Omega Healthcare Investors, Inc (OHI) Q4 2025 Earnings Call Transcript

Omega Healthcare Investors, Inc (NYSE: OHI) Q4 2025 Earnings Call dated Feb. 05, 2026

Corporate Participants:

Michele Reber — Senior Director of Asset Management

Taylor Pickett — Chief Executive Officer

Vikas Gupta — Chief Investment Officer

Robert O. Stephenson — Chief Financial Officer

Megan M. Krull — Senior Vice President of Data, Intelligence and Government Relations

Matthew P. Gourmand — President

Analysts:

Unidentified Participant

Nick Joseph — Analyst

Michael Goldsmith — Analyst

Julien Blouin — Analyst

Elmer Chang — Analyst

John Kilichowski — Analyst

Juan C. Sanabria — Analyst

Farrell Granath — Analyst

Michael Carroll — Analyst

Alec Fagin — Analyst

John Pawlowski — Analyst

Presentation:

operator

Thank you for standing by. My name is Van and I will be your conference operator today. At this time I would like to welcome everyone to the Omega Healthcare Investors Inc. Fourth Quarter Earnings Conference call. All lines have been placed on mute to prevent any background noise and after the Speaker’s remarks there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one again. Thank you. I would now like to turn the call over to Michelle Rieber.

Please go ahead.

Michele Reber — Senior Director of Asset Management

Thank you and good morning. With me today is Omega CEO Taylor Pickett, President Matthew Gormand, CFO Bob Stevenson, CIO Vikas Gupta and Megan Kroll, Senior Vice President, Data, Intelligence and Government Relations. 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 will refer to some non GAAP financial measures such as nareit, ffo, Adjusted ffo, BAD and ebitda.

Reconciliations of these non GAAP measures to the most comparable measure under Generally Accepted Accounting principles are 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.

Taylor Pickett — Chief Executive Officer

Thanks Michelle, Good morning and thank you for joining our fourth quarter 2025 earnings conference call. Today I will discuss our fourth quarter financial results and certain key operating trends. Fourth quarter adjusted funds from operations AFFO of $0.80 per share and FAD funds available for distribution of $0.76 per share reflect strong revenue and EBITDA growth principally fueled by acquisitions and active portfolio management. Our dividend payout ratio has dropped to 84% for AFFO and 88% for FAD. 2025 was a great year for our team. Full year AFFO and FAD growth exceeded 8% year over year driven in part by 1.1 billion in capital deployment.

In addition, the credit quality of our operators continued to improve as a result of active portfolio management and the overall improvement in industry fundamentals. During the fourth quarter we closed two Ridea transactions totaling $80 million. We significantly expanded our Sabre relationship and we committed capital in Canada. All this while delevering and strengthening the balance sheet. Our momentum from 2025 should carry us forward for another strong year in 2026. We will continue to actively manage and enhance the credit quality of our operating relationships. We will continue to deploy meaningful capital across all of our geographies and property types, including our new RIDEA platform.

It is likely by year end that Sabre will be our largest source of revenue. Furthermore, by year end it is likely that we will have the strongest tenant credit profile and balance sheet in Omega’s history. I will now turn the call over to Vikas.

Vikas Gupta — Chief Investment Officer

Thank you Taylor and good morning everyone. Today I will discuss the most recent performance trends for Omega’s operating portfolio including an update on Genesis as well as Omega’s investment activity for 2025 including fourth quarter and subsequent closings. We will also give an update on Omega’s pipeline and market trends for 2026. Turning to portfolio performance, Omega has investments in 1,111 facilities consisting of 1,027 in our owned real estate and mortgage loan portfolio and 84 facilities and joint ventures with operating partners and third party real estate investors. Of the total number of facilities, 62% are skilled nursing and transitional care facilities and 38% are US senior housing and UK care homes.

Trailing 12 month operator EBITDAR coverage for our triple net and mortgage core Portfolio as of September 30, 2025 increased to 1.57 times compared to our second quarter 2025 reported coverage of 1.55 times. Core portfolio coverage continues to trend in a favorable direction above industry average coverage levels and as discussed in prior quarters, provides us with confidence that our operating partners have sufficient means to provide superior clinical service to residents. In addition to the strong credit support this provides for existing investments, these coverage levels enable Omega and our operating partners to continue to grow our respective businesses.

As reported previously, Genesis filed for Chapter 11 bankruptcy protection in July 2025. As a reminder, Amanga leases Genesis 31 facilities for annual rent payments of 52 million. Our coverage continues to be above the mean coverage for our entire portfolio. Additionally, Omega has a 129 million dollar piece of a term loan with Genesis which is secured by a first lien on essentially all of the assets of Genesis on. Other than the AR on which we have a second lien, we believe that the loan is fully secured. While the Unsecured Creditors Committee has challenged the value of the loan collateral among other things as part of the proceeding, we believe these arguments are without merit.

