Omega Healthcare Investors (OHI) 3 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Michele Reber	Senior Director of Asset Management
Taylor Pickett	Chief Executive Officer
Robert Stephenson	Chief Financial Officer
Daniel Booth	Chief Operating Officer
Megan Krull	Senior Vice President of Operations
Jonathan Hughes	Raymond James
John Pawlowski	Green Street Advisors, LLC
Michael Griffin	Citigroup Inc.
David Rodgers	Robert W. Baird & Co.
Joshua Dennerlein	Bank of America Merrill Lynch
Tayo Okusanya	Credit Suisse
Nicholas Yulico	Scotiabank
Vikram Malhotra	Mizuho Securities USA LLC
Steven Valiquette	Barclays Bank PLC
Daniel Bernstein	Capital One Securities, Inc.
Richard Anderson	SMBC Nikko Securities America, Inc.

Call transcript

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Operator

Good morning, and welcome to the Omega Health Investors' Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Michele Reber. Please go ahead.

Michele Reber

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

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

been to In over is independently call not information our verified addition, will based Omega. turn financial that certain the discuss operators by operator that on has we coverage and by data provided Taylor. now I

Taylor Pickett

and over our course Today, quarter will quarter pandemic. I COVID financial operator Michele. third and Thanks, for our the earnings XXXX discuss Good morning, results call. conference the you restructurings third of thank our joining results,

share. funds share is $X.XX $X.XX distribution Our third quarter are per available and for FFO adjusted per

paid FAD and $X.XX second as all quarterly per payout dividend share, is of quarter. The $X.XX adjusted XX% share, of the $X.XX We funds per FFO, dividend adjusted dividend same our and the payout exactly have share, FAD FFO ratios share. share. for per available are ratio per The dividend is while is XX% distribution. maintained per year-to-date Year-to-date our of

per that We expect exceed share dividend per will payout. our full-year our FAD share full-year

restructurings. Turning to operator

to and interest proceeds of cash continue retained most in our the successfully retained the long-term Early no expect of through of they flows. restructurings per assets Agemo we to portfolio rent recent value interest that anticipate is XX XXXX, gross our diminution XX quarterly or successful generally paying and restructuring resulting add $XXX million. in our in example Agemo the We on The in work work assets nearly to will Agemo restructuring the on facilities the sale rent of and operator generating $X.XX of and begin the balance FAD. share little

per due operators Unfortunately, operator add occupancy deferrals. ongoing restructuring $X.XX In include UK certain addition, dramatic to and These inflationary likely challenges. increases transitions with ongoing will asset costs, the reimbursement the and utility redeployment share sale expected in sales, we rent restructurings Agemo proceeds are we asset Medicaid and discussions that costs continue to will another quarterly expect FAD. to of to have including

our era Turning is results. COVID to XXth earnings our era This call. COVID

financial As we management, pathway the risk a balance to active a our have with pandemic potentially sheet result of currently asset limited exit and damage.

generally an operator and billion last and over in $X.XX, Our to stock upside XXXX assets, existing particularly facilities completely Two, assets, exiting per equivalent have quarter compares to acquiring taken we in the the Specific current future per billion operator harvested you amount Three, or to underperforming by protect within nearly value in $X.X per restructuring. the One, include: Agemo deployed $X.X metrics asset pre-COVID quarter neutral FAD FAD months master addition strengthen while billion FAD first the shareholder the leverage $X.XX facilities purchases, our sale of actions some construction, share and long-term to disposing from consider our relationship. loans, XX capital, of of favorably resulted have which share exiting complete when of $X.X in buybacks. dozens we leases new credit cases via we in share transitioned the of of extension net in seven, active turning hedges will Five, our QX through interest result the our narrowed months. sub operators. XXXX and from agreement issuance The to which rate today. with X.X% long-dated Four, XX stronger XX fixed the issues in unsecured revolving asset risks next rates $XXX of debt equity. operator interest rates management from operators minimizes all to short-term operator as for currency virtually stack, maturities. Six, a the management, balance we billion continue And credit is maturity sheet, platform significantly XXXX. XX in of turning common foreign to increased that is base COVID-related our operators $X.X to we near-term debt ongoing $X.X our grapple our the We combined with issuance billion believe operator and risk of million bonds. the XX to

lobbying balance solid will in active and growth with via have resilient to operators. sheet to franchise, Bob. to deploying a capital operator day-to-day dividend capital relatively along portfolio our operators the turn put to supporting continue solid best management, us continue to our return call communication shareholders and I now to includes our practice our rock our over with and efforts, our position industry which Fortunately,

Robert Stephenson

good and morning. Taylor, Thanks,

Turning the to our third quarter. for financials

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

The updated share in FFO to Our exclude in million $XXX release both certain as our primarily is FAD adjusting related of third of in million cash $X.X the calculations. quarter as from straight-line XXXX, million of and $X.XX non-recurring The million net revenue to with included revenue are of $XX.X third share, adjusted and million the one-time revenue prepared three of the of for XXXX per October Agemo. to reductions outlined quarter million items reconciliation associated FFO per on quarter the our and revenue, and the contractual revenue found write-off compared to and adjusted operators well and for our $XXX was quarter, was operational operators. before receivables and of third for financial in last earnings the decrease for Dan end was status FFO or approximately $XXX for result quarter earnings adjusted completed Agemo, will and operators. to and items updates income provide three In revenue revenue, these excluded points. primarily or as for $X.XX of recognition XXXX an in operators throughout related I and asset several transitioned the commentary recorded talking as call, million Revenue of FAD additional FAD both restructurings Guardian $XXX which included these the in quarter year-over-year FFO basis adjusted his XXXX. FAD I our our provided sales provide on to supplemental. want operator $XXX third

