Omega Healthcare (OHI) Q1 2026 Earnings Transcript

Date

Wednesday, April 29, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — C. Taylor Pickett
• President — Matthew P. Gourmand
• Chief Investment Officer — Vikas Gupta
• Chief Financial Officer — Robert O. Stephenson
• General Counsel and Chief Administrative Officer — Megan M. Krull

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Takeaways

• Adjusted FFO -- $260 million, or $0.82 per share, reflecting a $0.02 per share increase compared to fourth quarter.
• Funds Available for Distribution (FAD) -- $247 million, or $0.78 per share, up $0.02 per share sequentially.
• Revenue -- $323 million, increasing from $277 million year over year due to new investments and portfolio management actions.
• Net income -- $159 million, or $0.47 per share, compared to $112 million, or $0.33 per share, for the same period last year.
• FAD per share growth -- Increased by 9.5% versus the same quarter prior year, indicating the targeted focus on sustainable FAD growth.
• Dividend payout ratios -- 82% on AFFO and 86% on FAD, showing reduced payout as a function of higher cash flow.
• Portfolio coverage -- Trailing twelve-month EBITDAR coverage for triple-net and mortgage core portfolio at 1.58x as of year-end, the highest in over a decade.
• New investments -- $326 million invested year to date, including a $109 million acquisition of 13 Georgia SNFs, a $10 million Alabama RIDEA transaction, a $7 million UK care home, and $27 million in loans.
• Strategic sale -- 18 CommuniCare assets being sold for $480 million at a blended rent discount rate of 7.7%; twelve Maryland facilities already sold post quarter.
• Expected accretion from asset sale -- Capital redeployment projected to generate approximately $0.03 per share in annual AFFO and FAD accretion.
• Weighted average yield -- New leases and loans year to date at a weighted average yield of 10.9%.
• Balance sheet highlights -- $425 million drawn on credit facility, $26 million in available cash, and $1.5 billion available under the $2 billion revolver as of March 31, with next debt maturity due April 2027.
• Leverage and coverage metrics -- Fixed charge coverage ratio at 6.3x and leverage unchanged at 3.5x.
• Guidance updated -- AFFO guidance narrowed to $3.19-$3.25 per share, with the midpoint raised by $0.02.
• Genesis bankruptcy exposure -- Omega Healthcare Investors (NYSE:OHI) funded $25 million as part of an $80 million DIP loan, expecting full payoff upon asset transfer.
• Pipeline profile -- Includes both marketed and off-market transactions in the U.S. and UK, with a focus on senior housing RIDEA deals aiming for mid-teens IRRs.
• Sabra operating company investment -- 9.9% equity interest closed, with returns reported by management as exceeding expectations to date.
• Planned loan repayments -- Anticipates $224 million in non–real estate-backed loans to be repaid during 2026, including $159.5 million from Genesis loans.

Summary

Management emphasized active capital allocation and portfolio management as key contributors to recent per-share FAD and AFFO growth, with a year-over-year increase of 9.5% in FAD per share. Omega Healthcare Investors executed $326 million in new investments across SNFs, senior housing, and care homes, while pursuing further expansion into RIDEA structures in both U.S. and UK markets. Divestitures included the strategic sale of 18 CommuniCare facilities for $480 million, expected to deliver $0.03 of incremental annual AFFO and FAD through reinvestment. The company's updated guidance narrows AFFO to the $3.19-$3.25 per share range, building in realized and anticipated asset dispositions, loan repayments, and positive portfolio escalators. Developments in the Genesis bankruptcy, and corresponding DIP loan funding from Omega Healthcare Investors, position the company for a full loan recovery assuming no adverse events in the bankruptcy process.

• Matthew P. Gourmand noted, "we are not looking to sell prodigious amounts of our skilled nursing." in response to strong private market demand for SNF assets, indicating selective disposition will remain rare.
• Competitive acquisition markets, especially for SNFs and senior housing, were discussed as persistent, with management focused on value-add opportunities yielding mid-teens IRRs and a disciplined underwriting approach.
• Vikas Gupta highlighted that RIDEA dealmaking in the UK is underway, stating, "We actually are looking at a few opportunities right now, so it will become part of our strategy in the UK going forward."
• Megan M. Krull addressed industry legislative trends, stressing that "Medicare Advantage represents a relatively low portion of our operators’ business," while also noting positive momentum on industry reform measures in Congress.
• Portfolio occupancy trends were discussed as stable, with rising EBITDAR coverage and expectations for gradual occupancy improvement tied to demographic trends in the U.S.