Based on our lease coverage and collateral, we believe our credit position in this portfolio is strong. The bankruptcy process is progressing with a few critical events taking place in the last few weeks, including a second auction of the Genesis assets and a related sale approval hearing. Per the Judge’s order, after the Results of the first auction of Genesis assets were not approved in November 2025, a second auction was held on January 13th and the winning bidder was a group known as 101 W. State Street. This group’s bid was approved by the bankruptcy court on January 26th.

The principals of 101 West street currently operate approximately 60 facilities on the West Coast. As required, they have submitted a hard deposit of 54 million and have an aggregate of 85 days inclusive of additional hard deposits needed for extensions to represent that they have procured market financing commitments which with contributed equity satisfies the cash portion of its bid. As previously reported, Omega committed to support Genesis by providing 8 million of a total $30 million debtor and possession loan. Genesis continues to pay us full contractual rent each month since filing bankruptcy due to the delays that came with having a second auction, the bankruptcy process is now anticipated to conclude in Q3 or Q4 of 2026.

If 101 West street consummates its purchase of the Genesis assets, Omega anticipates that it will assume our lease and the cash proceeds of the sale will be sufficient to cover the payment in full of our DIP loan and term loan. These assumptions and timeline along with all elements of the bankruptcy process are subject to further developments in events in the bankruptcy proceeding and we cannot be certain of the outcome. There are no material open issues with any other large operators turning to new investments. Ameca’s transaction activity in 2025 was very strong with over 1.1 billion in new investments.

These transactions varied in size and nature but demonstrate Omega’s ability to adapt to the evolving investment landscape in the long term care industry. In 2025 we continue to support the growth of our existing and new operators by focusing on strong credit backed real estate and also close on our first RIDEA transactions in the US senior housing space. Of our total 1.1 billion in new investments, a little over 700 million or approximately 66% was in senior housing facilities or UK care homes. Although we continue to invest in the US skilled nursing sector to support and partner with best in class operators such as Sabre, this demonstrates how we are focusing on all asset classes and deal structures to maximize returns for our shareholders.

As Matthew discussed on our last call, our primary goal is to allocate capital with a focus on growing fad per share on a risk adjusted basis. Accordingly, we have expanded our investment structures to now include RIDEA for US senior housing and UK care homes with the goal of achieving higher risk adjusted returns over time. We believe we are well positioned to enhance shareholder returns by acquiring underperforming assets at prices meaningfully below replacement cost and then partnering with proven operators to enhance the cash flow and underlying real estate value of such assets. Our targeted return for investments is an unlevered IRR of at least low to mid teens, not assuming any cap rate compression upon exit in our underwriting.

During the fourth quarter of 2025 Omega completed a total of 334 million in new investments, not including 31 million in CapEx. These new investments included the previously announced Sabre JV real estate transaction, US senior housing Radea transactions and various other real estate investments in the US and the uk. For our new RIDEA investments we acquired four senior housing facilities located in New Jersey, Wisconsin and Indiana for 37 million. We have engaged two third party managers to operate the facilities on our behalf. Additionally, we made a $43 million investment for a 49% equity interest in a Class A rental CCRC in North Carolina which will also operate via a RIDEA structure.

Our other fourth quarter investments included the purchase of a UK care home for 16 million and 16 million in real estate loans. These additional investments were at a rate of 10% and the real estate loans have an option for Omega to realize upside upon a refinance or sale of the facilities. Subsequent to quarter end, OMEGA closed on 212 million of additional investments as previously announced and anticipated. On January 1st, Mega closed on the purchase of 9.9% of the equity interest in Sabre’s operating company for 93 million. Mega will receive a minimum 8% cash return on our investment.

Cash flow from the Sabre operating company is anticipated to support a greater payment, but cash will be retained for Sabre’s growth and all additional amounts due to Omega will be accrued. As a reminder, this was step two of our overall investment in Sabre and where step one was our $222 million real estate investment for a 49% equity interest in 64 facilities operated by Sabre. The completion of our investment in the Sabre operating company creates strong alignment between Omega and Sabre. With our geographic scope and capital and Sabre’s operational expertise, we collectively are in a unique position to evaluate growth opportunities and have optionality for deal structures including our triple net master lease, the Sabre Omega Real Estate Joint Venture and the Sabre Operating Company.

We are actively evaluating additional opportunities to grow the Savor Omega relationship. Also subsequent to quarter end, Omega closed on the purchase of 13 skilled nursing facilities located in Georgia or 109 million and one senior housing facility in Alabama for 10.3 million. The skilled nursing facilities will be leased to a current Omega operator at a lease yield of 10.6% and and the senior housing facility will be operated by Omega and managed by a third party manager via a RIDEA structure. Lastly, we are proud to announce that we have closed on a commitment to fund up to 64 million for the development of five replacement long term care facilities in Ontario, Canada.

