Omega Healthcare Investors (OHI) Q4 2023 Earnings Call Transcript

Omega Healthcare Investors (OHI 0.61%)
Q4 2023 Earnings Call
Feb 08, 2024, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Omega Healthcare Investors fourth quarter 2023 earnings conference call. [Operator instructions] As a reminder, this conference is being recorded. I will now turn the conference over to Michele Reber. You may begin.

Michele Reber -- Senior Director, Asset Management

Thank you and good morning. With me today is 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 maybe forward-looking statements such as statements regarding our financial projections, potential transactions, operator prospects and outlook generally. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC.

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 are available in the quarterly supplement. 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 fourth quarter 2023 earnings conference call. Today, I will discuss our fourth quarter financial results and certain key operating trends. Fourth quarter FAD funds available for distribution of $0.64 per share was as expected, reflecting several portfolios that are in the process of being transitioned, which will result in meaningful FAD upside over the next few quarters.

Full year FAD was $2.62 per share, slightly below our full year dividend of $2.68 per share, resulting in a payout ratio of 102%. We continue to have a handful of cash basis operators, including Maplewood that will impact our go-forward AFFO and FAD, making 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. We believe that we have enough visibility into the timing and ultimate resolution of the portfolios that are being transitioned or sold to provide guidance for the first time since the pandemic started.

Our 2024 AFFO guidance is between $2.70 and $2.80 per share. As Dan will discuss, key tenant occupancy and rent coverage metrics continue to improve, including the under 1 times EBITDAR coverage operator metric, which dropped from 27.5% of total rent to 13.2% of total rent. We can break the 13.2% into a handful of buckets; operators representing 7.5% of the 13.2%, our strong credits and therefore, payment of rent should not be an issue. Operators representing 1.2% at third quarter and October EBITDAR coverage above 1.0 times, benefiting from state rate increases and operational improvements that we expect to continue on a go-forward basis.

0.9% represents facilities that have already transitioned to performing credit. That leaves operators representing 3.6%, of which an operator representing 0.5% was recently transitioned, which leaves a balance of 3.1%, representing 11 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 fourth quarter. Revenue for the fourth quarter was $239 million before adjusting for certain non-recurring items compared to $145 million for the fourth quarter of 2022. The year-over-year increase is primarily a result of timing related to operator restructurings, revenue from new investments completed in 2022 and '23 and net straight-line write-offs, partially offset by asset sales completed during that same time period.

Our NAREIT FFO for the fourth quarter was $129 million or $0.50 per share as compared to a loss of $30 million or a loss of $0.13 per share for the fourth quarter of 2022. Our adjusted FFO was $173 million or $0.68 per share for the quarter, and our FAD was $163 million or $0.64 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 fourth quarter financial supplemental posted to our website. Our balance sheet continues to remain strong. In the fourth quarter, we repaid 25 HUD mortgages totaling $227 million, these repayments stemmed from the previously disclosed LaVie asset sales and transitions.

We ended the quarter with over $440 million of cash on the balance sheet and over $1.4 billion in credit facility borrowing capacity and are well positioned to pay off our April 1, $400 million bond maturity and fund new investments. As of year end, 99% of our $5.1 billion in debt was at fixed rates and our net funded debt to annualized adjusted normalized EBITDA was 4.96 times and our fixed charge coverage ratio was 3.8 times. As Taylor mentioned, for the first time since the start of the pandemic, we are providing full year adjusted FFO guidance of between $2.70 to $2.80 per share. We are assuming no change in our revenue related to operators currently on an accrual basis of revenue recognition or stated another way, no additional operators being placed on a cash basis for revenue recognition.

We are assuming a timely completion of operator restructurings, which includes both the LaVie and Guardian portfolios and Maplewood's eventual return to full contractual rent. We are assuming $94 million in asset sales related to the facilities classified as held-for-sale as of year end. We have included the annual impact of new investments completed in 2023, as well as $27 million of new investments completed year-to-date. We project our quarterly G&A expense to run between $11.5 million to $13.5 million per quarter, with the first quarter typically being the highest.

