Good morning. And welcome to the Omega Healthcare Investors Fourth Quarter 2022 Earnings Conference Call. 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 would now like to turn the conference over to Michele Reber. Please go ahead.

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, contemplate 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 identify 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.

Thanks, Michele. Good morning. And thank you for joining our fourth quarter 2022 earnings conference call. Today I will discuss our fourth quarter financial results, operator restructurings and our expectations related to funds available for distribution. Our fourth quarter adjusted FFO is $0.73 per share and funds available for distribution are $0.70 per share. We have maintained our quarterly dividend of $0.67 per share. The dividend payout ratio is 92% of adjusted FFO and 96% of funds available for distribution. As expected, year-to-date FAD of $2.77 per share, exceeded our year-to-date dividend paid of $2.68 per share. Turning to operator restructurings, we have successfully concluded a number of operator restructurings, which have generally resulted in limited or no diminution in longer term funds available for distribution. Later, Dan will review some of our new and ongoing restructuring activity. As these are in process, the ultimate outcome is difficult to predict. However, based on operator discussions to-date, we believe our first quarter 2023 FAD will be less than our current dividend of $0.67 per share. We believe as these current restructurings are resolved and already completed restructurings, principally Agemo begin paying restructured rent, we will again return to a FAD run rate in excess of our current dividend. While we remain optimistic regarding the long-term skilled nursing facility industry prospects, we continue to remain cautious in the near-term as our operators contend with staffing issues and occupancy slowly heads back to pre-pandemic levels. Fortunately, some states have recognized the inflationary pressures facing our operators and have responded with supportive rate increases. We are appreciative and thankful for their support. I will now turn the call over to Bob.

Thank you, Taylor, and good morning. Turning to our financials for the fourth quarter, our NAREIT FFO for the fourth quarter was a loss of $30 million or a loss of $0.13 per share, as compared to $124 million or $0.50 per share for the fourth quarter of 2021. Our adjusted FFO was $177 million or $0.73 per share for the quarter and our FAD was $171 million or $0.70 per share and both excludes several items as outlined in our adjusted FFO and FAD reconciliation to net income found in our earnings release, as well as our fourth quarter financial supplemental posted to our website. Revenue for the fourth quarter was $145 million before adjusting for certain non-recurring items, compared to $250 million for the fourth quarter of 2021. The year-over-year decrease is primarily the result of incremental write-offs of straight-line accounts receivable and lease inducements in 2022 as a result of placing LaVie, Maplewood and two additional operators on a cash basis for revenue recognition. Consistent with historical practices, the $96 million of straight-line accounts receivable and lease inducements written off in the fourth quarter is excluded from our fourth quarter adjusted FFO and FAD calculations. Our fourth quarter 2022 FAD was flat compared to our third quarter 2022 FAD, as the decrease in cash revenues related to payments made by operators on a cash basis was offset by lower or favorable G&A expense due to the timing of professional services, as well as higher interest income from short-term balance sheet cash investments. In keeping with previous earnings calls, I will provide revenue, adjusted FFO and FAD commentary on certain operators, including updates on LaVie, Maplewood and Healthcare Homes, which were discussed in our January investor presentation. Dan will provide contractual and operational updates on these operators in…

Thanks, Bob, and good morning, everyone. As of December 31, 2022, Omega had an operating asset portfolio of 901 facilities with approximately 90,000 operating beds. These facilities were spread across 65 third-party operators and located within 42 states in the United Kingdom. Trailing 12-month operator EBITDARM and EBITDAR coverage for our core portfolio as of September 30, 2022, decreased to 1.37 times and 1.04 times, respectively, versus 1.39 times and 1.06 times, respectively, for the trailing 12-month period ended June 30, 2022. During the third quarter of 2022, our operators cumulatively recorded approximately $18.6 million in federal stimulus funds as compared to approximately $29 million recorded during the second quarter. Trailing 12-month operator EBITDARM and EBITDAR coverage would have decreased during the third quarter of 2022 to 1.21 times and 0.88 times, respectively, as compared to 1.23 times and 0.90 times, respectively, for the second quarter when excluding the benefit of any federal stimulus funds. EBITDAR coverage for the standalone quarter ended 9/30/2022 for our core portfolio was 0.91 times, including federal stimulus and 0.83 times excluding the $18.6 million of federal stimulus funds. This compares to the standalone second quarter of 0.96 times and 0.84 times with and without $29 million in federal stimulus funds, respectively. Occupancy for our core portfolio has continued to trend up from a low of 74.6% in January of 2022 to 78.3% as of mid-January 2023 based upon preliminary reports from our operators. Turning to our senior housing portfolio. Today, our overall senior housing investment comprises 184 assisted living, independent living and memory care assets in the U.S. and the U.K. This portfolio on a pure-play basis had its trailing 12-month EBITDAR lease coverage increased to 0.97 times at the end of the third quarter, as compared to the end of the second quarter,…

