Q4 2021 Omega Healthcare Investors Inc Earnings Call

Good morning, and welcome to the Omega healthcare investors fourth quarter 2021 earnings conference call.

Speaker 1: Good morning and welcome to the Omega Healthcare Investors fourth quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Speaker 1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this is an...

Please note this event is being recorded.

Speaker 2: I would now like to turn the conference over to Michelle Reber. Please go ahead. Thank you and good morning. With me today are Omega CEO Taylor Pickett, COO Dan Booth, CFO Bob Stevenson, and Megan Kroll, Senior Vice President of Operations.

I would now like to turn the conference over to Michelle Reiber. Please go ahead.

Yeah.

Thank you and good morning with me today are Omega CEO Taylor Pickett see Oh, damn Booth, CFO , Bob Stephenson and Megan Kroll Senior Vice President of operations.

Speaker 2: Comments made during this conference call that are not historical facts may be forward-looking statements, such as statements regarding our financial projections, dividend policy, portfolio restructurings, rent payments, financial condition or prospects of our operators, contemplated acquisitions, dispositions, or transitions, and our business and portfolio outlook generally. These forward-looking statements involve risks and uncertainties which may cause actual results to differ materially.

It's made during this conference call that are not historical facts may be forward looking statements such as statements regarding our financial projections dividend policy portfolio restructuring rent payments financial condition or prospects of our operators contemplated acquisitions dispositions or transitions and our business and portfolio outlook generally.

These forward looking statements involve risks and uncertainties, which may cause actual results to differ materially. Please see our press releases and our filings with the Securities and Exchange Commission, including without limitation. Our most recent report on Form 10-K , which identifies specific factors that may cause actual results or events to differ materially from those disk.

Speaker 2: Please see our press releases and our filings with the Securities and Exchange Commission, including without limitation our most recent report on Form 10-K , which identifies specific factors that may cause actual results or events to differ materially from those described in forward-looking statements.

Bribed and forward looking statements during the call today, we will refer to some non-GAAP financial measures such as NAREIT F. F O. Adjusted after I thought <unk> Fad and EBITDA reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles as well as an explanation of the usefulness of the non-GAAP measures are.

Speaker 2: During the call today, we will refer to some non-GAAP financial measures such as NAIRIT FFO, adjusted FFO, FAD, and EBITDA.

Speaker 2: Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles, as well as an explanation of the youthfulness of the non-GAAP measures, are available under the financial information section of our website at www.omegahealthcare.com and in the case of NAHRE FFO and adjusted FFO in our recently issued press release.

Available under the financial information section of our website at Www Dot I'll make a health care dot com and in the case of NAREIT SFO and adjusted <unk> in our recently issued press release. In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been.

Speaker 2: In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been independently verified by Omega. I will now turn the call over to Taylor.

Mentally verified by Omega I will now turn the call over to Taylor.

Thanks, Michele good morning, and thank you for joining our fourth quarter 2021 earnings conference call today, I will discuss our fourth quarter financial results skilled nursing facility industry trends and operator liquidity issues.

Speaker 3: Thanks, Michelle. Good morning and thank you for joining our fourth quarter 2021 earnings conference call. Today I will discuss our fourth quarter.

Speaker 3: skilled nursing facility industry trends, and operator liquidity issues.

Our fourth quarter, adjusted <unk> 77 cents per share funds available for distribution or 72 cents per share.

Speaker 3: Our fourth quarter adjusted FFO is 77 cents per share and funds available for distribution are 72 cents per share. We have maintained our quarterly dividends.

We have maintained our quarterly dividend of 67 cents per share.

Speaker 3: The dividend payout ratio continues to have cushion at 87% of adjusted FFO and 93% of funds available for distribution. Turning to skilled nursing facilities.

And our payout ratio continues to have cushion at 87% of adjusted <unk> and 93% of funds available for distribution.

Turning to skilled nursing facility industry trends.

Speaker 3: The Omicron COVID variant has paused the skilled nursing facility occupancy recovery and created further labor force stress. Omega sniff occupancy has been virtually flat for the three months ended December 31st, and the preliminary January occupancy is slightly down. One interesting item is that in December , 21% of our facilities are at or above pre-COVID occupancy levels, which may indicate that full occupancy recovery is achievable over time.

Oh I'm, a chronic COVID-19 area has paused the skilled nursing facility occupancy recovery and created further labor force stress Omega sniff occupancy has been virtually flat for the three months ended December 31st and the preliminary January occupancy is slightly down one.

One interesting item is that in December 21% of our facilities are at or above pre COVID-19 occupancy levels, which may indicate the full occupancy recovery is achievable over time.

Speaker 3: Unfortunately, the already difficult labor shortage grew increasingly worse as staff became infected and were forced to quarantine.

Unfortunately, the already difficult labor shortage grew increasingly worse, our staff became infected and were forced to quarantine.

Speaker 3: These staffing shortages have limited many facilities' ability to admit new residents, which has had the knock-on effect of backing patients up in the hospitals.

These staffing shortages have limited many facilities ability to admit new residents. We just have the knock on effect of backing patients up in the hospital systems.

Although the impact of omicron appears to be rapid and transitory. It is impossible to predict how quickly the industry occupancy recovery will regain traction where how rapidly the current labor force pressures will subside.

Speaker 3: Although the impact of Omicron appears to be rapid and transitory, it is impossible to predict how quickly the industry occupancy recovery will regain traction or how rapidly the current labor force pressures will subside.

Turning to operator liquidity issues and restructuring.

Speaker 3: Dan will provide detail regarding specific operator current liquidity and restructuring issues. In general, these efforts include one or more of the following actions.

Dan will provide detail regarding specific operator current liquidity and restructuring issues in.

In General these efforts include one or more of the following actions one rent deferrals.

Two asset sales or transitions to a new operator and three in certain cases rent resets with other amended lease provisions. Examples include elimination of purchase options future upward potential rent resets lease extensions or revisions of renewal rights and collateral enhancements adjustments are you.

Speaker 3: two, asset sales or transitions to a new operator, and three, in certain cases, rent resets with other amended lease provisions. Examples include elimination of purchase options, future upward potential rent resets, lease extensions or revisions of renewal rights, and collateral enhancements, adjustments or use.

As such.

Historically in many of our restructurings, one or more of the actions that I've outlined are sufficient to protect the value of our assets and most if not all of our long term cash flow generation from the restructured assets.

Speaker 3: Historically, in many of our restructurings, one or more of the actions that I have outlined are sufficient to protect the value of our assets and most, if not all, of the long-term cash flow generation from the restructured asset.

Speaker 3: We continue to remain hopeful that the outcome of our covered restructuring will yield a similar result.

We continue to remain hopeful that the outcome of our covered restructurings will yield a similar result.

Finally again, thank our operating partners and in particular their frontline caregivers and staff, who are cared for the tens of thousands of residents within our facilities.

Speaker 3: Finally, I again thank our operating partners, and in particular the frontline caregivers and staff who have cared for the tens of thousands of residents within our facilities. I will now turn the call over to Bob.

I'll now turn the call over to Bob.

Thanks, Taylor and good morning.

Turning to our financials for the fourth quarter.

Speaker 4: or NAIRI FFO for the fourth quarter was $124 million or 50 cents per share on a deluded basis as compared to $173 million or 73 cents per deluded share for the fourth quarter of 2020.

Our NAREIT F S. Though for the fourth quarter was $124 million or 50 cents per share dilutive basis, as compared to $173 million or 73 cents per diluted share for the fourth quarter of 2020.

Speaker 4: Our adjusted FFO was $190 million, or $77 cents per share for the quarter. That includes several items as outlined in our adjusted FFO reconciliation denoting.

Our adjusted <unk> was $190 million or 77 cents per share for the quarter and excludes several items as outlined in our adjusted <unk> reconciliation to net income found in our earnings release, and our supplemental and also on our website.

Speaker 4: down in our earnings release, in our supplemental, and also on our web.

Speaker 4: Revenue for the fourth quarter was approximately $250 million before adjusting for certain non-recurring items compared to $264 million for the fourth quarter of 2020.

Revenue for the fourth quarter was approximately $250 million before adjusting for certain nonrecurring items compared to $264 million for the fourth quarter of 2020.

The year over year decrease is primarily the result of $16 million of straight line and lease inducement write offs in the fourth quarter of 2021.