Non-cash stock-based compensation expense, which is included in NAREIT FFO but eliminated in our adjusted FFO, is estimated to be approximately $9.2 million per quarter. We assumed the repayment of our April 1 $400 million bond maturity. We assume no material changes in market interest rates as it relates to either the overnight investment rates earned on balance sheet cash or interest expense charge on credit facility borrowings. Our 2024 adjusted FFO guidance excludes any additional new investments or asset sales, as well as any additional capital transactions other than what was already mentioned.

As several operator transitions are still in negotiations and the precise timing is unknown, we provided a wide range to our adjusted FFO guidance. As stated in yesterday's earnings press release, in the fourth quarter, LaVie paid $5.3 million in rent. And in January, LaVie paid approximately $1.45 million from rent. We utilized Guardian's $4.4 million security deposit to record fourth quarter rent.

The remaining $60,000 in security deposit was exhausted in January and no additional cash rent was received from Guardian in January. And lastly, we recorded $11.6 million in Maplewood revenue in the fourth quarter through a combination of cash and security deposit applications. In January, Maplewood paid $3.8 million in rent. Dan will provide additional color on these operators in his prepared remarks.

And with that, I will turn the call over to Dan.

Dan Booth -- Chief Operating Officer

Thanks, Bob and good morning everyone. As of the December 31, 2023, Omega had an operating asset portfolio of 862 facilities, with approximately 84,000 operating beds. These facilities were spread across 69 third-party operators and located within 42 states in the United Kingdom. Trailing 12-month operator EBITDAR coverage for our core portfolio as of September 30, 2023, increased to 1.28 times versus 1.15 times for the trailing 12-month period ended June 30, 2023.

During the third quarter of 2023, our operators cumulatively recorded approximately $12 million in federal stimulus funds as compared to approximately $13.2 million recorded during the second quarter. Trailing 12-month operator EBITDAR coverage would have increased during the third quarter of 2023 to 1.21 times as compared to 1.07 times for the second quarter when excluding the benefit of any federal stimulus funds. EBITDAR coverage for the stand-alone quarter ended September 30, 2023 for our core portfolio was 1.33 times, including federal stimulus and 1.27 times, excluding the $12 million of federal stimulus funds. This compares favorably to the stand-alone second quarter of 1.21 times and 1.15 times with and without $13.2 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 80.2% as of mid-January 2024 based upon preliminary reporting from our operators. For comparative purposes, occupancy for our core portfolio was 83.2% for the fourth quarter of 2019 just prior to the onset of the COVID pandemic. Turning to portfolio matters. LaVie, in the fourth quarter of 2023, Omega sold a total of 30 LaVie facilities for $317.9 million of gross proceeds.

All of the facilities were located in Florida. Omega is currently in the process of transitioning six additional facilities, four in Louisiana and two in Florida to third-party operators. Omega's remaining portfolio with LaVie will consist of 30 facilities, which include 13 facilities in North Carolina, nine in Pennsylvania, six in Mississippi and two in Virginia. Three of those four states are considered highly desirable from an operating environment standpoint.

We are currently in ongoing discussions with LaVie on the best overall future for each of these remaining 30 facilities. LaVie has paid approximately $1.45 million per month for the last three months, including January of 2024. Maplewood. During the fourth quarter of 2023, Maplewood paid rent of $11.6 million, consisting of $9.8 million of cash payments and $1.8 million in security deposit applications.

In January of 2024, Maplewood paid $3.8 million in rent. Maplewood continues to see strong performance across the portfolio with 16 of the 17 facilities fully stabilized. Occupancy at inspired New York City is currently at 65%. And Maplewood believes there is a path to stabilization at the facility in the near future.

Maplewood was recently awarded Best of Senior Living Awards at all 17 facilities, which places the communities in the top 1% to 2% of senior housing care providers nationwide. This remarkable achievement reflects the dedication and commitment of the Maplewood employees. Guardian. Omega currently leases six facilities to Guardian, five in Pennsylvania and one in West Virginia.

We are currently negotiating lease terms to release the remaining six facilities to an unrelated third-party subject to normal regulatory approvals and the finalization of certain documentation. In addition to the aforementioned restructurings and transitions, Omega is working with several other relatively small operators on various restructurings. Turning to new investments. During the fourth quarter of 2023, Omega completed a total of $249 million in new investments, consisting of $167 million in real estate loans and other loans, $51 million in real estate acquisitions and $31 million in capital expenditures.