operator. interest. facilities October. remained yesterday's contractual both as $XXX mortgage million, continued FAD total mortgage for $XXX,XXX sold the was second of quarter second underpay purposes. sale, a first releases quarter earnings XX the FFO in of to the in FAD adjusted and and second was to press October. revenue contractual the In third purposes. as rent calls, conference no quarter, in release, and both placed we payments discussed for We mention this an made $X operator quarter FFO At to prior Of received was XX only so annualized of to FAD quarter. Agemo, interest rent an and Agemo the cash recorded operators and these basis for our our operator, sold moved release $XXX million operator million through in discussed We adjusted $X.X releases bringing the operators all press in FFO and earnings as from both and due received Agemo far rent million September recognize conference calls, the first in which X.X% of quarter its both and cash our only facilities assets rent the from in XX were Guardian second contractual pay not and continued stated facilities paid for representing million, adjusted the or not interest $X.X and either paid In collected and XX owed payments only QX the XX, QX Agemo rent October and cash QX, operator recorded contractual current annualized Also, two held First, and we've and the and will of interest extent both is X.X% assets we in Agemo on were regarding in representing rent to contractual did for revenue, in and quarter QX first

receivables held rent XXXX, this June's by representing contractual underpaid income. under of letter company this the rent our a the drew to we straight-line amount in operator $XX.X the from July, applied rent and contractual lease basis million last $XXX,XXX rent and rental the cash quarter due and an recognition cash proceeds wrote-off its quarter, rent. full credit to of this Finally, that and million unpaid operator continued of third XX, June of the second $X.X On credit we operator, XXXX, and revenue million quarter underpaid collateral We of letter interest the XXXX of a QX. inducements rent lease short-pay we through of approximately X.X% portion contractual pay $XXX,XXX. for against of mortgage the applied of and $X.X In collateral QX discussed annualized on its operator, place of in as agreement

the cash a October, In operator revenue, the the $XXX,XXX a operator of totaling to applied and the we quarter At lease. rent. $XXX,XXX on basis, collateral the portion $X.X XX, for applied $XXX,XXX cash in deposits security million recognized October FFO and in As rent fund purposes. underpaid as third FAD master is to collateral the October's paid and received in remains adjusted cash the we in rent

help debt. had Taylor, thanks to further start also highlighted we revolving $XXX improve in steps liquidity, of cash. pandemic million stack, outstanding and At credit borrowings our taken the of had ladder in maturity overall balance XX, our strong, cost by As $XX the our sheet facility since to under we we've September million remained capital protect and our the

have the the quarter. from completed we sales includes fourth today, million in which asset of in the As Agemo cash, $XXX proceeds received

into Our we when certainty an second at at our swaps the includes remaining swaps maturity calculations average becomes At recognize and will next XXXX. we to due XXXX discussed. adjusted and ratios. exhausted, expire [X coverage X/X%] at call fixed These annualize of and XXXX entered related revenue I to $XXX same our notes extent to million both debt rate $XXX It's collateral quarter. cost EBITDA and interest million a The swap collateral XXXX, similar In $X.X debt was our EBITDA Dan. debt first that net now funded our X.XXXX%. significant rate liquidity XX-year of FFO, and with the impact to $XXX over August is our in bonds. million decrease non-payments And in of of To provide liquidity our the refinance X.Xx. FFO important October EBITDA our as to XX. will of rates adjusted the operator September as ability us valued apply billion was are swaps turn XX% XX, fixed previously note in these to was X.Xx, ratio FAD, NAREIT in of charge

Daniel Booth

everyone. morning, good and Bob, Thanks,

and EBITDAR X.XXx, ended and of XX, core coverage an United spread within XX, operating asset decreased XXX X.Xx, trailing as period had XX, in to of portfolio EBITDARM XXXX, the facilities our states March operating versus across portfolio XXXX, operator respectively, and facilities XX operators, respectively, approximately X.XXx for These XX-month XX the and September XXXX. As were X.XXx XX-month Trailing with third-party June Omega XX,XXX of beds. located Kingdom. for

first would first recorded quarter quarter for X.XXx any second to stimulus XXXX federal approximately million to second as funds. June This in without and million have was quarter. X.XXx quarter XX, coverage our our XXXX and the the funds of stimulus; stimulus with for portfolio X.XXx, excluding XX-month federal decreased the funds. compares XXXX, the operators for EBITDARM and to core X.XXx and including standalone and federal favorably approximately for the X.Xx, trended ended of compared of stimulus excluding EBITDAR the X.XXx, stand-alone $XX federal $XX as operator reporting Trailing has operators. quarter overall of low core federal in $XX portfolio Occupancy in during of when the steadily XX% of XX.X% compared mid-October the cumulatively coverage from million to our a During from as X.XXx million up EBITDAR first X.XXx January XXXX based during recorded our of respectively preliminary benefit respectively. to in stimulus upon quarter $XX funds, respectively and