Speaker 4: The year-over-year decrease is primarily the result of $16 million of straight line and lease inducement write offs in the fourth quarter of 2021 related to guardian and one other operator in the fourth quarter of 2021.

Related to the Guardian and one other operator, both placed on a cash basis in the fourth quarter of 2021.

Speaker 4: In our last quarter's earnings call, in answer to a question, I provide a revenue commentary on golf coast, a GIMO, and guardian.

In our last quarter's earnings call and answer to a question I provided revenue commentary on golf coast of GMO and Guardian.

Speaker 4: I want to provide an updated revenue status and a Q1 2022 outlook on those operators.

I want to provide an update at revenue status and our Q1 2022 outlook on those operators.

Dan will be providing operational updates when these tenants in his prepared talking points.

Speaker 4: Dan will be providing operational updates on these tenants and his prepared talking.

First regarding golf coast in Q4, we recorded $14.8 million of revenue based on our continued ability to offset any unpaid rent against the balance of the sub debt obligations owed by Omega.

Speaker 4: First, regarding Gulf Coast, in Q4, we recorded $14.8 million of revenue based on our continued ability to offset any unpaid rent against the balance of the sub-debt obligations owed by Omega.

To be consistent with prior quarters, only $7 4 million of revenue. What's included within adjusted F. F O and bad at December 31st sub debt balance was fully exhausted and therefore, we will not recognize revenue related to Gulf coast in Q1 2022.

Speaker 4: to be consistent with prior quarters, only 7.4 million of revenue was included within adjusted FFO and FAD. At December 31st, the sub-depth balance was fully exhausted, and therefore we will not recognize revenue related to golf coast in Q1, 2022.

Looking at Gmail.

Speaker 4: Q4, we applied the remaining security deposit balance of $115,000 in October to partially cover October's rent.

In Q4, we applied the remaining security deposit balance of $115000 in October partially cover October right of.

GMO. Additionally, paid rent and interest in November of approximately $4 $6 million Q.

Speaker 4: Jimo additionally paid rent and interest in November of approximately $4.6 million.

Speaker 4: 2-1-2022 contractual rent and interest of $15 million will only be recognized to the extent that JIMU makes any additional payments as they are on a cash basis.

Q1, 2022, contractual rent and interest of $15 million well only be recognized to the extent a chemo makes any additional payments as they are on a cash basis.

Turning the Guardian and.

Speaker 4: In Q4, Guardian failed to make any rent or interest payments, and as a result, no revenue was recognised in Q4.

In Q4 Guardians failed to make any rent or interest payments and as a result, no revenue was recognized in Q4.

Speaker 4: In Q1 2022, we will only record revenue to the extent Guardian makes any payments as they were placed on a cash basis in Q4 2021.

In Q1, 2022, we will only record revenue to the extent Guardian makes any payments as they were placed on a cash basis in Q4 2021.

Lastly, as noted in the earnings press release in additional operator, representing three 5% of contractual annualized rent and mortgage interest revenue did not pay its January contractual amount due under its lease agreement and asked for a short term rental forbearance.

Speaker 4: Lastly, as noted in the earnings press release, an additional operator representing 3.5% of contractual annualized rent and mortgage interest revenue.

Speaker 4: Do not pay its January contractual amount due under its lease agreement and ask for a short-term rental forbearance.

Speaker 4: the operator does not make any rental payments during the first quarter and remains on a straight line basis for revenue recognition. We would include $9 million of revenue for Q1 for adjusted FFO purposes only.

If the operator does not make any rental payments during the first quarter and remains on a straight line basis for revenue recognition. We wouldn't include $9 million of revenue for Q1.

Our adjusted at that though purposes only.

Speaker 4: However, we will only recognize FAD based on cache received.

However, we will only recognize fad based on cash received.

Moving to Cecil and.

In Q4, 2021, we recorded a $50 million provision for credit losses, primarily driven by the funding and reserve of the $20 million of golf coast dip loan and a $38 million reserve related to Guardians mortgage loan.

Speaker 4: At Q4 2021, we recorded a $50 million provision for credit losses primarily driven by the funding and reserve of the $20 million Gulf Coast DIP loan and a $38 million reserve related to Guardian's mortgage loan.

Moving on to the balance sheet.

Speaker 4: It remains strong thanks to the steps we've taken during 2021 to further improve liquidity, capital stack, our maturity ladder, and our overall cost of debt. On the debt side, if...

It remains strong thanks to the steps we've taken during 2021 to further improve liquidity capital stack, our maturity ladder and our overall cost of debt.

On the debt side in March of 2021.

Speaker 4: issued $700 million of 3.25% senior notes due April of 2033. Our note issuance was leveraged neutral as proceeds were used to repurchase to a tender offer $350 million of our 4.375% in 2023 with the balance used to repay a library-based borrow.

<unk> $700 million of 3.25% senior notes due April of 2033, our note issuance was leverage neutral as proceeds were used to repurchase a tender offer $350 million of our 4.3, 75% notes due in 2023 with the balance sheet.

Used to repay Libra based borrowings.

Currently have no bond maturities until August of 2023 in March of 2020, we entered into $400 million of 10 year interest rate swaps at an average swap rate of 0.86, 75%.

Speaker 4: We currently have no bond maturities until August of 2023. In March of 2020, we entered into $400 million of 10-year interest rate swaps at an average swap rate of 0.8675%.

Speaker 4: These swaps expire in 2024 and provide us with significant cost certainty when we refinance our 2023 bomb maturity.

Swaps expire in 2024 and provide us with significant cost certainty when we refinanced our 2023 bond maturity in April of 2021, we closed on a new four year 1.45 billion dollar unsecured credit facility and a $50 million unsecured term loan at both mature.

Speaker 4: In April of 2021, we closed on a new four year $1.45 billion on secured credit facility and a $50 million on secure term loan that both mature in April of 2025.

In April of 2025.

At December 31st we had no outstanding borrowings on our revolving credit facility and we also had approximately $21 million in cash.

Speaker 4: At December 31st, we had no outstanding borrowings on a revolving credit facility. And we also had approximately $21 million in cash.

Speaker 4: At December 31st, over 99% of our $5.3 billion in debt was fixed. And our net funded debt to adjusted analyzing the DAW with 5.3 times. And our fixed charge coverage ratio was 4%.

At December 31st over 99% of our $5 $3 billion in debt was fixed and our net funded debt to adjusted annualized EBITDA was five three times and our fixed charge coverage ratio was four two times. It's important to note similar to NAREIT F. F. L. Adjusted F F O and Fad EBITDA.

Speaker 4: It's important to note, similar to May Read FFO, adjusted FFO, and FAD, EBIDAM these liquidity calculations includes our ability to apply collateral and recognize revenue related to our operator non-payments previously discussed. However, when the collateral is fully exhausted, a decrease in EBIDAM will impact our liquidity ratio.

These liquidity calculations includes our ability to apply collateral and recognized revenue related to our operator non payments previously discussed however, when the collateral is fully exhausted a decrease in EBITDA will impact our liquidity ratios.

On the equity side.

Speaker 4: On the equity side, in May of 2021, we established a new $1 billion ATM program.

May of 2021, we established a new $1 billion ATM program throughout 2021, we issued seven 6 million common shares of Omega stock generating $282 million in gross cash proceeds primarily through our ATM program.

Speaker 4: Throughout 2021, we issued 7.6 million common shares of a megastock generating $282 million in gross cash proceeds primarily through our ATM program.

As previously disclosed in January 2022, our board of directors authorized a repurchase of up to $500 million. Although Meg is outstanding common stock through March of 2025, we believe the actions taken to date provides us with significant liquidity and flexibility to weather the continued impact on our business primary.

Speaker 4: As previously disclosed, in January 2022, our Board of Directors authorized a repurchase of up to $500 million of Omega's outstanding common stock through March of 2025. We believe the actions taken to date provide us with significant liquidity and flexibility to weather the continued impact on our business primarily driven by COVID-19.

Driven by COVID-19 the.

Speaker 4: Steps taken over the past 12 months also provide us with the tools we need to continue to evaluate and act upon any additional actions that may be needed to further enhance our liquidity or improve shareholder value. I will now turn the call over to Dan.

The steps taken over the past 12 months also provide us with the tools, we need to continue to evaluate and act upon any additional actions that may be needed to further enhance our liquidity or improve shareholder value.