Industry glossary

• RIDEA: Real Estate Investment Diversification and Empowerment Act structure; allows REITs to participate in the operating profits of senior housing assets under management by third parties.
• EBITDAR coverage: A financial ratio measuring a tenant's ability to pay rent, calculated as earnings before interest, taxes, depreciation, amortization, and rent divided by rent expense; key to evaluating lease security.
• SHOP: Senior Housing Operating Portfolio; refers to REIT-owned senior housing properties where the REIT participates directly in revenue and expenses rather than triple-net lease income.
• DIP loan: Debtor-in-Possession loan; financing provided to companies undergoing bankruptcy, often secured with superpriority status over existing debt.
• HUD financing: U.S. Department of Housing and Urban Development–backed long-term, low-cost debt often used for stabilized skilled nursing or senior housing real estate.

Full Conference Call Transcript

C. Taylor Pickett: Thanks, Michele. Good morning, and thank you for joining our first quarter 2026 earnings conference call. Today, I will discuss our first quarter financial results and certain key operating trends. First quarter adjusted funds from operations, AFFO, of $0.82 per share and FAD, funds available for distribution, of $0.78 per share reflect strong revenue and EBITDA growth principally fueled by acquisitions and active portfolio management. Our dividend payout ratio has dropped to 82% for AFFO and 86% for FAD. Our exceptional first quarter results reflect our high-quality capital allocation throughout 2025 and 2026. We continue to find and close RIDEA transactions while still allocating meaningful capital to SNF facilities and UK care homes.

We expect our capital allocation and active portfolio management will drive significant future AFFO and FAD growth. Our active portfolio management is highlighted by our planned and partially completed second quarter sales generating $480 million in proceeds. We expect the redeployment of this capital will result in approximately $0.03 of annual AFFO and FAD accretion. I will now turn the call over to Matthew.

Matthew P. Gourmand: Thanks, Taylor, and good morning, everyone. We have spoken in previous calls about the team’s focus on creating shareholder value by growing FAD per share on a sustainable basis, and we saw this focus continue to bear fruit in the first quarter, as our FAD per share increased 9.5% over the same quarter last year. This along with a robust pipeline of investment opportunities gave us comfort to be able to increase the low end of our AFFO guidance, moving the midpoint up by $0.02 to $3.22. At the same time, our first quarter investments reflect the breadth of our capital allocation focus.

We invested in both triple-net and RIDEA structures, in skilled nursing, seniors housing, and long-term care real estate across the United States, the UK, and Canada. And we closed on our equity investment in Sabra’s operating company. In addition, we are in the process of selling a portfolio of 18 CommuniCare assets for $480 million. Vikas will provide additional details around the sale. However, from an overarching perspective, it was about putting assets into the hands of strong stewards at a price that made sense for each party while also enhancing our credit with CommuniCare.

While we would not expect to see this be a core element of our capital allocation strategy, we will continue to evaluate our portfolio and work with our operating partners to find innovative ways to both protect and enhance shareholder value over time. Finally, I would like to thank the team who continue to work tirelessly to execute on our vision as well as our operating partners and their staff who work every day to look after some of the sickest and most frail members of our community. Without them, none of this would be possible. I will now turn the call over to Vikas.

Vikas Gupta: Thank you, Matthew, and good morning, everyone. Today, I will discuss the most recent performance trends for Omega Healthcare Investors, Inc.’s operating portfolio, including an update on Genesis, additional detail on our strategic sales, Omega Healthcare Investors, Inc.’s investment activity year to date, and an update on our pipeline. Turning to portfolio performance, core portfolio coverage continues to trend in a favorable direction. Above average coverage levels with our trailing twelve-month operator EBITDAR coverage for our triple-net and mortgage core portfolio as of 12/31/2025 at 1.58x, compared to our third quarter 2025 reported coverage of 1.57x.

This represents the highest coverage in our portfolio in over a decade and reflects the combination of a relatively favorable operating backdrop combined with our active portfolio management, where we have focused on strengthening the lease credit across our portfolio. The Genesis bankruptcy process continues to move forward, with a few notable events having taken place in recent weeks. In March, we committed to fund up to $26.7 million, or one third, of a new aggregate $80 million DIP loan. As of the end of the first quarter, we have funded our $25 million of the initial $75 million advance.

Proceeds from this new superpriority DIP financing are used to fully repay the original DIP loan and to fund working capital needs. Additionally, the debtor has been advised that 101 West State Street has submitted a qualified financing commitment as required by the asset purchase agreement. The closing date, which can contractually be extended to the end of the third quarter, is conditioned on several factors including receipt of regulatory change-of-ownership approval. We anticipate that 101 West State Street will assume our Genesis master lease and our DIP loan and term loan will be paid off from the consideration received by the debtors at close.

