Omega Healthcare Investors (OHI) Q3 2023 Earnings Call Transcript

Omega Healthcare Investors (OHI 0.61%)
Q3 2023 Earnings Call
Nov 03, 2023, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Omega Healthcare Investors third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After today's presentation, there will be a brief question-and-answer session. [Operator instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Michele Reber. You may begin.

Michele Reber -- Senior Director, Asset Management

Thank you and good morning. With me today are Omega's CEO, Taylor Pickett; COO, Dan Booth; CFO, Bob Stephenson; and Megan Krull, senior vice president of operations. 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, dispositions, or transitions, 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 Nareit 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 Nareit FFO and adjusted FFO in our recently issued press release. In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been independently verified by Omega.

I will now turn the call over to Taylor.

Taylor Pickett -- Chief Executive Officer

Thanks, Michele. Good morning and thank you for joining our third quarter 2023 earnings conference call. Today, I will discuss our third quarter financial results and certain key operating trends. The third quarter FAD, funds available for distribution, of $0.68 per share was better than expected, modestly exceeding our $0.67 per share dividend.

The FAD dividend payout ratio is 99%. The decrease in FAD from the second quarter is due to the reduced rent from cash basis operators, with LaVie, as expected, paying $9 million less in cash rent in the third quarter compared to the second quarter. The November 1st LaVie asset sales have significantly reduced our LaVie exposure. The remaining LaVie portfolio is expected to cover above 1.0 times.

And therefore, LaVie should no longer be in the below 1.0 times EBITDAR coverage bucket going forward. We continue to have a handful of cash basis operators, including Maplewood, that will impact our go-forward AFFO and FAD, making fourth quarter 2023 and first quarter 2024 FAD difficult to predict. However, longer term, we believe all of these assets, but in particular Maplewood, are well positioned to generate reliable and growing cash flows and related rent. Turning to the under 1.0 times EBITDAR coverage operators, which represent 27.5% of total rent.

We can break the 27.5% into a handful of buckets. Operators representing 6.2% of the 27.5% are sitting on extremely strong balance sheets, and therefore, payment of rent should not be an issue. Operators representing 6.2% have second quarter EBITDAR coverage above 1.0 times, and operators representing 1.3% are benefiting from July state rate increases that have resulted in above 1.0 times coverage on a go-forward basis. 8.4% represents LaVie, which I have already discussed.

1.3% represents one operator that has already transitioned to a performing credit. That leaves operators representing 4.1%, of which operators representing 1.2% are in active restructurings or were recently transitioned, which leaves a balance of 2.9% representing eight small operating relationships. I will now turn the call over to Bob.

Bob Stephenson -- Chief Financial Officer

Thanks, Taylor, and good morning. Turning to our financials for the third quarter. Revenue for the third quarter was $242 million before adjusting for certain nonrecurring items, compared to $239 million for the third quarter of 2022. The year-over-year increase is primarily the result of timing related to operator restructurings, revenue from new investments completed in 2022 and '23, and short-term investment income, partially offset by asset sales completed during that same time period.

Our Nareit FFO for the third quarter was $161 million, or $0.63 per share, as compared to $159 million, or $0.65 per share for the third quarter of 2022. Our adjusted FFO was $182 million, or $0.71 per share for the quarter, and our FAD was $174 million, or $0.68 per share, and both exclude several items, consistent with historical practices and outlined in our Nareit FFO, adjusted FFO, and FAD reconciliations to net income found in our earnings release, as well as our third quarter financial supplemental posted to our website. Our $0.68 of FAD was $0.02 less than our second quarter FAD of $0.70. As Taylor mentioned, the $0.02 decrease compared to the second quarter was primarily the result of LaVie, cash-based operators, and the impact of additional weighted average shares, partially offset by the incremental short-term investment income.

Our fourth quarter FAD will be impacted by a number of items, including the timing of payments received from cash basis operators and the availability of security deposits, the full quarterly impact of rent and interest on new investments, the third quarter repayment of the $105 million seller's note and other asset sales, restructurings or releasing of a few small cash-based portfolios, short-term or overnight interest income earned on balance sheet cash, interest expense related to the term loan offset by bond and HUD repayments, and the weighted average shares outstanding impacted by potential equity issuances. Turning to the balance sheet. This is another quarter where we continue to strengthen our liquidity, capital stack, maturity ladder, and help protect our overall cost of debt. We started the quarter with approximately $350 million of cash on the balance sheet.

