Good day, and welcome to the Omega Healthcare Third Quarter 2016 Earnings Call and Webcast. All participants will be in listen-only-mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Ms. Michelle Reiber. Ms. Reiber the floor is yours ma'am.

Thank you and good morning. With me today are Omega’s CEO, Taylor Pickett; CFO, Bob Stephenson; COO, Dan Booth; and our Chief Corporate Development Officer, Steven Insoft. 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 restructuring, rent payments, financial condition or prospects of our operators, contemplated acquisitions 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 today. I will now turn the call over to Taylor.

Thanks, Mitchell. Good morning and thank you for joining Omega's third quarter 2016 earnings conference call. Adjusted FFO for the third quarter is $0.83 per share, funds available for distribution FAD for the quarter is $0.75 per share. We increased our quarterly common dividend to $0.61 per share, consistent with our plan as discussed during the last quarter call we've returned to our normal $0.01 per quarter increase. We've now increased the dividend 17 consecutive quarters. The dividend payout ratio remains very conservative at $0.73 of adjusted FFO and 81% of FAD. Our third quarter adjusted FFO was at the low end of our guidance range as the bulk of our anticipated $400 million plus in new investment activity occurred at the very end of the quarter. We've increased the low end of the fourth quarter guidance range revising the range from $0.83 to $0.86 per share up to $0.85 to $0.86 per share. This reflects our anticipated run rate including all of the acquisitions completed to-date. We are adjusting our 2016 full year adjusted FFO guidance range to $3.38 to $3.39 per share, which reflects the new fourth quarter guidance. On August 15th we posted updated evolving revenue model slides to our website. Three important slides were added as pages 27 through 29 of the presentation. These slides breakdown total Medicare payments for 2014 by major diagnostic category and bundles. The analysis compares the national breakdown and Omega for each major category. We can now accurately predict Medicare revenue that maybe subject to existing or proposed bundling programs. The current comprehensive care for joint replacement pilot CJR began on April 1, 2016 and covers hip and knee joint replacement, which in 2014 represented 7% of all Sniff Medicare revenue nationally and 5% of all Medicare revenue within Omega facilities. On July 1, 2017 CJR expands to cover hip and femur fractures which in 2014 represented 6% of all sniff Medicare revenue nationally and 5% of all Medicare revenue within Omega facilities. A new cardiac bundle pilot also commences on July 1, 2017 for heart attacks and bypass surgeries which in 2014 represented 2% of all sniff Medicare revenue nationally. As CMS introduces potential new bundling pilots, this data will allow us to immediately determine Medicare revenue that will be subject to the new proposed programs. For those of you interested in the detail, I encourage you to review the presentation on our website. Bob will now review our third quarter financial results.

Thank you, Taylor and good morning. Our reportable FFO on a diluted basis was $162.6 million or $0.80 per share for the quarter as compared to $147.5 million or $0.76 per share for the third quarter of 2015. Our adjusted FFO was $169.9 million or $0.83 per share for the quarter and excludes the impact of $3.7 million of non-cash stock-based compensation expense, $2.3 million of acquisition and merger related cost, $1.8 million in interest refinancing expense and $448,000 of revenue recorded as a result of transferring a single lease facility to a new operator. Operating revenue for the quarter was $224.6 million versus $202 million for the third quarter of 2015. The increase was primarily a result of incremental revenue from over $1.3 billion of new investments completed since September of 2015. The $225 million of revenue for the quarter includes approximately $18 million of non-cash revenue. Our G&A was $8.8 million for the quarter and we project our fourth quarter G&A expense to be approximately $8.5 million. In addition we expect our fourth quarter non-cash stock-based compensation expense to be approximately $3.7 million. Interest expense for the quarter, when excluding non-cash deferred financial costs and refinancing costs was $42.9 million versus $38.2 million for the same period in 2015. This $4.7 million increase in interest expense resulted from higher debt balances associated with financings related to our 2015 and ‘16 investments. As Taylor stated in our earnings release, we continue to aggressively prune underperforming assets and non-strategic relationships. During the quarter we sold six facilities for approximately $21 million, recognizing a gain of slightly over $5 million. In addition during the quarter we recorded $17.3 million in provisions for impairment and moved 13 facilities to assets held for sale. At September 30, 2016 we have 31 facilities classified as assets held for sale. We expect to sell these assets over the next several quarters for over $100 million. Turning to the balance sheet, in June we priced $700 million 4.375% senior unsecured seven year notes that were issued July 12th. Proceeds from the issuance were used to repay all outstanding borrowings under our credit facility. In July, we purchased the outstanding $180 million secured term loan we assumed with the Aviv Merger. We recorded $1.8 million of interest refinancing expense related to that purchase. Under our Dividend Reinvestment and Common Stock Purchase Plan, in the third quarter we issued 4 million shares of our common stock, generating gross cash proceeds of approximately $137 million. Our balance sheet remains extremely strong. For the three months ended September 30, 2016, our net debt to adjusted pro-forma annualized EBITDA was just under 4.9 times, and our fixed-charge coverage ratio was 4.6 times. I’ll now turn the call over to Dan.

