Omega Healthcare Investors, Inc. (NYSE:OHI) (the “Company” or
“Omega”) today announced its results of operations for the
three-month period ended June 30, 2017. The Company reported for
the three-month period ended June 30, 2017 net income of $68.2
million, or $0.33 per common share, Funds From Operations (“FFO”)
of $150.9 million or $0.73 per common share, and Funds Available
For Distribution (“FAD”) of $162.0 million.
FFO for the second quarter of 2017 includes $23.5 million of
interest refinancing costs, $3.7 million of non-cash stock-based
compensation expense, $2.7 million in provisions for uncollectible
accounts and $1.9 million of one-time revenue. Adjusted FFO is
$0.87 per common share for the three-month period ended June 30,
2017. FFO, Adjusted FFO and FAD are non-GAAP financial measures.
For more information regarding FFO and Adjusted FFO, see the “Funds
From Operations” schedule.
GAAP NET INCOME
For the three-month period ended June 30, 2017, the Company
reported net income of $68.2 million, or $0.33 per common share, on
operating revenues of $235.8 million. This compares to net income
of $113.2 million, or $0.57 per common share, on operating revenues
of $228.8 million, for the same period in 2016.
For the six-month period ended June 30, 2017, the Company
reported net income of $177.3 million, or $0.86 per common share,
on operating revenues of $467.5 million. This compares to net
income of $171.4 million, or $0.86 per common share, on operating
revenues of $441.7 million, for the same period in 2016.
The year-to-date increase in net income compared to the prior
year was primarily due to revenue associated with new investments
completed in 2016 and 2017, a one-time contractual settlement in
the first quarter of 2017 and the reduction of impairments on real
estate assets and acquisition costs. This increase in net income
was partially offset by an increase in interest refinancing costs
of $21.7 million, $12.4 million in increased depreciation and
amortization expense, $8.0 million decrease in gains on the sale of
assets, an increase of $1.1 million in provisions for uncollectible
accounts, $1.0 million in increased stock-based compensation
expense and $0.7 million in incremental general and administrative
expenses.
2017 RECENT DEVELOPMENTS AND SECOND
QUARTER HIGHLIGHTS
In Q3 2017, the Company…
- increased its quarterly common stock
dividend rate to $0.64 per share.
In Q2 2017, the Company…
- entered into new and amended senior
unsecured credit facilities to replace the Company’s prior
unsecured revolving credit and term loan credit facilities.
- completed $134 million in new
investments.
- invested $48 million in capital
renovation and construction-in-progress projects.
- redeemed $400 million of its 5.875%
Senior Notes due 2024.
- prepaid a $200 million senior unsecured
term loan.
- issued $550 million aggregate principal
amount of its 4.75% Senior Notes due 2028.
- issued $150 million aggregate principal
amount of its 4.50% Senior Notes due 2025.
- increased its quarterly common stock
dividend rate to $0.63 per share.
In Q1 2017, the Company…
- completed $8 million in new
investments.
- invested $30 million in capital
renovation and construction-in-progress projects.
- increased its quarterly common stock
dividend rate to $0.62 per share.
SECOND QUARTER 2017
RESULTS
Operating Revenues and Expenses – Operating revenues for
the three-month period ended June 30, 2017 totaled $235.8 million
which included $18.0 million of non-cash revenue and $1.9 million
of one-time revenue related to two operator’s contingent payments
that were not earned.
Operating expenses for the three-month period ended June 30,
2017 totaled $94.7 million and consisted of $70.4 million of
depreciation and amortization expense, $10.1 million of impairment
on real estate properties, $7.8 million of general and
administrative expense, $3.7 million of stock-based compensation
expense and $2.7 million in provision for uncollectible accounts.
The $10.1 million and $2.7 million charges were primarily the
result of the Company’s continued effort to exit certain
non-strategic facilities and/or operators.
Other Income and Expense – Other income and expense for
the three-month period ended June 30, 2017 was a net expense of
$72.3 million, primarily consisting of $48.1 million of interest
expense, $22.0 million of interest refinancing costs and $2.5
million of amortized deferred financing costs.
