Hunt Valley, MD-based Omega Healthcare Investors plans to pick up the pace of acquisitions in 2019, and senior living will play a role, executives told investors and analysts participating in a fourth-quarter and full-year 2018 earnings call on Tuesday.
“We for sure are going to be net acquirers in a meaningful way in 2019,” CEO Taylor Pickett said, adding that the real estate investment trust’s pipeline is more active now than it was in 2018.
Chief Corporate Development Officer Steven J. Insoft used the words “important” and “growing” to describe the senior living part of the REIT’s portfolio.
“Our overall senior housing investment now comprises 124 assisted living, independent living and memory care assets in the United States and United Kingdom,” he said. “On a stand-alone basis, the core portfolio not only covers its lease obligations at 1.19 times but also represents one of the larger senior housing portfolios amongst the publicly listed healthcare REITs.”
At the end of the fourth quarter, Insoft said, Omega’s seniors housing portfolio totaled $1.5 billion of investments, anchored by a growing relationship with Maplewood Senior Living as well as properties in the United Kingdom.
The REIT’s work with Maplewood, he added, continues on the assisted living / memory care high-rise known as Inspīr Carnegie Hill, which is under construction in Manhattan.
“The project is expected to cost approximately $285 million, including accrued rent, and is scheduled to open in late 2019,” Insoft said.
Pickett said he is looking forward to 2019.
“With our asset repositioning and portfolio restructurings complete, we expect significantly lower general and administrative costs and look forward to completing the MedEquities acquisition,” he said.
Omega announced in January its plans to acquire MedEquities Realty Trust in a transaction valued at approximately $600 million. MedEquities has 34 facilities — including an assisted living community in California — operated by 11 operators in seven states.
Omega filed a registration statement with the Securities and Exchange Commission related to the deal on Monday, the CEO said.
“Once the registration statement is declared effective by the SEC, MedEquities will mail a proxy statement to its stockholders to approve the merger. Omega stockholder approval is not required,” he said. “We expect the transaction to be completed in the second quarter, subject, of course, to approval by MedEquities stockholders.”
In the fourth quarter, Omega completed approximately $53 million in new investments and $45 million in capital renovations and new construction, the REIT announced. Among the projects:
- The $35.1 million acquisition on Nov. 30 of one independent living facility and three skilled nursing facilities in Pennsylvania from an unrelated third party. The four facilities have a combined total of 420 beds and were added to an existing operator’s master lease.
- The $8.1 million acquisition on Nov. 14 of an assisted living community and skilled nursing facility in Indiana from an unrelated third party. The facility has 30 assisted living beds and 70 skilled nursing beds and was added to an existing operator’s master lease.
Pickett also announced that Omega is closing its Chicago office and eliminating some positions effective Feb. 15 “as part of our constant evaluation to improve our effectiveness and efficiency.”
“As a result, for the quarter ended March 31, 2019, we will record a restructuring charge of approximately $2.5 million, consisting primarily of severance payments and office closure expenses,” he said.
For additional coverage of the Omega earnings call, see sister publication McKnight’s Long-Term Care News.