These new loans have a weighted average interest rate of 10.5%. The new acquisitions have a weighted average annual yield of 9%, with 2.5% annual escalators. During the full year of 2023, Omega made new investments totaling $667 million, including $84 million in capital expenditures. Subsequent to year end 2023, Omega has closed on $27 million in new mortgage loans.

These new loans completed in 2024, have a weighted average interest rate of 9.6%. Turning to dispositions. During the fourth quarter of 2023, Omega sold 32 facilities for $324 million. During the full year of 2023, Omega sold 69 facilities for $485 million.

I will now turn the call over to Megan.

Megan Krull -- Senior Vice President, Operations

Thanks, Dan and good morning everyone. There continues to be positive momentum on the staffing front, albeit with wide variation by market. Agency expense on a per patient day basis for our core portfolio for third quarter 2023 dropped to three times where it was in 2019 in comparison to the four times we reported last quarter and the five times we reported two quarters ago. And as expected, with the staffing shortages easing, we see occupancy continue to slowly improve with a slight slowdown in the winter months as is typical.

The number of core facilities recovered is now at 42%, up from the 37% reported in the second quarter. Additionally, 22% of core facilities that have not yet fully recovered are at or above 84% occupancy. Overshadowing these improvements, however, is the promise by CMS that they will finalize the staffing mandate sometime this year. This was not entirely unexpected given the current administration had promised its implementation.

Despite the long-term impact that this could have on the industry, especially if left unfunded, the impact is negligible in the near-term. Recall that the mandate as currently proposed is already slated to have a delayed implementation with the 24/7 RN requirement going into effect two years after the mandate is finalized for urban facilities and three years for rural and the required hours per resident day for RNs and nursing aids going into effect three years after the mandate is finalized for urban facilities in five years for rural. With AHCA's strong track record in getting improvements made to proposed rules, and more than 40,000 comments received by CMS, all of which need to be reviewed and considered, it is too soon to tell what the ultimate mandate will look like. We can only hope that reasonable minds will prevail and then any final mandate will be well balanced.

And of course, we also need to remember that a lot can happen in two years when the first impact is currently proposed is slated to occur. There is always the potential that additional rulemaking or legislation will change the final rule substantially within that time, not to mention the possibility that legislation could block the mandate altogether, with bipartisan legislation already introduced in Congress to do just that. I will now open the call up for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] And our first question comes from the line of Jonathan Hughes from Raymond James. Please proceed with your question.

Jonathan Hughes -- Raymond James -- Analyst

Hi. Good morning. Thanks for the time. On the fourth quarter acquisitions, I see the initial cash yields were 9%.

Can you just share if those were snaps or seniors housing? And then, maybe what yields you're underwriting on the current investment pipeline?

Dan Booth -- Chief Operating Officer

Yes. So most of the yields that we're underwriting to over 10% or even north or all the fourth quarter yields on those – the investments that you highlighted were 9%. Some of those deals were a long time in the making, has been in the pipeline for a while. So we had a quarter a price some quarters back.

The overall yield for the year is north of 10%. I think it's 10.4% blended. So – and that's pretty much what we're quoting today is 10% in North.

Jonathan Hughes -- Raymond James -- Analyst

OK. And then, that mix of investment activity over the past year, it's been – you call it, 60% loan investments versus 40% acquisitions. And I guess the loan investments might be because you're filling a void left by banks and those have been with existing relationships. But when do we see acquisitions pick up and comprise the majority of your investment activity?

Dan Booth -- Chief Operating Officer

I think we still did a number of acquisitions, right? I'd say that that's one of our same-store that we've done in prior years. I think we just have a pick up in loans, and as you said or kind of answering your own question, but it was just filling a void in the capital markets as they stand today, I mean, there is a lot of banks that aren't active and we're filling that void. We could continue to see that certainly in '24.

Jonathan Hughes -- Raymond James -- Analyst

OK. And maybe just one more for me. Can you share some details on the $50 million term loan made in December. What are use of proceeds? What is exposure to that operator and the EBITDAR coverage of that portfolio? And maybe why do such a short-term non-real estate investment? Thanks.

