OHI - Earnings call transcript Q3 2017 | Omega Healthcare Investors, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Omega Healthcare Investors 2017 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Ms. Reber. Michele ahead. go Please

Michele Reber

or Marshall. historical good CFO, are me Booth; Bob These acquisitions, Steven Operations, our projections, Form dispositions results results such identifies and prospects may financial cause statements. may Development outlook, XX-K, that be our and may policy, this and our Securities in CEO, events those Chief see business or are of condition Taylor the transitions or portfolio factors restructurings, which our conference our and as not actual Officer, Exchange Jeff releases SVP press forward-looking regarding and and contemplated Commission, uncertainties statements forward-looking on Pickett; without Stephenson; portfolio Insoft; made specific call morning. you, actual including, facts during generally. that with today With to financial cause Please operators, filings differ Omega’s risks our statements materially. Corporate forward-looking limitation, described Comments materially dividend Thank COO, to and differ from involve statements, which report rent Dan payments, most recent

at our to release now FFO, non-GAAP will the and adjusted issued today, to call website of financial of such and generally of measures, accepted the some FFO, well an usefulness will www.omegahealthcare.com the the as measures, as to FAD over I section we case the these are turn explanation EBITDA. the adjusted comparable non-GAAP yesterday. FFO, under press FFO non-GAAP Information in available of our in measure and under During as Reconciliations measures call most Taylor. of refer the accounting principles, Financial

Taylor Pickett

per call. is with basis portfolio The FFO to share. quarter Funds no $X.XX joining available and reduction Orianna cash distribution, $X.XX primarily and for in the Good Michele. is earnings for the the FAD FAD or per for for quarter third conference FFO to recognized adjusted thank quarter. converting morning accounting Orianna related Thanks, is the Omega’s adjusted Adjusted quarter share. FFO for third you in FAD third XXXX

quarter, sale two transition of another the down continues vendors Northwest completed third Orianna’s facilities of completed Omega flow the Orianna Texas Unfortunately, to cash obligations. the and to pay operator, we the remaining due we to continues to During apply facilities and buyers. underperform to past and other portfolio free the cooperatively

restructure. consultants and/or are We assets and versus regarding discussions of transition court sale Orianna’s in active potential a certain with owners state or the federal

cash we likely which are if to to out-of-court $X.XX can annual as million compared current year, would develop million. XX plan, result We’ve rent We of dividend $XX in our hopeful, to share. dividend successful, dividend, quarters. million consecutive the by an in rents $XX contractual of increasing common per our pay quarterly We the our $X.XX remain confident to increased now $XX per ability

FAD, facilities ratio dividend payout at paying the return XX% of conservative will percentages to rent. Our as improve adjusted and we and XX% expect FFO Orianna of these remains

and our accounting that the financial received third Our results. of the revised for anticipation now quarter balance our will cash impact Bob of cash the XXXX no reflects review Orianna’s guidance were year.

Robert Stephenson

morning. Thank you, good Taylor, and

the million, loss or to a on for loss $XX compared XXXX. of as was per of FFO for $X.XX diluted of million, per third share a reportable a basis share Our quarter, quarter a or $X.XX the gain of $XXX

cash of for of on expense. for million non-cash $X.XX quarter million in was quarter share million revenue impairments stock-based $XXX a approximately $XXX of Operating was million, Our $X on of adjusted from direct approximately the $XXX $XXX the Orianna revenue. for over placing The excludes $XX the versus recorded of quarter offset of the FFO and revenue new accounts, completed approximately was in decrease the partially decrease was therefore, million compensation in $XX quarter basis, non-cash revenue incremental Orianna the for and result for of we leases, The million asset financing million XXXX. $XXX impact quarter. by million revenue and provision third per quarter the third a revenue investments, $XXX The no uncollectible or primarily for of million XXXX. of since sales net includes

guidance. G&A the less quarter and slightly G&A quarterly was XXXX million is $X.X our Our for expense than expense

us the on and million adjusted quarter impairment. mentioned, we FFO not and release, and assets any and rent, to did In them approximately cash XXXX, therefore, since them portfolio third operators related and their revenue FAD and of to Taylor Orianna. did to placed on not related as straight basis required our a full revised Orianna second press quarter to plan As or outlined of operating contractual for we achieve transitioning the include their basis, $XX revenue some line our recorded their in cash cash of process initiating failed new including pay test of to Placing Orianna. all the a results,

change recorded the amortization $XXX or Orianna to on equivalent straight of reduce was $XX writing million fair impairments capital During their to line related lease we of $XXX quarter, lease. our which capital million approximately assets value lease rent portfolio, the our off million of the related to to that

for portfolio can and Orianna’s detail capital feel a conservative transition. than call, After The of a you operating current of is on in different to that to Officer operating note their the test Chief final million capital to fully based through to and an Accounting operating and accounting change impairment contractual It’s lease. $X.X our give is line our lease. for my on subjective believe estimate versus impairment Mike me I lease walk subject outstanding free is related Ritz, in analysis. provision estimate impairments is $X.X call leases. straight for on write-off recorded reserve to Orianna that the uncollectible We the important and accounts outcome to receivables receivables a also million based We

