Good morning, and welcome to the Omega Healthcare Investors Fourth Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Ms. Michele Reber. Please go ahead.

Thank you, and good morning. With me today are Omega's CEO, Taylor Pickett; CFO, Bob Stephenson; COO, Dan Booth; Chief Corporate Development Officer, Steven Insoft; and SVP Operations, Jeff Marshall. Comments made during this conference call that are not historical facts may be forward-looking statements, such as statements regarding our financial projections, dividend policy, portfolio restructurings, rent payments, financial condition or prospects of our operators, contemplated acquisitions, transitions or dispositions and our business and portfolio outlook, generally. These forward-looking statements involve risks and uncertainties which may cause actual results to differ materially. Please see our press releases and our filings with the Securities and Exchange Commission, including, without limitation, our most recent report on Form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in forward-looking statements. During the call today, we will refer to some non-GAAP financial measures, such as FFO, adjusted FFO, FAD and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles, as well as an explanation of the usefulness of the non-GAAP measures, are available under the Financial Information section of our website at www.omegahealthcare.com and in the case of FFO and adjusted FFO, in our press release issued yesterday. I will now turn the call over to Taylor.

Thanks, Michele. Good morning and thank you for joining our fourth quarter 2017 earnings conference call. Today I'll discuss five topics. Our strategic asset repositioning; second, the sustainability of our dividend; third, our 2018 guidance; fourth, the reimbursement and expense environment and fifth, our internal resources, external resources and unique business attributes for future success. Strategic asset repositioning, as healthcare delivery continues to evolve we continuously evaluate our assets, our operators and our markets to position our portfolio for success, not just in the near term, but over the next decade. Our strategy includes selling and transitioning assets that do not meet on operator, real estate or market criteria. We expect resulting portfolio to have improved coverage and provide significant growth opportunities and long term durability. As part of our strategic repositioning during the fourth quarter and year-to-date 2018, we disposed 224 million assets and we're evaluating over 300 million in potential assets to sell in 2018. The revenue reduction related to our 224 million in assets disposed is $24 million, while the trailing 12 months cash flow on these assets was only $19 million. The cash flow on these assets did not cover the underlying the rent, yet we were able achieve sale proceeds to equate to radials of 10.7%. Our strong sales results to date reflect the continued appetite for SNF assets by local market private buyers. The second topic is dividend sustainability. We're proud of our unprecedented streak of 22 straight quarterly dividend increases, wherein we increased the dividend from $0.43 per share to $0.66 per share, 53% over five and a half years. Our quarterly dividend growth was predicated on and driven by our consistent FFO and FAD growth. As a result of our strategic repositioning activities, 2018 will not be a growth year and therefore…

Thank you, Taylor, and good morning. Our reportable FFO on a diluted basis was $159 million or $0.77 per share for the quarter, as compared to $172 million or $0.84 per share for the fourth quarter of 2016. Our adjusted FFO was $164 million or $0.79 per share for the quarter and excludes the impact of approximately $3.9 million of non-cash stock based compensation expense, $900,000 in provision for uncollectible accounts, $500,000 of one-time revenue and $200,000 in impairments on direct financing leases. Operating revenue for the quarter was approximately $221 million versus $235 million for the fourth quarter of 2016. The decrease was primarily a result of placing Orianna and Daybreak on a cash basis in the third quarter and therefore recording no Orianna or Daybreak revenue in the fourth quarter. The decrease in revenue was partially offset by incremental revenue from over $375 million of new investments completed in 2017. The $221 million of revenue for the quarter includes approximately $15 million of non-cash revenue. Our G&A expense was $8.2 million for the quarter, which is slightly above of our third quarter G&A expense. For modeling purposes, we project our 2018 first and second quarter G&A run rate to be approximately $9.5 million to $10.5 million, resulting from additional legal expenses related to operator work outs, transitions and divestitures before returning to our traditional $8 million to $9 million of quarterly run rate. In addition, we expect our 2018 quarterly non-cash stock based compensation expense to be approximately $4 million, consistent with the fourth quarter of 2017. Interest expense for the quarter when excluding non-cash deffered financing cost and refinancing cost, was $48 million versus $44 million for the same period in 2016. The $4 million increase in interest expense resulted from higher debt balances associated with financings…

