Q1 2025 Omega Healthcare Investors Inc Earnings Call
Speaker Change: [music].
Unknown Executive: Thanks for watching!
Thank you everyone. My name is Karen and I'll be your conference operator today at this time I'd like everyone to welcome everyone to the Omega healthcare investors first quarter earnings conference call.
Karen: My name is Karen, and I'll be your conference operator today.
Michele Reber: At this time, I'd like everyone to welcome everyone to the Omega Healthcare Investors First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a Q&A session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question just press Star. One again, please do limit your questions to one question and one follow up question. Thank you.
Michele Reber: After the speaker's remarks, there'll be a Q&A session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, just press star one again. Please do limit your questions to one question and one follow-up question. Thank you.
Michele Reber: I would like to now turn the call over to Michele Reber. Please go ahead.
Speaker Change: I would like to now turn the call over to Michele Reber. Please go ahead.
Okay.
Michele Reber: Thank you and good morning. With me today is Omega's CEO, Taylor Pickett, President, Matthew Gorman, CFO, Bob Stephenson, CIO, Vikas Gupta, and Megan Krull, Senior Vice President of Operations.
Taylor Pickett: Thank you and good morning with me today is Omega CEO Taylor Pickett, President Matthew Gourmand, CFO, Bob Stephenson, CIO, vicar scooped out and Megan Kroll Senior Vice President of operations.
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. 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.
Taylor Pickett: 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.
Taylor Pickett: 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 during the call today, we will refer to some non-GAAP financial measures such as NAREIT F. F O adjusted F F O Fad and EBITDA.
Michele Reber: During the call today, we will refer to some non-GAAP financial measures, such as NARIT 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.
Taylor Pickett: 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.
Michele Reber: 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.
Taylor Pickett: I will now turn the call over to Taylor. Thanks, Michele. Good morning, and thank you for joining our first quarter 2025 earnings conference. Today I will discuss our first quarter financial results and certain key operating First Quarter Adjusted Funds from Operations of $0.75 per share, and FAD, funds available for distribution of $0.71 per share.
Taylor Pickett: I will now turn the call over to Taylor.
Taylor Pickett: Thanks, Michele good morning, and thank you for joining our first quarter 2025 earnings conference call.
Taylor Pickett: Today, I will discuss our first quarter financial results and certain key operating trends.
Taylor Pickett: First quarter adjusted funds from operations of <unk> 75 per share and Fad funds available for distribution of <unk> 71 per share reflects continued revenue and EBITDA growth funded primarily with equity which has allowed us to reduce leverage to three seven times debt to EBITDA.
Taylor Pickett: Flex Continued Revenue, and Eva.Group. funded primarily with equity, which has allowed us to reduce leverage to 3.7 times debt to either. We raised and narrowed our 2025 AFFO guidance from a range of $2.90 to $2.98 up to $2.95 to $3.01. which reflects our strong first quarter 2025 earnings tempered by the dilutive impact of our significant year-to-date share issuance. In March, Genesys did not pay its contractual rent of $4.2 million, and we partially pulled a letter of credit to cover the full short For more information visit Genesys.com Genesis paid full contractual rent in April and has remained current on all interest obligations due on our secured term line.
Taylor Pickett: Ah.
Taylor Pickett: We raised and narrowed our 2025 <unk> guidance from a range of $2 90.
Taylor Pickett: Two $2 98 up to $2 95 to $3 and once that.
Taylor Pickett: Which reflects our strong first quarter 2025 earnings tempered by the dilutive impact of our significant year to date share issuances.
Taylor Pickett: In March Genesis did not pay its contractual rent of $4 $2 million and we partially pulled a letter of credit to cover the full shortfall.
Taylor Pickett: Genesis paid full contractual rent in April and has remained current on all interest obligations due on our secured term loan.
Taylor Pickett: The balance of our letter of credit is $3.5 million. Genesis Management has indicated that their current liquidity issues stem from a tightening of their borrowing base. by their asset-based lender and legacy general and professional liability obligations. Omega's credit position with Genesys is strong. Our trailing 12-month cash flow to rent coverage exceeds 1.6 times. We believe that our $118 million term loan is fully secured by our priority lien in all of the Genesys ancillary businesses, which includes the AlignMed physician practice. their Accountable Care Organization.
Taylor Pickett: The balance of our letter of credit is $3 $5 million.
Taylor Pickett: Genesis management has indicated that their current liquidity issues stem from a tightening of their borrowing base.
Taylor Pickett: There are asset based lender and legacy general and professional liability obligations.
Taylor Pickett: <unk> credit position with Genesis is strong.
Taylor Pickett: Our trailing 12 month cash flow to rent coverage exceeds one six times.
Taylor Pickett: We believe that our $118 million term loan is fully secured by our priority lien and all of the Genesis ancillary businesses, which includes the aligned bad physician practice there.
Taylor Pickett: They're accountable care organization.
Taylor Pickett: Power Back Rehab and the equity ownership in shift med as a result of a prior career staff Turning to revenue mix within the portfolio. Over the last decade, we have driven a meaningful shift in our sources of revenue through both U.S. and U.K. senior housing capital allocations. The Percentage of Private Pay and Other Revenue has increased from 8% 10 years ago to 39% today. based on our current pipeline and current tenant We expect that the private and other revenue percentage will continue to grow.
Taylor Pickett: Power back rehab.
Taylor Pickett: And the equity ownership in shift bed as a result of the prior career stop sale.
Taylor Pickett: Turning to revenue mix within the portfolio over.
Taylor Pickett: Over the last decade, we have driven a meaningful shift in our sources of revenue through both U S and U K senior housing capital allocation.
Taylor Pickett: The percentage of private pay and other revenue.
Taylor Pickett: Has increased from 8% 10 years ago to 39% today.
Taylor Pickett: Based on our current pipeline and current tenant mix, we expect that the private and other revenue percentage will continue to grow.
Bob Stephenson: I will now turn the call over to Bob. Thanks, Taylor and good morning. Turning to our financials for the first quarter of 2025. Revenue for the first quarter was $277 million compared to $243 million for the first quarter of 2024. The year-over-year increase is primarily the result of the timing and impact of revenue from new investments completed throughout 2024 and 2025, operator restructurings and transitions, and annual escalators, partially offset by asset sales completed during that same time period. Our net income for the first quarter was $112 million, or $0.33 per common share, compared to $69 million, or $0.27 per common share, for the first quarter of 2024.
Bob: I will now turn the call over to Bob.
Bob: Thanks, Taylor and good morning, turning to our financials for the first quarter of 2025.
Bob: Revenue for the first quarter was $277 million compared to $243 million for the first quarter of 2020 for.
Bob: The year over year increase is primarily the result of the timing and impact of revenue from new investments completed throughout 2024, and 'twenty five operator, restructurings and transitions and annual escalators, partially offset by asset sales completed during that same time period.
Bob: Our net income for the first quarter was $112 million or <unk> 33, common share compared to $69 million or 27 per common share for the first quarter of 2024.
Bob Stephenson: Our NAIRI FFO for Q1 was $184 million, or $0.62 per share, as compared to $153 million, or $0.60 per share, for the first quarter of 2024. Our Adjusted FFO was $221 million, or $0.75 per share for the quarter, and our FAD was $211 million, or $0.71 per share, and both exclude several items outlined in our NAREIT FFO, Adjusted FFO, and FAD Reconciliations to Net Income, found in our earnings release, as well as our First Quarter Financial Supplemental, posted to our website. Our Q1 2025 FAD was 1.3 cents greater than our Q4 2024 FAD, with the increase resulting from incremental revenue related to the timing and completion $340 million dollars in fourth quarter 24 new investors.
Bob: Our NAREIT <unk> for Q1 was $184 million or <unk> 62 per share as compared to $153 million or <unk> 60 per share for the first quarter of 2024.
Bob: Our adjusted <unk> was $221 million or <unk> 75 per share for the quarter and our side was $211 million or <unk> 71 per share in both excludes several items outlined in our NAREIT <unk> adjusted <unk> and Fad reconciliation to net income down in our earnings release.
Bob: As well as our first quarter financial supplemental posted to our website.
Bob: Our Q1 2025 Fad was one three <unk> greater than our Q4 'twenty four fad with the increase resulting from incremental revenue related to the timing and completion of $340 million in fourth quarter 2000, and for new investments and.
Bob Stephenson: $78 million dollars in Q125 new investors. In addition, Maplewood paid $15.6 million in rent in the first quarter of 2025. An increase of $3.3 million, inclusive of $2.1 million of rent related to the opening of the Washington, D.C. facility in February of 2025. And we had reduced interest expense as we repaid $400 million of 4.5% seen or unsecured notes that matured January 15, 2025 using balance sheet cash. These were partially offset by the first quarter issuance of 7 million shares of equity for gross proceeds totaling $264 million as we continue to pre-fund our investment pipeline.
Bob: $78 million in Q1 25, new investments. In addition, maplewood paid $15 $6 million of rent in the first quarter of <unk> 25.
Bob: An increase of $3 $3 million inclusive of $2 $1 million of rent related to the opening of the Washington D. C facility in February of 25.
Bob: And we had reduced interest expense as we repaid $400 million of four 5% senior unsecured notes that matured January 15th 2025 using balance sheet cash.
Bob: These were partially offset by the first quarter issuance of 7 million shares of equity.
Bob: For gross proceeds totaling $264 million as we continued to pre fund our investment pipeline.