in portfolios including repositionings, earnings stated work and opportunities sales our second transfers. quarter and continue to asset our with asset both to we operators via we first identify to calls, As improve

associated we As a interest their estate versus in the $XXX non-cash to third in impairments rates. X.X with in excluding from selling financing a million XXXX, million period in LIBOR facilities million and recorded related to refinancing term floating resulted $XX of expense converting result, quarter to approximately of real when of December cost price. $XX higher was rate million new for balances XXXX for $XXX our issuing of a investments million and higher a quarter second deferred and on cost from to debt loan the result reduce XXXX and estimated higher overall Interest same primarily XXXX. expense the fixed bonds The million as blended five XXXX the $XX a increase financings cost rate debt, quarter, in XX, a

Turning to we at balance over $XXX the evaluating could million we as in potential had over the valued which September for sales, XX, sheet. sale, asset eight quarters. At and several facilities classified are $XX held million next occur

Our balance exceptionally sheet remains strong.

our times. was normal length related of its range has fixed our XX, charge ended adjusted coverage leverage was It’s note, Orianna. months outcomes, revenue calculations should X.X to of net range. When important EBITDA no rental these annualized September to three and return times our to EBITDA X.XX for annual debt the to XXXX, and the ratio For adjusting

We $X.XX of reduction have per adjusted is $X.XX lowered to share. primarily FFO result XXXX items. our guidance to a The two

a we their and First, placed quarters. X, receivable the loss both exceeded non of test. cash top on September contractual a as the outstanding third it reflects And our fourth basis temporary recognition Orianna second, revenue operator for XX revenue effective

Our providing to additional I judgment. includes contractual due will color with will turn call be to reporting is policy revenue multifaceted Jeff. on past this related and Dan now the operators for over significant receivables operator.

Jeff Marshall

SNFs Thanks, regulatory from Significant Bob, with curtailment over past programs. industry morning, and potential benefiting certain payment consequences months, and Medicaid adverse few impacting reform the of of mandatory everyone. legislation the legislative CMSs escaping bundling the continued and good federal activity

reduction legislative provided replace future for the activity, states failed. which federal ultimately repeal As but efforts to consistently Care congressional through Medicaid Affordable to September, the and extended to funding of Act,

Senate July votes Conference known attempted skinny House the Health Reconciliation a with skinny unsuccessfully repeal, Senate’s final failure as Reconciliation fiscal Health sufficient better year leaders the Republicans Bill. Following the Care for its Senate repeal focused on on Act, their Without called, push Graham-Cassidy Freedom Care Act. also previously for for the passed hoping American the The hope in replace Act to through repeal, Care to pass Republican

program funding match replaced would For program allocations from the SNFs, the Federal levels states state from XX per assessment have X% funding that not year maximum bill Federal an reduced in have disabled Medicaid X% costing capped capita this the Medicaid commencing in protected revenues, affected XXX,XXX funding for provider and would other SNFs toward to a tax of of would with have average Medicaid populations. elderly per budget existing XXXX,

for Republican heavily likely risk reform bill If procedure announced opposition other Medicare majority would it Legislation annual healthcare process bring floor Senate garner effective effect opposition the SNF passage week to tax the repeal Medicare for expected a they that might reform efforts, been legislation. the for a a this the reserved same is stalled agreement objections efforts efforts. party use the the January simple quarter. A pay Fortunately, this any even the in face industry. that, to X, Democratic that have industry sufficient Medicaid currently efforts is by ACA The a B. to both reconciliation reductions In parliamentary any pass House of Republican to for must lobbying staunch permanently reached to funding tax for Republicans to-date. succeed to repeal support replace underway. committees be Part that entire end opportunity allows XXXX. will failed the Senate unified The A single Senate to Bicameral SNF in activity, industry influenced September such industry, under Republicans to had change at and/or vote, future are replace eliminate be legislative that then positive last Bipartisan and of the budget as Therapy late Graham-Cassidy situation with included in a to vote. the caps

year At mandate knee daily decrease CJR. the program on performance of or at fracture payment on for August SNFs Comprehensive activity, one value-based of the Joint for and scope application rehospitalization rule upcoming the on the the Florida of SNF an Medicare CMS program Florida year cardiac offset rule bundling Medicare replacement of to into effect effectively XX bundling effective confirms calendar maximum based annual finalized also prompted implementation Replacement of each input at SNF within reduce industry fiscal XXXX, rule the XXXX XX XX/XX/XXXX protecting the future calls in rebates Governor, CMS Pursuant This XXXX and the facilities following incorporate SNFs X% development. calls Medicare a fee-for-service to access this bundling metrics. capacity residents increase Irma X% industry-friendly implementation would that value-based half programs on program and regulatory cut mandatory program to CMS’s rates days. increase, death hip willingness Hurricane state Scott, signifies by level, enhanced XX/XX/XXXX regulatory program. Act XX, called hip, issued SNF Medicare would Medicare cancel geographic of that pressure mandatory inflationary in the generator would Care and daily all rates for comparative the the existing Florida proposed knee after in Rick Medicare to As purchasing non-Omega to

dedication evacuation operators stories Texas from issues personal Irma following states both level this despite order, staff federal in at are resulting working governor’s and successful Florida the operators facing While similar and and we discussions incredible comply disaster-related staff to Hurricanes to involving for efforts resident with revealed other following in both where we our the SNFs House. for Reports most Harvey potential storm safety, the recovery in with and are of our regulations necessary.