Dan Booth -- Chief Operating Officer

Yes. So our relationship with that individual or companies that he controls is less than 1% of Omega rate. And just a couple of facts to highlight that relationship goes back for many, many years. Those individuals have been in the industry for over 35 years.

Our world cross on multiple fronts, including the fact that we share multiple relationships. He has an excellent history. He is a high net worth and the investment was actually to allow him to make an investment in another company that he privately owns, and so it falls outside of any relationship we have in this world – in the SNF world. And it's collateralized as well by the equity interest in that private investment.

So it's well collateralized, high net worth individual with great track record.

Jonathan Hughes -- Raymond James -- Analyst

And then, maybe – I don't know if I heard you, but what's maybe the coverage of that portfolio? I realize it's close to 1%, but if you have that that would be great.

Dan Booth -- Chief Operating Officer

So I mean, we just generally don't comment on individual operator coverages, so I'm not going to go there today, but I'll just say that, we have been paying for probably 10 years plus on both those leases and they pay like clockwork.

Jonathan Hughes -- Raymond James -- Analyst

All right. Appreciate the time.

Operator

Thank you. The next question is from the line of Vikram Malhotra with Mizuho. Please proceed with your question.

Vikram Malhotra -- Mizuho Securities -- Analyst

Good morning. Thanks for taking the questions. Maybe just to start off the guide. Could you give us some color on sort of what's baked in at the low end versus the high end? And how we should think about sort of operator resolution and investments, both at the high end and low end?

Bob Stephenson -- Chief Financial Officer

Yes. We returned to happily so our adjusted FFO guidance based on historical practices and gave a little bit wider range because we did mention we have LaVie and Guardian in the transition restructuring mode and Maplewood needs to return to paying full contractual rent. So at the low end, it means it takes a little bit longer on those transactions and the repayment on the high end, it's just sooner. I mean, it's kind of that simple.

Vikram Malhotra -- Mizuho Securities -- Analyst

Got it. OK. And then, specifically for Maplewood, as you look through the year, you mentioned sort of you're hoping as we go through the year, the return to more normal paying any assumptions you can share with us, one, just in terms of the Jan payment? Is that sort of a good run rate near-term? And then, second, what are you assuming for occupancy of the New York asset as we go through the year for that normalized payment to occur?

Taylor Pickett -- Chief Executive Officer

So, obviously, the January cash is a good run rate to start, but it doesn't reflect the impact of rate increases for '24, which the Maplewood team expects to be 7% to 8% net. So that's – we will see a pickup there as we start to march through the early part of the year, Vikram. And then, the team is still working through some revisions on Second Avenue. The thought process now is they'll be able to go from 65% into the 80s by year-end.

But you have to remember that building has become a little bit mature in a competitive market now in Manhattan. So even though we might have 10 move-ins in a month, you'll see six or seven move out. So the net is – it's real work to increase that occupancy over the next 10 months. Team hasn't finalized their plan.

We will probably have a lot more color on that for the next call.

Vikram Malhotra -- Mizuho Securities -- Analyst

OK. Great. And then, just, sorry, one – if I can just follow-up on the $50 million loan. It is sort of – it seems like a one-off.

I just wanted to hear from your perspective if this is truly a one-off? And is there something strategic to it as well? Because it sounded like not kind of focused on real estate but more relationship based. So I just want to understand the kind of – is this truly something very unique. And then, is there something else or strategic to it as well?

Dan Booth -- Chief Operating Officer

Yes. I would say that this is more of a one-off than anything else. It's not where we're going to focus our attention.

Vikram Malhotra -- Mizuho Securities -- Analyst

Thank you.

Operator

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

Michael Griffin -- Citi -- Analyst

Great. Thanks. Just wanted to ask a question around occupancy. You said that in January, you're seeing it north of 80%, but at the end of the year, it was about 79%.

Given that we're in a more seasonal time period, can you maybe just give some more color on why you're seeing occupancy increase? Is it a function of some of these facilities being better staffed or anything you could provide there would be helpful.

Megan Krull -- Senior Vice President, Operations

I think what we're hearing from our operators is mostly the fact that the staffing is easing up, right? Some of the agency has come down. They are getting more permanent staff and they are building up their cultures again. And it's just easier to have staff in the building and increase that occupancy. So that's really what's driving it.