Thanks, Bob, and good morning, everyone. Activity in the past several months has concluded perhaps the most challenging yet positive legislative and regulatory year for SNFs in decades. The industry elevated further threats to federal Medicaid funding, as tax reform took the focus of Medicaid reform in congress. Regulatory compliance pressure on SNFs was again delayed. Favorable leadership at the Federal and Human Services Agency will likely continue and Medicare Part B therapy caps were permanently repealed, partially paid for with a small reduction in the Medicare per day annual market basket rate increase. In congress the risk to SNF fundings through Medicaid reform has lessened with the reduction in the Republican senate majority from the Alabama election. Looking ahead to 2018, the concern for SNFs is the potential that a cut to Medicaid provider tax funding could be used as an offset to any ACA modification legislation, though the opposition in 2017 from several Republican senators to Medicaid reform legislation, indicates a low risk of such a cut in the coming year. Anticipated legislation to permanently repeal outpatient therapy caps finally passed with a budget bill attached to the February 9, continuing resolution to fund the federal government. This permanent repeal effective January 1, 2018, restores approximately 811 million in annual SNF Medicare Part B funding and eliminates annual legislative process to restore a therapy cap exceptions program that frequently resulted in SNF payment cuts. The repeal legislation is partially paid for with an October 1, 2018 cut to the SNF Medicare per day market basket increase of approximately 0.3%, estimated by the congressional budget office to total 1.9 billion in reduced funding over the next 10 years or 190 million annually. Most importantly the roughly 1 million Medicare Part B beneficiaries impacted by the caps will no longer…

Thanks, Jeff, and good morning, everyone. As of December 31, 2017, Omega had an operating asset portfolio of 973 facilities with approximately 98,000 operating beds. These facilities were spread across 74 third-party operators and located within 40 states in the United Kingdom. Trailing 12-month operator EBITDARM and EBITDAR coverage for our core portfolio increased during the third quarter of 2017 to 1.72 and 1.35 times, respectively, versus 1.71 and 1.34 times, respectively, for the trailing 12 months period ended June 30, 2017. Turning to portfolio matters, on our last call we highlighted restructuring efforts related to three operators, two of which are considered amongst our top ten in terms of revenue. We are in active confidential negotiations with Orianna and remain confident that our post transition restructuring rent or rent equivalent in the event of asset sales, will be in our previously stated range of between $32 million and $38 million. We hope to reach a final agreement with Orianna in the next several weeks. We plan to press release the details at that time. Moving on to Signature Healthcare, since our last earnings call, considerable progress has been made toward finalizing a comprehensive agreement among Signature and Signature's three primary landlords, which will effectively bifurcate each of the three portfolios into three distinct legal silos and separate virtually all legal obligations. As part of those agreements, Omega has agreed to defer certain rent payment obligations and provide for a working capital loan. While we remain cautiously optimistic that a satisfactory global restructuring with all constituents will be finalized in the near future, such restructuring remains contingent upon Signature's successful resolution of its material PL/GL claims. In addition to the ongoing discussions with both Orianna and Signature, Omega entered into a settlement on forbearance agreement during the fourth quarter with…