I will now turn the call over to Dan.

Thanks, Bob and good morning, everyone.

Speaker 4: As of December 31, 2021, Omega had an operating asset portfolio of 939 facilities with approximately 96,000 operating beds.

As of December 31, 2021.

It had an operating asset portfolio of 939 facilities with approximately 96000 operating beds. These facilities were spread across 63 third party operators and located within 42 states and the United Kingdom.

Speaker 4: These facilities were spread across 63 third party operators and located within 42 states in the United Kingdom.

Trailing 12 month, operator, EBITDAR and EBITDAR coverage for our core portfolio as of September 30th 2021.

Speaker 4: Trailing 12 month operator, EBITDA, and EBITDA coverage for our core portfolio as of September 30th, 2021. Decreased to 1.52 times and 1.18 times, respectively, versus 1.63 and 1.28 times, respectively, for the Trailing 12 month period and a June 30th, 2021.

Decreased to 1.52 times and 1.18 times respectively.

This is 1.63 and 1.28 times, respectively for the trailing 12 month period ended June 30th 2021.

During the third quarter of 2021, our operators kimberlite, we recorded approximately $26 million and federal stimulus funds as compared to approximately $49 million recorded during the second quarter.

Speaker 4: During the third quarter, 2021, our operators came relatively recorded approximately $26 million in federal stimulus funds. As compared to approximately $49 million, recorded during the second quarter.

Speaker 5: trailing 12-month operator EBIT-DARM and EBIT-DAR coverage would have decreased slightly during the third quarter of 2021 to 1.21 and 0.88 times respectively as compared to 1.22 and 1.89 times respectively for the second quarter when excluding the benefit of federal stimulus.

Trailing 12 month, operator, EBITDAR and EBITDAR coverage would have decreased slightly during the third quarter of 2021 to one point to one and eight eight times, respectively as compared to one point to two and 0.89 times, respectively for the second quarter when excluding the benefit of <unk>.

Stimulus funds.

EBITDAR coverage for the stand alone core ended September 30th 2021, four core portfolio was 1.04 times, including federal stimulus and point 92 times, excluding the $26 million of federal stimulus funds.

Speaker 5: Evened our coverage for the standalone core and in September 30th, 2021, for core portfolio was 1.04 times, including federal stimulus and 0.92 times, excluding the $26 million of federal stimulus.

This compares to the Standalone second quarter of 1.2 times, and <unk> 99 times with and without the $49 million and federal stimulus funds respectively.

Speaker 5: This compares to the standalone second quarter of 1.2 times and 0.99 times with and without the $49 million in federal stimulus funds, respectively.

Occupancy for our overall core portfolio continued to slowly trend upward throughout 2021, reaching a high of 75, 8% in December .

Speaker 5: Occupancy for overall core portfolio continued to slowly trend upward throughout 2021 reaching a high of 75.8% in December .

Speaker 5: up from a low in January of 2021 of 72.3.

Up from a low in January of 2021 of 72, 3%.

Speaker 5: January , 2022, mid-month occupancy actually fell off slightly to 75.4%. Mainly as a result of the robust Omicron burying.

January 2022 mid month occupancy actually fell off slightly to 75, 4%, mainly as a result of the robust omicron bearing.

Speaker 5: Turning to our senior housing portfolio, today our overall senior housing investment comprises 155 assisted living, independent living, and memory care assets in the United States and the United Kingdom.

Turning to our senior housing portfolio today, our overall senior housing investment comprises 155 assisted living independent living and memory care assets in the United States and the United Kingdom.

This portfolio in a pure play basis had its trailing 12 month EBITDAR lease coverage.

Speaker 5: This portfolio, on a pure play basis, had its trailing 12-month EBITDA lease coverage fall one basis point to .97 times at the end of the third quarter as compared to the end of the second quarter.

One basis point to point 97 times at the end of the third quarter as compared to the end of the second quarter.

Based on what Omega has received in terms of a mid month occupancy reporting for January to date. This portfolio is averaging approximately 86%.

Speaker 5: Based on what Omega has received in terms of mid-month occupancy reporting for January to date, this portfolio is averaging approximately 86 percent.

Turning to portfolio matters.

On October 14th 2021, Gulf Coast, and operator, representing approximately $30 million or 3% of annual revenue filed for chapter 11 bankruptcy in Wilmington, Delaware.

Speaker 5: On October 14th, 2021, Gulf Coast, an operator representing approximately $30 million, or 3% of annual revenue, filed for Chapter 11 bankruptcy in Wilmington, Delaware.

Speaker 5: As part of that filing, the debtors in Omega agreed upon and entered into a restructuring support agreement.

As part of that filing the batteries in a mega agreed upon and entered into a restructuring support agreement.

Speaker 5: Since that time, on December 1st, 2021, the management of OMEGA's 23 of the 24 GulfCoast facilities were transferred via a management and operations transfer agreement to an unrelated third party and Aspire Health.

Since that time on December one 2021, the management of a Mega has 23 of the 24 Gulf Coast facilities were transferred via management and operations transfer agreement to an unrelated third party and inspire health care <unk>.

Speaker 5: Subsequently, on December 31, 2021, Omega entered into a purchase and sale agreement for the sale of 22 of the 24 Gulf Coast facilities to a separate, unrelated third party.

Subsequently on December 31, 2021.

<unk> entered into a purchase and sale agreement for the sale of 22 of the 24 Gulf coast facilities to a separate unrelated third party.

The sale of the properties along with the change of ownership of the operations is anticipated to close sometime early in the second quarter of 2022 subject to the usual closing conditions.

Speaker 5: The sale of the properties, along with the change of ownership of the operations, is anticipated to close sometime early in the second quarter of 2022, subject to the usual closing conditions.

As referenced on our previous earnings call Omega has two other large operators that have ceased paying all or a material portion of their contractual rent.

Speaker 5: As referenced on our previous earnings call, Omega has two other large operators that have ceased paying all or a material portion of their contractual rent.

Speaker 5: The first, the GMO, representing approximately $53 million, or 5.5% of annual revenue, stopped paying rent and interest in August of 2021, and with the exception of November , every month since.

The first a GMO, representing approximately $53 million or five 5% of annual revenue stopped paying rent and interest in August of 2021.

And with the exception of November every month since.

Speaker 5: Accordingly, OMEGA drew upon existing security deposits of approximately $9.5 million to pay all rent due for August , September , and a portion of October , thereby exhausting our deposit.

Accordingly, Omega drew upon existing scared of deposits of approximately $9 $5 million.

They all rent due for August September and a portion of October , thereby exhausting our deposits.

Speaker 5: We are in ongoing discussions with the GEMA, which discussions may involve the releasing or sale of a material portion of their ports.

We are in ongoing discussions with a GMO, which discussions may involve the releasing or sale of a material portion of their portfolio.

The other operator Guardian, representing approximately 37 million or three 8% of annual revenue as.

Speaker 5: The other operator, Guardian, representing approximately 37 million or 3.8% of annual revenue, has failed to pay its contractual rent and interest since October of 2020.

As failed to pay its contractual rent and interest since October of 2021.

We have been and continue to be an active ongoing discussions with guardian to transition a significant portion of this portfolio to an unrelated third party.

Speaker 5: We have been and continue to be in active, ongoing discussions with Guardian to transition a significant portion of this portfolio to an unrelated third party.

Speaker 5: The exact number of facilities involved and the timing of such transitions is still being finalized.

The exact number of facilities involved and the timing of such transitions is still being finalized.

Turning to new investments in 2021, Omega made new investments totaling $841 million.

Speaker 5: In 2021, Omega made new investments totaling $841 million, including $164 million for capital expenditures.

$164 million for capital expenditures.

Subsequently on January one 2022.

Speaker 5: Subsequently, on January 1, 2022, Omega completed an $8 million purchase lease transaction for one skilled nursing facility in Maryland.

A completed an $8 million purchase lease transaction for one skilled nursing facility in Maryland.

Speaker 5: Separately, on January 31, 2022, Omega completed an $8 million purchase lease transaction for one care home in the United States.

Separately on January 31, 2022, Omega completed an $8 million purchase lease transaction for one care home in the United Kingdom.

Speaker 5: Turning to dispositions, in 2021, Omega divested a total of 48 facilities for approximately $319 million, including three facilities for $8 million in the fourth quarter.

