Omega Healthcare Investors, Inc.

Good day, ladies and gentlemen, and welcome to the Omega Healthcare Investors Incorporated Second Quarter Earnings Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Michelle Reber. Ma'am, the floor is yours. I think you're on mute.

Thank you, and good morning. With me today are Omega's CEO, Taylor Pickett, COO, Dan Booth, CFO, Bob Stevenson, and Megan Kroll, 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 restructuring, 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 NAREID FFO, adjusted FFO, FAD, and EBITDA. Reconciliations of these non-GAAP measures to the most comfortable 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 NAREID FFO and adjusted FFO, 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.

Thanks, Michelle. Good morning, and thank you for joining our second quarter 2023 earnings conference call. Today I will discuss our second quarter financial results and certain key operating trends. Second quarter FAT, funds available for distribution, of 70 cents per share significantly exceeded the first quarter FAT of 60 cents per share, comfortably ahead of our 67 cents per share dividend. The FAT dividend payout ratio is 96%. The large increase in FAT is primarily due to the resumption or increase in rent from cash basis operators. One operator, LaVie, paid partial rent April and full rent in May and June. which resulted in a three and a half cent increase in FAT quarter over quarter. As Dan will discuss, levy is still being restructured and we have agreed to partial rent payments of two and a half million per month for the third quarter, which will reduce FAT by three and a half cents from Q2 to Q3. When the levy restructuring is completed, we expect a significant increase in cash rents from the current agreed upon partial rent payments. In addition, during the second quarter, we issued 6.6 million shares of common stock to fund our pipeline and de-lever. These additional shares will put some modest pressure on our future FAD per share. Turning to positive operating trends. First quarter EBITDA coverage, excluding CARES Act support, continues to improve, increasing to 1.15 times versus 1.09 times in the prior quarter. This level of coverage reflects continued occupancy improvement, strong state reimbursement rates, and some moderation in the still difficult labor market. The under 1.0 times EBITDA operators represent 29.9% of total rent. We can break the 29.9% into a handful of buckets. Operators representing 6.2% of the 29.9% are sitting on extremely strong balance sheets, and therefore payment of rent should not be an issue. Operators representing 8.1% have first quarter EBITDA coverage above 1.0 times. 9.5% represents Levy. Levy's first quarter EBITDA coverage when excluding the anticipated sale or transition of 23 facilities, is also above 1.0 times. That leaves operators representing 6.1%, of which operators representing 3.5% are in active restructurings or were recently transitioned, which leaves a balance of 2.6, representing eight small operating relationships. I will now turn the call over to Bob.