Q4 2023 Omega Healthcare Investors Inc Earnings Call

Greetings and welcome to the Omega healthcare investors fourth quarter 2023 earnings conference call.

Operator: Greetings and welcome to the Omega Healthcare Investors fourth quarter 2023 earnings conference call. At this time, all participants are in listen-only mode.

At this time, all participants are in listen only mode.

Operator: After today's presentation, there will be a brief question and answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Michele Reber. You may begin. Thank you and good morning.

After today's presentation there'll be a brief question and answer session.

Speaker Change: If anyone should require operator assistance during the conference.

Speaker Change: Please press star zero from your telephone keypad.

Speaker Change: As a reminder.

Speaker Change: This conference is being recorded.

Speaker Change: I will now turn the conference over to Michele Reber He may begin.

Michele Reber: Thank you and good morning with me today is Omega CEO Taylor Pickett C O Dan Booth, CFO, Bob Stephenson and Megan Kroll Senior Vice President of operations comments.

Michele Reber: With me today is Omega's CEO, Taylor Pickett, COO, Dan Booth, CFO, Bob Stephenson, and Megan Kroll, Senior Vice President of Operations. Comments made during this conference call that are not historical facts may be forward-looking statements, such as statements regarding our financial projections, potential transactions, operator prospects, and outlook generated. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC.

Michele Reber: Comments made during this conference call that are not historical facts may be forward looking statements such as statements regarding our financial projections potential transactions, operator prospects and outlook generally.

Michele Reber: Factors that could cause actual results to differ materially from those in the forward looking statements are detailed in the company's filings with the SEC.

Michele Reber: During the call today, we will refer to some non-GAAP financial measures, such as NAVREAD FFO, Adjusted FFO, FAD, and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles are available in the quarterly supplement. 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... Thanks, Michele.

Michele Reber: During the call today, we will refer to some non-GAAP financial measures such as NAREIT at FIFO adjusted F. F O Fad and EBITDA reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles are available in the quarterly supplement in addition, certain operator coverage and financial information that we discuss.

Michele Reber: Based on data provided by our operators that has not been independently verified by Omega I will.

Michele Reber: Now I'll turn the call over to Taylor.

Taylor Pickett: Thanks Michele good.

Taylor Pickett: Good morning, and thank you for joining our 4th Quarter 2023 Earnings Conference. Today I will discuss our fourth quarter financial results and certain key operating. Fourth quarter FAD, funds available for distribution of 64 cents per share, was as expected. Reflecting several portfolios that are in the process of being transitioned, which will result in meaningful FAD updates over the next few. Full year FAD was $2.62.

Taylor Pickett: Morning, and thank you for joining our fourth quarter 2023 earnings conference call.

Taylor Pickett: Today, I will discuss our fourth quarter financial results and certain key operating trends.

Taylor Pickett: Fourth quarter Fad funds available for distribution of 64 cents per share was as expected, reflecting several portfolios that are in the process of being transition, which will result in meaningful fad upside over the next few quarters.

Taylor Pickett: Full year Fad was $2 62 per share slightly below our full year dividend of $2.68 per share.

Taylor Pickett: Slightly below our full year dividend of $2.68, resulting in a payout ratio of 102%. We continue to have a handful of cash basis operators, including Maple. This will impact our Go Forward AFFO, making first quarter 2024 FAD difficult to predict.

Taylor Pickett: Resulting in a payout ratio of 102%.

Taylor Pickett: We continue to have a handful of cash basis operators, including Maplewood now will impact our go forward F L and fad, making first quarter 2024, fad difficult to predict.

Taylor Pickett: However, longer term, we believe all of these assets, but in particular Maplewood, are well positioned to generate reliable and growing cash flows. We believe that we have enough visibility into the timing and ultimate resolution of the portfolios that are being transitioned or sold to provide guidance for the first time since the pandemic, and our 2024 ASFO guide, between $2.00 and $0.70. $22.80. As Dan will discuss, key tenant occupancy and rent coverage metrics continue to improve, including the under one times EBITDA coverage operator dropped from 27.5% of total revenue to 13.2% of total. We can break the 13.2% into a handful of operators representing 7.5 13.2, Strong Credits, and therefore payment of rent should not be an issue.

Taylor Pickett: However longer term, we believe all of these assets, but in particular maplewood are well positioned to generate reliable and growing cash flows and related brands.

Taylor Pickett: We believe that we have enough visibility into the timing and ultimate resolution the portfolios that are being transitioned or sold.

Taylor Pickett: <unk> guidance for the first time since the pandemic started.

Taylor Pickett: Our 2020 for Assai, so guidance is between $2.70 and $2.80 per share.

Taylor Pickett: As Dan will discuss key tenant occupancy and rent coverage metrics continue to improve.

Taylor Pickett: Excluding the under one times EBITDAR coverage operator metric.

Taylor Pickett: Which dropped from 27, 5% of total rent to 13, 2% of total rent.

Taylor Pickett: We can break the 13, 2% into a handful of buckets.

Taylor Pickett: Operators, representing seven 5% of the 13, 2% are strong credits and therefore payment of rent should not be an issue.

Taylor Pickett: Operators representing 1.2% of third quarter and October EBITDA coverage, above 1.0 times, benefiting from state rate increases, operational improvements that we expect to continue on a go-forward basis..9% represents facilities that have already transitioned to performing credit. That leaves operators representing 3, of which an operator representing 0.5% was recently

Taylor Pickett: Operators, representing one 2% at third quarter and October EBITDAR coverage.

Taylor Pickett: Above 1.0 times benefiting from state rate increases and operational improvements that we expect to continue on a go forward basis.

Taylor Pickett: One 9% represents facilities that have already transitioned to performing credit.

Taylor Pickett: That leaves operators, representing three 6% of which an operator, representing <unk>, 5% was recently transitioned.

Robert O. Stephenson: This leaves a balance of 3.1% representing 11 small operating companies. We will now turn the call over to Taylor and G'mor. Turning to our financials for the fourth quarter. Revenue for the fourth quarter was $239 million before adjusting for certain non-recurring items compared to $145 million for the fourth quarter of 2021. The year-over-year increase is primarily a result of timing related to operator restructuring, revenue from new investments completed in 2022 and 2023, and Net Straight Line Write-Off. Partially offset by asset sales completed during that same time, our NAREIT FFO for the fourth quarter was $129 million.

Taylor Pickett: Which leaves a balance of three 1% representing 11 small operating relationships.

Taylor Pickett: I will now turn the call over to Bob.

Robert O. Stephenson: Thanks, Taylor and good morning, turning to our financials for the fourth quarter revenue for the fourth quarter was $239 million before adjusting for certain nonrecurring items compared to $145 million for the fourth quarter of 2022 the year over year increase is primarily a result of <unk>.

Robert O. Stephenson: <unk> related to operate or restructurings.

Taylor Pickett: Revenue from new investments completed in 2022, and 'twenty three and net straight line write offs, partially offset by asset sales completed during that same time period.

Taylor Pickett: Our NAREIT F. S O for the fourth quarter was $129 million or <unk> 50 per share as compared to a loss of $30 million or a loss of 13 cents per share for the fourth quarter of 2022.

Robert O. Stephenson: $0.50 per share, compared to a loss of $30 million or a loss of $0.13 per share for the fourth quarter of 2020. Our adjusted FFO was $173 million. 58 cents per share for the, and our FAD was $163 million. $0.64 per share, And both exclude several items consistent with historical practice, outlined in our NARIT FFO, Adjusted FFO. For more information on FAD, Reconciliations to Net Income, found in our earnings release, as well as our 4th Quarter Financial Supplemental, please post it to our website. Our balance sheet continues to remain straight.

Taylor Pickett: Our adjusted <unk> was $173 million or 68 cents per share for the quarter and our fad was $163 million or 64 cents per share and both exclude several items consistent with historical practices and outlined in our NAREIT F. F. L. Adjusted at that though and Fad reconciliation.

Taylor Pickett: <unk> to net income found in our earnings release as well as our fourth quarter financial supplemental posted to our website.

Taylor Pickett: Our balance sheet continues to remain strong in.

Robert O. Stephenson: In the fourth quarter, we repaid 25 HUD mortgages, totaling $227 million. Repayment Stems, Previously Disclosed, Labib Ashton Transcribed by https://otter.ai. We ended the quarter with over $440 million of cash on the balance, and over $1.4 billion in credit facility borrowing capacity, and are well-positioned to pay off our April 1st $400 million dollar bomb fun new of your end. 99. 5.1 billion dollars, X-ray. Net Funded Debt Annualized Adjusted Normalized EBIT, www.ontario.ca/taylor_bench, This is the first time since the start of the pandemic that we've had a COVID-19 vaccine.

Taylor Pickett: In the fourth quarter, we repaid 25, HUD mortgages totaling $227 million. These.

