Omega Healthcare Investors, Inc. (NYSE:OHI) Q3 2023 Earnings Conference Call November 3, 2023 10:00 AM ET

Company Participants

Michele Reber - Senior Director, Asset Management

Taylor Pickett - Chief Executive Officer

Bob Stephenson - Chief Financial Officer

Dan Booth - Chief Operating Officer

Megan Krull - Senior Vice President, Operations

Conference Call Participants

Jonathan Hughes - Raymond James

Connor Siversky - Wells Fargo

Michael Carroll - RBC Capital Markets

Nicholas Yulico - Scotiabank

John Pawlowski - Green Street

Omotayo Okusanya - Deutsche Bank

Operator

Greetings and welcome to the Omega Healthcare Investors Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Michele Reber. You may begin.

Michele Reber

Thank you and good morning. With me today is Omega's CEO, Taylor Pickett; COO, Dan Booth; CFO, Bob Stephenson; and Megan Krull, Senior Vice President of Operations.

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, decisions 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 identify 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 NAREIT 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 NAREIT FFO and adjusted FFO and in our recently issued press release. In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been independently verified by Omega.

I will now turn the call over to Taylor.

Taylor Pickett

Thanks, Michele. Good morning and thank you for joining our third quarter 2023 earnings conference call. Today, I will discuss our third quarter financial results and certain key operating trends. The third quarter FAD, funds available for distribution of $0.68 per share was better than expected, modestly exceeding our $0.67 per share dividend. The FAD dividend payout ratio is 99%. The decrease in FAD from the second quarter is due to the reduced rent from cash basis operators with Levi as expected, paying $9 million less in cash rent in the third quarter compared to the second quarter. The November 1 Levi asset sales have significantly reduced our Levi exposure. The remaining Levi portfolio is expected to cover above 1.0x. And therefore, Levi should no longer be in the below 1.0x EBITDAR coverage bucket going forward. We continue to have a handful of cash-basis operators, including Maplewood that will impact our go-forward AFFO and FAD making fourth quarter 2023 and first quarter 2024 FAD difficult to predict.