A Maryland real estate investment trust is looking to close the book on its dealings with a troubled nursing home chain, with an optimistic eye toward growth in 2019.
Taylor Pickett, CEO of Omega Healthcare Investors, said changes have been beneficial on Monday morning, during a conference call with investors. He noted that Omega has transitioned 22 former Orianna Health System facilities to new operators this past quarter.
Another Orianna facility in Tennessee was sold for $4.3 million, leaving another 19 to unload, hopefully by the end of the first quarter of 2019, Pickett said. All told, he added, Omega has sold 71 properties this year, allowing the REIT to turn an eye more toward expansion.
“We’ve been in a little bit of a reposition mode over the course of the last year and a half,” Chief Operating Officer Dan Booth told investors. He said many of Omega’s nursing home operators have been focused this year on their existing properties and getting their “houses in order.”
“It seems to us, as we look out at ’19, this is more intuitive than anything, that people are starting to pay more attention to the deals that are out there,” he added. “And we do believe that it will be a more acquisitive year in 2019 as some of our operators sort of get back in the game.”
Orianna filed for bankruptcy earlier this year, and in May, a court approved Omega’s plans to offload some of those properties to other operators. In July, Omega terminated a lease restructuring agreement with Orianna. Pickett said during Monday’s call that he hoped to resolve issues with the operator in the first quarter of 2019. “Bankruptcy is its own beast,” the CEO said.
He expressed optimism for the back half of 2019, with the arrival of the Patient-Driven Payment Model and the aging population bringing more demand to its SNFs. Omega operators have been able to keep occupancy rates relatively level in recent months, despite struggles in the sector.
“We’re going to see general stability as we continue to battle the headwinds and we do have the benefit of a decent Medicare increase Oct. 1,” he said. “We think post-PDPM and with the demographics really taking hold, we’ll start to see some positive momentum in ’20 for sure,” he added.
All told, Omega reported net income of $59.1 million for the quarter ending Sept. 30, compared to a $137.5 loss the same quarter last year. The company tallied $221.85 million in revenues, beating analysts’ estimates.