Taylor Pickett: These repayments stemmed from the previously disclosed libbey asset sales and transitions.

Taylor Pickett: We ended the quarter with over $440 million of cash on the balance sheet and over $1.4 billion in credit facility borrowing capacity and are well positioned to pay off our April 1st $400 million bond maturity and fund new investments.

Taylor Pickett: As of year end, 99% of our $5.1 billion and debt was at fixed rates and our net funded debt to annualize adjusted normalized EBITDA was 496 times and our fixed charge coverage ratio was three eight times.

Taylor Pickett: As Taylor mentioned for the first time since the start of the pandemic, we are providing full year adjusted at that though guidance of between $2.70 to $2 80 per share.

Robert O. Stephenson: We are providing a full year adjusted FFO guide of $2.70 to $2.80. We're assuming no change in our revenue related to operators currently on an accrual basis of revenue recognition. Or stated another way, no additional operators being placed on a cash basis for revenue reckoning.

Taylor Pickett: We're assuming no change in our revenue related to operators currently on an accrual basis revenue recognition or stated another way no additional operators being placed on a cash basis for revenue recognition.

Robert O. Stephenson: We're assuming a timely completion of operator restructuring, which includes both the Levee and Guardian portfolios and Maplewood's eventual return to full contractuality. We're assuming $94 million in assets related to the facilities class, tell for sale at, including the annual impact of new investment in 2020, as well as $27 million of new investments completed. I project our quarterly G&A expense to run between $11.5 million and $15.5 million, or $13.5 million per quarter. The first quarter, typically, is the highest.

Taylor Pickett: We're assuming a timely completion of operator restructurings, which includes both the lobby and Guardian portfolios and Maple was eventual return to full contractual rent.

Taylor Pickett: We're assuming $94 million in asset sales related to the facilities classified as held for sale as of year end.

Taylor Pickett: We've included the annual impact of new investments completed in 2023.

Taylor Pickett: As well as $27 million of new investments completed year to date.

Taylor Pickett: We project, our quarterly G&A expense to run between 11, and a half million dollars 13, and a half million dollars per quarter with the first quarter typically being the highest.

Robert O. Stephenson: Non-cash stock-based compensation and NAREDA, but eliminated in our adjusted episode, is estimated to be approximately 9.2 million dollars. We assume the repayment of our April 1st $400 million bond. We assume no material changes in marketing. This measure relates to either the overnight investment rates earned on balance sheet cash, or the Expense Charge on Credit Facility Borrowing.

Taylor Pickett: Noncash stock based compensation expense, which is included in NAREIT at that though but eliminated and are adjusted at that though is estimated to be approximately $9 $2 million per quarter.

Taylor Pickett: We assumed the repayment of our April 1st 400 million dollar bond maturity, we assume no material changes in market interest rates as it relates to either the overnight investment rates earned on balance sheet cash or interest expense charge or credit facility borrowings.

Taylor Pickett: Our 2024, adjusted <unk> guidance excludes any additional new investments or asset sales as well as any additional capital transactions other than Bob has already mentioned.

Robert O. Stephenson: 2024 Adjusted FFO Guide. This concludes any additional new investments or assets, as well as any additional capital transactions. Other than what was already, several operators are still in negotiation. Precise timing is unknown. We provided a wide range to our adjusted FFO guidance. As stated in yesterday's earnings press release, in the fourth quarter, LaVie paid $5.3 million. In January, Levy paid approximately $1.45 million.

Taylor Pickett: As several operator transitions are still in negotiations and the precise timing is unknown, we provided a wide range to our adjusted <unk> guidance.

Taylor Pickett: As stated in Yesterdays earnings press release in the fourth quarter levee paid $5 $3 million in rent and in January Levine paid approximately $1.45 million from rent.

Robert O. Stephenson: We utilize Guardian's $4.4 million security deposit to record the fourth quarter, remaining $60,000. No additional cash grant was received from Guardia. And lastly, we recorded $11.6 million in Maplewood revenue through a combination of cash and. In January, Maplewood paid $3.8 million. Dan will provide additional color on these operators. Repair Remarks. And with that, I'll see you next time. Learn to call.

Taylor Pickett: We utilized guardians $4.4 million security deposit to record fourth quarter rent the remaining $60000 in security deposit was exhausted in January and no additional cash rent was received from Guardian in January.

Taylor Pickett: And lastly, we recorded $11 $6 million in Maplewood revenue in the fourth quarter through a combination of cash and security deposit applications in January maplewood paid $3 $8 million of him right.

Taylor Pickett: Dan will provide additional color on these operators in his prepared remarks, and with that I will turn the call over to Dan.

Daniel J. Booth: Thanks, Bob, and good morning, everyone. As of December 31st, 2023. Omega had an operating asset portfolio of 862%, approximately 84,000 facilities. These facilities were spread across 69 third-party operators and located within 42 states and the United States. For the trailing 12 months, Operator Iba, for our core portfolio as of September 30th, 2023, increased to 1.28 times. 1.15 times for the trailing 12-month period into June 30, 2023, during the third quarter of 2023. Operators Cumulatively Recorded Approximately $12 Million, Federal Stimulus Fund As compared to approximately $13.2 million, The Bulletproof Executive 2013, Trailing 12-month Operator EBITDA coverage would have increased during the third quarter of 2022, to 1.21 times, compared to 1.07. This is the second quarter when excluding the benefit of any federal stimulus. EVADAR coverage for the standalone quarter ended September 30th, 2020.

Daniel J. Booth: Thanks, Bob and good morning, everyone.

Daniel J. Booth: As of December 31st 2023, Omega had an operating asset portfolio of 862 facilities with approximately 84000 operating beds.

Daniel J. Booth: These facilities were spread across 69 third party operators and located within 42 states and the United Kingdom.

Daniel J. Booth: Trailing 12 month, operator, EBITDAR coverage for our core portfolio as of September 30th 2023.

Taylor Pickett: <unk> increased to 1.28 times versus 1.15 times for the trailing 12 month period ended June 30th of 2023.

Taylor Pickett: During the third quarter of 2023, our operators cumulatively recorded approximately $12 million and federal stimulus funds.

Taylor Pickett: As compared to approximately $13 $2 million.

Taylor Pickett: We recorded during the second quarter.

Taylor Pickett: Trailing 12 month, operator, EBITDAR coverage would've increased during the third quarter of 2023 to $1 two one times as compared to 1.07 times for the second quarter when excluding the benefit of any federal stimulus funds.

Taylor Pickett: EBITDAR coverage for the stand alone quarter ended September 30th of 2023 for our core portfolio was 1.33 times, including federal stimulus and 1.27 times, excluding the $12 million of federal stimulus funds.

Daniel J. Booth: Our core portfolio was 1.33 times, including federal stimulus, and 1.27 times, excluding the $12 million. Federal stimulus compares favorably to the Standalone Second of 1.21 and 1.15, with and without $13.2 million in federal stimulus. Occupancy for our overall portfolio has continued to recover, from a low of 74.7, in January of 2022. 80.2% as of mid-January 2024. Based upon preliminary reporting from our, For Comparative Purposes, occupancy for our Corp. was 83.2% for the fourth quarter of 2019, just prior to the onset of the COVID-19 pandemic. Journey to Portfolio Matters. In the fourth quarter of 2023, Omega sold a total of 30 Lobis for $317.9 million. All of the facilities were located.

Taylor Pickett: This compares favorably to the Standalone second quarter of one point to one times, and 1.15 times with and without $13 $2 million in federal stimulus funds respectively.

Taylor Pickett: Occupancy for our overall core portfolio has continued to recover.

Taylor Pickett: From a low of 74, 6% in January of 2022.

Taylor Pickett: 82% as of mid January 2024.

Taylor Pickett: Just upon preliminary reporting from our operators.

Taylor Pickett: For comparative purposes occupancy for our core portfolio was 83, 2% for the fourth quarter of 2019, just prior to the onset of the Covid pandemic.

Speaker Change: Turning to portfolio matters.

Speaker Change: Levy in the fourth quarter of 2023 Omega sold a total of 30 labeet facilities for $317 $9 million of gross proceeds.

Speaker Change: All of the facilities were located in Florida.

Daniel J. Booth: Omega is currently in the Transitioning, 6th Edition. For more information, visit www. FEMA.gov and third-party

Speaker Change: Omega is currently in the process of transitioning six additional facilities for Louisiana and two in Florida to third party operators.

Speaker Change: Omega is remaining portfolio with Lilly will consist of 30 facilities.

Daniel J. Booth: Omega's remaining portfolio with Liberty, www.ontario.ca, which includes 13 facilities in North Carolina, 9 in Pennsylvania, and Mr. to and Virginia.

Speaker Change: Which include 13 facilities in North Carolina nine in Pennsylvania.

Speaker Change: Six in Mississippi, and two in Virginia.