Thanks, Dan, and thanks to everyone on the line for joining today. In conjunction with Maplewood Senior Living, we continue to work on our planned 215,000 square foot ALF memory care high rise, at Second Avenue, 93rd street, Manhattan. The project is expected to cost approximately $250 million and is scheduled to open in mid 2019. We're very pleased with the progress of the New York City project, including the land and CIP of out New York City project at the end of the fourth quarter, Omega senior housing portfolio totaled $1.48 billion of investments on our balance sheet. While anchored by our growing relationship with Maplewood Senior Living and your best in class properties as well as Healthcare Homes in Gold Care in the UK, our overall senior housing investment now comprises 133 assisted living, independent living and memory care assets in the US and UK. On a standalone basis this portfolio not only covers the fleet obligations of 1.12 times, but also represents one of the largest senior housing portfolios amongst the publicly listed healthcare REITs. Our ability to successfully continue to grow this important component of our portfolio is highlighted by our 13 Maplewood facilities in the related is predicated on coupling our tenants operating capabilities with our commitment to having in house design and construction expertise. Through the same capability, we invested 31.1 million in the second quarter in new construction and strategic reinvestment. We currently have over 85 active capital reinvestment projects at the end of Q4, 14 of these projects represent new construction with a total budget of approximately $500 million inclusive of Manhattan and are actively being funded. We have $228 million of construction in progress on our balance sheet as of December 31, 2017. The remaining projects encompass approximately $197 million of committed capital, 135 million of which has been funded through 12/31/17.

Thanks, Steven. I want to thank our board of directors, the management team and all of our dedicated employees for their efforts during these difficult times in the Skilled Nursing Facility industry. The quality of our historical underwriting has limited the number of issues that we have faced and the strength of our balance sheet has protected all of our constituent's. We will continue to be extremely proactive and predicting the best markets, operators and assets in this changing environment and we'll prudently allocate capital with a view towards sustainable and durable shareholder returns. This concludes our prepared comments. We will now open the call for questions.

[Operator Instructions] Our first question comes from Chad Vanacore with Stifel. Please go ahead.

Good morning all. So based on your 2018 FAD guidance, the expected dividend payout ratio that's approaching about 100%, what gives you confidence in the stability of the current dividend and then what gets you back to more normalized payout ratio in line with historical?

Yeah when we think about the dividend and I mentioned it earlier in our prepared comments that we look at it throughout 2018 as growing, as we put our recycle - our sale proceeds back to work, and eventually get the Orianna assets working. So, we look at our fourth quarter FFO and FAD run rate of this year fourth quarter '17. And we expect they are going in at the end of '18 and going into '19 that our quarterly run rate is going to be at or above the current fourth quarter '17 run rate. And that's redeploying the asset proceeds that we are selling and then putting Orianna to work. So, although it looks high, in the near term I think because we have assets on the sideline that we know are going to have working by the end of the year.

Taylor, to get that at or above the fourth quarter run rate, in light of your expectations, pretty aggressive asset sales, why wouldn't - at some point when you make those sales and there's that lag between recycling and capital, why wouldn't that drop below that fourth quarter run rate?

We probably likely will and then place it overtime, so that's the point that - as we think about our guidance through this year, the run rate quarter-by-quarter is going to increase as the year moves on. It's a way to restore ourselves at or above the existing run rates.

Okay, alright. And then Taylor you mentioned in your prepared remarks that you expect improve senses trend in many markets in 2019. So what signals are you looking at that point toward that trend reversal and you may have mentioned that demographic study that you did?

Yes, it is that, we've done an incredibly comprehensive study by individual age groups and clinical condition in all of our major markets. And we feel highly confident that in trying to predict what everybody's talked about, when is the demographic wave actually going to come - provisioned. And it's starting - it's very clear to us that going into '19 we will start to see the demographic wave in a meaningful way. And a little bit later in the next month or so, we'll provide some high level guidance in our Investor Presentation that shows the detail of - into that taking, but we're confident that that's the picture we are looking at.

Alright, any hints as to how aggressively that moves over time?

It's consistent, it's not - there's not a spike, so if you look from this point forward, it's in the 2% to 3% range and its annual, it's just a consistent push on the demand on the pipeline supply in this business.

Alright and then just one more from me, last quarter, roughly 45 million of your total rent was below one time's coverage, this quarter that's down to 21 million. Can you talk about what changes that you've seen in portfolio that helped to improve that metric?

Chad can you come again on that one?

Oh, I'm sorry, Dan. So in your supplement on your breakout the percentage of rent under one time's coverage, it looks like it improved this quarter, I just wondered what was driving that?

It was a couple of portfolio's that were just up - with nine or above that crossed over into the higher buckets, and then there was a couple operators that either sold or re-leased to somebody else, so we got - so they're out of there.