Bob Stephenson: Our balance sheet remained strong as we ended the first quarter with $368 million in cash and the full borrowing capacity of our $1.45 billion credit. Our balance sheet cash was used to fund the $344 million dollar U.K. and Jersey acquisition on April 25th that Vickis will be discussing. Additionally, in April, we repaid our $50 million term loan and officially extended our credit facility maturity to the end of October. At March 31st, 95% of our $4.5 billion in debt was at fixed rates. And our fixed charge coverage ratio was 5.2 times, and our funded debt to annualized adjusted normalized EBITDA was 3.72 times, which is the lowest our leverage has been in over 10 We still have a target leverage range between 4 to 5 times, with the sweet spot being between 4.5 to 4.75.
Bob: Our balance sheet remains strong as we ended the first quarter with $368 million in cash and the full borrowing capacity of $145 billion credit facility.
Bob: Our balance sheet cash was used to fund the $344 million U K and Jerzy acquisition on April 25th that tickets will be discussing.
Bob: Additionally, in April we repaid our $50 million term loan and officially extended our credit facility maturity to the end of October.
At March 31, 95% of our $4 5 billion and debt was at fixed rates.
Bob: Our fixed charge coverage ratio was five two times and our funded debt to annualized adjusted normalized EBITDA was 372 times, which is the lowest our leverage has been in over 10 years, we still have a target leverage range between four to five times with a sweet spot being between four and five.
Bob: Half the 475 times.
Bob Stephenson: Given our equity currency, we have the flexibility to accretively fund investments with equity. As we have for the past several quarters, thereby positioning ourselves for outsized adjusted FFF growth. As we opportunistically look to the debt and banking markets if coupons and rates become more favorable.
Bob: Given our equity currency, we have the flexibility to Accretively fund investments with equity as we have for the past several quarters, thereby positioning ourself for outsized adjusted <unk> growth.
Bob: As we Opportunistically look to the debt and banking markets, if coupons and rates become more favorable.
Bob Stephenson: Turning to Guide. As Taylor mentioned, we raised and narrowed our full year adjusted FFO guidance to a range between $2.95 to $3.01 per share.
Bob: Turning to guidance.
As Taylor mentioned, we raised and narrowed our full year adjusted <unk> guidance to a range between $2 95 to $3 <unk> per share.
Bob Stephenson: A few of the key 2025 four-year guidance assumptions are We're assuming no change in our revenue related to operators on a cruel basis of revenue recognition. As a note, over 75% of our operators are currently on a straight line basis of accounting, which means any growth in revenue through annual escalators will not yield further growth in adjusted FFO, but would yield cash flow growth. We're assuming Maplewood's ability to pay contractual rent continues to improve. We're assuming Genesis continues to pay full contractual rent and of the $247 million in mortgages and other real estate-backed investments contractually maturing in 2025.
Bob: A few of the key 2025 full year guidance assumptions are.
Bob: We're assuming no change in our revenue related to operators on accrual basis of revenue recognition.
Bob: As a note over 75% of our operators are currently on a straight line basis of accounting, which means any growth in revenue through annual escalators will not yield further growth in adjusted SSO, but would yield cash flow growth.
Bob: We're assuming maple woods ability to pay contractual rent continues to improve.
Bob: We're assuming genesis continues to pay full contractual rent and interest.
Bob: Of the $247 million in mortgages and other real estate back investments contractually maturing in 2025.
Bob Stephenson: We're assuming $84 million will convert from loans to fee-simple real estate, and $68 million will be repaid throughout 2025. We are assuming the balance of the loan will be extended beyond 2025.
Bob: We're assuming $84 million will convert for loans to fee simple real estate and $68 million will be repaid throughout 2025, we are assuming the balance of the loans will be extended beyond 2025.
Bob Stephenson: We've included the impact of the new investments completed as of April 30. We project our quarterly G&A expense to run between $12 to $14 million in 2025. We assume we will repay our $238 million of secure debt in November 2025 with equity. We assume no material changes.
Bob: We have included the impact of the new investments completed as of April 30th.
Bob: Project, our quarterly G&A expense to run between $12 million to $14 million in 2025.
Bob: We assume we will repay our $238 million of secured debt in November 2025 was equity.
Bob: We assume no material changes in market interest rates.
Bob Stephenson: Market Interest Rate As they relate to either interest earned on the balance sheet cash or interest expense charged on credit facility borrowings.
Bob: They relate to either interest earned on the balance sheet cash for interest expense charge or credit facility borrowings.
Bob Stephenson: Finally, consistent with how we ended 2024, we assume we will position ourselves with enough cash on the balance sheet by year-end of 2025 to repay our January 2026 $600 million bond maturity. As a reminder, to the extent our equity currency remains favorable. and we continue to pre-fund investments or prepare for debt maturity. for every 4 million shares issued. Assuming shares are issued at a price consistent with the first quarter, our quarterly adjusted FFO is negatively impacted by slightly less than 1 cent per share, while our leverage improves or is reduced by approximately 0.15 turns. until the cash is put back to work in new investors.
Bob: Finally, consistent with how we ended 2024, we assume we will position ourselves with enough cash on the balance sheet by year end of 'twenty five to repay our January 2026, $600 million bond maturity as a reminder to the extent our equity currency remains favorable.
Bob: And we continue to pre fund investments or prepare for debt maturities.
Speaker Change: For every 4 million shares issued.
Speaker Change: Assuming shares are issued at a price consistent with the first quarter, our quarterly adjusted <unk> is negatively impacted by slightly less than <unk> <unk> per share, while our leverage improves or is reduced by approximately one five turns until the cash is put back to work in new <unk>.
Speaker Change: Estimates.
Bob Stephenson: Our 2025 adjusted FFO guidance does not include any additional investments or asset sales as well as any additional capital transactions. Other than what I just mentioned or what's included in the earnings.
Speaker Change: Our 2025 adjusted <unk> guidance does not include any additional investments or asset sales as well as any additional capital transactions.
Speaker Change: Other than what I, just mentioned or what's included in the earnings release.
Vikas Gupta: I will now turn the call over to Vicki. Thank you, Bob, and good morning, everyone. Today I will be discussing the most recent performance trends for Omega's operating portfolio and Omega's investment activity in the first quarter of 2020. as well as provide an update on Omega's pipeline and market trends for the remainder of 2020.
Vegas: I will now turn the call over to Vegas.
Vegas: Thank you Bob and good morning, everyone.
Speaker Change: Today I will be discussing the most recent performance trends for Omega operating portfolio and Omega investment activity in the first quarter of 2025.
Vegas: Well as to provide an update on Omega pipeline and market trends for the remainder of 2025.
Vikas Gupta: First turning to portfolio Trailing 12-month operator EBITDA coverage for our core portfolio as of December 31, 2024, increased to 1.51 times versus 1.50 times for the trailing 12-month period ended September 30, 2021. The most recent quarter's performance is another quarter of modest but continued trailing 12-month coverage improvement across. Omega's operating partners continue to showcase their expertise and resilience in a fluid regulatory and reimbursement environment. Omega and our operating partners continue to work towards the common goal of making disciplined and sustainable investment decisions while serving an increasingly complex resident population across various asset types.
Speaker Change: First turning to portfolio performance.
Speaker Change: Trailing 12 month, operator, EBITDAR coverage for our core portfolio as of December 31, 2024 increased to 151 times versus one five times for the trailing 12 months period ended September 32024.
Speaker Change: The most recent quarter's performance is another quarter of modest but continued trailing 12 month coverage improvement across our portfolio a measure of the operating partners continue to showcase their expertise and resilience in a fluid regulatory and reimbursement environment.
Speaker Change: And our operating partners continue to work towards a common goal, making disciplined and sustainable investment decisions, while serving an increasingly complex resident population across various asset types and markets.
Vikas Gupta: Omega is currently not engaged in restructuring activity with any of our major However, I did want to share a few positive updates for two of our larger LaVie, and me. Levy continues to work towards exiting bankruptcy during the second quarter of 2020. at which time the Omega Levy mass release will be assumed and assigned to a new entity known as Avalanche.
Speaker Change: Magna is currently not engage in restructuring activity with any of our major operators.
Speaker Change: However, I do want to share a few positive updates for two of our larger operators levee and maple.
Speaker Change: Levine continue to work towards exiting bankruptcy during the second quarter of 2025 at which time the Omega Levine Master lease will be assumed and assigned to a new entity known as of artists.
Vikas Gupta: The timeline for closing is based on final regulatory approvals and legal documentation between of artists, the various landlords, and the working capital. Omega is currently receiving full contractual rent of $3.1 million per month or $37.5 million per annum, and no changes to rent are expected at the time the lease is assigned.
Speaker Change: The timeline for closing as based on final regulatory approvals and legal documentation between of artists the various landlords and the working capital lender.
Speaker Change: Omega is currently receiving full contractual rent of $3 1 million per month, or 37 5 million per annum and no changes to rent are expected at the time the leases assigned to Novartis.
Vikas Gupta: Turning to Maplewood, Occupancy for the Core 17 Facility Maplewood Portfolio, Inclusive of Inspired Carnegie Hill in New York City. has reached a level of 94% as of April. Maplewood paid $13.5 million in rent in the first quarter for this portfolio, which is an improvement of $1.3 million from the fourth quarter of 2025. and an improvement of $2.3 million from the first quarter.
Speaker Change: Turning to my board occupancy for the core 17 facility Maplewood portfolio inclusive of inspire Carnegie Hill in New York City has reached a level of 94% as of April 2025.
