Omega Healthcare Investors Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jonathan Hughes - Raymond James & Associates, Inc - Analyst : Looking at EBITDAR coverage, and it's now basically 1.5 times. That's, I think, the highest in the post-pandemic world. And the outlook for improving coverage is strong due to some favorable supply-demand dynamics that I think we all know about. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, OHI.N - Q3 2024 Omega Healthcare Investors Inc Earnings Call But I wanted to ask about the triple net lease structure. I know you don't necessarily get to participate in that EBITDAR upside, but the safety of the rent paid to you does increase. I don't believe I've ever asked a question about lease expirations. But for those few leases that do expire, what's the ability you have to either increase rent and maybe reset coverage back to, say, a historical 1.3, 1.4 times range? Or would you rather just renew them higher modestly and take the higher coverage and greater rent safety?

Question: Jonathan Hughes - Raymond James & Associates, Inc - Analyst : And then I'll stick with just one more and looking at leverage. So maybe for Bob or you, Taylor as well. I think the 4.2 times leverage today is a decade low. I don't know what the all-time low is, but it's lower than at any point, I think, since 2014. The investment spreads today are really wide and accretive using equity that obviously never has to be refied. So my question is, has there been any change to the leverage target of 4 to 5x? Or is it still that range? Maybe any consideration to running even lower to put you in a better position for opportunities over the next several years?

Question: Michael Griffin - Citigroup Global Markets, Inc. - Analyst : Just wanted to touch on occupancy for a bit. Obviously, it continues to increase on a sequential basis. And I'm curious if you can kind of give us some building blocks on what the drivers of this are? Is this due to facility staffing increasing? Is it due to greater resident penetration? And do you think we're in a world and a scenario in the near term where we are at or above kind of your pre-COVID level of occupancy?

Question: Michael Griffin - Citigroup Global Markets, Inc. - Analyst : And then just maybe turning to the transaction activity and kind of your thoughts on the acquisition environment. Are you seeing a lot of these deals mostly driven by motivated sellers that have upcoming maturities they can't refi? Or has the market become more deep and liquid and bid-ask spreads have narrowed somewhat? And then if you could comment maybe on the availability of any bridge to HUD lending, that would be helpful, too.

Question: John Pawlowski - Green Street - Analyst : Megan, one for you on the regulatory front. I know state support has been a positive surprise for a while now. Have any of your major states reimbursement or kind of tied staffing service roles actually surprised negatively in recent months?

Question: John Pawlowski - Green Street - Analyst : Yes. Have any states -- essentially has state support surprised negatively in any recent months in any of your states?

Question: John Pawlowski - Green Street - Analyst : And then any concerning staffing rules kind of in the realm of a Pennsylvania-like scenario rumored right now in the market in any other states?

Question: Elmer Chang - Scotia Bank - Analyst : This is Elmer Chang on with Nick. I mean, just looking at your exposure to different segments, skilled nursing, senior housing, I mean, this is a function of what you've been investing in. But given exposure to skilled nursing ticked down this quarter, maybe below at least historical levels, how are you thinking about operational volatility and investments going forward between these two segments?

Question: Elmer Chang - Scotia Bank - Analyst : And then sticking to the investment side. You did add a skilled nursing facility development in Florida, I think -- I believe this quarter into the pipeline. How are you thinking about exposure to that market and maybe development as an investment avenue going forward depending on spreads you're seeing?

Question: Justin Haasbeek - RBC Capital Markets, LLC - Analyst : Just where do you see the best new investment opportunities? Should we still think about the best opportunities being in the U.K. care home market?

Question: Justin Haasbeek - RBC Capital Markets, LLC - Analyst : Okay. And then you mentioned that there are some bigger portfolios on the market that you guys did see. Can you just provide some color on sort of the pipeline, the size of the pipeline right now and the asset mix and location? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 2:00PM, OHI.N - Q3 2024 Omega Healthcare Investors Inc Earnings Call

Question: Alec Feygin - Robert W. Baird & Co. Inc. - Analyst : Kind of off the pipeline question, you already talked about the US versus UK, but can you talk about lending versus real estate acquisitions and where the pipeline is headed so far in 4Q? It looks like it's been weighted to the loan side.

Question: Alec Feygin - Robert W. Baird & Co. Inc. - Analyst : Okay. And maybe speak on the 15 assets that are currently held for sale? And then also how much of the portfolio can be a candidate for asset sales?

Question: Daniel Byun - Bank of America - Analyst : Just to go back on Maplewood. Do you provide any color on why you pushed back on the timing for the Maplewood development?

Question: Joe Dickstein - Jefferies LLC - Analyst : It looks like a new SNF operator was added to the sub 1 times EBITDAR coverage list, representing 3.2% of rent. I guess, if you could just provide some color on maybe what drove the coverage decline and maybe where -- what states the operator is located in?