Thanks, Dan, and good morning, everyone. While the announcement this week at the end, the public health emergency effective May 11th of this year, is perhaps not unexpected, it is not particularly ideal given some of the benefits that it provided the long-term care industry, which is still deeply entrenched in post pandemic recovery phase. Specifically, the three-day stay waiver was still tied to the PHE and will now end on May 11th. This waiver huge benefit to the industry during the height of the pandemic as the reimbursement associated with the ability to scale in place helped to offset some of the increased costs connected with managing COVID outbreaks. That said, the other major benefit of the PHE was the continuation of the enhanced 6.2% FMAP add-on. However, that had already been delinked from the PHE as a result of the Consolidated Appropriations Act of 2023, which passed in late 2022. That act provided for a phase-down of the add-on throughout 2023 from 6.2% in the first quarter to 5% in the second quarter, 2.5% in the third quarter and down to 1.5% in the fourth quarter with no add-on provided after 2023. It is too soon to tell what the impact of those reductions will have on the FMAP rate add-ons that certain states like Texas had been providing to skilled nursing providers. In terms of recovery, while occupancy is continuing to slowly rebound, not unexpectedly the recovery has tapered off slightly in these winter months. However, 31% of core facilities have now recovered from an occupancy perspective, up from 29% in the second quarter, while another 24% of core facilities that have not yet fully recovered are at or above 84% occupancy. Based on the January 2023 jobs report for Long-Term Care, ACA reported that as of…

[Operator Instructions] Our first question is from Jonathan Hughes with Raymond James. Please go ahead.

Hey. Good morning. Question for Bob and just to simplify for us listening, because there are a lot of moving pieces driven by revenue from operators, either resuming paying rent, no longer paying rent, and the application of security deposits. But can you give us the expected change in FAD from $171 million in the fourth quarter last year to the first quarter of this year and then maybe also the expected G&A in the first quarter?

Yeah. Jonathan, I will try to summarize, it’s not that easy, because you are right, there are a lot of moving parts and I am only going to address the operators that we talked about on the -- in our presentation or in the press release. So the first one would be, so they paid us $24.8 million in Q4, I stated they paid $2.5 million in January, which was 34% pursuant to the deferral agreement. That equates to roughly $7.5 million for Q1. Plus, there’s the seller financing note and remember notes are paid in arrears. So that would equate to another $1.4 million in Q1 or $9 million combined related to LaVie from a FAD standpoint Q1. Looking at Maplewood, they paid us $20.2 million in Q4 combined rent and interest. They paid, as I stated, $5.8 million in January for rent, $1.5 million in interest or combined $7.2 million. That equates to $17.3 million in rent, plus the $1.5 million in interest, because as we stated that, interest will be ticked for the remainder of the year. Those two combined roughly $18.8 million in FAD related to Maplewood in Q1. Agemo, pretty simple, they paid us nothing in Q4 or Q1, therefore, we don’t anticipate Q1. However, they will start paying at an annual rate of $27.9 million starting in April. Healthcare Homes, they paid us £5 million in Q4. That equates to about $5.9 million, plus or minus. We agreed to defer rent through April, therefore no FAD in Q1. We will book AFFO and revenue as they remain on a straight-line revenue recognition basis. The 2.4% operator, they paid us $1.5 million in Q4, they paid us $0.5 million in January. We will only record FAD to the extent we get cash from them. Dan did mention we anticipate this portfolio to transition in Q1. The 2.2% operator, they paid us $3.8 million in Q4. They paid us $310,000 in January and similar to the 2.4, we will only record FAD as it’s collected. Dan mentioned we anticipate this portfolio to transition in Q1, is not stated, but if you take Dan’s numbers, I think, that’s going to translate to about $1.5 million of cash received, plus or minus depending on the transition timing related to that operator in Q1. And I think, lastly, you did ask the G&A -- about G&A. G&A was $8.8 million in Q4. G&A runs roughly $9 million to $12 million per quarter, and historically, our first quarter is typically high due to a number of factors, payroll taxes and really timing of professional as we do our 10-K, prepared for a proxy and things of that nature. Hopefully, that was short enough to answers your question.