Speaker Change: Maplewood paid $13 5 million in rent in the first quarter for this portfolio, which is an improvement of $1 3 million from the fourth quarter of 2024, and an improvement of $2 3 million from the first quarter of 2024.
Vikas Gupta: The Inspire Embassy Row facility in Washington, D.C. opened in February 2020. This new facility comprises 174 units and is located in the historic and highly desired Embassy Row area of downtown. The facility is in the process of leasing up with an occupancy of 20% as of the end Maplewood paid $2.1 million of incremental rent in the first quarter for Inspire MBA. for a total rent payment of $15.6 million in the In April 2025, Maplewood paid total rent of $5.8 million. of which one million was attributable.
The inspire embassy row facility in Washington, DC opened in February 2025.
This new facility comprises of 174 units and is located in the historic and highly desired embassy row area downtown Washington D C.
Speaker Change: The facility is in the process of leasing up with an occupancy of 20% as of the end of April.
Speaker Change: <unk> paid $2 1 million of incremental rent in the first quarter for inspire embassy row for a total rent payment of $15 6 million in the first quarter in April 2025, Maplewood paid total rent of $5 8 million of which 1 million was attributable timber zero.
Vikas Gupta: Turning to new investors. Omega 2025 Transaction Activity through the end of April was very with over $423 million in new real estate investment. and 34 million of CapEx investments funded in the first quarter, or total new investment activity of over 450,000. During the first quarter, Omega completed a total of $112 million in new investments. Inclusive of 34 million. The new investments include 58 million in real estate acquisitions via two separate transactions. a purchase lease transaction of two senior housing communities in Texas, which were leased to a new operator, and a purchase leaseback transaction. of four care homes in the UK, at least to an Both transactions have an initial cash yield of 10%, with the annual escalators ranging from 2% to 2.5%.
Speaker Change: Turning to new investments.
Speaker Change: 2025 transaction activity through the end of April was very strong with over $423 million in new real estate investments and $34 million of Capex investments funded in the first quarter for total new investment activity of over $457 million.
Speaker Change: During the first quarter Omega completed a total of $112 million of new investments inclusive of $34 million in Capex. The new investments include $58 million in real estate acquisitions via two separate transactions a purchase lease transaction of two senior housing communities in Texas, which will lead to a new operator, and a purchase leaseback transaction.
Speaker Change: Our four care homes in the UK leased to an existing operator, both transactions have an initial cash yield of 10% with annual escalators ranging from 2% to two 5%.
Vikas Gupta: In addition, Omega invests the 20 million in new real estate loans in the which have a weighted average interest rate of 10.8%. Subsequent to the first quarter of 2025, Omega closed on a $344 million investment for a portfolio of 45 care homes across the U.K. and Jersey. Omega leased the 45 care homes to four existing and two new operators. with an initial cash field. The UK continued to be a large driver of our 2025 new investors. totaling approximately 392, or 93% of our total new investments, excluding As I've mentioned previously, we've accumulated a strong bench of operators and other relationships in the UK that lead us to highly accretive investors.
Speaker Change: In addition, Omega invested $20 million in new real estate loans in the first quarter, which have a weighted average interest rate of 10, 8%.
Speaker Change: Subsequent to the first quarter of 2025 Omega closed on a $344 million investment for a portfolio of 45 care homes across the UK and Jersey and make are leased to 45 care homes to four existing and to new operators with an initial cash yield of 10%.
Speaker Change: The UK continued to be a large driver of our 2025, new investment activity totaling approximately 392 or 93% of our total new investments excluding capex.
Speaker Change: As I've mentioned previously we have accumulated a strong bench of operators and other relationships in the UK, the alere to highly accretive investment opportunities.
Vikas Gupta: Additionally, as a result of our scale, reputation, and strong operator base across the UK, we were able to quickly evaluate, structure, and close on complex transactions like the 45-care home transaction we closed in April. It is important to highlight that while these transactions varied in size and nature, and were comprised of both real estate investments and real estate loans, Approximately $402 million, excluding CapEx, or $9,400,000. Owned Real Estate Investments leased to third party operators under long term triple net We continue to support the growth of our existing and new offices. by focusing on strong credit backed real estate and real estate loans with exceptional returns that often provide Omega with the ultimate opportunity for real estate.
Speaker Change: As a result of our scale reputation and strong operator base across the U K, we were able to quickly evaluate structure and closed on complex transactions like the 45 care home transaction, we closed in April it.
Speaker Change: It is important to highlight that while these transactions varied in size and nature and were comprised of both real estate investments and real estate loans.
Speaker Change: Approximately $402 million, excluding capex or 95% were owned real estate investments leased to third party operators under long term triple net lease structures.
Speaker Change: We continue to support the growth of our existing and new operators.
Speaker Change: <unk> on strong credit backed real estate investments and real estate loans with exceptional returns that often provide a mega with the ultimate opportunity for real estate ownership.
Vikas Gupta: Turning to the pipe. Omega's pipeline and transaction network for the remainder of 2025 continues to be favored. We continue to see marketed opportunities both in the U.S. and the U.K., while also benefiting from off-market opportunities that our operating partners and other relations Additionally, while we continue to see increase for real estate loans due to the restricted lending environment, we're seeing a material increase in opportunities to acquire real estate in 2021. specifically in the U.S. with opportunities ranging the spectrum of individual sellers to regional owner-operators and institutional real estate. We will continue to evaluate and engage in select loan opportunities, primarily for existing operator relations.
Speaker Change: Turning to the pipeline.
Speaker Change: <unk> pipeline in transaction outlook for the remainder of 2025 continues to be favorable we continue to see marketing opportunities both in the U S and the UK, while also benefiting from off market opportunities that are our operating partners and other relationships and bring us.
Speaker Change: Additionally, while we continue to see inquiries for real estate loans due to the restricted lending environment, we're seeing a material increase in opportunities to acquire real estate in 2025.
Speaker Change: Specifically in the U S with opportunities ranging the spectrum of individual sellers to regional owner operators and institutional real estate sellers, we will continue to evaluate and engage in this life of loan opportunities primarily for existing operator relationships when our priority will always be allocating capital.
Vikas Gupta: But our priority will always be allocating capital towards accretive owned real estate deals that grow up.
Speaker Change: Towards accretive owned real estate deals and grow our balance sheet I will now turn the call over to Meg.
Unknown Executive: I will now turn the call over to Thanks, Dickinson. Good morning, everyone. I'll start today with news that, while not unexpected, is very much appreciated.
Meg: Thanks, and good morning, everyone.
Meg: I'll start today with news that while not unexpected is very much appreciated.
Unknown Executive: In early April, the federal judge in the Texas court case brought against the staffing mandate found in favor of the summary judgment filed by the industry associations among The court found that CMS lacked the authority to issue a regulation requiring registered nurses 24-7. and 3.48 hours per resident day of nurse staff. which would have effectively replaced a statute already in place. As a reminder, the Congressional Budget Office had scored the reversal of this rule as saving the federal government $22 billion over 10 years.
Meg: Early April the federal Judge in a Texas Court case brought against the staffing mandate found in favor of the summary judgment filed by the industry associations amongst others.
Meg: Court found that CMS lack the authority to issue of regulation, requiring registered nurses 24, seven and $3 48 hours per resident day, a nurse staffing time.
Meg: Which would have effectively replaced the statute already in place.
Meg: As a reminder, the congressional budget office had scores the reversal of this rule is saving the federal government $22 billion over 10 years.
Unknown Executive: We are extremely grateful to finally see some conclusion on this front and applaud the efforts of all those involved. Also in April, both the Senate and House passed respective budget resolutions, which, amongst other things, tasked the House Energy and Commerce Committee with reducing spending by $880 billion over 10 years. While not specifically calling out cuts to the federally funded portion of Medicaid, it is largely believed that in order to meet the requirement, some level of Medicaid reform will need to occur. We continue to believe that the Medicaid expansion population, those able-bodied adults that were added with the Affordable Care Act, are likely the largest target of these spending cuts, given that the federal government covers a higher percentage of that Medicaid spend – 90% – than the traditional Medicaid population, approximately 63% on average.
Speaker Change: We are extremely grateful to finally see some conclusion on this front and applaud the efforts of all of those involved.
Speaker Change: Also in April both the Senate and house passed respected budget resolutions, which amongst other things task the house energy and Commerce committee with reducing spending by $880 billion over 10 years.
Speaker Change: While not specifically calling out cuts to the federally funded portion of Medicaid. It is largely believed that in order to meet the requirement some level of Medicaid reform will need to occur.
Speaker Change: We continue to believe that the Medicaid expansion population there was able bodied adults that were added with the affordable care Act are likely the largest target at these spending cuts given that the federal government covers a higher percentage of that Medicaid spend 90% than the traditional Medicaid population approximately 63.
Speaker Change: Percent on average.
Unknown Executive: However, while spending cuts there may cover a vast amount of the required cuts, there may still be some action that would impact the traditional Medicaid population. There is no way to tell at this time what will ultimately happen.
Speaker Change: However, while spending cuts there may cover a vast amount of their required cuts there may still be some action that would impact the traditional Medicaid population there.
Speaker Change: There is no way to tell at this time, what will ultimately happen.
Unknown Executive: All of that said, with overall coverage strong, fundamentals continuing to improve, and a president that stood by this industry during COVID, essentially recognizing that it was too important.
Speaker Change: All of that said with overall coverage strong fundamentals continuing to improve and our president that stood by this industry. During COVID-19 essentially recognizing that it was too important to fail, we feel well positioned and are hopeful that no attempt at draconian cuts in this space will be proposed I will now open the <unk>.