The loan has a current pay interest rate of 10% and at Omega’s option is convertible to a 34.9% equity stake in the borrower entity that owns 21 facilities. Omega’s collateral for the loan is this entire 21 facility portfolio valued today at over 130 million. Based on the credibility of our development and operating partner, the strong collateral for the loan, the waitlist for long term care facilities driven by demographics and the overall support of the Canadian government for the long term care sector in Ontario, we believe this is a good risk adjusted opportunity for our initial entry into Canada.

Turning to the pipeline Similar to 2025, our pipeline for 2026 is strong Marketed opportunities both in the US and the UK continue to be substantial and we continue to see off market opportunities through our operating partners including our new RIDEA partners and managers. We continue to focus on growing our Rolodex of potential operating partners as we’ve done for the past two decades. Our relationships are the key component to our growth. As mentioned earlier, we continue to evaluate and focus on purchasing US skilled nursing facilities, US senior housing facilities and UK care homes with increased flexibility on deal structures to ensure that Omega and its shareholders are able to benefit from additional sources of income, whether that be through variations on triple net lease structures, RIDEA for senior housing assets or UK care homes or strategic joint ventures.

I will now turn the call over to Bob.

Robert O. Stephenson — Chief Financial Officer

Thanks Vikas and good morning. Turning to our financials for the fourth quarter of 2025, revenue for the fourth quarter was $319 million compared to $279 million for the fourth quarter of 2024. The year over year increase is primarily the result of the timing and impact of revenue from net new investments completed throughout 2024. 2025 our net income for the fourth quarter was $172 million or $0.55 per common share compared to $116 million or $0.41 per common share. For the fourth quarter of 2024, our adjusted FFO was $250 million or $0.80 per share for the quarter and our FAD was $238 million or $0.76 per share and both exclude several items and outlined in our NAREIT FFO adjusted FFO and FAD reconciliations to net income found in our earnings release as well as our fourth quarter financial supplemental posted to our website.

Our fourth quarter 2025 FAD was one penny greater than our third quarter FAD, with the increase primarily resulting from incremental revenue related to the timing and completion of $485 million in new investments during the third and fourth quarters. Incremental Maplewood revenue as they paid $18.9 million in Q4, an increase of $200,000 compared to Q3. Lower net interest expense of approximately $1 million resulting from bond and term loan payoffs in the fourth quarter. These were partially offset by $100 million in asset sales and $61 million in loan repayments over the past two quarters, resulting in a $2.1 million reduction to the fourth quarter fad, coupled with the issuance of a combined 7.8 million common shares of stock and OP units over the past two quarters to fund new investments.

Our balance sheet remains incredibly strong as we continued to take steps to improve our liquidity capital stack maturity ladder. In the fourth quarter we funded 310 $34 million of new investments primarily by issuing 5.5 million Omega Operating Partnership units valued at $222 million. Additionally, in the fourth quarter we reduced our funded debt by over $700 million as we repaid $600 million of senior unsecured notes, repaid a 183 million pound sterling secured mortgage loan, and repaid the $428.5 million term loan all prior to their scheduled maturity dates. All three pieces of debt were repaid utilizing a combination of balance sheet cash or REVOLVER and fully borrowing on the $300 million delayed draw term loan.

Our next schedule maturity is in April 2027. In the fourth quarter, we also improved our liquidity as we entered into a new $2 billion ATM program at December 31st. We ended the quarter with $27 million in available cash on the balance sheet and over $1.7 billion of available capacity under our $2 billion revolver. Our fixed charge coverage ratio was 5.8 times and our leverage was further reduced to 3.51 times. 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 Taylor mentioned, our momentum from 2025 should carry us forward for another strong year in 2026.

We are providing full year adjusted FFO guidance of a range between $3.15 to $3.25 per share which includes the assumptions outlined in our press release issued yesterday. I’d like to take a moment to highlight a few of the guidance assumptions. It includes the impact of the new investments completed as of February 4th and does not include any additional investments not outlined in our press release and includes the impact of scheduled loan repayments and potential asset sales. Of the $213 million in mortgages and other real estate loans that are scheduled to mature in 2026, it assumes $157 million will be repaid and the balance will be converted to fee simple real estate.

Similarly, of the $267 million in non real estate backed loans that are scheduled to mature in 2026, it assumes 196 million will be repaid during 2026 which includes $137 million in Genesis loans with the balance of the loans being extended beyond 2026. As I stated on our third quarter earnings call, we are always pruning and strengthening our portfolio through asset sales and our initial 2026 guidance includes approximately 15 to 25 million dollars per quarter in asset sales. The high end of the range in our guidance includes but is not limited to additional cash for Maplewood as well as other cash based operators, timing or potential extension of loan repayments and asset sales G and A at the lower end of the range, to name a few.