a parts the to the of could launched November cost the CMS for mandate the SNF both has industry’s houses participation, comply. to own as providers implementation estimate various unfunded about revise looming campaign urge SNF the the prior of The Association delay With federal an CMS’s Phase allow regulations in requirements new more from CMS administration. rule Healthcare time to of average led $XX,XXX by annually deadline American XXXX to and Congressional X

delayed any failure new Fortunately, comply CMS for to previously with requirements. the one-year for penalties

industry continue to Finally, the Seema whether successor. resignation current issues and Department the now of strongly Health will I CMS the Tom industry-friendly the turn Secretary, Human Dan. a largely will of Price, call treatment of supported over Services SNF administrator, successor favorable question his raises Verma, potential of by

Daniel Booth

everyone. Thanks, good and morning, Jeff,

portfolio for of and Clearly, second X.XX across March quarter XXX Orianna XX-month portfolio XX-month X.XX to operating portfolio period facilities X.XX located fact had X.XX XXXX to XXXX. EBITDAR the transition. for of operators Omega XX be assets to trailing our respectively. reclassification facilities operator XXX,XXX As These XXXX increase upon operator asset XX versus are EBITDARM for increased quarter portfolio, and core X.XX and The EBITDARM portfolio September our the an have the beds. and United now portfolio and times, ended third-party the XX during states times, approximately of in would our XXXX, XX, facilities based the operating considered Had core within due Kingdom. times, Orianna were respectively, EBITDAR our coverage to respectively, and core X.XX second non-core been in months from in XX and core was that of remained our the of coverage these in trailing the spread

Orianna, operator. the In basis. on to experience our in discussed addition several Signature rent another cases, liquidity these impacting to performance XX issues, last we as operators including both continue specific Healthcare, issues top pay timely In a operator calls, are ability of to

Orianna, cash as operator, by previously accounting, and fallen on The Taylor behind has both first placed has on been as a significantly Bob. rent, discussed and result, basis a

regions, their the continues portfolio Oriannain due have we rent has struggle by Texas overall Northwest both streamlining While and assist past to to grown. and operations transitioning endeavored

to XX facilities asset consensually either Our the next virtue is by re-leasing or transition portfolio hopefully other step remaining of of sales operators. to

a $XX remaining a considered we are decline will the EBITDAR performance. contractual within and of times states annum. This our current believe assuming result million $X coverage and X.X by attractive re-leased million between range per forma industry, given all between are pro our in rent we very While facilities X.X ratio expect the to

the CapEx reorganization. relationship involves may lender, including keep our of restructure the deferred amount of certain a scenario Signature components Signature’s a Signature’s continue of funds significant Our anticipated top longstanding At involve in rent, their line has under consideration, other past fallen Justice of we would note liquidity to Signature of restrictions as capital constituents, certain rent second with third lender, Department upon availability. approval that capital due is to balance following excess consensual vast letter a further out involve a important XX base formal long-term is Signature $X working that the borrowing a to path this restructuring it out-of-court operator, working current court-involved working reducing This quarter their multiple credit. time, thus also constituents situation, by credit Signature’s other the the a third-party claimants. third-party rent landlord, we Despite of in other of covered capital the result predominantly in Healthcare, majority and tightening behind on This of believe have of by million. of a and

outcome While have discussions, significant constituent we cannot and of the predict these can we out-of-court made we optimistic be realized. are resolution progress ultimate feel an that third-party that

to be on In top addition cash the behind placed future XX Orianna efforts, ongoing operator one fallen and rent has basis has have to that that required accounting. and Signature payments non rent, other we on restructure

that have less this be the rent the return half Beginning latter approximately in negotiated fourth amount our be full will expect January, several quarter of and a the begin the in last with about forbearance rents in in to to past agreement we and due rent. contractual than repaid Over which result XXXX. will operator, months, with we XX% to payments current settlement to contractual rent

a divest, In just the within have to over Omega in assets number sale XX work including repositioned their we to portfolios. addition re-lease discussed, order these with to facilities ultimately of months, to and/or three last of the continues tenants strengthen facilities. XX our our close operators portfolio, overall Accordingly,

this operators nine current two Omega also facilities. and addition, facilities year, closed In we re-leased have to

continue properties of assets of the process further sale the portfolio the divesting additional in marketing review over currently non-core are our quarters. attention for We opportunistically with and to coming

investments. new to Turning

Omega During an $XX million of two additional quarter completed million, investments expenditures. XXXX, totaling plus third of new the $XXX capital

an for in completed in purchase nursing Omega that facilities nursing with leasehold one completed $XXX facility Specifically, loan Omega Indiana of a million purchase lease as skilled the XX the part $X.X operator. of interest transaction transaction skilled million simultaneously and existing same for

for operator. the during quarter, Texas existing purchase in Additionally with assisted-living transaction third facility a million Omega completed Omega $X.X lease an one

combined approximately base. cash capital to over and call has to million Omega our revolver future the fund $XXX funds today turn and I investments tenant of now provide of existing to As availability Steven. will

