Omega Healthcare Investors, Inc. (OHI): PESTLE Analysis [Nov-2025 Updated]

You're trying to gauge the true risk in Omega Healthcare Investors (OHI), and the 2025 picture is a high-stakes trade-off. The long-term investment case is solid-driven by the undeniable growth of the US 65+ population-but the near-term is messy. Honestly, OHI's success right now isn't defintely about new acquisitions; it's about whether their Skilled Nursing Facility (SNF) tenants can survive the persistent labor crisis and the pain of late 2025's elevated interest rates. This PESTLE analysis cuts through the noise to map those exact political, economic, and social pressures that will determine tenant health and, ultimately, your return.

Omega Healthcare Investors, Inc. (OHI) - PESTLE Analysis: Political factors

Medicare/Medicaid rate increases for 2025 remain tight, often below 3.0% annual inflation.

You need to see Medicare and Medicaid rate increases that genuinely cover your tenants' rising labor and supply costs, but the political reality is that these increases are often a tight squeeze. For the federal Fiscal Year (FY) 2025, which started October 1, 2024, the Centers for Medicare & Medicaid Services (CMS) finalized a net increase of 4.2% in Medicare Part A payments for Skilled Nursing Facilities (SNFs). This sounds good, but it's a net figure.

The core Skilled Nursing Facility Prospective Payment System (SNF PPS) market basket increase-the measure of inflation for the goods and services SNFs buy-was only 3.0%. The extra 1.2% came from a one-time 'forecast error adjustment' that corrected for an underestimate of inflation two years prior. This means the underlying, repeatable rate of increase is still running close to, or below, the actual cost inflation your operators face, especially with labor markets still tight. On the Medicaid side, which is state-funded and covers the majority of long-term stays, the increases are even more varied and often lower.

For example, in Ohio, the finalized Medicaid rates for the first half of 2025 saw an average statewide increase of just $3.23 per Medicaid day, bringing the new statewide average rate to $275.09. Massachusetts implemented a 2% average increase for Rate Year 2025, funded by a $40 million state appropriation. That's a low number in an inflationary environment, defintely not enough to cover all the cost pressures.

State-level minimum staffing mandates increase tenant operating costs and financial stress.

The political push for higher quality of care directly translates into higher operating costs for Omega Healthcare Investors, Inc.'s tenants. The most significant recent political event here was the federal government's attempt to mandate minimum staffing levels nationwide, a rule that would have required 0.55 hours per resident day (HPRD) for Registered Nurses (RNs) and 2.45 HPRD for Nurse Aides (NAs).

The industry estimated the annual cost to comply with the proposed federal mandate at up to $6.8 billion, and the government's own estimate was approximately $4.23 billion. Here's the quick math: those costs would have been passed directly to operators, straining rent coverage ratios and increasing the risk of tenant financial distress. The good news for operators is that a federal judge in the U.S. District Court of Northern Texas vacated the two core nurse staffing provisions of the CMS rule in April 2025 on a nationwide basis. That was a major win for the industry.

Still, the political pressure hasn't gone away. State-level mandates remain a persistent threat, and the federal government is still moving forward with the requirement for a facility assessment, which could still lead to facilities staffing above the minimums based on resident acuity. The political focus is still on staffing, and that means higher labor costs are a permanent fixture.

Potential for federal healthcare reform impacting post-acute care reimbursement models.

The biggest political risk for the entire healthcare sector is the looming threat of significant Medicare spending cuts. The Congressional Budget Office (CBO) has estimated that the federal 'PAYGO' law, which requires spending cuts to offset new spending, could trigger Medicare sequestration cuts totaling more than $500 billion between 2026 and 2034. For FY 2026 alone, these cuts could amount to $45 billion. That is a colossal number that would directly reduce payments to your tenants.

Also, Congress is actively considering broader health care legislation in late 2025 that could include:

• Reforms to Medicare Advantage (MA) plans, which are already under scrutiny for high denial rates for post-acute care.
• Implementation of Medicare site-neutral payment policies, which would reduce the payment differential between care provided in a hospital outpatient setting versus a Skilled Nursing Facility.
• Changes to reimbursement for Long-Term Care Hospitals (LTACHs).

Any move to reduce the payment gap between different post-acute care settings will increase competition and put downward pressure on SNF revenues, directly impacting OHI's rental income stability. The political environment is pushing for cost control and greater accountability.

Increased scrutiny on private equity ownership of Skilled Nursing Facilities (SNFs).

