OHI - Earnings call transcript Q4 2019 | Omega Healthcare Investors, Inc.

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Operator

Good morning and welcome to the Omega Healthcare Q4 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Michele Reber. ahead. go Please

Michele Reber

statements this good Taylor and and me are made today Corporate historical are Thank statements and contemplated facts operators, be CFO, outlook portfolio or financial transitions morning. Bob CEO, policy, business regarding acquisitions, projections, and generally. our during forward-looking may Comments rent Insoft. Pickett; prospects payments, Officer, of Booth; our dividend call our portfolio restructurings, financial Stephenson; Omega's such that as condition or Development not you, Steven With conference COO, Chief dispositions Dan

which These events Please cause statements. which identifies forward-looking described report to statements and Securities involve or risks that press without factors those in our forward-looking specific Commission results and our materially. recent cause uncertainties limitation, differ Exchange Form with actual most results the may differ and on to XX-K, releases may from filings actual materially see including our

financial will non-GAAP During as measures we these well under the most FFO, call to of FFO, Generally today, some the refer principles comparable measures www.omegahealthcare.com Information and Reconciliations as as Accounting measures adjusted measure are such Financial press issued the FAD an of our of section and the EBITDA. in non-GAAP of in Accepted of website non-GAAP the under explanation our recently case available the at FFO and FFO usefulness adjusted release. to

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

over I will turn to Taylor. call the now

Taylor Pickett

the reimbursement our earnings call. morning earnings joining environment. Today will Michele. fourth our discuss current and and Good fourth conference for XXXX you results, guidance, quarter XXXX Thanks, I thank quarter

adjusted we $X.XX FFO and for per FFO distribution. share share declared of XX% ratio Payout fourth quarter dividend is is funds of for $X.XX XX% Our available a adjusted the quarter. per and

XXXX. commentary, further earnings planning payout ratio our with prior we in expect ratio improvement and dividend XXXX throughout payout and our call dividend Consistent strengthened

XXXX midpoint per year revised FFO XXXX share. share above per high the to full $X.XX to of and guidance Our per end our share $X.XX was the initial our $X adjusted of was $X.XX $X.XX of guidance of

Our to $X.XX is share. FFO XXXX $X.XX adjusted guidance per

anticipate also XXXX distribution XXXX available share FAD FAD. X% with higher share per XXXX in X% for increase funds to a per We meaningful than

On most The PDPM rehab from the revenue initial reimbursement reimbursement front, feedback expense to implementing equation operators neutral of new the have the operators has of been our has reported positive the savings. been and positive. side slightly October system Medicare

needed currently in At modify flow would this the time, much Medicaid as improvement we Texas refine MFAR. to and If have UPL cash PDPM. XX Utah mid-November, UPL two facility portion In states as Accountability and a level result taxes. Medicaid for would the have MFAR modest of funding federal upper finalized proposed expect programs and a Fiscal provider Rule and while Indiana, programs tax provider referred programs. limit payment of CMS commonly

proposed with the on analysis funds. and incremental Based of discussions our UPL would other and our eliminate has industry leaders tenants MFAR MFAR

are impact is early or and for finalized states be compliant in to Indiana programs. the years too finalized it tax and facilities the our the after that will Indiana under two MFAR Utah the all will the is effective estimate MFAR provider It most, three the taxes, finalized if after of other and to programs rule provider Texas. For potential able likely most UPL states. on for of ultimate rules become not years is become If

revenues at in any expect least expense by partially we As will reductions reductions. offset be

to I will now over turn the Bob. call

Robert Stephenson

good Thank and you, Taylor, morning.

XXXX. the quarter to $X.XX the share $X.XX share basis per for $XXX was quarter $XXX million or per of fourth diluted diluted Our NAREIT FFO on compared for or as a million

quarter the FFO in our adjusted in million as and in Our was release per adjusted several earnings reconciliation supplemental website. for $XXX items well found net $X.XX our our to as outlined income and as share FFO excludes our or

of Revenue result for during $XXX revenue the a quarter as made of was was lease quarter renovations the and fourth XXXX. fourth $X.X capital since to that million combination our incremental of well of a period. made primarily investments increase same The million $XXX approximately from billion versus of time the for over as completed XXXX facilities amendments new quarter

and of tenant, a OP by Omega termination of related in the to XXXX, partially January collected which The that income sale effective in and revenue revenue upon or throughout the XXXX cash facilities. transitions XXXX, security related new the deposits fourth lease certain And the the quarter offset to revenue. and One-time to cash sales unitholders standard on we accounting operators asset of by in lease Xst real was reduced resulted adopted of receipts repayments held lease ground timing and basis. due taxes finally increase related loan estate revenue to occurred recording