During the quarter, in addition to paying our $0.67 dividend and making regular bond interest payments, we paid off a $350 million bond that matured in August; we entered into a $428.5 million term loan that has a two-year maturity with two one-year extensions at our option, effectively a four-year term loan; we swapped the term loan rate from floating to fixed at just under 5.6%; and lastly, we issued 4 million shares or $126 million of equity to continue to delever. In total, we ended the quarter with over $550 million of cash on the balance sheet. Ninety-nine percent of our $5.3 billion in debt was at fixed rates and our net funded debt to annualized adjusted normalized EBITDA was 5.01 times and our fixed charge coverage ratio was 4.0 times. Looking forward, based on the current capital markets, our pipeline, and an April 1, 2024 $400 million bond maturity, we expect to continue to be opportunistic in the equity market while targeting leverage below five times.

In summary, consistent with the commentary provided last quarter, we still expect our fourth quarter FAD per share to approximate our $0.67 dividend. However, as Taylor mentioned, it's hard to predict given the number of items I've laid out that may impact FAD. I will now turn the call over to Dan.

Dan Booth -- Chief Operating Officer

Thanks, Bob, and good morning, everyone. As of September 30, 2023, Omega had an operating asset portfolio of 883 facilities with approximately 86,000 operating beds. These facilities were spread across 65 third-party operators and located within 42 states and the United Kingdom. Trailing 12-month operator EBITDAR coverage for our core portfolio as of June 30, 2023 increased to 1.15 times, versus 1.1 times for the trailing 12-month period ended March 31, 2023.

During the second quarter of 2023, our operators cumulatively recorded approximately $13.2 million in federal stimulus funds, as compared to approximately $5.8 million recorded during the first quarter. Trailing 12-month operator EBITDAR coverage would have increased during the second quarter of 2023 to 1.07 times, as compared to 1.02 times for the first quarter, when excluding the benefit of any federal stimulus funds. EBITDAR coverage for the stand-alone quarter ended June 30, 2023 for our core portfolio was 1.21 times including federal stimulus and 1.15 times excluding the $13.2 million of federal stimulus funds. This compares favorably to the stand-alone first quarter of 1.18 times and 1.15 times with and without the $5.8 million in federal stimulus funds, respectively.

Occupancy for our overall core portfolio has continued to recover from a low of 74.6% in January of 2022 to 80.1% as of mid-October 2023, based upon preliminary reporting from our operators. Turning to portfolio matters. LaVie. As previously discussed, Omega and LaVie have continued our process of restructuring their portfolio by transitioning certain underperforming facilities, mostly located in the state of Florida.

During the course of the restructure, Omega has transitioned 48 facilities, 46 through outright asset sales and two through retenanting, including 29 facilities that were sold on November 1, 2023 for gross proceeds of $305 million. We are now down to six remaining transition facilities, including two in Florida and four in Louisiana, which we are hopeful to transition in the near term. Post these recent sales and in anticipation of closing our six remaining transition facilities, Omega's portfolio with LaVie will include a total of 31 facilities, which include 13 facilities in North Carolina, two in Virginia, nine in Pennsylvania, six in Mississippi, and one in Florida. During the third quarter and for the month of October of 2023, LaVie paid partial rent of approximately $2.5 million per month.

Maplewood. In the third quarter and for the month of October of 2023, Maplewood continued to short-pay its contractual rent by $1 million per month. We currently are working with Maplewood and the estate of Greg Smith to address these shortfalls. In anticipation of January 2024 rate increases and improved occupancy at the Second Avenue facility in Manhattan, Maplewood believes there is a pathway forward to meet its full contractual rental obligations.

However, the timing at this point is unknown. To date, including October, we have applied $4 million of the $4.8 million security deposit to cover the rent shortfalls. Guardian. On Omega's first quarter 2022 earnings call, Omega announced that we had entered into a restructuring agreement with Guardian Healthcare after agreeing to sell 12 facilities, eight in Pennsylvania and four in Ohio, and successfully releasing eight facilities, all located in Pennsylvania.

