Omega Healthcare Investors Inc. (NYSE:OHI) Q1 2018 Earnings Conference Call Transcript

May 08, 2018 • 10:00 am ET

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Omega Healthcare Investors Inc. (NYSE:OHI) Q1 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Omega Healthcare Q1 2018 Earnings Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions (Operator Instructions) Please note this event is being recorded.

I now would like to turn the conference over to Michele Reber. Ms. Reber, please go ahead.

Executive
Michele Reber

Thank you, and good morning. With me today are Omega's CEO, Taylor Pickett; CFO, Bob Stephenson; COO, Dan Booth; Chief Corporate Development Officer, Steven Insoft; and SVP Operations, Jeff Marshall.

Comments made during this conference call that are not historical facts may be forward-looking statements, such as statements regarding our financial projections, dividend policy, portfolio restructurings, rent payments, financial condition or prospects of our operators, contemplated acquisitions, transitions or dispositions and our business and portfolio outlook, generally. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially.

Please see our press releases and our filings with the Securities and Exchange Commission, including, without limitation, our most recent report on Form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in forward-looking statements.

During the call today, we will refer to some non-GAAP financial measures, such as FFO, adjusted FFO, FAD and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under Generally Accepted Accounting Principles, as well as an explanation of the usefulness of the non-GAAP measures, are available under the Financial Information section of our Web site at www.omegahealthcare.com and in the case of FFO and adjusted FFO, in our press release issued yesterday.

I will now turn the call over to Taylor.

Executive
Taylor Pickett

Thanks, Michele. Good morning. And thank you for joining our first quarter 2018 earnings conference call. Today, I will discuss our strategic asset repositioning and portfolio workouts, our dividend and 2018 guidance, macro industry trends and our data analysis effort.

As part of our strategic repositioning, in the first quarter of 2018, we disposed of $98 million in assets. And including assets held for sale, we're evaluating over $250 million in additional asset sales in 2018. The revenue reduction related to our $98 million of first quarter assets disposed is $10 million, while the trailing 12 month cash flow in these assets is $4 million. The cash flow on these assets did not cover the underlying rent, yet we were able to achieve sale proceeds that equates to rent yields of approximately 10%.

Our strong sales results today reflect the continued appetite for SNF assets by local market private buyers. We've made great progress addressing troubled operators. Orianna is in the middle of a controlled Chapter 11 bankruptcy process. Signature is being resolved outside of bankruptcy, and Daybreak is paying current (inaudible) obligations timeline. Later in the call, Dan will provide more detail regarding portfolio workouts.

Turning to our dividend and 2018 guidance. Our quarterly dividend of $0.66 per share reflects a payout ratio of 85% of adjusted FFO, and 96% of funds