Steven Insoft

today. high on Thanks Manhattan. continue Dan conjunction to in on square to Senior we everyone our mid-XXXX. Street Second Living, cost in XXrd scheduled at with in Care project foot Maplewood XXX,XXX rise approximately expected open and for and The joining the line is thanks work Memory to Avenue million ALF In $XXX to planned is

growing represents senior assets and this Gold housing a REITs. investment the covers progress quarter, of portfolios very one living, listed investment health only best-in-class are Homes United project land comprises among including the its obligations in end as larger basis Kingdom, the New well memory On Care senior the independent and Senior York also our X.XX lease relationship pleased of Senior standalone We at anchored properties, Healthcare Living of Omega the assisted-living, at balance their billion on housing overall Housing not sheet, and in New as City CIP U.S. York times, $X.XX care U.K. with while of totaled with our portfolio portfolio the project, of second the now publicly in XXX Maplewood our but by the City our and approximately the

Our facilities expertise. million pipeline and currently funded. $XXX ability the and actively in of capability design the operating our construction this Maplewood to is quarter related approximately we our $XX.X of important being capital capabilities projects commitment highlighted with projects portfolio strategic end of predicated new to same component second a represent We and active construction in-house QX, of the our successfully and XX reinvestment coupling having construction these Manhattan continue in by of have budget grow XX inclusive tenants at over to this XX total with million is reinvestment. Through are our on invested new

construction have through of September sheet We turn on the $XXX million encompass Taylor projects approximately of XXXX. million our of of as funded $XXX for X/XX/XXXX. will I remaining back in final which been has comments. progress call The balance $XXX committed million capital, XX, to

Taylor Pickett

years Thanks Omega Steven. headwinds to limited that in the the specific some as business coming in believe and quarters, has solid to prolonged operating a recent is favorable however lead I performance. operator demographics environment positioned of underlying period faced is supply should and improve robust

However, company the in a funding challenging I if believe thrive. to envision, environment position we will the still proves than more be

allocation value but operators opportunistic capital market by an difficult focus our That presented time, extremely restructurings, that sheet, not foreclosures, excellent operator history that an and continue unprecedented environment team, and cycle the comments. the cut will team operator fellow collateral concludes of subsequent our transfers. set environment property in easy a but has shareholders. across us in XXXXs. prudent, and the to create It multiple balance success. our to up for quality run management opportunities a teeth company management funding We this well-positioned we on prepared growth our properties for I was lease As believe an put a strong faced bankruptcies, early the position in proven recoveries

now for the will We up call questions. open

Operator

begin Our question [Operator Vanacore now comes of will the Instructions] We question-and-answer Please first from Chad Stifel. session. ahead. go

Chad Vanacore

all. morning good Hey

in and go quarter so these when why last and transitioning mentioned team, give a rebranded, most Orianna, now didn’t you turnaround talked So as what provided assets? about guys placed a plan was of work you that the the operations up turnaround on management route place, of

Daniel Booth

it with as started look if were call, different a met working we further had last constituents. not we portfolio think on to since we had different been some budget this that if involves going transitioning the past take not all expectations dates And back behind rents, due I approach approach just quarters. we to of mean Orianna to several and being the on weren’t that I fallen quarter, other and

this assets been red just agreement we hopefully making not they that payments it’s point to a think what to it and to if are eventually been these think moved. – is meet time think matter I efforts, at better off continue So, able I budget, being of not being have to they an able come their that we’ve have

Chad Vanacore

All where was that just one under on right, coverage bring about that this quarter, last and it times I haircut, thinking the rent with so did coverage portfolio, to? think

Daniel Booth

and as take as per we we is $XX coverage gave just coverage when of that event $X in today, the X.X the no if so and of land X.X occurs million between is – where would Well, land the that haircut rent future portfolio for – there rent times. a between a data the might this I transition indicated million it and these but range properties, in you annum, we

instead. of being equal everything Given course

Chad Vanacore

about think involved potential just in the in sales, restructuring and you there’s some not there, a place plan past, still but case? think then the and mentioned asset that’s Okay rent really Signature, I it had

Daniel Booth

That’s still the case, yes.