Thanks, Bob, and good morning, everyone. As of the end of the third quarter of 2016, Omega had an operating asset portfolio of 1,001 facilities, with approximately 101,000 operating beds. These facilities were distributed among 81 third-party operators located within 41 states in the United Kingdom. Trailing 12-months operator EBITDARM and EBITDAR coverage for our portfolio dipped slightly during the second quarter of 2016 to 1.72 and 1.34 times respectively, versus 1.75 and 1.37 times respectively, for the trailing 12-month period ended March 31, 2016. Turning to new investments, during the third quarter of 2016, Omega completed seven separate transactions totaling $428 million plus an additional $38 million of capital expenditures. Two of these transactions of $48 million term loan to subsidiaries of Genesis Healthcare and the acquisition of $4 million ALF in Florida were discussed as subsequent events in our previous earnings call. Additionally during the quarter Omega closed five other transactions including a $337 million purchase lease transaction for 31 facilities located in Florida, Kentucky and Tennessee with over 4,000 operating beds. The facilities were leased to affiliates of Signature HealthCARE an existing Omega operator pursuant to a 12 year master lease with an initial cash yield of 9%. The other four transactions completed during the quarter totaled $39 million and involve two SNFs and two ALFs located in four separate states. Year-to-date investments for Omega through the end of September, totaled $1.25 billion, including capital expenditures. Turning to our Genesis relationship as of September 30, 2016 Genesis Healthcare was our third largest tenant in terms of revenue at just under 7% and our 8th largest investment. We currently lease 57 facilities in 13 states with annualized second quarter rent of approximately $55 million. As mentioned on our last call, EBITDARM and EBITDAR coverage for the 12-month period ended June 30th was 1.72 and 1.35 times, up slightly from the March 2016 trailing 12-month, which was 1.71 and 1.34 times, respectively. Overall, Genesis’s rent coverages, occupancy and quality mix has remained very consistent over the last four quarters. As of today Omega has over $1.1 billion in cash and revolver availability to fund future investments. I will now turn the call over to Steven.

Thanks, Dan and thanks to everyone on the line for joining today. In conjunction with Maplewood Senior Living, we commenced abatement related construction activity in the third quarter on our planned 200,000 square-foot ALF memory care high rise at Second Avenue and 93 Street in Manhattan. Demolishing activity of the existing structures is eminent with foundation work scheduled for Q1 2017. The project is scheduled to open in the first half of 2019. Our commitment to reinvest in our assets continue, not only did we invest $38 million in the third quarter, a new construction and strategic reinvestment. We currently have over 90 active capital reinvestment projects in planning or process at the end of Q3. 14 of these projects represent new construction, with a total budget of approximately $480 million inclusive of Manhattan and are actively being funded. We have a $157 million of construction in process on our balance sheet as of September 30, 2016. Our reinvestment strategy prioritizes the allocation of capital to those facilities that are not only in markets that present the highest potential for success, but also leased to those operators best suited to succeed in the evolving marketplace.

