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Thank you for standing by. My name is Dan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Omega Healthcare Investors Inc. Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Michele Reber, please go ahead.

Thank you, and good morning. With me today is Omega's CEO, Taylor Pickett; President, Matthew Gourmand; CFO, Bob Stephenson; CIO, Vikas Gupta; and Megan Krull, Senior Vice President, Data Intelligence and Government Relations. Comments made during this conference call that are not historical facts may be 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 discussed 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 2025 earnings conference call. Today, I will discuss our fourth quarter financial results and certain key operating trends. Fourth quarter adjusted funds from operations, AFFO, of $0.80 per share and FAD, funds available for distribution of $0.76 per share reflects strong revenue and EBITDA growth, principally fueled by acquisitions and active portfolio management. Our dividend payout ratio has dropped to 84% for AFFO and 88% for FAD. 2025 was a great year for our team. Full year AFFO and FAD growth exceeded 8% year-over-year, driven in part by $1.1 billion in capital deployment. In addition, the credit quality of our operators continued to improve as a result of active portfolio management and the overall improvement in industry fundamentals. During the fourth quarter, we closed two RIDEA transactions totaling $80 million. We significantly expanded our Sabra relationship, and we committed capital in Canada, all of this while delevering and strengthening the balance sheet. Our momentum from 2025 should carry us forward for another strong year in 2026. We will continue to actively manage and enhance the credit quality of our operating relationships. We will continue to deploy meaningful capital across all of our geographies and property types, including our new RIDEA platform. It is likely by year-end that Sabra will be our largest source of revenue. Furthermore, by year-end, it is likely that we will have the strongest tenant credit profile and balance sheet in Omega's history. I will now turn the call over to Vikas.

