructurings. restructurings, other Omega various relatively is to on aforementioned

investments. new to Turning

facility to quarter Omega back X% a with homes a million. annual sale-leaseback to operator; totaling whereby and a The of of Omega $XX where transaction to the it following: weighted acquired operators total care acquired it in existing million back sale-leaseback million transaction, CapEx $XX.X During have from include XXXX, million U.K. X.X% new existing $XXX XX an facilities new XX.X% average yield whereby the a of acquired transaction investments. to one the back a Michigan of lease operator; and escalators $XXX investments inclusive and cash separate in one $XX million leased second the and $XX in these leased new sale-leaseback and facility completed in to X investments, operator Omega loans new ranging million Louisiana in a Omega

homes gross U.K. annual million X Omega's the Year-to-date on million. of investments XX% Omega of has include aforementioned through excluding in is total to These CapEx the closed partner now investment and $XXX July, with care of rent investments facilities $XXX investments, XX%. to million operators $XX.X current buyout The our U.K. inclusive results in in $XXX of investments of closed on the quarter. are Subsequent new which XXXX, million, in quarter new a second return JV the established through leased XX second CapEx. Omega

call I Megan. to will over the turn now

everyone. morning, good and Dan, Thanks,

the structural the meet the quarter, perspective despite labor staffing of of to was implication mandate. with limited level of to most required finalized how staffing visibility into April from the access last requirements in mandate and of in discussed terms create inability As facilities to a the the

have would it important is filed It a certain While to the adjust the operators industry or mandate. that expected, legislative along rule to overturn be that the to overturn note successful levers or previously election. the lawsuit is to of with otherwise, unlikely any associations, prior several as

take argued and gave Chevron be it to the that the time of mandate, attorney used Supreme ultimate Although Chevron for lawsuit the the for outcome doctrine, same mandate. Court's as certainly successfully recent of of the in move interpreting reference appear overturn be regulatory in against the will bodies who success which some to the favor both determined, and overturned the laws the fact the being the case staffing lawsuit weigh to the against is to to

The fundamentals the improve. continue business to of

they recovery all levels, is states the has meaningful step efforts. the provide to indicative ways regulatory While that recovery the and to hope forward. any perspective the the continue occupancy pre-pandemic in in a going stabilized of many and fact face We not at and same coverage up in support pressures from have do necessary of

error well by the is of market increase, increase which This net or slightly in plus adjustment. as issued the productivity approximately X.X% included X.X% billion, this X% than a proposed CMS offset basket X.X% basket resulting X.X% forecast a market its rule payment XXXX provided in week, for a a better final $X.X rule. adjustment,

indicative scrutiny whole. So while always industry likely on the a and and to be, cooler of well pressure an will there of level prevail always some ultimate achieve be will a industry as from reasonableness hopefully, continues the the of understanding and heads be level balanced a of will perspective, regulatory

open for questions. now the will I call up

[Operator the line Instructions] question coming Hughes Our with of Jonathan Raymond first James. is from

the acquisitions and assisted what loans. of I like was today in of then nursing yields, skilled terms pipeline hoping details versus looks you could share versus living some size, investment

Sure.

and over is So seeing as both in lot U.K. pipeline a of today, very our indicated remains here active. States the we quarter, deals, We're the last in

of which is what average Our consistent with the is market. seeing yield a we're little XX%, in north

through over of If July of deals we you the compare we million XXXX. that, indicated as on did call, just $XXX

had done time we that last over through If to just deals same $XXX you the compare year, million of period.

again, very of than a as pipeline. once result we've a doubled So active more And that's that.

to any on capital Okay. Or lending the to challenging come competitors private more sidelines Are you bank back largely space? are due seeing still the they the environment?

seen So them. we haven't

they've seeing material any So not we're come in form. them back,

me then The sub-Xx. on I forward on quarter, And fund one most the as of equity revolver. acquisitions and of activity now in Bob. more addressing last debt capacity maturities? you was about thoughts Okay. just is raise of early and could plenty source the ATM capital for XXXX There's how in second more quarter for the think the investment via accretive think you year, an to leverage and Hoping funding just the going it talk obviously,

Absolutely.

right maintain and equity your hit all to I We our first Xx. than to using accretively leverage do statement debt. the want we continue think less could now, acquisitions

look we'll that. would I looking continue -- forward, to do So

for And the year. then just thoughts maturities next on

Yes.

million of got $XXX we'll front our in have front the to in million April. paid that January in XX, $XXX we of coming and just off in way similar We get up we that

the sit whether bond it's likely, look down more in we'll to it for quarter, be see So bond, would at market the equity. but fourth and

from coming with line is Michael Griffin question Citi. next of the Our

rate some I'm you or venture. sense, you of wondering partner give behind there it. constraints more in stake just Can the if give -- capital then interest were has, a to force been liquidity your stake, us any their you sell partner's for have us the that them Cindat on your the quoted And to on wanting buyout might joint of that. kind could color driving