Daniel J. Booth: Three of those four states are considered highly desirable for an operating environment. We are currently in ongoing discussions with Levee on the best overall future for each of these remaining 30 companies. The total amount to be paid is approximately $1.45 million. The Bulletproof Executive 2013, During the fourth quarter of 2020, Maplewood paid rent of $11.6 million.

Speaker Change: Three of those four states are considered highly desirable from an operating environment standpoint.

Speaker Change: We are currently in ongoing discussions with Liberty on the best overall future for each of these remaining 30 facilities.

Speaker Change: Libbey has paid approximately $1.45 million per month for the last three months, including January of 'twenty 'twenty four.

Speaker Change: Maplewood.

Speaker Change: During the fourth quarter of 2023.

Speaker Change: We would paid rent of $11 $6 million.

Daniel J. Booth: Assisting of 9.8 million dollars of cash and $1.8 billion, here to January of 2024, Maplewood paid $3.8 million in. Mayboard continues to see strong performance. 16 of the 17 facilities fully. Spire New York City, Maplewood believes there is a path to stabilization at the in the near future. Maplewood was recently awarded the Best of Senior Living Award.

Speaker Change: Consisting of $9 $8 million of cash payments and $1 $8 billion in security deposit applications.

Speaker Change: In January of 2024, Maplewood paid $3 8 million in rent.

Speaker Change: Maplewood continues to see strong performance across the portfolio with 16 of the 17th disorder is fully stabilized.

Occupancy and inspire New York City is currently at 65%.

Speaker Change: And Maplewood believes there's a path to stabilization at the facility in the near future.

Speaker Change: Maplewood was recently awarded best of Senior living Awards at all 17 facilities, which places the communities in the top 1% to 2% of senior housing and care providers nationwide.

Daniel J. Booth: All 17, places the communities in the top 1-2%. Senior Housing Care Providers Nation. This remarkable achievement reflects the dedication and commitment of the Maplewood, Omega currently leases six facilities. 5 in Pennsylvania, and 1 in Washington, D.C. We are currently negotiating leases to release the remaining six facilities to an unrelated third party, Subject to normal regulatory. And the final is:

Speaker Change: This remarkable achievement reflects the dedication and commitment of the Maplewood employees.

Speaker Change: Guardian.

Speaker Change: Omega currently leases six facilities to Guardian, five in Pennsylvania, and one in West Virginia. We're currently negotiating lease terms to release the remaining six facilities to an unrelated third party subject to normal regulatory approvals and the finalization of certain documentation.

Daniel J. Booth: In addition to the aforementioned restructurings and transitions, Omega is working with several other relatively small companies on various. Turning to new investors, during the fourth quarter of 2023, Omega completed a total of $249 million in new investments.

Speaker Change: In addition to the aforementioned restructures and transitions Omega is working with several other relatively smaller operators on various restructuring.

Daniel J. Booth: Turning to new investments.

Speaker Change: During the fourth quarter of 2023.

Speaker Change: Omega completed a total of $249 million in new investments.

Daniel J. Booth: Consisting of $167 million in real estate loans and other loans, $51 million in real estate acquisitions, and $131 million, these new loans have a weighted average interest rate of $10.00.

Speaker Change: Consisting of $167 million in real estate loans and other loans.

Speaker Change: $51 million in real estate acquisitions, and $31 million in capital expenditures.

Speaker Change: These are the loans have a weighted average interest rate of 10, 5%.

Speaker Change: The new acquisitions have a weighted average annual yield of 9% with 2.5% annual escalators.

Daniel J. Booth: The new acquisitions have a weighted average annual yield of 9%, 2.5% annual. During the full year of 2023, Omega made new investments totaling $667 million, including 84 million dollars.

Speaker Change: During the full year of 2023, Omega made new investments totaling $667 million.

Speaker Change: Including $84 million in capital expenditures.

Daniel J. Booth: Subsequent to year-end 2023, Omega closed on $27 million in new mortgages. These new loans, completed in 2024, have a weighted average interest rate of $9,000. Turning to this, during the fourth quarter of 2023, Omega sold 32 facilities for $324 million. During the full year of 2023, Omega sold 69,000,000,000,000,000,000,000,000,000,000,000,000, 480.

Speaker Change: Subsequent to year end 2023, Omega has closed on $27 million in new mortgage loans.

Speaker Change: These new loans completed in 2024 have a weighted average interest rate of nine 6%.

Daniel J. Booth: Turning to dispositions during the fourth quarter of 2023, Omega sold 32 facilities for $324 million.

Daniel J. Booth: During the full year of 2023, Omega sold 69 facilities for $485 million.

Daniel J. Booth: I will now turn the call over to Megan.

Megan Kroll: Now I turn the call over to Dan. Thanks, Dan, and good morning. There continues to be positive momentum on the staffing front, albeit with wide variation. Agency expense on a per patient day basis for our core portfolio. The third quarter of 2023 dropped to three times where it was until..., in comparison to the four times we reported live and the five times we reported. And, as expected, with the staffing shortages easing, we see occupancy continue to slowly improve with a slight slowdown in the winter months. The number of core facilities recovered is now at 42%, up from the 37% reported in the second quarter.

Megan: Thanks, Dan and good morning, everyone. There continues to be positive momentum on the staffing front, albeit with wide variation by market.

Megan Kroll: Agency expense on a per patient day basis for our core portfolio for third quarter 2023 dropped to three times, where it was in 2019 in comparison to the four times, we reported last quarter and a five times, where you reported two quarters ago.

Megan Kroll: And as expected, but the staffing shortages easing we see occupancy continue to slowly improve but a slight slowdown in the winter months as is typical.

Speaker Change: The number of core facilities recovered is now at 42% up from the 37% reported in the second quarter.

Megan Kroll: Additionally, 22% of core facilities that have not yet fully recovered are at or above 84%. Overshadowing these improvements, however, is the promise by CMS that it will finalize the staffing mandate sometime this year. This was not entirely unexpected given the current administration. Despite the long-term impact that this could have on the industry, especially if left unfunded, the impact is negligible. Recall that the mandate as currently proposed is already slated to have a delayed implementation, with the 24--7RN requirement going into effect two years after the mandate is finalized for urban areas and three years for the world, and the required hours per resident day for RNs and nursing aides going into effect three years after the mandate is finalized for urban areas.

Dan: Additionally, 22% of core facilities that have not yet fully recovered or at or above 84% occupancy.

Megan Kroll: Overshadowing. These improvements however is the promised by CMS that they will finalize the staffing mandates sometime this year.

Speaker Change: This was not entirely unexpected given the current administration had promised its implementation.

Megan Kroll: Despite the long term impact that this could have on the industry, especially if left unfunded the impact is negligible in the near term.

Speaker Change: Recall that the mandate as currently proposed is already slated to have a delayed implementation, but the 24 seven R. N requirement going into effect two years. After the mandate is finalized for urban facilities and three years for rural and they're required hours per resident day for Orange and nursing aides going into effect three years. After the mandate is finalized for urban.

Speaker Change: All of these in five years for a while.

Megan Kroll: With ACCA's strong track record of getting improvements made to proposed rules and more than 40,000 comments received by CMS, all of which need to be reviewed and considered, it is too soon to tell what the ultimate mandate will look like. We can only hope that reasonable minds will prevail and that any final mandate will be good. And, of course, we also need to remember that a lot can happen in... When is the first impact, as currently proposed, slated to occur?

Megan Kroll: With AGA strong track record in getting improvements made to proposed rules and more than 40000 comments received by CMS, all of which need to be reviewed and considered it is too soon to tell what the ultimate mandate will look like.

Megan Kroll: We can only hope that reasonable lines will prevail and then any final mandate will be well balanced.

Megan Kroll: And of course, we also need to remember that a lot can happen in two years. When the first impact is currently proposed is slated to occur there.

Operator: There is always the potential that additional rulemaking or legislation will change the final rule substantially within that time, not to mention the possibility that legislation could block the mandate altogether, with bipartisan legislation already introduced in Congress. I will now open the call. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: There's always the potential that additional rulemaking or legislation will change the final rule substantially within that time not to mention the possibility that legislation could block the mandate altogether with bipartisan legislation already introduced in Congress to do just that.

Speaker Change: I will now open the call up for questions.

Operator: Thank you well now be conducting a question and answer session.

Operator: You'd like to ask a question. Please press star one on your telephone keypad.

Operator: Asian tone will indicate your line is in the question queue.

Operator: You May press Star two if you like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: We ask that you please limit yourself to one question and one follow up.

Operator: We ask that you please limit yourself to one question and one follow-up. One moment, please, while we poll for questions. Thank you. Thank you, and our first question comes from the line of Jonathan Hughes from Raymond James. Please receive your question. Hi, good morning.

Jonathan Hughes: One moment please poll for questions. Thank you.

Operator: Thank you and our first question comes from the line of Jonathan Hughes from Raymond James. Please proceed with your question.

