The most significant challenges of the post-pandemic period are behind Omega Healthcare Investors, CEO Taylor Pickett said in a press release issued in conjunction with Thursday’s fourth-quarter and full-year 2023 earnings call with investors and analysts.
Fourth-quarter funds available for distribution, or FAD, of $0.64 per share was as the Hunt Valley, MD-based real estate investment trust expected, “reflecting several portfolios that are in the process of being transitioned, which will result in meaningful FAD upside over the next few quarters,” Pickett said on the call.
Those restructurings will continue to affect financial results in the first and second quarter of this year, he said.
“We continue to have a handful of cash-basis operators, including Maplewood [Senior Living], that will impact our go-forward AFFO [adjusted funds from operations] and FAD, making first-quarter 2024 FAD difficult to predict,” the CEO said.
Pickett said that the timing and resolution of the issues with the portfolios that are being transitioned or sold allow the REIT to provide guidance for the first time since the pandemic started, with 2024 AFFO guidance between $2.70 and $2.80 per share.
According to Chief Financial Officer Robert Stephenson, revenue for the fourth quarter was $239 million before adjusting for certain nonrecurring items, compared with $145 million for the fourth quarter of 2022.
“The year-over-year increase is primarily a result of timing related to operator restructurings, revenue from new investments completed in 2022 and 2023, and net straight-line write-offs, partially offset by asset sales completed during that same time period,” Stephenson said.
According to Stephenson, the REIT’s balance sheet remains strong. In the fourth quarter, Omega repaid 25 Housing and Urban Development mortgages totaling $227 million. The repayments stemmed from previously disclosed asset sales and transitions involving LaVie Care Centers, formally known as Consulate Health Care.
“We ended the quarter with over $440 million of cash on the balance sheet and over $1.4 billion in credit facility borrowing capacity and are well-positioned to pay off our April 1 $400 million bond maturity and fund new investments,” Stephenson said.
“We’re assuming no change in our revenue related to operators currently on an accrual basis of revenue recognition,” the CFO added.
The company ended the year with $5.1 billion of outstanding indebtedness with a weighted-average annual interest rate of 4.4%. The indebtedness consisted of an aggregate principal amount of $4.55 billion of senior unsecured notes, $478.5 million of unsecured term loans, $61.6 million of secured debt and $20.4 million of borrowings outstanding under its unsecured revolving credit facility.
As of Dec. 31, total cash and cash equivalents were $442.8 million, and the company had $1.43 billion of undrawn capacity under its unsecured revolving credit facility, according to the press release.
Also as of the end of the calendar year, Omega had an operating asset portfolio of 862 facilities spread across 69 third-party operators and located within 42 states and the United Kingdom.
Jan. 26, the REIT announced a quarterly cash dividend of $0.67 per share, payable Feb. 15.