Thanks, Steven. Mike can we please open the call for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question we have comes from Tayo Okusanya of Jefferies. Please go ahead

Yes, good morning. Just a quick question around again the rent coverages on the SNF portfolio were pretty stable this quarter, but again just given all the concern around skilled nursing. How do you see the rent coverages kind of progressing as we start to think about 2017, giving concerned of our bundling, giving concerns about the shift over to Medicare Part A? And what are you hearing from your tenants at this point about how they are addressing that?

Well the good news is while we have seen a slight dip in the coverages it’s not related to revenue, it’s really more expense driven it’s really relegated to just a couple of operators who have had some management changeovers. But so far we really haven’t seen any dramatic impact in either -- in revenue at all or in occupancy or payer mix shifts. So we feel pretty good about that, we feel that our operators are holding pretty firm in terms of where they’re coming out with their coverages, obviously ‘17 is a new year. But at this point, I mean we’re hopeful that they will be able to maintain our current coverages or at least close to it.

Okay. Are they doing anything dramatically different though in anticipation of this kind of real change in how they are reimbursed over the next two to three years?

We have seen -- every operator has a slightly different approach, if we can look at Genesis which kind of went both feet in, in terms of preparing our entire organization for bundling and we had some of our regional operators that have taken more of a rifle shot approach and in markets where it’s more intensive have changed their model and shifted. The interesting thing is both approaches seem to have been effective. I mean I know that that is necessarily a right answer. The other thing I’d point out is the next round of bundling as we mentioned in our prepared comments is mid-2017 it’s July 1st, expansion of the CJR and the new cardiac program, which for our portfolio is another 7% of Medicare revenues. So there is a shift and a shift in mindset, but it’s been gradual and I think that’s the expectation we have that any changes in coverages are going to be gradual we’ll be able to monitor them pretty effectively. I think to be fair though, to think about coverages going up is the wrong way to look at the equation from our perspective it’s sort of flat possibly modest, but predictable declines, I don’t -- we don’t see big seismic shift.

Okay, that’s helpful. I think against that backdrop how do you kind of think about acquisitions going forward? Are you still kind of pretty interested in doing bunch of deals just kind of given they’re still very accretive to your bottom-line and from that point do you see yourself doing more senior housing to trying to diversify a little bit more away from skilled nursing?

I think it’s going to be -- Tayo what we’ve done and it’s going to be continuing to support our existing relationships as much as we can. And so, where there are opportunities to augment markets that make sense we’re going to continue to deploy capital that way and we have three senior housing providers now in the portfolio that are all active. And so we will continue to deploy capital in that direction, but unless we found a new operator in the senior housing role it’s really going to be with the three active tenants that we have to that. And I will say just because I know there will be a comment about this the pipeline today for deals isn’t that active and I think it reflects the election, maybe reflects year-end which we see all the time and it reflects the little bit of uncertainty around interest rates which are obviously to some extent tied to election and the economy in general. So, all that’s creating a little bit of a gap in pipeline maybe 2017 rolls around and we see that pickup there is a little more clarity around all those issues.

Fair enough. Thank you.

Thank you.

Next we have Michael Knott with Green Street Advisors.

Hey, guys, nice to see the pickup in investment activity, good for you guys. Question for on coverage, one area of uncertainty when I speak with a lot of investors is how your coverage would breakout between skilled only and assisted living. So just want to give you guys a chance to maybe help everyone understand how that number would maybe differentiate between those two buckets in your portfolio?

We have looked at that and the answer is believe or not, not materially. One of our larger ALF operators has quite high coverage for ALF operator. And so it really makes the difference between our SNF portfolio and our ALF portfolio relatively immaterial.

Okay. Thanks for that color, that’s helpful. And then just thinking about on the investment side a couple of questions, I think you just commented that the pipeline is not that active right now; do you care to quantify it? And then also was that comment for both skilled an assisted living or just skilled?

It’s the comments relates to both and when we think about our pace for 2016 at $1.3 billion and I look at the pipeline today we don’t see that type of pace today in our pipeline. Now, come January 2017 could that change, yes, but not nearly to type of pace we have seen the last twelve months.

