Omega Healthcare Investors Inc. (NYSE:OHI) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 10:00 am ET


Omega Healthcare Investors Inc. (NYSE:OHI) Q4 2018 Earnings Conference Call Transcript


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Good morning and welcome to the Omega Healthcare Fourth Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note today's event is being recorded. I would now like to turn the conference over to Ms. Michele Reber. Please go ahead ma'am.

Michele Reber

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

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, dispositions or transitions 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 website at, and in the case of FFO and adjusted FFO in our recently issued press release.

I will now turn the call over to Taylor.

C. Taylor Pickett

Thanks, Michele. Good morning and thank you for joining our fourth quarter 2018 earnings conference call. Today, I will discuss the completion of our strategic asset repositioning and portfolio restructuring, the status of MedEquities acquisition, our fourth quarter results and our expectations for 2019. We have completed our strategic asset repositioning and portfolio restructurings. In 2018, we disposed of 86 facilities for total consideration of $409 million. The revenue reduction related to these assets was $47.4 million, while the trailing 12-month cash flow on these assets was $28 million.

Cash flow on these assets did not cover the underlying rent, yet we were able to achieve sale proceeds that equate to a cash flow yield of 7%. We will redeploy these proceeds into higher quality assets with good rent coverage while experiencing minimal revenue impacts. In addition to the facilities that we disposed, we transitioned 63 facilities to 12 existing and new operators, which should improve facility level results and typically has resulted in better overall credit strength. All of the 42 Orianna facilities have been transitioned or sold. 26 facilities have been released to six existing Omega operators with related annual rent of $19.1 million.

One facility in Tennessee was sold for $4 million. 15 facilities in South Carolina and Georgia were sold. We expect to receive $116 million from the estate liquidation and have received a note with a face value of $30 million and