Chad Vanacore

Kentucky and DoJ settlement discussions? terms All PL right Geo and of their in claims what’s in progress

Daniel Booth

I they people are speak PL in with that are DoJ discussions the they ongoing. optimistic PL discussions Geo think I think there that pretty Geo quite discussions along, although I are want to are the claimants far claims I for or Signature, time been are say some would ongoing, ongoing, with but DoJ don’t have now

Chad Vanacore

as team? the that now, decision in dividend you’ve several All you’ve what’s raise are made your here a arrears got and rent, a the dividend Signature on right and management tenants feel secured investors about commitment to how then should

Taylor Pickett

a a over the this gain in quarter, dividend that look very we going our dividend We’ve in good we’re like so we quite and bit cushion feel of so and built we at dividend a back thereof. XX significant raising and time comfortable as quarters in payment that pattern the cushion XXXX, Orianna Daybreak about row. feel temporary, we’re Yes, to

Chad Vanacore

All right thanks.

Operator

Please Our ahead. question Lyons. John from Hilliard go next comes Roberts of

Tyler Agee

morning, you Tyler and were Agee with for this or on Hey, the John. other about they issues speak Could is issues led the you factors same do to of good unique see Orianna that Orianna? some with tenants to the

Taylor Pickett

unique occupancy a sense to Orianna is declines in that we a from year period. saw full as over example XX% an XX%

seen haven’t occupancy but with occupancy had occupancy X%, which We overall we hold steady. that revenue in saw been you’d revenue the is steady has rates, a you in that growth of see growth reflected fairly the of and kind portfolio, not if decline the modest

So been five portfolio at coverage, that Orianna you environment, in coverage. not overall other we quality steady could the indicative a look do at When last possibly operator’s our the look better the quarter. it’s as portfolio fairly including the of but for hands,

Tyler Agee

All willing right will and at? forward up push cap that you’re moving maybe and then requirements your underwriting to invest the rates this affect

Daniel Booth

underwriting. stuck pretty I think we’ve to tight our

that’s in You Texas, was our bit of was in think it think from harder the is I future, we’ll who then to underwriting just we’re will, portfolio. multi know a with a of Southeast. little which assets in in stuck was thing buy Northwest, now which operators the the a assets the regional probably there mean normal our I the And Orianna different assets portfolios, regional little was years, aligned a portfolio a that we’ve coverage back with with but this and that few that, dispersion manage. you quite with geographic self unique was if lot stick a this regional was in one one-four I it dates sort

in regions. I we’ll think I that a portfolios bigger or nature our different with acquiring acquire stick then learned think anything to we or regions, stick of are portfolios bifurcate operators our in our those with those underwriting changed in regional I we’ll knitting and if different we if multiple So think underwriting,

make So I anything focus given think had think any stick to operators to success that in we’re this, really I the that we your that learn with over we’ve a is the from are going to and on tend region years for – that change region.

Tyler Agee

all had, thanks. that’s I right All

Operator

Our go Yulico comes Please ahead. from next question Nick UBS. of

Nick Yulico

Thanks.

did non top question, that think you First the was ten Daybreak? I said, mention operator you

Taylor Pickett

is. We but it didn’t,

Nick Yulico

Okay, so were by they ten but operator top were a quarter by not at – are so top they ten least there? guess second in the revenue, a they investment, back I difference what’s the operator

Taylor Pickett

about are I Just of X.X… happen so gets so for the XX. be portfolio in that a what XX and stream, they big the it’s investment escalators you had revenue rent – X, mature revenue the number years, balance between a they from frankly at or just is mean difference there, they to stream, that – are up

Robert Stephenson

X.X.

Taylor Pickett

revenue million quarter. a $X.X of

Nick Yulico

those for cash out so the that, think it’s the what you return trying cash resolved? then like out I that’s for just in cut, sounds it’s Signature official and Signature, rents, providing credit, an I’m different get about just flow it some guys, clear not of they’re guess scenarios sort And or you you deferring I of door the options we from back is going not flow talked that. is capital for mean rent working thanks should there, if how might line still what how going impact of about on even to Okay, guys what it CapEx to ultimate all the figure –

Taylor Pickett

approximately XX% goes, in company we’ve the of in Once put discussing our as of that’s mean deferred some be around talking again set we with total rent far just I set I other in years stone yet with rent would discussions constituents. on but not think the as Signature but stone, Nick, sort around are a items. But It’s still we’ve been not number these for with three to brackets deferred it. what been of

Nick Yulico

actual Okay, your booking just rent on cash rent versus the you on difference what And collected Signature then amount the year-to-date, is the helpful. in FFO, that the dollar that’s you a are lastly, that basis? between FAD

Robert Stephenson

hold $XX.X as are for million in our the basis, on million on one a aortic the past Like about because supporting one we Nick net in quarter, net second that, had quarter month have Dan we mentioned since a collected growth do rent. they of the revenue are collateral of third Yes, $XX due contractual We Nick. on a basis Signature.

Nick Yulico

should something fourth paying? differential, what on that for have the similar been quarter? and Okay we Based you assume

Taylor Pickett

that. I’d estimate Yes, at this fair point say to that’s

Nick Yulico

Okay, thank you.

