Omega Moves 32 Florida Nursing Homes To PACS Group, With $26.1 Million In Added First-Year Rent
Omega says it also took a one-time expense of about $90 million as Airamid-linked operators gave way to PACS subsidiaries on October 1.
Omega Healthcare Investors moved 32 Florida skilled nursing facilities from an operator run by Airamid affiliates to PACS Group subsidiaries, according to an 8-K filed Monday. Rent on the portfolio is scheduled to rise by $26.1 million in year one, and Omega booked a one-time expense of about $90 million.
What the filing says
The 8-K itself is a short Regulation FD filing, which is a public disclosure of information to all investors at once. It attaches a press release, Exhibit 99.1, that carries the details. The transition took effect October 1.
The rent schedule in the press release has three parts:
- Rent is scheduled to rise by $26.1 million in year one.
- It rises by an additional $2.5 million in year two.
- Contractual 2% escalators apply after that.
The 32 facilities will be added to Omega's existing master lease with PACS, which is listed on the New York Stock Exchange under the symbol PACS. Omega said it incurred a one-time expense of approximately $90 million in connection with the transition. The release does not say what the expense consists of.
What management said
CEO Matthew Gourmand said the deal shows how Omega can "structure a highly accretive transaction for our shareholders," while serving what he called the needs of two long-standing operators. He said Omega had referenced its active portfolio management efforts on recent earnings calls.
Chief Investment Officer Vikas Gupta said Omega had enjoyed an excellent relationship with Airamid "for over 15 years." He credited the outgoing operator with weathering the clinical and economic challenges of the pandemic. Of PACS, he said Omega is excited to support "their entry into the state of Florida."
What it changes for holders
For Omega, the same portfolio now produces more scheduled rent under a lease with a different operator, in exchange for the roughly $90 million charge. The company's own wording, "highly accretive," means it expects the deal to add to results; the release gives no earnings figure to test that.
Omega shares closed at $45.72 on Friday, before the announcement. The next earnings report should show how the $90 million expense and the added Florida rent flow through its results.
The release's risk list includes the ability of operators to manage staffing shortages and costs, which is the context for a swap of operators.
The filing gives the rent, the escalators and the $90 million charge, but not a date for when the added rent first appears in Omega's results.