The quarter of $XXX revenue of approximately $XXX,XXX million to revenue only non-cash Daybreak. $X.X of million revenue, the $XX related includes million and for one-time

for X.XXX% the XXXX for G&A XXXX. the non-cash due cost we issued was financing excluding XXXX. a outstanding fourth $X.X over million deferred increase million senior In $X.X $XX.X million of fourth quarter October of quarter. resulting when million expense the quarter notes quarter borrowings September, Our was from the with of $XXX for Interest higher expense

forward balance sale In a the The annual connection borrowed acquisition the $XXX $XXX $XXX of in Encore sheet portfolio December agreement strong X.X proceeds the assumption majority Our acquisition. and debt of to shares stock underwritten generating into finance sell September, through continues repay million the a million financed we we agreement an On portfolio debt Encore X.XX%. million public of at used blended the to remaining The HUD the of were all-in of to with rate was settled of million. proceeds common of forward remains equity approximately equity net sale improve. offering. entered XX, to

related our no to builds within adjusted construction scheduled $X.X XX months. revenue debt next fixed of It's these December times. annualized associated approximately and funded note X.X X.X was debt was EBITDA the coverage charge XX operational fixed new our and process has to At our to XX% important become to was five times calculations and on net with billion in EBITDA ratio

to related include quarter X.X a revenue during quarter, forma completed When of builds contractual be pro and adjusting would asset full our quarter then new roughly for times. leverage revenue acquisitions the sold five the eliminating the in and to

and following. guidance XXXX assuming are modeling we For purposes, the

approximately completed cash rent. two in XXXX revenue months portfolio million was On recorded the only on result the Encore $XX.X we in October and of quarter the of or a acquisition as XXst fourth

HUD assumed approximately rate the also acquisition. in at blended debt of a million We result a of $XXX X.XX% as

on we the On accordance service the Effective rent credit posted in financed completed joint borrowings will of put UK in on on our XXth the supplemental our projects Avenue Second approximately December was joint our We venture, and venture with facility. be information $XX X, page assume schedule into new January with the related investment will million Maplewood XXXX our on seven annual project. to website. be paying construction

$XX to basis should of be between XXXX that continue portfolio portfolio the on generating million $X $X quarter We assume and beginning of per million $XX to assume million cash or million end a We recorded from the quarter. the from per by with quarterly the be revenue XXXX. will rent Daybreak approximately revenue non-cash

term per variability XX% $XX.X of and by $X.X compensation be our stock-based project credit XXst, million to The on revolving is million per as as approximately million rates. We is to approximately December debt was debt. driven of Non-cash our interest estimated G&A well million floating borrowings loan rate $XXX LIBOR expense quarter. At or $X.X expense our quarter. in primarily facilities

sold fourth occur. although in We guidance additional included disposition $XXX,XXX opportunities not recorded during revenue asset to of related may quarter, the asset

issuances. share Regarding

will In recent addition million be X.X assume with on $XX common to plan $XX in XX. forward issuances. a quarter stock our to reinvestment which million quarterly XXXX, common million shares through issuing of sale consistent per approximately December We purchase and the equity agreement, dividend settled we

equity potential we through our to our subject equity under an continue Lastly, stock conditions, to fund acquisitions. or to ATM equity sale based and on and market decide issue price agreement may additional delever to forward

generating of our stock and in and we a of ATM common million XXXX through approximately million combination In gross stock common sold reinvestment proceeds dividend shares issued X.X our or $XXX over purchase Omega plans.

debt Regarding overall our extend we debt to issuances decide subject issue current to debt. market to based our long-term additional curve treasury conditions, and and on the reduce cost of continue may to maturity debt schedule

to Dan. now call I turn over will the

Daniel Booth

morning, Good everyone. Bob. Thanks,

located had the operating These beds. As were an operators approximately United with XXst, spread third-party states XX of Omega within XX,XXX across XXXX of facilities XX operating XXX portfolio December facilities in Kingdom. and asset

XXXX stayed period XXth compared XX and and core EBITDARM operator at portfolio the the during third of ' our trailing coverage ended Trailing for XX-month times quarter X.XX to EBITDAR June respectively. of X.XX XX-month flat

Turning to portfolio matters.