In May of 2022, Guardian resumed making full contractual rent and interest payments on its remaining portfolio of 16 facilities. Subsequently, in May of 2023, Omega sold 10 additional Guardian facilities, leaving only six remaining facilities, one in West Virginia and five in Pennsylvania. Recently, in the third quarter of 2023, Guardian informed Omega that they intend to exit the nursing home industry entirely and needed to transition their remaining facilities with Omega. At that time, Guardian ceased making its contractual rent payment of approximately $1.5 million per month.

Since that time, Omega has been using Guardian's $7.3 million security deposit to cover rent. The security deposit will be substantially depleted after applying full contractual rent to December of this year. Since becoming aware of this situation, Omega has sought to retenant the remaining six facilities with the goal of concluding the transitions by year-end. At this point, Omega is in discussions with a potential new tenant with the goal of a year-end close, subject to the normal due diligence, satisfactory documentation, and regulatory approvals.

In addition to the aforementioned restructings and transitions, Omega is working with several other relatively small operators on various restructurings. Turning to new investments. On August 29, 2023, Omega closed on a sale-leaseback transaction for one facility in Virginia for $16 million. The facility was added to an existing operator's master lease with an initial cash yield of 10%, with 2% annual escalators.

On September 8, 2023, Omega closed on a $40 million sale-leaseback transaction for 14 care homes in the U.K. Concurrently with the acquisition, Omega entered into a master lease for the care homes with a new operator with an initial cash yield of 10.2%, with 2.5% annual escalators. Subsequent to the third quarter, Omega closed on two additional transactions. Specifically, on October 2, 2023, Omega provided $38 million in mortgage loans to a new operator to purchase two assisted living facilities in Pennsylvania.

The loan bears a blended interest rate of 9.3% and have terms that range from three to five years. Additionally, on October 2nd of 2023, Omega closed on a purchase lease transaction for one facility in Maryland for $22.5 million. The facility was added to an existing operator's master lease with an initial yield of 10%, with 2.5% annual escalators. During the third quarter, Omega closed on a total of $106 million in new investments, including $24 million in capital expenditures.

As of September 30, 2023, Omega has closed on $418 million of new investments, including $53 million in capital expenditures. Turning to dispositions. During the third quarter of 2023, Omega received $99 million in proceeds related to facility sales. As of September 30, 2023, Omega has divested 27 facilities for a total of $161 million in gross proceeds.

And as previously mentioned, on November 1, 2023, Omega sold 29 LaVie facilities for total gross proceeds of $305 million. I will now turn the call over to Megan.

Megan Krull -- Senior Vice President, Operations

Thanks, Dan, and good morning, everyone. From an occupancy perspective, the slow positive trends have continued with the number of core facilities now recovered at 37%, up slightly from the 35% reported in the first quarter. Additionally, 26% of core facilities that have not yet fully recovered are at or above 84% occupancy. While the staffing shortage situation continues to ease slowly, there's still large variation by market, and occupancy is still believed to be impacted.

As noted last quarter, in June, AHCA released the results of a survey of 425 nursing home providers, results of which showed that 52% are still limiting new admissions due to staffing shortages. Agency expense on a per-patient-day basis for our core portfolio for second quarter 2023 dropped to four times where it was in 2019, in comparison to the five times we reported last quarter. Despite the continued staffing limitations in the industry, as expected, CMS moved forward with releasing a proposed staffing mandate on September 6th. And while it was not as onerous as it was believed it might be, it is certainly not palatable given the current state of play.

Included in the proposal is a requirement for an RN to be on-site 24/7, along with required RN hours per resident day of 0.55 and required nursing eight hours per resident day of 2.45. And while the 24/7 RN requirement is a two-year delayed implementation for urban facilities, three years for rural, and the required hours per resident day for RNs and nursing aides is a delayed implementation of three years for urban facilities and five year for rural, with the industry still in flux post-pandemic, predicting out where the state of staffing will be at that time is difficult at best. The comment period for this proposal is open through November 6th, and AHCA has been bringing to light some of the difficulties of the proposed mandate, most importantly, the fact that it is currently unfunded. While it is too soon to tell what the ultimate outcome of this proposal will be, we hope that if a final mandate is indeed imposed, that CMS will hear the voices of the industry and implement a fair, balanced mandate that is realistically achievable by whatever delayed time frame is ultimately set.