The political and regulatory environment is hostile toward private equity (PE) ownership in the SNF space, and this scrutiny extends to REITs like Omega Healthcare Investors, Inc. that lease to for-profit operators. The U.S. Government Accountability Office (GAO) estimates that at least 5% of nursing homes are PE-owned, though the true figure is likely higher, with some estimates ranging from 5% to 13%. This is a small but highly scrutinized segment.

CMS has proposed new transparency and reporting rules to shine a light on complex ownership structures, which is a direct response to political pressure. The concern is clear: studies have linked PE ownership to a 1.4% reduction in overall staffing and a 3% decrease in frontline caregiver hours, while Medicare costs per resident increased by 3.9%, or $1,080 annually. The Federal Trade Commission (FTC), Department of Health and Human Services (HHS), and CMS have all promised increased scrutiny and more restrictive antitrust policy regarding PE roll-ups. This political focus increases the regulatory compliance burden and reputational risk for OHI's tenants, which could translate into higher fines and operational instability.

Omega Healthcare Investors, Inc. (OHI) - PESTLE Analysis: Economic factors

Persistent high interest rates (late 2025) increase OHI's cost of capital for new acquisitions.

You are seeing a capital market environment where the cost of borrowing remains stubbornly high, and that directly impacts Omega Healthcare Investors, Inc.'s (OHI) ability to execute its growth strategy. While OHI is a seasoned financial operator, the sustained high interest rate environment means new debt is more expensive, which can compress the spread between their cost of capital and the yield on new investments.

Here's the quick math: In September 2025, OHI secured a new $2.3 billion senior unsecured credit facility. The new $2.0 billion Revolving Credit Facility is initially priced at Term SOFR plus 1.050%, plus a facility fee of 0.250%. This floating-rate exposure means their cost of capital for new deals is higher than in the pre-2022 era. Still, OHI is managing its debt profile proactively; they repaid $600 million of 5.250% senior unsecured notes in October 2025, reducing future interest expense.

The key is the yield-to-cost spread. OHI's new real estate acquisitions and loans completed in Q2 2025, totaling $527 million, had a weighted average initial annual cash yield of 10.0%. This high yield is necessary to maintain a healthy margin over their current borrowing costs and their long-term debt of $5,000 million as of June 2025. The company's Debt-to-Equity ratio sits at 1.00 as of June 2025, which is a manageable leverage point for a REIT, but it means every new dollar of debt is scrutinized for its accretive potential.

Labor cost inflation for nurses and aides remains elevated, squeezing tenant margins.

The most critical economic risk for OHI is not on its balance sheet, but in the operating statements of its tenants. Labor is the single largest expense for a skilled nursing facility (SNF) operator. The persistent workforce shortage for clinical staff, like Registered Nurses and Certified Nursing Assistants (CNAs), continues to drive up wages.

Industry projections show clinical labor costs are expected to grow by 6% to 10% annually, outpacing general inflation by a significant margin. This cost pressure is directly squeezing the tenant's earnings before interest, taxes, depreciation, amortization, and rent (EBITDAR), which is OHI's primary measure of rent coverage. While OHI's core portfolio operator EBITDAR coverage remained relatively flat at 1.51 times as of March 31, 2025, that stability is under threat. If a tenant's coverage ratio drops below 1.0x, their ability to pay rent-OHI's revenue-is compromised. The operators are battling a structural problem where their increased operating expenses, especially labor, are simply outpacing the increases in government reimbursement rates.

US economic growth slowdown could temper state Medicaid budget increases.

The health of the US economy directly influences state budgets, and Medicaid is the largest component of state spending, accounting for 29.8% of total state spending in Fiscal Year (FY) 2024. A slowdown in US economic growth translates to lower state tax revenues, which then pressures state legislatures to temper increases in Medicaid reimbursement rates for SNF services.

While total Medicaid spending growth was still robust at 8.6% in FY 2025, the state-funded portion is under pressure due to the end of enhanced federal funding (FMAP) from the pandemic era. State general fund revenues are already slowing, with a 1.2% annual decline recorded in FY 2023. This means states are facing a greater burden just as cost inflation for operators remains high. For example, while the Centers for Medicare & Medicaid Services (CMS) estimates a net increase of 4.1% in Medicare Part A payments for SNFs in FY 2025, this is often deemed insufficient to cover the 6% to 10% labor cost inflation. This reimbursement gap is a clear risk to OHI's rent collection stability.

High inflation drives up property insurance and maintenance costs for OHI's portfolio.