Unknown Executive: We feel well positioned and are hopeful that no attempt at draconian cuts in this space will be I will now open the call up for questions. At this time, I'd like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Please limit to one question and one follow-up. We'll pause for just a moment while we compile the Q&A roster.
Speaker Change: All up for questions.
Speaker Change: Okay.
Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. Please limit to one question and one follow up we'll pause for just a moment, while we compile the Q&A roster.
Jonathan Hughes: Our first question comes from the line of Jonathan Hughes of Raymond James. Please go ahead. Morning, thanks for the prepared remarks and commentary.
Speaker Change: Our first question comes from the line of Jonathan Hughes of Raymond James. Please go ahead.
Jonathan Hughes: Hey, good morning, Thanks for the prepared remarks and commentary.
Jonathan Hughes: I was hoping you could share some more details on Genesis and then not paying rent and interest in March but then paying in April. I know that The surprising thing is we haven't really heard from them in a few years, but the shortfall was driven by their ABL lender.
Speaker Change: Was hoping you could share some more details on Genesis and then not paying rent and interest in March but then paying in April I know that was it.
Speaker Change: The pricing is we haven't really heard from them in a few years, but the shortfall was driven by their ABL lender can you just remind us.
Taylor Pickett: Can you just remind us of the Genesys corporate capital structure, if they're on accrual or cash accounting, and then the geographic footprint of your Genesys? Yeah, Jonathan, it's Taylor. Good morning.
Speaker Change: Genesis corporate capital structure, if theyre on accrual or cash accounting and then the geographic footprint of your Genesis portfolio.
Taylor Pickett: Yes, Jonathan it's tailored morning.
Taylor Pickett: So just a slightly bigger picture of the Genesis. Genesis has a weak balance. And so to the extent that their principal capital partner is their AVL lender, if they squeeze down on availability, it affects liquidity. I think it's just a one-time thing. From our perspective, they should continue to pay. The coverage is great. Our MES loan is collateralized by an enormous amount of ancillary assets. So I would expect they'll continue to pay and if for some reason their situation becomes more difficult, we're in a fine spot. I mean, we've been through these a million times.
Speaker Change: So just slightly.
Speaker Change: Slightly bigger picture.
Speaker Change: The Genesis Genesis has a weak balance sheet.
Speaker Change: And so to the extent that there.
Speaker Change: The principal capital partner is their ABL lender.
Speaker Change: They squeeze down on availability FX liquidity.
Speaker Change: I think it's just a onetime thing from our perspective.
Speaker Change: They should continue to pay the coverage is great. Our mezz loan is collateralized by an enormous amount of ancillary assets.
Speaker Change: So.
Speaker Change: I would expect they'll continue to pay that for some reason.
Speaker Change: The situation becomes.
More difficult.
Speaker Change: Word of five spot I mean, we've been through these 1 million times I'm not worried at all.
Taylor Pickett: I'm not worried at all.
Taylor Pickett: In terms of geography, it's principally mid-Atlantic. We used to have some northeast presence. We still have a tiny bit in that area. Mid-Atlantic all the way down into West Virginia.
Speaker Change: In terms of geography.
Speaker Change: Instantly.
Speaker Change: Mid Atlanta, we used to have some northeast presence, we still have a tiny bit better.
Speaker Change: Yeah.
Speaker Change: Mid Atlantic all the way down into West Virginia.
Taylor Pickett: And then in terms of accounting, Genesys is on a cash basis because for, I don't know, three, four years they've had. Accounting Opinion A Billionth Anniversary And I don't expect that change. Jonathan, so on the lease is on a cash basis. It's been there for 2020.
Speaker Change: And then in terms of accounting.
Speaker Change: Genesis is on a cash basis.
Speaker Change: Because for I don't know three or four years they've had.
Speaker Change: And accounting opinion.
Speaker Change: Go ahead Sir.
Speaker Change: And I don't expect that.
Jonathan Hughes: Yes, Jonathan so the lease is on a cash basis, it's been here for 2020.
Taylor Pickett: The loans that Taylor mentioned, given the fact that collateral supports the loans, easily supports loans, that's on an accrual basis. Okay, that's great. I appreciate that.
Jonathan Hughes: The loans that Taylor mentioned, given the fact that collateral supports the loans easily supports Lowe's.
Jonathan Hughes: Full basis.
Speaker Change: Okay, that's great color I appreciate that and then.
Jonathan Hughes: And then I've got more Genesis questions, but I'll save those and I'll ask one about acquisitions. Can you maybe share more details on the UK portfolio acquisition? We've seen a lot more interest lately in UK healthcare real estate from various capital sources. So yeah, I was pleasantly surprised to see the attractive 10% yield on that transaction.
Speaker Change: I've got more Genesis questions, but I'll save those and I'll ask one about acquisitions can you.
Speaker Change: Yes, maybe share more details on the UK portfolio acquisition, we've seen a lot more interest lately in the UK healthcare real estate from various capital sources. So yes, I was pleasantly surprised to see the attractive 10% yield on that transaction can you just talk about how that deal evolved in and share some details on composition of that portfolio.
Vikas Gupta: Can you just talk about how that deal evolved and share some details on the composition of that portfolio? Yeah, Jonathan, it's a Vegas. So that deal is an example of our how strong our platform is in the UK, there was a seller looking to exit completely. And we were able to come in with six different operators and give them a solution. And a very quick timeline. They wanted to close everything on the same day and we were able to deliver. I mean, to be honest, I don't think there's a ton of competition because there's not a lot of people who could do that.
Speaker Change: Yes.
Jonathan Hughes: Yes, Jonathan.
Jonathan Hughes: So that deal is an example of our how strong our platform is in the U K there was a seller looking to exit.
Jonathan Hughes: Completely and we were able to come in with six different operators and give them a solution and a very quick timeline. We wanted to close everything on the same day, and we were able to deliver that.
Jonathan Hughes: Honest I don't think there is a ton of competition because it was all on people who could do that.
Vikas Gupta: So, and these assets fit well, they're all over the UK, Scotland and Jersey, and all of our operators took them, that are taking them, it fits really well in their geography. and good quality assets that have a very good use.
Jonathan Hughes: So and these assets well, they're all over the UK, Scotland, and Jersey, and all of our operators talk about them that are taking them.
Jonathan Hughes: It's really well in those geographies.
Jonathan Hughes: And good quality assets that have a very good useful life.
Jonathan Hughes: Alright, I appreciate the cover.
Speaker Change: Alright, I appreciate the color I'll hop off thanks for the time.
Unknown Executive: I'll hop off.
Seth Berge: Thank you for the Our next question comes from the line of Seth Berge from Citibank. Please go ahead. Hi, and thanks for taking my question. I guess, have you seen any immigration impact on labor availability and wage pressures? Yeah, we haven't seen that at this point. I mean, there's a potential there could be an indirect impact down the road, but we really haven't seen anything at this point.
Seth Bergin: Our next question comes from the line of Seth Bergin from Citibank. Please go ahead.
Speaker Change: Hi.
Speaker Change: Thanks for taking my question I guess are you seeing any immigration impact on labor availability and wage pressures.
Speaker Change: Yeah, we haven't seen that at this point I mean.
Speaker Change: There is a potential there could be an indirect impact down the road, but we really haven't seen anything at this point.
Speaker Change: Great and then I guess for my follow up just going back to Genesis.
Seth Berge: Great, and then I guess for my follow up, just going back to Genesis, do you have any sense of if their operating fundamentals are improving or do you have any metrics you could provide there? Well, the coverage metric is the big one, the big driver, and our portfolio has been consistently above one and a half times. Directionally, it's, it's, it moved up through, has COVID improved, and it's kind of leveled out like the rest of the portfolio at that, for them, north of 1.6, compared to the whole portfolio of 1.5. Thanks.
Speaker Change: You have any sense if thats their operating fundamentals are improving or do you have any metrics you can provide there.
Speaker Change: Yeah.
Speaker Change: Well the coverage metric is the big one the big driver in our portfolio has been.
Speaker Change: Assistant way above one five times.
Speaker Change: Directionally, yes.
Speaker Change: Yes.
Speaker Change: It moved up through has COVID-19 improved.
Speaker Change: Kind of leveled out like the rest of the portfolio at that for them North of one <unk> compared to the whole portfolio of one five.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: Yeah.
Juan Sanabria: Okay, our next question comes from line of Juan Sanabria from BMO Capital Markets. Please go ahead. Hi, good morning. Just on Genesis, on the loan portion, how much, I guess, pick interest or other kind of non-cash is there, where if that has to switch for whatever reason, knowing you have a lot of credit behind that would be potentially at risk? As Taylor mentioned, we have those loans that have adequate collateral since the accounting requires you to keep on a cruel basis. In the quarter, we bought $2.4 million of PIC. Okay, great.
Speaker Change: Okay. Our next question comes from the line of Juan seen Umbria from BMO capital markets. Please go ahead.
Speaker Change: Hi, good morning.
Speaker Change: On Genesis.
Speaker Change: On the loan portion.
Speaker Change: How much I guess pick interest or other kind of non cash is there where if that has to switch for whatever reason or you have a lot of credit behind that would be potentially at risk.
Speaker Change: So as I said, we had mentioned we have there as well.
Speaker Change: Adequate collateral.
Speaker Change: Please refer to.
Speaker Change: You keep on accrual basis in the quarter, we booked $2 4 billion.
Speaker Change: Okay.
Speaker Change: Okay, great and.
