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Maplewood Senior Living On Firmer Ground One Year After Facing Cash Crunch

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Maplewood Senior Living is on more stable footing in 2024, according to executives with Omega Healthcare Investors (NYSE: OHI), about a year after the operator said it was facing a “modest liquidity crunch.”

Omega previously moved to restructure its Maplewood portfolio after the operator fell behind on payments last year. Under that restructuring, the Hunt Valley, Maryland-based real estate investment trust (REIT) agreed to defer certain rent escalators and interest payments with the intention of giving the operator more runway on which to recover.

Fast-forward to Thursday, leadership noted Maplewood’s expected return to normal rent payments going forward. Although CEO Taylor Pickett noted that the company has not finalized cash budgets for 2024 with Maplewood, he believes the company will meet its rent payment targets by the end this year or some time in 2025, “assuming nothing else happens.”

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In addition to highlighting progress with Maplewood, Omega management also issued forward-looking guidance for the first time since stopping earlier in the pandemic.

“We believe that we have enough visibility into the timing and ultimate resolution of the portfolio’s that are being transitioned or sold to provide guidance for the first time since the pandemic started,” Pickett said during the company’s fourth-quarter earnings call Thursday.

Omega’s fourth-quarter revenue registered at $239.3 million. Adjusted funds from operations (AFFO) for 2024 is expected to be between $2.70 and $2.80 per share, the company said.

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Omega stock rose 6.48% on Thursday to rest at $29.91 per share, up $1.82 since the previous day’s market-close.

Maplewood on firmer ground in 2024

Maplewood’s latest challenges came to light about a year ago with Omega’s disclosure. Although the operator had largely rebounded with regard to occupancy since the pandemic, Omega management noted in 2023 that rate increases did not match the pace of inflation.

But those challenges have eased in the previous 12 months, Omega executives reiterated during the call with investors and analysts Thursday.

Highlights for Maplewood during the fourth quarter of 2023 include the Westport, Connecticut-based operator reaching stabilized occupancy levels at 16 of its 17 communities, and occupancy at its New York City Inspir community hitting 65%. The company also is moving closer to the opening of a new Inspir project in Washington, D.C.

Omega realized revenue from Maplewood of $11.6 million in the fourth quarter, executives said. In January of this year, Maplewood paid $3.8 million in rent.

Helping to fill out the rosier picture for Maplewood in 2024 are the occupancy improvements at its Inspir community in New York City.

At present, Taylor said the Maplewood leadership team was “still working through some revisions on Second Avenue,” as the community’s occupancy stands at 65% as of 4Q23.

“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’s become a little bit mature in a competitive market in Manhattan,” Taylor said. “Even though we might have 10 move-ins in a month, you’ll see six or seven move-outs, so it’s real work to increase that over the next 10 months.”

When asked if leadership believed the Inspir Carnegie Hill would stabilize by the end of 2025, Taylor was confident in the community’s pace to meet that target. He noted that the Maplewood leadership’s plan to increase occupancy was not yet “finalized” and teased “probably a lot more color” on Maplewood’s recovery plan at the New York property during the first-quarter earnings call later this year.

“I think that’s absolutely fair to assume it’ll be fully leased-up [by year-end ’25],” Taylor said. “The cash flow number is substantial but they haven’t finished their plan so we’re not prepared to talk about that today.”

Maplewood believes there’s a path to stabilization at the community in the “near future,” added COO Dan Booth.

In July, SHN reported on Maplewood’s unique challenge in attracting affluent New York City residents that can often afford to pay private home care costs at its luxury community.

“What they can’t get is the engagement and socialization that we offer, and they and the families can’t get the relief that we provide,” Maplewood Vice President of Clinical Innovation and Population Health Brian Geyser said during a panel at Senior Housing News’ BRAIN conference last year.

In 2024, Taylor said Maplewood expects 7% to 8% rental rate increases.

“We will see a pickup there as we start to march through the early part of the year,” Taylor said.

Maplewood’s $200M project in D.C.

In 2021, Maplewood’s Inspir brand announced plans to expand to Washington D.C.. At the end of last month, Maplewood announced the opening of a sales office for the community, known as Inspir Embassy Row.

As planned, the “ultra-luxury,” eight-story community is planned to have 174 units and “unique and beautifully designed amenity spaces.” Like the operator’s community in New York City, Inspir Embassy Row will be in close proximity to acclaimed dining, entertainment and cultural venues.

On Thursday, Taylor noted the D.C. development, which is being renovated within a former hotel in D.C.’s Dupont Circle neighborhood, was a “about a $200 million” project. 

A model at the Inspīr Embassy Row leasing gallery allows prospective residents to see the architectural and design plans for the community.

“The expectation is that the cash returns there will be at least 8%, it could be higher,” Taylor said. “They’ve opened their sales office and they’ve got a decent list. People are looking forward to being there.”

Taylor said additional capital to help drive fill up at the D.C. property would “fall on” Omega to provide.

“How that gets accounted for, I can’t tell you and it’s going to depend on Maplewood when we get to the day the doors open,” Taylor said.

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