Inflationary pressures are not limited to wages; they are also hitting property-related expenses. The good news for OHI is that its dominant business model is the triple-net lease. This means that property-level expenses-including property insurance, maintenance, and property taxes-are generally the operator's responsibility, not OHI's.

However, this is a double-edged sword. While OHI's direct operating expenses for Q1 2025 were only $175.3 million, the rising cost of insurance and maintenance for the 1,024 properties in OHI's portfolio further squeezes the tenant's already thin margin. Increased non-labor operating expenses, like supplies and infrastructure, have also been a persistent issue for providers. This cost stack-up, from labor to insurance, increases the risk of tenant financial distress, which is the ultimate economic risk for OHI. You should monitor the EBITDAR coverage ratio closely, as it reflects the operator's ability to absorb these rising costs and defintely pay the rent.

Omega Healthcare Investors, Inc. (OHI) - PESTLE Analysis: Social factors

You're looking at Omega Healthcare Investors, Inc. (OHI) and seeing the clear demographic tailwinds, but you also know that social factors-like staffing and public perception-are the immediate operational risks. The long-term demand from an aging population is a massive advantage, but the near-term labor crisis and post-pandemic image problem are creating a capacity bottleneck that limits how fast your tenants can grow occupancy and revenue. This is a classic supply-demand mismatch: demand is surging, but operational supply is constrained by people, not just buildings.

US 65+ population growth drives long-term demand for SNF and assisted living beds.

The demographic shift is the single most powerful driver for Omega Healthcare Investors, Inc.'s long-term business model. In 2025, approximately 62 million Americans are aged 65 and older, representing about 18% of the total U.S. population. This is a huge, growing customer base. By 2030, this cohort is projected to reach 71.6 million people, comprising over 20% of the population.

Here's the quick math: the number of people aged 80 and over-the group most likely to need a Skilled Nursing Facility (SNF) or assisted living-is expected to surge by millions in the coming years. This demand is already outpacing supply, with experts estimating a need for 156,000 new senior living units by the end of 2025, a figure projected to climb to as high as 800,000 by 2030.

Public perception of SNFs remains challenged post-pandemic, affecting occupancy recovery.

Honesty, the public image of Skilled Nursing Facilities (SNFs) took a beating during the pandemic, and that perception is still a headwind. Nursing home executives state that the most pressing issue in 2025 is correcting the misperception that their facilities are outdated institutions. This stigma, which is often unfair, makes it harder for SNFs to attract residents and staff, even as the need for their services increases.

Operators are actively working to improve infrastructure, open new service lines, and re-center their business models to combat this negative public image. What this estimate hides is that while the public perception of the entire sector is challenged, facilities with a strong quality-of-care track record and modern amenities are performing much better and seeing faster occupancy gains.

Severe shortage of clinical staff (RNs, LPNs) limits tenant capacity and operational stability.

The labor shortage is defintely the most critical operational risk for Omega Healthcare Investors, Inc.'s tenants right now. You can have the perfect building, but if you don't have the staff, you can't fill the beds. This severe shortage of clinical staff, particularly Registered Nurses (RNs) and Licensed Practical Nurses (LPNs), is limiting tenant capacity and driving up labor costs.

The Health Resources and Services Administration (HRSA) projects a national deficit of over 78,000 full-time RNs by 2025. Some forecasts are even more alarming, predicting a shortfall of approximately 500,000 nurses by the same year. This staffing pressure is a core reason why hospitals face bottlenecks and why SNFs cannot accept all available referrals. The SNF sector's payrolls have dropped 7.3% since 2020, highlighting the persistent difficulty in maintaining a full workforce.

• Projected RN shortfall by 2025: Over 78,000 positions.
• Nursing home payroll drop since 2020: 7.3%.
• Staffing shortages contribute to hospital bottlenecks.

Occupancy rates are recovering slowly but still lag pre-pandemic levels by over 500 basis points.

Occupancy recovery is steady but slow, reflecting the friction caused by the staffing crisis. For Omega Healthcare Investors, Inc.'s portfolio, the average tenant occupancy rate was around 81.8% as of June 2025, a modest improvement from the 78.6% reported in June 2023. This is a positive trend, but it still significantly lags the pre-pandemic benchmark.

Pre-pandemic (Q4 2019) senior housing occupancy was about 87.3%. This means that as of mid-2025, the occupancy rate for Omega Healthcare Investors, Inc.'s tenants is still lagging the historical pre-COVID level by approximately 550 basis points (bps). This gap represents significant unrealized revenue potential for the operators and, consequently, a risk to rent coverage for the REIT.

