Omega Healthcare Investors (NYSE: OHI) leadership sees a runway for occupancy growth ahead for Maplewood Senior Living’s New York City luxury community.

During Friday’s second-quarter earnings call, Omega reported that Maplewood’s Inspir 2nd Avenue property carried an occupancy rate of 67%, up two percentage points from the fourth quarter of last year. The community, which carries monthly rent upward of $22,000, grew its occupancy rate without resorting to rate concessions, OHI CEO Taylor Pickett said.

With the Inspir property in Manhattan at 120 residents, Pickett said the operator is moving “in the right direction.” Though the community is on an upward trajectory, he noted the community is not likely to hit a 90% baseline in 2024.

“Probably, you’re looking at ’25,” Pickett told investors and analysts during the company’s second-quarter earnings call Friday.

But stabilizing the Inspir Manhattan community is hard to predict, with an anticipated improvement in occupancy in 2025, Pickett said. An ongoing challenge for Maplewood’s ongoing development in the Washington, D.C. market was attributable to a 25% bump in construction costs in the last 36 months.

In the fourth quarter of last year, Omega highlighted Maplewood’s expansion into the DC market, a project first announced in 2021 on D.C.’s Embassy Row. Fast-forward to today, and the project’s budget has increased by $50 million.

“It just reflects the fact that when we close this out, that’s what it’s going to end up costing,” Pickett added.

While Maplewood was the first luxury senior living project to enter Manhattan, other senior living providers have followed suit with the addition of multiple communities since Inspir’s opening.

The Maplewood business is in the process of being transitioned out of the estate of the company’s late CEO Greg Smith.

Omega had previously run into trouble related to a “modest liquidity crunch.” But as of the fourth quarter of 2023, the operator’s situation had improved.

The remainder of the 16-property Maplewood Senior Living portfolio are “performing well” and are making full rent payments, Pickett said. In the second quarter, Maplewood paid $11.8 million in rent compared to $11.3 million in the first quarter.

In July, Omega repaid a maturing $400 million senior unsecured bond, along with completing $221 million in new investments through the issuance of 7.6 million shares of common stock, or $245 million in equity proceeds while ending the quarter with over $35 million in cash and $1.4 billion in credit facility borrowing capacity.

Omega also completed $115 million in real estate acquisitions, including three separate second-quarter transactions acquiring 34 skilled nursing facilities for $114.7 million and leased to an existing operator and two new operators—with an anticipated annual cash yield of 10.4%.

Omega’s adjusted funds from operations were about 71 cents per share. Net income for the quarter registered at $117.1 million, representing an increase of $55.6 million compared to 2Q23.