If think to year, you debt from next when guess, benefit accretion you'd you the I were refi, much comes due do how get? the

The It we provisions. we within out. the up, that. when cutting hear relationship their it market had The think first we you're JV, buy-sell a from your good to question. timing little I Michael, trigger I bit to perspective just was you, Yes. got was difficult Cin, the like a And that XX% to set felt but they with look a at elected it asset. all and the piece ultimately out that bid got XX% when really attractive attractive. do partner we price match yields and that's came had Unfortunately, the a thought to not opportunity on us take so. We of at paper you not it

X%. capital capital would -- debt of be Our cost about

pickup I refi. or at the that's look mean, there, you it's differential So the X.XX% $XXX million. the essentially with

then Appreciate on just Guardian color the the Great. Taylor. And portfolio. there,

a Just that to new to be that helpful. would have any sense, is get wanted you I there a something but there Pennsylvania operate wasn't? Guardian the operator tough case is was differently in, thought relatively color doing

second not set -- We struggling. question. rent in moved second can ticker sure revenue in were I'm to expect that quarter, then a Pennsylvania of receive the if in of that. kind the I to the We basically all heard will, quarter. year. rent, operator we you a it in, facilities The through of in tell up were you was that kicker, embedded that forward we the I go structure unique had and the remainder did. which higher well, The if the kicked performed they able

next Feldman Our is coming Wells question with from Fargo. Jamie

similar to the and Great. have to put for refi, you a number about out just do and those to mortgage the investments in think I a 'XX. for capital talk real guess rate? 'XX you at how that estate-backed Can of and earnings? opportunity you starting, work plans decent maturing other plays that Or

due of XX we've is it, in that No there kind thing next, the over -- material. particular are got mortgages course one months. one the that are coming So of call

to a of some to a of mortgage think short-term this going pay We to part, expect see back, don't mess but off of extended. there sprinkled rolling the loans I for we're lot and dollars we some be expect there. in those yes, little were most

it 'XX, neutral do ends you I Okay. you but guess for think in or it think think I mean, you you can... -- earnings 'XX, -- to obviously,

Yes, at it all impact on shouldn't material any earnings. have

more investment put going looks this do in opportunity pretty more And U.K. had particularly you're you -- it Okay. recently? think might it seems in environment seeing looks opportunities about then like the work what forward? there to where has like talk you've you what How much the set and favorable Can like the been year. you

active the now. Both is the states quite and right U.K.

I a market that a from overall what quicker think we in we not of going got haven't us the have in that had as So just capital COVID, for players mean they U.K. many there's And players capital is I come we there seen into yet. there lot yet. pretty quick. recovery over

to opportunistic ons. point U.K. pick looking able being facets of we're this of choose the all we're at and So in really and kind at there

how frame the Well, Okay. investment opportunity? like of you would magnitude the

the this about in that that created would we've pipeline. the year I X pipeline changed. first the The seen think of opportunities months hasn't

when can now seeing. similar the pipeline set it's but in to we're of predict a opportunity come you that is So through, terms stuff going

you project? Okay. you on just lease of develops then Maplewood how your the finally, that half up, give an think Second into on back update 'XX can early 'XX? and Avenue And the thoughts What

Yes.

But occupied backfilled doing being and we're well, and residents continues Second I market also will lot up. to the to And has a followed a remember buildings XX% there's up that products. ramp mean, continue new in, there's are we're away that pass so us have Manhattan. of in with matured, but building new X trend Avenue in where first So residents. you

it's when XX%, to -- there's to get well. it's continue they So but we certainly and pathway do to a tough I'm not predict sure

Mizuho. with The next of question the line from is Vikram Malhotra coming

move like And also just an D.C. New you update Maplewood But a of you sort on discounting, like think in give I maybe seems lease-ups expand you if said just stick-on on did some there's give maybe at us you of point. occupancy. slower. lot Any bit in, can us York, competition, some it NAREIT, a statistics just could you move wonder share just I the out

rate rent? for sort Just run are can up to you get of full lease you a what anticipating the where

Yes.

think as in there timing been, some of I predict. is been has that I discounting to there's But Manhattan. you product mentioned, impossible will say

price much can desirable, prices. so If somebody Manhattan. not property -- there's you Fortunately, is in pretty hold much the sensitivity

Second think Avenue about you has So residents. XXX which

is we're It it's why exceptional. So care that's $XX,XXX to already. community the well, a of get shows month. And a vibrant very RevPOR able

the think get direction. when Not to But XX%. question, we have headed probably, answer everything year, So 'XX. right looking the this I XX% to at you're

of And operations last Avenue. that sheet. to the has Maplewood, core close were on ramp-up then And that for is things on well. incredibly transition The way. The that there is operating transitioning was operations of out Greg been with Smith balance team. do X the just us facilities of XX and balance other the The loop process stabilizing Second the One portfolio, really the the rest estate. sheet is of key ramp-ups stabilized. in its One

this It's have you solid feel the fully timing just current really good supports outlook. rent, to about we the base So and predict. that is impossible