We remain confident that our term loan is fully collateralized based on the underlying collateral and the ascribed value of the Genesis estate. These assumptions, along with all elements of the bankruptcy process, are subject to further developments and events in the bankruptcy proceeding. As Taylor and Matthew mentioned, we are in the process of a strategic sale of 18 CommuniCare assets located in Maryland and West Virginia for a contractual purchase price of $480 million and a rent discount at a blended 7.7%. Subsequent to quarter end, 12 Maryland facilities were sold; we expect the remaining 6 West Virginia facilities to be sold in the second quarter.

While asset sales are not typically a core component of our capital allocation strategy, the strong pricing offered for these facilities combined with the improvement of our credit with CommuniCare presented an opportunity to realize significant value for our shareholders. Turning to new investments, our transaction activity for 2026 started strong, with $326 million in new investments year to date. Similar to previous quarters, these transactions varied in size and asset type, demonstrating our ability to continue to develop, underwrite, and close accretive transactions in our core asset classes.

We continue to support the growth of existing and new operators in the U.S. skilled nursing space and UK care home space, as well as expand our new senior housing RIDEA portfolio. As Matthew said earlier, our primary goal is to allocate capital with a focus on growing FAD per share on a sustainable basis. During 2026, Omega Healthcare Investors, Inc. completed a total of $251 million in new investments not including $13 million in CapEx. These new investments included the previously announced purchase of 9.9% of the equity interest in Sabra’s operating company, the $109 million acquisition of 13 Georgia skilled nursing facilities, and a $10 million investment in an Alabama senior housing RIDEA transaction.

Our other first quarter investments included the purchase of a UK care home for $7 million and $27 million in real estate loans. The weighted average yield on these leases and loans was 10.9%. Subsequent to quarter end, we closed $75 million of additional investments. We purchased two Indiana skilled nursing facilities for $33 million and three senior housing facilities in Rhode Island for $42 million. The skilled nursing facilities will be leased to a current Omega Healthcare Investors, Inc. operator at a lease yield of 10%. The senior housing facilities will be operated by Omega Healthcare Investors, Inc. and managed by a third-party manager via a RIDEA structure.

Turning to the pipeline, our pipeline includes both marketed and off-market opportunities in the U.S. and UK. A large component of these opportunities are U.S. senior housing assets that will be structured and operated using our new RIDEA platform. As mentioned previously, we have built out our infrastructure at Omega Healthcare Investors, Inc. with an experienced team of investment professionals that are finding deals that meet our investment criteria and then coupling them with proven third-party managers who we believe will deliver on those underwritten expectations. We continue to pursue deals that will achieve IRRs in the mid-teens range. In addition to senior housing RIDEA deals, we are aggressively pursuing both U.S. skilled nursing and UK care home deals.

In the UK, we have built out our team to help find off-market transactions and quickly evaluate opportunities with existing and new operators in order to continue deploying meaningful capital through both triple-net and RIDEA structures. I will now turn the call over to Bob.

Robert O. Stephenson: Thanks, Vikas, good morning. Turning to our financials for 2026, revenue for the first quarter was $323 million compared to $277 million for 2025. The year-over-year increase is primarily the result of the timing and impact of revenue from new investments completed throughout 2025 and 2026, annual escalators, and active portfolio management. Our net income for 2026 was $159 million, or $0.47 per common share, compared to $112 million, or $0.33 per common share, for 2025.

Our adjusted FFO was $260 million, or $0.82 per share for the quarter, and our FAD was $247 million, or $0.78 per share, and both are adjusted for several items outlined in our NAREIT FFO, adjusted FFO, and FAD reconciliations to net income found in our earnings release as well as our first quarter financial supplemental posted to our website. Our first quarter 2026 adjusted FFO and FAD were both $0.02 greater than our fourth quarter AFFO and FAD, with the increase primarily resulting from incremental net income from $585 million in new investments completed during the fourth and first quarters, and revenue from annual escalators of $2 million.

These were partially offset by income related to $53 million in asset sales and $88 million in loan repayments over the past two quarters, resulting in a $1.4 million reduction to our first quarter adjusted FFO and FAD, as well as the impact from the issuance of a combined 7.7 million common shares of stock and OP units over the past two quarters to fund the new investments. Our balance sheet remains incredibly strong. Our debt is well laddered, and we have significant liquidity. At March 31, we had $425 million in borrowings on our credit facility. However, we also had $26 million in available cash and assets held for sale which we expect to sell for approximately $480 million.

Additionally, we have over $1.5 billion in available capacity on our $2 billion revolver, with our next scheduled debt maturity not until April 2027. At quarter end, our fixed charge coverage ratio was 6.3x and our leverage remained flat at 3.5x. We are excited as our balance sheet and cost of capital continue to position us to accretively fund our active pipeline. Turning to guidance, as we press released yesterday, we narrowed our full year adjusted AFFO guidance to a range between $3.19 to $3.25 per share. This is a $0.02 increase over the midpoint of our February guidance. I would like to take a moment to highlight a few of the guidance assumptions we outlined in our earnings release.