Daybreak's and position calls operational previous to have on liquidity mentioned performance deteriorate. As continued

As Omega of a in the than fourth $X recognized result rent quarters in XXXX. less and both third million

such currently of consensual discussion Daybreak a and considerable orderly been the a for and As the transition Omega are have Omega. an potential that Daybreak concerning ongoing portion of leased facilities from

five operator of approximately an to million. in existing an close During sold and for with Omega has and transitioned to unrelated XXXX $X $X rent facilities one million third Omega December XXXX party annualized year-to-date facility of

transitions transitioning Daybreak. sales, majority either of existing over During third or the facilities. cooperation Omega the legal be the These and operator vast Daybreak's quarters approvals, of will regulatory documentation diligence, course course due anticipates Omega to next subject party several through the releases of

between to expect annual $XX efforts of rent equivalents. While to complete with or far Omega million transition up from these million that conclusion $XX continues in Omega end rent will upon

Omega states. facilities Turning million. consisted investments, of XX $XXX October which two consists to purchase XXXX Encore previously eight the of on portfolio of skilled announced on nursing closed and facilities XX transaction assisted-living located as across the facilities The new for XXst,

million two being Properties December Management. master Omega The a operator Healthpeak facilities to generate will in via three XX, annual previously venture escalators Omega XXXX operators. XX% from on acquisition to of closed leased The with joint with leases. interest $XX an Capital Cindat cash in X.X%. triple-net are announced ranging Subsequently facilities approximately rent existing its X.XX% initial on One

single borrower. investment portfolio two operators the total via XX separate third-party to master a development care across UK and leases loan approximately was The with equity Omega's leased $XX homes consists owned million. triple-net facility three of

investments ended made new the December nine billion capital in During $XXX XXst, including approximately $X.X million year expenditures. totaling Omega

dispositions. to Turning

facilities total proceeds During $XX divested quarter of the Omega fourth for million. XXXX XX of

divested year December strategically Omega total the For for of ended XX facilities XXst, a million. $XXX

as today, and combined and availability of has Omega capital future cash billion expenditures. investments to revolver of approximately $X.X Lastly, fund

now Steven. over the I to will turn call

Steven Insoft

including XXrd this our and on accrued to investment project, work City quarter, York care CIP project Street in Senior Senior scheduled of balance Living, ALF Maplewood to with In of of everyone rent Thanks, continue approximately high and line Omega billion on Dan, million $X.X and and fourth memory Second end quarter. the totaled rise cost is we Including New at at $XXX Housing to land the conjunction our joining The today. the expected at Manhattan. thanks Avenue end is for the sheet. portfolio open of our the on

as our Living Maplewood Gold Senior best-in-class relationship and the and Healthcare Homes in by Care with Anchored well their properties UK. as

publicly Our now assisted but portfolios covers living basis, represents comprises UK. larger standalone lease also not X.XX in healthcare at portfolio the housing memory overall assets housing one senior investment and of care senior only and independent amongst the the times, On REITs. the core obligations its living, listed a US XXX

as continue as by well to our as XX and newly Our coupling successfully ability the our on Maplewood in XX-unit including this commitment the tenants' predicated ALF portfolio operating our important highlighted to in-house related design grow Southport component of capabilities facilities with our to construction is expertise. Connecticut having pipeline opened

$XX.X million same program. and invested Through reinvestment our predominantly in in CapEx we is was investment related projects, portfolio remaining the to quarter $XX.X our million active construction reinvestment. the million ongoing of of new this the construction fourth related this to capability, $XX.X strategic investment

I call over will comments. final for the Taylor now to some turn

Taylor Pickett

Steven. concludes prepared our Thanks, This comments.

call up the open for We questions. will now

Operator

Instructions] [Operator

come Omotayo ahead. Mizuho. from Our go first Okusanya question will Please with

Omotayo Okusanya

have morning regulatory more questions gentlemen. I two the Hi. Good front. on

are I just front The about uptick. first flattish clients a seeing. course, your on bit little it's the modest one, surprised of the about appreciate comment of just PDPM. that I'm color the some to been you've And revenue a given what

under of RUGs some seems be PDPM to Just given versus and about coming out far so data reimbursements the that IV?

Taylor Pickett

Yes.

are So higher the as you bit cut November we which that a have days a because bit more moderated, little And Xst. was rates. October with few first little you was over saw October pickup. of all know expected patients

So the again consistent in from it's remember terms basis national in with what is we've the Xst our Medicare a I other operators have modest also that of a improvements increase that in would little with X.X% early call on on heard of that. make And in portfolio general. to you October revenue. the kicked say

anything So it's it's but up like a we saw not RUGs little IV. bit, at

Omotayo Okusanya

you. Got

And helpful. the MFAR. part then that's Okay, with second

industry Just to share proposal. curious towards proposal. period finally at Any if approval color influence commentary of the comments comments those kind made some potentially of whether of that And the about reacting of had the kind comment just the CMS could this on what how around by proposal? gets the sense how is of that everyone you were the to approved and timing being kind

Taylor Pickett

just early the observer - rule, after would were there it's of five is think, process the the the of I about In three. implementation process. Yes, whether be this couple are some one years versus there still and a in commentary

I more the been that time So think industry. some commentary has lead around there providing to

general the program is the likely think to ability that. very be form there I retain view in current taxes, difficult to its the provider is is while to going retain UPL

some it regs other it the comment about that call but refined. the reservation I detailed addresses very been strategies would even perceived is that have make well-written around current a I is, uses, wouldn't Beyond that only perceived.

pushing And think intent they're so CMS at along. level I there's the on it

obviously we'll this lot So of didn't active early, want I think it. year. There's to not can we we said becoming being it this think and in sit cover to it's a see here and road an That don't it ignore but reg about call.