Michael Griffin -- Citi -- Analyst

Great. That's helpful. And then, just on the remaining LaVie assets in the portfolio. Is the plan to ultimately sell out of all of them and exit that relationship? Or do you see yourself kind of hanging on to some once the restructuring process comes to an end?

Taylor Pickett -- Chief Executive Officer

Dan and his team are still in the middle of the discussions. So it's – we don't really have an answer for that. I will tell you, though, the important thing is, as Dan mentioned, those assets performed well. So if we never – chance they end up there is a lot of value there.

It's just a question of working through the process to make sure we maximize the value proposition.

Michael Griffin -- Citi -- Analyst

Great. That's it for me. Thanks for the time.

Operator

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

Connor Siversky -- Wells Fargo Securities -- Analyst

Good morning out there. Thank you for the time. One on Maplewood, I'm curious what we should expect from the Washington, D.C. development when it rolls online next year.

Do you have any sense of what that fixed cost load will look like once the doors are open? Is it reasonable to assume that opening that operation would impact Maplewood's forward cash flow profile negatively? And then, could you put any numbers around it at this time?

Taylor Pickett -- Chief Executive Officer

Yes. It's a little too early to put numbers around it. I will tell you that, it's about $200 million project. The expectation is that the cash returns there will be at least 8%.

It could be higher. We're working through the presales now. They have opened their sales office, and they have got a decent list right now, that are looking forward to being there. In terms of the costs, Maplewood as an entity doesn't have a source of capital or fund to fill up.

So ultimately, that's going to fall on us, it will be additional capital. How that gets accounted for, I can't tell you and it's going to depend on Maplewood when we get to the day of the doors open.

Connor Siversky -- Wells Fargo Securities -- Analyst

OK. That's helpful. Thanks. And then, maybe one on rent coverage, so curious to see if there are any expectations for that number trending into 4Q? We have mid data suggesting that occupancy had more or less flattened down as expected given the seasonality.

I'm wondering if any Medicaid rate hikes took hold toward the end of the year that could push the number higher specifically?

Megan Krull -- Senior Vice President, Operations

We did have the Medicare rate hikes in October, and we had some increases in Medicaid. But I think you'll just continue to see as the occupancy improves as that coverage is going to improve. With the exception, obviously, that December, you have audit adjustments and that can sometimes play into what the coverage looks like.

Connor Siversky -- Wells Fargo Securities -- Analyst

All right. OK, I will leave it there. Thanks for the time.

Operator

Our next question is from the line of Tayo Okusanya with Deutsche Bank. Please proceed with your question.

Tayo Okusanya -- Deutsche Bank -- Analyst

Yes. Good morning. Just one just about general regulatory backdrop. Again, the – from CMS and minimum staffing rules, the comment period has ended, just kind of curious what kind of came out of the comment period, what could potentially be next steps as CMS continues to kind of think through implementation of minimum staffing rules.

Megan Krull -- Senior Vice President, Operations

So like I said, there are about 40,000 comments plus that we're submitting, and every single one of them needs to be reviewed and considered. I think the idea right now is that the likely implementation of the rule would be sometime in the summer at the earliest, potentially a little bit later than that. And to the extent we don't really know the extent of how that rule is going to change from where it was proposed. But with that many comments, it's likely that there are going to be some improvements in it.

But at the end of the day, even after it gets finalized, there is still legislative action that can be taken to repeal it, that's in Congress right now. And there are other ways that that can be changed over time. And so, it's really too soon to tell what the ultimate impact of that final rule will even be.

Tayo Okusanya -- Deutsche Bank -- Analyst

Got it. That's helpful. And then, just indulge me on the acquisition front as well. Again, I know you don't have acquisitions in guidance.

You did do decent volume in 4Q. Just kind of – as you kind of think going forward, opportunities to buy skilled nursing versus senior housing and potential cap rates, any kind of color you could provide on that would be helpful?

Dan Booth -- Chief Operating Officer

I will say that we are seeing a very active pipeline at this point. It's proactive, but since before the start of COVID. So we are, as we pointed out, seeing a number of loan requests. But we're able to pick and choose the right deals, and we are able to – we are holding pretty firm on our 10% yield requirements.