Our 2026 adjusted FFO guidance does not include any additional investments or additional capital market transactions other than what I just mentioned or what was included in the earnings release. I will now turn the call over to Megan.

Megan M. Krull — Senior Vice President of Data, Intelligence and Government Relations

Thanks Bob and good morning everyone. Last quarter I mentioned the potential for an automatic 4% cut to Medicare related to the deficit caused by the obbba. Since then the automatic reduction has been dealt with legislatively as has historically been the case, and is therefore no longer an issue. Additionally, in December, HHS officially repealed the minimum staffing standards through an interim final rule, an action that we applaud as the draconian nature of the rules stood to make the provision of and access to care more difficult. Moving forward, we hope that this administration, who has been so supportive of this industry, will work with industry leaders to find other ways to obtain regulatory rationalization going into 2026.

Additionally, while Medicare Advantage has been a topic of conversation over the last week, with CMS proposing relatively flat rates in 2027 despite rising health care costs. I think it is important to point out that the impact to our portfolio would be minimal if implemented as proposed. Not only are our current coverages, as noted earlier by vicus, able to withstand a certain level of expense pressure in the face of reimbursement not keeping pace, the percentage of our operators revenue associated with Medicare Advantage is low. With total Medicare accounting for less than 26.1% of overall operator revenue.

When excluding non Medicare quality mix and a Medicare Advantage penetration arguably far less than the 50% plus you see in the overall Medicare population, only a small portion of the business is impacted by this news. While we are unconcerned with this latest development, we are still carefully watching state reactions to the OBBBA as well as the impact it may have on the overall health of our operators referral sources. We continue to support the efforts of our operators, partners and industry associations in educating lawmakers both at the federal and state levels on the importance of the services provided by the long term care industry and the need to fund it appropriately.

I will now open the call up for questions.

Questions and Answers:

operator

At this time I would like to remind everyone in order to ask a question press Star, then the number one on your telephone keypad. Please limit your questions to one and one. Follow up. Your first question comes from the line of theft IRGI from cd. Just go ahead.

Nick Joseph

Thanks. It’s Nick Joseph here with Seth. Just wanted to dive in a little to the shop strategy and kind of curious how you think of it being differentiated versus peers and the ability to grow just given the competition and the capital that has been moving into that space.

Matthew P. Gourmand

Sure Nick, it’s Matthew here. So I think the differentiation as much as anything is on two or three different fronts. Number one, we are looking at smaller deals tend to be relatively rifle shot deals as opposed to larger portfolio deals. You tend to find a little bit better economics in that situation. I would say a lot of the deals we’re looking at are deals that need a little bit of love, a little bit of turnaround, either lower occupancy, lower margin. We’re aligning with operators who have expertise in that specific area, be it the asset class that we’re looking at and the region that we’re looking at and have demonstrated the ability to turnaround facilities like that.

So I think, you know, we’re much more looking for the, as Vika said in his talking points, the low to mid teens IRRs and the only real way to obtain that is taking assets that need a little bit more of a turnaround opportunity and then obviously we’ve structured the promotes as everyone tries to align our interests with those of our managers to make sure that they are sufficiently incentivized to obtain the financial returns that we’re looking to achieve.

Nick Joseph

That’s very helpful. Thank you. As you think about kind of the turnarounds for those assets, do you assume that occupancy goes down initially or how do you underwrite at least the initial years of performance of those facilities?

Matthew P. Gourmand

Sure. It’s a case by case basis. It’s going to be determined on what we think needs to get done within those facilities. The ability of the former manager to market those effectively, the ability to push rate. Each one is very idiosyncratic. But needless to say, we spend a lot of time really understanding and scrubbing the reality of those numbers and the viability of those numbers to make sure that we’re conservatively underwriting.

Nick Joseph

Thank you.

Taylor Pickett

Thanks.

operator

Our next question comes from the line of Omopayo Okusanya from Deutsche Bank. Please go ahead.

Unidentified Participant

Hey guys. Yeah, this is Sam on for tio. I was wondering if you guys can give any update on PACs. Like do you guys have any insight around the outcome of the federal investigation?

Vikas Gupta

Yeah, Dan, this is Vikas. No, we don’t have any more info on the investigation than what the public knows. I will say we continue to be in close touch with the pacs management team. Their buildings continue to perform strongly here at Omega. Good credit, good operating results and good clinical performance. So right now we feel generally good about that.

Unidentified Participant

I guess my follow up would be around Genesis. I guess. How should we think about the timing and expected returns on the redeployment of proceeds from Genesis related loans in 2026?

Robert O. Stephenson

This is Bob in the guidance. What we’re assuming is sometime mid year the loans. I said 137 million. That’s made up of the combination of 8 million for the dip and 129 million of what was on our balance sheet at 1231. When that gets, when we receive that back in, we will first pay off any balance that’s on the credit facility and the balance of that then will be invested roughly 3 1/2% our overnight rates.

