Omega Healthcare Investors Inc.

S&P Global Ratings' stable outlook on Omega reflects our expectation that the headwinds in the SNF industry will perpetuate over the next two years as increased enrollment in Medicare Advantage and a gradual shift to bundled payments from fee-for-service is partially offset by increased census due to an increasingly older population. However, we anticipate Omega will generate stable cash flows from its portfolio of triple-net leased properties and believe its tenant-level rent coverage will remain relatively flat. We project that Omega's key credit metrics will remain relatively unchanged over the next 12-18 months, with adjusted debt to EBITDA in the mid- to high-5x area. We could consider downgrading Omega if its operator troubles accelerate, leading to a significant deterioration in

...Omega Healthcare Investors Inc. is the largest pure-play SNF-focused health care REIT, with a well-diversified portfolio by geography and operator. As of June, 30, 2019, Omega had gross investments of approximately $9.6 billion and was well-diversified across 41 states and the United Kingdom. Moreover, Omega's tenant base consists of 75 operators with only one tenant, Ciena, accounting for more than 10% of revenues (at 11.0%). We expect Omega to have a robust growth appetite over the next 12-18 months as it continues to grow its portfolio in a leverage-neutral manner. Following the completion of the MedEquities merger in the second quarter of 2019, Omega announced another large $735 million acquisition that is expected to close by early 2020. We believe the company will fund this growth in a leverage-neutral manner, supported by a stock price which has been trading at a modest premium to consensus net asset value (NAV) levels....

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