Alright thanks for taking the questions.

Thanks, Chad.

Our next question comes from Nick Yulico with UBS. Please go ahead.

Thanks. Just going to the guidance, I wanted to understand what's actually assumed in the guidance for some of the larger operators Signature, Daybreak, Orianna is a little bit more clear - Preferred Care. In terms of rent that's in I guess, FFO versus FAD?

Yeah, for Daybreak Nick, as Dan mentioned they maintained their payment plan. So, once they caught up on the pass to AR, which is going to happen at or around at the end of this quarter. We'll begin to book Daybreak on a - it's contractual basis which is $7 million quarter run rate. Orianna you mentioned, with that - that's likely to be towards the backend of 2018 and frankly that's conservative in terms of timing and how we think about guidance and if that changes and we get a little better result, we'll update that in our guidance. Preferred Care as Dan, mentioned, we were in the process of transitioning those 16 assets. The Preferred Care contractual the $11 million, we are not done with those negotiations as it relates to the transition of those assets. But, it's likely that that's under a contractual under period in the $6 million of - qualified for 7 range and then Signature is - it's really just a question of getting to the finished line in terms of those negotiations. So, our expectation is Signature will have no change.

Okay, and then just to be clear there on Signature, I think - I thought you said their paying 75% of their rent today, is that right?

That's correct.

Okay, so from an FFO stand point you guys are still booking the full rent and it's also assumed that full rent is in for the guidance for FFO for the year?

We are recording the full rent and part for that is the significant credit sitting behind that, the AR billed-to-date and part of our restructuring is a detailed plan. It has waterfall where we will look to recover that overtime. So, yes, the answer is yes.

Okay, but you said at some point you may - under the agreement you may be deferring rents, I guess which would be on top what is already - what they are not paying right now on rent?

No, no that's not the case. If we're able to reach our ultimate agreement with them, the deferred rent would be deferred out of our full contractual rent and as we disclosed in our supplemental contractual rent as close to $60 million. So the deferred rent is out of that assuming we get to an answer to be approximately 10%.

Okay and then your FAD guidance for the year, does that actually factor in that Signature is not paying the full market rent right now?

Yes, it factors that in and our expectation for Signature.

Okay, thanks. Just one more for me, on the asset sales for this year, I mean should we assume that the caprate is similar to what you have recently sold at close to 11% since the coverage's are I assume low on those assets?

I think that's probably a reason, to call it under 11% on yield basis Nick and I'm sure you've done the math. From what I've talked about it, we feel really good about the cap rates that we are seeing in the market. We have cash flow analysis. We sold of 19 million at total 224 million of proceeds which implies 8.5% cap rate. As you know, we don't talk about cap rates that much, we typically look at rent yields, but you have the math right. So, I would think about it as in the 10% to 11% range, so from hard perspective the redeployment of those sales proceeds results in a very little slippage in terms of run rate.

And, then - sorry, just one more question if I may. You gave a detail on - I didn't catch it on the numbers for construction budgets - it will be helpful to have this in the supplemental broken down somewhere, but what is the balance of what you feel of the fund altogether on the Maplewood, New York City project and some of the other various projects. And then I guess how do you plan to fund that it sounds like your dispositions are going to be used for acquisitions? Thanks.

Yeah, just as a - it peak's out of the supplemental if you will a lot of the information, so, if you look at page 7, the supplemental Second Avenue the remaining commitment is just over a $100 million. And you could see the clearance for the other properties that we have coming out of the ground. So just short of total including other CapEx besides new builds just shy of 300 million. And, really this reflects our normal pacing of CapEx where we spend somewhere between 25 million and 40 million a quarter. As Second Avenue accelerates, it may go up a little bit, so from our perspective that's part of our normal spend and when we think about recycling of sale asset proceeds, the deployment of this is part of that. And a lot of this as you can see, runs into 2019, so it's not obvious that this year.

Thank you.

Our next question comes from Juan Sanabria with Bank of America. Please go ahead.