Omotayo Okusanya

It be be but from reg date active the data three to could five an could year, this actual years effective years now. implementation

Taylor Pickett

Yes.

For most you're the XXXX. part, looking at

Operator

come ahead. The Siversky from question Berenberg. Conner with Please next will go

Connor Siversky

your PDPM. thank the acuity taking in higher you One coding gentlemen, my new patients? one Under has any from more operators morning, thing, on there regard and been to taking framework, Good question. for thing commentary on

Taylor Pickett

I doing know I the initial stick same patients. have and certainly it's coding. think, long on would know we to weren't take It more they've capturing a that been shift, time there think really coding of been sure higher was before. for patients been been that's taken I'm they have the the they've You that that was actively if any not they acuity about is you on are what taking

Connor Siversky

mean shift I State to on over so the on goal the in general. then New of how care of SNF you similar maybe states The next admissions? reducing district to rollout that And avoidable right. hospital subject Right, to by usage they're more have XX% value-based In more program. pertaining York five working that meaningful years. on and where could the a the developments relate in Are presence then you the seeing any

Taylor Pickett

Ohio seeing trend about different think not steps dual York, We're that baby broad-based and we've eligible. seen talking in the the states but I you're is play in New inevitable

expect Medicare to the and going it's frankly advantage evolve just it's And country. package. the have you across that's to way think I different to continue

prohibitive. So as from cost a a that whereas see setting our today be positive skilled we The our industry you'll these it be shifts perspective of will facility residents is out and of you a would if care our an cost home taking today. for example higher settings through go of nursing in think

Connor Siversky

that. And for from Thanks okay. one Right, then me. last

pricing estate seeing general PDPM. more to related be would for may outside the to what some your on assets. Just of pressures that willing target real any positive underwrite? some commentary environment in put you competitive there SNF Are you'd be Intuitively surrounding eyes some opportunities given

Taylor Pickett

I we the bit seeing it it. nothing wouldn't is little call of in the puts how a that aggressive of pricing business, we're outside There box that seen but more We've underwrite.

Operator

question Hughes next Raymond go The of comes ahead. Please from James. Jonathan

Jonathan Hughes

Hey, good morning.

of that is trying AFFO of guidance a scenario. just some number. not XQ I'm XXX But little that the modest quarter Just did us that looking operator get walk at get that run-rate. mention reflective you true or the conservative include cuts? to scenarios and, transitions to seems us the items understanding the Bob, of any better would end a AFFO downward 'XX it maybe rent through you low to non-Daybreak Does can timing guidance, in

Robert Stephenson

Yes. Well, if you Daybreak. on the said we look,

really - some we've annual in they and in booked grand all annually basis. $X occurred on only the million guidance that's said they of on an I of maintain the a that's of it's First know gave already quarter similar booked basis of year. XXX we're revenue that's cash fourth timing already been don't the full of Dan Daybreak

we variations which Also don't. rates, we're subject to interest in

our guidance. We additional also of guidance rates. the standpoint used As they're our that $XX proceeds ATM equity assume I earlier and LIBOR debt does because there those million like I they're assume plans $XX to a in and but you that we to to out down from dilutive. as clockwork combination said of our flat happen through And equity be million delever, help other will pay

Taylor Pickett

would a I through and significant reasonably add, Daybreak at typical comment But fees other in working you midpoint. actually good the you and one process. and that transition the think our G&A things Jonathan consulting as modeled know move have if with is we're The properties. legal We've get we can complicated to spot pretty

we're turn comment, case Daybreak be going two response. Daybreak and the that little not I we about a don't expecting other sideways If of comments its make through. We other we that terms the is to bit timeline that's see think some and that budget, incurred costs only in come

conservative of perspective our feel of those have an it's and we value being to continue issue is, significant that because with complicated. really timing comfortable and values, our properties around One range we're from it's

our was had I related that that transition of Daybreak earnings through everyone a assets it's that sale. saw pretty to And best we them know then an impairment clear the handful second run for as thing the

value we you requires accounting them think market what to to mark is. fair So down

fluid This look it's it's That a and as non-cash could potentially accounting. have we is situation impairments, work create sell that assets that said. again being at we'll possible. forward other We'll assets other

is The And work quarter so here for think we the we that we've there have we to about think point $X but got that cash there rate assets we to is of million they run per of and us. where about created the when is from think million group up that growth. out to end $X

Jonathan Hughes

That just mentioned, in the back and I given prior a mean, issues is you taken I to knew that charge that mean, impairments for helpful. facing very that guess Why I that challenges charge we going now, see Okay. why didn't we quarters? the was portfolio.