Unidentified Participant

Got it. Okay, thank you. That’s all I got, guys. Appreciate the time.

operator

Our next question comes from the line of Michael Goldsmith from ubs. Please go ahead.

Michael Goldsmith

Thanks a lot for taking my questions. First, I want to ask for some color on the Georgia skilled nursing portfolio. Just given this. A little bit of a higher initial yield at 10.6% that we’ve seen in the US of late. Is that pricing more of a function of having some hair on it or maybe more of an a reflection of off market deal flow? And am I reading it right that the facilities were transitioned to one of your existing operators from a prior operator? Yeah. Michael, this is Vicky. So just for some guidance, we are still quoting 10% for all SNF deals today.

This deal was an off market deal and we were able to achieve slightly higher. Nothing super hairy about it. Good buildings in Georgia. And yes, we are leasing this to a current mega operator. Got it. And just as a follow up here, historically acquisition volume upside tends to come from the portfolio transaction. So how does the outlook for portfolios look right now? Are you seeing portfolios trade and if so, are they trading at a premium or a discount? Thanks.

Matthew P. Gourmand

Sure. This is Matthew. They’re trading to the extent that they do trade, they’re trading at a premium both on the skilled nursing and the seniors housing side of things and in the UK care homes. So there’s not many chunky deals that we’re seeing out there right now. But to the extent that they have traded over the last six to 12 months, we have tended to see a little bit of a premium there. Candidly, we’d rather choose selectively the facilities that we’re looking to buy. And so particularly when you’re paying a premium for those larger deals, they’re not particularly attractive to us.

But we obviously continue to look at everything.

Michael Goldsmith

Thank you very much. Good luck in 2026.

Matthew P. Gourmand

Thank you.

operator

Our next question comes from the line of Julian Bluein from Goldman Sachs. Please go ahead.

Julien Blouin

Yeah, thank you for taking my question. Just regarding maybe the acquisitions that are closed in the fourth quarter and subsequent to quarter end, can you give us a sense of how those were sourced? Were they mostly on or off market? And then what were the motivations, the sellers? I know you mentioned some turnarounds. So were these deals sort of mostly distressed situations?

Vikas Gupta

Yeah, just looking at the deals quickly, it’s really a mixed bag. Some are marketed, some are not marketed. I will say there are quite a few that are off marketed that came through current relationships then most notable of course being the Sabre deal. And then the second question was what.

Julien Blouin

The motivation, seller motivation was.

Vikas Gupta

So I mean it’s again a mixed bag. Some of it is liquidity, some of it is exiting. There are some turnarounds here which where we have put in new operators such as the Georgia transaction. So once again that’s a mixed bag as well.

Julien Blouin

Got it. Okay, thank you. And then your tenant coverage, you Mentioned, you know, continues to rise the highest, I think, in recent history. Do you feel like at these coverage levels, you’re approaching sort of coverage levels where you might be able to release that sort of positive spreads in future years? I know there’s not much expiring this year, but a little bit more in 2027, or is it really more that it just sort of increases the likelihood of renewal upon expiration?

Matthew P. Gourmand

Yeah, unfortunately, it’s much more the latter. Majority of our leases have renewal options unilaterally at the right of the tenant.

So even though it might show that it’s expiring in 2027, to your point, if they’re covering well, the likelihood is they will exercise that option to renew. And therefore, the opportunity for incremental pickup in the near term is relatively limited. But obviously, as we continue to look out, eventually the second and third renewal options, it tends to normally be a couple of renewal options will also expire, and that pickup will be opportunistic for us. However, we don’t see anything in the next three or four years that’s going to meaningfully move the needle on that front.

Julien Blouin

Okay, thank you.

operator

Our next question comes from the line of Nick Ulico from Scotiabank. Let’s go ahead.

Elmer Chang

Hi. Thanks. This is Elmer Chang. I’m with Nick. Considering guidance assumes rental payments at the current run rate. Is it reasonable to assume Maplewood returns to the contractual rate by year end? Because I think based on the improvement in rent payments in recent quarters, maybe there is some expectation they would be at contractual rent by this quarter.

Vikas Gupta

Yeah, as we’ve said previously, Maplewood is paying us all their cash flow now. So as Bob discussed, we are getting a run rate of 76 million right now, and we assume that number will increase at a small level later this year.

Matthew P. Gourmand

We don’t really look at it so much in terms of contractual to fix this point, at the end of the day, they’re going to continue to pay the cash flow. They obviously have some interest expense as well that is due above and beyond their contractual rent obligations. So as they continue to improve and they’ve demonstrated a really decent ability to improve and enhance their cash flows over the last few years. And I think the management team is operating as well as any management team that we’ve seen out there right now. We will continue to benefit from that cash flow.

