After witnessing a senior living and skilled nursing portfolio occupancy slump as the omicron virus erupted in the fourth quarter of 2021, things are looking up, Omega Healthcare Investors CEO Taylor Pickett said during Tuesday’s first-quarter earnings call.
“Turning to skilled nursing facility industry trends. Fortunately, the December and January pause and facility occupancy improvement reversed in February and March, with preliminary mid-April Omega core occupancy levels at 77.9%, up to 300 basis points since January 2022,” Pickett said.
Staffing shortages and elevated costs remain issues for operators in Omega’s senior living portfolios and the ability to admit new residents, Pickett said.
“At this point, it is impossible to predict how quickly industry occupancy will fully recover or how rapidly the current labor force pressures will subside,” he added.
“The good news is that … we are starting to see traction on the occupancy recovery front despite these staffing challenges. And as of February 2022, approximately 25% of core facilities have now recovered from an occupancy perspective,” said Megan Krull, senior vice president of operations.
Financials
Pickett said that 14.5% of Omega’s contractual rents and interest is involved in restructuring discussions. Additionally, he said, 12.3% of contractual rents were not paid in the first quarter.
The company reported net income of $195.2 million, or $0.79 per common share, on revenues of $249.3 million for the first quarter. Those figures compare with net income of $164.4 million, or $0.69 per common share, on revenues of $273.8 million, for the same period in 2021, the company said.
In the first quarter, the company sold 27 senior living and skilled nursing facilities for $332.6 million, recognizing a gain of approximately $113.6 million. The proceeds and gain primarily relate to the March 31 sale of 22 facilities that previously were leased and operated by Gulf Coast Health Care. The net cash proceeds from the Gulf Coast sale, including related costs accrued for as of the end of the first quarter, were $304 million; Omega recognized a net gain of approximately $113.5 million.
“The Gulf Coast portfolio net proceeds of over $300 million offset the lost Gulf Coast contractual revenue, while Guardian Healthcare, which is still in process, will result in a very modest diminution in value from the pre-restructuring contractual rents and no diminution of value from our origination yields,” Pickett said.
Booth said that Omega is involved in ongoing discussions with Agemo Holdings on a restructuring agreement, which is expected to involve the sale of a material portion of the Agemo properties within Omega’s portfolio.
On January 1, 2022, the Company acquired a Maryland skilled nursing facility for $8.2 million and amended an existing operator’s master lease, with an initial term expiring on December 31, 2032, to include the acquired facility. The initial annual yield for the additional facility is
9.5% and includes annual escalators of 2.5%.
For additional coverage of the earnings call, visit McKnight’s Long-term Care News.