Thank you, Taylor, and good morning, everyone. Today, I will discuss the most recent performance trends for Omega's operating portfolio, including an update on Genesis as well as Omega's investment activity for 2025, including fourth quarter and subsequent closings. I will also give an update on Omega's pipeline and market trends for 2026. Turning to portfolio performance. Omega has investments in 1,111 facilities consisting of 1,027 in our owned real estate and mortgage loan portfolio, and 84 facilities in joint ventures with operating partners and third-party real estate investors. Of the total number of facilities, 62% are skilled nursing and transitional care facilities and 38% are U.S. senior housing and U.K. care homes. Trailing 12-month operator EBITDAR coverage, for our triple-net and mortgage core portfolio as of September 30, 2025, increased to 1.57x compared to our second quarter 2025 reported coverage of 1.55x. Core portfolio coverage continues to trend in a favorable direction, above-industry average coverage levels, and as discussed in prior quarters, provides us with confidence that our operating partners have sufficient means to provide superior clinical service to residents. In addition to the strong credit support this provides for existing investments, these coverage levels enable Omega, and our operating partners to continue to grow our respective businesses. As reported previously, Genesis filed for Chapter 11 bankruptcy protection in July 2025. As a reminder, Omega leases Genesis' 31 facilities for annual rent payments of $52 million. Our coverage continues to be above the mean coverage for our entire portfolio. Additionally, Omega has a $129 million piece of a term loan with Genesis, which is secured by a first-lien on essentially all of the assets of Genesis other than the AR, on which we have a second lien. We believe that the loan is fully secured. While the unsecured creditors committee has challenged the value of the loan collateral among other things, as part of the proceeding, we believe these arguments are without merit. Based on our lease coverage and collateral, we believe our credit position in this portfolio is strong. The bankruptcy process is progressing with a few critical events taking place in the last few weeks, including a second auction of the Genesis assets and a related sale approval hearing. Per the judge's order after the results of the first auction of Genesis assets were not approved in November 2025, a second auction was held on January 13, and the winning bidder was a group known as 101 West State Street. This group's bid was approved by the bankruptcy court on January 26. The principals of 101 West Street currently operate approximately 60 facilities on the West Coast. As required, they have submitted a hard deposit of $54 million and have an aggregate of 85 days, inclusive of additional hard deposits needed for extensions to represent that they have procured market financing commitments, which with contributed equity, satisfies the cash portion of its bid. As previously reported, Omega committed to support Genesis by providing $8 million of a total $30 million debt-earned possession loan. Genesis continues to pay us full contractual rent each month since filing bankruptcy. Due to the delays that came with having a second auction, the bankruptcy process is now anticipated to conclude in Q3 or Q4 of 2026. If 101 West Street consummates its purchase of the Genesis assets, Omega anticipates that it will assume our lease, and the cash proceeds of the sale will be sufficient to cover the payment in full of our DIP loan and term loan. These assumptions and time line, along with all elements of the bankruptcy process are subject to further developments and events in the bankruptcy proceeding, and we cannot be certain of the outcome. There are no material open issues with any other large operators. Turning to new investments. Omega's transaction activity in 2025 was very strong with over $1.1 billion in new investments. These transactions varied in size and nature, but demonstrate Omega's ability to adapt to the evolving investment landscape in the long-term care industry. In 2025, we continue to support the growth of our existing and new operators by focusing on strong credit-backed real estate, and also closed on our first RIDEA transactions in the U.S. senior housing space. Of our total $1.1 billion in new investments, a little over $700 million, or approximately 66% was in senior housing facilities or U.K. care homes. Although, we continue to invest in the U.S. skilled nursing sector to support and partner with best-in-class operators such as Sabra. This demonstrates how we are focusing on all asset classes and deal structures to maximize returns for our shareholders. As Matthew discussed on our last call, our primary goal is to allocate capital with a focus on growing FAD per share on a risk-adjusted basis. Accordingly, we have expanded our investment structures to now include RIDEA for U.S. senior housing and U.K. care homes with the goal of achieving higher risk-adjusted returns over time. We believe we are well positioned to enhance shareholder returns by acquiring underperforming assets at prices meaningfully below replacement costs. And then, partnering with proven operators to enhance the cash flow and underlying real estate value of such assets. Our targeted return for our investments is an unlevered IRR of at least low to mid-teens not assuming any cap rate compression upon exit in our underwriting. During the fourth quarter of 2025, Omega completed a total of $334 million in new investments, not including $31 million in CapEx. These new investments included the previously announced Sabra JV real estate transaction, U.S. senior housing RIDEA transactions and various other real estate investments in the U.S. and the U.K. For our new RIDEA investments, we acquired 4 senior housing facilities located in New Jersey, Wisconsin and Indiana for $37 million. We have engaged 2 third-party managers to operate the facilities on our behalf. Additionally, we made a $43 million investment for a 49% equity interest in a Class A rental CCRC in North Carolina, which will also operate via a RIDEA structure. Our other fourth quarter investments included the purchase of a U.K. care home for $16 million and $16 million in real estate loans. These additional investments were at a rate of 10%, and the real estate loans have an option for Omega to realize upside upon a refinance or sale of the facilities. Subsequent to quarter end, Omega closed on $212 million of additional investments. As previously announced and anticipated, on January 1, Omega closed on the purchase of 9.9% of the equity interest in Sabra's operating company for $93 million. Omega will receive a minimum 8% cash return on our investment. Cash flow from the Sabra operating company is anticipated to support a greater payment, but cash will be retained for Sabra's growth, and all additional amounts due to Omega will be accrued. As a reminder, this was step 2 of our overall investment in Sabra, where step 1 was our $222 million real estate investment for a 49% equity interest in 64 facilities operated by Sabra. The completion of our investment in the Sabra operating company creates strong alignment between Omega and Sabra. With our geographic scope and capital and Sabra's operational expertise, we collectively are in a unique position to evaluate growth opportunities and have optionality for deal structures, including our triple net master lease, the Sabra Omega real estate joint venture, and the Sabra operating companies. We are actively evaluating additional opportunities to grow the Sabra Omega relationship. Also, subsequent to quarter end, Omega closed on the purchase of 13 skilled nursing facilities located in Georgia for $109 million and one senior housing facility in Alabama for $10.3 million. The skilled nursing facilities will be leased to a current Omega operator, and a lease yield of 10.6%, and the senior housing facility will be operated by Omega and managed by a third-party manager via a RIDEA structure. Lastly, we are proud to announce that we have closed on a commitment to fund up to $64 million for the development of 5 replacement long-term care facilities in Ontario, Canada. The loan has a current pay interest rate of 10% and at Omega's auction is convertible to a 34.9% equity stake in the borrower entity that owns 21 facilities. Omega's collateral for the loan is this entire 21 facility portfolio valued today at over $130 million. Based on the credibility of our development and operating partner, a strong collateral for the loan, the waitlist for long-term care facilities driven by demographics, and the overall support of the Canadian government for the long-term care sector in Ontario, we believe this is a good risk-adjusted opportunity for our initial entry into Canada. Turning to the pipeline. Similar to 2025, our pipeline for 2026 is strong. Market opportunities both in the U.S. and the U.K. continue to be substantial, and we continue to see off-market opportunities through our operating partners, including our new RIDEA partners and managers. We continue to focus on growing our Rolodex of potential operating partners. As we have done for the past 2 decades, our relationships are a key component to our growth. As mentioned earlier, we continue to evaluate and focus on purchasing U.S. skilled nursing facilities, U.S. senior housing facilities, and U.K. care homes with increased flexibility on deal structures to ensure that Omega and its shareholders are able to benefit from additional sources of income. Whether that be through variations on triple net lease structures, RIDEA for senior housing assets or U.K. care homes or strategic joint ventures. I will now turn the call over to Bob.

