Omega CEO Says 'We're Not A Bank' After Funding An $846 Million UK Mortgage Loan
Matthew Gourmand ruled out loans for their own sake, saying the UK loan is a route to owning 55 care homes.
Omega Healthcare Investors, a real estate investment trust that owns and finances nursing homes and senior housing, will steer away from lending for lending's sake, CEO Matthew Gourmand said on the company's third-quarter earnings call. The comment followed an $846 million mortgage loan on 55 UK care homes that Omega funded after the quarter ended.
"Running On A Treadmill"
Asked by a Bank of America analyst how big the loan book will get, Gourmand said loans for the purpose of loans are "like running on a treadmill" — a lot of energy, no progress. "We're not a bank and we don't want to trade at the kind of multiples that warrant," he said.
He described the UK structure as "effectively a conduit to access the real estate" and said he does not consider it a loan per se. Any loan Omega makes, he said, "better" come with something attached beyond "just putting money out the door."
Omega's profile fits that stance: its customers are operators that pay rent under long-term leases or repay loans, and the company says it prefers owning property or sharing in operating upside.
How the UK loan came together
Chief Investment Officer Vikas Gupta said the loan, to existing tenant Foundation Partners, carries an initial rate of 8.72% and covers 55 care homes in southeast England and the Midlands, seven of them leaseholds. It came out of a competitive, marketed sale process, and the loan structure helped Omega show the seller it could close fast.
Omega plans to convert the loan to ownership once regulatory approvals arrive, which Gupta expects in about one year. He said Foundation should find upside through higher rates and acuity, and that when the rent reset takes effect Omega can earn a return close to what it would have if it had started at a 10% return.
Gupta said the portfolio is higher quality than Omega's average UK holdings, with a high private-pay mix. He added that the entry cap rate is a bit more aggressive than the company has done historically. Omega completed $946 million of new investments after quarter end, including this loan.
Guidance leans on loan repayments
CFO Neal Ballew said Omega funded the loan with balance sheet cash, capital recycled from loan repayments and revolver borrowings. The company raised its full-year adjusted funds from operations guidance to $3.28 to $3.30 per share from $3.22 to $3.26. That outlook assumes $306 million of loans outstanding at September 30 are repaid in the fourth quarter, including $150 million of Genesis loans.
Ballew also gave a yield on the $48 million Omega spent to convert 30 UK care homes to operating structures: $12.5 million of cash flow after rent, a 26% yield. Gourmand called that conservative.
For the April bond maturity of $700 million, Ballew said a mix of a term loan and at-the-market stock sale proceeds is one scenario. Omega shares were at $48.62, up about 2%, in Wednesday trading.
Gupta's one-year timeline for converting the Foundation loan to ownership is the next marker for whether the loan becomes the real estate Gourmand says Omega wants.
Sources
- Omega Healthcare Investors (OHI) Surpasses Q3 FFO and Revenue Estimates — Yahoo Finance
- Omega Healthcare Investors: Q3 Earnings Snapshot | wusa9.com — Associated Press
- Omega Healthcare Invts Q3 2026 Earnings Call Transcript — benzinga.com
- Omega Healthcare's Q3 earnings boosted by funds available for distribution, reduced leverage (OHI:NYSE) | Seeking Alpha — seekingalpha.com
- Omega Reports Third Quarter 2026 Results and Recent Developments — businesswire.com