But we don’t look at it from a standpoint of contractual rent. We just look at it from a standpoint of more like a ridea like model at this point in time.

Elmer Chang

Right okay, thanks. Maybe second question is how should we think about the cadence and impact of loan repayments this year and even in 2027, outside of the Genesis loans, just given the volume of investments you’ve done in the last couple years.

Matthew P. Gourmand

Sure. This is Matthew again. Yeah, the loan repayments, it’s tough to model. Bob’s obviously given guidance as to what we think in 2026. Loans are not a large portion of our overall business, but they do represent a little bit of a headwind. To the extent that they do come back, I don’t think it’s going to be a meaningful headwind over the longer term. Obviously we have fairly pronounced amount of stuff potentially coming back in 2026 that we’ve highlighted. But longer term, it obviously creates a little bit of a headwind until we able to redeploy the capital.

But with the market being relatively robust today in terms of opportunities to deploy that capital, I don’t think it’s a long term headwind for the company.

Elmer Chang

Okay, thank you.

operator

Our next question comes from the line of John Klikowski from Wells Fargo, please go ahead.

John Kilichowski

Hi, good morning team. Maybe just to go back to Maplewood here with the core portfolio well occupied, what are you seeing in terms of Rev4 export? What can you kind of disclose about the success of really driving the economics there? I’m just curious about. I understand you. You’re not too focused on timeline to full rent, but just sort of helpful to think about what’s the growth of that existing portfolio.

Vikas Gupta

Yeah. Hey John, this is Vikas. Just some stats for you here. The Second Avenue building is now at 97% and the overall core portfolio is a 96%. And you know, as for growth, a lot of it’s going to be driven by rate increases. Maplewood is shooting to do a single digit percentage, a high single digit percentage increase this year. We still don’t know what that’s going to be net, but that will, that will drive some growth and we plan that will happen going forward in the years to come.

John Kilichowski

Okay, very helpful. Thanks, Vick. And then just to stay on Maplewood here for Embassy Row, I don’t know what else you can talk about here, but is there, there’s a JV partner in the opco. Correct. And are you able to give any guidelines around maybe the remaining capital availability from them and helping make those yield on cost famous? I’m just curious, sort of the, what’s the lease up trajectory and sort of timeline that needs to take place at Embassy Row such that you wouldn’t need to pull, let’s say capital from the outperformance on the core portfolio to make hold the yield on cost payments.

Matthew P. Gourmand

So I would say that we actually for the first month we’ve seen positive cash flow on that facility at the end of last year, which is great. That’s obviously prior to paying any rent. The lease up is going in accordance with our expectations. I think Maplewood is extremely focused on, on ensuring that doesn’t create too much of a headwind for their overall portfolio performance. It’s tough to say, you know, when you’re in lease up what, what that looks like. We look at it holistically over the context of the overall portfolio and as Bob’s indicated, we expect a modest pickup in February and an ability to continue to pay that rate going forward.

But it’s just too early to tell both in the lease up of that building and in the rate increases that they’re trying to push across the portfolio right now what that’s going to look a consolidated basis.

John Kilichowski

Got it. Thank you very much. Congrats on the quarter.

Matthew P. Gourmand

Thanks.

operator

Our next questions comes from the line of Juan Sanabria from BMO Capital Markets. Please go ahead.

Juan C. Sanabria

Hi, good morning. Just on the shop investments, just curious, I know you talked about unlevered yields but for the stuff you’ve done fourth quarter and and year to date here, just curious on the initial yields and how we should be modeling the returns on that capital. And as part of that, can you talk a little bit about the capex assumptions and maybe just give a little color on how we should think about FAD relative to adjusted FFO from a guidance perspective for the full year?

Taylor Pickett

Yeah, I’ll take the first part. Juan, it’s Taylor. We’re purposefully not disclosing initial yields because they’re all over the place.

We have deals in the pipeline that have high single digit yields right out of the box, some that are lower. It all goes back to what Matthew said. Every deal is idiosyncratic and we’re looking at long term irrs and we’re not aggressive in terms of how we underwrite to get to those. So we feel really good about what we’re finding. And the operators were putting these buildings in the hands. Operators hands, where these buildings are going. And that’s probably all I can say about it in terms of capex. Do you want to take that?

Matthew P. Gourmand

Yeah. So again, a little bit of a mixed bag. One, some of the facilities we’ve picked up really don’t need a lot of initial capex. Other ones probably do need a little tlc. That’s a little bit of the nature of the turnaround element. We tend to price that in initially within our expectations. And I would say that the yields that we’re always quoting to you are yields that we think are sustainable after a decent capex assumption, either from an initial investment standpoint or even from a recurring standpoint. I don’t know what that does in terms of how that looks for our AFFO relative to our FAD going forward.

But we are primarily focused on just growing that that fad.