Hi, just with regards to your rent coverage disclosed in your sup, where you exclude it seems like 17% of your rents. What is the coverage on that 17%?

I mean, it would be well south of 1-1.

Why is that excluded, because I mean it seems like the pressure is building on some your operators. We've talked about a number of them, but yet you're disclosing that the rent coverage below 1.2 times has decreased quarter-over-quarter. But, that other bucket is growing, I mean what is included in that bucket? Is it Orianna, Daybreak, Signature, are those in that bucket?

So, Orianna is, we weren't pretty consistent about the core versus total is right around 93% for quite a few quarters. And, if you remember last quarter, it dropped down to 87% which was the inclusion of Orianna because we went on a cash basis. And, I think if you add that Orianna, it moves the needle a little bit, our coverage would go from 135 to 133 give or taken. And then in. this quarter we went from 87% of our assets in core to 83%. So that's the 17% you're talking about, that's really three additional portfolio's that we put into, two referred portfolio that help our self as we got signed purchase agreements on them. And then the other portfolio is the Preferred Care portfolio that we mentioned, which are ultra vision probably. I mean they'll be ultimately more end up in the hands of our other operators, because they are either - there is a purchase and sales agreement signed up or we have transition agreements that are in the works that start of fall out of our core. And that's been consistent with how we looked at it, Nick for a long, long time, Juan I'm sorry.

It's okay. It looks like on CommuniCare you have lowered your exposure there, either through asset sales or transition. What's going with that tenant, is there any issues that we should be aware and can you give us a of sense of the coverage?

Yeah, sure, we actually did a pretty sizable deal with CommuniCare. We took on 15 facilities Indiana. But as part of that arrangement we also did a deal with them where we allowed them to sell it or buybacks certain Ohio assets, which the overall portfolio have been the ones set have been struggling. And so, we have reduced our exposure to CommuniCare, those were the under performers of the facility. Overall CommuniCare is been doing quite well there, slightly below the mean - but actually in the last quarter they recorded a bit above the mean. And so, they are performing quite well, and to the extent we got few more Ohio assets that we plan on disposing up their coverage will get better.

And then on, the asset sales the 300 million, what's the rent coverage on that pool of assets that corresponds to that 10% to 11% cap rate that you just talked about?

I can tell you, it's significantly below 1-1.

Okay. And, what's the coverage on a same store basis for the 83% of rents shown in the supplemental to my initial question. How is that trended on an apples-to-apples basis?

I'd have to calculate that, I don't have that on top of my head.

Okay, thank you.

Our next question comes from Michael Knott with Green Street Advisors. Please go ahead.

Hi guys. On Signature can you sort of help us understand how if you did take a deferred rental obligation? How that would fit with booking the full rent and adjusted FFO, I just didn't quite understand that. And then sort of related to that, sounds like going to the cash accounting and that situation is a non-zero probability but, the guidance seems to assume a 100% probability of statistical work. Can you help us understand us that a little bit more?

On the guidance part it's based on facts and circumstances. Right now we fully believe and are confident that that resolution will be reached and basically what I was saying that if for some reason they keep sliding, and we put it on a cash - and it would be required to put it on a cash basis. Again, that is only an account, it has no impact on the negotiation to the final account. It's just we would then stop recording revenue until the cash to AR is gone up to sort of a certain degree, like that has no - so, given the fact of circumstance today, there is no need to do that, so it is in our guidance. And from the second part of that - our guidance standpoint, we have factored in what we anticipate that final outcome would look like, that's part of our guidance.

Okay, so if you did take a deferred rental obligation that would reduce your adjusted FFO contribution from Signature for '18 versus '17 and that's in your guidance?

That's correct. They are kind of bad as well.

Okay, that's helpful thanks. And then on the assets sales, when you say evaluating the plus 300 million just, how far or long are you on deciding on the amount and what is the timing, what should we expect, to expect most of that in the first half of the year or?