I will now open the call up for questions.

Questions & Answers:

Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator instructions] Our first question comes from the line of Jonathan Hughes with Raymond James. Please proceed with your question.

Jonathan Hughes -- Raymond James -- Analyst

Hi. Good morning. Thanks for the time. Could you share some more details or background on what happened at Guardian and their decision to exit the skilled nursing business? I recall they had, I think, some issues last year and they were restructured.

Seems like maybe operations got better and then worse. Is it maybe a real estate issue there with that portfolio rather than an operator issue? Just any color. That'd be great.

Dan Booth -- Chief Operating Officer

Yeah. The -- we've gone through a couple of restructures with Guardian over the last couple of years. The -- their decision to exit the industry in its entirety was -- came as quite a surprise. I think it's a myriad of issues, but I think that the management there is aging and they decided to exit the business, quite frankly.

They've got a lot more facilities than just ours. But yeah, they've been struggling as of late. They were -- they had deep liquidity issues, and they've decided to exit. And, you know, we're looking to replace them as operators.

Jonathan Hughes -- Raymond James -- Analyst

OK. And then, Taylor, in your prepared remarks, you mentioned like 2.9%, almost 3% of operators are in the sub-1 times EBITDAR coverage bucket, and I don't think those have been restructured. Not individually are that impactful, but together, they're almost a top 10 tenant. What's the expectation for each of those? I understand they might have strong balance sheets or other businesses are still paying with rent, but some are actually negative in EBITDAR coverage.

I guess, should we take a more conservative approach there in terms of of rent looking forward?

Taylor Pickett -- Chief Executive Officer

I feel pretty comfortable with that bucket, Jonathan. It's -- every one of those eight credits has a slightly different story. But in terms of looking at it as a whole, any type of discount will be minimal, so we're not -- we're not particularly worried. And if you look historically, that's the type of percentage we've had in the under one bucket for many, many years.

Typically, those things work themselves out over long periods of time. I expect this to be exactly the same.

Jonathan Hughes -- Raymond James -- Analyst

OK. And then one more from me if I can sneak one in. What does the investment pipeline look like today in terms of size and yields? And I realize deals take time, but when do you think we could see more robust fee simple, so owned versus loans acquisition activity?

Dan Booth -- Chief Operating Officer

You know, we could go back years, and we could state that the pipeline is choppy. I would say that it's borderline robust at this point, but it's still choppy. You know, we're still seeing a lot of deals in the U.K. We're seeing a fair amount of deals in the U.S.

And again, size is choppy. So, I can't predict what we're going to see in '24 at this point, but I think it would be similar to what we've seen so far in '23, you know, which we've done just under, I guess, half a billion in new investments in the year to date.

Jonathan Hughes -- Raymond James -- Analyst

OK. All right. I look forward to hearing more in a couple of weeks. Thanks.

Have a great weekend.

Operator

Our next question comes from the line of Vikram Malhotra with Mizuho. Please proceed with your question.

Georgi Dinkov -- Mizuho Securities -- Analyst

Hi. This is Georgi on for Vikram. Just on LaVie and Maplewood, from a cash flow perspective, how should we think about the range of outcomes in 2024?

Taylor Pickett -- Chief Executive Officer

So, I think for LaVie, it's worth just taking a little half step back at that whole restructure. So, to date, the 46 assets that have been sold have generated 515 million of proceeds. The six assets that still need to be transitioned, have a little bit of wood left to chop for Dan, are likely to be sold, and we're looking at a price point north of 40 million. So, call it 555 million, 560 million of sales proceeds from LaVie.

The two assets that were released were released for $2 million. And then we have the balance that Dan mentioned are extremely strong states, North Carolina, Virginia, and Mississippi, to a lesser extent, Pennsylvania. That will generate, on their own, an enormous amount of cash flow supporting a lot of rent. But as we said, we're still chopping the wood with LaVie.