I will have to go back and add up the numbers, but I think we can get a sense of where we will shake out from fourth quarter to first quarter. So I appreciate that. And then my one follow-up for -- would be for Taylor on dividend coverage. You mentioned in yesterday’s press release for an expected increase in the payout ratio and then in your prepared remarks earlier for an expected shortfall in the dividend coverage in the first quarter, and Bob, you just gave us the components of that. But given these building blocks of operators coming back online in the second quarter and hopefully more in the back half of the year, does that trajectory of improving cash flow give the Board comfort to maintain the current dividend. We are just trying to get a better sense of how they view the trade-offs between temporary shortfalls and returning that capital to shareholders? Thanks.

Yeah. It definitely gives me comfort. I won’t speak for the whole Board because we make a decision every quarter based on what we see. But if you take the building blocks that Bob talked about, the next step is to connect the dots from Q1 to Q2 and so you have a number of operators in Q1 that are not paying or partially paying and we should see a big pickup in Q2. And so that’s the piece that’s missing, but to the -- with Agemo coming back on, the transition of the 2.4% operator, which should go at approximately the contractual rent, very little diminution. Those are big moving parts that are -- that get us back into a reasonably comfortable FAD from a dividend perspective.

All right. Thanks for the time.

The next question is from Michael Griffin with Citi. Please go ahead.

Great. Thanks. Just going back to the LaVie rent deferrals. I mean, how concerned should we be that down the road, this could turn into, I guess, some form of rent reduction. And then have you gamed out a scenario, where you could allow X amount of rent reductions and still kind of keep the dividend intact?

Yeah. So on the LaVie question, we did identified, if you will, sort of the bottom tier of their assets in their portfolio and we discussed we have sold some of those already and we anticipate selling some other ones here in the first half of the year. And we think those two sales will bring the overall portfolio back into the black, back in the coverage that we have seen historically and that the rent deferrals will have a finite period of time.

Got you. That’s helpful. And then just maybe on those potential asset sales that you mentioned. I mean it looks like there’s still private appetite out there, but just maybe it’s cooled so much given sort of lack of bridge to HUD financing out there. I am curious what you are seeing in the transaction market and if any of these potential sales occur in the future, could we see seller financing to act on similar to the sale earlier this year, end of last year?

Yeah. So the capital markets obviously have cooled, rates have gone up, it’s become more difficult, hence, the seller take back paper that we did in the fourth quarter. Right now, actually, our -- most of our restructures involve re-leases, not sales. So the capital markets don’t come into play and that’s kind of what we see out in the future a little bit more transitions via re-leases than actual asset sales. So we are hoping not to rely and we are open -- our new operators will not have to rely on the capital markets.

All right. That’s it for me. Thanks for the time.

The next question is from Steven Valiquette with Barclays. Please go ahead.

Thanks, and good morning, everyone. Thanks for taking the question here. So, I guess, kind of similar to the first question in the Q&A, it is a little bit challenging to keep track of all the exact timing of some of the remedies and restructuring of the various operators. I guess, my question is the number of operators with rent coverage below 1.0, improving from 27 to 26 through September 30th. I guess if we did just try to fast forward beyond September 30th to today, you just think about all the announcements and restructurings you have disclosed in recent months. But if nothing else changed, but just taking those into account, what would the number of operators be in the sub-1.0 rent coverage category today pro forma for all your announced within restructuring, again, assuming no other changes to the other operators? Thanks.

Specifically, how many -- there are -- we added obviously some new restructures in this quarter. So the number will go up the exact number of operators, like, I don’t have that pro forma number.

And bear in mind, those numbers don’t include some of these rate increases that kicked in, in the latter half of last year and into this year. So there’s just a lot of moving parts.

Okay. All right. That’s fair. Separate question, I think you touched a little bit on some of the rate updates, but just curious if you can provide just a little more color on any particular state level skilled nursing rate update for 2023 for your SNF operators in some of your key states that really stood out that could be some potential positive relief as we think about the evolution of 2023? Thanks.