It's definitely going to be earlier in the year. The evaluation includes evaluating whether there are potential sellers out there and some of these potential sales have moved far enough longer. We have purchase agreements, but as you know Michael signing a purchase agreement is different than closing. So, I would expect from a timing perspective that you see a significant amount of this within the next three, four months.

Okay and then Taylor can you give us little more color on your M&A comments in your prepared remarks, is that more at the operator level or real estate level or just any more color would be helpful on that?

The real estate level, I think it's just hard what we've seen a number of times, when we go through these cycles, there's a fair amount of uncertainty, the assets that are out in the market place for us generally aren't that attractive, but I think as this cycle begins to end, what we typically see is an uptick in real estate sale activity and I would expect that to occur again backend of '18 into'19.

And when you say that, you mean more sort of the fragmented part of the market, smaller owners and those type of owners?

Yeah, what we would typically focus on in terms of consolidating, yes.

Okay and then last one for me in a hotbox. Can you just comment on Genesis and whether the performance there is still as you said before pretty good and if it is, can you just may be comment on why the performance there seems to be different than what other owners continue to experience?

Yeah, the Genesis - our portfolio performances continue to do well, it has been and continued to be about the mean. I can't really comment on why it does better than other portfolio's, other than obviously there's different assets in different states. A lot of our assets are legacy fund facilities. We continue to support the management team, we think they are doing a good job, they have done a good job and we will remain supported. But, on our portfolio once again it's been consistent and it continues to perform.

Thank you.

Our next question comes from Tayo Okusanya with Jeffries. Please go ahead.

Hi, yes good morning everyone. Thanks a lot for the commentary and intro, I thought that was very helpful. A couple of quick ones for me, in regards to the acquisitions and sales planned for the year, could you just talk a little bit about just kind of timing and I think for the sales you've kind of given us this 10 to 11 range on pricing. But curious what kind of pricing you are expecting on acquisitions as well?

In terms of timing, from our perspective given what we've seen in our pipeline, it's pretty clear that our sales are going to be in front of the redeployment of cash into acquisitions. In the acquisition market, the SNF assets are still in the 9's call it 9.5% type yields as the norm. I wouldn't be surprised, I haven't seen that may be creep in a little bit more. And, on the outside we don't look at a lot of the products, but I will say on the UK front, the yields are 8.5%.

Got you and the disposition again - so we're obvious you mean that's like a one two event for the whole thing, or it's like the first half event?

I wouldn't call it a first half event from a modeling perspective, but as we indicated we have - and Dan mentioned earlier, we have a hand full of purchase agreements that depending on how things go could be first quarter events.

Okay, that's helpful. Then going to Preferred Care, are you actually booking revenue for today in BK?

As of today for Preferred Care, yeah they are on a cash basis, so whatever they pay we book them.

Okay, they are on cash basis. And then this idea of moving from 11 million in rents down to about 6 to 7 with the transition, when do you expect that to happen, is that like most models in right now, is that like a back half event where you kind of have the drop in revenues or when are you kind of expecting it?

Our view is it's likely to be - we're hopeful it's a first quarter event. They are moving through, as Dan mentioned, that the bankruptcy's we have to deal with that element of it. But our hope is we move on to the first quarter because we are moving on to existing tenants that have really strong credit profiles, so we feel very good about. We also feel good about the cut, although we knew that was that portfolio would get remarked eventually. This was otherwise expired in 2023, now it is accelerated because of the events that occurred, but the credit's going to be incredibly well enhanced.

Got you and then Signature, again, I think I kind of understand what's going on there, but I guess I'm curious if they are only paying 75% of their rent today, why is the expectation that the rent deferral will only be 10%?

They are going through a process Tayo, so they've engaged professionals or expenses. They are working through a variety of other things, but it's principally going through this process and professional costs and pay downs of other obligations as running through the data of Signature. Dan do you have any?

Well, I mean because of the resolution, once it's hopefully deemed is less of the discount than this 75%, is miserably less. So, hence the difference.

Okay and then last one for me again, I appreciate your patience. We kind of talked a lot about the tenant where the kind of non problems that you've disclosed with the past year quarters. Could you just talk a little bit more about some of the other tenants we have not discussed again names like CommuniCare, Maplewood, HHC, Guardian, Diversicare. What kinds of status have your other top tenants, what's happening with them?