And then -- that's helpful, thanks. And then any color on the direction of lease yields it look like it was pretty clear the activity you have this quarter that skilled was a 9 lease yield and assisted living was an 8, do you sense any that that has changed in the last few months or maybe going forward do you expect those types of levels or anything different from that?

I certainly wouldn’t expect less and I think some of it’s going to be relationship driven and how important certain assets are to components of our portfolio, but I would think that 9 is kind of the bottom and we may see 9.5 perhaps pushing back towards 10 and similar to ALF portfolio for us 8 plus.

Okay. That’s interesting. Thanks, I’ll get back in the queue.

Thank you.

Next we have Chad Vanacore with Stifel.

Good morning, this is Kennedy [ph] on for Chad.

Good morning.

I know you guys last quarter and it looks again this quarter the number of operators below one time EBITDAR coverage improve, just looking at the one times to 1.2 times range, it looks like as a percentage of rent that moved higher sequentially, but there is five fewer operators in that bucket. So, can you just give us some color on what’s going on there?

So, the percentage of net bucket from first quarter to second quarter went from 20.5% to 21.2% just to sort of put some quantity around that number. Some of the operators from a first quarter to the second quarter some of them moved actually down some of them moved up. We sold a few assets so they went away. There was -- we've got a couple of our bigger operators in that bucket that 1 times to 1.2 times. One of them we discussed on the last call it's one of our larger operators had some pretty significant managerial changeovers which started at the very top and then really trickled down across all facility level management. And that's taken some time and that's run through their numbers. You had one other operator where that was just above 1.2 times that felt just under 1.2 times. So that added to the percentage a little bit. But other than that there wasn't any other real material change in the percentage is virtually the same.

Okay, thanks, that's great. And then just looking at the number of operators, it looks like it dropped from 84 to 81. I know you guys had mentioned your dispose of non-core facilities and prune your portfolio. Can you give us an idea on really just how you decide to end those relationships with operators? And how you're thinking about your dispositions and also your plan for the $100 million proceeds what you'll put that towards? Thanks.

Sure. Bob the $100 million, our expectation is even though I mentioned the pipeline is not very active. It's active enough that we feel comfortable that $100 million will go back to get work in acquisitions. So really once that's put back to work it’s a push on the revenue line. And then in terms of exiting, typically it involves smaller relationships where there is not likely to be a growth opportunity and occasionally we're pushing the issue. But very often it's in conjunction with the operator, where we have a discussion about where they're heading and what their desires are. You have a debt market that’s still reasonably open to regional operators. And a coupled these exits have been just sales back to the operator where they've been able to finance. So these aren’t big, but I think in terms of number of operators, we went from 84 to 81. And probably next year you'll see a number in the 70s.

Alright, great. Thanks for the answers.

Next we have Nick Yulico of UBS.

Thanks, hi everyone. So just going to the page six where you give the different buckets on the coverage. If you add up all the rent and debt service listed there gets to it looks like $680 million I guess there is an annual number. And then if I go to your just quarterly revenue, looks like you reported $225 million multiply that by 40 you get to $900 million. So it looks like on that coverage pace that you're only reporting coverage in those buckets for 75% of your revenue. Is my math wrong? Because I'm trying to reconcile that with what you say here which is the 92% stat which I'm not sure what that means? Thanks.

Nick it should be 92%. There is no doubt I am wondering if we are comparing different time periods and I'm not exactly sure where you’re pulling your numbers from. This is the stats that you see on page six specific to TTM ended 630 versus here your 225 is third quarter, fourth quarter annualized.

Okay, but I mean what you're saying that the 6 -- if I add all this up rent, debt service on this page trailing 12 months as of second quarter of 2016 it’s $680 million, which you're saying is equals 92% of your what trailing 12 months revenue at second quarter 2016 that's the right way you to look at this?

Yeah, it’s exactly right.

Okay. So there anything else that was sort of added or shuffled around transitioned after that period is not on this coverage page?