Omega Healthcare Investors, Inc. (OHI) - PESTLE Analysis: Technological factors

Increased adoption of remote patient monitoring (RPM) and telehealth in post-acute care.

The push toward value-based care is accelerating the adoption of Remote Patient Monitoring (RPM) and telehealth in post-acute settings, which directly impacts Omega Healthcare Investors' tenants. This isn't a futuristic concept anymore; it's a financial necessity for operators. By 2025, more than 71 million Americans are expected to use some form of RPM service, reflecting a massive shift in how we deliver care to the elderly and chronically ill.

For skilled nursing facilities (SNFs), RPM is a critical tool for managing chronic conditions and reducing expensive hospital readmissions. Studies show that RPM programs can reduce hospital readmissions by as much as 38% for patients with chronic conditions. That's a huge win for a tenant's bottom line, as it improves their quality ratings and their standing with referral hospitals. Omega Healthcare Investors has already shown its commitment to this space, having made strategic investments in technologies like SafelyYou, which uses AI-enabled video to detect falls and improve caregiver response times in its properties.

The sheer market growth confirms this trend. The global RPM market is projected to increase significantly, from a value of $27.72 billion in 2024 to $56.94 billion by 2030. This kind of growth signals a clear opportunity, but also a capital requirement for OHI's operators to stay competitive.

Need for capital investment in Electronic Health Records (EHR) systems by OHI's tenants.

Honest to goodness, 2025 is a pivotal year for post-acute care digital transformation, driven by a convergence of regulatory pressure and the need for operational efficiency. Many skilled nursing facilities still lag behind acute care hospitals in adopting modern, interoperable Electronic Health Records (EHR) systems. This lag creates a business risk for Omega Healthcare Investors, as financially weak tenants cannot afford the necessary upgrades, which ultimately affects their ability to pay rent.

The investment required isn't trivial. For a smaller skilled nursing facility, the average cost of implementing a ready-made EHR solution is around $400,000. Operators are recognizing this need for investment: a recent survey found that 29% of skilled nursing industry professionals plan to make tech platforms their top investment area in 2025. Omega Healthcare Investors is helping to mitigate this burden and improve tenant viability through direct investment, such as its strategic stake in MedaSync, an AI-driven reimbursement software that helps SNF operators streamline their financial processes.

Automation in non-clinical tasks (e.g., laundry, food service) to mitigate labor shortages.

The labor crunch in healthcare is real and persistent. The U.S. healthcare sector faces a projected shortage of hundreds of thousands of care providers by 2025, which puts immense pressure on Omega Healthcare Investors' tenants' operating margins. Automation in non-clinical tasks is the clearest near-term action to mitigate this. It's a simple equation: technology frees up nurses to be nurses.

While we aren't seeing robots fold laundry everywhere yet, the investment in automation focuses on administrative and documentation tasks. AI-powered systems can cut staff documentation and administrative work by 30-40%, translating to hundreds of staff hours saved annually. This is a direct attack on high labor costs. The industry's focus on AI is clear, with 57.5% of operators seeing AI as useful in helping to manage costs. The market for robotic nurses and related automation is also on a clear growth trajectory, expected to reach $4.5 billion by 2033.

Here's a quick look at the impact areas:

• Automated scheduling and staffing to match staff to resident acuity.
• AI-powered administrative assistants for claims and patient data processing.
• Automated medication dispensing systems to reduce error and free up pharmacy staff.

Cybersecurity risks increase as tenant facilities digitize patient and financial records.

As Omega Healthcare Investors' tenants digitize their operations-which is necessary for survival-they are simultaneously exposing themselves to a significant, growing financial risk: cybersecurity. Healthcare remains one of the most targeted sectors. In 2023, data breaches in the U.S. healthcare industry compromised over 133 million records. This is defintely a systemic risk for OHI's portfolio.

Nursing homes and secondary institutions are not immune; they accounted for 26% of ransomware attacks. The financial impact of a breach is staggering: the average cost for a healthcare data breach in 2024 was $9.8 million, with each compromised record costing an average of $408, which is three times the cross-industry average.

The industry is responding with capital, but it's a huge expense. The healthcare sector is expected to invest a staggering $125 billion in cybersecurity tools and services between 2020 and 2025. OHI must encourage and potentially facilitate tenant investment in security, as a major breach could severely destabilize an operator's financial health and their ability to pay rent.

