Omega’sMaplewood Transition Takes Hold as Senior Housing Occupancy Holds Steady

Omega Healthcare Investors (NYSE: OHI) is making headway on its plan to restructure a 17-community portfolio operated by Maplewood Senior Living after the senior living operator faced a “modest liquidity crunch” in January.

Omega and Maplewood announced a plan to restructure their operating relationship earlier this year.

Under the plan, Maplewood and Omega have agreed to fix the operator’s annual rent at $69.3 million and defer annual 2.5% rent escalators through 2025. In addition, Omega will defer 7% interest on a $250.5 million secured revolving credit facility in 2023, with cash interest payments planned to start in 2024. The REIT also increased a secured credit facility by about $13 million and placed Maplewood on a cash basis for revenue as of the fourth quarter of 2022.

The Hunt Valley, Maryland-based real estate investment trust (REIT) is restructuring the Maplewood portfolio in order to better the operator’s “current cash flows with rent and interest obligations due to Omega,” Omega COO Daniel Booth said on the company’s 4Q2022 earnings call.

Maplewood’s Inspir Carnegie Hill community in Manhattan and Maplewood at Princeton in New Jersey currently carry occupancy rates of 57% and 86% occupancy, respectively. Preliminary occupancy results in the company’s senior housing portfolio show it is remaining steady, with occupancy at 85.3% as of mid-January, according to Booth.

Maplewood in 4Q22 paid Omega a total of $20.2 million in rent and interest, according to Omega Healthcare Investors CEO Robert Stephenson. In addition to the sum paid in Q4, Maplewood paid Omega “$5.8 million in January for rent and $1.5 million in interest,” he said on the earnings call.

“Although occupancy has now largely recovered at the Maplewood facilities, the pandemic caused a decline in their occupancy and, similar to other operators, a long-term increase in labor costs,” Booth said. “Also, as previously announced, construction constraints during the pandemic resulted in delayed openings and elevated costs at the Manhattan and Princeton developments.

The senior housing portion of Omega’s portfolio consists of 184 senior living communities with various combinations of IL, AL and memory care assets throughout the U.S. and the United Kingdom.

Omega reported net income of 4Q2022 of about $47 million, bringing the total income for 2022 to $439 million or $1.80 per common share, an increase of $11 million or $0.05 per common share compared with 2021.

In addition to its plans to restructure with Maplewood, Omega management reported the company is utilizing security deposit amounts of $2 million and $5.4 million, respectively, to offset shortfalls from two of its senior living operators. One operator,accounting for 2.4% of Omega’s rent, hasn’t paid in full since March 2022;

“Omega is currently in discussions with this operator, which will likely result in a transition of this portfolio to a third party sometime during the first quarter of 2023,” Booth said.

Another, accounting for 2.2% of Omega’s rent, recently began making only partial payments. 

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