No, how could it, I mean we don’t report, we only go through second quarter on coverages right we don’t have operator data through the third quarter. We’re always a one quarter lag.

Okay. And then just one other question on this coverage issue is how can we think about your coverage on a same-store basis since the pool is changing so much I mean you have fair amount of assets sold or put into assets held for sale, how can we get a sense for what your portfolio is looking like on a coverage basis from a same-store basis?

Well it’s good to be about the same. And obviously we haven’t included that data we’re happy to actually maybe not prepare it as a slide in our supplemental but to include it in our prepared comments on the next call. It’s very consistent.

Okay, thanks.

Next Eric Fleming of SunTrust.

Hey guys just want to go back to Steve, can you just go back to the numbers on the capital the CapEx reinvestment numbers that you’re saying I just wasn’t able to write fast enough?

Absolutely we invested $38 million…

Sorry just the future [ph] you are saying there is 90 projects in the work is that…

Approximately 90 active projects of varying sizes with the Manhattan one being the largest.

Okay. And then….

I would encourage you to page seven of the supplement, we added some new data, which is new build the major renovation in CapEx projects. So we’re breaking it down with our new builds which was 14 and then the CapEx projects. So that might be helpful.

Okay. So of that you are just saying -- so that’s what the math is saying you gained a $400 million plus in remaining investment for that?

Yeah the remaining commitment is $318 million.

Okay, yeah all right thanks.

Things were drop off that are finish and things will get out in next quarter we got stuff in the queue.

Thanks, a lot guys.

Next we have Juan Sanabria of Bank of America. Please go ahead.

Hi, good morning. I was just hoping you could talk to the rent coverage levels you’re underwriting to for skilled nursing acquisitions at this point in time if that’s changed at all with a little bit more uncertainty and if you could just start there?

Yeah the coverages what we underwrite to has moved around over the last 10-12 years was really a kind of a 1.35, 1.40 and sort of a go-go late 90s it got down to 1.25s and now it’s really back up to the 1.4 coverage ratio after 5% management fee.

Okay. And why not increase that particularly in a market where there is kind of I guess a lower volume flow given the uncertainty from the traditional target ranges why not give yourselves more of a buffer?

I think there is a little bit -- if we were in absolutely new credit relationship we’d probably think a lot harder about it where it’s an existing relationship and we’re typically adding to a small piece of a pie to a much bigger relationship. To think about 1.5 versus 1.4 in a portfolio that’s going to add 20% to the overall asset base for an individual operator that’s not moving the dial. So to answer your question if we were looking at a brand new relationship we might be a little more aggressive in our thoughts around coverages out of the box, but the vast majority of what we’re buying we’re adding to existing relationships. And so you are not going to move the dial that much going from 1.4 to say 1.5.

Okay. And then the assets you’re looking to sell about $100 million any kind of trend in those numbers is it below average rent coverage numbers that you’re trying to sell? And if you can give us any sense of what the coverage levels are there and maybe how we should think about dispositions kind of on a go forward basis as we start to think about ‘17?

Yeah it’s a little bit of a mix bag, but the coverages are below our average, below 1.3 of combined. And then at the disposition activity it’s -- we have got 31 assets in held for sale, there is not a clear pathway to sale, we have another 30, we will continue to identify one-offs as we go. But this year we got a little more aggressive with spent it’s a full year post merger, and we really had a good view of the portfolio and we attacked it pretty aggressively in terms of assets we wanted to move. There is not a long list where we sit there go or there is another 30 behind it at least as I sit here today.

Okay great. And just one last quick one from me, there is some change potentially coming on the way customers or patients can litigate disputes not having to go to arbitration, any thoughts on how that may impact cost structures or coverage levels at all?