Turning senior the investment independent comprises assisted January pure-play and as which results, housing housing the of XXXX. at as to its quarter XXX X.XXx occupancy U.S. first assets end of Today, memory end versus basis senior of living, EBITDAR Based this XX% our in lease and United has the second had our mid-October living in at upon on the compared for Kingdom. portfolio to the portfolio XX.X% of This recovered increased a preliminary coverage quarter, overall the to portfolio. XXXX to trailing covered XX-month X.XXx. care of

to Turning matters, Agemo. portfolio

As discussions been previously in Agemo for some we with have reported, ongoing time. quite

unrelated result, million parties. of and quarter Tennessee approximately to anticipated restated be portfolio Other additional from a XX with rent the a sales Maryland sold a beginning operators. second a transactions annual facilities of subsequently of involved and the Agemo of in in interest the in formerly $XXX weeks. to The Agemo initial facilities separate two million third series third in two As Kentucky million Georgia, annual is in facilities proceeds in that of It quarter, with beds. in consist XX facilities total $X.X gross in Florida remaining The divested $XX the facilities facilities and of of one XX XX totaled coming in leased in will operating and the Florida, during X,XXX Omega fourth would approximately quarter facility and XXXX.

has discussions X.X% total the March, approximately this contractual this sales the to since such, operator, rent of a in began an security Omega to of in of rent as and shortfall. a Omega experience million mentioned of the Accordingly, amount of Omega's operator operator future failed parties. previously the in existing point, approximately liquidity pay issues. full As payments, to discussions. only rent quarter XXXX, may another portion with an and partial Omega the this second rent rent first to offset as representing began this utilized causing of facilities as allocated similar and/or utilization has Omega partial during rent deposit deferrals, asset third include resulted too representing the which re-leases approximately a million, Subsequently, re-leases to potential is discuss sales those currently outcome predict It begin At facilities. in quarter third-party the Omega it XXXX, which million three recognizing $X.X with total these XXXX, payments early initial Through monthly unrelated rent an rent first making released of an is security to of Omega of operator, October $X shortfalls. re-leases annual with occur to for operating To of October deposit security XXXX. begun thus the rent of operator that majority anticipated materially offset is facilities. $X.X that have in of sales previously end, meantime, revenue of the XXX to and/or half Omega utilizing for to existing the will XXXX, unrelated throughout of same certain brand future full is beds quarter. deposit combined In Omega in and/or to existing X.X% this

yield XX% a XXXX, to term. bears $XX in a XX purchase for Omega of operator a a has the million to cash investment The facilities September closed loan of five-year X, and mezz new Turning loan Texas. On mezz on new investments.

expenditures new and investments $XX investments operator closed cash purchase XXXX, into XX, yield as lease escalators. four September for homes Omega's million. XX, September initial totaled totaled Omega's new entered XXXX, with with expenditures of with a $XXX Kingdom. on quarter capital homes leaseback Additionally, United the X% Concurrently the transaction with $XX Omega for on million a Omega the and the care million. capital for care in new a X.X% master an Year-to-date, acquisition, of

Turning to dispositions.

the divested fourth total proceeds that Subsequently, for in quarter Megan. These mentioned million. the million. include facilities XXXX, I four XX third for the quarter for earlier. Agemo $XXX will sold additional facilities fourth has call net numbers to Omega million. proceeds XX to-date, inclusive Omega turn Year-to-date, quarter, the facilities XX During of now $XXX I of net the sold Omega facilities of sales sales over of an $XX approximately

Megan Krull

everyone. Thanks, Dan, morning, and good

from be the to of continue COVID appears a diligent operators While worst about to managing clinical facilities, within them. COVID perspective behind be

exacerbated to by to also Based self-imposed an agency said, nursing of slow for an ACA pace. additional continue which faring to living to at occupancy take compared recover pandemic the that homes recovered with now XX% perspective from July, admission operators altogether. quarter better reported loss of jobs That somewhat in a attempt XX% recovered core the continues their usage hindered of are the favorably XX%. down bans However, recovery assisted facilities on to Occupancy shortages, of XXXX, have with by at report Occupancy workforce last for eradicate their X% levels pressures of an X.X%. as total compares due long-term XX.X% be February, XXXX toll. to and continues staffing facilities extremely still to a XX%, by within care, pre-COVID

nursing Expenses pre-COVID staffing modestly. and items. to very staffing as momentum However, months XXXX. hearing through there it added with month we continue staffing-related also XXXX have home in from slight operators an from many X,XXX started Anecdotally, from other started in July, particular elevated positive of average March, be per to easing to jobs levels the several last relates that is be

expense basis agency per a quarter. XXXX patient than on our a core per at day for it portfolio $X second in was There XXXX. quarter patient be quarter first slightly to Xx second versus elevated was While for more of continues day PPD what in decrease

we to slow pandemic. the movement very the is similar positive FMAP to what saw in distribution this promising, during While homes the fundamentals nursing with

have keeping As a certainly are with inflation, rates and there relates setting from Medicaid the have-nots state to perspective. it pace

last saw help give staffing inflationary many As increases states quarter, defray to mentioned quite costs. we substantial

cuts are those However, in not that be we way we in to either didn't even make kept Where inflation. to the give meaningful portfolio keep their states also seeing the not or are least and/or most reimbursement. tends FMAP other up or strain states with either at rates setting pace funds haven't in seeing any

of and For state of late strain keeping recently. we the Florida quarter state on very will with X.X% the mentioned certain instance, limited rate state you some of portfolios. having increase, somewhat FMAP only a our pace were the a put released That facilities a from last inflation. sale note in Florida is is XXXX, which funds said, in

costs now federal support even such will to help seeing, will open encouraged the with rate very While in is impose the not the a some quite this hope if funding mechanisms time. the slow still government recovery extremely set call that the industry lag mandates. we basis, I an to we up entrenched increased it are costly for cautiously only will will is can long questions. a in positive deeply pandemic fit states, and albeit for that on the evident We are by pace, of momentum see and without be mandates phase that of commensurate