So, where that ultimately falls is a positive. Timing, not predictable over the next couple of quarters. Then Maplewood is a little -- is more predictable. We'll have rate increases -- normal rate increases in January.

That covers a big part of the gap. But you could continue to have expense pressures in this industry. And we continue to look at the fill-up of Second Avenue, which is hugely important on an incremental basis, and that's really the driver. But as Dan mentioned, we can map that out principally driven off of the occupancy fill-up in Second Avenue.

And at some point in '24, Maplewood is going to have sufficient cash flow to pay the contractual rent, but that timing's a little bit questionable as well. Longer term, we're really comfortable with both sets of assets.

Georgi Dinkov -- Mizuho Securities -- Analyst

OK. Thank you. That's helpful. And just a second question, can you provide like more color on what have you seen on the labor side and how states are preparing for the minimum staffing? And if you can highlight any states that have the potential to increase Medicaid rates or like, you know, address minimum staffing with funding, that would be very helpful.

Megan Krull -- Senior Vice President, Operations

Yeah. I mean, look, I don't know that any states are really addressing the minimum staffing at this point because it's a little too soon to tell what's going to happen there. Comment period is up next week. And so, we're just waiting to see what ends up coming out of it.

As you know, there's a delayed implementation for most of it, but certainly, the rural areas are going to be hit a little bit harder than the urban areas once it does kick in. In terms of rate setting, again, none of these rates are impacted by the staffing mandate at this point. But we do watch, especially our top 10 states, really carefully and, you know, have seen positive things over the last several months kicking in in July and October. We talked a little bit about Florida and Texas.

Last quarter, we did hear from one of our operators that the California 10% FMAP increase is going to continue until they have a rebasing of that rate, which typically happens in January, but might be a little bit delayed. And North Carolina's FMAP got put into their rate as well. So, feeling decent on the reimbursement perspective, but still too soon to tell what's happening with the staffing mandate.

Georgi Dinkov -- Mizuho Securities -- Analyst

Great. Thank you for taking my questions.

Operator

Our next question comes from the line of Michael Griffin with Citi. Please proceed with your question.

Avery Tiras -- Citi -- Analyst

Good morning. This is Avery on for Michael Griffin. Question on the LaVie sales. I'm wondering if you can give us a sense of the per-bed valuation on those sales and how many more of the LaVie assets are targeted for sale, if any?

Dan Booth -- Chief Operating Officer

So, as I mentioned, we've got six more assets targeted for sale, either sale or release, and the price per bed over the course of the 48 that we talked about is in a range of between 90 and 100 per bed.

Avery Tiras -- Citi -- Analyst

Great. Thank you. And just to follow up, how are you guys thinking about future equity issuances to fund investment activity versus continuing to tap the debt market? I know you want to keep leverage below that five times, so just how you're thinking about funding needs for investment opportunities.

Bob Stephenson -- Chief Financial Officer

We sit down and we take an 18-month approach of looking at the capital markets and our needs. So, as I said, we have over $2 billion in current liquidity with the combination of the 600 million of cash on our balance sheet, as well as the untapped credit facility. We have access to the ATM. And again, we don't look at it day by day, but we have a longer-term approach looking at that.

We know we have two debt maturities coming up, one in April of '24 and early in '25. So, we will be opportunistic if it calls for that.

Avery Tiras -- Citi -- Analyst

Great. That's helpful. That's all for me. Thank you.

Operator

Our next question comes from the line of Connor Siversky with Wells Fargo. Please proceed with your question.

Connor Siversky -- Wells Fargo Securities -- Analyst

Good morning out there. Thanks for having me on the call. You know, broadly speaking on acquisitions, external activity, so we've seen a lot of activity in the past three weeks or so and some transactions have been received better than others. And at the same time, we're fielding a lot of questions for some REITs with the cost of capital on the margin of generating accretion of whether or not they kind of take the jump here and continue to invest.

Whereas, OHI doesn't have that problem. Your cost of capital is very strong. I mean, do you look at the current environment as an opportunity to really get aggressive and chase acquisitions or do you look at something like the minimum staffing requirement and work on those parameters of risk in your underwriting framework and try to be more cautious given what you're seeing right now?