Juan C. Sanabria

And just with regards to the 26 earnings guidance, any how should we think about the delta between FAD and adjusted sfo?

Vikas Gupta

Well, remember, yeah, you’re right we only give AFF guidance but escalators will impact FAD as it goes along. But same with fad, you got to remember that the asset sales and the repayment of the low maturities also will impact that. So I would keep about the same relationship.

Matthew P. Gourmand

Yeah, I think the ratio, I mean you have to remember, you know, we’re a $14 billion company and we just started investing in Ridea. So I think that the ratio that you’ve seen between AFFO and FAD over the last few years is probably not going to meaningfully change in 2026.

Juan C. Sanabria

Okay. And then just Canada, a new market for you and I think your first investment in the long term care there. So just curious if you could give us a little bit of a, a quick one on one on the Canadian market versus the U.S. i’m assuming it’s more akin to U.S. skilled nursing and kind of what, what opportunity this new sleeve potentially represents for Omega.

Matthew P. Gourmand

Sure. I mean as you can imagine all of these things are pretty involved and detailed. If you were going to give an analogy, I’d probably say it’s closest to the UK care home market more than the skilled nursing market in the fact that it’s a little bit more of a socialized medicine system there so they don’t make people exhaust the financial options to the extent they do in the us. At the same time most people tend to be longer term residents within those facilities. In terms of a little bit of a background on this, we’re very excited about this opportunity.

We had an opportunity to invest with a very well established and high quality developer and operator in the Canadian long term care market that we’ve got to know. Over the last year we were able to structure a deal that we think can be sustainably accretive. However, I would say this is a little bit of an IDIOSYNCRATIC investment, we wouldn’t expect to significantly grow in the general Canadian senior housing market as this is traditionally offered yields that are not particularly compelling to us given our cost of capital. However, we would be open to continue to grow with this operator assuming that they can find deals that fit within the parameters of our cost of capital and are able to be accretive deals for us.

operator

Our next question comes from the line of Farrell Granite from Bank of America. Please go ahead.

Farrell Granath

Thank you and good morning. Similar, I guess, to that question is thinking about the investment mix in 26. I’m just curious if what you’ve already closed in January of 26 and early February is kind of in line of how we should be thinking of a mixture of loans as well as triple net and shop.

Vikas Gupta

Yeah, I’ll speak to the pipeline. I think that’ll help you. If you just look at our pipeline, it is strong as both Taylor and I said, it’s in lines with really where we closed 20, 25. And if you look at what’s, what’s actionable about a third is skilled nursing, a third is senior housing, the third is UK care homes. As for structure, it’s a mixed bag. I would say a lot of the UK and US senior housing is rightea focused.

Farrell Granath

Okay, thank you. And also just given recent headlines around the CMA investigating some peers for recent transactions in the uk, does that change any of your feelings on transactions in the UK or influence any of your investment decisions?

Vikas Gupta

Yeah, no, we are not concerned about that. Our lawyers do similar type of checks for us every time we do a UK care home transaction. We’ve never ever been in breach of anything or close to it. So from our perspective, we are not. Worried about growing in the UK right now.

Farrell Granath

Okay. And just one small follow up also just on your dividend, if there’s any additional updates on coverage or how you’re thinking about your dividend.

Taylor Pickett

We’re getting closer to needing to increase the dividend, but obviously it’s a, it’s a board call and typically we’ll get to the point where we’re required to increase our dividend from a tax perspective and that’s going to be in the low 80s of terms of fat payout. That’s how I would think about it.

Farrell Granath

Okay, thank you very much.

operator

Our next question comes from the line of Michael Carroll from RBC Capital Markets. Please go ahead. Yep, thanks.

Michael Carroll

I wanted to circle back on the Canadian loan. I want to make sure I understand this. So I guess the initial loan, your security is these five long Term care developments, but you have the option to convert it into the entire operator. 35% stake in the entire operator.

Matthew P. Gourmand

So the collateral is actually over 20 long term care homes that they currently own that as Vikas said, is valued meaningfully more than the loan that we’re looking to put out there. About twice the value of the loan that we’re looking to put out there. And yes, initially the yields, it’s a loan structure to give us the yields that we’re looking for.

But to the extent that over time the operating company is able to achieve yields similar to or above the yields we’re achieving from a loan standpoint, we then have the optionality to flip that over. And based on our modeling, we would expect to be able to do that at some point during the time of the loan.

Michael Carroll

Okay, can you give us an idea of what the equity stake would be? I guess the yield on the equity stake today, and I’m assuming it’s lower than the loan amount. And then how much growth is in the long term care market? I mean, how fast could that yield grow? So if you do convert it into an equity stake, I mean, are we thinking about a mid single digit type growth rate or is it potentially higher than that? Are they seeing the similar trends as we are in the US?