Thanks, Vikas, and good morning. Turning to our financials for the fourth quarter of 2025. Revenue for the fourth quarter was $319 million, compared to $279 million for the fourth quarter of 2024. The year-over-year increase is primarily the result of the timing and impact of revenue from net new investments completed throughout 2024 and 2025. Our net income for the fourth quarter was $172 million or $0.55 per common share compared to $116 million or $0.41 per common share for the fourth quarter of 2024. Our adjusted FFO was $250 million, or $0.80 per share for the quarter, and our FAD was $238 million, or $0.76 per share, and both exclude several items 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 fourth quarter 2025 FAD was $0.01 greater than our third quarter FAD with the increase primarily resulting from incremental revenue related to the timing and completion of $485 million in new investments during the third and fourth quarters. Incremental Maplewood revenue as they paid $18.9 million in Q4, an increase of $200,000 compared to Q3. Lower net interest expense of approximately $1 million, resulting from bond and term loan payoffs in the fourth quarter. These were partially offset by $100 million in asset sales and $61 million in loan repayments over the past 2 quarters, resulting in a $2.1 million reduction to the fourth quarter FAD coupled with the issuance of a combined 7.8 million common shares of stock and OP units over the past 2 quarters to fund new investments. Our balance sheet remains incredibly strong as we continue to take steps to improve our liquidity, capital stack maturity ladder. In the fourth quarter, we funded $334 million of new investments primarily by issuing 5.5 million Omega operating partnership units valued at $222 million. Additionally, in the fourth quarter, we reduced our funded debt by over $700 million as we repaid $600 million of senior unsecured notes, repaid a GBP 183 million secured mortgage loan and repaid the $428.5 million term loan, all prior to their scheduled maturity dates. All 3 pieces of debt were repaid utilizing a combination of balance sheet cash, our revolver and fully borrowing on the $300 million delayed draw term loan. Our next scheduled maturity is in April 2027. In the fourth quarter, we also improved our liquidity as we entered into a new $2 billion ATM program. At December 31, we ended the quarter with $27 million in available cash on the balance sheet and over $1.7 billion of available capacity under our $2 billion revolver. Our fixed charge coverage ratio was 5.8x, and our leverage was further reduced to 3.51x. We are excited as our balance sheet and cost of capital continue to position us to accretively fund our active pipeline. Turning to guidance. As Taylor mentioned, our momentum from 2025 should carry us forward for another strong year in 2026. We are providing full year adjusted FFO guidance of a range between $3.15 to $3.25 per share, which includes the assumptions outlined in our press release issued yesterday. I'd like to take a moment to highlight a few of the guidance assumptions. It includes the impact of the new investments completed as of February 4 and does not include any additional investments not outlined in our press release and includes the impact of scheduled loan repayments and potential asset sales. Of the $213 million in mortgages and other real estate loans that are scheduled to mature in 2026, it assumes $157 million will be repaid, and the balance will be converted to the simple real estate. Similarly, of the $267 million in non-real estate backed loans that are scheduled to mature in 2026, it assumes $196 million will be repaid during 2026, which includes $137 million in Genesis loans, with the balance of the loans being extended beyond 2026. As I stated on our third quarter earnings call, we are always pruning and strengthening our portfolio through asset sales, and our initial 2026 guidance includes approximately $15 million to $25 million per quarter in asset sales. The high end of the range in our guidance includes, but is not limited to, additional cash from Maplewood as well as other cash-based operators, timing or potential extension of loan repayments and asset sales, G&A at the lower end of the range to name a few. Our 2026 adjusted FFO guidance does not include any additional investments or additional capital market transactions other than what I just mentioned or what was included in the earnings release. I will now turn the call over to Megan.