Operator

of Sanabria Our Bank next Juan comes question from America. ahead. of Please go

Juan Sanabria

seen talk portfolio how the just could the rent hoping of we that sell or the be your rates may have plant about assets that thinking morning. of you coverage should of Hi, million was about cap for we $XXX we’ve you should kind terms range the that cap of dispositions that good earmarked? thinking have to I in and kind this some rates, at peers of is be mid-teens,

Taylor Pickett

I lost were acquisition to as of that from when we same in give property, rent but cap to of sense think going put as proceeds offset diminution $XXX we’d based we X%, the we assets cap if we’ve have would sold. cap of to about able be X.X% sale our today, about what the history at so are think think rates, sale worth redeploy the of to investors we portfolio been So, any sell modeling, you see work we on those way trying again about rates, not about so money and and of we magnitude rents, that we’re whatever historically just rates think to the a order and to million

Juan Sanabria

assets? To not coverage necessarily selling low

Taylor Pickett

selling some it’s and sold, based look last of high on we’ve quite XX are them rates quite we – would low that are of found you paper depends the the market, the Some some that assets coverage, of those would it on where cap region look selling. history but the just low, on

sweats proceeds. to So, the of going potential the over clear, we it of the be itself again million way believe perspective out is for rent just replace of to where portfolio and order we’re rent, magnitude to all still just at next And to recycle months. see the from indicator we’ll we an need $XXX twelve look our just the nine, is,

Juan Sanabria

are you then comment hoping these peers being the you completely the of Genesis coverage to Genesis, big portfolio, more regional wanting I portfolio but and is speak about a from national some player, how recent one if you rethinking and of EBITDAR could just you underlying the assets? players, one to could your exposed of is be about on lessons issues to was exiting Genesis talked their your Okay, on

Taylor Pickett

mean below any is don’t them. did sell now have above – point quarters handful coverage our a well quarters. lot We issues. with of have their quite regions mean legacy mean, Yes, by a off just at acquisitions. virtue I this a don’t it’s really portfolio, well assets and facilities has four time good performance six been last us for taken obviously stable Genesis and quite it’s its few really some we different sales five, a with But right been over I of or is and on we back, of quite any the but

performance in future. We’re with near between companies the the there the plate our portfolio happy really nothing and the is on two of

there a is We beyond – discussing there but third fourth that covenant Genesis. with is quarter nothing really the relief request have there I some that, in we’re and and guess

Juan Sanabria

EBITDAR me, about just a how last and question forward. you guys going Okay do for think coverage the

NIC the some you so arrears, is which or stale in the part declines assumes and to months? data guys that’s If you quarter like continued of occupancy Orianna, look evolves XX coverage that’s with XX that EBITDAR trailing next bit the how to pointed are over XX the issues months a of thinking at level the

Taylor Pickett

the other comes steady, to demographic all You’ve really have good shift very it headwinds of that versus seen we job nice done it’s about has by and down exactly admissions. of it that right driven hit the on feel the our and occupancy we’ve occupancy referrals our be where operators been to a portfolio means and going thing, maintaining really

in to are that driver direction. monitor expect frankly occupancy at push and and we’ll big closely the in of start other big feel being a going way off the That drop So will you have to of will demographic said, even some terms your the coverage. point, we occupancy see that to continue hit to if it be and point pressure we don’t we

Robert Stephenson

at well stabilize they cost point, really portfolio. coverages as And our hopefully some have for labor because driving been

Juan Sanabria

Thank you.

Operator

Green go Michael from question Street Please Advisors. next Knott of Our come ahead.

Michael Knott

I up, happen and Bob, did have Orianna Daybreak? remarks, prepared I breakdown keep to guys, Hey in hey you but the of a detailed might change missed was trying to provide between the guidance

Robert Stephenson

putting on cash change Well, a them due said driven those basis. primarily what was I the guidance two to

zero booked of on the – months put revenue said third that Daybreak, the $X.X the related we million them X, we quarter, cash to And two booked we related with them. that only of to in we on basis September Orianna. a revenue So

Michael Knott

there not is Orianna now? the Okay. is a And rents range in terms Daybreak not of needed, far of as same a in then on – that that if that boat providing along was or a the transition situation, range, as as portfolio, for not on

Daniel Booth

Not in same at all. boat the

very sort forbearance pay As they’ll a of starting We up is in of was it this portfolio. recently with quarterly think one transition think full January, matter rent. of a fact, Daybreak really we agreement on have a signed issue. a We whereby short-term settlement don’t

we team. as We operators management feel feel them the the facilities. good about about in So good

here. diminution going think any don’t there’s get we It’s So time. over actually to improve coverage

Michael Knott

above X.X just or It you were significantly. you that that, two that driving expectations? Okay. the in And bucketing of then supplemental. particular was just Can that a talk EBITDAR the the in your like anything percentage about show below up about or ticked tenants question maybe coverage looked

Daniel Booth

don’t detail I have in the me. of front

X.X. one, and below then credit had another going sizable we I think X.X, down this rated one one another is below that AA is – the it’s blipped but Signature main because

I above. temporarily think, the those drivers. will are back that’s two But go

Michael Knott

one is what bucket of XX%, same of or or pretty is something seems the either of on amount And to And this the range? X.X And what big swap then last that range be maybe me a portfolio table. X.X offline, percentage range that curious it’s wide. that for the but I’d follow-up X.X to in the X.X

Taylor Pickett

around X.X I X.X, think, since and you coalesce averages is to X.X. much above going have don’t the overall our it’s

point we Michael, So data but… we that run can haven’t – specific actually

Michael Knott

Okay.