We may see it come through professional liability rates to some extent, but it’s very early to predict how that might have effect insurance costs. The other thing is just to be clear in most -- in a wrongful death claim, which tend to be the big claims, most jurisdictions don’t allow arbitration provisions because the patient isn’t the claimant, it’s the family and they haven’t signed the arbitration. So it’s not quite as -- it’s an interesting dynamic, but the fact of the matter it’s a little -- it’s a subset of all the potential lawsuits that our operators face, it’s not every potential lawsuit. And so wrongful death is always in more jurisdictions is thrown out because the complainant didn’t signed the form. So such a long answer to -- there is a lot of moving parts around it, the thought today is it’s not going to be significant in terms of increased costs, but we don’t have good data yet from the insurance companies.

Thanks, guys.

Thank you.

That’s we have Todd Stender with Wells Fargo.

Hi thanks. I am not sure if I missed this, can you guys give a little more detail on the 31 SNF portfolio you acquired, I think you may have said that the in place operator with Signature?

, :

Who was the seller and can you go into senses if you can give the rent coverage and if you can’t is it higher or lower than the Signature average?

The rent coverage is consistent with where they end up overall, which is right around the median for Omega. The seller we don’t comment on it it’s really kind of up to the seller.

And how about any Genesis assets you’d consider adding to, is that an operator you would add to at this point, you got Welltower and Sabra being sellers, what’s your appetite for Genesis?

We love Genesis as an operator, but they’re already 7% of our revenue mix. So a meaningful addition to the Genesis position today would be a little bit tougher us to look at.

Okay. And then just looking at SNFs and ALFs at this point, what coverage ranges are you comfortable buying at, at this point?

I think once again we commented on SNF coverages, we’re looking for a 1.4 because the rule of thumb I mean obviously we look through to the underlying operations and make adjustments accordingly whether they are positive or negative. But so for SNFs it’s a really a 1.4 and then for ALFs it’s really more of a 1.2.

Great, thank you.

Thank you.

Michael Knott, Green Street Advisors.

Hey guys. Given that the 2018 lease expirations are higher than your typical year. Just curious if you have any early cover or thoughts on that any of that concerning to you or lower coverage?

So, the majority of those lease expires in ‘18 are two operators and we're in conversations with both of those about extending out.

Both have coverages that are right around, I mean we have -- it would be stunning for either one of those relationship. First of all, it's the bulk of the facilities that each of those operators runs. Second of all the coverages are strong. So it would be stunning if we’re able to hand those keys back and frankly it would be fine, because we'd find alternative operators.

And just in general and not specific to those situations, but if someone had an expiring lease of 1.3 times and you guys are underwriting to 1.4 that's probably reflective of market. Would there likely be some kind of rent roll down in that type of generic situation again not to ask you to comment on those specific ones, but in general how would we think about that?

I don't think you’d see a rent roll down at all and we are aware of situations in the marketplace today where folks are leasing portfolios aggressively with coverages that are just above 1 time. So the point being that you have operators that have appetite for leases that cover much at much lower levels than we're comfortable underwriting for new dealers.

Okay, thanks. And then just a couple of other quick ones, this follows on Juan's question a little bit on the dispositions. I'm just curious if the thought process on the pruning that you're undertaking it sounds like the coverage is below your average on those assets not surprisingly. But is it sort of a multi-fascinated analysis that accounts for your thoughts on the operator and then also the specific real estate that is under those leases. Just curious you can comments about the thought process.

Yeah that's absolutely right. And you have a -- really an interesting mix where many of these properties are two, three, four properties out of much bigger master lease relationships that we've identified with the operator but these just don't make sense strategically going forward. And then on the other hand you have a small two, three, four facility operator relationship where you're exiting the whole relationship. And it is as you said multi-fasted, some of it's just property driven, geography driven and some of it is operator strategic driven.

Okay. And then last one from me is can you just help me understand how you're thinking about further investment in the UK today post-Brexit?

Yeah, I mean right now Brexit hasn’t really had any impact on our UK operators or our UK operator I should say. We're still looking opportunistically in the UK for transactions. As of yet the Brexit move has not changed our investment perspective.

And it's not causing the increase in opportunities or any kind of disruptions in the financing environment that might help you?

We have not seen that yet. It hasn't created a disruption or a pickup in transactions, actually it created somewhat of a slowdown. Obviously the financing markets have changed, but at this point we're not looking at those with any real specificity.