Taylor Pickett

It's at would this goes you the And just coming a you rules and make the accounting to really, remember master is back of it's decision. tell out it rules, accounting the time lease. a

out So the the a of to make at likely you carve lease the time a outcome assets sale. master certain is decision and

assets identify to values. for And you proceeds allocated have sale individually the those versus specific

you pull accounting You event. have the of him an pool, out

that rate if the entire the look from we that to pool at accounting at you we release charge. worth. re-lease mass If were pool be There will a perspective think it's no

the rules of decisions to So when accounting those and the decision about it's master of lease made. out really timing are the the goes assets of pulling

and for clear a have our want to that's about that's might It's we as impairment. that and little analysis that the that get assets it pulled we bit another constituents potentially assets other bringing reason make fluid another you to up. to and reason thank you this make So do for when portfolio out, that it's decisions

the Daybreak note of I'd assets. The the is only other vast thing majority

part had $X.X which of assets, you all and across of acquisition pool a Aviv mark-up assets. legacy a Our were that billion

purchase mark-up you're So some prior a is basically. away the accounting impairment that's of going seeing

Jonathan Hughes

quarter MFAR you have altered for then uncertainty outlook. I in-turn the now And your appreciate it. one and proposal the growth to underwriting trajectory? and the got sticking both impacted maybe but of one your external PDPM Okay, around with on last issues those just similar more. question this I has comments Taylor process asked regulatory impact of regulatory the this

Taylor Pickett

underwritten you UPL tell in the would any MFAR the equation. I on side deal. of so We Yes, never

doesn't deal in from underwriting it So change perspective, we' underwritten done. never our our because we've ever any

as very of increases look to tweaks terms today seeing take that what think the In should modest, that of modest revenue PDPM, any are we you that we're forward. be PDPM out might come into but have than based you on account

Jonathan Hughes

Okay.

you properties today? So at nothing drastically look impacting that's how the

Taylor Pickett

a No. a That's That's statement. good. fair

Operator

comes Joseph question next from ahead. The with Nick go Please Citi.

Nick Joseph

acquisitions. today Maybe following Obviously, could pipeline think Thanks. seeing realistically you're But you of achieve you volume in XXXX? up that. just in on guidance what any assume kind - and the do what

Taylor Pickett

that has flow there at deal is and slowdown little of been of a really say flow. usually in pipeline a the would the beginning in beginning So the didn't see of we year a XXXX bit of far transactions. I just our there so steady

have course small of coming take at look transactions of course those. few and operator, share size, lion's we It's through our a operators in our The they're seen we a And hard are to that scale. predict. of

those transactions the know You any up underwriting what end end the day, of ones that we deal. end being whether up actually of we are awarded at if actually and the

I over the the deals year. the point transactions are our with the a our this say course are do game operators So almost predict. dozen of few of will impossible we bigger that will to at normal

will to do We our continue our operators. with CapEx

I steady deals had size tell this area, the to historically pretty this had year, big to deals are and a change. it's early tell, expect But we we've success. too to that's point. couple some of don't bigger very unpredictable listen early So but that hope at We

Nick Joseph

housing? senior Thanks. then Prop appeal role of terms And nursing occurs. If on of understanding skilled impact of split or and helpful. XX just the That's What's your California. in also

Taylor Pickett

if done it nursing whether facilities. to applies skilled an it's We've analysis. So applies it unclear to,

event level value less perspective. from did a a facility $XXX,XXX estate assessment high tax We in properties California. taxes and what per California. little assume XX We that increase see just in than in would have real a in It does very result XXX,XXX

some perspective. you Just give to

It for the doesn't flows ability cash is, purposes, are any I impact think operators' our for there can residential be to income whether going it tax nursing come rent. to not skilled considered change again obviously. is And to or nursing it down properties. facilities skilled pay residential really considered So would facilities of

some is where it falls. debate about there there So

Operator

come The next Yulico Please from with question will Nick Scotiabank. ahead. go

Nick Yulico

just on first Hill you ask guys development at now where to the wanted Thanks. Carnegie are on right pre-leasing. I Hi.