Juan Sanabria: And I'm just curious, you know, there was a one of your larger cap peers did a significant sniff transaction first time in a while. Did you guys look at that? Or how do you do you do you see them in other deals? Or just curious on this data competition for US fee simple acquisitions here?
Speaker Change: Just curious if there was a one of your larger cap peers did a significant transaction first time in a while.
Speaker Change: Did you guys look at that or how do you.
Speaker Change: Do you see them in other deals or just curious on the state of competition for U S fee simple acquisitions here and if there's been any impact as a result of Dodge cuts too.
Juan Sanabria: And if there's been any impact, as a result of doge cuts to, you know, financing availability from HUD or otherwise, as a result of the government job So, Juan, are you talking about large cap pier, I'm not sure, pier, well tower? Yeah, I think they would say the same thing, but yes. We don't see. low power much. But when you think about it, The deal I've heard that they closed on was rather large. And it was cobbled together privately, it wasn't a marketed deal. So we were aware of some things happening, but we were never part of a bid process.
Speaker Change: Financing availability from hot or otherwise as a result.
Speaker Change: Great job cuts.
Speaker Change: So one are you talking about large cap peer make sure Pierre well tower.
Yeah, I think they would say the same thing but yes.
Speaker Change: We don't see.
Speaker Change: Low power launch.
Speaker Change: But when you think about it.
Speaker Change: The deal I've heard that they closed all was rather large.
Speaker Change: It was cobbled together privately it wasn't a marketed deal.
Speaker Change: So we were we were aware of some things happening, but we were never a part of a bid process.
Speaker Change: Okay.
Juan Sanabria: Okay, and just as a With the doge cuts, has there been any change to like the receptiveness or availability of HUD lending as a result of cuts?
Speaker Change: Okay.
Speaker Change: This is a.
Speaker Change: With the Doge cuts has there been any change to the receptiveness or availability of HUD lending as a result of a card send it off like that that particular department was.
Unknown Executive: I don't know if like that, that particular department was https://www.thevenusproject.com Thank you guys, appreciate it.
Speaker Change: Downsize your website is that going to impact.
Speaker Change: Debt financing availability generally.
Speaker Change: Yes at this time, we havent heard anything changing on the upfront.
But well keep our eyes.
Speaker Change: Our ear close to the ground there, but nothing at this point.
Speaker Change: Thank you guys I appreciate it.
Emily Meckler: Our next call comes from Emily Meckler from Green Street. Please go ahead. Hi everyone, thanks for the time.
Speaker Change: Our next call comes from Emily Meckler from Green Street. Please go ahead.
Emily Meckler: Hi, there and thanks for the time.
Vikas Gupta: Can you provide a little more color on the PACS portfolio and to what extent you'd be able to re-tenant the current facilities operated by the company and how have coverage levels trended over the past couple quarters? Yeah, this is Vickis. We have around 50 buildings with PACs, and they do extremely well. And so overall, we don't have a worry that we would not be able to re-tenant them at the current rent or even more. But at the current time, we've had discussions with PACs, and there's been no discussions of trying to exit our.
Emily Meckler: And a little more color on the <unk> portfolio and to what extent you'd be able to re tenant the current facilities operated by the company and how have coverage levels trend.
Emily Meckler: Trended over the past couple of quarters.
Emily Meckler: Yes. This is I guess, we have around 50 billings impact and they do extremely well.
Emily Meckler: And so overall we.
Emily Meckler: We don't have a worry that we will not be able to reach and then I'll, let the current rates or even more what are the current time, we've had no discussions with accident, there's been no discussions trying to exit.
Vikas Gupta: Okay, great. Thank you.
Speaker Change: Okay, great. Thank you and then just wondering.
Vikas Gupta: And then just one on kind of turning to the transaction market. Has your underwriting criteria shifted over the past few months, specifically in the US given the potential changes to Medicaid repayment?
Emily Meckler: Turning to the transaction market have you.
Speaker Change: Underwriting criteria shifted over the past few months, specifically in the U S. Given the potential changes to Medicaid repayments.
Vikas Gupta: This is Vikas again. No, the answer is no, nothing's changed, but we are, I mean, we're watching things closely, but at the current time, based on just all of the unknowns out there, we continue to underwrite.
Emily Meckler: Yes.
Emily Meckler: This is because again no. The answer is no nothing has changed but we are I mean, we're watching things closely but at the current time based on just all of the unknowns out there we continue to underwrite to segue.
Unknown Executive: Okay, thank you for the time.
Emily Meckler: Okay. Thank you for your time.
Omoteo Akusana: Our next question comes from. Omoteo Akusana from Deutsche Bank. Please go ahead. Hi, good morning, everyone. So on Genesis, again, you had mentioned earlier, like it's just again, lending markets are a little bit tougher in general. Just kind of curious, again, what we're seeing with Genesis of the ABL lender reducing capacity? I mean, are you starting to see that more broadly in the industry just because, you know, lending is getting tighter?
Speaker Change: Our next question comes from.
Oh Matteo <unk> from Deutsche Bank. Please go ahead.
Speaker Change: Hi, Yes, good morning, everyone.
Speaker Change: So on Genesis and again, you had mentioned earlier, it's just again lending markets are a little bit tougher in general.
Speaker Change: I was curious again, what we're seeing with Genesis of the ABL lender reducing capacity.
Speaker Change: Are you starting to see that more broadly in the industry just because.
Taylor Pickett: Or do you really kind of really look at this more as a Genesis specific It's the latter. This is Genesis specific. We haven't seen anything across the landscape. I will tell you, ABL lenders are notoriously difficult as it is.
Speaker Change: Lending is getting tighter or do you really kind of really look at this more as a genesis specific issue.
Tayo: Tayo its the latter this is genesis specific we havent.
Tayo: Seeing anything across the landscape I will tell you ABL lenders are notoriously difficult.
Tayo: <unk>.
Taylor Pickett: But in terms of a trend, we're not seeing any That's helpful.
Tayo: But in terms of a trend.
Tayo: We're not seeing anything.
Tayo: Okay. That's helpful and then for the term loan book the $118 million, if you want to hazard a guess of the.
Taylor Pickett: And then for the term loan book, the $118 million, if you were to hazard a guess of the LPV on those assets relative to the collateral, what would that number be? That's really, really a guess. But I will tell you, I think we're substantially overclouded. Substantial. Gotcha. Okay. And then that's helpful.
Tayo: LTV on those assets relative to the collateral, but what would that number be.
Tayo: That's really really I guess, but.
Tayo: I will tell you I think we're substantially over collateralized.
Tayo: Substantially.
Tayo: Gotcha, Okay and then.
Matthew Gorman: Maplewood, once it's all stabilized, what would be the run rate for the rent? on May 4th when Stabilize talks. You mean our contractual? Yeah, the contractual. Yeah, like, what do you get to at the end of it all?
Speaker Change: Maplewood once it's all stabilized what would be the run rate for the Rins.
Tayo: On Maplewood when stabilized.
Tayo: Yes.
Tayo: You mean, our contractual.
Tayo: Actual like what do you get to at the end of it all so this this is Matthew here.
Matthew Gorman: So this, this is Matthew here. It's a little bit. It's a little bit convoluted, because we're growing in our DC assets. So the contractual rent on the portfolio outside of DC, it's currently $69 million. And then in the DC project, it's going to be a 6% rate this year going up to seven going up to eight and then 2.5% escalates thereafter. So you can kind of do the math around that. Thank you.
Tayo: A little bit.
Tayo: It's a little bit convoluted, because we're growing in our D. C asset so the contractual rent on the portfolio outside of D. C is currently $69 million and then the DC projects is going to be a 6% rate this year going up to seven going up to eight and then two 5% escalators thereafter.
Tayo: So you can kind of do the math around that.
Speaker Change: Thank you.
Tayo: Yeah.
Nick Yulico: Our next question comes from the line of Nick Yulico from Scotiabank. Please go ahead. Thanks. Good morning. Just turning to Lavie, you talked about, you know, the entity, you know, there's going to be the master lease assigned to a new entity, no change to rent expected. Can you just remind us, does that mean then that the escalator is going to kick back in? What is the escalator there? And then also, you know, is there any like straight line rent that gets returned on once they exit bankruptcy?
Speaker Change: Our next question comes from the line of Nick <unk> from Scotiabank. Please go ahead.
Speaker Change: Thanks, Good morning, just turning to levee you talked about the entity.
Speaker Change: As you can be the master lease assigned to a new entity no change to rent expected can you just remind us is that does that mean, then that the escalators going to kick back in and what is the escalator there and then also.
Speaker Change: Is there any like straight line rent at that gets returned on and wants to exit bankruptcy.
Vikas Gupta: Yeah, Nick, this is Vickis. So basically, nothing's going to change. We'll continue to get rent, we'll continue to get our kickers, I believe they're two and a half percent on this lease. And so there's really nothing from a business perspective that will be changing on that lease after this design. We'll continue to get full rent. And this portfolio has strong coverage above 1.5%.
Yes, Nick this is I guess.
Speaker Change: So basically nothing is going to change.
Speaker Change: Continuing to get rent or continue to get our takers I believe there are two 5% on this list.
Speaker Change: So there's really nothing from a business perspective that will be changing on at least asking as well.
Speaker Change: We will continue to get full rent and this portfolio has strong coverage of about one four times.
Vikas Gupta: Do you want to answer the straight line question? Yeah, yeah. Yes, that's the answer. So there's gonna be straight line rent benefit that starts to kick in again on the lease. So I'm sorry, that Bob is how it was. So the question is, will straight line rent kick in? with this initiation of the new lease. Yes. Okay, great.