Thanks, Bob, and good morning, everyone. Last quarter, I mentioned the potential for an automatic 4% cut to Medicare related to the deficit caused by the OBBBA. Since then, the automatic reduction has been dealt with legislatively as has historically been the case, and is therefore, no longer an issue. Additionally, in December, HHS officially repealed the minimum staffing standards through an interim final rule, an action that we applaud as the draconian nature of the rule stood to make the provision of and access to care more difficult. Moving forward, we hope that this administration, who has been so supportive of this industry will work with industry leaders to find other ways to obtain regulatory rationalization going into 2026. Additionally, while Medicare Advantage has been a topic of conversation over the last week, with CMS proposing relatively flat rates in 2027, despite rising health care costs, I think it is important to point out that the impact to our portfolio would be minimal, if implemented as proposed. Not only are our current coverages as noted earlier by Vikas, able to withstand a certain level of expense pressure in the face of reimbursement not keeping pace. The percentage of our operators' revenue associated with Medicare Advantage is low. With total Medicare accounting for less than 26.1% of overall operator revenue when excluding non-Medicare quality mix and a Medicare Advantage penetration arguably far less than the 50% plus you see in the overall Medicare population, only a small portion of the business is impacted by this news. While we are unconcerned with this latest development, we are still carefully watching state reactions to the OBBBA as well as the impact it may have on the overall health of our operators' referral sources. We continue to support the efforts of our operators, partners and industry associations in educating lawmakers both at the federal and state levels on the importance of the services provided by the long-term care industry and the need to fund it appropriately. I will now open the call up for questions.

[Operator Instructions] Your first question comes from the line of Seth Bergey from Citi.

It's Nick Joseph here with Seth. Just wanted to dive in a little to the SHOP strategy? And kind of curious how you think of it being differentiated versus peers and the ability to grow just given the competition and the capital that has been moving into that space.

Sure, Nick. It's Matthew here. So I think the differentiation as much as anything is on 2 or 3 different fronts. Number one, we are looking at smaller deals tend to be relatively rifle shot deals as opposed to larger portfolio deals, you tend to find a little bit better economics in that situation. I would say a lot of the deals we're looking at are deals that need a little bit of love, a little bit of turnaround either lower occupancy, lower margin. We're aligning with operators who have expertise in that specific area. Be it the asset class that we're looking at, and the region that we're looking at, and have demonstrated the ability to turn around facilities like that. So I think we're much more looking for the -- as Vikas said in his talking points, the low- to mid-teens IRRs, and the only real way to obtain that is taking assets that need a little bit more of a turnaround opportunity. And then, obviously, we've structured the promotes as everyone tries to align our interests with those of our managers to make sure that they are sufficiently incentivized to obtain the financial returns that we're looking to achieve.

That's very helpful. As you think about kind of the turnarounds for those assets, do you assume that occupancy goes down initially? Or how do you underwrite at least the initial years of performance of those facilities?

Sure. It's a case-by-case basis. It's going to be determined on what we think needs to get done within those facilities, the ability of the former manager to market those effectively, the ability to push rate. Each one is very idiosyncratic. But needless to say, we spend a lot of time really understanding and scrubbing the reality of those numbers and the viability of those numbers to make sure that we're conservatively underwriting.

Our next question comes from the line of Omotayo Okusanya from Deutsche Bank.

This is Sam on for Tayo. I was wondering if you guys can give any update on PACS, like do you guys have any insight around the outcome of the federal investigation?

Yes, and this is Vikas. No, we don't have any more info on the investigation than what the public knows. I will say we continue to be in close touch with the PACS management team. Their buildings continue to perform strongly here at Omega, good credit, good operating results and good clinical performance. So right now, we feel generally good about that at Omega.

And I guess my follow-up would be around Genesis. I guess, how should we think about the timing and expected returns on the redeployment of proceeds from Genesis-related loans in 2026?

