Omega Healthcare in Acquisition Mode

C. Taylor Pickett, CEO of Omega Healthcare Investors Inc. (NYSE: OHI), participated in a video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco.

With the majority of dispositions now complete, Pickett said Omega will return to its normal acquisition-driven operating model. He noted that historically, Omega has been able to conduct $400 million to $1 billion a year in acquisitions.

Indeed, Omega announced Jan. 2 that it will acquire MedEquities Realty Trust, Inc. (NYSE: MRT) for $600 million. “This acquisition reinforces our commitment to the skilled nursing and senior housing industry, while adding new asset types to our portfolio furthering our strategic objectives,” Pickett said in a statement.

In the video interview, Pickett described the environment for skilled nursing operators as “still somewhat difficult.” He noted that operators are likely to face headwinds for the next 12 months, including 3 percent year-over-year labor cost increases. However, reimbursement rates are better than they’ve been the last couple of years, he noted.

“Twelve months from now, there’s a lot of light at the end of the tunnel for this industry with a reimbursement system that will improve its PDPM (patient-driven payment model) and demographics that are an amazing driver of cash flow at the property level,” Pickett said.

Meanwhile, Pickett said Omega is happy with its 41-state geographic footprint, as well as its investments in the United Kingdom. He noted that the UK market hasn’t been developed with big institutional capital providers and is still very fragmented—similar to the United States 30 years ago.

“We like our entrée in the UK and will look to grow that; we’ll look to remain in our 41 states and grow in the states where we already have a big presence,” he said.