Taylor Pickett

as true So and quarter, same I had last is said today. Nick,

We are the we'd they sort of quarter. to properties to of on at pre-leasing be our we reasonably we similar on would the a of where leases be target the the translate we the be time word range the looking isn't of opening, - would deposits, the because we XX% number open are suburban end we at would comfortable, have into use. It's the by XX%, pre-deposited at but time

Nick Yulico

right a right year, And mean, of about the we last Okay. deposits last talked end to by bit when at you think - mean, we I that I the I think, now about than now you're like I little this, had, are closer at higher XX% XX%?

Taylor Pickett

We're yet, number anticipate eight for not we're at remember - opening almost another weeks. not but we we're quite not that

opening you in putting as lot to translate likelihood significantly deposits the deposits more become higher. down, those the So of not closer get leases is only interested to the a people

Investor Day. the still market So discussed that with on on we we're the similar track

Nick Yulico

on guess UK there with Okay. updates have And any opportunities markets on the of US looking you you've even I in focus, development opportunities, then I potential or know additions in sort with the a Maplewood. coastal them? been additional to pipeline your terms of actively

Taylor Pickett

we that sort any got moving four So to Princeton, at middle we given pipeline in them closed on time. fourth now that with right is the looking site typical are on dirt of And New of opportunities we've six a we're Jersey quarter.

what not stopped they opportunity all the of been in looking at New Northeastern, not last actual the a with Obviously developer over still pipeline focused couple York, into has low-volume, transactions, seen operator. in consistent set, but the Their because markets we're States, them of really are of terms the Metro years high-quality volume. but opportunities translate we've United have historically

Nick Yulico

it's Daybreak. rent just Is to be annual that what's the Okay. it And in of then from range to is wanted back XXXX? in going Daybreak factored just actually clear guidance the for million guidance range. I what is X

Robert Stephenson

That's of of just under the It's that it. correct. timing slightly

Nick Yulico

it. Got

Okay.

is get the be I there you the get million that potential of that in back fourth if So end to XXXX. quarterly the that additive rent at after would guidance? million benefit your quarter X X to of you that to transition guess

Robert Stephenson

That's correct.

Nick Yulico

this sell Texas ahead or Indiana this it would be to exposure Okay, pass and to a meaning and thanks. And then market sense taking guess, I legislative your MFAR, ahead to wondering, and guess are And some of right difficult, if now still, environment difficult makes question, of just window where just those maybe that is still a are it you more the portfolio. reduce or is going you the I back of difficult I seems what if your XX% in you at you it up any is could sell happens? states does Indiana I'm transaction already guess have starting change is considering Texas, add if it last steps factor to reducing like could that be exposure of

Taylor Pickett

Yes.

never UPL at So, underwritten I our earlier mentioned any yes, of deals. we've

we're overly component or point of going it's away any is So think your from to about an at that cash of states investment perspective, elimination and rational not. those go I whether that. sales that's decide though to to have any buyer going in flow not look concerned the To

is think out don't that know because I sitting the a reg just now sell don't there. I to window So say there I will

the got more certain in point were aspects Texas of optimistic. where QIPP We to able we participate because In Daybreak were a it's fair program. they

huge there, decisions into to we per XXX,XXX that the from factor And or or see partner. by facility any that you'd are here as road going Daybreak that's numbers of transition to you'd from think potential XXX,XXX see facility, QIPP it's made about potential per not benefit buyer but any

Nick Yulico

million that's your Okay. it to $X after or not the - It's still that quarter still you that - helpful. passes? $X and number that's - going impacts disrupt MFAR don't think expectation not still and not if transition per But it's million of

Taylor Pickett

don't Texas, a I so likely remember XXXX and think event. that's really

have point, discussion probably it but range a So will it it's terms it. of you but impacts be I our a time, item, think fair in don't

Operator

question Stifel. Chad of The comes from next Vanacore

Chad Vanacore

I'm that of already. retread we've some Hey, good morning. to kind ground going covered

So of end Maplewood about What get of the to bridge you from the FFO end XQ you've the to thinking high you guidance, on. $X.XX low got gets coming the guidance.

former little Daybreak a got facilities. the from income bit You've of

considering So I what cost out we'd other side know on the side. should the income we things else you've - be should laid of what already?

Taylor Pickett

the yes, also you of The the projects mention those on guidance our of that is that out be page supplemental at seven. did we laid impacted. also construction could Daybreak part Well, timing

So guidance. a also drive a down the or earlier you could or that up in month in guidance closed a month later they

on piece so - an run So then the And G&A increased that's you a unknown. believe partly of as it is that's well, but we based what have - it Chad. we've will be, our rate

Chad Vanacore

And right. on All PDPM. just then

and on portfolio. kind you you say had minimal seeing far of providers, use what therapy you're concurrent group but impact So your of across

Taylor Pickett

bag. been has a mixed It

have very done to-date operators tend have of pretty that little have coverages. a and to We handful those interestingly operators good

implement to and but the hasn't waiting fully had at will running other - can and Dan group they you were we've And concurrent. working XX%, group and they're them prepared through and they're probably. have concurrent cost who how money and they could not So operators moved then

Chad Vanacore

right. All

So Sorry. on that would be? average what

Taylor Pickett

don't at enough tell have don't of throw pool data me concurrent. and We just I looks group out. end XX% some at it the the XX% you enough and to just number and that a data what together zero that you for between operators it's to have blend somewhere can tell whole to just high some We like.

