Omega CEO: We see distressed assisted living assets but no ‘distressed pricing’


Omega Healthcare Investors (NYSE: OHI) CEO Taylor Pickett has seen distressed assisted living communities in the marketplace, but not at prices indicating their condition.

“On the assisted living side, we’ve done a lot of work to find prospects who are potentially struggling, and quite frankly those haven’t come to fruition,” Pickett said during the Q1 2021 earnings call. ‘business Tuesday. “We have seen a struggling business, but there is a lot of money out there to pursue these deals.”

The Hunt Valley, Md., Healthcare real estate investment trust (REIT) has had some of its own challenges, especially in areas where significant outbreaks of Covid-19 have been recorded at the start of the pandemic. But the REIT is also seeing signs now that some headwinds are not as strong as they were last year.

For example, the Maplewood Senior Living portfolio, which is concentrated in the New York and Boston metropolitan areas, reached 80.4% occupancy in the second quarter of 2020. By November 2020, occupancy had rebounded to 85.6% before peaking.

Omega announced that it had invested $ 2.2 billion in senior housing at the end of the first quarter of 2021, a total that includes the recent $ 510 million acquisition by 24-community company Brookdale Senior Living (NYSE: BKD ). All of the Company’s 156 assisted living, independent living and memory care assets in the US and UK are subject to triple head leases. Excluding the newly acquired Brookdale communities, Omega’s senior housing portfolio recorded 12-month EBITDA rental coverage of 1.08 times in the fourth quarter of 2020.

“As the Covid epidemics affected different markets at different times, this drop in performance was to be expected,” said Steven Insoft, director of business development for Omega. “Increasing immunization rates among residents and staff is a critical step in restoring occupancy and performance. While we remain constructive about the prospects for senior housing, the Covid-19 epidemic has warranted a much more selective approach to development. “

At the moment, the company is entering into transactions doing “a myriad of different things,” Pickett said.

“We can’t look at our normal past 12 months because you have the Covid results and all that stimulus money and everything,” he said. “So you really look at what happened before 2020, the results for 2019, and then you have to look at the operators and their 2021 budgets – or in most cases, 2022 – and where they expect to be. . [It’s] a slightly larger pad than normal for your blankets.

One bright spot in the company’s portfolio is the Inspir community operated by Maplewood in Manhattan, which is seeing “encouraging” early returns, according to Insoft.

“We’re well into the mid-1930s in terms of residents in the building,” Insoft said. “We had always kind of guaranteed that the project was a three-year stabilization, and we really don’t have any reason to get away with it at this point.”


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