Yeah. So if we look at our top 10 states, five of the states either in the latter half of last year or expected at some point this year, Indiana, Ohio, Michigan, Pennsylvania, Virginia, again, not all of those are set in Ohio, not quite yet, are looking at least a 10%-plus increase in rates and some of those, like Pennsylvania kicked in January, that was 17.5%. So we have got quite a few here in the mid- to high-teens as well. And then you have got California and North Carolina, who have FMAP funds still running through there and expecting to potentially put that into their rates in the future. So we don’t see anything big on the horizon for those other than potentially FMAP converting into rates. New York is in our top 10, obviously, we don’t have a SNF presence there and that leaves Florida and Texas. So, Florida, as you know, did a 7.8% increase in October of 2022. That helped several of our operators moved quite substantially in their coverage. But in the grand scheme of things wasn’t quite as large as some of what these other states are doing. So we are watching them carefully. They are doing rate setting right now. So we are just hoping that they keep pace with inflation or beat it. But that’s too soon to tell at this point. And then you have Texas, right? So you have got the FMAP potentially going away there. We think we are cautiously optimistic with the rate setting that’s going to be happening in April, May and what’s sort of been proposed at this point that, that will likely stay in place come September 1st when the rates kick in and it could be substantially higher than that, there’s still some lobbying efforts going on and too soon to tell there. But those are our top 10 states.

Okay. All right. Great. Appreciate the color. Thanks.

The next question is from Joshua Dennerlein with Bank of America. Please go ahead.

Yeah. Hi, everyone. Just kind of curious on that 2.2% operator, where you did the transition, it’s seems -- it’s a little hard to tell, but it seems like there’s a rent cut associated with that transition. Could you kind of -- could you clarify that if there is a rent cut and what the size is? And then I’d be curious to know if that’s kind of indicative of maybe how operators under 1 time covered. What kind of support they might need?

Yeah. So I indicated the cut was about -- well, the new rent, if you will, from all the transitions including the four that are still to come, we end up with rent approximately 77% of what it was previously, which is $17.3 million versus the old rent of $22.4 million, so call it, $5 million.

And just to the second part of your question, is that indicative, I would be very careful kind of taking that as a broad brush analogy for other restructurings. I mentioned the 2.4% operator is in the process of transitioning and it will be no in rent there. We have done a smaller one that’s so small we don’t have to talk about it, Colorado assets and it was very much less than the discount we saw in this portfolio. This is a very old portfolio, the 2.2% portfolios, a very old portfolio that needed a lot of care and we are really happy to have moved it. But it’s not -- I would not paint that brush across the rest of them what we are doing.

Okay. That’s good color. And then I wanted to kind of ask on the public health emergency ending. It sounds like the FMAP funding got decoupled from that ending. Could you kind of provide more color on that and maybe how the end and the phase out of the FMAP that might impact your tenants in your portfolio?

Yeah. I mean the FMAP is interesting, right, because the fact that they decoupled it from the public health emergency is actually beneficial, because then they can sort of have it phased down throughout the year. We don’t know what the states will do with that, right? Some of the states like Texas still have it in their language, have the FMAP tied to the public health emergency ending. So they will have to do something further to get that additional funding through the end of the year. But on the FMAP side, you have got -- in our top 10 states, we have got Florida, Indiana, Ohio, Michigan, Pennsylvania, so five of our states that really didn’t have any FMAP rate. They might have given lump sums in the past or potentially those rates expired previously. So there’s nothing affecting those ones. California had previously already announced that they were extending their 10% FMAP through the end of the year, so regardless of the public or the decoupling there through the end of the year. So they are good. Virginia has previously taken their FMAP rate and put it into their base rate and quality add-ons. So they had already sort of solved that problem previously, because at New York, we don’t have a skilled presence. So that leaves Texas and North Carolina, which is the 2 that we are watching. Both of them have pretty substantial FMAP that ramp with the public health emergency. Texas, as I have mentioned, has it slated to continue or to go into their rate with the September 1st rate setting. We will see if that gets finalized, but we are pretty hopeful that it does. There might be a gap period, but I think Texas will probably step up on that piece of it now that there’s additional funding. And then you have North Carolina, who there’s a big push to get that into their July 1st rate setting of this year. So they will get FMAP through June, as determined in that state already, and then hopefully, they get it into the rate July 1st. So I think we are relatively covered there the last two states step up.

Thanks.

The next question is from Georgi Dinkov with Mizuho. Please go ahead.

Hi. Thank you for taking my question. Just going back to the PHE, I remember you just mentioned some of the waivers could go away. But I was wondering, do you expect any of the levers to stay in place and become permanent going forward?

We don’t. I mean, we hope that at some point in time, the ability to skill in place that three-day stay waiver would become policy, because it is good policy. But at this point, no, we don’t expect anything to stay in place the PHE.