Robert Stephenson

our coming quantifiable of some terms November, Most that's in October Chad. only Yes, a month of and discussions. from knowledge have information. we one all but really We results is the lot have - of

Chad Vanacore

are Have Fair any there? the Is right. seen market out still coming about the All pre-MFAR. market transaction just changes market It's anybody thinking about early. any How material enough. you into deceleration? of the dropping acceleration, post-PDPM,

Taylor Pickett

And Normally, of close sort see new as sort slowdown. at we really hit out a didn't pause then than the of the people we slowdown there's of transactions No before market. deals. their a see end other button the the of you sort year,

didn't this really at new we're that, wild of we seeing but said I not As transactions see point. influx some

Chad Vanacore

right. All

talk to soon. it for you me. that's guys I'll So

Operator

The Daniel with One next from is Bernstein Securities. Capital question

Dan Bernstein

little accommodate Good expect operators are to or some point request for patients in ahead bit. funding in and any seeing morning. future? at PDPM higher to acuity go the Back maybe increase a Do able CapEx you you

Taylor Pickett

to be we sure Not accommodate At would any this associated escalation CapEx seeing honest, operators requests that. not funding have how seen this but not be that. that our from with to point there of much point at we're

Dan Bernstein

Hill, to some the make I rents right paid Okay. being doors to in only And sure when just you then yes, that, the on want Carnegie get Inspir that start not of have rents paid rent? just guidance the three housekeeping. the are open? get quarters So

Taylor Pickett

XXXX. Xst January annual on an No. They're effective the $XX affected basis paying million

we So they or concerned AFFO report are far But as on revenue paying as revenues. is don't that.

So it's till FAD, report we open. revenue it's in don't

Dan Bernstein

Okay.

It in AFFO FFO So guidance. it's in guidance. FAD not the is technically and the

Taylor Pickett

correct. That's

Dan Bernstein

schedule. Okay. on the the equation, of And debt early possibility maturity mentioned then side the extending very you call, of the the in

any schedule might point maturity loans. mostly there Looking have there at coming guidance that's other million of terming out? in you any the - you some term for at so XXX of or over and due in those of the or and the X%. be chunk term about debt, Is out any considering Is that term XXXX some loans this

Taylor Pickett

in I debt will spread debt on the at we our market we in but and given 'XX debt prepared yield my and due No, some be we'll had the looking management on and accommodates and that we'll as said definitely liability that long-term comments the of facility that be curve 'XX see quarters. credit in well and as shorter-term at take the that loans. should to be do looking as We'll the far term if out couple we next that looking

Dan Bernstein

way one guidance not other? Okay, giving the or but that's actually

Taylor Pickett

not. is It

Dan Bernstein

geographies Okay. you in about would last previous certain I when property about disposition one the How to dispositions? to question you the your by But that? operator or disposition Indiana. terms bit Texas property, And exposure think then you Are me is Maybe talk about strategy. are risk are on a or going there it think, question side. that what whether by looking into operator a from decrease you taking want account actually or regulatory you're little of, on you

Taylor Pickett

of all it's Interestingly the above.

So we're constantly operators we looking evaluate at individual and properties. We'll think about geographies.

and based the up geography. lightened in State we We've give Illinois Arkansas Missouri. of exited that on is, you the So can best completely example I was now and

definition because Daybreak Texas And particularly lighten in will be just suburban our to perspective, of so Demographics are sold. Texas like we be we great, the Texas in slated urban, facilities By markets. are in the those to up process Texas. clear, some from

but all think, last of So felt that needed to from, the answer been be I we majority I vast two the done, above, the has work it's over that is the think years. done

Dan Bernstein

I all day. have. That's Okay. Good

Operator

with Fargo. Wells Next is go up Stender ahead. Please Todd

Todd Stender

Thanks. Bob to back to go accounting just the treatment.

better maybe Carnegie understand bit Just so a for I little Hill.

I guidance. get You your recognizing are don't do have you yet? you just you out the XX in cash Maybe number the payments, mind? guess, but could the Are receiving flush or you million in not if you it cash that just not

Robert Stephenson

Yes.

So two things.