Tayo Okusanya -- Deutsche Bank -- Analyst

Great. Thank you.

Operator

Thank you. Our next question is from the line of Josh Dennerlein with Bank of America. Please proceed with your question.

Carole Greenough -- Bank of America Merrill Lynch -- Analyst

Hi, this is Carole Greenough on behalf of Josh. I had a question about the Medicaid reimbursement. Are there any states that you are currently trying to avoid or target in that sense?

Megan Krull -- Senior Vice President, Operations

Fairly same target, I mean, there are certainly some states that have their difficulties right now, like Pennsylvania is one of those, not necessarily that we would avoid it because we think, ultimately, that will head in the right direction down the road. And Florida, as you know, we exited quite a bit in 2023 and 2022. So, we are not looking to jump back in there quickly anytime soon. And then, there are certain states, Texas has staffing issues, our operators personally doing pretty well there, but there are staffing issues in the state.

You have got states like Iowa and Missouri, you just had recent rate increases that's too soon to tell how those states are going to do. So, we just look at where our operators are, where they are looking to do business and where the right opportunities are, and just make sure we understand the risk of each individual state.

Carole Greenough -- Bank of America Merrill Lynch -- Analyst

Great. And one other question about the debt investments, though, $167 million, and we are discussing the makeup between the loan and acquisition volumes. Do you see that going forward of continuing to bridge that gap in the capital markets, or is there another color that you are seeing in the deal flow?

Dan Booth -- Chief Operating Officer

Right now, I think there is just a dearth in senior lending. And otherwise, it's just – there is not a lot of people out there with capital that are prepared to lend at this point. So, we are just filling a void.

Carole Greenough -- Bank of America Merrill Lynch -- Analyst

Great. Thank you.

Dan Booth -- Chief Operating Officer

I can't predict that one that will last.

Operator

Thank you. The next question is 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, your conversations with your operators, can you give us a rough sense for the average labor cost increases your operators are expecting in 2024?

Megan Krull -- Senior Vice President, Operations

I think it's going to vary by operator depending on what regions they are in. There already have been large wage increases over the past several years. And so, it just depends on the competition in those particular states.

John Pawlowski -- Green Street Advisors -- Analyst

All right. Can you give us some direction? Is it closer to 3%? Is it closer to 10%? I am just trying to get a sense for the pace of moderation labor cost backdrop?

Megan Krull -- Senior Vice President, Operations

Again, it's going to be very operator-specific. I would say, on average, I am sure it's probably in the 4% or 5%, but I can't really say for sure where that would end up. It just depends on where they are located.

John Pawlowski -- Green Street Advisors -- Analyst

Got it. And then, as occupancy builds across markets, and there is still staffing shortages, have you seen pockets of your portfolio that haven't needed to go back to the agency labor from pretty hard and pull that lever just to compete with, again, just the demand of healthcare rising in the markets?

Megan Krull -- Senior Vice President, Operations

So, I would say, in general, I mean, like I noted, the agency has come down pretty substantially over the last few quarters. There are definitely pockets where you have buildings that are using a lot of agency. But I would say, if we talk operator to operator, most of the time in a few of their buildings that have an agency as opposed to all of their buildings to have agency.

John Pawlowski -- Green Street Advisors -- Analyst

Yes. Thank you for your time.

Operator

Thank you. The next question is from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Juan Sanabria -- BMO Capital Markets -- Analyst

Hi. Good morning. Just a two-parter, I guess on dispositions. I guess first, how should we think about the rents collected for the dispositions that took place in the fourth quarter largely tied to LaVie.

Was there anything being accrued or accounted for there? And secondly, how should we think about the held for sale or '24 guidance on dispositions in terms of potential yields on those proceeds?

Dan Booth -- Chief Operating Officer

So, the LaVie assets were sold, right. So, we just put a cap rate on those sold assets and then turn around and obviously, reinvest those proceeds. We are still working through the restructuring will be, so we haven't determined exactly what the actual rent will be when that's all shaped out. So, that's kind of the TBD.