Turning to dispositions in 2021 Omega divested a total of 48 facilities for approximately $319 million, including three facilities were $8 million in the fourth quarter.

I will now turn the call over to Megan.

Thanks, Dan and good morning, everyone. The Covid case search over the last month from Omicron has resulted in case counts books President's and staff combined at levels, we have not seen since January 2021. However.

Speaker 6: Thanks, Dan, and good morning, everyone. The COVID case surge over the last month from Omicron has resulted in case counts of both presidents and staff combined. At levels we have not seen since January 2021.

However, the severity hospitalizations and death rates are nowhere near where they had been pre vaccine.

Speaker 6: However, the severity, hospitalizations, and death rates are nowhere near where they had been pre-vaccine.

On the card is not proving to be as much of an issue of clinically. It is exacerbating the already severely strained staffing environment and the long term care industry, which in turn is impacting occupancy recovery, while also substantially increasing staffing and staffing related expenses.

Speaker 6: So while Omicron is not proving to be as much of an issue clinically, it is exacerbating the already severely strained staffing environment in the long-term care industry, which in turn is impacting occupancy recovery, while also substantially increasing staffing and staffing-related expenses.

Agency expense itself continues to increase and on a per patient day basis for our core portfolio for third quarter 2021 was more than five times, what it was in 2019.

Speaker 6: Agency expense itself continues to increase and on a per patient day basis for our core portfolio for a third quarter 2021 was more than five times what it was in 2019.

Speaker 6: Vaccination rates in the industry continue to improve, with residents and staff at approximately 87% and 83% respectively, according to CMS data, with the staff percentage seeing meaningful movement given the impending federal mandate.

Vaccination rates in the industry continue to improve with residents and staff at approximately 87% and 83% respectively. According to CMS data with the stock percentage seeing meaningful movement, given the impending federal mandate.

Speaker 6: For the states that were not a part of the preliminary injunction, the deadline for full vaccination is late February , with the other states with a deadline of mid-March.

For the states that were not a part of preliminary injunction the deadline for full vaccination late February with the other states with a deadline in mid March.

Speaker 6: CMS intends to enforce the mandate via the survey process starting in March with achievement of certain benchmarks and proof of a plan to reach 100%, providing the potential to push any enforcement action out up to 90 days.

CMS intends to enforce the mandate via the survey process starting in March with achievement of certain benchmarks and proof of the plan to reach 100%, providing the potential to push any enforcement actions out up to 90 days.

Of the $25 $5 billion release from the provider relief fund to HHS and announced in September .

Speaker 6: Of the $25.5 billion release from the Provider Relief Fund that HHS had announced in September , nearly $7.5 billion of the $8.5 billion American Rescue Act funds have been paid out starting in November , with approximately 96% of applications having been processed.

Nearly $75 billion of the $8 5 billion dollar American rescue axons have been paid out starting in November with approximately 96% of applications, having been processed and.

Speaker 6: and nearly $11 billion in face four payments had been paid out starting in December , with approximately 82% of applications having been processed.

Nearly $11 billion in fees for payments have been paid out starting in December with approximately 82% of applications have been processed.

Well this additional release from the provider relief fund has been a welcome change from where this administration had been it is certainly not anywhere close to a cure all.

Speaker 6: While this additional release from the provider relief fund has been a welcome change from where this administration had been, it is certainly not anywhere close to a cure-all.

Approaching what will be almost two full years of dealing with this pandemic day in day out the long term care industry has forever changed as it continues to face new and increased challenges every day.

Speaker 6: Approaching what will be almost two full years of dealing with this pandemic day in and day out. The long-term care industry is forever changed as it continues to face new and increased challenges every day.

Speaker 6: Governmental support is needed, now more than ever, to deal with unprecedented staffing shortages and other increased costs, and we are hopeful that this latest round of funding will prove to be just a first step in the right direction.

Governmental support is needed now more than ever to deal with unprecedented staffing shortages and other increased costs and.

We are hopeful that this latest round of funding what proved to be just a first step in the right direction.

I will now open the call up for questions.

We will now begin the question and answer session.

Speaker 1: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad.

To ask a question you May press Star then one on your telephone keypad.

If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker 1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star 1.

To withdraw your question. Please press Star then two.

Speaker 1: Our first question is from Jonathan Hughes with Raymond James. Please go ahead.

Our first question is from Jonathan Hughes with Raymond James. Please go ahead.

Hey, good morning.

Speaker 7: Hey, good morning. Bob, could you please confirm that aggregate income that was booked in the fourth quarter from applying those security deposits that will not be in the first quarter? I know you gave the figures. I think it was like $7.5 million from Gulf Coast and maybe like $4.6 million from a GMO. So is that about $12 million total? Is that right?

Bob could could you. Please confirm that aggregate income that was booked in the fourth quarter from applying the security deposits that will not be in the first quarter I know you gave that.

Figures and the thing is like $7 5 million from Gulf Coast, and maybe like four six from a GMO says that about 12 million in total is that right.

Speaker 8: No, the Gulf Coast is correct. The 7.4 million for Gulf Coast. For AGMO, it was only 115K. The second part of the AGMO, they did pay, as Dan mentioned and I mentioned, they did pay November , a rent payment in November . Okay, and that's the live.

No.

The Gulf Coast is correct is $7 4 million for Gulf Coast for a gmail or was it only a 115 K.

The second part of the E Mail, they did pay as Dan mentioned and I imagine you did pay November .

Hey rent payment in November .

Okay. So it is good and that's the last time.

Sorry, sorry.

Okay. So that's the last time, Okay fair enough.

Speaker 9: OK, so that's the last time. OK, fair enough.

And then what is the.

Speaker 7: Can you share maybe the location of the operator representing that three and a half percent of rents who did not pay in January ? I'm just trying to understand if.

Can you share maybe the location of the operator, representing three.

Percent of rents, who did not pay in January I'm, just trying to understand if.

Speaker 7: you know, the locations partly to blame for what other are longer paying and you know, was that operator included in the 15 to 20% of at-risk rents that was identified last summer.

Yes.

The location is partly to blame for why they are no longer paying and once that operator included in the 15% to 20% of at risk rents that was identified last summer.

Speaker 5: So that operator is spread across several states throughout the South.

So that operators spread across several states throughout the south.

Yeah.

Speaker 5: You know, I think it was a come, all the, you know, they're all struggling in the south with labor. It's the same, same sort of story. So very new development. It's very fluid. It were in ongoing discussion with that operator.

You know I think it was a come August you know, they're all struggling in the south with labor. It's the same same sort of story.

A very new development, it's very fluid.

Ongoing discussions with that operator.

Okay and was that.

Speaker 7: Okay. And was that, there's analysis, I think, done last summer that kind of identified 15 to 20% of that risk rent. Was this operator in that bucket, or is this maybe an incremental one?

Theres analysis, I think than last summer that kind of identified 15% to 20% of that risk rents with this operator in that bucket or is this maybe an incremental one.

I believe it was I'd have to go back and double check.

Okay.

Speaker 7: Okay. All right. I can follow up on that. I saw that, you know, Florida is your largest state, and just yesterday, the Senate in Tallahassee proposed a $375 million Medicaid funding increase, which would boost funding by almost $550,000 per SNF.

Alright, I can follow up on that.

I saw that Florida is your largest state and.

ZIP yesterday at the Senate in Tallahassee propose a 375 million Medicaid funding increase which is which reduced funding by almost $550000 personnel.

Speaker 7: Is that figure, is that roughly half the amount of contractual annual rent for the 115 or so properties you have in the state?

Is that figure is that roughly half the amount of contractual annual rent for the 115 or so proper.

Properties you have in the state.

Yeah.

Speaker 10: I haven't done that math to be honest with you, but this is a bit of a process just like getting any bill passed. It was very heartwarming to see the Senate push, put forth a budget with

I haven't done that math to be honest.

With you but.

This is a bit of a process just like getting any built asked it was very heartwarming to see the second bush.

Put forth a budget.

Such a great rate increase I mean next up his house, they're going to push through another one which we hope will also be hum.

Speaker 10: such a great rate increase. Next up is PALS, they're going to push through another one which we hope will also be, you know, have high rate increases. But, you know, sort of time will tell how that shakes out. What we start with and what we end up with are not always the same thing. But to do that math, I would have to go back and look at the data.

Hi rent increases.

Time will tell how that shakes out.