Operator

Instructions] question you. now with question-and-answer Raymond begin and will the James. Hughes first comes we Jonathan gentlemen, session. from Thank [Operator Our Ladies

Jonathan Hughes

was about UK would I talk the made to this you've you able the morning. investments year. good Hey, hoping be in

care increased quarter that yield think throughout as of quarter, homes in on past lease the this those meaningfully I portfolio have was were year. same the interest the first obviously, but the acquired X% rates

costs in capital? So impact those pricing are or of you starting any movement from to yields see upward on acquisition higher any UK

Taylor Pickett

Yes.

and – a several actually the second the both over first in several X% quarters quarter that deals did quarter previously, cut traditional the of before. The of years was the we our lot deals right, the were the were So that UK. last course in

So hold to we a that continue forward, quote [held] But pipeline yield, to there forward, will go deal those yields. our X%. in are go the our transactions, where with on as we we going up going or yields original but really unless from two

Jonathan Hughes

private cash can think – I Okay. Bob you balance to you quickly said, acquirer the and today cash $XXX that is million. And Agemo realize balance really longer continues, of the today then could a be in here evidenced market or maybe I States properties? this said SNFs competitive offense uncertainty for swing How back net change. period sale, the by is but of the

Robert Stephenson

has said, cetera. last have are our – bridge-to-HUD, transactions different change. But of the of a our using rates capital et so. we lot debt share way pipeline a interest movement probably fund year or I bank and the cost that We acquirers our other Obviously, them you in well, deals the towards same still been UK or and today. most very, pretty is seeing significantly. starters, of And our quarters a else last combination is as are that Yes. we're do up much of mean, for than expect competitive. or over gone We're the everybody very to more the looking The the lion's several at in U.S. actually bit little

change think I has not So the materially of time. again, once changed. course over But will the pipeline that

it's in the there's now, same. So an future, but right pick expectation up will the that

Jonathan Hughes

coverage then saw Xx my Thanks. from forward? it bit going bucket that the sub expected talk talked a coverage Xx And And about in last on about one tick EBITDAR bucket coverage quarter. coverage, an trajectory Can saw down I you on sub did you Okay. increase. last just how the little that

Taylor Pickett

QX coverage occupancy. along pretty and go with trailing one But go is you we little about Jonathan, down coverage up bit saw interesting QX, the a interesting quarter-to-quarter of little that XX saw a from things is that the Yes. talk to it always we months bit.

think a trend. that's I So good

the is states, rates a in you to Megan's being and thing example, is new October. valid. liquidity We'll still of other tight. see coverage. The mind coming through said, a is of in Florida that impact are have comments XXX% the kicking number great That keep

have operators. we think feel about a restrike one to with cover just – some not pretty number. But rent scenarios We more below we about where particularly to When good ground we it's the math need a cash I level of there future to where restructuring a dilute meaningful flows are do in of you some we've think restructuring, shown in way. different avenues lot that don't your pathways

So quarter-to-quarter. little one and positive identify bit we think operators problems there. when of a the see in of group don't about momentum that think And we we bucket it, I that's think below long-term about

Jonathan Hughes

the All time. right. Appreciate

Taylor Pickett

you. Thank

Operator

Thank you.

Green Your with next Street. from Pawlowski comes question John

John Pawlowski

for months, demand-related in margin UK? Good Could type given – of seeing just seen degradation in morning. the a you what give sense the have environment? the the us Thanks the softness shaky any And the you question. UK, recent are in then operators taking macro

Daniel Booth

of in is the I'll haven't which question UK. first results of first, diminution do seen So the we lot a

will results are We've We and them you're operator's that expecting talking much hit of I fourfold, increased but fourfold. we generally is a question. any some big diminution expense, of seen the as that increase about all significantly. rates operators. Taylor it Obviously, now. be relates, provisions being to as that component something real mentioned, in But was being not said, date, That recovery all material in from heard haven't there's things the catch inflation as could quicker starting of through equal, Utilities occupancy an utility when are it didn't second the could to the by as run UK. sorry, I'm our is UK.

John Pawlowski

Yes.

Sorry multipart the for question.

I issue, softening know an demand in actually been Just Has the terms from but any are there of quarters door. occupancy? just coming recent – in expenses in

Daniel Booth

not. there's No,

John Pawlowski

of Taylor, And percent comments on Okay. one. your back to operators below then the

well in is a a there's rent the a point there's XX-month substantial of just old while. one for below lot trailing taken You're been news on figures, amount but of

terms a restructuring. starting what of you sense – Have up types and could this give for rent you're deferrals type other to us cohort conversations So about to starting of people think conversations in of with just or ask picked having any operators? of

Taylor Pickett

Yes.

we've lease think both to more of transitions, enhancing it's deferrals, about – I sales. incremental transitions assets new or it's those I think to moving operators, little so around And sales. scenarios, around conversation had but you're in and some a extent, rent talking bit

expectation in that's so there. the other frankly, the bigger than what's the for Bob vast Dan about. my bulk to continue of the perspective that from And and couple majority And talked them pay of operators

John Pawlowski

for Thanks the time. Okay.