All the names you just mentioned including all the other top ten are - have been pretty steady over the course of last several quarters. Everybody is dealing with labor pressures and everybody is dealing with issues in different given markets, but for the most part, the coverage is on top ten excluding Signature and Orianna, they've really held up. We don't have any out layers they entered - in fact some instances we've got some portfolios that have actually crept up a little bit.

Got it, helpful. Thank you.

Our next question comes from Daniel Bernstein with Capital One Securities. Please go ahead.

Hi good morning, I just want to go back to Preferred Care, I just want to understand to see a 11 million contractual rent that's in 4Q, and then it's going to drop to that 5 to 7 million range in 1Q. Is that how we're going to model that, just to understand?

Yeah, from a modeling stand point that's good.

Okay and then in terms of - how are you thinking about underwriting the credits. It seems like the industry is moving from more national operators to the smaller regional operators kind of almost like a re-fragmentation of the industry a little bit. Are you under writing the credits of those operators differently, are there new operators that may take over some of these assets or is it just all existing operators that you are going to transition to?

For the most - it's existing operators and it's the same model that we talked about which is the regional players will continue to get bigger, firms that have 20, 30, 40 facilities that have the capacity to go to 50, 60, 70. That continues to be the strategy. So, I don't think it's - I think it's really just the regional consolidation which has been a big part of our strategy for a long time, and that's where these properties will go.

Okay, I don't know if you can do this, but are you able to bifurcate some of the lease coverage's work between Senior's housing skilled nursing and may be the rental - lease coverage versus the rent covered - versus the interest coverage on your mortgage and it's a little hard to understand, which of those buckets are doing well or worse and I don't know if you can detail that a little bit more or not, but that's the question.

We don't have that by bucket today, but I can tell you just generally speaking our SNF three's an ALF coverage's that's been consistent forever. But we could - we thought one point of it, if it got - our portfolio got material enough then we would start to segregate how we look at the world, but today once again, the out portion is filling around 10% or 12% of which we could break that out, I suppose in the future.

Okay, now just trying to figure out the trends of the interest coverage versus the SNF coverage versus the senior's coverage and it may make a difference in - as how we view your safety of SNF versus the off leases, which obviously near lower coverage? That's all I have, appreciate your time thanks guys.

Our next question comes from Eric Fleming with Sun Trust. Please go ahead.

Hey a quick question, the insurance proceeds, is that in the guidance, is that in that timing, will that be second half?

That's not in the guidance. People get, that's just the tax that comes in and we are used to re-built the facility.

Yeah, we thought about it Eric, the cash will come in likely as a re-build so, we'll be able to redeploy it, but it's going to take a period of time.

Okay, great, thanks.

Thank you.

Our next question comes from Todd Stender with Wells Fargo. Please go ahead.

Hi thanks, may be just wanted to get a sense of current under rating on an EBITDA rent coverage standpoint. And maybe you can point to what the Preferred Care leases would go to once they are transitioned and then what you're current under writing is on new acquisitions?

Well our current under writing on new acquisitions is held up, I mean it's the 1-3 to 1-4 range and it's really and quite frankly in the last year or so it's been closer to the 1-4 range. We are not done on the Preferred Care re-leasing, so I don't really want to telegraph what we are ultimately shooting for. It's going to be below that. With the expectation that the cash flow will be somewhere inspired by putting these facilities into the master leases of the existing operators that have adequate rent coverage cushions, so they can absorb, a period time where they take on these underperforming facilities.

Okay, and how about just going back to Genesis, are there any Genesis facilities included in the 300 million of asset sale expectations?

No.

And just as a reminder, what's the dollar amount in loans that remain outstanding to Genesis?

48 million.

And then just lastly, I guess on the balance sheet, you guys were talking about the net debt to EBITDA, I didn't quite catch the pro forma expectations, it sounds like it was getting closer to five which should be a pretty good debt?

