Omega Healthcare Investors has reached a deal with the estate of Greg Smith, the late president and CEO of Maplewood Senior Living, to transition control of Maplewood to some members of the existing Maplewood management team, the Hunt Valley, MD-based real estate investment trust announced last week as it shared second-quarter financial results.
The agreement was reached July 31, two days before the REIT’s latest earnings call, according to Omega.
Smith passed away unexpectedly in March 2023. Under the terms of the agreement, which must be approved by a probate court, members of Maplewood’s management team would assume Omega’s lease and loan agreements related to the 17 Maplewood Senior Living and Inspir properties in the REIT’s portfolio. In the meantime, Omega shared information about Maplewood’s financial situation and progress at two upscale Inspir properties.
The REIT reported that Maplewood paid $11.8 million of rent in the second quarter, an amount $6.2 million short of the $18 million due under its lease and loan agreements (including $17.3 million in rent and $0.7 million in interest). In July, after the second quarter ended, Maplewood paid $4 million in rent, which Omega said was $2 million less than the contractual rent and interest amounts due under its lease and loan agreements.
Sixteen of the 17 senior living communities in the core Maplewood portfolio “do incredibly well,” Omega CEO Taylor Pickett said. “So you have this solid base that fully supports the current rent, and we feel really good about the outlook.”
Occupancy at the other community, Inspir Carnegie Hill, which opened in Manhattan in 2021, is at 67%, with 120 residents, the CEO said.
“We were the first in, but there’s three buildings that followed us in Manhattan,” Pickett said. As the building has matured, he added, some residents have died, necessitating the recruitment of new residents.
“It’s tough to predict when we get to 90%, but there’s certainly a pathway, and they continue to do well,” Pickett said. The occupancy goal probably will not be reached until 2025, he added.
“It’s a vibrant community already. It shows very well. The care is exceptional,” Pickett said, adding that “there’s not so much price sensitivity in Manhattan” for desirable properties. “And that’s why we’re able to get RevPAR [revenue per available room] of $22,000 a month.”
Another Inspir property, Inspir Embassy Row, is under construction in Washington, DC, and is expected to open in December.
The development budget for the property has risen by $50 million, and Pickett said the increase is due to construction cost increases seen by senior living and other industries in the United States over the past three years.
Occupancy has stabilized
As of June 30, Omega’s portfolio included 253 senior living communities and 660 skilled nursing facilities, with a total of approximately 86,000 operating beds. The properties were located across 77 third-party operators in 42 states and the United Kingdom, according to Chief Operating Officer Dan Booth.
Booth said that occupancy in the REIT’s core portfolio of senior living communities and SNFs was 80.8% as of mid-July, up from a low of 74.6% in January 2022. Senior Vice President of Operations Megan Krull said that although occupancy has not returned to pre-pandemic levels, it has stabilized.
“We’ve historically, since COVID, seen the [assisted living] product come back a little bit quicker, but I think, generally speaking, we’re seeing census increases at all of them. The SNF is now catching up,” she said.
Pipeline is ‘very active’
Booth said that in the second quarter, the REIT completed $245 million in new investments, including $33 million in capital expenditures. After the second quarter ended, he added, Omega closed on $373 million in new investments, not including capital expenditures.
“Year to date through July,” he said, “Omega has closed on $702 million in new investments, inclusive of capex investments through the second quarter.”
Pickett said the dollar amount of investments this year through July is more than twice the amount made during the same period of time in 2023, which was “just over $300 million of deals.”
The CEO described the REIT’s investment pipeline as “very active.” “We’re seeing a lot of deals both here in the States and over in the UK,” he said.
