Omega Healthcare Investors, Inc.

Greetings, and welcome to the Omega Healthcare Investors second quarter 2024 earnings conference call. At this time, all participants are in 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. Thank you. You may begin.

Thank you and good morning. With me today is 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, potential transactions, operator prospects, and outlook generally. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. During the call today, we well referred to some non-GAAP financial measures, such as NAVRED FFO, adjusted FFO, FAD, and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles are available in the quarterly supplement. 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 2024 earnings conference call. Today, I will discuss our second quarter financial results and certain key operating trends. Second quarter FAD funds available for distribution of 68 cents per share was better than expected and should continue to improve as several portfolios are in the process of being transitioned, which will result in FAD upside over the next few quarters. Our dividend payout ratio is now below 100%. and should continue to drop into the mid-90% range in the upcoming quarters. As a result of year-to-date portfolio transitions and acquisitions, we have narrowed and increased our 2024 AFFO guidance to a range of $2.78 per share and $2.84 per share. We have issued a significant amount of equity to fund our robust pipeline, which has helped to further de-lever the balance sheet. As Dan will discuss, key tenant occupancy and rent coverage metrics continue to improve. The under one times EBITDA coverage operator metric dropped to 8.9% of total rent. In looking at the 8.9% balance of below one times operators, we can break the 8.9% into two buckets. Operators representing 6.1% of the 8.9% are strong credits and therefore payment of rent should not be an issue. That leaves operators representing 2.8%, consisting of eight small relationships. On July 24th, we, as the 49% minority partner in a real estate joint venture, closed on the acquisition of the remaining 51% joint venture interest. We now own a 100% interest in the 63 UK facilities previously owned by the joint venture. The acquisition included the assumption of $243 million in secured debt. It is our intention to repay the secured debt in November 2025 as prepayment of the debt prior to November of 2025 will result in significant prepayment penalties. The interest rate of 10.38% on the assumed debt is significantly above omega debt market rates. For GAAP accounting purposes, the above market portion of the interest expense is capitalized as part of the joint venture acquisition. We intend to use this same gap accounting treatment for our FFO, adjusted FFO, and FAD calculations. Lastly, after more than four years of COVID-related industry issues, the industry has generally recovered to pre-COVID operating metrics. The combination of strong demographics and limited or no new supply should bode well for our operating partners. I will now turn the call over to Bob.