Operator

Thank you. Citi. comes The with from Michael Griffin question next

Michael Griffin

Any Can the Coast was be additional Did we Agemo go and Guardian rate us Maybe back the would was Thanks. that? of commentary to the can cap the over Great. changed Gulf on of to of great. anything sales? there what transaction. it marketing similar the process? you give sense any sort kind How marketed? was And pool buyer

Daniel Booth

and the third-party It number some part? assets. hire broker interested similar I'm a that to So sorry, out. how on laid transaction well There to bids. say. the received, was, in of an second was what It was sense, did Agemo parties we Gulf a number was Coast would of the I outside active

Michael Griffin

you And kind when pricing then just of the were in coming up first of deal terms expectations marketing versus in? when ended like it

Daniel Booth

that even potentially I'd that met expectations exceeded price say transaction. in we and

Michael Griffin

on then have cap have sense basis, And translated a what a – it to? rate of you do might

Taylor Pickett

question. fair a it's Well,

this a the look historical to low. cash stages. returning of at I'd forma If buyers Most the pre-pandemic And say flows, very as cap would it's about underwriting rates look consistent levels you thinking from with be extremely They're flows the they're pro perspective. aggressive. cap historical on at pre-pandemic cash rates

Michael Griffin

and you Do have you permanent? think then permanent. thoughts the that PHE, know levels have expectation And that. on these I it's to Texas, here that color expire but the states any there's exposure in add-ons, Appreciate you. Kentucky on Got it potential of be made hadn't Carolina your stay January. reimbursement I extension in think North expected like they additional I'd curious will

Megan Krull

will that there's pushed public know Well, will with get in on going It emergency, terms on the COVID. sort of depend no of health whether way to what's out.

right FMAP, two June believe an they to instance, states, little in and PPD mean either that going The They Texas. increase extended to better. out those terms try be positive. FMAP push to in pushing Carolina, the bit also operators We're operators but I budget. $XX got I do think May. rate then terms proposal through the rate. inflation determination setting we in well. they're don't. that made XX, every And in big you're a do just they or around in Texas, rate we know increase. In it's in there's some more on a to and large has try correct. a setting for XXXX. That through they're of permanent have of I XXXX, the news It's that rather tie least Kentucky it, confirm XXXX actually for was when governor's to done I increase. of coming pretty April watch haven't to XXXX. get the At have a I large actually, rate But Texas. particular that That hopeful that believe, setting, go includes that they will or that something now setting much rate They that North increase and the XXXX, will as with happen hard optimistic of it by We're years cautiously in

we don't have Kentucky really concerns the so And front. on

Michael Griffin

it the time. me. Thanks That's for Okay. for

Taylor Pickett

you. Thank

Operator

Rodgers next Baird. you. comes with Dave The from question Thank

David Rodgers

morning. Yes, good

sell million not and the retenant them? today, kind that or guys is question on much of the fully sell And you of accelerate maybe Does have tenants location, those you'll just broader comments? X.X% preference On so paying a year. based number based do so into that's more this $XXX or XXXX on your then or you whether XXXX

Daniel Booth

Based upon the tenants, we geography more see of think sales. I re-leases than that those would

think I going up. don't So number that is

David Rodgers

challenges, additional next house? the jobs in of maybe, the Thank of of in I of give recovery have the a or level, we Okay. the guess, talked you. for more one as other back occupancy added kind you. continuing And from sense nursing look you for or about there a two you us operator The at kind that grow the side maybe of of are nursing. into skilled one quarter then versus to And been component what's Megan, added operators? been Can the

Megan Krull

was level that, getting don't ACA little I is that It report a side are do detail. on that was Unfortunately, nursing about better. But from talking from. think of I an our operators have bit what the

a little So we getting in hoping quarters, bit in having Folks over few start general. little seeing the coming that. things more we're nurses bit are international just and seeing improve a next traction

David Rodgers

Great. right. you. All Thank

Operator

next Thank from with you. Dennerlein The Joshua Merrill comes question Lynch.

Joshua Dennerlein

you are everyone. morning, operator Could remind it correct Please coverage. if top like Good me us Yes. – slip belowXx operator I'm just top your this but looks wrong, the of operator the in some where positive those has geographic kind states through negatives of and funding states, the walked on ahead? like kind and but exposure the year what of in the

Daniel Booth

I you one know, as with really first X. on state the been the recently Florida, say its didn't did and along for this in they is pass Florida, probably our which go help time biggest in the of Medicaid that, really particular challenging increase has X% during that which states they will been effective October years So of in pandemic. a Texas, has exposure operator, in rates

the won't that that Florida. than through but a East is see part fourth are operator particular better Coast, and those quarter, big faring until Basically, running latter So help year. of we this much that to the

Joshua Dennerlein

them of increase kind will that a Xx Okay. while? coverage going stable that Xx for above at With of to see that we're Medicare back or kind rate, get

Daniel Booth

a a they're lot moves We than with efforts be forecast there's in. the much it cetera. in get closer, conjunction that they Xx increase reducing Xx. But parts, other to it's that hard occupancy moving So so will and et that to above of that undertaking, rate hope trying certainly of agencies, obviously Medicaid it's including to

Joshua Dennerlein

costs then your And UK are Okay. you impacting mentioned power over operators there.

people help there out of or there's support over going operators. kind if it's on just any if curious Just government the to kind of that's

Daniel Booth

it So by not will. help assist. we seen of we believe yet, now, do it hasn't impacted And them government right as any that the but have to intervention

Joshua Dennerlein

the Thank Appreciate Okay. All right. color. you.