We start with them what we ended up with are not always the same thing, but to do that math I would have to go back in.

And look at that.

The math okay.

Okay, Yeah, hopefully, we get some more clarity on that from the house shortly.

Speaker 7: Okay, yeah, hopefully we get some more clarity on that from the house shortly. But last one for me, what is the expected sale price and maybe the expected yield current or contractual on the 19 properties that are under contract to be sold and maybe that expected timing? Thanks.

Last one for me.

What is the.

Expected sale price and maybe the expected.

Yield current or contractual on the 19 properties that are under contract to be sold in and maybe that expected timing. Thanks.

Speaker 4: Yeah, John said so. You know, there was 41 buildings listed for wholesale that were made in 19 that we didn't give a price to it. So around approximately 90 million dollars and the timing hopefully will be. You know, since we're in helper sale, that means there's timing involved, but hopefully, but it's the next quarter or so.

Yes, Jonathan so as always.

41 buildings electric for wholesale that remaining 19 that we didn't get the prices surround approximately $90 million and the timing hopefully will be that's.

Were in held for sale.

So there is timing involved but hopefully within the next quarter or so.

Okay.

Speaker 9: Okay, and the rent maybe that was certainly being booked.

The rent maybe that was that's currently being booked.

Speaker 8: Yeah, so in the court court are related to those buildings. We put $1.7 million of rent. I d d d d d of rent.

Yes, so in the fourth quarter related to those buildings, we bought $1 $7 million upfront.

Okay Alright.

Alright, great Thats it for me thanks for the time.

Speaker 1: The next question is from Conor Seversky with Baronberg. Please go ahead.

The next question is from Connor <unk> with Baird. Please go ahead.

Good morning, all thanks for having me on the call.

Speaker 4: Good morning all, thanks for having me on the call. Maybe a couple for Megan here. So based on the most recent BLS data, we're seeing that SNF employment head count is down, called at 15% while the hourly cost of labor is up around 15%. So I'm wondering within that framework, can you give a sense of what percentage of the SNF labor force is currently attributable to agency labor?

Maybe a couple for Megan here so based on the most recent BLS data foreseeing that stiff employment head count is down call. It 15%, while the hourly cost of labor is up around 15%. So I'm wondering within that framework can you can you give a sense of what percentage of the sniff Labor Force is currently attributable to age.

Nancy Labor.

Yeah, I think that's probably pretty tough to determine we haven't looked at it from that perspective, I know you know certain operators are obviously affected more than others, but you have some buildings that you know hardly have any agency or no agency at all and then you have other buildings, where it's a very large percentage of their workforce at any given point in time.

Speaker 6: You know, I think that's probably pretty tough to determine. We haven't looked at it from that perspective. I know certain operators are obviously affected more than others, but you have some buildings that hardly have any agency or no agency at all, and then you have other buildings where it's a very large percentage of their workforce at any given point in time. And obviously with the Omicron variant in there, agency is being used quite a bit more due to quarantine for the current staff and people being out with COVID in general.

And obviously with the Omicron variant in there agency is being used quite a bit more due to quarantines for the current staff and people being out with Covid in general.

Okay, and then I think in your prepared remarks, you had mentioned that the cost was about five times that of of your standard labor pool, or my or am I mixing a message there.

Speaker 6: Okay, then I think in your prepared remarks, you would mention that the cost was about five times that of your standard labor pool or am I mixing a message there? It's about five times the agency usage that we had in 2019, which was pretty minimal.

It's about five times the agency usage that we had in 2019, which was you know pretty minimal.

Okay that makes it that's not as of yet that's not as a percentage of the total labor. It's just how much it's gone up over that time.

Speaker 6: Okay. That makes sense. That's not as a percentage of the COVID labor. It's just how much it's going up over that day.

Okay, and then I mean I know this is a bit of an abstract question, but given that we are approaching the time of the year when we could get a sense of what the preliminary ruling looks like I mean, what kind of rate basket increase would you view as favorable and then what do you think could communize draconian given the current operating environment.

Speaker 11: Okay, and then, I mean, I know this is a bit of an abstract question, but given that we are approaching the time of the year when we could get a sense of what the preliminary ruling looks like, I mean, what kind of rate basket increase would you view as favorable, and then what do you think could come in as draconian given the current operating environment?

I mean, given where costs have gone I think as you know I think last year was about two 2.3% something along that lines that would be pretty draconian to me I would think you would need to be quite a bit higher given where costs have gone.

Speaker 6: I mean, given where costs have gone, I think, you know, I think last year was what, 2, 2.3%, something along that line, that would be pretty draconian to me. I would think it would need to be quite a bit higher given where costs have gone.

Okay, I think we'd all agree with you there and then one other one on occupancy trends you can see that Guardian I believe recently reported a pretty strong increase in referrals I think it was to the tune of about 125% do you get the sense of these patterns will affect and occupancy gains in the coming months or do admissions remained difficult given the labor picture.

Speaker 11: I think we'd all agree with you there. And then, you know, another one on occupancy transit, you can see that guardian, I believe, recently reported a pretty strong increase in referrals. I think it was a tune of about 125%. You get the sense that these patterns will reflect an occupancy gain from the coming months or do admissions remain difficult given the labor picture. I mean, what I mean to ask here are those, are those increases in referrals translating to occupancy at present? …..…

What I mean to ask you are those are those increases in referrals translating to occupancy at present.

Or would you not.

When you say guarded.

Speaker 3: Connor, when you say Garnet, you're talking about, what are you talking about?

You're talking about.

Are you talking about.

Yeah. It came out it came out of a skilled nursing news the other a couple of weeks back.

Speaker 11: It came out of skilled nursing news a couple weeks back.

Oh.

Okay.

Not aware of that.

Yeah, I mean, the only thing I, yeah, I I'm not worried about either but the only thing I would say as you know we have quite a number of operators who have been telling us for quite a while now that the admissions are out there, but they can't take them because they don't have the staff right. So I don't think it's necessarily translating and it certainly isn't gonna be translating in the omicron environment.

Speaker 6: Yeah, I mean, the only thing that, yeah, I'm not aware of that either, but the only thing I would say is, you know, we have quite a number of operators who have been telling us for quite a while now that the admissions are out there, but they can't take them because they don't have the staff, right? So I don't think it's necessarily translating, and it certainly isn't going to be translating in the Omicron environment. We'll see what happens if some of those staffing issues start to ease up a little bit once the surges go down.

We'll see what happens if some of those staffing issues start to ease up a little bit once the surgeons go down.

Okay.

Speaker 11: Thanks for that. And then last question from me, just thinking about the potential portfolio sales. I mean, where do you seek to push the proceeds from these sales? I mean, would you push them directly to the share buyback, giving your cost to capital and the risk of acquiring assets in the current environment, or perhaps pushing it to the ongoing kind of maintenance cat-backs or capital-improving projects you have?

Thanks for that and then last question for me just thinking about the potential portfolio sales I mean.

Where do you seek to push the proceeds from these sales I mean would you push them directly to the share buyback given your cost of capital and the risk of acquiring assets in the current environment.

Or perhaps pushing it to the.

Ongoing kind of maintenance capex or capital improvement projects you have.

So kind of.

Speaker 3: So, kind of, we still have, the pipeline is incredibly active, but we still have deals with the pipeline. So I think, you know, step one is redeploying those ZAT capo into the pipeline.

We still have.

The pipeline is incredibly active but we still have some deals in the pipeline. So I think step.

Step one is redeploying that capital into pipeline deals.

Speaker 3: And then if we don't have play wide deals, then I think we just...

And then.

If we don't.

If we don't have pipeline deals that I think we just we step back and think about the best way to allocate capital.

Speaker 3: step back and think about the best way to allocate capital. And we have put the tool in the toolkit with the share buyback. So we have the potential to use that.

And we have put the tool in the toolkit with the share buyback. So we have the potential to use that lever, but I will tell you that that's something we would we would only use on a leverage neutral basis, so we'd be taking out debt and equity we go that route.

Speaker 3: But I will tell you that that's something we would only use on a leverage neutral basis. So we'd be taking out that end equity if we go that route. But the priority for us is to support our current tenants. The last thing we want to do is have a deal in our pipeline where we're not supporting our tenants which has always been the franchise for growth.

The priority for us to support our current tenants and the last thing we want to do is have a deal in our pipeline.