Bob Stephenson -- Chief Financial Officer

Hey Juan. On Page 18 of the supplemental, we show – we list how much we booked in the fourth quarter around what was disposed of and you could say it's 244,000, its very immaterial.

Juan Sanabria -- BMO Capital Markets -- Analyst

It's helpful. And how about what should we be assuming for the '24 guidance in terms of dispose?

Bob Stephenson -- Chief Financial Officer

Adding – bidding held-for-sale assets that they are held for sale assets, we booked 788,000 in the fourth quarter related to those.

Juan Sanabria -- BMO Capital Markets -- Analyst

OK. And then, just on Guardian, so what's the status there? Do you have an operator offset? It's just a question of getting the state approvals, or if you could just give us a little color on the process from here and where you stand?

Taylor Pickett -- Chief Executive Officer

Yes. Dan and the team have identified likely transition partner and they are working through the process. Again, the timing is I am hopeful that by the time we have our second quarter call, we can tell you where it landed, but we all know right now.

Juan Sanabria -- BMO Capital Markets -- Analyst

And then, just last one for me. You gave the adjusted FFO guidance, but how should we think about that as it relates to that adjusted FFO, and any commentary you can give on when you would expect the dividend to be covered?

Bob Stephenson -- Chief Financial Officer

Juan, so based on the assumptions in the forecast, I would assume that that's going to run anywhere from $0.02 to $0.04 less per quarter based on the AFFO guidance. And there is a possibility based on given the range and what we see, but really timing to know that we could, on a run rate basis cover the dividend in the links that it would. But again, timing is the key there.

Juan Sanabria -- BMO Capital Markets -- Analyst

Thank you very much.

Operator

Our next question is from the line of Michael Carroll with RBC. Please proceed with your question.

Michael Carroll -- RBC Capital Markets -- Analyst

Yes. Thanks. Now, with regard to your investment outlook, should we assume that Omega was mainly targeting individual deals to achieve that 10% yield target? I know there are big or a few bigger portfolios out there. Is that something that you guys are going to kind of stay away from just given your current cost of capital?

Taylor Pickett -- Chief Executive Officer

It's – I think that's a fair statement. Your bread-and-butter tends to be the singles and doubles. There are some relative – there are some more sizable transactions in the UK that are hitting the pipeline. So, you might see some stuff there.

That's all 10%. If you want to call us back and tell us the sizable ones we are not aware of here in the states we wanted here --

Michael Carroll -- RBC Capital Markets -- Analyst

And then, with regard to Guardian, how long does it take for the approval process to go through. So, if the tenant that you are talking to decides that they want to take the assets, how long does it take to get the regulatory approval before they can get in there?

Dan Booth -- Chief Operating Officer

In the statement we are talking about 30 days to 60 days, from the time that you filed.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. And then, as Guardian kind of winds down, is there any chance that you can get a true up rent payment as the transition is completed and that operator kind of move away?

Dan Booth -- Chief Operating Officer

Not likely.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. And then, just last one. I believe in your prepared remarks when you were talking about guidance, you kind of implied that you think your guidance implies that Maplewood eventually return back to full contractual rents. Was that a comment that that could occur in 2024, or was that just a general comment that that will occur sometime in the future?

Taylor Pickett -- Chief Executive Officer

We are not – we haven't finalized with the Maplewood team, their cash budgets for '24. But I think they are aspirational that by the end of the year they can reach that target, but is definitely going into '25 will be there. Assuming nothing else happens – unusual happens.

Michael Carroll -- RBC Capital Markets -- Analyst

Great. Understood. Thank you.

Operator

Our next question is from the line of Nick Yulico with Scotiabank. Please proceed with your question.

Nick Yulico -- Scotiabank -- Analyst

Thanks. Maybe a question for Bob, I was hoping to just get a kind of a walk on the balance sheet based on some of the activity you are assuming on asset sales. I wasn't sure if there is any more HUD repayment associated with those. And then, you have sort of the cash that's earmarked, it sounds like a lot for the bond maturity.

Just trying to understand like from a point in time where you guys are at from a cash available to invest into new acquisitions based on all of that? And then, how are you thinking about funding additional acquisitions, whether it's equity or debt?