Great. Thank you. And just going back to LaVie, we noticed that the new rate is 2%. Can you provide more color what was that rate prior to the cut?

8.1%.

Blended 8.1%.

Right.

8.1%. Okay. Thank you. And just last one for me, can you provide more color on acquisition opportunities and pricing in the U.S. and the U.K., and I guess, what is your plan for the year and where do you see opportunities?

So we have seen activity actually pick up as of late. I wouldn’t call it robust at this point, but it has picked up. It’s picked up both in the states and in the U.K. So while we are not -- we don’t predict what kind of deals we will do in the year, we have been active throughout these restructures, we anticipate continuing to be active.

Great. That is all for me.

The next question is from Tayo Okusanya with Credit Suisse. Please go ahead.

Hi. Yes. Good morning, all. Just following up on that acquisition question, the deals you guys did during the quarter pretty attractive cap rates there on a cash or GAAP basis. Just kind of curious, is that kind of what the market looks like when you are kind of doing deals that kind of 10%-plus GAAP yield, and if that’s the case, how does one think about what your acquisition activity could look like in 2023?

So the deals that we did in the fourth quarter, a lot of those deals had been in process, if you will, for quite some time, so that the yields that were could have been quoted back in even as far back as the second quarter. Our overall cap rates have gone up and so now we are quoting deals at probably about a 1% higher cap rate throughout 2023. So that’s kind of what we are looking at in terms of changes in the market. Does that helpful, Tayo.

Got you. Yeah. And does that -- just kind of given what those cap rates are in your applied cost of capital, it still seems like, again, you get to the cumulative transaction, so does that make you more interested in deal activity this year or no?

I don’t think it changes. I think -- it’s just a matter of sourcing good deals with quality credits and getting a return that makes sense in the current capital market.

The one thing I would say, Tayo, just to add to what Dan spoke about is, I’d love to put our $300 million of cash to work at 10%. So we are looking pretty hard at those type of opportunities. As you can model out, that’s versus the overnight rate of something in the like 3. That’s pretty powerful.

Got you. And then if you look in those one more on the regulatory front, one of the popular topics last year was Biden trying to push for minimum staffing levels at skilled nursing facilities. I have not heard much about that in 2023. Just curious if you could give any update on that initiative and kind of what you are hearing on that front?

I mean it’s still operating in the background and you still have ACA pushing for something that is reasonable and funded and I think that’s the big piece of it, right? It needs to be funded, because just there’s not much staffing out there to begin with and so that problem needs to be solved. But we haven’t heard anything substantial there.

Great. Thank you.

The next question is from David Rodgers with Baird. Please go ahead.

Yeah. Good morning, everybody. Just a couple of quick ones for me, I guess, excluding the named tenants, the 3%, 2.4% and the 2.2%, are you in active negotiations with any other tenants and what percentage of the portfolio would that be for either deferral, rent reductions, forgiveness loans, et cetera?

So, yeah, there’s active negotiations, but they are all small. They are all -- would be operators that would represent less than 1% of revenue.

But in the aggregate, I guess, nothing that we should be worried about here in the near-term?

Nothing that adds up to any material number.

Okay. Thank you. And then, Bob, one for you maybe, as we model out interest income for the year in totality and you gave specific operators. But I guess maybe in totality, can you give us the sense of how much of that might be on non-accrual, how much is actual cash interest and then the paid-in-kind component. I don’t know, as a percentage or dollars, whatever is easiest?

Not off the top of my head. Again, because some of these, as Dan mentioned, like LaVie, part of that is still going on with that negotiation, as well as some of these others. And from FAD, remember that’s only based on cash received. So I am not worried about the accrual side of it.

Okay. All right. Thanks, guys.

[Operator Instructions] The next question is from John Pawlowski with Green Street Advisors. Please go ahead.

Thanks. Good morning. My apologies if I missed this. Could you provide the average value per bed for the first 11 LaVie dispositions and the average value per bed anticipated on the next tranche of the dispositions?

They are just north of 100,000 of that, I believe, on both.

Okay. For that -- for the first group of sales that have already closed, how much lower do you think it would have traded if you didn’t provide seller financing or could you find another buyer at all without seller financing?

That’s tough to predict what would have could have happened in the past, I don’t know. It’s difficult to say.

Were there other bidders in the tent with the financing or the seller financing needed to actually get it across the finish line?

At the end of the day, we needed to get across the finish line with this buyer.