The next question we have comes from Nick Yulico of UBS.

Hi everyone, this is Terence [ph] here on for Nick. Just a quick follow-up, have you given any rent concessions to tenants year-to-date?

None.

Okay thank you.

You’re welcome.

And next we have Jeff Walkenhorst of Copeland Capital Management.

Good morning guys, thanks for taking the questions. We appreciate the dividend growth and you continue to grow it consecutively and at a very healthy 9% pace year-over-year, which is among the best of many REITs particularly in your peer group. But it seems like there is a disconnect given the share price performance and also we appreciate the information that you've published in the August slide deck. So maybe looking at the changing reimbursement environment you have CJR bundle 1, bundle 2 and the Cardiac bundle. We add those up we're looking at, at least based on the 2014 data only 12% of the Medicare payments in your portfolio at least of that time. So what -- maybe you can help us reframe or understand the growth prospects, I mean is there a disconnect is there something that the market is missing or that is misunderstood in the story?

From our perspective I think the biggest thing is the pace of change and there is really two components, one is none of the change in -- that’s going on now and began 10 years ago with Medicare advantage. So we saw Medicare advantage penetrate 30 plus percent of the Medicare population and then ACOs were introduced so now between advantage and ACOs you have almost half of the Medicare population already in some form of a capitated environment. And now Medicare’s reaching out into fee-for-service but very carefully. And so, I think the big disconnect for us is that this is something new and revolutionary as oppose to an evaluation and CMS is being thoughtful the rollout of the second phase of CJR and the cardiac pilot doesn’t start till July 1st of ‘17. So, we’ve already felt a lot of the impact of the pilot one, in our numbers and it hasn’t been significant. I think that’s to me that’s the biggest disconnect and in the second half of it is all of this is necessary because the demographics coming our way in the next four years are massive. And really it sort of everyone our operators in CMS getting from here to there in the most efficient way.

Right. So you still -- you view that as positive the changing reimbursement environment I guess there is some unknowns and some the market is seem more risk, but has it permanently changed the growth prospects and to the earlier question would we expect rent roll downs or do you think it’s -- the environment still a support annual rent escalators of 2% plus for most of your portfolio?

We feel comfortable with the environment, because I think it’s already happened in our industry and it’s just going to continue, which is the sorting between the folks that are sophisticated enough to handle the type of patients that are going to be coming through the settings that they are running and we fell like we’ve identify that group. So, from where we seat, we look at our escalators, which really track inflation and we look at the opportunities for our top 10 or top 30 frankly operators, which make up the vast majority of our rents. They are going to be the folks that win in this process.

Right, okay. One last one in terms of the scale that you guys have put together with the Aviv acquisition versus other competitors or new supply that maybe coming online, has the environment got more difficult in terms of -- for Omega to or is the scale in advantage to the company and the ability to work through the changing environment and to potentially grow the portfolio further?

I think the scale will be an advantage. We can look at markets broadly, we can look at moving properties amongst our operators. We have a lot more flexibility than a portfolio that national with one operator or 100 facilities spread out all over the places. Our density is going to help us and the number of operators will help us.

Has it worked to-date as you expected when over the past year and a half or so since you announced the deal and closed the deal?

Absolutely, you look at a lot of our acquisition activity, we’re driving it through the new tenant base that we picked up with the merger, which is one the things we talked about our model driven off of our tenant relationships. And we picked up a number of them that have been very active in terms of continuing to consolidate the business.

Okay, thanks. Thanks very much, good luck guys.

Thanks.

[Operator Instructions] Well at this time there appears to be no further questions we’ll go ahead and conclude today’s Q&A. At this time I’d like to hand the conference back over to management for any closing remarks.

Thanks, Mike and thanks everyone for joining the call today. Bob Stephenson will be available for any follow-up that you may have.

And we thank you sir and to the rest of the management team for your time also today. The conference call is now concluded. At this time you may disconnect your lines. Again we thank you for participating on today’s conference call. Thank you take care and have a great day.