Our guidance includes the impact of new investments completed as of April 27, and does not include any additional investments not outlined in our press release. It includes the impact of scheduled loan repayments and expected asset sales. Of the $159 million in mortgages and other real estate loans that are scheduled to mature in 2026, it assumes $65 million will convert to fee simple real estate and that the balance will be repaid. Additionally, $224 million in non–real estate-backed loans at 03/31/2026 are expected to be repaid throughout 2026, which includes approximately $159.5 million in Genesis loans. The 18 CommuniCare facilities and assets held for sale are expected to be sold for $480 million.

Our Q1 rent related to these facilities totaled $9.2 million. The high end of the range in our guidance includes, but is not limited to, timing or potential extension of loan repayments and asset sales, additional cash from Maplewood as well as other cash-based operators, and G&A at the lower end of the guidance range, just to name a few. Our 2026 adjusted FFO guidance does not include any additional investments, asset sales, or capital market transactions other than what I just mentioned or that was included in the earnings release. I will now turn the call over to Megan.

Megan M. Krull: Thanks, Bob, and good morning, everyone. With the budgetary season well underway in most states, we continue to watch for any signals of state reactions to the OVBBA as it relates to long-term care. As expected, things have been relatively quiet, with most meaningful discussions not expected until sometime next year. On a separate note, over the last year or so, Medicare Advantage has come under scrutiny due to allegations of upcoding, high denial rates, delayed payments, and cost savings not keeping pace with expectations. Last week, bipartisan legislation was introduced in Congress, applauded by industry associations, which addresses just these types of concerns.

While I noted last time that Medicare Advantage represents a relatively low portion of our operators’ business, the momentum behind fixing these issues is important to our industry, as similar issues arise in managed Medicaid. Indiana, for instance, which implemented managed Medicaid back in 2024, has decided to unwind that program specifically for the long-term care population in nursing homes for very similar reasons that we see in Medicare Advantage. We applaud these efforts to deal with these fundamental structural problems head on to ensure that our payment systems align with the needs of this frail and vulnerable population. We will now open the call for questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star then the number one on your keypad. And if you would like to withdraw your question, press star 1 again. We do request for today’s session that you please limit to one question and one follow-up. Your first question comes from the line of Nicholas Joseph with Citi. Your line is open.

Nicholas Joseph: Hi. This is Marlon for Nick. Could you please elaborate on the rationale behind the CommuniCare asset sales and whether or not they are indicative of broader conditions in the Maryland and West Virginia markets?

Vikas Gupta: Thanks.

Matthew P. Gourmand: Hi. Yes. The primary reason for the disposition was opportunistic. We had an opportunity to sell assets and enhance our credit with CommuniCare. We were able to get a bid that we thought was fair to both parties. I think a little bit of it is a reflection that these are both relatively hot markets right now. Both Maryland and West Virginia are markets that people are looking to acquire in, so we took advantage of that to a certain extent. But I do not think you can expect us to be doing this as part of the core business. Occasionally, we will look to divest assets.

In this situation, we were also able to enhance our credit, so to the extent that we can continue to do that, we will. But as we look out through 2026, I do not think you are going to see any large dispositions like this happening in the next few quarters.

Operator: Got it. Thank you. Your next question comes from the line of Richard Anderson with Cantor Fitzgerald. Your line is open.

Richard Anderson: Thanks. Good morning, everyone. So when you think about your external growth strategy through all the different layers you mentioned—SHOP, skilled, and care homes—can you talk about your comfort level on the initial yield? How low on the initial yield spectrum are you willing to go if you have line of sight into a reasonable IRR over the long term? Thanks.

Matthew P. Gourmand: Yes. I do not think we have a number. I would encourage internally not to see this as a competition to see how low we can go. I think it is more really about trying to find the long-term opportunity. If there truly is a situation today where there is a lot of low-hanging fruit that we can fix immediately, I do not think that there is an element necessarily we ascribe to the lowest we would go. I think we really have to look at (a) what the long-term opportunity is and (b) the visibility around that.

Obviously, we would be less reluctant to take a swing at things where there is a cost saving that we know a better manager can operate. I think situations where you are looking at a facility that maybe has very low occupancy and historically had low occupancy—relying on a paradigm shift in that occupancy is probably a level of naivety that we would not underwrite to. But it is contingent on the opportunities that present themselves and the risk-adjusted return that we assign to that.

Richard Anderson: Right. So when you think about value add—like a low initial cap rate concept—do you think it would be like a 50/50 split in terms of what you are looking at today relative to a more stabilized entry level?

