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CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS

6 Months Ended

Jun. 30, 2025

CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS [Abstract]

CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS

NOTE 4 – CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS

Contractual receivables relate to the amounts currently owed to us under the terms of our lease and loan agreements. Effective yield interest receivables relate to the difference between the interest income recognized on an effective yield basis over the term of the loan agreement and the interest currently due to us according to the contractual agreement. Straight-line rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement. Lease inducements result from value provided by us to the lessee, at the inception, modification or renewal of the lease, and are amortized as a reduction of rental income over the non-cancellable lease term.

A summary of our net receivables and lease inducements by type is as follows:


		June 30,			December 31,
		2025			2024

		(in thousands)
Contractual receivables – net		$	11,552		$	12,611

Effective yield interest receivables		$	2,099		$	1,839
Straight-line rent receivables			246,458			238,690
Lease inducements			8,576			8,788
Other receivables and lease inducements		$	257,133		$	249,317

Cash Basis Operators and Straight-Line Receivable Write-Offs

We review our collectibility assumptions related to rental income from our operator leases on an ongoing basis. During the three and six months ended June 30, 2025, we placed two new operators, which Omega did not previously have a relationship with prior to 2025, and one existing operator on a cash basis of revenue recognition, as collection of substantially all contractual lease payments due from them was not deemed probable. During the three months ended June 30, 2025, there was a $15.5 million write-off of straight-line rent receivable associated with placing the existing operator on a cash basis of revenue recognition, as we received information regarding substantial doubt of its ability to continue as a going concern. The lease agreements with the two new operators were executed in 2025 as part of the transition of facilities from prior operators. As we had no previous relationship with these new operators and collection of substantially all contractual lease payments due from the new operator was not deemed probable, we placed the new operators on a cash basis of revenue recognition concurrent with the lease commencement dates, so there were no straight-line rent receivable write-offs associated with placing these operators on a cash basis.

During the six months ended June 30, 2025, we also wrote-off $2.1 million of straight-line rent receivable balances through rental income as a result of transitioning facilities between operators.

During the six months ended June 30, 2024, we placed one new operator on a cash basis of revenue recognition. In the first quarter of 2024, we entered into a lease with the new operator as part of the transition of facilities from another operator. As we had no previous relationship with this new operator and collection of substantially all contractual lease payments due from the new operator was not deemed probable, we placed the new operator on a cash basis of revenue recognition. We did not have any straight-line receivable write-offs through rental income as a result of placing operators on a cash basis of revenue recognition during the three and six months ended June 30, 2024, respectively.

As of June 30, 2025, we had 22 operators on a cash basis for revenue recognition, which represent 17.5% and 20.6% of our total revenues for the six months ended June 30, 2025 and 2024, respectively.

Rent Deferrals and Application of Collateral

During each of the six months ended June 30, 2025 and 2024, we allowed two and three operators to defer $2.7 million and $1.8 million, respectively, of contractual rent and interest. The deferrals during the six months ended June 30, 2025 and 2024 primarily related to Maplewood ($2.4 million and $1.5 million, respectively). During each of the six months ended June 30, 2025 and 2024, we received repayments of deferred rent of $2.6 million and $1.0 million, respectively.

Additionally, we allowed one and four operators to apply collateral, such as security deposits or letters of credit, to contractual rent and interest during the six months ended June 30, 2025 and 2024, respectively. The total collateral applied to contractual rent and interest was $4.3 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively.

Lease Inducements

As discussed in Note 2 – Real Estate Assets, we agreed to a one-time $10.0 million lease inducement payment to an operator in connection with a new lease agreement executed in the first quarter of 2025. As this operator is on a cash basis of revenue recognition, the inducement was written off and recorded as a reduction to the rental income recognized for the six months ended June 30, 2025.

Operator Collectibility Updates

Maplewood

For the three and six months ended June 30, 2025, Maplewood paid $14.4 million and $28.0 million of contractual rent, respectively, falling short of the $17.3 million and $34.6 million of contractual rent due under its lease agreement for those periods, respectively. These amounts exclude contractual rent and payments related to Inspir Embassy Row in Washington D.C. of $3.2 million and $5.3 million for the three and six months ended June 30, 2025, respectively, which were paid in full and are separately discussed in Note 2 – Real Estate Assets. Maplewood also did not pay any of the $3.1 million and $5.4 million of contractual interest due under the secured revolving credit facility for the three and six months ended June 30, 2025, respectively.

Maplewood initially short-paid the contractual rent amount due under its lease agreement during the second quarter of 2023 and has not made full contractual rent and interest payments since that time. Maplewood is on a cash basis of revenue recognition for lease purposes, so rental income is only recorded for contractual rent payments that were received from Maplewood for the respective periods. We recorded rental income of $14.4 million and $11.8 million for the three months ended June 30, 2025 and 2024, respectively, and $28.0 million and $23.1 million for the six months ended June 30, 2025 and 2024, respectively.