Speaker Change: Do you want to answer the straight line question.
Speaker Change: Yes.
Speaker Change: Yes, let's dance.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: It would be straight line rent benefit.
Speaker Change: Starts to kick in again on the on the lease.
Speaker Change: So I am sorry, Bob.
Speaker Change: So the question is will.
Speaker Change: Straight line rent kick in.
Speaker Change: The initiation of the new lease yes, sorry.
Speaker Change: Yes.
Nick Yulico: Thanks.
Speaker Change: Okay, great. Thanks.
Unknown Executive: Is there a way, can you just remind us, like, quantify what that benefit is? Well, it's going to be the length of the lease at two and a half percent, and then you divide it by the length of the lease. I just don't know the end date of that. Okay, got it.
Speaker Change: Can you just remind us like quantify what that what that benefit is.
Speaker Change: Well, it's going to be.
Speaker Change: Linked to the lease at two 5%.
Speaker Change: The lease I just.
Speaker Change: Don't know the data.
Speaker Change: Okay got it was a follow up thanks.
Unknown Executive: We can follow up. Thanks.
Unknown Executive: And then just the second question is any high-level perspective you could share on provider tax? And you talked about it a little bit and potential Medicaid changes are in flux, but just at a high level, like anything you're hearing about, you know, what that could turn out to be if it's a proposal and, you know, any sort of early thoughts on impact to the portfolio? Yeah, I mean, look, I think we think of the largest impact out there on Medicaid being on the Medicaid expansion population. And with the last within the last couple of days, that's actually come out that they're suggesting per capita caps on the expansion population only.
Speaker Change: And then just the second question is any high level perspective, you could share on provider Taxane and then you talked about it a little bit and potential Medicaid changes are in flux, but just at a high level like anything youre hearing about what that could turn out to be.
Speaker Change: Our proposal and.
Speaker Change: Any sort of early thoughts on impact to the portfolio.
Speaker Change: Yeah, I mean look I think we think of the largest impact out there on Medicaid being on the Medicaid expansion population and with the last within the last couple of days, that's actually come out that they are suggesting per capita caps on the expansion population only.
Unknown Executive: The greatest risk to traditional Medicaid is provider taxes, as you said. Right now, you know, provider taxes can go anywhere up to six percent of net patient revenues. You have about half the states, almost half the states in the US who are at six percent, but then it goes down from there. Several states don't have any any provider tax whatsoever. And we're not hearing that that would be wiped out completely. It's more so that it might come down a percentage or two. In terms of the impact, it's really difficult to tell from a portfolio perspective.
Speaker Change: The greatest risk at the traditional Medicaid is provider taxes is that.
Speaker Change: Right now provider taxes can go anywhere up to 6% of net patient revenues and of that half the states almost half the states in the U S who are at 6%, but then it goes down from there several states don't have any any provider tax whatsoever.
Speaker Change: And we're not hearing that that would be wiped out completely at solar so that might come down a percentage or killed.
Speaker Change: In terms of the impact it's really difficult to tell from a portfolio perspective every state is different certainly in certain number of states are going to step up and probably burnt that gap.
Unknown Executive: Every state's different. Certainly, a certain number of states are going to step up and probably bridge that gap. And it's just too soon to tell what that would actually look like. But that that is the greatest risk, which is probably a good thing when you look at the broad spectrum of the things they could do. Okay, great.
Speaker Change: Too soon to tell what that would actually look like but that that is the greatest risk.
Speaker Change: Which is probably a good thing when you look at the broad spectrum of the things they could do.
Speaker Change: Okay, great. Thank you.
Unknown Executive: Thank you.
Speaker Change: Yeah.
John Kilichowski: Our next call comes from the line of question, excuse me, comes from the line of John Kilichowski from Wells Fargo. Please go ahead. Thank you. Good morning. Maybe on the disposition side, you did a lot in the quarter. I'm curious if that was just a cleanup of non-core assets or you're being opportunistic on a good deal. Just curious what prompted that. A little bit of both. We had some assets held for sale at the end of last quarter that we executed on.
Speaker Change: Our next call comes from the line of question excuse me comes from the line of John Killer Child Ski from Wells Fargo. Please go ahead.
Speaker Change: Thank you and good morning.
Speaker Change: Maybe on the disposition side you did a lot in the quarter I am curious if that was just a cleanup of non core assets or you're being opportunistic on a good deal just curious what prompted that.
Speaker Change: So a little bit of both.
Speaker Change: Some assets held for sale at the end of last quarter that we.
Speaker Change: Executing on.
Bob Stephenson: Then there was another portfolio that, quite frankly, we were not necessarily envisioning selling, but somebody came along and made us an offer that would allow us to redeploy the capital effectively, accretively and grow fat. We felt that those assets were not core to the portfolio. They had been somewhat optimized in terms of the achievements that they had realized in the coverage. Therefore, we took advantage of the price that was offered. Got it.
Speaker Change: And then there was another portfolio that quite frankly, we weren't necessarily envisioning selling.
Speaker Change: But somebody came along and made us an offer.
Speaker Change: That would allow us to redeploy the capital.
Speaker Change: Effectively accretively and grow Fad, we felt that those assets would.
Speaker Change: We're not necessarily core to the portfolio.
Speaker Change: They had been somewhat optimized in terms of the achievements.
Speaker Change: <unk> realized in the coverage and therefore, we took advantage of the price that was offered to us.
Speaker Change: Got it and then just in the opening remarks, it sounded like the commentary about the opportunities in the U S. For your pipeline, we're improving because a lot of the activity. We've seen is in the U K I'm.
Vikas Gupta: And then just in the opening remarks, it sounded like a commentary about the opportunities in the US for your pipeline were improving because a lot of the activity we've seen has been in the UK.
Vikas Gupta: I'm curious what you think the rest of the year is going to look like in terms of acquisition opportunities between the US and UK. Yeah, John, this is Vickis. Right now the pipeline overall is healthy. It is a little bit more US heavy at the moment, which is, you know, a change from where we have been historically last year or so.
Speaker Change: I'm curious what you think the rest of the year is going to look like in terms of acquisition opportunities between the U S and the UK.
Speaker Change: Yes, John this is I guess.
Speaker Change: Right now the pipeline overall is healthy.
Speaker Change: It is a little bit more U S heavy at the moment.
Speaker Change: Which is a.
Speaker Change: The change from where we've been historically last year or so.
Vikas Gupta: But we'll see how things play out as year And I guess last thing just kind of piggybacking on that is as you're underwriting change for those deals in the US based on what we've seen and kind of the the overhang of the Medicaid concern. Now, as I previously said, we are still underwriting the same because there's just too many unknowns out there. Got it. Thank you.
Speaker Change: We will see how things play out as year progresses.
Speaker Change: And I guess the last thing just kind of piggybacking on that is has your underwriting changed for those deals in the U S. Based on what we've seen in kind of the the overhang of the Medicaid concerns.
Speaker Change: No as I previously said, we are still underwriting the same because there is just too many unknowns.
Speaker Change: Got it thank you.
Wes Holliday: Our next call comes from the line of, our next question comes from the line of Farrell Granath from Bank of America. Please go ahead. Thank you and good morning.
Speaker Change: Our next call comes from the line of our next question comes from the line of apparel granite from Bank of America. Please go ahead.
Speaker Change: Thank you and good morning, Glenn.
Wes Holliday: Going back to the UK market, I'm curious about how you get comfortable with extending into new operators and can you just specifically characterize your platform and if it's any different than what you do in the U.S.? Mr. Vikas, again, that's a good question. So, I mean, our platform is very similar to the US, where we have we've grown a bench of operators. Today, we have about 14 operators in the UK. And to be honest, we underwrite the same, we look at real estate quality markets and the operator and see how they would they would fit into predict our assets.
Speaker Change: Going back to the U K market I'm curious about.
How you get comfortable with extending into new operators.
Speaker Change: And can you just specifically characterize your platform and if it's any different than what you do in the U S.
Speaker Change: Mr. Vic is again, that's a good question. So I mean, our platform is very similar to the U S. Where we are we've grown a bunch of operators today, we have about 14 operators in the U K and to be honest, we underwrite the thing we look at real estate quality markets and the operator and see how they would fit into <unk>.
Vikas Gupta: So it is very much just taking our platform here and putting it out there. But it's been 10 years going now. And we believe that we finally have it at a good level.
Speaker Change: So it is very much to just say hey, our platform here.
Speaker Change: It out there, but it's been 10 years.
Speaker Change: Ongoing now and we believe that we finally had a good.
Speaker Change: Yeah.
Speaker Change: Okay.
Vikas Gupta: Thank you.
Speaker Change: Thank you and also your comment about the material change in.
Vikas Gupta: And also, your comment about the material change in the transaction market in the U.S., I'm curious what, when you're coming to deals, are you seeing greater competition? And is that changing any cap rates that are coming to the table? Yeah, I mean, there's a pickup in volume right now due to the interest rate environment. But no, overall, I mean, you know, different players come in and out, private equity, other REITs into our space. But no, overall, the competition is about the same as it has been. Okay, thank you very much.
Speaker Change: The transaction market in the U S. I'm curious what when you are coming to deal with are you seeing greater competition.
Speaker Change: And is that changing any cap rates that are coming to the table.
Speaker Change: Yes, I mean, theres a pickup in volume right now due to the interest rate environment, but no overall, what I mean.