Matthew P. Gourmand: It depends on what the market presents us, Rich. What you are finding right now is the stabilized assets that have the most stabilized margins, high occupancy, relatively newer vintage—they tend to be coming in at lower yields but without that upside. So from that standpoint, we have been fortunate enough to find stuff that is, you know, stabilized 7%, 8%, 9% that we think, with a relatively easy lift, we can take into the double digits.

But I do not think that we are going to be looking at the true stabilized assets with a 7% where you are relying predominantly on rate increases to exceed costs to drive that growth, because occupancy and rate, to a certain extent, are already fully baked in. So from that standpoint, I think that most stuff we are going to be looking at is what we would say is value add.

Richard Anderson: And then my second question is on RIDEA. Will you take that show on the road a little bit in terms of looking at opportunities in the UK with the RIDEA mindset?

Vikas Gupta: Yes. This is Vikas. We actually are looking at a few opportunities right now, so it will become part of our strategy in the UK going forward.

Richard Anderson: Thanks very much.

Operator: Your next question comes from the line of Michael Goldsmith with UBS. Your line is open.

Michael Goldsmith: Good morning. I am here with Dustin Hasbey. Thanks for taking my question. Maybe sticking with CommuniCare—we estimate the cap rate was roughly 7.7% based on a contractual rent, but maybe it was a little bit lower given the EBITDAR coverage and assuming the rent is renegotiated. Is that right? And then also, why do you think the private market for U.S. SNFs is so competitive right now? And is the best path forward for Omega Healthcare Investors, Inc. to focus more on other segments until the competition cools for the SNFs? Thanks.

Matthew P. Gourmand: Your math is correct, so you get an A for that. And yes, I think right now the competition has been strong for a number of years. I think a lot of people are looking at this as a long-term secular play. That is part of the reason we really like the space. Ultimately, there has been no net new supply for over a decade in this space. Most states have some sort of restriction on new supply.

To the extent that an operator is getting in today, even with, let us say, a mid-6s yield, if they believe that occupancy is going to continue to improve and that they can run these facilities well, the operating leverage that exists within the business alone can move this into the high-single and low-double-digit yields over time for them. And then they have the opportunity once these buildings are stabilized to finance them to HUD, which is obviously relatively low-cost debt. So while there is a strong bid in the market, we do not think it is an irrational bid.

We just think that it is reflective of the long-term secular plays that exist, and one of the reasons we are not looking to sell prodigious amounts of our skilled nursing. In terms of opportunities, yes, we are seeing less of them, but we are still seeing select opportunities. I think we are not going to rule out or stop looking at skilled nursing. We are just going to continue to remain very disciplined and look for opportunities that align with what we are trying to achieve from a FAD per share growth standpoint.

Michael Goldsmith: Got it. And as a follow-up, noticed another quarter of healthy investing volume for your new SHOP segment. Maybe provide some color on the economics of that Rhode Island portfolio. Does Omega Healthcare Investors, Inc. take more of a hands-off approach to its SHOP operations given it is still a small segment, or are you in the process of building out a data platform and other standard operating procedures related to SHOP?

Vikas Gupta: Yes. So this Rhode Island deal falls right in the category of everything we have been about in our SHOP world. We are underwriting to stabilized mid-teens IRRs, and it just follows all the protocols we have been saying. We use our data, underwriting, our entire team to get around it, so it is just a typical RIDEA deal—value add in our book.

Matthew P. Gourmand: And then the other thing I would add is you are right—obviously we do not have the level of experience or sophistication of some of our peers who have devoted years and significant amounts of money to rolling out various different technologies and have experience on that side of things. I think our attitude right now is we spend an awful lot of time both hiring people internally who have great experience in this space but also developing relationships as a team to understand really strong operators.

Our attitude as of now is we are hiring them because of their expertise, and for us, given our relative lack of expertise in the space, to start second-guessing them straight out of the gate would probably be naive at best. So while we obviously, by our very nature, are extremely focused on what they are doing and seeking to learn from them and understand from them, I do not think we are in a position to necessarily tell them how to run their businesses at this point in time. That is effectively what we are hiring them to do on our behalf.

Michael Goldsmith: Thank you very much. Good luck in the second quarter.

Matthew P. Gourmand: Thanks.

Operator: Your next question comes from the line of Julien Blouin with Goldman Sachs. Your line is open.

Julien Blouin: Thank you for taking my question. I wanted to touch on the level of competition you are seeing in the transaction market, specifically in U.S. senior housing or RIDEA structures. We are seeing a lot of capital flowing into this space, so just wondering if you are finding it increasingly more difficult to achieve the mid-teens IRRs you are targeting.