This is Bob. In the guidance, what we're assuming is sometime midyear, the loans, as I said, $137 million, that's made up of the combination of $8 million for the DIP and $129 million of what was on our balance sheet at 12/31. When that gets -- when we receive that back in, we will first pay off any balance that's on the credit facility, and the balance of that then will be invested at roughly 3.5% of overnight rates.

Our next question comes from the line of Michael Goldsmith from UBS.

First, I wanted to ask for just some color on the Georgia skilled nursing portfolio. Just given this is a little bit of a higher initial yield at 10.6% that we've seen in the U.S. of late, is that pricing more of a function of having some hair on it, or maybe more of a reflection of off-market deal flow? And am I reading it right that the facilities were transitioned to one of your existing operators from a prior operator?

Yes, Michael, this is Vikas. So just for some guidance. We are still quoting 10% for all SNF deals today. This deal was an off-market deal, and we were able to achieve slightly higher. Nothing super area about good buildings in Georgia. And yes, we are leasing this to a current Omega operator.

Got it. And just as a follow-up here. Historically, acquisition volume upside tends to come from the portfolio transactions. So how does the outlook for portfolios look right now? Are you seeing portfolios trade? And if so, are they trading at a premium or a discount?

Sure. This is Matthew. They're trading to the extent that they do trade, they're trading at a premium, both on the skilled nursing and the seniors housing side of things, and in the U.K. care homes. So there's not many chunky deals that we're seeing out there right now. But to the extent that they have traded over the last 6 to 12 months, we have tended to see a little bit of a premium there. Candidly, we'd rather choose selectively the facilities that we're looking to buy. And so particularly when you're paying a premium for those larger deals, they're not particularly attractive to us, but we obviously continue to look at everything.

Our next question comes from the line of Julien Blouin from Goldman Sachs.

Just regarding maybe the acquisitions that were closed in the fourth quarter and subsequent to quarter end. Can you give us a sense of how those were sourced, were they mostly on or off market? And then, what were the motivations of the sellers? I know you mentioned some turnarounds. So were these deals sort of mostly distressed situations?

Yes. Just looking at the deals quickly, it's really a mixed bag, some were marketed, some were not marketed. I will say there are quite a few that are off-marketed that came through current relationships, then the most notable, of course, being the Sabra deal. And then, the second question was?

What the motivation -- seller motivation was?

I mean it's, again, a mixed bag. Some of it is liquidity. Some of it is exciting. There are some turnarounds here, which where we have put in new operators, such as the Georgia transaction. So once again, that's a mixed bag as well.

Got it. Okay. And then, your tenant coverage, you mentioned continues to rise is the highest, I think, in recent history. Do you feel like at these coverage levels you're approaching sort of coverage levels where you might be able to re-lease that sort of positive spreads in future years? I know there's not much expiring this year, but a little bit more in 2027? Or is it really more that it just sort of increases the likelihood of renewal upon expiration?

Yes. Unfortunately, it's much more the latter. So majority of our leases have renewal options unilaterally at the right of the tenant. So even though it might show that it's expiring in 2027, to your point, if they're covering well, the likelihood is they will exercise that option to renew, and therefore, the opportunity for incremental pickup in the near term is relatively limited. But obviously, as we continue to look out, eventually the second and third renewal options, it tends to only be a couple of renewal options. We'll also expire and that pickup will be opportunistic for us. However, we don't see anything in the next 3 or 4 years that's going to meaningfully move the needle on that front.

Our next question comes from the line of Nick Yulico from Scotiabank.

This is Elmer Chang on with Nick. Considering guidance assumes rental payments at the current run rate, is it reasonable to assume Maplewood returns to the contractual rate by year-end? Because I think based on the improvement in rent payments in recent quarters, maybe there was some expectation they would be at contractual rent by this quarter.

Yes. As we've said previously, Maplewood is paying us all their cash flow now. So as Bob discussed, we are getting a run rate of $76 million right now, and we assume that number will increase at a small level later this year.

We don't really look at it so much in terms of contractual to Vikas' point. At the end of the day, they're going to continue to pay the cash flow. They obviously have some interest expense as well that is due above and beyond their contractual rent obligations. So as they continue to improve and they've demonstrated a really decent ability to improve and enhance their cash flows over the last few years, and I think, the management team is operating as well as any management team that we've seen out there right now, we will continue to benefit from that cash flow. But we don't look at it from a standpoint of contractual rent. We just look at it from a standpoint of more like a RIDEA-like model at this point in time.

