Omega Healthcare Investors, Inc.

Greetings and welcome to the Omega Healthcare Investors Third Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After today's presentation, there will be a brief question and answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Michelle Reber. You may begin.

Thank you and good morning. With me today are Omega's CEO, Taylor Pickett, COO, Dan Booth, CFO, Bob Stevenson, 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, 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 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, 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 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 68 cents per share was better than expected, modestly exceeding our 67 cent 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 Levee, as expected, paying $9 million less in cash rent in the third quarter compared to the second quarter. The November 1st Levy asset sales have significantly reduced our Levy exposure. The remaining Levy portfolio is expected to cover above 1.0 times, and therefore, Levy should no longer be in the below 1.0 times EBITDA 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. However, longer term, we believe all of these assets, but in particular Maplewood, are well positioned to generate reliable and growing cash flows and related rent, turning to the under 1.0 times EBITDA coverage operators, which represent 27.5% of total rent. We can break the 27.5% into a handful of buckets. Operators representing 6.2% of the 27.5% are sitting on extremely strong balance sheets, and therefore payment of rent should not be an issue. Operators representing 6.2% have second quarter EBITDA coverage above 1.0 times, and operators representing 1.3% are benefiting from July state rate increases that have resulted in above 1.0 times coverage on a go-forward basis. 8.4% represents levy, which I have already discussed. 1.3% represents one operator that has already transitioned to a performing credit. That leaves operators representing 4.1%, of which operators representing 1.2% are in active restructurings or were recently transitioned, which leaves a balance of 2.9%, representing eight small operating relationships. I will now turn the call over to Bob.