We're we're not supporting our tenants, which has always been the franchise for growth.

Okay I'll leave it there thanks al.

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

Speaker 1: The next question is from Nick Joseph with Citi. Please go ahead.

Speaker 12: Thank you. You mentioned that industry occupancy overall has stalled a bit, but I think you said 20% of your portfolios adder of pre-COVID occupancy levels. So what do you see in different at those facilities? That enough of geography or labor differences versus the other 80% that are still struggling?

Thank you you mentioned that industry occupancy overall, the stalled a bit but I think you said, 20% of your portfolio is at or above pre COVID-19 occupancy levels. So what do you see different at those facilities I don't know, if it's geography or labor differences versus the other 80% that are still struggling.

Speaker 6: You know, there's a there's a certain larger percentage within that bucket that's non-sniff. So that's a piece of it. We've dug in quite a bit to look at, you know, state concentrations to look at size of buildings.

Yeah, there's a there's a certain larger percentage within that bucket. That's non snaps. So that's a piece of it.

We've dug in quite a bit to look at you know state concentrations to look at sides of buildings.

Speaker 6: various other items that had affected COVID originally. And we haven't really seen much correlation other than how far did they drop originally, right? So if they were more than a 15% drop originally, obviously, it takes longer for them to come back, but to be in that bucket, they had a smaller, a smaller percentage drop. So that's why they're coming back a little bit quicker.

And various other items that had affected COVID-19 , originally and and we haven't really seen much correlation other than how far did they drop originally right. So if they were.

More than a 15% drop originally obviously.

It takes longer for them to come back but to be in that bucket them. They had you know a smaller and smaller percentage drops that's why they're coming back a little bit quicker.

Yeah.

Speaker 12: Thank you. And then just on the dividend, how are you thinking about it for the remainder of the year? Obviously, there's a lot of uncertainty in terms of rent collections and other noise in the numbers. You declared the first quarter dividend already, but how are you thinking about the policy just kind of more broadly?

Thank you and then just on the dividend how are you thinking about it for the remainder of the year, obviously, there's a lot of uncertainty.

In terms of rent collections and other noise in the numbers you declared the first quarter dividend already.

How are you thinking about the policy I'm, just kind of more properly.

Consistent with how we've talked about in the past.

Speaker 3: Consistent with how we've talked about it in the past. It's the extent we're working through these restructuring, but we have a view that long-term cash flows are going to not going to be impacted or the impact is minimal. Then I think we'll be consistent with our dividend policy. And I guess the best example of that is golf cut.

To the extent, we're working through these restructurings.

We have a view that long term cash flows.

Not going to be impacted or the impact is minimal.

I think we'll be consistent with our dividend policy and I guess, the best example of that is golf coast.

Speaker 3: We have $30 million in rent, which Q1, we're not going to collect any rent because they're bankrupt.

We had we had $30 million rent, which Q1, we're not going to collect any rent because they're in bankruptcy.

Speaker 3: But we're going to redeploy the disaster by selling them and we'll end up with $300 billion net that we'll redeploy. So the ultimate resolution on the Gulf Coast situation is a push from a cash level perspective. And I think to the extent that some of these other restructuring end up.

But we're going to redeploy those assets by selling them and.

Well end up with.

Call It $300 billion net debt will redeploy so the ultimate resolution of the Gulf Coast situation is a push from a cash flow perspective, and I think to the extent that some of these other restructurings end up.

Speaker 3: in that same realm, there's no reason to jump.

In that same realm.

There's no reason to jump.

Speaker 3: to jump forward and say, hey, we're gonna change our dividend policy. But, you know, as everybody on this call knows,

To jump forward and say, hey, we're going to change our dividend policy, but.

As as everybody on this call knows.

Speaker 3: It's an evolving environment, we're going to be as transparent as we can, but I'd say today the policy is the same, unless we see a long-term impact on our cash flows, we're not changing the dividend.

It's an evolving environment, we're going to be as transparent as we can.

I'd say today policies are the same unless we see a long term impact on our cash flows were not to change it.

Thank you very much.

The next question is from Daniel Bernstein with capital one. Please go ahead.

Speaker 1: The next question is from Daniel Bernstein with Capital One. Please go ahead.

Speaker 13: Hi, good morning. I just wanted to go back to a GMO and understand that, have they not paid rent in January and maybe kind of what your expectations are for 1Q rent versus 4Q?

Hi, good morning.

Wanted to go back to a GMO and understand it.

They're not paid rent in January and maybe.

What your expectations are for <unk> versus <unk>.

Speaker 5: So the last rent that they paid was in the month of November . They did not pay December . They did not pay January .

So they paid.

The last rent that they paid within a month of November they did not pay December they did not pay January .

They have still not been the recipient of any provider relief funds.

Speaker 5: They have still not been the recipient of any provider relief funds. There's kind of two buckets that came out that what I've called the easy bucket that the federal government was able to ascertain the amounts relatively quickly and those monies were distributed. And then there will be more complicated applications which are being...

There's kind of two buckets that came out.

What I would call the easy bucket.

Federal government was able to ascertain the amounts relatively quickly and those monies were distributed.

There will be more complicated applications, which are b.

<unk> gone through as we speak so we do expect that there will be a significant amount of provider week funds coming to some of our operators, including <unk> as I mentioned, we did not get any funds in the first round and that likely will be a source for some rent going forward.

Speaker 10: gone through as we speak. So we do expect that there will be a significant amount of provider leak funds coming to some of our operators, including signature. If you did not get any funds in the first round and that likely will be a source for some rent going forward. But that's sort of in the short run.

Sort of in the shop.

Speaker 5: In the long run, I think that signature portfolio is going to be we're going to probably slice off a fairly significant chunk of that and either release it or sell it much like we're doing in golf.

In the long run I think the portfolio is going to be.

We're going to.

Probably slice off a fairly significant chunk of that either re lease it or sell it much like we're doing in Gulf coast.

Speaker 13: Okay. Okay. No, that's, that's, that's great call. And then I just wanted to go back to the labor environment some, and, you know, you look at the RPRF funds coming in, uh, you know, you've got the, uh, I guess, uh, uh, Jonathan said earlier, the, uh, a potential increase in Medicaid funding in.

Okay. Okay no that's good.

That's great color and then I just wanted to go back to the labor environment saw them and you know.

You look at the our pure funds coming in.

You've got the I guess, Jonathan said earlier the.

A potential increase in Medicaid funding in Florida.

Speaker 13: Florida, maybe in Texas, you know, is that enough to allow SNF operators to better compete.

Florida, maybe in Texas, you know is that in.

Enough to allow sniff operators too.

Better compete.

For for waiver I guess, maybe the right way to ask it is.

Speaker 13: for labor, I guess maybe the right way to ask it is the PRF funds and other government support, just a shortfall relative to the increase in wages out there in Kentucky.

Is the P. R F funds and other government support.

Just a shortfall relative to the increase in wages.

Out there.

Yeah.

Speaker 13: You know, so just, you know, can snips compete for nurses? I think that's really the bottom.

So just just sniffs compete for nurses I think that's really the bottom line.

Speaker 3: You know, short answer is yes, but we don't.

Yeah. The short answer is yes.

Yes, but we don't.

It still remains to be seen how this all plays out.

Speaker 3: You know, it still remains to be seen how this all plays out. One of the...

One of the biggest issue.

Speaker 3: In labor, we have a permanent increase in the labor costs rate. In this end, if your fat is not going to let you go like, the biggest issue is eliminating agents.

Labor.

We have a permanent increase in the labor costs.

That is not going to go away.

The biggest issue is eliminating agents.

And I think we will be able to get back.

Is it balanced with agency over time, but.

Speaker 3: into balance with agency over time. But I don't know if that's six months or 12 months or 18 months and that cost.

But I don't know that six months or 12 months or 18 months and that cost.

Incrementally, it's pretty rough and I just don't know.

Speaker 14: incrementally is pretty rough and I just don't know if we'll have sufficient support from the state to overcome that.

Sufficient okay.

Okay got that short term.

Okay.

Speaker 15: That's all the questions I have. Thanks for the time, guys.

That's all the questions I have thanks for the time guys.

Speaker 1: The next question is from Tio, Oculasagna, with Credit Suisse. Please go ahead.

The next question is from Tayo Okusanya with credit Suisse. Please go ahead.