Next Step: Omega Healthcare Investors' Asset Management team should conduct a technology-readiness audit for its top 10 at-risk tenants by the end of Q1 2026, focusing on their EHR interoperability and cybersecurity spend versus industry benchmarks.

Omega Healthcare Investors, Inc. (OHI) - PESTLE Analysis: Legal factors

Stricter enforcement of patient safety and quality-of-care regulations by Centers for Medicare & Medicaid Services (CMS).

You need to pay close attention to the Centers for Medicare & Medicaid Services (CMS) regulatory shifts in 2025. These aren't just minor tweaks; they represent a fundamental tightening of the reins on your operators, making compliance risk a top-tier financial concern. The CMS guidance updates, such as QSO-25-14-NH effective in early 2025, put a much sharper focus on specific areas of resident care and facility operations.

The core change is the enhanced ability of surveyors to find and penalize non-compliance. CMS is now allowing for more flexible imposition of Civil Monetary Penalties (CMPs) and expanding the potential for multiple instance CMPs for the same type of non-compliance within a single survey. This means a single operational failure can result in a much larger financial hit than before. Plus, the new FY 2025 Skilled Nursing Facility (SNF) Value-Based Purchasing (VBP) program adjustments are estimated to reduce aggregate payments to SNFs by $187.69 million, directly linking quality metrics to revenue. This is a defintely a headwind.

• New CMS Surveyor Guidance (QSO-25-14-NH) was implemented in early 2025.
• Psychotropic medication oversight consolidated under F605, requiring explicit resident consent.
• Stricter enforcement of staffing via Payroll Based Journal (PBJ) data.

Increased litigation risk against SNF operators related to staffing and care quality.

The regulatory environment is directly fueling litigation risk, especially for a capital provider like Omega Healthcare Investors. When operators fail to meet the new CMS standards-particularly the forthcoming federal minimum staffing requirements-the paper trail for plaintiff attorneys becomes crystal clear. The use of PBJ data by CMS to monitor staffing levels creates an indisputable record that can be easily used in negligence and False Claims Act (FCA) lawsuits.

This risk is compounded by the renewed focus on healthcare investor liability. In July 2025, the U.S. Department of Justice (DOJ) and the Department of Health and Human Services (HHS) relaunched the DOJ-HHS False Claims Act Working Group, signaling an intensified focus on fraud investigations where federal healthcare dollars are involved. More critically, a new law in Massachusetts, effective April 2025, expands False Claims Act liability to investors who have a significant equity stake and fail to report violations, which is a significant legal risk for any real estate investment trust (REIT) with a triple-net lease structure. You must ensure your operators have robust compliance programs in place by the May 1, 2025, deadline for new CMS 855A ownership disclosures.

State-level moratoriums on new SNF bed construction limit supply growth in key markets.

Moratoriums and Certificate of Need (CON) laws are a double-edged sword: they stifle new competition but also prevent your operators from building modern replacement facilities. About 35 states still have CON laws, which require government permission to build new SNFs. This effectively limits supply growth in key markets where Omega Healthcare Investors' properties are located, which can be a near-term benefit for occupancy but a long-term risk for facility modernization.

For example, in Minnesota, which has a moratorium, the legislative appropriation available to fund additional costs to the medical assistance program for moratorium exceptions is $8,121,912 for the period from July 1, 2025, to June 30, 2026. Furthermore, projects with costs under $2,421,908 can proceed as 'threshold projects' without applying for a full exception, effective October 1, 2025. This cap forces operators to limit modernization efforts to small-scale improvements, not full facility replacements.

Here is a snapshot of state-level regulatory activity in 2025:

Compliance costs for new fire safety and building codes in older OHI properties.

The age of Omega Healthcare Investors' portfolio means that compliance with evolving fire safety, health, and building codes, including the Americans with Disabilities Act (ADA), is an ongoing capital expenditure drag. Since your operators hold the triple-net lease (NNN) obligation, they are primarily responsible for these costs, but a struggling operator can push the expense back to the landlord (OHI) via rent defaults or bankruptcy. That's the real risk.

Omega Healthcare Investors is actively allocating capital to mitigate this. As of December 31, 2024, the company had total commitments of $221.8 million dedicated to funding the construction of new leased and mortgaged facilities, capital improvements, and other commitments. A significant portion of this pool is necessary to fund legally mandated upgrades in older properties to maintain licensing and marketability. Your operators need to budget for the inevitable, especially as local jurisdictions adopt stricter versions of the Life Safety Code (LSC).