Maybe second question is how should we think about the cadence and potentially earnings impact of loan repayments this year and even in 2027, outside of the Genesis loans, just given the volume of investments you've done in the last couple of years?

Sure. This is Matthew again. Yes, the loan repayments, it's tough to model. Bob has obviously given guidance as to what we think in 2026. Loans are not a large portion of our overall business, but they do represent a little bit of a headwind to the extent that they do come back. I don't think it's going to be a meaningful headwind over the longer term. Obviously, we have a fairly pronounced amount of stuff potentially coming back in 2026 that we've highlighted. But longer term, it obviously creates a little bit of a headwind until we able to redeploy the capital, but with the market being relatively robust today in terms of opportunities to deploy that capital, I don't think it's a long-term headwind for the company.

Our next question comes from the line of John Kilichowski from Wells Fargo.

Maybe just to go back to Maplewood here. With the core portfolio well occupied, what are you seeing in terms of RevPOR for? what can you kind of disclose about the success of really driving the economics there? I'm just curious about I understand you're not too focused on time line to full rent, but just sort of helpful to think about what's the growth of that existing portfolio?

Yes. John, this is Vikas. Just some stats for you here. The Second Avenue building is now at 97%, and the overall core portfolio is at 96%. And as for growth, a lot of it is going to be driven by rate increases. Maplewood is shooting to do a single-digit percentage -- a high single-digit percentage increase this year. We still don't know what that's going to be net, but that will drive some growth, and we plan -- that will happen going forward in the years to come.

Okay. Very helpful. And then, just to stay on Maplewood here. For Embassy Row, I don't know what else you can talk about here, but is there -- there's a JV partner in the OpCo, correct? And are you able to give any guidelines around, maybe the remaining capital availability from them, and helping make those yield on cost payments? I'm just curious sort of what's the lease-up trajectory and sort of time line that needs to take place at Embassy Row, such that you wouldn't need to pull, let's say, capital from the outperformance on the core portfolio to make whole the yield on cost payments?

So I would say that we actually -- for the first month, we've seen a positive cash flow on that facility at the end of last year, which is great. That's obviously prior to paying any rent. The lease-up is going in accordance with our expectations. I think Maplewood is extremely focused on ensuring that doesn't create too much of a headwind for their overall portfolio performance. It's tough to say when you're in lease-up, what that looks like, we look at it holistically over the context of the overall portfolio. And as Bob has indicated, we expect a modest pickup in February and an ability to continue to pay that rate going forward. But it's just too early to tell, both in the lease-up of that building and in the rate increases that they're trying to push across the portfolio right now what that's going to look like on a consolidated basis.

Congrats on the quarter.

Our next question comes from the line of Juan Sanabria from BMO Capital Markets.

Just on the SHOP investments, just curious, I know you talked about unlevered yields, but for the stuff you've done fourth quarter and year-to-date here. Just curious on the initial yields and how we should be modeling the returns on that capital? And as part of that, can you talk a little bit about the CapEx assumptions? And maybe just give a little color on how we should think about FAD relative to adjusted FFO from a guidance perspective for the full year?

Yes, I'll take the first part, Juan, it's Taylor. We're purposefully not disclosing initial yields because they're all over the place. We would have yields in the pipeline that have high single-digit yields right out of the box. We have some that are lower. And it all goes back to what Matthew said. Every deal is idiosyncratic, and we're looking at long-term IRRs and we're not aggressive in terms of how we underwrite to get to those. So we feel really good about what we're finding, and the operators are putting these buildings in the hands -- the operator's hands, where these buildings are going, and that's probably all I can say about it. In terms of CapEx, do you want to take that?

Yes. So again, it's again, a little bit of a mixed bag one. Some of the facilities we've picked up really don't need a lot of initial CapEx. Other ones probably do need a little PLC. That's a little bit of the nature of the turnaround element. We tend to price that in initially within our expectations. And I would say that the yields that we're always quoting to you are yields that we think are sustainable after a decent CapEx assumption either from an initial investment standpoint or even from a recurring standpoint. I don't know what that does in terms of how that looks for all our AFFO relative to our FAD going forward. So we are primarily focused on just growing that FAD.