And everything $X.XX just in ballpark the in the just, share I XX% you're mentioned the impact count sort in Bob, just follow-up XX%, together back putting half? a on FAD, Okay. But XQ. to that on Am the goes the, quarter you of then into correct

fit would that math range, the yes. That's the

it. Got

to includes, quarter. impact you've you just That said in and the also that the in just then of basically you the and correct? Okay. acquisitions into you we out into XQ third that of just clarify to so well the the XQ announced fourth that's those the I as the terms just deal XQ, sorry, run closed forward as that terms loans as deals in going deals rate. the can timing that you -- the that bake done get In want And quarter. into mentioned the clarify, of

the We've XX, acquisitions through said guidance. all baked baked I those into completed we're July in.

line is of with Sanabria Juan BMO question from the Capital coming next Markets. Our

This filling Juan. is for Robin in

did Maplewood, on increase the D.C. why million? Washington, Just $XX budget by development curious

costs this all construction construction really Yes. this industry, what we've that last but X increase. DC, end not almost close going the reflects the It fact in to years, XX% to it's what out, across industries just that's in seen over when costing. just up that relates we this

into on 'XX? exposure recently the the Okay. trend this what's And get sub-X And can how coverage, expected low to?

of are think there. things I interesting that So couple there's a

You is above EBITDARM have the a X. of that operators number coverage

of And larger so working be think operators that those And operator. And would I way largest the a smaller bucket. at some think activity operators handful we And less and -- of that -- going a there's XXXX. restructuring we're into currently work goal. I handful their just the of are normal. the probably sell-side than That then there's out X of that's the naturally settle including for bucket, X%

If years, at to history X% bucket. that look always you our X% in had we've XX for

Capital is line Our the next Markets. question of Justin Haasbeek coming from RBC with

the operator going remainder mentioned how rent pay going could year. to rent total portfolio this just new be quarterly the next for into can in You should forward? million for continue that this we volatile And about $X.X think of year? How forward the Guardian assets the

again, -- there's kickers. Once revenue revenue-based it's

we to So we second move forward. we're based that right and now, around. results, quarter see that's what think But going sustainable, going that's could upon

is from to coming Feygin question, which Baird. our on with Alec the of line move next We'll

in portfolio X coverage First anything performing? Can about which is out, or you how metric bought on EBITDAR the are guys operators any Cindat you JV, the share that else?

we Their in our coverage see consistent is what portfolio. overall with

of there down us. terms in portfolios really underwriting, unusual So type middle cut the nothing for

out? XXXX update able $XXX you an just in were All loans there? right. due update from were Or the to extended were real And March that those million be estate other June paid any XX of on that would XX, to provide

loan. tough to it's little liquidity that's plenty in collateralized of Yes. fully mean market a borrow. a There's I a

out. comfortable were we very so extending line that And

But or XX, paid that has was the back to June been extended loan extended again? XXXX,

that you what circle You I know is. want because I state what, to we're loan have just with it all on to out looking trying anything. back Bob don't each Can figure other

from Dennerlein Joshua next of America. is with coming Bank The question

I wondering This on behalf new Grades to the Josh. of back the Carl you or could also go assets is if Guardian was tenants.

I mechanics that's the should we being Just understand thinking hitting evaluated an the would be if be certain a the quarter? throughout timing Is and evaluated that with increased? and is rent, they're that kicker, that revenue goals, there understanding adjustment that revenue with

So it the in was evaluated quarter. second

As continue meet it, forward to criteria quarter and I kicker indicated, it's they do it. did There's to the the will in the to no that kick reported the or go sustainable. year. magic of extent we It we having believe after quarter throughout more

Or get for does from could going excess that to that it they at up? least continue amount reevaluated go forward

Once again, sustainable. second the recorded I think that quarter the that they is revenue in

either So down, go it's up I much to don't going to remain pretty think flat. or it's going

Okay. the the we your than operators, performing a at coverage least is occupancy And in facility that in data saw there standout? better uptick or also terms or any specific of others operator and of type that's

SNF like terms ALF versus or... in mean of You

Yes.

bit But historically since is little I we've mean but catching at seeing quicker. of SNF ALF seen think think census now COVID sort generally the of them. The all increase we're I I product a up. speaking,

at There over to to the closing Taylor are floor Pickett I for would comments. no further time. back turn like questions this

everyone, free Please follow-up Thanks, joining call to team. our with for today. feel the

Thank you. This today's teleconference. concludes

for time. thank your lines your at We you participation. disconnect this may You