Okay. Last one for me. Megan, just as the months roll along and occupancy stays pretty low, are there any pockets of the portfolio, either regionally or kind of urban versus suburban, where you just think occupancy is structurally lower now in any part of the portfolio versus pre-COVID levels?

I don’t know that I would necessarily say structurally lower. I do think that there are certain areas that have more severe staffing issues that’s affecting occupancy, and over time, if that gets corrected, you should see that come back. But I mean, we have over 50% of the portfolio that’s either fully recovered or is 84% and above as they haven’t recovered and so I think that’s pretty telling as to where folks can get to. But I mean you have states like Florida has really bad staffing issues and they are not as recovered as the rest of the portfolio and we see that in various different places as well.

Okay. Thanks for the time.

The next question is from Nick Yulico with Scotiabank. Please go ahead.

Thanks. I want to go back to the interest income question and maybe ask it for the fourth quarter, the $25 million of interest income and then the $5 million on the non-real estate loans. How much of that is non-cash?

Nick, again, not off the top of my head, I think, $2 million is non-cash and that is a little bit of pick. So, on the last answer, if an operator is on straight-line accounting, we do count that taken bad, as Nick, you and I have discussed in the past, but it’s a very small number, it’s $2 million.

Okay. Thanks, Bob. The other question is on LaVie and the transaction that happened. So I am just wondering, I am trying to understand why there’s any fee that was paid to LaVie in this, because it looks like what happened here is, if I am reading this as effectively you got no cash in from the sale. You got seller financing. You had the buyer pay a portion of the fee that you owed LaVie, which I am not sure why there’s any feel to LaVie if they are not paying rent or not -- they are going to be pick on your term loan, why is there any money going to LaVie in this transaction?

So there’s no pick on the term loan. I am not sure what you meant there, but, yeah, there was ...

Sorry, I said on the new -- I thought it says on the -- you amended the term loan, so it’s now payment-in-kind.

Okay. I am sorry. Yes. You are right. I like you meant on the fourth quarter.

Okay.

So, yeah, the termination fee, if you will, was paid to LaVie to help them with their wind-down costs. I mean whenever there’s a transition, there’s associated obligations and liabilities associated with those buildings, so that was to sort of help them to operate and also help them pay out some of those wind-down costs.

Okay. So I guess I am just -- I want to make sure I am understanding this. So then in the fourth quarter, you had this $36 million of acquisition merger transition related costs that ran through expenses that you add back then. Is that fee that net -- looks like it’s like a net $10 million fee that you guys paid to LaVie, is that then just -- you guys just totally added that back and it’s not coming out of AFFO or FAD?

That’s correct.

Okay. I guess I am just wondering why that’s, like, how that makes sense. If you book the rent, the $25 million of rent, but effectively you paid $10 million to LaVie, why wouldn’t it be a net $15 million of rent cash from LaVie?

I am not following exactly what you are saying, Nick. But we take $10 million in cash, that piece is what you see in the FAD add-back as. I am sorry.

I was just wondering like if you -- I mean if you guys are paying LaVie $10 million of cash as a fee, but then you are booking $25 million of revenue from them -- cash revenue, I mean, isn’t that shouldn’t really be $15 million, because you paid them $10 million?

But there was no tax revenue on that piece.

There’s no cash revenue. Sorry, I thought you guys booked $25 million of cash revenue in the fourth quarter?

No. Not on that -- not that component of it.

Okay. I get so.

Yeah. I will call you and walk you through it. So you are confusing the rental payment and the transition pick on those $225 [ph].

Okay. Because the rent, the $24.8 million of received for rent in the quarter, that was -- I thought that was a cash rent number.

That is correct. That’s what we were paid.

Okay. All right. Thank you.

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

Hi. Thank you for taking my follow-up. Maplewood, the expansion of the loan commitment there to $320 million, could you talk a little bit about what the reason for that was?

Tayo, can you repeat that? I did not hear.

Yeah. Maplewood, so the expansion of the loan commitments to Maplewood, I think, the commitment was expanded to about $320 million, which is an increase of about $70 million versus where it was before. Could you just talk a little bit about that kind of additional commitment you have made to them and what that’s about?

So $13 million of it, as I indicated, was the increase in the line itself and the other delta of $53-odd million is the pick.

Okay. So the $53 million is the pick. Okay. Understood. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Taylor Pickett for any closing remarks.

Thank you. Thanks everyone for joining our call today. As always feel free to reach out to Matthew and Bob with follow-up questions. Have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.