Operator

you. Thank

comes Credit Okusanya question Tayo Suisse. from next with Your

Tayo Okusanya

chances talk everyone. kind your some that from operators now. – little could manage just lobby challenges Good that a about happening? kind morning, they're any the just bit you Yes. of with with And of through perspective Hi. helping managing group help having what's lobby the group Could of

initiatives trying XXXX. kind even is if called there if extended maybe January maybe trying curious to in federal I'm of around of any Specifically, help, to get more certain PHE benefits get federal

point, with now group challenges of are lot that what doing are right help curious a operators getting. given just still lobby this the is all the of facing at Just even they kind

Megan Krull

necessarily So the their dried they think those FMAP trying concentrating of pretty setting. and money are to into spending particularly who those have on and trying get much not rate time federal the because get up point. on at states the some efforts I ACA states But this is as increases that's much to

efforts their sure about they've really they're with of come of been it it's with to the some along that's where in at those So that it when talking any making government, Biden federal and pay through, through that been concentrating concentrating terms has come mandates mandates. money mandates looking for on, that these

that's their efforts concentrating where right of they're sort So now.

Tayo Okusanya

the there any end of at that like XX flow may Got I over a debt up six on from this that also point? free mean about additional next months right. maturities with tenants something thinking meaningful have then may should you. tenant apart to amount side, be the or And we the All weak coming challenges just due that cash that are

Daniel Booth

or big coming of than sheet. they're Tayo, every are those lion's any debt debt renewed, But one no, working credit, share be other capital lines not and automatically years. short-term. really just on come their which generally usually up that They're than fairly third-party balance have the there up operators of operators would two with don't our other saddled our components

Tayo Okusanya

Great. Thank you.

Operator

you. Thank

with question next Nick from Your Yulico Scotiabank. comes

Nicholas Yulico

Hi. Good morning, everyone.

at to looking want sure make I So this I'm correctly.

their rent, earnings that where coverage the portfolio, adds beyond X small one, the various like quarter and release where current operator looks you in there's above referencing you're of the on operators. X.X% is, give out I that you're this new calling that not which are it on the are of to below the sup So up Page specific tenants ones on page that think,

a that right So you putting have I and the also is whole rent maybe rent? for portfolio, just on then want aside on number understand to be Agemo, now are clear or portfolio current if not operators the just what – percent of in

Robert Stephenson

Bob Hey, here. Nick. It's

that. So at looking you're right

get I'll up. we them back Agemo out So put until

of on of them our see cash back being and they Agemo the grow we the And you quarter. need that listed full right a roughly so that have the X portion, there, during still XX% all. just at Of amount a largest up, they're kind all to operators Page operators other basis. So – aren't current, they six not paid the pay third on five

is So who's on that's go have that next X.X%, important. paying. then had the And talked through cash Genesis there Agemo, X.X% big already And basis, Dan's XX% of if the about. are you you and the it, one you a the Guardian,

helps. I they represent five that XX% you take the know operators, So don't of color if those XX%. XX% to

Nicholas Yulico

I X that on not that nothing I Yes, that's operators, think – are Page we mean on are wouldn't guess any clear there other there's be be as just helpful. rent? to this about then, current And

Robert Stephenson

like I one, said, all not it's is there Agemo. only The

Nicholas Yulico

which Got you okay, already highlighted. it. Agemo,

helpful. Thanks. Okay. That's

going know year coming earlier expect – So portion get Agemo that rent the the assets. some other back of to that question next I had you retained talked on was about I how I – rent, you're you and guess

redeployment the proceeds I calculated, the nine-month dividend. existing if as about of benefit kind talked you getting there. at covering guess, FAD, you guys and some just look mean, it's You But of I the barely

it's flow cash dividend. cash the covering from flow the at look You not ops on statement, the

timing cash just those there incremental guess forward, There's the it's a sort have sounds So with used et of further I of you're getting already these of some along flow proceeds. understand pressure redeployment I'm on because tenants trying credit, from might like sort some you letters between of as there's to of on bit going little cetera. – two. having element delta it

to income be next same year So any time, heading income I'm next with just year if thinking Board the that your that of of into higher-than-normal understand, you would know to trying if And considered ratio. guess, versus any, perhaps the how dividend just clear, let's standpoint at about guess, sort I a from pressure the dividend? there's taxable issues down that taxable be say, I year, this payout this would, Thanks. there's also is then

Taylor Pickett

about just perspective, provided forward, get and you run going of Agemo our things, our sale redeployment is around the $X.XX FAD. I to of we that rate are $X.XX which the from reason Agemo get think alone, Nick, you And that's of these fixing color some proceeds Yes. FAD fixed. Agemo the look other without to of

fall had we perspective, So beyond on I or think And it's – side, issues. going and think Board's from have these have look They'll let's out the tax additional resolve we're in these about extent. pretty to one still where gains, the then as bunch we're from two quarters likely perspective. some dividend to sales sales likely will XXXX. We gains. A our of really have tax some state steady the that shelters

lots levers So around frankly, But we'll necessarily pull plan be we upward be can Not not that. income, thinking manage that. on we about dividend, the pressure we have of taxable but the tax downward. to have

Nicholas Yulico

Okay. Appreciate. That’s helpful. Thanks, Taylor.

Operator

Thank you.

Stifel. comes question from [indiscernible] next Your with

Unidentified Analyst

Good morning, everyone. Hey.