Bob Stephenson -- Chief Financial Officer

Yes. There are a lot of questions within that one. So, let me try to address them all. So, I will start saying that, we today, we are sitting with $440 plus million in cash on the balance sheet.

And yes, it's earmarked for the April 1st maturity of $400 million. However, if an acquisition comes up, use that. And as I have stated in my prepared remarks, we have over $1.4 billion in credit facility capacity to handle a combination either the debt repayment and/or future acquisitions. We are also, as I have stated in the assumptions that we are assuming that we will dispose the $94 million of assets held for sale.

So, that's additional cash to help us handle that a maturity/acquisitions. Again, it's really – it's going to be dependent on the pipeline from a capital funding standpoint, but I think we are well positioned just where the balance sheet sits today.

Nick Yulico -- Scotiabank -- Analyst

OK. Thanks. And then, I guess second question is on some of the recent loan investments, whether it was the $50 million term loan or other loans. Were any of those – is there a non-cash interest portion of any of those recent loans? And maybe if you could also just break out on Page 3 of the sup, you guys do give all the buckets on the different loans.

If there is any non-cash interest income associated with any of those different loan investments you have.

Bob Stephenson -- Chief Financial Officer

Certainly not on the new deals that we just did. I don't think there's any embedded in Page 3, but --

Taylor Pickett -- Chief Executive Officer

Yes. All the – Nick, all the numbers that we are quoting for yields are all cash. There are a couple of loan deals where we have some upside opportunity if there is a refi for excess proceeds, but we don't include any of that in our yield calculation.

Nick Yulico -- Scotiabank -- Analyst

OK. Thanks. And then, so just on Page 3 then all the interest income associated with the various loans you are saying is like 100% cash. I wasn't sure if there was any like pick component of any of these loans.

Bob Stephenson -- Chief Financial Officer

Yes. As you know, we have a few contracts out there, a few loans out there that has an OK component that you and I walked through in the past, they are still in place.

Nick Yulico -- Scotiabank -- Analyst

OK. I will follow up. Thanks.

Operator

Our next question is from the line of Wes Golladay with Baird. Please proceed with your question.

Wes Golladay -- Robert W. Baird and Company -- Analyst

Hey. Good morning, everyone. I just have a quick question on the New York assets for Maplewood. Do you see that assets stabilizing by the end of next year? And then, if you haven't handy, do you know how much EBITDA upside is that the asset?

Taylor Pickett -- Chief Executive Officer

Well, as I have mentioned, we are still working through with the Maplewood management team, a revision of the cash flows there. But yes, I would think if you are talking about end of next year, end of '25, I think that's absolutely fair to assume it will be fully leased up. And the cash flow number is substantial, but they haven't finished their plans. So, we are not prepared to talk about that today.

Wes Golladay -- Robert W. Baird and Company -- Analyst

OK. And then, looking at the held-for-sale assets, are those mostly LaVie or it would be the 11 small operators that make up that 3.1% of troubled tenants?

Bob Stephenson -- Chief Financial Officer

So, the held-for-sale assets is – it's some properties from one existing operator that we are just carving out a few properties. And the second one is one portfolio that we are in the process of selling.

Wes Golladay -- Robert W. Baird and Company -- Analyst

OK. So, would that be part of that 3.1%, you did mention 11 operators you are still working through would that, I guess come down after you sell these assets?

Bob Stephenson -- Chief Financial Officer

Yes. There is one operator in that 3.1% that we will likely exit those assets and the 3.1% go down.

Wes Golladay -- Robert W. Baird and Company -- Analyst

OK. Thank you.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to Taylor Pickett for closing comments.

Taylor Pickett -- Chief Executive Officer

Thanks for joining us this morning. We appreciate the time. Feel free to call the team if you have any follow-up questions.

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

Vikram Malhotra -- Mizuho Securities -- Analyst

Michael Griffin -- Citi -- Analyst

Connor Siversky -- Wells Fargo Securities -- Analyst

Tayo Okusanya -- Deutsche Bank -- Analyst

Carole Greenough -- Bank of America Merrill Lynch -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Juan Sanabria -- BMO Capital Markets -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Nick Yulico -- Scotiabank -- Analyst

Wes Golladay -- Robert W. Baird and Company -- Analyst

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