And just with regards to the '26 earnings guidance, any -- how should we think about the delta between FAD and adjusted FFO?

Well, remember -- okay, you're right. We only give AFFO guidance, but escalator will impact that as it goes along. But same with FAD, you got to remember that the asset sales and the repayment of the loan maturities also will impact that. So I would keep about the same relationship.

Yes. I think the ratio -- I mean, you have to remember, we're a $14 billion company, and we just started investing in RIDEA. So I think that the ratio that you've seen between AFFO and FAD over the last few years is probably not going to meaningfully change in 2026.

Okay. And then, just Canada, a new market for you, and I think your first investment in the long-term care there. So just curious if you could give us a little bit of a quick one-on-one on the Canadian market versus the U.S., I'm assuming it's more akin to U.S. skilled nursing and kind of what opportunity this new sleeve potentially represents for Omega?

Sure. I mean as you can imagine, all of these things are up pretty involved in detail. If you were going to give an analogy, I'd probably say it's closest to the U.K. care home market, more than the skilled nursing market and the fact that it's a little bit more of a socialized medicine system there, so they don't make people exhaust the financial options to the extent that they do in the U.S. At the same time, most people tend to be longer-term residents within those facilities. In terms of a little bit of a background on this, we're very excited about this opportunity. We had an opportunity to invest with a very well-established and high-quality developer and operator in the Canadian long-term care market that we've got to know over the last year. We were able to structure a deal that we think can be sustainably accretive. However, I would say this is a little bit of an idiosyncratic investment. We wouldn't expect to significantly grow in the general Canadian senior housing market, as this is traditionally offered yields that are not particularly compelling to us given our cost of capital. However, we would be open to continue to grow with this operator, assuming that they can find deals that fit within the parameters of our cost of capital and are able to be accretive deals for us.

Our next question comes from the line of Farrell Granath from Bank of America.

Similar, I guess, to that question is, thinking about the investment mix in '26. I'm just curious if what you've already closed in January of '26 and early February is kind of in line of how we should be thinking of a mixture of loans as well as triple net and SHOP?

Yes. I'll speak to the pipeline. I think that will help you. If you just look at our pipeline, it is strong, as both Taylor and I said. It's in lines with really where we closed 2025. And if you look at what's actionable, about 1/3 is skilled nursing, 1/3 is senior housing and 1/3 is U.K. care homes. As for structure, it's a mixed bag. I would say a lot of the U.K. and U.S. senior housing is RIDEA-focused.

Okay. And also, just given the recent headlines around the CMA investigating some peers for recent transactions in the U.K., does that change any of your feelings on transactions in the U.K. or influence any of your investment decisions?

Yes. No, we are not concerned about that. We -- our lawyers do similar type of checks for us every time we would do a U.K. care home transaction. We've never ever been in breach of anything or close to it. So from our perspective, we are not worried about growing in the U.K. right now.

Okay. And just one small follow-up also just on your dividend, if there's any additional updates on coverage or how you're thinking about your dividend?

We're getting closer to needing to increase the dividend, but obviously, it's a Board call. And typically, we'll get to the point where we're required to increase our dividend from a tax perspective. And that's going to be in the low 80s of -- in terms of FAD payout. That's how I would think about it.

Our next question comes from the line of Michael Carroll from RBC Capital Markets.

I wanted to circle back on the Canadian loan. I want to make sure I understand this. So I guess the initial loan, your security is these 5 long-term care developments, but you have the option to convert it into the entire operator, a 35% stake in the entire operator?

So the collateral is actually over 20 long-term care homes that they currently own. But as Vikas said, is valued meaningfully more than the loan that we're looking to put out there about twice the value of the loan that we're looking to put out there. And yes, initially, the yields, it's a loan structure to give us the yields that we're looking for. But to the extent that over time, the operating company is able to achieve yields similar to or above the yields we're achieving from a loan standpoint, we then have the optionality to flip that over. And based on our modeling, we would expect to be able to do that at some point during the term of the loan.

Okay. Can you give us an idea of what the equity stake would be, I guess, the yield on the equity stake today? And I'm assuming it's lower than the loan amounts, I guess. And then, how much growth is in the long-term care market? I mean, how fast could that yield grow? So if you do convert it into an equity stake, I mean, are we thinking about a mid-single-digit type growth rate? Or is it potentially higher than that? Are they seeing the similar trends as we are in the U.S.?

