Omega Healthcare Investors continued to see financial performance that exceeded its expectations in the third quarter, executives of the Hunt Valley, MD-based real estate investment trust said Friday, as occupancy improves and the tight labor market moderates. Some operators, however, such as Maplewood Senior Living, continue to struggle, necessitating restructurings and rent deferrals, they said.
As previously reported, Westport, CT-based Maplewood short-paid its June rent by $1 million, and the company continued to short-pay its rent by $1 million per month during the third quarter. Omega applied $3 million of Maplewood’s $4.8 million security deposit to those rent shortalls. In October, the REIT applied an additional $1 million of Maplewood’s security deposit to its rent shortfall.
The company recorded $17.3 million in revenue from Maplewood during the third quarter, consisting of $14.3 million of contractual rent payments and the $3 million security deposit application. During the nine months that ended Sept. 30, Omega had allowed Maplewood to defer a total of $1.3 million in contractual rent and interest.
Omega had entered a formal restructuring agreement with Maplewood in the first quarter, which included funding $22.5 million of capital expenditures through Dec. 31, 2025.
Friday on a third-quarter earnings call, Chief Operating Officer Dan Booth said that the REIT is working with the operator and the estate of Greg Smith to address the operator’s shortfalls. Smith was president and CEO of Maplewood and its Inspīr luxury brand when he died unexpectedly on March 31.
With anticipated rate hikes in January and expected improved occupancy, Booth said, Maplewood believes that it has a pathway forward to meet its full contractual obligations, although the timing remains unknown.
Booth added that Omega also is working with several other small operators on various restructurings.
Investment pipeline ‘opportunistic’
In the third quarter, Omega closed on $160 million in investments, including $24 million in capital expenditures, including the acquisition of 14 care homes in the United Kingdom for $39.5 million. As of Sept. 30, the company had closed on $418 million in new investments, including $53 million in capital expenditures for the year, the COO said.
During the third quarter, Omega received $99 million in proceeds related to facility sales. As of Sept. 30, the company had sold 27 facilities for $161 million and had 14 facilities listed as held for sale.
Subsequent to the end of the third quarter, the company has closed on $60.7 million in new investments, including the acquisition of two Pennsylvania assisted living communities. Chief Financial Officer Bob Stephenson described the potential investment pipeline as “opportunistic.”