Taylor Pickett -- Chief Executive Officer

So, it's a little bit of a -- it's a great question. It's a little bit of both, right? We -- we're prepared to allocate as much capital as possible to our existing operators and opportunities, but the underwriting has to include some risk adjustment for a variety of things, including minimum staffing. But from my perspective, we don't take our foot off the pedal. It's just incorporating those risks into how we think about allocating capital.

You know, as Dan mentioned, we're close to half a billion year to date, and the pipeline's pretty robust. So, we'll continue to look at very opportunistically at what's out there.

Connor Siversky -- Wells Fargo Securities -- Analyst

OK. And then just to follow up on that point, so earlier in the call, Megan mentioned that the labor environment remains more challenged in the rural areas versus the urban areas. I mean, does this also imply a willingness for OHI maybe to sell out of those rural assets in favor of concentration in urban areas?

Taylor Pickett -- Chief Executive Officer

Well, you've seen us sort the portfolio pretty actively for a number of years. And obviously, through COVID, we've done a lot of that. I would say that there's not a whole lot more to do. But when you think about much of our disposition activity, it has followed that pathway, a little more rural, a little more labor challenged.

So, I don't have an expectation of big dispositions, but we'll continue to sort the portfolio, as we always have.

Connor Siversky -- Wells Fargo Securities -- Analyst

Got it. Thank you for the time.

Operator

Our next question comes from the line of Juan Sanabria with BMO. Please proceed with your question. Juan, your line is live. Our next question comes from the line of Michael Carroll with RBC Capital Markets.

Please proceed with your question.

Michael Carroll -- RBC Capital Markets -- Analyst

Yeah. Thanks. I just wanted to circle back on Guardian. I mean, how much interest did you receive when those assets kind of came to the market? I mean, did you -- I mean, it sounds like you have one specific operator you're pretty far along with right now.

But did you run a process or did you target a few operators? I guess how did that initially work?

Dan Booth -- Chief Operating Officer

Yeah. So, we have existing operators in the state of Pennsylvania, and then of course, we know other operators in the state. So -- and also in the state of West Virginia. So, we reached out to operators that we know, first and foremost, that we do business with, and also operators that we know are in the state of Pennsylvania and still doing business.

So, it's a pretty broad net that we throw out there looking for new operators, and it is just as a matter of narrowing it down to the right one.

Michael Carroll -- RBC Capital Markets -- Analyst

And then I guess, how much interest -- when you started offering up those assets to potential operators, how much interest were they in those properties? And then kind of off of that, I mean, can you provide some color on how those assets are performing today and will these new operators be willing to step in at a stabilized rent rate or do you need to have some type of ramp-up as operations kind of stabilize and improve?

Dan Booth -- Chief Operating Officer

Those are the discussions that we're having as we speak. It's a good question. Those facilities are not performing exceedingly well. And I would say there was interest, but it wasn't an overwhelming amount of bids that were put in at the end of the day.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. Great. Thank you.

Operator

Our next question comes from the line of Nicholas Yulico with Scotiabank. Please proceed with your question.

Nick Yulico -- Scotiabank -- Analyst

Hi. Thanks. Bob, I guess maybe just going back to the cash on the balance sheet, trying to get a better feel for how we should think about how much of that could be earmarked for investments versus you did talk about the debt maturities you do have in April?

Bob Stephenson -- Chief Financial Officer

Yeah, Nick. Again, take a big-picture approach to that, I mean, because cash is fungible. We're sitting with 600 million today. If we could deploy that -- the pipeline's choppy.

It's robust but choppy. We could deploy it right away in acquisitions. That would be the first dollar spent, absolutely. But again, we'll sit down and look based on the pipeline and based on that debt maturity coming up, how we want to fund it.

I mean, right now, you know, we have the cash and we have the availability and we do have the ATM.

Nick Yulico -- Scotiabank -- Analyst

OK. Thanks. And then second question is just going back to LaVie and if we think about you've now moved through most of the transitions or asset sales. What -- do you have a sense for, you know -- and I know there's still, I guess, some reinvestment that could happen with proceeds.