Taylor Pickett

bar X.X way at But line looking just charts probably the it’s up, the

Michael Knott

Thanks. follow-up offline. thanks. I’ll Okay,

Taylor Pickett

Thank you.

Operator

comes ahead. question Tayo of Okusanya next Jeffries. from go Our Please

Tayo Okusanya

good Hi, morning.

had September on adjusted? one quick know X. part quarter any basis cash fourth we said your to on out or you a you as them well thinking moved them as Just of How Daybreak. quarter? from about I also to be zeroing should in get of guidance cash rents kind you’ve fourth Are expecting them, you

Robert Stephenson

out in Tayo, already guidance put from paying, standpoint, they they fact, AOR a because first cash their thing when That first. you them zero matter to the pay, they’ve October, are million. $X.X basis, a of on gets applied I’d them as a outstanding paid as

straight And then mentioned and whatever So in back AOR. in on their on their them that Dan basis. achieving to I back put line all to to they on pay had our against full applied them back accounting paying the expect January a them put early XXXX their us as fully get they’re It’s by expect be fourth quarter we sometime rent. outstanding just to assuming plan will –

Tayo Okusanya

Gotcha. this at balance point? What’s their AR

Robert Stephenson

million, It’s days, slightly more roughly. $X than XX

Tayo Okusanya

million. $X about that’s So

you. that’s just one And for of kind Taylor, Okay, helpful.

two time kind did more mean, during I about had the kind call comment like of I more earlier make the over that about tenant of talking scenario. the issues. you the So we and we’ve been quarters, And feel on past credit-related last

saw through different? this is XXXXs. you guess all from then, the REIT. your talk a issues of any think I bit then is and about different you today? about tenant-related period because little you You guys SNF any back down period in the feel of working back then this back how what of Do going seeing what valuations question what But kind late issues was lower for happened are diligently back versus bunch focused just But they credit-related a much whole today even you’re tenant kind than could you is,

Taylor Pickett

was XXXXs people late were that was take were was dollar flat to quickly. know. it to a essentially prospective looked pay, fix system a where and answer being terms where necessarily it in them a fiscal the And a in more call the an different a amount in the had Yes, people can get run really the fiscal a we’re as levels environment at to very incented it from reimbursement and you perspective, government was is older rents paid. of reimbursed. determined issue, And of care paid go that policy up fix efficient your cost cost-based significant fixing very What the but costs was residents on this for a rate which system a of right fee to the dramatic is we that the service, off, cuts it from issue today would as – seeing impacts that’s not so to that place fixing be stay how that very policies reimbursement broken we

appropriate. general think, general that in I there’s reimbursement rates a are sense

the little and any policy terms in other to scenario balance little fix a it dollars to to as get care we’ve push and one relating shift very, to a That you the much place of about in trying deal coverages operator down different that. different or of to to very put points with slow-moving that. makes have and shift coverages XX that’s problem, bit we’ll being access where a relating closer an demographic through possible has issues about So so our that train, very kind said, gone efficient is work basis you to a down the have puts – sheet at wave when talked has decision as and the that’s coming slower you

they’d is we’re I will. see We Daybreak both don’t we examples, on Orianna through. that they their thought good now think think a one way where or

those We end and the at of opportunities have way of where plenty there’s they Daybreak, of issue assets lots tunnel. a versus transition to have that liquidity

coverages be XXXX. our of As north X.X we will going Dan expect into mentioned,

Tayo Okusanya

to does Okay, they do don’t that’s file? to a like, scenario to end kind where actually potential helpful. your if also restructuring there the regards earnings of change And if happens Signature, in have similar what then you math up with either risk? to And an that happens out-of-court having Orianna, file, what they

Taylor Pickett

typically of that timing. larger going is know I cash filing similar. unknowns restructuring that through with be it affect it’s We exiting an process your can months be in to very assets that at issue take the going flows to it biggest and/or the scenario. be out to think a six I worse. quick mean, from initiation are very, But the answers has how in-court-type long principally timing, does of get and would

Tayo Okusanya

Gotcha.

now. that to issues, is that’s tenant-related right very investors of my all call, clear that’s questions it’s just these helpful. more where do fully lot can end, from a investor to IR kind your on One what help potential through that –there focus we the a now would kind XXXX? you I Okay, in it of the so be redline thing are think, could of earnings tenant permanent risks walk be person helpful have really it’s in

Taylor Pickett

We agree.