Speaker 16: Yes, good morning. Everyone in regard to the, the, the loan book, you know, you actually did take the charges according to, but going forward. I'm assuming those loans are still performing and they're still booking all the interest income associated with it. Is that a correct assumption? Or should we be making some adjustments for that in 2022 as well? Well, let's see in the first quarter.

Hi, Yes, good morning, everyone in regards to the loan book, Yes, you did take the charges. According to FIFA, but going forward I'm, assuming those loans are still performing at a still booking all the interest income associated with it is that a correct assumption.

Should we be making some adjustment for that in 2020 , two as well relative to the fourth quarter.

That's correct.

Speaker 8: That's correct. You know, we've done our piece of work so related to those and we are talking the thing.

We've done our seasonal reserve related to those and we are booked.

Interest paid on this.

Okay.

Speaker 14: Okay, that's helpful. And then also during the quarter, I noticed that you did have a severance charge, I think, on LinkedIn. It looks like Steven Insoft has kind of moved on. Could you talk a little bit about that and kind of what that may mean in regards to what the setup for the future management team? Does he get replaced? Are those responsibilities being handled by someone else? Sure. Well, first of all,

That's helpful. And then also during the quarter I noticed that you didn't you did have a severance charge I think that on Linkedin, It looks like Stephen and soft has kind of moved on.

Could you talk a little bit about that and kind of what's what that may mean in regards to what.

The setup for the future management team does he get replaced or those responsibilities being handled by someone else.

Sure well first of all.

Steven.

A great asset.

Really appreciate it his time here at Omega.

Speaker 14: really appreciated his time here at Omega. And we just got to the point in time towards the end of this year where...............

And we just got to the point of time towards the end of this year.

Software.

It was it was time for both parties.

Speaker 3: It was time for both parties to separate and separate.

Separate it's very amicable.

Speaker 14: And his responsibilities have been to other senior members of the team, including Megan, Son McCall, and Vika Scoopta, our senior VP of acquisitions.

And.

He has his responsibilities have been.

It moved into other senior members of the team.

Megan on the call and biggest scooped up.

Our senior VP of acquisitions.

Gotcha. Thank you.

Speaker 1: The next question is from Vee Kramelho?ra with Mzuho. Please go ahead.

The next question is from Vikram Malhotra with Mizuho. Please go ahead.

Speaker 5: Thanks good morning. Thanks for seeing the question. So maybe just just stepping back, I guess, can you sort of walk us through what sort of your base case versus maybe their case of sort of recovery versus pre-COVID? I think at Nairi, if you were talking, you know, maybe late third quarter 2022, just kind of how are you viewing sort of the recovery path from your own in terms of timeline?

Thanks. Good morning, Thanks for taking the question. So maybe just just stepping back I guess can you sort of walk us through what sort of base case versus maybe bear case of soda recovery versus pre Covid I think at NAREIT. You were talking you know maybe late third quarter 'twenty. Two just kind of how are you viewing sort of the recovery path.

From here on in terms of timeline.

Yes, so the recovery for us is really a focus on occupancy occupancy recoveries into the.

Speaker 3: Yeah, so the recovery for us is really a focus on occupancy and occupancy recoveries into the low 80% and hopefully, ultimately back to 80, 45%. So, if the pace of recovery post Omicron.

Low 80 percents.

And hopefully ultimately back to 83, 5%.

So if the pace of recovery post omicron.

Speaker 3: consistent with pre at caught 40 or 50 basis points a month. Um, that we have 12 months at least.

As consistent with pre yet call it 40 or 50 basis points a month.

We have 12 months at least.

Speaker 3: So I think we have to now be thinking about 2023 and hope that we can get to the next

I think we have to now be thinking about 2023.

And hope that we don't have another.

Speaker 3: very, very come up this creates a pop.

Barry come up that creates a pulse.

Okay that makes sense and then just going back to the buyback.

Speaker 17: Okay, that makes sense. And then just going back to the buyback, can you maybe just give us a bit more color sort of...

Can you, maybe just give us a bit more color sort of what's the thought process behind authorizing. It now in terms of you you've talked about a lot of funds you have some recovery going on the dividend in your mind is well covered so I'm just trying to understand like you know typically when you've seen other companies put buybacks and it's usually.

Speaker 17: What's the thought process behind authorizing it now in terms of you've talked about a lot of funds you have, some recovery going on, the dividend in your mind is well covered.

Speaker 17: I'm just trying to understand, typically when you've seen other companies put buybacks in, it's usually when maybe the stocks are well below their NAV or perceived NAV. I'm just trying to figure out, what is, is there some potential news that you're anticipating or event you're anticipating that would warrant the buyback now versus some other coin?

When you know maybe the stock so well below there any have you perceived any b I'm just trying to figure out like what is is there. Some potential news that you were anticipating or event youre anticipating that would warrant the buyback now versus some other point.

Speaker 3: Now, it really is just putting a tool in the toolkit.

No.

It really is just putting a tool in the toolkit.

Given that.

Speaker 3: Given that, as Dan mentioned, we have the potential for additional asset sales and thinking about where that capital would go, maybe it's on our balance sheet as cash. Hopefully we deploy it through the pipeline. But it is another tool in the toolkit that we elect on a leverage-neutral basis.

As Dan mentioned we.

Have the potential for additional asset sales.

And thinking about where that capital ago, maybe it's on our balance sheet as cash.

We deploy it through the pipeline, but it is another tool in the toolkit.

On a leverage neutral basis deploy that cash.

Is there is there some sort of a.

Speaker 17: Is there is there some sort of level you're looking at in terms of a floor or some number you're saying? Okay, you know because you the last two years if I if I if I'm correct, I think you Issued stock at 34 30, maybe 36 somewhere in that range Is there a level which that says hey this doesn't make sense There's a big disconnect between us and where maybe private market is trading

Level Youre looking at in terms of a floor or some number you're saying Okay. You know because you asked do we have the site if I if I'm correct. I think you issued stock at 34, 30, maybe 36 somewhere in that range.

Is there a level, which they paid it doesn't make sense, there's a big disconnect between us and where maybe private market is trading.

So when you see the stock dip into the Twenty's, that's interesting, but we have not established a level.

Speaker 14: Well, you know, when you see the stock dip into the 20s, that's interesting, but we have not established the level.

Okay Fair enough just two quick numbers question you mentioned looking at.

Speaker 17: Okay, fair enough. Just two quick numbers questions. You mentioned looking at new deals. Today, for where new deals are occurring, what sort of coverage levels on an EBITDA basis are you targeting or is the market focused on?

New deals.

The due date for where new deals are occurring what sort of coverage that moves on an EBITDAR basis are you targeting or is the market focused on.

So.

Speaker 5: So, you know, a lot of underwriting is taking place based upon 2019 results to be honest with you because

You know a lot of underwriting has taken place based upon.

2019 results to be honest with you because you know with occupancy down and labor costs up it's very difficult to get your arms around.

Speaker 5: You know, with occupancy down and labor costs up, it's very difficult to get your arms around.

Speaker 5: what those assets are worth with those type of operating results. So a lot of it's based on historical results. So the cap rates, I don't think have changed much. It's just not based upon current run rates. It's based on the historical.

What those assets are worth.

With those type of operating results. So a lot of it is based upon historical results.

So you know.

The cap rates I don't think have changed much. It's just not based upon current run rate just based on the historical.

Speaker 5: And quite frankly, we're seeing right now more opportunity in the UK than we are in the US.

And quite frankly, we're seeing.

Right now more opportunity in the UK than we are in the U S.

Okay.

Speaker 17: Okay. I guess from an EBITDA coverage, if somebody were to enter a new deal, a new lease today, or you were to do one, you'd look at a number that's on an EBITDA basis north of 1-3?

I guess from an EBITDAR coverage, if somebody were to enter a new deal.

Leads to death or you were to do one you'd look at a number that's what on an EBITDAR basis north of one three.

Yeah historically.

Okay.

Speaker 17: And just the last question on that on that EBITDA, so I know you said

And just last question on that on that EBITDAR. So I know you said.

In place EBITDAR, excluding care funds I think it was <unk> 92.

Speaker 17: EBITDA are excluding care funds, I think, was 0.92. I'm just looking at the chart in your supplement where you break down the EBITDA coverages by ranges. I think 36% of rent is between 1.24% is between 1.2 and 1.8. But the weighted average is 1.19. Can you just maybe elaborate on that calculation?