Yes, but that's also post the completion of the Orianna transaction.

Okay, so a year end number that is timing for the pro forma that's couple of quarters out you would say?

Absolutely, again it's close to that and you'll see that in the first notice on the website.

Okay, great, thank you.

The next question is a follow-up from Tayo Okusanya with Jeffries. Please go ahead.

Yeah, just a quick one. Dan, you gave some really good color just about the overall regulatory outlook - some of the proposed cuts coming up, some of the changes that apparently targeted capitals are positive. When you talk to your tenants and they kind of juggle all this stuff, including potential RCS changes. What in general turn, you will kind of follow the net impact of all this stuff will be slightly positive, slightly negative, neutral. Now that depends on the tenants and what their overall business mix is today? Just trying to get a sense of over the next year or two, what the regulatory changes could mean for the possibility of the tenant?

Yeah, it absolutely dependent on the tenant, but the overall general segment from everything everyone knows at this point is that it's neutral to slightly positive.

Okay, that's helpful. And then one more form me, the insurance proceeds, again they are not in the numbers you said guidance, but when you do get this proceeds, do you book it as revenue or what is it booked as?

It is booked as income because we had to take the impairment, but that's not in numbers.

That's a bit offside to your AFFO if you do get the proceeds?

I would exclude that from the AFFO, just as I excluded the impairment related to it.

Got you, okay, understood. Thank you.

The next question is a follow-up from Juan Sanabria with Bank of America. Please go ahead.

Hi, just a follow-up on Todd's question I believe on the Genesis loan? So, what's assumed there in terms of accruing for interest income on that $48 million loan, and that is like a temporary forgiveness to them, and if you can give us a sense of kind of what - how that re-structuring for Genesis is playing out when you are expecting interest continued to be repaid again?

So, we continue to accrue the interest upon that loan, that's our one significant concession that will work out, it's really driven by another two big landlords. And just to give you a little bit of color on that loan, because that loan is fully collateralized, very sophistically collateralized including accrued interests. So, we feel very comfortable about that loan in any scenario. In terms of where Genesis is headed, we leave that to them, but the pieces we know we forget about the products.

So, when do they start paying cash again on the loan, what's your expectation? What's in the guidance I guess?

My understanding was that they haven't started making any payments on that one. There was a bifurcation between the cash component and the optic component. So the forbearance is in February, so we would expect that to come back in March unless there's some. There's been no other discussion related to it, but it would be - the expectation would be March unless we have some change between now and then.

Okay, and then just on your demographic comment, what's the average entry age of skilled nursing customer?

Yes, it's very interesting Juan, the utilization rates for skilled - if you look at each age from 65 through 75, the curve is very gradual, and it moves up obviously. And then it's the 75 to 76 year old age group and up each year, it starts to increase very significantly as you'd expect all the way into the 80s and 90s and it increases each year of age. So and we call it 76 years old as an interesting point where you start to accelerate utilization and you think about birth rates beginning to increase in 1940. So, a couple of years ago, we started to see those 1940 year olds first hit 76, now 77, and 78 years old and they are progressing up and we have a lot behind them from a mentality perspective from 1941 and then 45, obviously it explodes. But, from 41 you had birth rate going up and that's part of the driver in this demographic and part of the detailed analysis that Steven Insoft and Mathew Gourmand will work on to provide high level information to our investors.

The average age of skilled nursing patient is in the mid 70's , so more or less ten years younger than senior's housing? Is that what you guys are saying?

If you look at and we'll provide the utilization curve that we've developed as part of our information at least on a national basis we've provided. The mid 70s utilization rates that's where you really start to see a pick up in a meaningful way, so I haven't taken this in average but because it may hit even more heavily as you get out on the curve, but I think it is fair to think about it as mid 70s and beyond driving a bulk of the admissions into our facilities.

Okay, thank you.

This will conclude our Question-and-answer session. I would now like to turn the conference over to Taylor Pickett for any closing remarks.

Thank you very much for joining our call today. We will be available for any follow-ups that anyone may have. Have a great day.