Funds From Operations – For the three-month period ended
June 30, 2017, FFO was $150.9 million, or $0.73 per common share on
207 million weighted-average common shares outstanding, compared to
$172.3 million, or $0.87 per common share on 199 million
weighted-average common shares outstanding, for the same period in
2016.
The $150.9 million of FFO for the three-month period ended June
30, 2017 includes the impact of $23.5 million of one-time interest
refinancing costs, $3.7 million of non-cash stock-based
compensation expense and $2.7 million in provision for
uncollectible accounts, offset by $1.9 million of one-time
revenue.
The $172.3 million of FFO for the three-month period ended June
30, 2016 includes the impact of a $5.4 million cash receipt related
to early termination of mortgages, $3.7 million of non-cash
stock-based compensation expense, $3.5 million of acquisition costs
and a $1.2 million adjustment (recovery) related to the provision
for uncollectible accounts.
Adjusted FFO was $179.0 million, or $0.87 per common share, for
the three months ended June 30, 2017, compared to $173.0 million,
or $0.87 per common share, for the same period in 2016. For further
information see the “Funds From Operations” schedule.
FINANCING ACTIVITIES
New and Amended Credit Facilities – As previously
announced, effective May 25, 2017 Omega entered into (a) a new $1.8
billion senior unsecured revolving and term loan credit facility,
consisting of a $1.25 billion senior unsecured multicurrency
revolving credit facility (the “Revolving Credit Facility”), a $425
million U.S. Dollar senior unsecured term loan facility (the “U.S.
Dollar Term Loan Facility”), and a £100 million British Pound
Sterling senior unsecured term loan facility (the “Sterling Term
Loan Facility” and, together with the Revolving Credit Facility and
the U.S. Dollar Term Loan Facility, collectively, the “REIT Credit
Facilities”) and (b) an amended and restated $250 million senior
unsecured term loan facility (the “2017 Restated Term Loan
Facility”).
The REIT Credit Facilities replace Omega’s previous $2 billion
senior unsecured revolving credit and term loan credit facility
(the “2014 Credit Facility”), part of which (a $200 million term
loan due June 27, 2017) was previously repaid from proceeds of
Omega’s $700 million senior notes offering in April 2017, prior to
that term loan’s scheduled maturity of June 27, 2017.
The Revolving Credit Facility matures in four years, on May 25,
2021, with two options by the Company to extend the maturity six
additional months for each option. At June 30, 2017, the Company
had $155 million in borrowings outstanding under the Revolving
Credit Facility. The Sterling Term Loan Facility and the U.S.
Dollar Term Loan Facility, which were each fully drawn as of June
30, 2017, mature on May 25, 2022. For the three months ended June
30, 2017, the Company recorded approximately $5.5 million relating
to the write-off of deferred financing costs associated with the
termination of the 2014 Credit Facility.
$550 Million Senior Notes and $150 Million Senior Notes –
As previously announced, on April 4, 2017 the Company issued (i)
$550 million aggregate principal amount of its 4.75% Senior Notes
due 2028 (the “2028 Notes”) and (ii) an additional $150 million
aggregate principal amount of its existing 4.50% Senior Notes due
2025 (the “2025 Notes,” and together with the 2028 Notes
collectively, the “Notes”). The 2028 Notes mature on January 15,
2028 and the 2025 Notes mature on January 15, 2025.
The 2028 Notes were sold at an issue price of 98.978% of their
face value before the underwriters’ discount and the 2025 Notes
were sold at an issue price of 99.540% of their face value before
the underwriters’ discount. The net proceeds from the offering were
used to (i) redeem all of the Company’s outstanding $400 million
aggregate principal amount of 5.875% Senior Notes due 2024 (the
“5.875% Notes”) on April 28, 2017, (ii) prepay a $200 million
senior unsecured incremental term loan facility on April 5, 2017
that otherwise would have become due on June 27, 2017, and (iii)
repay outstanding borrowings under the 2014 Credit Facility.
$400 Million Senior Notes Redemption – On April 28, 2017,
the Company redeemed all of its outstanding 5.875% Notes. As a
result of the redemption, during the second quarter of 2017, the
Company recorded approximately $16.5 million in redemption related
costs and write-offs, including $11.8 million for the call premium
and $4.7 million in net write-offs associated with unamortized
deferred financing costs.