I'm just looking at the chart in your supplement where you break down the EBITDAR coverages by ranges I think 36% of renters between one Oh, sorry is between one point a 24% is between one point to win 1.8, but the weighted average is 1191.

Can you just maybe elaborate on that calculation.

Speaker 10: Yeah, I can tell you that 1.19 is definitely a typo.

Yeah, I can tell you that.

119 is definitely a typo.

We will have we will go back.

Speaker 10: What is the actual number? I don't know. We just noticed this like seconds before the call. Okay. Okay. No worries.

What what is the what is the actual number.

I don't know I, just we just noticed this like seconds before the call.

Okay, Okay, no worries I'll follow up thanks, so much.

Speaker 1: The next question is from Andrew Roosevelt with Wolf Research. Please go ahead.

The next question is from Andrew Roosevelt's with Wolfe Research. Please go ahead.

Speaker 18: Hey good morning guys, how are you? Okay, Andrew, are you?

Hey, good morning, guys how are you.

Okay Andrew.

Yeah, great. So I got I had a I got stumped on a question from somebody.

Speaker 18: yeah great so i got i had a i got stumped on a question um... from somebody i think often people look at the stuff that you know isn't paying rent in the kind of assume like the the of it that is your own uh... which which isn't necessarily right what would you have a sense of what your coverage buckets would look like if you included uh... and it's eighty nine percent that's in there what what it would look like if you included the eleven that weren't

Often people look at the stuff that you know isn't paying rent and then kind of assume like.

The EBITDA is zero.

Which isn't necessarily right.

Do you have a sense of what your coverage buckets would look like if you included and he gets 89% that's in there what what it would look like if you included the 11 that weren't.

Okay.

Well certainly be lower but no I don't have that off top of my head.

Speaker 10: Well, it would certainly be lower, but no, I don't have that off top of my head.

Got it but it.

Speaker 18: got it but would it be lower but it wouldn't be zero right there's some capacity to parent yeah not even close to zero

It would be lower but it wouldn't be zero right. There, there's some capacity at the parent.

Not even close to zero.

Got it okay and in the 89 I'm just trying to back that into the the the tenants that did the 11 tenants that aren't paying out is just the three and a half in the 89.

Speaker 18: got it okay and in the eighty nine i'm just trying to back that into the the tenon step that the eleven the tenon said i'm paying out is the three and a half in the eighty nine

The new tenant that you announced this quarter, yes, no they're not in that.

Speaker 10: the new tenant that you announced this quarter yeah no they're not in that i don't think they are out of any on the other core i'm sorry

Oh, Oh, any 80 90 in their core I'm sorry.

They are in the 89, okay, great that was it thanks a lot guys.

Speaker 18: the R in the 89, okay, great. That was it, thanks a lot guys.

The next question is from John Pawlowski with Green Street. Please go ahead.

Speaker 1: The next question is from John Polosky with Green Street. Please go ahead.

Speaker 4: Thanks for taking the time. Maybe just one question on the capital plan for this year. If you're cost of capital stays in the same zip code as right now and acknowledging it.

Thanks for taking the time and maybe just one question on the capital plan for for this year, if your cost of capital stays in there.

In the same ZIP code as right now and acknowledging that it has taken another leg down or stocks taken another leg down this morning, but what kind of aggregate disciplined disposition volume could we see come through the system. This year.

Speaker 4: taking another leg down or stocks taking another leg down this morning, but what kind of aggregate disposition volume could we see come through the system this year?

Well, we've already talked about.

400 plus million for the 41 held for sale assets you got that.

Speaker 14: four hundred plus million for the forty-one health for sale assets. So you got that. And then the restructuring's are still in process. There's no doubt in my mind there will be some sales out of that, but tagging that number is just impossible.

Then the restructurings are still in process. There is no doubt in my mind there'll be some sales out of that but taking that numbers just passed.

Yeah.

Okay, and then apologies if I missed it could you just give some expectations on pricing on the dispositions.

Speaker 4: OK. And apologies if I missed it. Could you just give some expectations on pricing on the dispositions?

The range of cap rates.

Speaker 14: They're incredibly high because most of those assets currently have low cash.

They are incredibly high.

Because most of those assets currently up well.

Cash flow numbers.

Speaker 14: you're looking at multiples like 20 times cash flow. Very, very high. But remember, it's what Dan mentioned, that the buyers are looking at how these properties performed pre-COVID and are looking at a post-COVID environment with their pricing.

Youre looking at multiples like 20 times cash flow.

Very very hot.

Remember, it's what Dan mentioned that the buyers are looking at how these properties performed pre COVID-19 .

We're looking at that.

The post COVID-19 environment with our pricing.

Okay, Alright, thank you guys.

Yes.

Again, if you have a question. Please press Star then one.

Speaker 1: Again, if you have a question, please press star then 1.

Speaker 1: The next question is from Joshua Dennerlein with Bank of America. Please go ahead.

The next question is from Joshua <unk> with Bank of America. Please go ahead.

Yeah, Hey, guys.

I guess.

One question I had is maybe what are you guys looking for or like a turn in the sniff industry and maybe could you remind us if theres anything else on your watch list.

Yeah.

You mean.

Speaker 19: Well, the key metric for us is just occupancy, but yeah, some of that's going to be driven from staffing. Is that the question in terms of the term? Yeah, I guess. Is it is it just the labor component or I saw on your latest incident report that looks like 75% of your facilities have have COVID cases. So I wasn't sure if like, that was kind of impacting it. And you got to wait for that to come down.

The key metric for US is just the occupancy, but yes. All of that is going be driven from staffing is that is that the question in terms of the term yeah. I guess is it is it just the labor component or I saw on your latest incident or the it looks like 75% of your facilities.

<unk> cases, so I wasn't sure if like that was kind of impacting it and you've got to wait for that to come down.

Yes.

Speaker 14: Yeah, it's like, so you're right. It's all the components of that labor, COVID.

So you're right, it's all the components of that labor.

Covid.

Having that facility count go down and then ultimately occupancy is as I think you've heard a couple of times in this call.

Speaker 14: having that facility count go down and then ultimately occupancy is as I think you've heard a couple times in this call.

We think theres more demand out there then the industry can surf because of.

Speaker 14: think there's more demand out there than the industry can serve because of the underlying labor issues which are partly driven by COVID infections.

The underlying.

Labor issues, which are partly driven by COVID-19 infection. So.

Speaker 14: You know, they all run together. Ultimately for us though, it's getting occupancies back. And then what was the second half of your question?

They all they all run together ultimately for us, though it's getting Occupancies back and then what was the second half of your question.

Just the update on the watch list.

Speaker 19: I just a update on the watch list.

You bet.

Speaker 19: that that report you put out last summer, that that study you did last summer, where you kind of looked at your top tenants, like, are there still tenants that you were kind of watching that, that have been

That report you put out last summer that study you did last summer, where you kind of look at your top tenants like or.

Or are there still tenants that you were kind of watching that that had been paying.

Speaker 19: paying rent or we kind of pass all the ones that you were concerned about, whereas there may be more to that.

Paying rent or are we kind of past pass all the ones that you were concerned about whereas there may be more to that.

We're not past tenants that we're concerned about.

Speaker 14: We're not past tenants that we're concerned about. I will tell you that we've had.

I will tell you that we've had.

Additional tenants.

Speaker 14: additional credits to express some liquidity concerns over the next couple of years. So I think...

Express some liquidity concerns over the next.

So I think.

All of our constituents needs to be very careful thinking that that the restructuring type scenarios are behind us I am sure we will have more than they might be small.

Speaker 14: all of our constituents need to be very careful thinking that the restructuring type scenarios are behind us. I'm sure we will have more and they might be small, they might be bigger, but there's no doubt we're going to be having these discussions for a few.........

They might be bigger, but there's no doubt we're going to be.

Having.

Discussions for a few more quarters, just no doubt in my mind.

Okay.

Thank you.

This concludes our question and answer session I would like to turn the conference back over to Taylor Pickett for any closing remarks.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to Taylor Pickett for any closing remarks.

Great. Thanks, everybody for joining us today as always feel free to reach out to the team and it won't be responsive and have a good day.

Speaker 1: Thanks everybody for joining us today. As always, feel free to reach out to the team and we'll be responsive. Have a good day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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

Okay.

Speaker 20: You

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