Jonathan Hughes: Hi, good morning, Thanks for the time.

Jonathan Hughes: Thanks for your time. On the fourth quarter acquisitions, I see the initial cash yields were 9%. Can you just share if those were SNAPs or senior housing?

Jonathan Hughes: On the fourth quarter acquisitions I see the initial cash yields were 9% can you just share if those were snaps are seniors housing.

Daniel J. Booth: And then maybe, yields you're underwriting on the current investment pipeline? Yeah, so most of the yield that we're underwriting to or 10% or even higher is, all the fourth quarter yields on those investments that you highlighted are worth 9%. Some of those deals were a long time in the making that had been in the pipeline for a while. So we had quarter price, you know, some quarters back. The overall yield for the year is north of 10%. I think it's 10.4%, blended.

Jonathan Hughes: And then maybe what yields are you underwriting on the current investment pipeline.

Daniel J. Booth: Yeah. So most of the yields that we're underwriting to or 10% or even north art.

Daniel J. Booth: Although fourth quarter yields on those.

Daniel J. Booth: Investments that you highlighted is 9% some of those deals for a long time and is making its been in the pipeline for a while so we acquired a price.

Daniel J. Booth: You know some quarters back.

Daniel J. Booth: The overall yield for the year is north of 10%.

Daniel J. Booth: All of a sudden blended so.

Daniel J. Booth: So and that's pretty much what we're quoting today is 10% in the north. Okay, and then that mix of investment activity over the past year has been, you call it 60% loan investments versus 40% acquisitions. And I get the loan investments might be because you're filling a void left by banks, and those have been with existing relationships. But when do we see acquisitions pick up and comprise the majority of your investment activity? You know, I think we still did a number of acquisitions, right? I'd say that, go to www.youtube.com or the link in the video description to watch the full interview. We continue to see that, certainly, in 24.

Daniel J. Booth: And that's pretty much what were quoting today is 10% of north.

Daniel J. Booth: Okay.

Daniel J. Booth: And then that mix of investment activity over the past year, it's been.

Daniel J. Booth: Call it 60% loan investments versus 40% acquisitions, and I get the loan investments might be because you're filling a void.

Daniel J. Booth: By banks and those have been with existing relationships, but when do we see acquisitions pick up and comprised the majority of your investment activity.

Daniel J. Booth: I think we still did a number of acquisitions right I'd.

Daniel J. Booth: I'd say that.

Daniel J. Booth: That's one of our same store that we've done in prior years I think we just have to pick up and.

Daniel J. Booth: And loans and as you said are you kind of answered my question, but it was just I want to avoid.

Daniel J. Booth: Capital markets.

Daniel J. Booth: And to that I mean, there's a lot of banks that are active and we're filling that void.

Daniel J. Booth: We can continue to see that certainly in 'twenty four.

Speaker Change: Okay, and maybe just one more for me.

Daniel J. Booth: Okay, and maybe just one more question for me. Can you share some details on the $50 million term loan made in December? What is the use of the proceeds? What is the exposure to that operator and the EBITDA coverage of that portfolio? And maybe, you know, why do such a short-term non-real estate investment? Thanks. Yeah, so our relationship with that individual or the companies that he controls is less than 1% of Omega's retching. And just a couple of facts to highlight that that relationship goes back for many, many years as individuals. We have been in the industry for over 35 years. Our worlds cross on multiple fronts, including the fact that we share multiple relationships. He has an excellent history, he has a high net worth, and the investment was actually to allow him to make an investment in another company that he privately owns.

Daniel J. Booth: Can you share some details on the $50 million timeline made in December what or use of proceeds.

Daniel J. Booth: It has exposure to that operator, and the EBITDAR coverage of that portfolio and maybe why do such.

Daniel J. Booth: A short term non real estate investments. Thanks.

Daniel J. Booth: Yeah, so our relationship with that individual.

Daniel J. Booth: Companies that he controls.

Daniel J. Booth: Less than 1% of Omega Ratchet and just a couple of facts to highlight that that relationship goes back for many many years as soon as it goes.

Daniel J. Booth: And in the industry for over 35 years or Woods cross on multiple fronts and putting it back share multiple relationships.

Daniel J. Booth: He has an excellent.

Daniel J. Booth: History.

Daniel J. Booth: He has a lot of high net worth and the investment was actually to allow him to make an investment in another company that is privately owned.

Daniel J. Booth: And so it falls outside of any relationship we have in this world, in the SNCC world. And it's collateralized as well by the equity interest in that private industry. So it's well collateralized by net worth individuals with a great track record. And then maybe, I don't know if I heard you, but what's maybe the coverage of that portfolio? I realize it's less than 1%, but if you had that, that

Daniel J. Booth: Hum.

Daniel J. Booth: And so it falls outside of any relationship we have in this world and snowfall.

Daniel J. Booth: And I'd collateralized as well by the equity interest in that private industry.

Daniel J. Booth: But what kind of lives.

Daniel J. Booth: High net worth individuals with great track record.

Daniel J. Booth: And then maybe I don't know if I heard you, but what's maybe the coverage of that portfolio unrealized loss of 1%, but if you had that that'd be great.

Speaker Change: So I mean, we generally don't comment on individual operator, coverages, so I'm not going to go.

Daniel J. Booth: So I mean, we just generally don't comment on individual operator coverages, so I'm not going to go there today, but I'll just say that I've been paying for probably 10 plus years on both those leases, and they pay like clockwork. All right, I appreciate the time. Thank you. The next question is from the line of Vikram Malhotra with Mizuho. I am pleased to see you with your question.

Vikram Malhotra: They are today, but I'll just say that.

Vikram Malhotra: And then paying for probably seven plus years on both those leases and they pay like clockwork.

Vikram Malhotra: Alright, I appreciate the time.

Vikram Malhotra: Thank you.

Daniel J. Booth: Next question is from the line of Vikram Malhotra with Mizuho. Please proceed with your question.

Vikram Malhotra: Good morning, Thanks, taking the questions.

Vikram Malhotra: Thanks for the questions. Maybe just to start off the guide, could you give us some color on sort of what's baked in at the low end versus the high end?

Vikram Malhotra: Maybe just to start off the guide.

Vikram Malhotra: Could you give us some color on sort of what's baked in at.

Vikram Malhotra: At the low end versus the high end and how we should think about for the operator.

Robert O. Stephenson: And you know, how should we think about sort of operator resolution and investments, both at the high end and the low end? Yeah, Vikram, we returned to, and happily so, our adjusted FFO guidance based on historical practices and gave a little bit wider range because we did mention we have Libby and Guardian in the transition slash restructuring mode, and Maplewood needs to return to paying full contractual rent. So at the low end, it means it takes a little bit longer on those transactions, and the repayment on the high end is just sooner. I mean, it's kind of like that.

Robert O. Stephenson: Resolution N investments both at the high end insulin.

Robert O. Stephenson: Yeah. That's that's what we were trying to happily sell our adjusted <unk> guidance based on historical practices and gave them a little bit wider range. Because we didn't mentioned it we have the B and Guardian N V transition such restructuring Lillian and make what needs to return to.

Robert O. Stephenson: Painful contractual rent so at the low end it takes a little bit longer on those transactions.

Robert O. Stephenson: And the repayment of the high end it is necessary I mean, it is kind of that.

Robert O. Stephenson: Sure.

Vikram Malhotra: Got it Okay, and then specifically for you Don Maplewood.

Robert O. Stephenson: Thank you for joining us. I've got it. Okay. And then specifically for Maplewood, as you look through the year, you mentioned sort of you're hoping as we go through the year, the return to more normal being any, any, any assumptions you can share with us one in terms of the Jan payment, is that sort of a good run rate near term? And then second, what are you assuming for occupancy of the New York asset as we go through the year for that normalized payment to occur? Yeah, so, um... Obviously, the January cash is a good run rate to start, but it doesn't reflect the impact of rate increases for 24, which the Maplewood team expects to be 7% to 8% net.

Robert O. Stephenson: As you as you look through the year, you mentioned sort of you're hoping as we go through the year they returned to more normal being any.

Robert O. Stephenson: Any any assumptions you can share with us or wanting just in terms of the Jan.

Robert O. Stephenson: Is that sort of a good run rate in the near term and then second what are you assuming for occupancy in the New York asset as we go through the year for that normalized payment due to blocker.

Robert O. Stephenson: Yeah. So.

Robert O. Stephenson: But I obviously the January cashes is a good run rate to start.

Robert O. Stephenson: But it doesn't reflect the impact of <unk>.

Robert O. Stephenson: Rate increases for 2004.

Robert O. Stephenson: Which the maplewood team expects to be seven.

Robert O. Stephenson: 7% to 8% net.