So of get just year idea to the next side. SNF trying an on

some on you think a some we're healthy I getting that in rates increase Medicare. and X.X% mentioned states

So is some growth normalization of the rate of XX%. blended XXX I points see skill then the mix. occupancy around you probably And basis another guess add and

but I'm deal. X%, at It X% you will maybe trend is suggest over running to not in generalizing improve great slightly coverage. but spot a year, probably is coverage positive does revenue mentioned this, above modestly where today. think probably the labor the next that I

bottom if are if improve think under already? Xx current, don't extent the many more will look at coverage you to we XX is that of do SNF months, of have leases and curious those sort, today those the some you I'm need still larger line, operators' not particularly over addressed when how restructuring So look at they that we lease meaningfully the the next

Taylor Pickett

see going and reacting seems fallen our our from When that we're in Xx about, and or incredibly we going all them, perspective, inflation we about an But perspective, to there's think it's states as continue at to from to mentioned, will cautious. through pathway And parts. we're positively predictable. And continue engaged about bucket, fine, them these environment to operator moving a about that's we operators rate the assets one talked an got slow that's credit issue another biggest daily that you'd what and and into above I say coverages, you, the frankly, going you've things improve get XX puzzle. look things. months, lots it's on that on all can talk I next those complex whole identified tell party to time an You've long see based We we discussions improving to but basis. relatively things list, extremely I our extremely re-lease today this an area, of we're for Dan and think to if certain difficult, toggles but actually sell are highlight have it to or all there nearly a would take be we occupancy, pull. to or that's with were we'll a that resolve there's meaningful There's to the levers going I've nothing where that's

in parts. pretty be, many just of outcome predicting too coverages terms would So those we moving our good feel about what

Unidentified Analyst

Got you. Yes.

the Is it I might if not how we any point, a bandwidth similar the ramp larger can clarify now more are just maybe larger to to some about. that now say – excess more heard to transition transition those take operators maybe doing we you on just you portfolio challenging you it think transitioning, to in are backup revenue think a rent to levels, is I the you expect up might do quickly think there So follow-up over but we that that that longer short-term need portfolio? takes shortfall if operations? to or thinking of of have what SNF

Taylor Pickett

three an gaps moving operator I that not or you four always mean just you assets have in currently on think takes have to limited. that's it where and regulatory going can I be a you it's months. time front, paying

we're talking less that not of transitions deterrent more a of take things that or be in creates type about alone them. the terms would talking the portfolios We're bite of are speed. type that that size So But of operators for size about of gaps.

Unidentified Analyst

control Okay. consent the have change last me. And one in from On sale? any lease current a language that you there’s of do Brookdale, require Omega's if

Taylor Pickett

– I'm answer. looking you think and I provide go to tell a that around. you do, going we to doubt look I all We're don't but happy we take we're

Daniel Booth

be would That in not normal lease a with the [Pelico].

Unidentified Analyst

you. Okay. Thank helpful. That's

Operator

Thank you.

with Your comes Malhotra Vikram from next Mizuho. question

Vikram Malhotra

question. And missed were there? today additional What on us expect just debt this, Maybe did. do the deep can first sell asset sort on looking you pricing taking for walk in you Thanks And bed? assets? you buyers it to you the may markets? what's but sales just of have are a intact, given that the like going through how I $XXX market was around if is remain to $XXX,

Daniel Booth

the about but specifically, the lion's So Florida. as $XXX,XXX bed. state three in it's a facilities blend it it's states, of those the remember, relates bit because a sale share That's to of little a were Agemo of

So I don't think those numbers will hold.

and same the sure was We those market ago. I'm would to rates. the were to set seen months would think rates expect that up go with if to to of I out go see fact back seen type them bed Everybody down. I interest not original our we today we that significantly. were that you've happy climb the that. price has held group buyer months

Vikram Malhotra

Got it.

could mentioned referenced that swapped that flesh I to And just I make that being next ratios then year. correctly, liquidity you out was us? last And something you just you had coming that in heard Okay. year. for had it you Could debt debt sure impacted. the pertaining want And due clarify, about you to sentence,

Taylor Pickett

separate topics Two there. Yes.

sub do. like the So we we the sub and first lock pandemic most which X, because X [indiscernible] one, when first go companies on treasury they were did started, the really

it with of particular just to a a tied wasn't million to maturity. $XXX time, happens and did we So coincide treasury but tied maturity, locks, to date it and

a August, a treasury our to maturity. quarter it's us through into apply have to of them locks we that them what saying in unwind So or debt and if ability go – apply And maturity then choose giving the we was XXXX, to on they hold the liquidity but and the EBITDA XXXX calculation. different XXXX first go to those I ratios

some in do they've really less And applied if then calculations security EBITDA, their we're this to not But calculation. deposits for it's again, to. paid, once don't small… all we those security we're an And to EBITDA that's allowed extent deposits. we they the – have rent exhausted in that the EBITDA because we So hence, quarter, have a

Vikram Malhotra

in compliance – it just impacted. Like ratios with would comment Those above mean, those. was be your or I you're well that

Taylor Pickett

we Well, No a have or REIT impact, no ton bond impact, cushion. debt of covenant zero.

Vikram Malhotra

tenants then the not just Thanks either you to and the And where been last cash to to Okay. have clarifying. disclosure chart of terms – bands. rent on for you've one rent paying just the coverages, paying back converted I disclosed the your want have go in with the or

tenant happens on clear, – do in or X.X% paying I'm can are cash buried continuously Just has that have there's quarter, even may out or it you've But no I you've quarter above issue, every above some called what now other be every always not you over we pre-COVID. an to the see. that you called there have that, about. know is have tenant – not worth mean totally no all that tenants out that, is issues had to and call like what that because and it's There there assuming over disclosed but it we not out,

Taylor Pickett

them, That's told Agemo The it was correct. five six was I listed – about. talked you sixth are I listed here. we I mean of

Vikram Malhotra

And it you is then the it us between fairly below – them you very Is security maybe to tenants deposits may credit just variability for in is just – fair have general, and the one it agreements, to you varied or of of future? clarify, are in lot on that describe draw a can in tenants? so across the the is lease need letters for or there that

Daniel Booth

It's personal or credit very And of varied, also or support terms yes. credit then of not varies guarantees. amongst only you there's type what in either corporate have secondary that, it

Vikram Malhotra

it. Got

you. Thank Okay.