So that and receiving cash we FAD XXX%. hits the are

the recording that or side on AFFO with as what's cap which basically the be a piece piece the approximately start far quarter. NAREIT As is you will they it associated occupancy, FFO that million quarter first interest the that of in through side until but $X take running don't

quarter a it's first getting anyway piece So where of just it it falls you're out. the in

So interest expense is $X by lower million. roughly

up for - XXX I'll and date it. quarter Starting just occupancy doing - the date make ease the just second of a of assuming

million will You'll XX revenue, the will the associated go the away. as but take won't, to be cap your you booked - but interest revenue with

line straight it and amount place. You straight goes that revenue the of amount because also date of exact have the to final top full determined that's line on based the tell spent into place I can't that. on you

Todd Stender

got it. Okay,

Okay.

quarterly then goes going this $X forward? away interest you million capitalized get So run rate million of $X about

Robert Stephenson

That's correct.

Todd Stender

not Okay. Middleburg they're and That's Carnegie cash flow? they Kent, as along start as under the come two when Ohio. but got Hill And to other other did as in in, then properties The then Florida far helpful. They well, QX you've construction.

Taylor Pickett

just For my in-service large slide plus estimated it modeling with but are slide it of I a because dollar I they model to or not amount. the do quarter again I've purposes when what minus tried, okay, date. used timing and

Operator

Lukas with Our is next from Green Street Advisors. question Hartwich

Lukas Hartwich

Hey, thinking reform on industry healthcare moving you're Presidential thoughts that the from odds of Election. guys. that? any potential the curious the impact just nursing housing how senior and impact about Lots could I'm pieces or of the in skilled industries

Taylor Pickett

Okay.

stability business. of I see current you'll administration just the think regulatory if seen, improvements on won't is the a the stays place, and which what see, continuation we've you around in front

There administration. in for was services. out and a of grants that proposal XX long-term under out and has block highlight our it's proposal come Medicaid that's around population the that care I'll carved

that all early So by Act, have our changes business hard further Affordable our it's If on Medicare Care as Care focus go my minimal. no us. definition have blue, like perspective we commentary and there's but it does from around is a Affordable proposal is and the would for the if impact business to just of change that expansion that the Act very impact doesn't or very, we that significant that predict, one

Lukas Hartwich

Can about the just of amount That's underlying loans? health income a then interest Thank of is payment more, talk And you. helpful. decent one you in kind. those

Taylor Pickett

be that mean, they the new the revenue base are I if there. revenue recording standards fine, of we out They're weren't, recommendation wouldn't

So there's issue around those. no

Lukas Hartwich

Great. That's Thank you. me. for it

Operator

a is Omotayo from question next with Okusanya Mizuho. The follow-up

Omotayo Okusanya

Good Hi. morning.

easily? So strapping Daybreak operator. and doing the from you there and a create follow-up potentially of challenges What just quick and again that process could the actually doing asset out selling to the around that relatively

Taylor Pickett

releases, a will It's mentioned not these have but almost to actually operator of new through the you're and you cooperation. sales, current you have it, but we if need the be system. operator's go to lot almost Any going court

need financial information. They the They personnel. to need we access So need to facility. access the

is They in do targeted cooperate the of manner. need smooth. way would it we And current host what to in need operator was if file this we different wanted could back There [indiscernible]. with down. to a that's when the that that a make cooperative order to things that to way That we the go whole

what we've that's So doing. been

Operator

from The a is next question follow-up Jonathan Raymond James. with Hughes also

Jonathan Hughes

again. thanks Hey,

at traditional of than strategy operators but a like Given greater more properties risky underwriting the PDPM I Encore portfolio selling thoughts the leaseback really positive clarity. know lower view lower your it since that's underwriting growth buying risk, changed return, and process, little uncertainty become there? MFAR. every but a hasn't has new Any bit regulatory less impacted on from your and to sale transactions

Taylor Pickett

I perspective. the a we've we around the type business this you it attractive you transactions about thing that from for of One makes think is it, really number makes point. make that tailwind years a our haven't Encore talked certainty the great behind relative and leaseback demographic throw seen it and sale

Jonathan Hughes

any leasebacks about of earlier? the in pipeline talked Okay. those sale Are there traditional

Robert Stephenson

Not point. this of No. any at significance

Operator

back conference Ladies turn remarks. and over like our I Taylor any the would question-and-answer to gentlemen, session. closing this concludes to for Pickett

Taylor Pickett

joining everyone us to for everybody, Thanks. morning. this Thanks

Matthew Have follow-up questions any great call. a have give Bob a or you If please day.

Operator

now sir. for you, you attending is thank conference The concluded. And Thank today's presentation.

disconnect. now may You

Omega Healthcare Investors (OHI) 6 Feb 202019 Q4 Earnings call transcript