Robert O. Stephenson: I'm, So that's, you know, we'll see a pickup there as we start to march through the early part of the year, Pickering, and then the team is still working through some revisions on Second Avenue. The thought process now is they'll be able to go from 65% to the 80s by year end. I'm, But you have to remember that building has become a little bit mature and is in a competitive market now in Manhattan.

Robert O. Stephenson:

Robert O. Stephenson: So that's.

Robert O. Stephenson: We'll see a pickup there.

Robert O. Stephenson: As we start to March or the early part of the year and then the team is still working through some revisions on second Avenue.

Robert O. Stephenson: The thought process now is.

Robert O. Stephenson: So they'll be able to go from 65% into the Eighty's by year end.

Robert O. Stephenson: But you have to remember that building has become a little bit mature and in a competitive market now in Manhattan. So even though we might have 10 movies in a month.

Robert O. Stephenson: So even though we might have 10 move-ins in a month, you'll see six or seven move out. So the net is it's it's it's real work to increase that occupancy over the next 10 months. The team hasn't finalized their plan yet; we'll probably have a lot more color on that for the next call. Okay, great. And just sorry, one, if I can just follow up on the 50 million loan, it seems like a one-off. I just wanted to hear from your perspective on whether this is truly a one-off? And is there something strategic to it as well?

Robert O. Stephenson: Youll see six or seven move outs. So the net is.

Robert O. Stephenson: It's it's it's real work to increase that occupancy over the next 10 months.

Robert O. Stephenson: Jim hasn't finalized that plan will probably have a lot more color on that for the next call.

Robert O. Stephenson: Okay, Great and then just sorry, one last if I can just follow up on the 50 million loan. It is sort of it seems like a one off I just wanted to hear from your perspective is this is <unk>.

Robert O. Stephenson: Really a one off and is there something strategic.

Robert O. Stephenson: Strategic do it as well because it sounded like a not kind of focused on real estate, but more relationship based so I just want to understand the need the you know.

Robert O. Stephenson: Because it sounded like it was not kind of focused on real estate but more relationship based. So I just want to understand the, you know, kind of is this truly something very unique? And then is there something else or strategic to it as well?

Robert O. Stephenson: Kind of it has to be something very unique and then is there something else how strategic do it as well.

Speaker Change: Yeah, I would say that this is more of a one off than anything else is.

Michael Griffin: Yeah, I would say that this is more of a one-off than anything else. It's not where we're going to focus our attention. Thank you. Our next question is from the line of Michael Griffin with Citi. Please proceed with your question. Great, thanks. I just wanted to ask a question about occupancy.

Michael Griffin: It's not where we're going to focus our attention.

Michael Griffin: Thank you.

Michael Griffin: Our next question is from the line of Michael Griffin with Citi. Please proceed with your question.

Michael Griffin: Great. Thanks, just wanted to ask a question around occupancy you said bad January youre seeing at north of 80%, but at the end of the year was about 79% given that we're in a more seasonal time period, but can you maybe just give some more color on why youre seeing occupancy increase is it a function of.

Megan Kroll: You know, you said that in January, you're seeing occupancy rates of north of 80%, but at the end of the year, it was about 79%. Given that we're in a more seasonal time period, can you maybe just give some more color on why you're seeing occupancy increase? Is it a function of some of these facilities being better staffed, or anything you could provide there would be helpful?

Megan Kroll: Some of these facilities being better staffed or anything you could provide there would be helpful.

Megan Kroll: Yeah, I think we know what we're hearing from our operators is mostly the fact that the staffing is easing right from the agency has come down, they're getting more permanent staff, and they're building up their cultures again. And it's just easier to have staff in the building and increase that occupancy. So that's really what's driving the great.

Speaker Change: Yeah, I think we know what we're hearing from our operators. If it's mostly the fact that the shopping is easing up rate from the agency has come down there getting more permanent stopped them, they're building up their cultures again, it's just easier to have stopped in the building and increased occupancy that's really what's driving it.

Speaker Change: Great. That's helpful. And then just on the remaining love the assets and the portfolio is the plan to ultimately sell out of all of them in an exit that relationship or do you see yourself kind of hanging onto some once the restructuring process comes down.

Megan Kroll: That's helpful. And then just on the remaining Levy assets in the portfolio, is the plan to ultimately sell out of all of them and exit that relationship, or do you see yourself kind of hanging on to some once the restructuring process comes to an end? Yeah, well, Dan and his team are still in the middle of the discussions, so it's

Megan Kroll: Yeah, well I'm, Dan and his team are still in the middle of the discussions.

Daniel J. Booth: We don't really have an answer for that. I will tell you, though, the important thing is, as Dan mentioned, those assets perform well. So, if members' hands are tied up, there's a lot of value there.

Megan Kroll: So it's we.

Daniel J. Booth: We don't really have an answer for that I.

Daniel J. Booth: I will tell you, though the important thing is as Dan mentioned those assets performed well.

Daniel J. Booth: So.

Daniel J. Booth: If the members and they end up there's a lot of value. There. It's just a question of working through the process to make sure we maximize the value proposition.

Daniel J. Booth: It's just a question of working through the process to make sure we maximize the value proposition. Great. That's it for me.

Speaker Change: Great. That's it for me thanks for the time.

Connor Siversky: Thanks for the time. Our next question is from the line of Connor Siversky with WellFargo. Please proceed with your question. Good morning out there.

Connor Siversky: Okay.

Connor Siversky: Our next question is from the line of Conor Seversky with Wells Fargo. Please proceed with your question.

Connor Siversky: Good morning out there. Thank you for the time.

Connor Siversky: Thank you for your time. One on Maplewood. I'm curious what we should expect from the Washington, DC, development when it rolls online next year. Do you have any sense of what that fixed cost load will look like once the doors are open? Is it reasonable to assume that opening that operation would impact Maplewood's forward cash flow profile negatively? And then could you put any numbers around it?

Connor Siversky: One of them Maplewood I'm, you know I'm curious, what we should expect from the Washington D. C development when it rolls on my next year do you have any sense of what that fixed cost load will look like once the doors are open is it reasonable to assume that opening that operation would impact may cause forward cash flow profile negatively and then could you put any numbers around it.

Daniel J. Booth: Yeah, it's probably a little too early to put numbers around it. I will tell you that it's about a $200 million project. The expectation is that the cash returns there will be at least 8%. It could be higher. You're working through the pre-sales now that they've opened their sales office. And they've got a decent list right now. People are looking forward to being there.

Speaker Change: At this time.

Speaker Change: Yeah, it's probably it's a little too early to put numbers around it I will tell you that.

Daniel J. Booth: Yeah, it's about $200 million project the.

Daniel J. Booth: The expectation is that.

Daniel J. Booth: The cash returns there'll be at least 8%.

Daniel J. Booth: It could be higher.

Daniel J. Booth: We're working through the pre sales now they've opened their sales office.

Daniel J. Booth: Got a decent list right now.

Daniel J. Booth: We're looking forward to being there.

Daniel J. Booth: In terms of the the the costs.

Daniel J. Booth: In terms of the cost, Maplewood, as an entity, doesn't have a source of capital or fund to fill up, so ultimately, that's going to fall on us, and it'll be an additional capital. How that gets accounted for? I can't tell you, and it's going to depend on Maple when we get to the day the doors open. Okay, that's helpful. Thanks. And then maybe one on rent coverage.

Daniel J. Booth: Maplewood as an entity it doesn't have a source of capital to fund the Philip So ultimately that's going to fall on us at all.

Daniel J. Booth: Additional capital.

Daniel J. Booth: How that gets accounted for.

Daniel J. Booth: I can't tell you.

Daniel J. Booth: And it's going to depend on when we get to the day of the doors open.

Daniel J. Booth: Yeah.

Daniel J. Booth: Okay. That's helpful. Thanks, and then maybe one on rent coverage. So I'm curious to see if there are any expectations for that number trending into <unk>, we have the nic data, suggesting that occupancy had more or less flattened out as expected given seasonality I'm wondering if any Medicaid rate hikes took hold towards the end of the year that could push the number.

Connor Siversky: So I'm curious to see if there are any expectations for that number turning into 4Q. We have NIC data suggesting that occupancy has more or less flattened out as expected given seasonality. I'm wondering if any Medicaid rate hikes took hold towards the end of the year that could push the number higher specifically. We did have Medicare rate hikes in October.

Connor Siversky: Specifically.

Connor Siversky: We know that the Medicare rate hikes in October.

Megan Kroll: And we had some, some increases in Medicaid, but I think you'll just continue to see as the occupancy improves that that coverage is, with the exception, obviously, that December you have audit adjustments, and that can sometimes play into what the coverage is. All right. Okay. I'll leave it there. Thank you for your time.

Connor Siversky: And we had some some increases in Medicaid, but I think you'll just continue to see.

Megan Kroll: Occupancy improves that that conversion to that grant.

Megan Kroll: With with the exception obviously, that's the number you have audit adjustments and that can sometimes play into where the coverage sounds like.