But, you know, as we think about prior rent on LaVie when it was sort of fully paying versus now what you're going to get in terms of new rent, rent equivalents, is there any like percentage number you can give us on a rough feel about, you know, how that played out? Is it going to be 70% to 80%? I think you said 80% in the past about sort of a recapture rate on operators going through a transition and asset sales like this.

Taylor Pickett -- Chief Executive Officer

Yeah, you're exactly right. We were pretty conservative in our thinking there, Nick. When -- I think when this is resolved, we'll be pushing 90% or north.

Nick Yulico -- Scotiabank -- Analyst

Great. Thanks, everyone.

Operator

Our next question comes from the line of Alec Feygin with Robert W. Baird. Please proceed with your question.

Alec Feygin -- Robert W. Baird and Company -- Analyst

Hi. Thank you for taking my question. Just a question on the Guardian assets. What's the historical timing of releasing those senior housing assets?

Dan Booth -- Chief Operating Officer

Do you mean just in general or specific to Guardian? I mean, I --

Alec Feygin -- Robert W. Baird and Company -- Analyst

In general [Inaudible]

Dan Booth -- Chief Operating Officer

You know, it depends -- in general, it could take anywhere from three to 12 months. It's a pretty wide range, depending on whether it's a sale and the sale is being financed or whether it's a -- just a retenanting.

Alec Feygin -- Robert W. Baird and Company -- Analyst

Thank you. And second one is have labor costs/shortages actually gotten better or has it just stopped getting worse?

Megan Krull -- Senior Vice President, Operations

I definitely think it's getting better from what we hear from our operators. I mean, we are seeing agency come down quarter over quarter, which is a good sign, and operators are definitely feeling less tension there, but it still exists, right? So, it's going to take some time before that rights itself. I definitely think it's improving.

Alec Feygin -- Robert W. Baird and Company -- Analyst

Thanks. And last one in, how much did you guys buy the LaVie assets for and when was that?

Dan Booth -- Chief Operating Officer

Some of those assets date back to, you know, 1995, I think, 1998. I don't know off the top my head. Some of those assets have been on our balance sheet for over 20 years.

Alec Feygin -- Robert W. Baird and Company -- Analyst

Thank you for the time today.

Operator

Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question.

John Pawlowski -- Green Street Advisors -- Analyst

Thanks for the time. Megan, a question for you on just sectorwide occupancy. Just curious why occupancy, do you think, hasn't seen a bigger benefit from just the cumulative closures of facilities over the last several years?

Megan Krull -- Senior Vice President, Operations

You know, I think -- look, we've seen a large percentage of our portfolio actually recover, so it is very specific to the region that you're in. And if you look at Florida, for instance, the staffing issues, they're just so strong that that's why the occupancy hasn't recovered. So, I think when you look at different places, you're going to have a different story there.

John Pawlowski -- Green Street Advisors -- Analyst

As the months and years roll along, again, with just supply being down, it would suggest, you know, kind of almost a structural change in demand if a significant amount of regions aren't back to a pre-COVID occupancy, which, again, should be adjusted higher for closure. So, are you incrementally more concerned about its broader than just labor issues delaying the recovery in occupancy?

Megan Krull -- Senior Vice President, Operations

No. I mean, look, I think it's going to get there. We've got demographics on our side that's coming into play. And quite frankly, at some point, as those demographics come back into play, we're going to have maybe a shortage of nursing homes in certain areas.

John Pawlowski -- Green Street Advisors -- Analyst

OK. Last question for me, just curious whether you think Guardian could be a leading indicator for other operators that may just be fatigued and then staring out at a burdensome labor mandate. Do you see other operators -- do you see this being -- this a -- the beginning of a wave of additional operators exiting the business?

Taylor Pickett -- Chief Executive Officer

No. I think Guardian, really, it is syncretic, very unique. If you look through the rest of the portfolio, it just doesn't have similar issues. I will say that the state of Pennsylvania, in general, has become a little bit more difficult operating environment.