Matthew P. Gourmand

Yeah, the initial yield today is lower than obviously our 10% yield on the debt.

I don’t honestly know exactly what the number is, Michael, but it’s cash flow positive and it’s obviously got a lot of collateral behind it to the extent of when we convert it over, it’s going to be somewhat contingent on whether there’s continued opportunities to do these developments. It is nicely accretive. So I would say that mid single digit growth is on the conservative side of things. I think this could definitely be high single digit or even double digit growth as they continue to develop. There’s a lot of need within the Canadian market right now and this is a proven developer and operator that we think can meet a certain amount of the need that the Canadian people have in the Ontario market.

Michael Carroll

Okay, great, Appreciate it, thanks.

operator

Our next question comes from the line of Alec Fagin from Baird. Please go ahead.

Alec Fagin

Hey, thanks for taking my question. So first for me would be when you evaluated the development loan in Canada, how would that compare to maybe similar loans in the United States? And would you expect that to be a bigger part of the investment flow in 2026?

Matthew P. Gourmand

So it’s very different in this situation. We had a lot of collateral sitting behind our loan. A lot of the Time when you’re putting these loans out there, the collateral might just be the development deal itself, which has inherently more risk attached to it. This also is a known entity that has proven an ability to develop at very, very consistent cost rates relative to budget over a prolonged period of time, which gave us increased comfort. And so to that, don’t think this is something that we’re going to look to be doing. First of all, we’re just not fans of loans generally to the point we were making earlier.

Those loans tend to come back to you and you know, this really is a little bit of a loan with a vehicle to have equity interest longer term, which is obviously something that we are more interested in. But the idea of loaning into development deals is probably not something we’re going to be looking to do.

Alec Fagin

All right, that’s helpful. And maybe now that you’re in the RIDEA business, are you looking to convert any current senior housing in the portfolio to that structure?

Matthew P. Gourmand

There’s two forms of conversion here. There’s the conversion out of necessity and the conversion out of opportunity. You’ve seen a lot of people convert because ultimately there wasn’t the capacity to pay the rents where we sit today in our senior housing portfolio. Obviously we’ve talked about Maplewood being a RIDEA like model, but outside of that, all of our operators are cash flowing sufficiently to continue to pay our rent. So there’s no necessity to do that. But if there were opportunistic chances to take operating exposure at a yield that is compelling to us, either in the US or the uk, we’d obviously look to do that.

We understand that the nature of such operating exposure creates increased volatility. So we’d be looking for a fairly healthy yield in order to do that. But it’s not outside of the realm of possibility. We’d look to do so.

Alec Fagin

Okay, thank you.

operator

Our next question comes from the line of John Pawlowski from Green Street. Please go ahead.

John Pawlowski

Hey, thanks for the time, Matthew. First question on your guys foray into ridea. It is a. I mean it is a different skill set for a triple net credit investor framework from Omega of old. And just curious, what has had to change internally, either on the investment team or asset management team to get ready for a more operationally intensive, tougher model to underwrite.

Matthew P. Gourmand

It’s probably quicker to tell you what hasn’t changed. You’re absolutely right, John. This is inherently a higher risk, potentially higher return model. We don’t have that credit support sitting behind in the form of coverage and therefore I would say that we have looked at every element of this from the standpoint of the quality of the underwriting. We’ve brought in new members of the team who have decades of experience within the senior housing business, who have a very deep bench of operators that they know that they’ve worked with before. We’ve looked at every element of the P and L in terms of trying to understand why lower occupancy happens, what the differentiation of CapEx is between the asset classes, whether we want a first tier market, a second tier market.

Looking at the demographics, we have taken an extremely, what I think, thoughtful and intense approach to truly understand what the risks are around this. Given the fact that there isn’t that credit sitting behind us, we are still, I think sufficiently conservative to understand that very much like the uk it makes sense for us to dip our toe into this judiciously. I wouldn’t look for us to be doing a billion dollar deal anytime soon because we do think there’s still more to learn. But as we’ve seen in the uk, the ability to deploy capital over the course of a decade for it to become not only a meaningful part of our business, but a highly accretive and valuable part of our business, I think we look at over the next decade right.

Being a similar opportunity.

John Pawlowski

Okay, I appreciate all those thoughts. Megan, maybe a quick one for you. At the state level. Are you hearing any concerning anecdotes or potential draft legislation for staffing mandates at the state level?

Megan M. Krull

No, nothing more than what we’ve heard in the past. So there’s always rumblings and there are states who are pushing the federal government to try to institute another staffing mandate, but we’re not really hearing that across the board.

John Pawlowski

Thank you for the time.

operator

Again, if you would like to ask a question, press star one on your telephone keypad. I will now turn the call back over to Taylor Pickett for closing remarks.

Taylor Pickett

Thanks. Thank you. Thanks all for joining our call today. As always, we’re available for follow up questions.

operator

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