Speaker Change: Alright, Okay I'll leave it there.

Tayo Okusanya: Our next question is from the line of Tayo Okusanya with Deutsche Bank. Please proceed with your question. Hi, yes, good morning.

Megan Kroll: Our next question is from the line of Tayo Okusanya with Deutsche Bank. Please proceed with your questions.

Tayo Okusanya: Hi, yes, good morning.

Megan Kroll: Just one just about the general regulatory backdrop. Again, the from CMS and minimum staffing rules; the comments period, you know, has ended. Just kind of curious what came out of the comment period, what could potentially be next steps, as CMS continues to kind of think through implementation of minimum staffing rules. So, like I said, there are about 40,000 comments plus that were submitted, and every single one of them needs to be reviewed and considered. I think the idea right now is that the likely implementation of the rule would be sometime in the summer at the earliest, potentially a little bit later than that. And to the extent that we don't really know the extent of how that rule is going to change from where it was proposed, but with that many comments, it's likely that there are going to be some improvements in it. But at the end of the day, even after it, you know, gets finalized, there's still legislative action that can be taken to repeal it. That's what's in Congress right now.

Tayo Okusanya: One just about general regulatory backdrop are again, the from CMS and a minimum staffing rules. The comment period has ended just kind of curious what you know what kind of came out of the common period local potentially be next steps as CMS continues to kind of think through implement.

Megan Kroll: Jason a minimum staffing rules.

Megan Kroll: So like I said there are about 40000 comments that were submitted in every single one of them needs to be.

Megan Kroll: And considered.

Megan Kroll: Yeah, right now is that the likely implementation of the rule.

Megan Kroll: Be sometime in the summer at the earliest essentially.

Megan Kroll: Essentially a little bit later than that.

Megan Kroll: And so to the extent, we don't really know the extent of how that will kind of change from where it was proposed.

Megan Kroll: That many comments, it's likely that there are going to be some improvement in it.

Megan Kroll: But at the end of the day you have three you know gets finalized theyre still legislative action that can be taken to repeal it.

Megan Kroll: In Congress right now.

Tayo Okusanya: And there are other ways that that can be changed over time. And so it's really too soon to tell what the ultimate impact of that final rule will even be. Gotcha, that's helpful. And then just indulge me on the acquisition front as well.

Megan Kroll: There are other ways that that can be changed over time and so it's really too soon to tell what the ultimate impact of that final only the bay.

Tayo Okusanya: Gotcha. That's helpful. And then just indulge me on the acquisition front as well again I know you don't have acquisitions in guidance.

Daniel J. Booth: Again, I know you don't have acquisitions and guidance, but you did do decent volume in 4Q. Just kind of, you know, as you kind of think going forward about opportunities to buy skilled nursing versus senior housing and potential cap rates. Any kind of color you could provide on that would be helpful.

Daniel J. Booth: Did do decent volume in fourth Q.

Daniel J. Booth: Just kind of you know is.

Daniel J. Booth: Was it kind of think going forward opportunities to buy skilled nursing versus senior housing and potential cap rates.

Daniel J. Booth: Any kind of color you could you could provide on that would be helpful.

Speaker Change: I will say that we are seeing a very active pipeline at this point right exactly.

Daniel J. Booth: I will say that we are seeing a very active pipeline at this point; it's probably been as active since before the start of COVID. So we are, as we pointed out, seeing a number of loan requests. But you know, we're sort of able to pick and choose the right deals.

Daniel J. Booth: Since before the start of Covid so.

Daniel J. Booth: We are as we pointed out a number of loan requests.

Daniel J. Booth: But where we're able to pick and choose the right deals and we are able to we are holding pretty firm on our 10% yield requirements.

Daniel J. Booth: And we are able to; we are holding pretty firm on our 10% yield requirements. Great, thank you. Thank you. Our next question is from the line of Josh Dennerlein with Bank of America, or anything., https://www.youtube.com.uk, Sincerely saying target.

Joshua Dennerlein: Great. Thank you.

Joshua Dennerlein: Thank you. Our next question is from the line of Josh <unk> with Bank of America. Please proceed with your questions.

Joshua Dennerlein: Hi, this is on behalf of Josh.

Joshua Dennerlein: I had a question about the Medicaid reimbursements are.

Joshua Dennerlein: Are there any states that you are currently trying to avoid or target.

Joshua Dennerlein: In that sense.

Joshua Dennerlein: I mean, there are certainly some states that have their difficulties right now, like Pennsylvania is one of those, but not necessarily that we would avoid it because we think, ultimately, that will, you know, head in the right direction down the road. You know, Florida, as you know, we exited quite a bit in 2023 and 2022, so we're not looking to jump back in there quickly anytime soon. And then there are certain states, you know; Texas has staffing issues.

Joshua Dennerlein: Sincerely thank target I mean, theres certainly some states that have their difficulties right now like Pennsylvania is one of those not necessarily that we would avoid that because we think ultimately that well.

Joshua Dennerlein: They're actually not really.

Joshua Dennerlein: Yeah, Florida as you know, we exited quite a bit in 2023 and 2022 and so we're not looking at jump back in there quickly anytime soon.

Joshua Dennerlein: And then there are certain states you know, Texas has staffing issues, our operator, especially doing pretty well there, but there are shopping as she is in the state.

Daniel J. Booth: Our operators personally do pretty well there, but there are staffing issues in the state. You've got states like Iowa and Missouri. You just had recent rate increases. It's too soon to tell how those states are going to do. And we just look at where our operators are, where they're looking to do business, and where the right opportunities are, and just make sure we understand the risk in each individual state. Great. And one other question about... Get Invested! We're discussing it. Do you see that going forward? Bridge that Gap in the Capital Markets or, You know, right now, I think there's just a dearth of senior lending and otherwise, it's just, you know, there's not a lot of people out there with capital that are prepared to lend at this point. So we're just filling a void. I can't predict that one, but I think it'll last.

Daniel J. Booth: You've got states like Iowa, Missouri, you, just said I'm sorry rate.

Daniel J. Booth: Rate increases.

Daniel J. Booth: It's too soon to tell how those states are going to do so.

Daniel J. Booth: And we just look at you know where our operators are where they're looking to do business and where the right opportunities are and just make sure we understand the risk of each individual let's see.

Daniel J. Booth: Great and one other question about the debt investments, though 167, we are discussing the makeup between the loan acquisition volumes do you see that going forward of continuing to bridge that gap in the capital markets or is there another color that you're seeing them in the deal flow.

Daniel J. Booth: You know right now I think there's just a dearth in them.

Daniel J. Booth: Senior lending in an otherwise it's just you know theres not a lot of people out there with the capital that are prepared to lend at this point. So we're just filling a void.

Speaker Change: Great. Thank you I don't I can't predict that long that lasts.

Michael Carroll: Thank you. The next question is from the line of John Pulaski with Green Street. Please proceed with your question. Thanks for your time.

Daniel J. Booth: Thank you. The next question is from the line of John Pawlowski with Green Street. Please proceed with your questions.

John Roberts: Thanks for the time that Mega in your conversations with your operators can you give us a rough sense for the average labor cost increases your operators are expecting in 2024.

Megan Kroll: Megan, in your conversations with your operators, can you give us a rough sense for the average labor cost increases your operators are expecting in 2024? You know, I think it's going to vary by operator depending on what regions they're in. There have already been large wage increases over the past several years, and so it just depends on the competition in those particular states. If you take some direction, is it closer to 3?

Megan Kroll: You know I think it's going to vary by operator, depending on what regions. There in there already have been large wage increases over the past several years until it it just depends on the competition in those particular states.

Megan Kroll: Can you give us some direction as it is it closer to three and the closer to 10% I'm just trying to get a sense for the pace of moderation labor costs backdrop.

Megan Kroll: Is it closer to 10%? I'm just trying to get a sense for the pace of moderation and the labor cost backdrop. Again, it's going to be very operator specific. I would say, on average, I'm sure it's probably in the four or five percent range, but I can't really say for sure where that would end up.

Megan Kroll: Again, it's gonna be very operator specific I would say on average it I'm sure. It's probably in the four 5%, but I can't really say for sure where that where that data dependent.

Megan Kroll: It just depends on where they're located. Okay. And then as occupancy builds across markets and there's still staffing shortages, have you seen pockets of your portfolio where they haven't needed to go back to the agency labor pool pretty hard and pull that lever just to compete with, again, just the demand for healthcare rising in the markets? So I would say in general, I mean, like I noted, the agency has come down pretty substantially over the last few quarters. There are definitely pockets where, you know, you have buildings that are using a lot of agency, but I would say, operator to operator, most of the time, it's just a few of their buildings that have agency as opposed to all of their buildings that have agency. Thank you for your time.

Megan Kroll: Okay.

Megan Kroll: Okay, and then as the occupancy delta across markets and they're still staffing shortages have you seen pockets of your portfolio or that haven't needed to.

