Omega Healthcare Investors Inc. (NYSE:OHI) Q3 2019 Earnings Conference Call Transcript

Nov 06, 2019 • 10:00 am ET

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Omega Healthcare Investors Inc. (NYSE:OHI) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Omega Healthcare Investors Third Quarter 2019 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Michele 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; 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 www.omegahealthcare.com. And in the case of FFO and adjusted FFO in our recently issued press release.

I will now turn the call over to Taylor.

Executive
C. Taylor Pickett

Thanks, Michelle. Good morning and thank you for joining our third quarter 2019 earnings conference call. Today I will discuss our third quarter results, our recent acquisition activity, Daybreak and the current reimbursement environment.

Our third quarter adjusted FFO is $0.76 per share. We declared a $0.67 per share dividend for the quarter. Payout ratio is 88% of adjusted FFO, and 97% of funds available for distribution. A one pay increase in our dividend reflects both known earnings upside namely the recently closed $735 million Encore transaction and the 2020 opening of Maplewood New Manhattan facility. And our optimism around continued growth opportunities and improvement in cash rents or rent equivalents from the Daybreak facilities.

Future potential dividend increases will be evaluated periodically by our Board of Directors and will be partially dependent on achieving both known earnings upsides and additional growth opportunities. On October 31st, we closed our previously announced Encore Portfolio acquisition for $735 million.

In addition, during the third quarter we opportunistically sold 19 facilities for $177 million recognized related gain of $53.1 million. We continue to work with Daybreak as Dan will detail Daybreak's near-term liquidity issues, which resulted in the payment of only $750,000 of third quarter rent. We expect these liquidity issues will be resolved over-time and anticipate significant future Daybreak rent upside as we work through the near-term Daybreak restructuring issues.

Lastly, on the reimbursement front. Operator feedback related to PDPM, the new Patient Driven Payment Model has been positive. It is still too early to know