Tayo Okusanya

me. That’s all for

Taylor Pickett

Thank you.

Operator

of next Daniel Capital Bernstein Please ahead. question comes Our One. go from

Daniel Bernstein

coverage lease is are the good I acquisitions still just And morning. you’re at there? if ask to want for new out appropriate, And adjusted that you given Hey, underwriting looking still about you’ve risks underwriting? the given environment. at your all, X.X of some when

Daniel Booth

still ago. up yes, that at questions I But think, came X.X. I question few we’re a Yes, mean,

there’s of these that taking are times we’re our of new have north. a existing coverage think that or lot of with investments, lot tenants an all – a existing X.X, I X.X

underwriting think I overall coverage And so, as But stands the this it’s policy. even X.X portfolio. additive still to conservative environment, in the

Daniel Bernstein

mind mean, XXXX, look I’m we you that or and back take because tenant But reason the bringing and I X.X, offline. like – appropriate now XXXX, Is that’s that some really it whether that’s X.X, not. you’re would in having up, you can and only asking you’re number issues.

you such does this something have as other far this you have to and to deal with? with bit I landlords, deal as Orianna little more or other Signature is, that’s other transitioning, with or question that as for cleaner you landlords have is have The creditors any that’s a

Taylor Pickett

legal – is the Orianna cleaner, entity, asset. much only has It’s Omega

Daniel Bernstein

assets? Have about Okay. transitioning you to I I transition to just do how I other assets? have to in of along want interest had operators but a six-month talking assume kind What the you from kind take you but this assets? started the you process over the interest know have, to far of you what operators have process, timeline, And terms those in those at you other understand point give of are

Daniel Booth

assets. conversations mention portfolios in talked haven’t any kind gauge portfolio specific our had to states specifically, no-name in about certain operators don’t had these of But We but have given be and with that conversations. levels of properties states. progressed. certain we And far We’ve try who pretty that’s we well in interested in lay interest we what would as facilities think as of know as land the as it of far

Daniel Bernstein

for maybe of I’ll a now Okay. hop talk little and bit offline. Thanks.

Taylor Pickett

Thanks, Dan.

Operator

go from question Stender ahead. Wells comes Please Fargo. next of Our Todd

Todd Stender

Hi, thanks. of a is you behind It through just just Do aggregate, some impairment? Can or rent it, there guess, in seems reduction that? go the we hear math, can the I take expected $XXX capping of million high. you the

Robert Stephenson

picture, exactly Yes, different different the lease, big Todd, completely that analysis but done. offline, operating there’s you versus a two through big call lease capital picture, walk I’ll are in

to is pretty and there in look going very in scenario. the cash come the asset lease do that future you value, which life of impairment cash scenario, In all expected are either debt flow this operating your First, straightforward. not, book nominal indicators is at you over of that’s the that that’s compare identical to

a treat you leasing side, mortgage. you’re at – expected capital discount it it back the the looking see, at On cash you flow like

in at financing that of direct the speak. So so you the the life the life the you discount the life lease, at flows the to mortgage, rate remaining of expected for look take case, back you initial cash and this mortgage, the –

– different so actually value, present does cash value it As then up, analysis, different. two it nominal comes again, versus it’s and

Todd Stender

rate rate has me, if I maybe think, that the that has just the at And that’s, – to discount changed has today, that dropped stock what seems but rate the all Okay. owned just just number you’ve discount numbers wondered headline guess, maybe? impacting that and so since the discount the appears I discount I property the high dropped

Robert Stephenson

lease. that straight again, discount is I build recall same the million about And for number it’s the capital rate. $XX of or, line up No, the accretion

Todd Stender

it. Got

And what think you. what part do Orianna rent underwritten two the that just part one. reminder, you was was assuming underwritten? is, that it’ll thank be level? Okay, rent coverage as new That’s a And a

Daniel Booth

in but X.X can’t was. in at believe we’ll that’s it to XXXX, I’m it range. I you exactly, been I in Back that tell looking was have I X.X what would the that it going believe that certain range, forward. be And

Todd Stender

rent you we of coverage that that because ranges gears, coverages of at for months. a are those? for look big then, of then $XXX assets dispose What sale XX kind kind I guess, the next may gave for and Okay. held just million, the switching number, you have do for for you And when rent

Taylor Pickett

mean, for then give indication again, to about order we’re sale $XXX not what all. averages and directionally an tiny our us. A identified. to the lot as at just would of trying And magnitude of hasn’t X.X we but it’s that are less the the number going of million, than Well, thinking held of I for discussed, coverages disposals. going we’re to drive been expect specifically be the But

Todd Stender

you. over session. conference would remarks. Thank Okay. back turn for concludes the Pickett any closing to That to I Taylor like our question-and-answer

Taylor Pickett

Thank call joining very today. for you much our

will management team follow-up any the questions, be have you available. If

Operator

The conference now concluded. you has attending today’s Thank presentation. for

may You now lines. disconnect your

Omega Healthcare Investors (OHI) 31 Oct 172017 Q3 Earnings call transcript