Vikas Gupta: Yes, it is competitive. As you know, there are a lot of players in this space now. But as Matthew mentioned, we are looking at a lot of value-add product, and we are finding it. The team is going out there, we are reviewing transactions, and if it fits, it fits. At the same time, everyone has its own underwriting criteria, and for what we are looking for, we continue to find assets.

Julien Blouin: Okay, great. And then back to the CommuniCare sale—clearly a strong cap rate just on current rents, but even if we were to assume a resetting of rents to something like your average EBITDAR coverage of 1.5x, that would mean an even lower cap rate, I guess. What kind of buyer is this? Is it a buyer that really sees the potential to change management of the assets and improve operations? Is that a key part of their play?

Matthew P. Gourmand: I cannot speak to what their business plan was behind that. What I can tell you is they are long-term players in the space, highly established, like to own the operations and the properties. And I think that their belief is kind of as we spoke to earlier, that there is a 20-year secular play here and that the price that they paid for these assets today, in 10–15 years’ time, may actually look like a bargain given the fact that there is no new supply coming online in most states. So they are an established, reputable player. Beyond that, I cannot speak to what their plans are for the business.

Julien Blouin: Thank you.

Operator: Next question comes from the line of Omotayo Tejumade Okusanya with Deutsche Bank. Your line is open.

Omotayo Tejumade Okusanya: Good morning, guys. I wanted to talk a little bit about Medicare Advantage. We have seen a bunch of healthcare providers report over the past week—UnitedHealth, Humana—all talking about CMS Medicare Advantage and the rollout of these value-based care systems. Some seem to be adopting really well; others are struggling. How do you see this impacting skilled nursing referrals from hospitals over 2026–2027, and does it change anything? How do you expect skilled nursing operators to react to these value-based programs infiltrating the system, so to speak?

Megan M. Krull: Like I said last time, Medicare Advantage is not a huge piece of our business. It definitely has less penetration in the skilled nursing space than it does in the general Medicare population. At this point, there is not much in the way that it impacts our operators other than there are certain areas that have higher Medicare Advantage penetration. Sometimes those rates are materially lower than Medicare, and sometimes that means taking a Medicaid resident might make more sense than taking a resident at Medicare Advantage rates. As an industry, I think there is a big push to get those rates up to more reasonable numbers.

And like I said in my talking points, there is legislation last week to deal with some of these other issues that are going on, like the high denial rates, where typically you might have a high denial but then if you push back it will get approved. You should not have that type of thing going on. Value-based care is a big thing and something to watch for all of us. Ultimately, we try to partner with the most sophisticated operators, and that plays into their game plan really well.

Omotayo Tejumade Okusanya: That is helpful. And then just occupancy trends—the past few quarters have kind of stagnated. What may be happening there? Is it still changing with shift mix? How do we think about that given the backdrop of aging U.S. demographics and limited new supply?

Megan M. Krull: I do not think there is any read-through over a few quarters as to what occupancy is doing. The demographics are here and coming, and ultimately you will see that needle move. When you look at our performance, the coverages provide ample coverage for our rent. We are good with where things are, and we expect to see occupancy increase in the next year or two.

Omotayo Tejumade Okusanya: Thank you.

Operator: Next question comes from the line of Nicholas Philip Yulico with Scotiabank. Your line is open. Next question comes from the line of William John Kilichowski with Wells Fargo. Your line is open.

William John Kilichowski: Good morning. Thank you. My first question is just on the transaction market. Earlier, we talked about the competitiveness of SHOP, but I would be interested in the competitiveness of the SNF landscape today. There has been a vacuum of REIT capital and some other capital moving from skilled nursing into SHOP. Are you finding it incrementally any easier to transact in the SNF space given the money that is moving over, or is it still heavily competitive?

Vikas Gupta: The short answer is heavily competitive. We were able to find an off-market larger deal that we did in the first quarter, but it is competitive, and a lot of that is coming from the family office space still. Otherwise, we are just not seeing a lot of trading at this time that we like and that fits our investment criteria.

William John Kilichowski: Got it. Very helpful. And then my second one for you is that we have got Governor Tim Walz legalizing alcohol in SNFs in Minnesota. What are we thinking for new build-outs—speakeasies or local pub vibes?

Vikas Gupta: Is this Medicaid reimbursed? Are non-tenants going to be allowed in?

Matthew P. Gourmand: I do not think that is necessarily something that we are looking at right now. Obviously, we have a history of partnering with operators who evolve no matter what the operating backdrop is, even if that includes the use of things previously prohibited in the facility. I suspect that our operators will thrive no matter what the circumstances are.

William John Kilichowski: Got it. Thank you.

Operator: Next question comes from the line of Nicholas Philip Yulico with Scotiabank. Your line is open.