Here's the quick math: if a property is older, the cost-per-bed for a full LSC compliance upgrade can be substantial, often requiring a full sprinkler system installation or major structural changes. This capital must be deployed, or the asset becomes unmarketable or, worse, unlicensable. The operator must manage this CapEx within their already tight margins, or the facility's value-and your rent-is at risk.

Omega Healthcare Investors, Inc. (OHI) - PESTLE Analysis: Environmental factors

Growing pressure from investors for Healthcare REITs to disclose and improve ESG metrics.

You're seeing a monumental shift in how institutional investors view environmental, social, and governance (ESG) factors-it's no longer a 'nice-to-have,' but a core financial risk indicator. By 2025, investors are demanding structured, transparent disclosures, not just a vague sustainability story. This is driven by new regulatory mandates, like the EU's Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) framework, which are setting a global baseline for reporting. Honestly, if you can't report on your emissions or physical risk exposure, you risk exclusion from key capital pools.

Omega Healthcare Investors, Inc. (OHI) is responding, but the pressure is on to integrate this into their core business model, especially since they operate as a triple-net landlord, meaning their tenants control the day-to-day facility operations. Still, their capital allocation shows commitment: since 2015, OHI has allocated 60% of its development capital to facilities built to LEED certification standards. That's a clear signal to the market that they prioritize efficiency in new builds. For their corporate operations, they've already achieved a roughly 20% reduction in corporate office electricity usage intensity compared to their 2020 baseline.

Increased capex needed for energy efficiency upgrades to meet tenant and regulatory demands.

The cost of keeping older facilities competitive and compliant is rising. Your tenants-the skilled nursing and senior housing operators-are increasingly focused on utility costs and energy performance, and new regulations are tightening the screws on building efficiency. This means OHI, as the property owner, must increase its capital expenditure (CapEx) to support these upgrades, often without a direct, immediate rent increase to match the outlay. It's a necessary investment in asset resilience and tenant retention.

In the first three quarters of the 2025 fiscal year alone, OHI reported significant CapEx not related to new investments, totaling $54 million through September 30, 2025, which includes $30 million in Q2 and another $24 million in Q3. A portion of this capital is defintely earmarked for the kind of energy efficiency and severe weather resistance upgrades that future-proof the portfolio. This proactive CapEx is essential for maintaining asset value and avoiding obsolescence in a market that is quickly prioritizing green buildings.

Climate change risks (e.g., severe weather) necessitate higher property insurance and disaster preparedness.

Climate volatility is a massive, quantifiable risk for any REIT, especially one with a geographically diverse portfolio like OHI. Severe weather events-hurricanes in the Southeast, wildfires in the West, and extreme cold in Texas-are driving insured losses and, consequently, skyrocketing insurance premiums. The U.S. saw a combined 55 billion-dollar disaster events in 2023 and 2024, causing over $281 billion in damage, which is why property insurance costs are up an average of 21% nationwide over the past couple of years. You can't ignore that kind of trend.

OHI is actively managing its exposure to physical risk. They have a corporate goal to derive less than 10% of rental income from properties located in FEMA designated 100-year flood zones. As of June 6, 2025, the company reported that only about 5% of its annualized rent and 4% of its gross real estate investment balance were located in these defined at-risk geographies. This is a strong risk-mitigation number, but the cost of coverage still rises across the board.

Focus on sustainable building materials and waste reduction in facility renovations.

The push for sustainable construction goes beyond just energy efficiency; it's about the materials themselves and the lifecycle of the building. With 60% of OHI's development capital since 2015 going to LEED-certified facilities, the focus is clearly on sustainable building materials. LEED certification inherently requires a focus on things like construction waste management and the use of materials with low volatile organic compounds (VOCs). This isn't just an environmental win; it's a health benefit for the elderly residents, which ties directly into the 'Social' part of ESG.

While the primary responsibility for waste reduction at the facilities falls to the operators (due to the triple-net lease structure), OHI sets an example at its corporate level by promoting energy efficiency features, water efficient fixtures, and using low-VOC paints and floor adhesives. This corporate effort, plus the LEED standard for development, helps drive the conversation with operators. It shows them that sustainable practices are feasible, and it helps OHI manage its own Scope 1 and 2 emissions, which are directly controlled by the company.

• Allocate 60% of new development capital to LEED-certified standards.
• Prioritize low-VOC (volatile organic compound) paints and adhesives in renovations.
• Encourage water efficient features in new and upgraded facilities.