Speaker Change: Some players come in and out private equity other recent <unk>, but no overall.
Speaker Change: The competition is about the same as it has been.
Speaker Change: Okay. Thank you very much.
Speaker Change: Okay.
Richard Anderson: Our next question comes from Wes Holliday of Baird. Please go ahead. Hey, good morning, everyone.
Speaker Change: Our next question comes from Wes Golladay of Baird. Please go ahead.
Wes Golladay: Hey, good morning, everyone can you talk about your FX exposure now.
Richard Anderson: Can you talk about your FX exposure now? Yeah, so if you look at our UK, from a hedging standpoint, what we look at, we try to do net investment hedges and or cross-currency swaps when possible, it makes sense. But bigger picture is, we have a big portfolio of assets over there and we collect rent in pound sterling. And as you know, looking at the pipeline and the acquisitions we just completed, we're paying pound sterling. So that's a net investment hedge, right? It's a perfect hedge there.
Speaker Change: Yes, so if you look at our U K.
Speaker Change: From a hedging standpoint, what we look at where we've tried to do net investment hedges and cost currency swaps.
That makes sense, but bigger picture is we have.
Speaker Change: A big portfolio of assets over there and we collect right.
Speaker Change: In pound Sterling and as you know looking at the pipeline and the acquisition. We just completed were paying pound Sterling, that's a net investment hedge right.
Speaker Change: Perfect catch there.
Richard Anderson: Okay, and then you have been extending your credit facility. Are you looking to do something bigger at the end of the year? I would like to get something done prior to the end of the year, hopefully mid-summer, and given our size, as you would expect, we would hope that that would increase in size. Okay, thanks a lot.
Speaker Change: Okay, and then you have been extending your credit facility are you looking to do.
Speaker Change: Something bigger at the end of the year.
Speaker Change: I would like to get something done prior to the end of the year hopefully mid summer and <unk>.
Speaker Change: Given our size, yes, you would expect we would hope that that would increase in size.
Speaker Change: Okay. Thanks, a lot.
Richard Anderson: Our next question comes from Richard Anderson of Wedbush Security. Please go ahead. Thank you.
Speaker Change: Our next question comes from Richard Anderson of Wedbush Securities. Please go ahead.
Speaker Change: Thank you.
Taylor Pickett: You know, in the beginning, you said, you know, you're not worried at all about Genesis, which, you know, is worrisome, I guess, you know, the fact that you have to say and, and, you know, it may all work out perfectly fine. But correct me if I'm wrong, and maybe this is the wrong way to look at it, but the three and a half million that's remaining on the letter of credit. seems all thin relative to, you know, you know, the future. Is that a fair way to think about it? Or am I, you know, looking at it the wrong way?
Speaker Change: So in the beginning you said youre not worried at all about Genesis, which.
Speaker Change: And I was worried.
Speaker Change: The fact that you have to say.
Speaker Change: And.
Speaker Change: You may all work out perfectly fine, but correct me if I'm wrong and maybe this is a wrong way to look at it but the $3 5 million that's remaining on the letter of credit.
Speaker Change: It seemed volt thin relative to you know.
Speaker Change: Future is that a is that a fair way to think about it or or my my.
Speaker Change: Looking at it the wrong way.
Taylor Pickett: Um, I don't think, well... Three and a half million is less than a month, right? So the extent that you want more than a month, it doesn't give you a lot of room to maneuver. On the flip side, If we don't get paid, it's a default. There's a default, there's a process, and these assets are incredibly valuable. You know, look, it's unfortunate that we have a lot of noise because of the blip in the payment. But the reality from our perspective is We're not worked. And, you know, we'll work through the process, if need be.
Speaker Change: I don't think well.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: It's less than a month right. So.
Speaker Change: The extent that you want more than a month.
Speaker Change: It doesn't give you a lot of room to maneuver.
On the flip side.
Speaker Change: If we don't get paid it's a default.
Speaker Change: There is a default there is a process.
Speaker Change: These assets are incredibly valuable so.
Speaker Change: Yes.
Speaker Change: Hi.
Speaker Change: It's unfortunate that we have a lot of noise because of the blip in the payment, but the reality from our perspective.
Speaker Change: As.
Speaker Change: We're not worked.
Speaker Change: Ed.
Speaker Change: We'll work through the process.
Speaker Change: It may be.
Speaker Change: Okay.
Unknown Executive: Okay. All right.
Speaker Change: Okay.
Speaker Change: Alright.
Unknown Executive: I guess I'll move on from that. The other thing I wanted to... I wanted to ask about was the 2.8% CMS recommendation for fiscal year 2026 and the value-based adjustment of 2%. You know, I kind of queried about this, and you all think that the right number to think about relative to the 4.2 of this year is 2.8, putting aside the incentive component of value of the VVP.
Speaker Change: I guess I'll move on from that.
Speaker Change: Yes.
Speaker Change: The other thing I wanted to.
Speaker Change: I wanted to ask about was the $2 8 million, 2% CMS recommendation for fiscal year, 2026, and the value based adjustment of 2%.
I kind of worried about this and you all think that the right number to think about relative to the $4. Two of this year is $2 eight.
Speaker Change: Putting aside the incentive component of our value of the V P but.
Unknown Executive: But some see it differently, and I'm wondering where you stand. Is the real number 2.8, or is it some fraction of that or some lower number of that when you take into account, you know, staffing and you take it into account, you know, wages and you take into account, you know, again, the VVP adjustment? What's the real number for 2026 in your mind? Okay, so is it overly simplistic to take the 2.8, subtract the 2, and then assume that your operators will meet those thresholds and you'll end up at 2.8? Is that the way to think about it?
Speaker Change: Some say it differently and I'm wondering where you stand as is the real number 2.8 or is it some fraction of that or some level of lower number of that when you take into account.
Speaker Change: Staffing would be taken into account wages and you take into account again, the Pvp adjustment, what's the real number for 2026 in your mind.
Speaker Change: I mean, the sheer numbers that two 8% we thought it was going to come in around 3%. So it's right around where we thought it was going to be and quite frankly normally what happens when you get a proposed rule by the time it becomes a final rule, there's probably maybe a little bit of a bump in there.
Speaker Change: But in terms of Youre just talking to.
Speaker Change: Total overall picture of what's going on in the nursing homes, I mean, yes, staffing obviously call it costs more but things have sort of leveled off from that perspective is while it's not as heated as it was over the last couple of years and it's sort of too soon to tell even on the tariff side, but that's kind of due to expenses, but we.
Speaker Change: Really when you think about it the Medicare piece of the population is a very small percentage of our business and we really tend to concentrate more on the Medicaid side of things, which has been very much so keeping pace.
Speaker Change: With inflation and we hope to see that going forward.
Speaker Change: Okay. So is it overly simplistic to take the two eight subtract the two and then.
Speaker Change: And assume that the operators will meet those thresholds and you'll end up at two eight is that is that the is that the way to think about it or am I kind of oversimplifying.
Unknown Executive: Or am I kind of oversimplifying? I think you're probably oversimplifying. You're talking about the value based piece where they potentially could pick up more of that. Yeah, that's what I'm asking. I mean, we kind of swing back. Yeah, we tend to think of our operators as being pretty strong on the quality piece of it. And so they would pick up whatever they can from that aspect. Okay.
Speaker Change: I think youre, probably over simplifying you're talking about the value based piece, where they potentially could pick up more is that.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: That's what I was asking.
Speaker Change: I mean, what kind.
Speaker Change: Kind of a swing factor.
Speaker Change: Yes, we tend to think of our operators being pretty strong on the quality piece of it and so they would pick up whatever they can from that aspect.
Speaker Change: Okay.
Unknown Executive: That's the answer then. Thank you very much.
Speaker Change: That's the that's the answer then thank you very much.
Michael Carroll: Our next question comes from Michael Carroll of RBC Capital Markets. Please go ahead. Yep, thanks.
Our next question comes from Michael Carroll of RBC capital markets. Please go ahead.
Michael Carroll: Yeah, Thanks, I guess.
Megan Krull: I guess, Megan, I wanted to circle back on the provider tax comments. I know the House Republicans initial menu of budget cuts included reducing the provider tax or potentially reducing the threshold to 3%. And I think you just said that they're talking about only reducing it by one to 200 basis points. I mean, has that changed? Or is it still kind of that evolving scenario where we just don't know yet where they want to set it, even if they do want to do something with it? It is very much so evolving. So you know, one day, you might hear they're going to cut it by 1%.
Speaker Change: Megan I wanted to circle back on the provider tax comments I know the house Republicans initial menu of budget cuts included reducing the provider tax or potentially reducing the threshold of 3% and I think you just said that they're talking about only reducing it by one to 200 basis points.
Speaker Change: Has that changed or is it still kind of that evolving scenario, where we just don't know yet where they wanted to start it even if they do want to do something with it.
Speaker Change: Very much so evolving so one day, you might hear they're going to cut it by 1% and up next day it might be 2%. So it's a little all over the place.
Megan Krull: And the next day, it might be 2%. So it's a little all over the place. It'll be interesting to see what happens from an expansion perspective, right? The more they can pick up from that 880 billion from the expansion, the less they're going to have to pick up on the traditional Medicaid side.
Speaker Change: It'll be interesting to see what happens from an expansion perspective right. The more they can pick up from that 880 billion from the expansion that was less they're going to have to pick up on the traditional Medicaid side.
Megan Krull: Okay, that makes perfect sense.
Speaker Change: Okay that makes perfect sense and then if I can just sneak one Genesis question did they pay their may rent, yet I guess or how long do they have until they need to pay their may rent.
