As a leading skilled nursing operator starts to close the book on one troubled chapter, it holds an optimistic eye toward the field’s future.
Omega Healthcare Investors on Monday reported a net income of $82 million during the three-month period that concluded in June. CEO Taylor Pickett told investors during a conference call that the future is bright for the Hunt Valley, MD, real estate investment trust under the recently finalized Patient Driven Payment Model from the Centers for Medicare & Medicaid Services.
“We are optimistic that PDPM will positively impact both facility performance and patient care with its focus on the needs of patients, rather than the volume of services provided,” Pickett said.
Omega broke into the headlines recently amid an attempt to unload facilities once operated by bankrupt Orianna to new operators. Just last month, Omega terminated a lease restructuring agreement with the struggling operator.
Pickett provided a brief update on “asset repositioning” efforts Monday, noting that Omega disposed of 64 facilities in the first half of this year, representing some $311 million on the balance sheet.
The company is looking to sell another 15 to 20 facilities in the coming quarters, but the bulk of such efforts is winding down, excluding parts of its Orianna property portfolio not slated for transition. Most recently, on July 1, the company moved 13 facilities, representing $12 million in annual rent, to an existing Omega operator. Last Wednesday, another one, totaling $450,000 in rent, transitioned to another operator, Pickett said.
There are another nine facilities — in North Carolina, Virginia, Georgia and Tennessee — slated for similar fates. Pickett noted that the aforementioned termination of an agreement with Orianna is tied to the 19 remaining facilities. Officials continue to hold conversations with various potential operators, and are estimating rent range of $32 to $38 million for those properties. Overall, the CEO said his team has seen a lot of interest in the skilled nursing space.
“Our strong sales results today reflect the continued appetite for SNF assets by local market private buyers,” he said.
Omega closed the quarter with a portfolio of 923 senior-care facilities, in 40 states and the UK, spread across nearly 70 third-party operators.
For additional coverage of the Omega call, see “Manhattan assisted living high-rise project sees cost, height increases, Omega says,” in our sister publication, McKnight’s Senior Living.