Equity Shelf Program and Dividend Reinvestment and Common
Stock Purchase Plan – During the three-month period ended June
30, 2017, the Company sold 0.4 million shares of its common stock
generating $12.4 million of gross proceeds. The following table
outlines shares of the Company’s common stock issued under its
Equity Shelf program and its Dividend Reinvestment and Common Stock
Purchase Plan in 2017:
Equity Shelf (At-the-Market) Program for
2017
(in thousands, except price per share)
Q1 Q2 Year To Date Number
of shares 228 - 228 Average price per share $ 31.12 $ - $ 31.12
Gross proceeds $ 7,079 $ - $ 7,079
Dividend Reinvestment and Common Stock
Purchase Program for 2017
(in thousands, except price per share) Q1 Q2
Year To Date Number of shares 239 375 614 Average
price per share $ 30.67 $ 33.02 $ 32.11 Gross proceeds $ 7,335 $
12,386 $ 19,721
2017 SECOND QUARTER PORTFOLIO
ACTIVITY
$182 Million of New Investments in Q2 2017 – In Q2 2017,
the Company completed approximately $134 million of new investments
and $48 million in capital renovations and new construction
consisting of the following:
$115 Million
Acquisition – On May 11, 2017, the Company acquired 18 care
homes in the United Kingdom (“UK”) (similar to ALFs in the United
States) from Gold Care Homes, an unrelated third party, for $114.8
million, including acquisition costs. The 18 care homes with 992
registered beds were leased back to the seller under a 12-year
master lease with an initial annual cash yield of 8.5% with 2.5%
annual escalators.
$9 Million
Acquisition – On June 22, 2017, the Company acquired a
skilled nursing facility (“SNF”) for $8.6 million. The 100 bed SNF,
located in North Carolina, was added to the existing operator’s
master lease with an initial annual cash yield of 9.5% with 2.5%
annual escalators.
$11 Million Mortgage
Loan – On June 30, 2017, the Company entered into an $11.0
million first mortgage loan with an existing operator of the
Company. The loan is secured by three SNFs with approximately 271
beds located in Michigan. The loan is cross-defaulted and
cross-collateralized with the Company’s existing master lease with
the operator. The loan bears an initial annual interest rate of
9.5% with 2.25% annual escalators.
$48 Million Capital
Renovation Projects – In addition to the new investments
outlined above, in Q2 2017, the Company invested $47.7 million
under its capital renovation and construction-in-progress
programs.
ASSET DISPOSITIONS AND
IMPAIRMENTS
During the second quarter of 2017, the Company sold eight
facilities for approximately $45.5 million in net cash proceeds
recognizing a loss of approximately $0.6 million. Five of the sold
facilities were previously classified as investment in direct
financing leases and two were classified as assets held for sale.
In addition, during the second quarter, the Company recorded
approximately $10.1 million of impairments on six facilities to
reduce the net book value of these facilities to their estimated
fair value or selling price.
As of June 30, 2017, the Company had seven facilities, totaling
$18.9 million, classified as assets held for sale. The Company
expects to sell these facilities over the next few quarters.
DIVIDENDS
On July 13, 2017, the Board of Directors declared a common stock
dividend of $0.64 per share, increasing the quarterly common
dividend by $0.01 per share over the prior quarter, to be paid
August 15, 2017 to common stockholders of record as of the close of
business on August 1, 2017.
2017 ADJUSTED FFO GUIDANCE
REVISED
The Company has revised its 2017 annual Adjusted FFO available
to common stockholders to be between $3.42 and $3.44 per diluted
share. The Company's 2017 FAD guidance and reconciliation to
projected net income can be found in the Company's Second Quarter
2017 Financial Supplement located on the Company's website. The
following table presents a reconciliation of Omega’s guidance
regarding Adjusted FFO to projected GAAP earnings.
2017 Annual Adjusted FFOGuidance Range(per
diluted common share) Full Year Net Income $1.82 - $1.84
Depreciation 1.40 Gain on assets sold (0.03) Real estate impairment
0.09 FFO $3.28 - $3.30 Adjustments: Contractual settlement (0.05)
Provision for uncollectible accounts 0.02 Transaction costs 0.00
Interest – refinancing costs 0.11 One-time revenue (0.01)
Stock-based compensation expense 0.07 Adjusted FFO $3.42 - $3.44
Note: All per share numbers rounded to 2
decimals.