Yes. The initial yield today is lower than obviously our 10% yield on the debt. I don't honestly know exactly what the number is, Michael, but it's cash flow positive, and it's obviously got a lot of collateral behind it. To the extent of when we convert it over, it's going to be somewhat contingent on whether there's continued opportunities to do these developments. It is nicely accretive. So I would say that mid-single-digit growth is on the conservative side of things. I think this could definitely be high single digit or even double-digit growth as they continue to develop. There's a lot of need within the Canadian market right now, and this is a proven developer and operator that we think can meet a certain amount of the need that the Canadian people have in the Ontario market.

Our next question comes from the line of Alec Feygin from Baird.

So first for would be when you evaluated the development loan in Canada, how would that compare to maybe similar loans in the United States? And would you expect that to be a bigger part of the investment flow in 2026?

So it's very different. In this situation, we had a lot of collateral sitting behind our loan. A lot of the time when you're putting these loans out there, the collateral might just be the development deal itself, which has inherently more risk attached to it. This also is a known entity that has proven an ability to develop a very, very consistent cost rates relative to budget over a prolonged period of time, which gave us increased comfort, and so to that point, I don't think this is something that we're going to look to be doing. First of all, we're just not fans of loans generally to the point we were making earlier. Those loans tend to come back to you. And this really is a little bit of a loan with a vehicle to have equity interest longer term, which is obviously something that we are more interested in. But the idea of loaning into development deals is probably not something we're going to be looking to do.

All right. That's helpful. And maybe now that you're in the RIDEA business, are you looking to convert any current senior housing in the portfolio to that structure?

There's two forms of conversion here, right? There's a conversion out of the necessity and the conversion out of opportunity. You've seen a lot of people convert because ultimately, there wasn't a capacity to pay the rents. Where we sit today in our senior housing portfolio, obviously, we've talked about Maplewood being a RIDEA like model, but outside of that, all of our operators are cash flowing sufficiently to continue to pay our rent. So there's no necessity to do that. But if there were opportunistic chances to take operating exposure at a yield that is compelling to us, either in the U.S. or the U.K. We'd obviously look to do that. We understand that the nature of such operating exposure creates increased volatility, so we'd be looking for a fairly healthy yield in order to do that, but it's not outside of the realm of possibility we'd look to do so.

Our next question comes from the line of John Pawlowski from Green Street.

Matthew, first question on your guys' foray into RIDEA. It is -- I mean, it is a different skill set for a triple net credit investor framework from Omega of old. And just curious, what has had to change internally either on the investment team or asset management team to get ready for a more operational-intensive tougher model to underwrite?

It's probably quicker to tell you what hasn't changed. You're absolutely right, John. This is inherently a higher risk, potentially higher return model. We don't have that credit support sitting behind in the form of coverage. And therefore, I would say that we have looked at every element of this from the standpoint of the quality of the underwriting. We brought in new members of the team who have decades of experience within the senior housing business, who have a very deep bench of operators that they know that they've worked with before. We've looked at every element of the P&L in terms of trying to understand why lower occupancy happens, what the differentiation of CapEx is between the asset classes whether we want a first-tier market, a second-tier market, looking at the demographics. We have taken an extremely, well, I think, thoughtful and intense approach to truly understand what the risks are around this, given the fact that there isn't that credit sitting behind us. We are still, I think, sufficiently conservative to understand that very much like the U.K., it makes sense for us to dip our toe into this judiciously. I wouldn't look to -- for us to be doing a $1 billion deal anytime soon, because we do think there's still more to learn, but as we've seen in the U.K., the ability to deploy capital over the course of a decade to -- for it to become not only a meaningful part of our business, but a highly accretive and valuable part of our business. I think we look at over the next decade, RIDEA being a similar opportunity.

Okay. I appreciate all those thoughts. And Megan, maybe a quick one for you at the state level. Are you hearing any concerning anecdotes or potential draft legislation for staffing mandates at the state level?

No, nothing more than what we've heard in the past. So there's always rumblings, and there are states who are pushing the federal government to try to institute another staffing mandate, but we're not really hearing that across the board.

[Operator Instructions] I will now turn the call back over to Taylor Pickett for closing remarks.

Thank you. Thanks all for joining our call today. As always, we're available for follow-up questions.