Operator

question with Valiquette Thank you. Barclays. The Steven comes next from

Steven Valiquette

Great, thanks. Good morning, everybody.

of here. a questions So couple

Somebody just another a a And Brookdale brought I August source of might they of a for expected principal through rent. just there analysis amount maybe change million lease with pay I scenario but master earlier. Omega notes of terms of about operator in a go one. happen kind in up control and Brookdale guess a XXXX. would to you up the because for down of had on $XXX top show what of missed tranche. of senior that quick still guys your you the of have XX the do the What's due percent housekeeping this, one funds as

that around right time, just tranche? Thanks. but the some what obviously, now got pattern You is curious thought

Robert Stephenson

The first. question currently latter we're the cash of the on address with I'll $XXX million, Yes. million balance sheet. sitting $XXX

locks that We – million. hedged $XXX treasury the have or worth worth

go scenario And atypical company stock And we event lease rights sources. there but to are a two so respond we Dan rights where we are in what to question the our be prior to around that. because of in it as mentioned, partially primary of like need answered the I have change something Brookdale, think public control, then a the

equity new of if there transaction, So holders. would was we set a have

Steven Valiquette

Okay.

event how of to maybe event you matter way are acquired to more hypothetical at be say, about the I'm let's attention, and little if that by, Or it's another it this wouldn't sort guess, in equity just So is I would messy – things REIT that was obviously, but probably private way that ask it that by now? a under scenario? this the we'll acquired think high curious start as get in just theoretically well. probably Is – level your much just it it has

Taylor Pickett

I'd really with REIT, probably happy be the the on credit. Depending

Steven Valiquette

be talk could offline might more helpful. Thanks. follow-up Okay. offline. about We it Maybe I'll

Taylor Pickett

Sure.

Operator

you. Thank

Bernstein with question comes Daniel Capital next One. Your from

Daniel Bernstein

has Good sale? A for Did lot provide been financing asked. you seller any Agemo asset Hi. morning.

Daniel Booth

No.

Daniel Bernstein

the I'm the leverage? rates Okay. to And financing maybe lot skilled thinking related – tightening I to guess to question a was outside NIC Just understand of understand of maybe potential trying for some then interest guess, available? for buyers aggressiveness I Are just especially the up assets. lending that. nursing. And finding came of that significantly, I up. they out are the a conference buyers using of trying going of

buyers out understand maybe from on to environment of SNFs some and lending just there So how to to trying buying that's is be for the aggressive and much the continue future? cash investing available

Daniel Booth

So our of them. as the indicated, the number the I financing. in start days trade, with and financing buyers latest price from financing the to. Agemo to a able were was for end, privy appropriate one I don't specifics come the we held now. that sizable really of weeks where underwrite the was up ago, firm not to I'm and matter set with their The that which which

their come long good. table to as money, closing So the they with we're as

anything in have don't any we size. – the have today We market of

have are So I'm know other what that issues encountered significantly. up any not being we than moved trades sure

very extent we the any put wary the something on of that affect that have be market to and likely that, of could we'll to So pricing. size,

Daniel Bernstein

spoken And housing much you then about really fundamentals. Okay. haven't senior too

seniors to up maybe nursing, on the to versus be trying kind the well. in seniors get as was thoughts to I your your thoughts skilled just trends maybe going of slightly. trending incrementally understand housing on which trying seems So forward there But

Daniel Booth

have at is Maplewood, pre-COVID Well, portfolio, just and high perspective occupancies our Dan, which end, the up. from it's interesting because we going

pretty UK Brookdale well. performs portfolio The of the piece has recovered. Our

those us, you big pockets pretty three when for So it looks think about good.

that's Now just we're what But see on what's hear you we in industry, going reading. that. the honestly, obviously and

labor when shape. So everything appears around for the inflation it costs good perspective, real is from to we our issue and in And pretty our obviously, at everybody else. be look portfolio, the

Daniel Bernstein

color. all have. the appreciate I Thanks. right. I All That's

Operator

Instructions] Anderson Thank with comes Your SMBC you. Nikko. from [Operator Rich next question

Richard Anderson

provide the wall X.X what apologize here, flying also and do gave from sitting, of Good Did XX in the and question, been rent I you starting for in Thanks. been standpoint? assets quarter. I it's presumes I've Kentucky, morning. second interest but million remaining coverage XX a the said. and Tennessee you of Agemo if have one that But

Daniel Booth

for. we we the – above would normally coverage just So would you be. a it's actually and – new what XX But know, didn't what think to let underwrite facilities it's credit indicate our at we or

left is made that what's creditworthy. So yes, sure we've

Richard Anderson

Okay.

a those So from in highly perspective credit obviously, spot based numbers. a on comfortable

Daniel Booth

From a that's coverage perspective, correct.

Richard Anderson

Okay. Thank you.

Operator

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

Taylor Pickett

are everyone, Yes. answers. reach couple Have day. follow-up a your out joining Please I a feel for or morning. I we'll appreciate it. get Bob, this free know to Thanks, and great to us Matthew there of items.

Operator

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

disconnect. now may You

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