Hunt Valley, MD-based Omega Healthcare Investors’ revenue for the second quarter was $250 million compared with $245 million for the same quarter a year ago, Chief Financial Officer Robert O. Stephenson said Thursday on the real estate investment trust’s earnings call.
“The year-over-year increase is primarily the result of timing related to operator restructurings, revenue from new investments completed in 2022 and 2023, partially offset by asset sales completed through that same time frame,” the CFO said.
CEO Taylor Pickett stated in a press release issued in conjunction with the call that the second-quarter financials “exceeded our expectations.”
Net income for the quarter was $62 million, or $0.25 per common share, compared with $92 million, or $0.38 per common share, for the same period in 2022.
Funds from operations for the quarter were $155 million, or $0.63 per common share, according to Stephenson, as compared with $161 million, or $0.66 per common share, for the same period last year.
Adjusted funds from operations for the quarter were $183 million, or $0.74 per common share, compared with $185 million, or $0.76 per common share, for the same period in 2022.
Funds available for distribution for the quarter were $173 million, or $0.70 per common share, compared with FAD of $172 million, or $0.71 per common share, for the same period last year.
During the quarter, Omega completed $129 million in real estate acquisitions, invested $124 million in real estate loans and other loans and investments, funded $17 million in capital renovation and construction-in-progress projects, and sold 10 facilities for $45 million in cash proceeds, generating a $12 million gain.
LaVie restructuring ongoing
During the second quarter, LaVie Care Centers paid $16.9 million in rent ($2.5 million for April and full rent of $7.2 million for both May and June) in accordance with restructuring agreement terms disclosed in the first quarter.
“Restructuring discussions, including the sale and release of additional facilities, are still ongoing, and the company anticipates the additional restructuring activity to be completed in the next several months,” the REIT noted. “The company expects LaVie will continue to pay $2.5 million per month until the additional restructuring activities are completed.”
Chief Operating Officer Dan Booth said that Omega and LaVie are in the process of transitioning some underperforming facilities, most of them in Florida.
“To date, 13 facilities have been divested. Currently, Omega is in the process of selling or releasing an additional 23 facilities, most of which are expected to be transferred throughout the fourth quarter of 2023,” Booth said.
Omega also has agreed to allow LaVie to short-pay rent by approximately 66% during the third quarter, he added.
Maplewood challenged
During the second quarter, Omega said, Maplewood Senior Living short-paid its June and July contractual rent by $1 million each month.
“Based on Maplewood’s latest cash flow projections, which incorporate anticipated January rate increases and improved census at the 2nd Avenue facility in Manhattan [the Inspir Carnegie Hill luxury assisted living and memory care high-rise], Maplewood believes there is a path forward to meet its full contractual rental obligations in the first quarter of 2024,” Booth said.
This month, the REIT drew on a $4.8 million security deposit from Maplewood, which it will apply to any rental shortfalls realized in the third quarter. In addition to the aforementioned restructurings and transitions, Omega said it is working with several other relatively small operators on various restructurings.
For additional coverage of the earnings call, see McKnight’s Senior Living and McKnight’s Long-Term Care News.
