Pickett: We expect that Omega will continue to maintain a conservative balance sheet with debt to EBITDA leverage of 4 times to 5 times.

Thomas: Omega has the highest dividend yield (7.7%) in the healthcare sector. In my opinion, partly due to under-valuation and also due to higher risk assets. How would you describe your company's value proposition?

Pickett: I believe that our equity is undervalued. However, the SNF industry is very cyclical, with cycles typically driven by investor views on reimbursement risk. We happen to be in a cycle of high perceived reimbursement risk.

Thomas: Omega has increased its dividend by 14.2% in 2010, 13.1% in 2011, and 9.3% in 2012. Is this growth sustainable?

Pickett: Our investment strategy has remained the same for the last 9 years and we have delivered great financial results. The strategy has not changed and there are many industry opportunities. We are optimistic about our future growth prospects.

Thomas: Do you see trends of skilled nursing customers to transition into in-home services? If so, could this be problematic for your tenants/operators in the future?

Pickett: In-home services have grown dramatically over the last decade. During the decade, SNF occupancy has remained stable, while patient acuity in SNFs has gone up. Our view is that the care delivered in the SNF setting cannot be delivered less expensively in the home. We believe in-home services and SNF care are compatible versus competitive settings.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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