Elmer Chang: Hi. Good morning. This is Elmer Chang on with Nick. Sorry about that earlier—my phone dropped. My first question is on recent senior housing RIDEA communities that you have been acquiring. As you further build out that platform, I know it is dependent on opportunities that may be closer to stabilized assets, but how should we think about underwriting NOI upside to earnings for those recent acquisitions?

Matthew P. Gourmand: It is tough for me to be overly precise. Thankfully, we are a $14 billion company and we have put a couple hundred million dollars out. So from that standpoint, I do not think it is going to move the needle that much near term. If you are looking generally at the idea that a blended yield between 7% and 9% coming out of the gate on these things is reasonable, you will not be too far off. Then, hopefully, that will meaningfully improve over time. But given the relative size of it right now, if you are in that ballpark, missing or exceeding expectations is probably going to be limited given the relative size.

Elmer Chang: Got it. Thank you. And second, going back to the planned CommuniCare sale, what assumptions in terms of initial yield and future growth are driving your estimates for $0.03 of accretion to FAD that you expect? And how much of the $480 million is going to be reinvested, or maybe already in deals under LOIs or under contract?

Matthew P. Gourmand: We went back and forth on what the number was. I wanted to say $0.04 because, technically, putting it back to work at a 10% gives you three and a half pennies, and that rounds up, but we decided to be conservative. So the numbers probably are in the low 9%s in terms of what we are saying. I still think we are going to expect to deploy capital in the 10%s, but that is the math around it. In terms of LOIs, we are not going to talk too much about what is in LOIs today, but this is an interesting market right now.

In seniors housing and skilled nursing and care homes, you are seeing probably more appetite and more players than we have seen in well over a decade. This is clearly a space that is exciting people and creating interest, and as a result, there are more competitors out there. But we still, as we look out in the portfolio, see significant opportunities across all three platforms. From that standpoint, I do not want people being confused that just because it is a competitive market that we do not think the pipeline is going to be robust for us over the next 24 months.

We are just going to have to be more selective, more creative sometimes in our structuring, and be on the road, quite frankly, finding more off-market deals through relationships. From that standpoint, I think we are in a good place going forward, but nonetheless, it is competitive.

Elmer Chang: Thank you.

Operator: Next question comes from the line of Michael Albert Carroll with RBC Capital Markets. Your line is open.

Michael Albert Carroll: Thanks. I wanted to circle up on the Sabra equity deal. I know that there is a minimum yield to that transaction. It looks like the initial yield is coming in a little bit higher than that. Should we assume growth at a high single-digit to low double-digit rate each year, given the organic growth outlook you are starting to see in skilled nursing facilities and maybe as you layer on new acquisitions and Sabra can continue to grow externally? Is that a good ballpark to think about the growth outlook that equity investment could potentially generate?

Vikas Gupta: This is Vikas. Let me answer that a little differently. As we have said before, you are speaking of our Sabra investment. It is a private company, so we cannot release financial information for them, but we are very happy with our investment to date. It is beating expectations, and we are getting returns slightly above what we thought we would get. Sabra plans to keep growing and they think like us—good, smart transactions that are accretive. We plan that there will be further growth here above our underwritten expectations.

Michael Albert Carroll: That is helpful. And circling back on Maplewood, has there been any discussion to transition that Maplewood investment into a pure RIDEA contract? I know that Omega Healthcare Investors, Inc. still gets a lot of the upside given how it is struck in the net lease side, but does it help to simplify that agreement?

Vikas Gupta: To be honest, that is what we are doing right now. We see it as a RIDEA asset now, so we do not see the need to do that. We thought about it from time to time, but right now, we are truly treating this like our RIDEA asset. All of the cash flow comes to Omega Healthcare Investors, Inc., and the team receives promotes for hitting certain cash flow hurdles. At this point, we do not see a need for a structural change.

Michael Albert Carroll: Great. Appreciate it.

Operator: Next question comes from the line of Juan Carlos Sanabria with BMO Capital Markets. Your line is open.

Juan Carlos Sanabria: Hi. Good morning. On building out the team in SHOP or RIDEA, how should we think about that? Is that more on trying to source opportunities, or inclusive of building out asset management capabilities?

Vikas Gupta: Again, the answer is all of the above. We have hired a lot of smart people to help us step up our investment criteria and underwriting abilities, to go out there and find more relationships. For example, we have boots on the ground in the UK now to find off-market transactions for us. Additionally, both on asset management and accounting, we have hired a good bit of people to help us manage our transactions after they close.

Juan Carlos Sanabria: And then there is some news about litigation and some punitive damages awarded to victims, where the REIT was held culpable—at the time it was Colony Capital, not DigitalBridge. Thoughts there, and does that change the calculus at all or make you more hesitant on these transactions potentially in states like California where it is more litigious?