Megan Kroll: Go back to the agency labor for them pretty hard and pull that lever to compete with again, just the demand of health care arising in the markets.

Megan Kroll: So I would say in general I mean, like like I know that the agency has come down pretty substantially over the last few quarters. There are definitely pockets, where you have buildings that are you seeing a lot of agencies, but I would say, yeah, we talk operator to operator.

Megan Kroll: Most of the time, it's you know a few of their buildings that have agency as opposed to all of their buildings that agency.

Speaker Change: Yeah. Thank you for your time.

Juan C. Sanabria: Thank you. The next question is from the line of Juan Sanabria with BMO Capital Markets. Please use your question. Good morning.

Megan Kroll: Thank you. The next question is from the line of Juan Sanabria with Bank of BMO Capital markets. Please proceed with your question.

Juan C. Sanabria: Hi, good morning.

Juan C. Sanabria: Just a two-parter, I guess on dispositions. I guess first, how should we think about the rents collected for the dispositions that took place in the fourth quarter largely tied to Levy? Was there anything?

Juan C. Sanabria: Just a two parter I guess on dispositions I guess first how should we think about the rents collected for the dispositions that took place in the fourth quarter largely tied to live he was there anything.

Robert O. Stephenson: I'm being accrued or accounted for there, and secondly, how should we think about the health for sale or 24 guidance on dispositions in terms of potential yields on those proceeds? The LV assets were sold, right? So, you know, we just put a cap rate on those sold assets and then turn around and obviously reinvest those proceeds. We're still working through the restructuring of these, so we haven't... Determine exactly what the actual rent will be when that's all shaken out. So that's kind of the PBD. Hey, Juan, on page 18 of the supplementary, we show, we list, you know, how much we booked in the fourth quarter around what was disposed of, and you can see it's 244K. It's very immaterial.

Juan C. Sanabria: I'm being accrued or accounted for there and secondly, how should we think about the held for sale or 24 guidance on dispositions in terms of potential yields on on those proceeds.

Robert O. Stephenson: So the old B assets were sold right. So.

Robert O. Stephenson: You know, we just put a cap rate on those sold assets and then turnaround and obviously reinvest those proceeds.

Robert O. Stephenson: We're still working through the restructuring what base so we haven't.

Robert O. Stephenson: Determine exactly what the actual rent won't be when that's all shaked out.

Juan: So that's kind of a TBD.

Juan: In page 18 of the supplemental we show we list.

Juan: How much we booked in the fourth quarter around what was disposed off and you can say, it's 244 K, it's very immaterial.

Juan: So for sale and.

Robert O. Stephenson: And how about, what should we be assuming for the 24 guidance in terms of this post? And in the help for sale assets, we've booked $788,000 in the fourth quarter related to this. And then just, uh... on Guardian.

Juan: And how about what should we be assuming for the 24 guidance in terms of disposals.

Robert O. Stephenson: And then they can help ourself as Ed said.

Juan: Yeah that the held for sale assets.

Juan: So 780 8-K in the fourth quarter related to this.

Juan: Okay, and then just Oh.

Robert O. Stephenson: Guardian.

Juan C. Sanabria: So what's the status there? Do you have an operator all set? It's just a question of getting the state approvals or if you could just give us a little color on the process from here and where you stand.

Juan: What's the status. There is do you have an operator all sat it's just a question.

Juan C. Sanabria: Getting the state approvals or if you could just give us a little color on on the process from here and where you stand.

Daniel J. Booth: Yeah, Dan and the team have identified a likely transition partner, and they're working through the process. Again, you know, the timing is, I'm hopeful that by the time we have our second quarter call, we can tell you where it landed. We don't know right now.

Speaker Change: Yeah, Dan and the team has identified likely transition partner and they're working through.

Daniel J. Booth: Process.

Daniel J. Booth: Again, you know the timing is.

Daniel J. Booth: I'm hopeful that by the time, we have our second quarter call, where we can tell you where were Atlanta, but hum.

Daniel J. Booth: We don't know right now.

Robert O. Stephenson: And then just last one for me, you gave the adjusted FFO guidance, but how should we think about FAD as it relates to that adjusted FFO? And any commentary you can give on when you'd expect a dividend to be covered. Yeah, Juan.

Speaker Change: And then just last one for me you can see adjusted ethical guidance, but how should we think about that as it relates to that adjusted ethics all in.

Speaker Change: And any commentary you can give on when you'd expect the dividend to be covered.

Robert O. Stephenson: L bonds so.

Robert O. Stephenson: So, you know, based on the assumptions in the forecast, I would assume that that's going to run anywhere from two to four cents less per, it in per quarter based on the AFFO guides. And there's a possibility, based on given the range and what we see, but really timing is unknown, that we could, on a run rate basis, cover the cooler cover the dividend in the late second quarter. But again, timing is Thank you very much. Our next question is from the line of Michael Carroll with RBC. Please proceed with your question. Yep, thanks. Now, with regard to your investment outlook, should we assume that Omega is mainly targeting individual deals to achieve that 10% yield target? I know there are a few bigger portfolios out there, but Is that something that you guys are going to kind of stay away from just given your current cost of capital? Um, I think that's a fair statement. There are bread and butter, and it tends to be singles and doubles.

Speaker Change: Based on the assumptions in the forecast I would assume that that's going to run anywhere from two to four cents.

Robert O. Stephenson: Less.

Michael Carroll: It is different per quarter based on the <unk> guidance and there's.

Michael Carroll: There's a.

Michael Carroll: Profitability basically given a range and what we see but really Tommy's I know they'll be quick one.

Michael Carroll: Run rate basis cover that cover the dividend in the late.

Michael Carroll: Second word.

Michael Carroll: But again timing is the key there.

Michael Carroll: Thank you very much.

Robert O. Stephenson: Our next question is from the line of Michael Carroll with RBC. Please proceed with your question.

Michael Carroll: Yeah, Thanks, not with regard to your investment outlook should we assume that that Omega is mainly targeting individual deals to to achieve that 10% yield target I know there are a big or a few bigger portfolios that are out there or is that something that you guys are going to kind of stay away from just given your current cost of capital.

Michael Carroll: It's I think that's a fair statement near our bread and butter tends to be the singles and doubles.

Michael Carroll: Um, there are some. Relatively speaking, there are some more sizable transactions in the UK that are hitting the pipeline, so you might see some stuff there. That's all 10. If you want to call us back and tell us the sizable ones we're not aware of here in the States, we'd love to hear from you. And then, with regard to Guardian, how long does the approval process take? So if the tenant that you're talking to decides that they want to take the assets, how long does it take to get regulatory approval before they can get in there? In the state that we're talking about, 30 to 60 days from the time that you file.

Michael Carroll: There are some real.

Michael Carroll: Relatives there were.

Michael Carroll: More sizable transactions in the U K there the pipeline.

Michael Carroll: So you might see some stuff there that's all 10.

Michael Carroll: If you want to call us back in Tulsa sizeable ones, we're not aware off here in the states we loved it.

Michael Carroll: Yeah.

Michael Carroll: And then with regard to the Guardian, how long does it take for the approval process to go through so if the tenant that youre talking to decides that they want to take the assets how long does it take to get the regulatory approval before they can get in there.

Michael Carroll: Thus in the state that we're talking about.

Michael Carroll: 30 to 60 days.

Michael Carroll: From the time that you file.

Daniel J. Booth: Okay, and then as Guardian kind of winds down, is there any chance that you can get a true up-run payment as the transition is completed and that operator kind of moves away? Not likely. And then just last one, I believe in your prepared remarks when you were talking about guidance, you kind of implied that you think your guidance implied that Maplewood would eventually return to full contractual rents. Was that a comment that that could occur in 2024, or was that just a general comment that that will occur sometime in the future? Um, we're not we haven't finalized with the Maplewood team their cash budgets for 24, but I think they're aspirational, that by the end of the year they can reach that target, but definitely going into 2025 we'll be there. Assuming nothing else happens, you know, unusual things happen.

Michael Carroll: Okay, and then as his guardian kind of winds down is there any chance that you can get a true up rent payment as the transition is completed in that operator kind of moved away.

Daniel J. Booth: Not likely.

Daniel J. Booth: Okay.

Daniel J. Booth: And then just last one I believe when you in your prepared remarks. When you were talking about guidance you kind of implied that you think your and your guidance implies that maplewood eventually return back to a full contractual rents was that a comment that that could occur in 2024 or was that just a general comment that that will occur sometime in the future.

Daniel J. Booth: We are not we haven't finalized with the maplewood team there.

Daniel J. Booth: There are cash budget for 'twenty four.

Daniel J. Booth: But I.

Daniel J. Booth: I think they're aspirational that by the end of the year they can reach that target.

Daniel J. Booth: But this definitely.

Daniel J. Booth: Going into 'twenty five.