As discussed further in Note 5 – Real Estate Loans Receivable, no interest income was recorded on the Maplewood secured revolving credit facility during the three and six months ended June 30, 2025 and 2024 as the loan is on non-accrual status for interest recognition.

In July 2025, Maplewood short-paid the contractual rent and interest amounts due under its lease and loan agreements by $1.8 million.

As previously disclosed, we entered into a settlement agreement with the Greg Smith, principal and chief executive officer of Maplewood, estate (the “Estate”) in the third quarter of 2024 that, among other things, grants Omega the right to direct the assignment of Mr. Smith’s equity to the key members of the existing Maplewood management team or their designee(s) or another designee of Omega’s choosing, with the Estate remaining liable under Mr. Smith’s guaranty until the transition is complete or one year from the court’s approval date, if earlier, and requires Omega to refrain from exercising contractual rights or remedies in connection with the defaults. We are still awaiting regulatory approvals related to licensure of the operating assets before the transition will be completed.

LaVie

LaVie Care Centers, LLC (“LaVie”) commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division in June 2024. On December 5, 2024, a plan of reorganization was confirmed by the Bankruptcy Court, pursuant to which the LaVie master lease agreement was to be assumed and assigned by certain of the debtor(s) to operators designated by the Plan Sponsor upon the effective date of the plan. The plan of reorganization was effective as of June 1, 2025, which resulted in the LaVie master lease agreement being assumed by and assigned to ENDMT LLC (“Avardis”) and amended and restated. The amended master lease has a lease term ending December 31, 2037 and requires monthly rent payments of $3.1 million, which escalate 2.5% annually.

For the three and six months ended June 30, 2025, LaVie paid full contractual rent of $6.2 million and $15.5 million, respectively, through the date the plan of reorganization became effective. As LaVie is on a cash basis of revenue recognition for lease purposes, rental income recorded was equal to cash received of $6.2 million and $5.9 million during the three months ended June 30, 2025 and 2024, respectively, and $15.5 million and $10.3 million during the six months ended June 30, 2025 and 2024, respectively. Avardis paid full contractual rent of $3.1 million in June and July 2025, following the effective date of the plan of reorganization. Avardis is on a straight-line basis for rental income recognition, and we recognized $3.6 million of rental income related to Avardis for June 2025.

We did not recognize any interest income related to LaVie during the three and six months ended June 30, 2025 and 2024, as the three loans that were outstanding during the periods have interest paid-in-kind (“PIK”) and are on non-accrual status.

Genesis

Genesis Healthcare, Inc. (“Genesis”) was placed on a cash basis of rental revenue recognition during the third quarter of 2020 based on information the Company received from Genesis regarding substantial doubt as to their ability to continue as a going concern. Genesis continued to make their rent and interest payments to us until March 2025, when it failed to make the rent payment due under its lease agreement and the interest payment due under one of its three loan agreements.

During the second quarter of 2025, Genesis made all required contractual rent and interest payments. As Genesis is on a cash basis of revenue recognition, we recognized rental income related to Genesis of $12.8 million and $25.3 million (which includes $21.1 million for contractual rent payments received and $4.2 million from the application of proceeds from the letter of credit that was held as collateral from Genesis) during the three and six months ended June 30, 2025, respectively. During the three and six months ended June 30, 2024, we recognized rental income of $11.9 million and $23.8 million, respectively, for contractual rent payments received from Genesis. In addition, we recognized $4.1 million and $8.3 million of interest income (which includes $0.1 million from the application of proceeds from the letter of credit) related to three loans with Genesis during the three and six months ended June 30, 2025, respectively. The $13.0 million real estate loan with Genesis was settled in full in May 2025 so only the two term loans discussed in Note 6 – Non-Real Estate Loans Receivable remain outstanding as of June 30, 2025. We recognized $3.7 million and $7.2 million of interest income related to two term loans with Genesis during the three and six months ended June 30, 2024, respectively. As of June 30, 2025, there was $3.5 million remaining under the letter of credit.

In July 2025, Genesis commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division. Genesis will continue to operate, as a debtor-in-possession (“DIP”), the 31 facilities subject to a master lease agreement with Omega, unless and until Genesis’ leasehold interest under the master lease agreement is rejected or assumed and assigned. We committed to provide, along with other lenders, up to $8.0 million of a $30.0 million junior secured DIP financing to Genesis, as further discussed in Note 6 – Non-Real Estate Loans Receivable. As a condition of the DIP financing, Genesis is required to pay Omega full contractual rent under its lease agreement. In July 2025, prior to filing for bankruptcy, Genesis paid full contractual rent and interest due of $4.8 million. As discussed in Note 6 – Non-real Estate Loans Receivable, 8.2% per annum of the total 13.2% per annum interest on the term loans is PIK interest.