Megan M. Krull: I would like to think that was a one-off unique situation because REITs do not get involved in the operations and are not involved in the patient care. To hold a REIT accountable for care that they are not providing does not make sense. But we will continue to watch the various different areas and make sure that is part of our investment thesis.

Juan Carlos Sanabria: Thank you.

Operator: Next question comes from the line of Wesley Golladay with Baird. Your line is open.

Wesley Golladay: Good morning, everyone. Quick question on how the SNF pipeline is evolving for the broader market. Are you starting to see more operators stabilizing assets and going directly to HUD?

Vikas Gupta: This is Vikas again. To be honest, we are not seeing a lot of SNF assets trading at all right now. I think people are sitting on their assets and taking them to HUD. We have seen broken deals pop up from time to time, and I think we are going to start seeing more of those in the future.

Wesley Golladay: For those, would you look to loan on those or buy them outright?

Vikas Gupta: Buy them outright.

Wesley Golladay: Thank you.

Operator: Next question comes from the line of Vikram L. Malhotra with Mizuho. Your line is open.

Vikram L. Malhotra: Morning. Thanks for taking the questions. You have had a nice pickup in FAD over the last several quarters. What are your latest thoughts on the dividend—pushing that higher? And, Matthew, you made a comment on focusing on per-share FAD growth. With all these different levers, where do you think that could trend from today’s growth?

Robert O. Stephenson: Fair question. In terms of the dividend outlook, obviously it is a Board decision. But when you think about 2025 at $0.71 of FAD, Q1 this year at $0.78 of FAD, and all the same tools in place to replicate that type of performance, I would think by year end the Board is going to need to start conversations about our dividend. It really just comes down to the velocity of putting some of the capital back to work because the escalators are in place, the portfolio is stable, we have excess cash flow rolling into the balance sheet and into investments, and then you have the pipeline. It is just how fast we recycle those dollars.

We will get there—whether it is 2026 or 2027. The tools are all there for us to perform at that level of growth.

Operator: Next question comes from the line of Michael Lee Stroyeck with Green Street. Your line is open.

Michael Lee Stroyeck: Thanks, and good morning. Maybe going back to the earlier question on UK RIDEA, does the competitive backdrop within the UK compare versus the U.S.? And has there been the same level of cap rate compression that we have seen in the States?

Vikas Gupta: There are some new players in the UK. But through our relationships, we continue to find a good bit of deal activity that we can do at our current cap rates. We are still quoting 10%.

Michael Lee Stroyeck: That goes for the RIDEA side as well?

Vikas Gupta: Yes, that goes for RIDEA as well. A little bit of our RIDEA growth there will be through our current relationships. Same thing applies.

Michael Lee Stroyeck: Got it. And then one question on Maplewood. Last quarter, you outlined high single-digit rate increases across that portfolio. Can you provide an update on how 1Q has progressed on that front?

Vikas Gupta: The net increases were high single-digit increases, with both D.C. and New York being at the very high end of it.

Michael Lee Stroyeck: Got it. Thanks for the time.

Operator: Next question comes from the line of Farrell Granath with Bank of America. Your line is open.

Farrell Granath: This is Farrell Granath. First, how do you consider the balance between triple-net with potential revenue upside baked into the contract versus a pure-play RIDEA, and how do you consider that in your acquisition pipeline?

Matthew P. Gourmand: The Maplewood situation is kind of contrived from the background in terms of how the deal started. At the end of the day, there is an operating team and an operating company that have the rights to those operating profits if and when those profits exceed our rents. I do not think we would necessarily be looking to create that situation again. We have had situations where we have provided a lease with upside upon value realization, and that has worked reasonably well. A lot of that was our first foray into some level of participation in the upside. But now we have torn the band-aid off and gone full RIDEA. I think that is where our preference lies.

At the same time, it is about creating alignment of interests with our partners. If someone else wants to participate in that upside and is willing to put capital in, we are open to creative situations—be they JVs, leases with upside, or some form of debt that can convert to equity over time. We are agnostic as to structure. We believe we have a strong underwriting ability and an ability to understand where value can be created, and as long as we see where value can be created and we can share in that value, we can structure the deal however it works for our operating partners and us.

Farrell Granath: And on a similar vein, when selecting the operators themselves to enter onto your SHOP platform, how do you underwrite these operators in your selection? Do you focus more on scaled operators or those that are maybe smaller and looking to expand rapidly?

Vikas Gupta: We are looking for experienced operators who have a proven track record, and they tend to be regional. They know those markets well and have performed in those markets before. It is a process—we interview several managers, and we pick the best one that fits those criteria.

Operator: There are no further questions at this time. I will turn it back to C. Taylor Pickett for closing remarks.

C. Taylor Pickett: Thanks all for joining us this morning. Please follow up with the team with any additional questions. Have a great day.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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