And so, there's a bit of that. And we do have a decent presence in the state of Pennsylvania. But most of that is with operators in big master leases where a little bit of pressure they're feeling in Pennsylvania is offset by really good results in other geographies. So, no, I don't -- it may be a little bit of an indicator in Pennsylvania for Pennsylvania-only operators, but we really don't have that as an issue.

John Pawlowski -- Green Street Advisors -- Analyst

OK. Thank you for the time.

Operator

Our next question comes from the line of Juan Sanabria with BMO. Please proceed with your question. Juan, your line is live. Our next question comes from the line of Tayo Okusanya with Deutsche Bank.

Please proceed with your question.

Tayo Okusanya -- Deutsche Bank -- Analyst

Hi. Yes. Good morning, everyone. So, the question I have is, it sounds pretty much like fundamentals are kind of all moving in the right direction at this point.

And I guess, again, there's still some tenants that, on the margin, are still having issues. So, I'm trying to understand thematically, you know, where the pressure points still remain and whether, indeed, all this is slowly behind us and things will be hunky dory going forward or if there's still kind of issues out there that could still persist for longer than anticipated? It sounds like part of it is occupancy and just kind of labor constraints making it very hard to drive occupancy higher. Curious if any of it is just, you know, as Medicare Advantage continues to grow, the pressure it's putting on profitability. I'm just kind of curious where else, you know, there could be some potential kind of, you know, fundamental issues one has to worry about, you know, in terms of just operator profitability.

Taylor Pickett -- Chief Executive Officer

Yeah, Tayo. I think the short answer is what you said in the beginning, the fundamentals are all strong and the residual cleanup that we have now is just that. We've been in the business for three decades, and you're always going to have certain issues that come up in this business. But I think that's what we're going to be looking at in the back half of 2024, just sort of normal way business.

Medicare Advantage, it's been around forever. I don't see -- there's really no incremental pressure there. And I think the market's really sorted itself well in terms of operators that can provide the clinical care for the Advantage providers that works effectively. And we're aligned with -- most of our big operators are already aligned with those organizations.

So, I feel good about all of that. And look, we've -- we said pretty transparent, we've solved dozens of issues, we're down to a handful, and I think we have a lot of visibility around them.

Tayo Okusanya -- Deutsche Bank -- Analyst

That's helpful. And then just one other quick one, did you discuss the cap rate or the NOI associated with the LaVie sales in November, the 305 million?

Taylor Pickett -- Chief Executive Officer

No. As Dan mentioned, really, it's per bed sale prices, which hover that. You know, it's between 90,000 and 100,000 of bed is where Florida's traded. Those facilities all have some turnaround component in them.

So, the cap rate is really -- doesn't really mean anything.

Tayo Okusanya -- Deutsche Bank -- Analyst

But can you give us a sense of what NOI kind of disappears from you guys as a result of those sales?

Taylor Pickett -- Chief Executive Officer

Yeah, it goes back to the last couple of -- the last part of the restructuring, and Dan's working through that, which is disposing of the six properties that remain, two in Florida and four in Louisiana, and then the appropriate rent around the retained portfolio, which that portfolio has a very substantial cash flow. So, I think there'll be a lot of value there. But that is a TBD that Dan's working on.

Tayo Okusanya -- Deutsche Bank -- Analyst

TBD. Fair enough. Thank you.

Operator

There are no other questions in the queue. I'd like to hand the call back to Taylor Pickett for closing remarks.

Taylor Pickett -- Chief Executive Officer

Thanks, Doug. Thanks everyone for joining today. As always, please reach out to the team with any follow-up questions you may have. Have a great day.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Michele Reber -- Senior Director, Asset Management

Taylor Pickett -- Chief Executive Officer

Bob Stephenson -- Chief Financial Officer

Dan Booth -- Chief Operating Officer

Megan Krull -- Senior Vice President, Operations

Jonathan Hughes -- Raymond James -- Analyst

Georgi Dinkov -- Mizuho Securities -- Analyst

Avery Tiras -- Citi -- Analyst

Connor Siversky -- Wells Fargo Securities -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Nick Yulico -- Scotiabank -- Analyst

Alec Feygin -- Robert W. Baird and Company -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Tayo Okusanya -- Deutsche Bank -- Analyst

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