The Company's Adjusted FFO guidance for 2017 includes
approximately $219 million of actual new investments completed to
date and approximately $50 million of planned capital renovation
projects; however, it excludes the impact of additional new
investments. It also excludes the impact of gains and losses from
the sale of assets, revenue from divestitures, certain revenue and
expense items, interest refinancing expense, capital transactions,
acquisition costs, provision for uncollectible accounts, and
stock-based compensation expense. The Company may, from time to
time, update its publicly announced Adjusted FFO guidance, but it
is not obligated to do so.
The Company's guidance is based on a number of assumptions,
which are subject to change and many of which are outside the
Company’s control. If actual results vary from these assumptions,
the Company's expectations may change. Without limiting the
generality of the foregoing, the timing and completion of
acquisitions, divestitures, capital and financing transactions, and
variations in stock-based compensation expense may cause actual
results to vary materially from our current expectations. There can
be no assurance that the Company will achieve its projected
results.
CONFERENCE CALL
The Company will be conducting a conference call on Thursday,
July 27, 2017 at 10 a.m. Eastern to review the Company’s 2017
second quarter results and current developments. Analysts and
investors within the United States interested in participating are
invited to call (877) 511-2891. The Canadian toll-free dial-in
number is (855) 669-9657. All other international participants can
use the dial-in number (412) 902-4140. Ask the operator to be
connected to the “Omega Healthcare’s Second Quarter 2017 Earnings
Call.”
To listen to the conference call via webcast, log on to
www.omegahealthcare.com and click the “earnings call” icon on the
Company’s home page. Webcast replays of the call will be available
on the Company’s website for two weeks following the call.
Omega is a real estate investment trust investing in and
providing financing to the long-term care industry. As of June 30,
2017, Omega has a portfolio of investments that includes
approximately 1,000 properties located in 42 states and the United
Kingdom and operated by 77 different operators.
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements regarding Omega’s or its tenants’,
operators’, borrowers’ or managers’ expected future financial
condition, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing opportunities
and plans, capital markets transactions, business strategy,
budgets, projected costs, operating metrics, capital expenditures,
competitive positions, acquisitions, investment opportunities,
dispositions, merger integration, growth opportunities, expected
lease income, continued qualification as a REIT, plans and
objectives of management for future operations and statements that
include words such as “anticipate,” “if,” “believe,” “plan,”
“estimate,” “expect,” “intend,” “may,” “could,” “should,” “will”
and other similar expressions are forward-looking statements. These
forward-looking statements are inherently uncertain, and actual
results may differ from Omega’s expectations. Omega does not
undertake a duty to update these forward-looking statements, which
speak only as of the date on which they are made.
Omega’s actual results may differ materially from those
reflected in such forward-looking statements as a result of a
variety of factors, including, among other things: (i)
uncertainties relating to the business operations of the operators
of Omega’s properties, including those relating to reimbursement by
third-party payors, regulatory matters and occupancy levels; (ii)
regulatory and other changes in the healthcare sector; (iii)
changes in the financial position of Omega’s operators; (iv) the
ability of any of Omega’s operators in bankruptcy to reject
unexpired lease obligations, modify the terms of Omega’s mortgages
and impede the ability of to collect unpaid rent or interest during
the pendency of a bankruptcy proceeding and retain security
deposits for the debtor's obligations; (v) the availability and
cost of capital; (vi) changes in Omega’s credit ratings and the
ratings of its debt securities; (vii) competition in the financing
of healthcare facilities; (viii) Omega’s ability to maintain its
status as a REIT; (ix) Omega’s ability to manage, re-lease or sell
any owned and operated facilities, if any; (x) Omega’s ability to
sell closed or foreclosed assets on a timely basis and on terms
that allow Omega to realize the carrying value of these assets;
(xi) the effect of economic and market conditions generally, and
particularly in the healthcare industry; (xii) the potential impact
of changes in the SNF and ALF market or local real estate
conditions on the Company’s ability to dispose of assets held for
sale for the anticipated proceeds or on a timely basis, or to
redeploy the proceeds therefrom on favorable terms and (xiii) other
factors identified in Omega’s filings with the Securities and
Exchange Commission. Statements regarding future events and
developments and Omega’s future performance, as well as
management's expectations, beliefs, plans, estimates or projections
relating to the future, are forward looking statements. Omega
undertakes no obligation to update any forward-looking statements
contained in this announcement.