Daniel J. Booth: Assuming nothing else happens.

Daniel J. Booth: The unusual happens.

Daniel J. Booth: Great, understood. Thank you. Our next question is from the line of Nick Yulico with Scotiabank. Please proceed with your question. Thanks, and maybe a question for Bob.

Speaker Change: Great understood. Thank you.

Daniel J. Booth: Yeah.

Nick Yulico: Our next question is from the line of Nick <unk> with Scotiabank. Please proceed with your question.

Nick Yulico: Oh. Thanks, So maybe a question for Bob I was hoping to just get if I I'm kind of a walk on the balance sheet. You know based on some of the activity you're assuming on a you know asset sales I wasn't sure. If there's any more HUD repayment associated with those in and then you have sort of the cash that's earmarked it sounds like.

Nick Yulico: I was hoping to just get a kind of walk on the balance sheet, you know, based on some of the activity you're assuming on asset sales. I wasn't sure if there was any more HUD repayment associated with those. And then you have sort of the cash that's earmarked, it sounds like a lot for the bond maturity, just trying to understand, like, from a point in time, you know, where you guys are from with respect to, you know, cash available to invest in new acquisitions based on all that. And then how are you thinking about funding additional acquisitions, whether it's equity or debt? There are a lot of questions in that one, so let me try to address them all.

Nick Yulico: A lot for the bond mature or are you just trying to understand like from a point in time you know.

Nick Yulico: Where you guys are at from a cash available to invest.

Nick Yulico: Into new acquisitions based on all of that and then how are you thinking about funding our.

Nick Yulico: Additional acquisitions, whether it's equity or debt.

Speaker Change: Okay very good.

Speaker Change: A lot of questions within that one so I'll, let let me try to address them all so.

Robert O. Stephenson: So I'll start saying today we're sitting with $440-plus million in cash on the balance sheet. And yes, it's earmarked for the April 1st maturity of $400 million. However, if an acquisition comes up for us to use that, and as I stated in my prepared remarks, we have over $1.4 billion in credit facility capacity to handle a combination of either the debt repayment or future acquisitions.

Speaker Change: I'll start, saying a week today, we're sitting with 440 plus million dollars of cash on the balance sheet and yes. Its earmarked for the April 1st a maturity of 400 million. However, if an acquisition comes up first you use that.

Robert O. Stephenson: Stayed at my prepared remarks, we at one point or over one 4 billion credit facility capacity.

Robert O. Stephenson: Ill handle a combination that you go to the debt repayment and our future acquisitions. We're also as I stated in the assumptions that we're assuming that we will dispose the $94 million of assets held for sale. So that's additional cash to help us handle that Bob majority slash.

Robert O. Stephenson: We're also, as I stated in the assumptions, assuming that we will dispose of the $94 million of assets for sale. So that's additional cash to help us handle that bond maturity slash acquisitions. Um, Again, it's really going to be dependent on the pipeline from a capital funding standpoint, but I think we're well positioned just because we're balanced today. Okay, thanks. And then, I guess the second question is on, you know, some of the recent loan investments, whether it was a $50 million term loan or other loans, were any of those, you know, a non-cash interest portion of any of those recent loans, and maybe if you could also just break out, you know, on page three of the SUP, you guys do give all the buckets on the different loans, you know, if there's any I'm certainly not on the new deals that we just did.

Robert O. Stephenson: Acquisitions.

Robert O. Stephenson:

Robert O. Stephenson: Again, it's really it's going to be dependent on when the pipeline from a capital funding standpoint, but I think we're well positioned just where the balance sheet sits today.

Speaker Change: Okay. Thanks, and then I guess second question is on you know.

Speaker Change: Some of the recent loan and divestments, whether it was the $50 million term loan or other.

Speaker Change: Loans were any of those you know is there a noncash interest.

Speaker Change: A portion of of any of those recent loans and maybe if you could also just break out you know on page three of the Sup you guys do give all the the buckets on the different loans you know if theres any noncash.

Speaker Change: Interest income associated with any of those different loan investments you have.

Speaker Change: Certainly not on the new deals that we just did I don't think there's a page three but.

Robert O. Stephenson: I don't think there's a bend on page three, but... Yeah, Nick, all the numbers that we're quoting for yields are cash. There are a couple of loan deals where we have some upside opportunity if there's a refi for excess proceeds, but we don't include any of that in our yield calculation. Okay, thanks. And then, on page three, then all the interest income associated with, you know, the various loans, you're saying is like 100% cash. I wasn't sure if there was any like tech component of any of these loans.

Robert O. Stephenson: Hi.

Speaker Change: Yeah, I'll do that.

Robert O. Stephenson: All the numbers that we're quoting for yields are all cash.

Robert O. Stephenson: There are a couple of loan deals, where we have some upside opportunity if theres a refi for excess proceeds, but we don't we don't include any of that in our yield calculation.

Robert O. Stephenson: Yeah.

Robert O. Stephenson: Okay. Thanks, and then so just on page three then all the interest income associated with.

Robert O. Stephenson: The various loans Youre, saying is 100% cash I wasn't sure. If there was any pik component of any of these loans.

Robert O. Stephenson: Yeah.

Robert O. Stephenson: You know, as you know, we have a few contracts out there, a few loans out there that's an okay component that you and I have walked through in the past, that they're still in place. Okay, I'll follow up. Thanks. Our next question is from the line on West Gallaudet with Baird. Please proceed with your question. Hey, good morning, everyone.

Robert O. Stephenson: We have a few contracts out there a few loans out there that I thought okay consolidation you have walked through in the past is that they are still in place.

West Gallaudet: Okay I'll follow up thanks.

Robert O. Stephenson: Yeah.

Robert O. Stephenson: Our next question is from the line of Wes Golladay with Baird. Please proceed with your question.

West Gallaudet: Hey, Yeah. Good morning, everyone. It's up a quick question on the New York asset for Maplewood do you see that asset stabilizing by the end of next year and then if you have it handy you know how much EBITDA upside is that the asset.

West Gallaudet: I just have a quick question on the New York asset for Maplewood. Do you see that asset stabilizing by the end of next year? And then, if you have it handy, do you know how much EBITDA upside there is on the asset?

Daniel J. Booth: Well, as I mentioned, we're still working through a revision of the cash flows there. But yeah, I would think if you're talking about the end of next year, the end of 25, it's absolutely fair to assume it'll be fully leased up. And the cash flow number is substantial, but they haven't finished their plan.

Daniel J. Booth: Well as I mentioned, we're still working through.

Daniel J. Booth: The Maplewood management team.

Daniel J. Booth: A revision.

Daniel J. Booth: The cash flows there.

Daniel J. Booth: But yeah I would think if you're talking about end of next year and a 25.

Daniel J. Booth: It's absolutely fair to assume it'll be fully leased up.

Daniel J. Booth: And the cash flow number is substantial but.

Daniel J. Booth: I haven't finished their plant so we're not prepared to talk about that today.

Daniel J. Booth: So we're not prepared to talk about that today. Okay, and then, you know, looking at the health or cell assets, are those mostly the Vs, or would any of them be the 11 small operators that make up that 3.1% of troubled So I think the health assets for sale are, it's two, it's, it's some properties from one existing operator that you're just carving out a few properties. And the second one is one portfolio that we're in a process of shopping. Okay, so would that be part of that 3.1% you did mention 11 operators are still working through with that, I guess, come down after you're still back? Yes, there is one operator in that 3.1% that we will likely exit those assets in the 3.1% or go down.

Daniel J. Booth: Okay, and then you know looking at the the held for sale assets are those mostly living where we didn't have it be the 11th small operators that make up that 3.1 per cent of troubled tenants.

Daniel J. Booth: So.

Daniel J. Booth: Held for sale assets is it's too.

Daniel J. Booth: It's some properties from one existing operator.

Daniel J. Booth: Just carving out a few properties and the second one as one portfolio.

Daniel J. Booth: That we're in the process of Uh Huh.

Daniel J. Booth: Okay. So would that be part of that 3.1%. You did mentioned 11 operators are still working through with that I guess come down after you sell these assets.

Daniel J. Booth: Yes, there is one operator in that three 1%.

Daniel J. Booth:

Daniel J. Booth: We will likely exit those assets and the three 1% down.

Speaker Change: Okay. Thank you.

Daniel J. Booth: Okay, thank you. Thank you. There are no further questions at this time. I would like to turn the floor back over to Taylor Pickett for closing comments.

Daniel J. Booth: Thank you there are no further questions at this time I would like to turn the floor back over to Taylor Pickett for closing comments.

Taylor Pickett: Thanks for joining us this morning. We appreciate the time. Feel free to call the team if you have any follow-up questions. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Taylor Pickett: Thanks for joining us. This morning, we appreciate the time and feel free to call. The team. If you have any follow up questions.

Speaker Change: Thank you.

Taylor Pickett: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.