Taylor Pickett: And then if I can just sneak one Genesis question in, did they pay their May rent yet, I guess, or how long do they have until they need to pay their May rent? The May rents due May 5th, so still not. Great. Thank you.
Speaker Change: And then may rents two basis.
Speaker Change: Still not too.
Speaker Change: Okay.
Speaker Change: Okay, great. Thank you.
Vikram Malhotra: Our next question comes from Vikram Malhotra from Mizzouho. Please go ahead. Morning. Thanks for doing the question. I guess just going back to Genesis and your conversations with them, like why did the ABL lender shrink the borrowing base? Did something change in the business or the collateral? And can you just clarify, has this ABL lender done this with any other operator? I have no idea whether the ABAIL lender has done it with other operators. I believe it related to a pool of collateral that was aging.
Speaker Change: Our next question comes from Vikram Malhotra from Mizuho. Please go ahead.
Vikram Malhotra: Good morning, Thanks for taking the question.
I guess, just going back to Genesis in your conversations with them like why did the ABL lender shrink the borrowing base did something change in the business. So the collateral and can you just clarify this ABL lender done this with any other operator.
Vikram Malhotra: Yeah.
Vikram Malhotra: I have no idea, whether the ABL lender has done it with other operators.
Vikram Malhotra: I believe it related to a pool of collateral.
Vikram Malhotra: Was aging.
Taylor Pickett: Beyond that, I don't have any more colors.
Vikram Malhotra: Beyond that I don't have any more color.
Taylor Pickett: Okay, just going back to the comments from the US acquisitions. I guess, you know, last quarter, and maybe in the quarter before that, you sort of said it's you were much more focused on the US, less opportunities that make sense for you. So I'm wondering, like, apart from rates, like, what else? What else has changed for the pool to become, you know, larger number one and more attractive to Omega? Yeah, it's just where we see accretive opportunities. And it's a little bit more heavy on the US at the moment. We did close a large UK transaction.
Vikram Malhotra: Okay.
Vikram Malhotra: Back to the comments in the U S acquisitions.
Vikram Malhotra: I guess last quarter, and maybe even the quarter before that you had sort of said it you were.
<unk> much more focused on the U S less opportunities that makes sense for you.
Vikram Malhotra: So I'm wondering like apart from rates like what is it what else has changed for the pool to become larger number one and then more attractive to Omega.
Vikram Malhotra: Yeah, It's just where we see accretive opportunities.
Vikram Malhotra: It's a little bit more heavy on the U S. At the moment, we did close a large UK transaction and at this point is more U S opportunities are coming to US again, we are focusing on accretive opportunities with current partners and new partners. So wherever we see them, that's where we're heading towards.
Taylor Pickett: And at this point, there's more US opportunities are coming to us. Again, we are focusing on accretive opportunities with current partners and new partners. So wherever we see them, that's where we're heading.
Bob Stephenson: Okay, great. And then, Bob, if I can just lastly clarify, you'd mentioned kind of having enough capital to deal with the 26 debt payments, if I'm correct me if I'm wrong, but does that essentially mean, you know, through the year, you'll be raising a fair amount of equity to kind of deal with that and acquisitions as well? That is correct. Again, it's predicated on price out there.
Speaker Change: Okay, Great and then Bob if I can just lastly, clarify you had mentioned kind of having enough capital to deal with the 26 deaths.
Vikram Malhotra: Our payments.
Vikram Malhotra: Correct me, if I'm wrong, but does that essentially mean.
Vikram Malhotra: Through the year, you will be raising a fair amount of equity kind of deal with that and acquisitions as well.
Vikram Malhotra: That is correct and again, it's predicated on price out there.
Vikram Malhotra: Okay.
Vikram Malhotra: Thank you.
Megan Krull: Our next question comes from Matteo Accusona from Deutsche Bank. Please go ahead. Yes, just a very quick follow up for Megan, are you hearing anything about the federal government maybe potentially filing an appeal against the judgment on minimum staffing? I have not heard anything like that at this point. I mean, but at the end of the day, regardless of the court case, right, the likelihood is is that the mandate is going to end up in the budget as a $22 billion win for it being going away. So it'll be handled one way or another.
Vikram Malhotra: Our next question comes from.
Vikram Malhotra: Deutsche Bank. Please go ahead.
Speaker Change: Yes, just a very quick follow up for Megan.
Speaker Change: Are you hearing anything about the federal government may be percentage of filing an appeal against the judgment on minimum staffing.
Speaker Change: Yeah.
Speaker Change: I have not heard anything.
Speaker Change: I mean, but at the end of the day, regardless of the court case rate. The likelihood is is that the mandate is going to end up in the budget is a $22 billion.
Speaker Change: Well, firstly going away, so it'll be handled one way or another.
Megan Krull: That's it. Thank you.
Speaker Change: Gotcha. Thank you.
Juan Sanabria: Our next question comes from Juan Sanabria from BMO Capital Markets. Please go ahead. For Genesis, Taylor, how should we think of or what's the meaning behind? telling us about the pull Collateral that's aging that means there is like a growing error of debt balance for Genesis or is it the paul, you have to hoping for a little bit more color if that's possible. This is with regards to the ABL question, sorry. I. What are you looking at? I'm trying to understand what it is you're you're looking for. Sorry, I was basically following up on Vikram's question with regards to the ADL, the shrinking borrowing base, and you said it's the pool of collateral that was aging.
Speaker Change: Our next question comes from one Santa Maria from BMO Capital markets. Please go ahead.
Speaker Change: Okay.
Speaker Change: For Genesis Taylor.
Speaker Change: Should we think of or what's the meaning behind.
Speaker Change: The pool of collateral that was aging does that mean there is a growing.
Speaker Change: Bad debt balance for Genesis.
Speaker Change: Is that the same collateral Paul you guys have just bookings.
Speaker Change: Looking for a little bit more color if that's possible.
Speaker Change: Yeah.
Speaker Change: With regard this is with regards to the ABL question sorry.
Speaker Change: Aye.
Speaker Change: What are you look I'm trying to understand what it is youre youre looking for cost.
Speaker Change: Basically following up on that question with regards to the APL.
Speaker Change: The shrinking borrowing base. When you said is the pool of collateral that was aging I just I'm not sure what that means so just hoping for a little bit.
Taylor Pickett: I just I'm not sure what that means. So just hoping for a little bit of clarification. Yes. So this is just what we've been told. I mean, I don't have I don't audit their ADL asset base. My understanding is their asset base is north of $400 million, the loan is less than $300 million. But ABL lenders can pull different toggles. So, I don't have any more information than that. really not worried about it, but to the extent that they rely on the ABL lender for liquidity, it can create issues for the company.
Speaker Change: Clarification, yes. So this is just what we've been told.
Speaker Change: Have I don't audit their ABL asset base.
Speaker Change: I understanding is their asset bases.
Speaker Change: North of $400 million alone is less than $300 million.
Speaker Change: But ABL lenders can pull different targets so.
Speaker Change: I don't have any more information than that.
Speaker Change: Really not worried about it but to the extent that.
Speaker Change: They rely on the ABL lender for liquidity it.
Speaker Change: It can create issues for the company.
Juan Sanabria: Understood. Sorry about that.
Speaker Change: Understood sorry about that and just one quick one for me.
Juan Sanabria: And just one quick one for me. How should we think of the cap rates for the, for the yields for the first quarter disposition? It's tough. Some of those assets we weren't receiving rent on, so it's effectively an infinite yield. But I think if you look back at what the rent was assigned on those facilities, you'd probably find it's in the 10% to 12% range on legacy rents. And then the opportunistic one was probably more like a 7% yield, which, as you can see, is why we wanted to take advantage of that, because we're still getting 10s in the marketplace.
Speaker Change: Should we think of the cap rates for the where the yields for the first quarter dispositions.
Speaker Change: It's tough.
Speaker Change: Some of those assets, we want receiving rent on so it's effectively an infinite yield, but I think if you look back at what the rent was signed on those facilities.
Speaker Change: You can probably find it in the 10% to 12% range on legacy rents and then the opportunistic one was probably more like a 7% yield which as you can see it was why we wanted to take advantage of that because we're still getting tenants in the marketplace.
Unknown Executive: So the net number is probably below 10, once you look at the whole thing, but it's very difficult to pass that out, given the fact we weren't receiving rent on some of those facilities. Thank you. As a reminder, to ask a question, please press star followed by the number one. We'll wait for a few moments.
Speaker Change: The net number is probably below 10 once you look at the whole thing, but it's very difficult to <unk>.
Speaker Change: That out given the fact, we weren't receiving rent on some of those facilities.
Speaker Change: Okay.
Speaker Change: Thank you.
As a reminder to ask a question. Please press star followed by the number one we'll wait for a few moments.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yeah.
Taylor Pickett: Great, that seems to be all of our questions.
Speaker Change: Right that seems to be all of our questions I will now turn the call back over to Taylor Pickett CEO for closing remarks.
Taylor Pickett: I will now turn the call back over to Taylor Pickett, CEO, for closing remarks. Thanks. Thank you all for joining our call today.
Speaker Change: Thanks, Thank you all for joining our call today.
Unknown Executive: And that concludes our call. You may disconnect.
Speaker Change: This concludes our call you may disconnect have a great rest of the day.
Have a great rest of the day.
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Speaker Change: Sure.
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Speaker Change: Okay.
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Speaker Change: Thanks.
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Speaker Change: Okay.
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