OMEGA HEALTHCARE INVESTORS,
INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share
amounts)
June 30,2017
December 31,2016 (Unaudited)
ASSETS Real estate properties Real estate investments $
7,730,199 $ 7,566,358 Less accumulated depreciation
(1,366,376 ) (1,240,336 ) Real estate
investments – net 6,363,823 6,326,022 Investments in direct
financing leases – net 582,307 601,938 Mortgage notes receivable –
net 662,709 639,343
7,608,839 7,567,303 Other investments – net 278,985 256,846
Investment in unconsolidated joint venture 38,968 48,776 Assets
held for sale – net 18,889
52,868 Total investments 7,945,681 7,925,793 Cash and
cash equivalents 21,031 93,687 Restricted cash 12,203 13,589
Accounts receivable – net 288,686 240,035 Goodwill 644,184 643,474
Other assets 34,869 32,682
Total assets $ 8,946,654 $ 8,949,260
LIABILITIES AND EQUITY Revolving line of
credit $ 155,000 $ 190,000 Term loans – net 899,292 1,094,343
Secured borrowings – net 53,737 54,365 Unsecured borrowings – net
3,321,858 3,028,146 Accrued expenses and other liabilities 323,543
360,514 Deferred income taxes 17,714
9,906 Total liabilities 4,771,144
4,737,274 Equity:
Common stock $.10 par value authorized –
350,000 shares, issued and outstanding – 197,224 shares as of June
30, 2017 and 196,142 as of December 31, 2016
19,722
19,614
Common stock – additional paid-in capital 4,896,076 4,861,408
Cumulative net earnings 1,908,634 1,738,937 Cumulative dividends
paid (2,954,230 ) (2,707,387 ) Accumulated other comprehensive loss
(41,903 ) (53,827 ) Total stockholders’
equity 3,828,299 3,858,745 Noncontrolling interest 347,211
353,241 Total equity
4,175,510 4,211,986 Total
liabilities and equity $ 8,946,654 $ 8,949,260
OMEGA HEALTHCARE INVESTORS,
INC.
CONSOLIDATED STATEMENTS OF
INCOME
Unaudited
(in thousands, except per share
amounts)
Three Months EndedJune 30,
Six Months EndedJune 30, 2017
2016 2017 2016
Revenue
Rental income $ 193,997 $ 186,454 $
386,534 $ 363,157 Income from direct financing leases 15,462 15,521
31,108 30,963 Mortgage interest income 16,297 21,371 32,253 37,977
Other investment income – net 7,278 4,982 14,192 8,413
Miscellaneous income 2,763 496
3,454 1,193 Total operating revenues 235,797
228,824 467,541 441,703 Expenses Depreciation and
amortization 70,350 65,505 140,343 127,938 General and
administrative 7,807 8,167 16,587 15,844 Stock-based compensation
3,734 3,665 7,478 6,443 Acquisition costs 19 3,504 (22 ) 7,275
Impairment loss on real estate properties 10,135 6,893 17,773
41,451 Provision for uncollectible accounts 2,673
(1,154 ) 5,077 3,970 Total
operating expenses 94,718 86,580 187,236 202,921 Income
before other income and expense
141,079 142,244
280,305 238,782 Other income (expense) Interest
income 254 4 258 12 Interest expense (48,085 ) (39,651 ) (93,126 )
(76,873 ) Interest – amortization of deferred financing costs
(2,543 ) (2,210 ) (5,045 ) (4,342 ) Interest – refinancing costs
(21,965 ) - (21,965 ) (298 ) Contractual settlement - - 10,412 -
Realized gain (loss) on foreign exchange 79 -
140 (22 ) Total other expense (72,260 )
(41,857 ) (109,326 ) (81,523 ) Income before (loss) gain on
assets sold
68,819 100,387 170,979
157,259 (Loss) gain on assets sold – net (622 )
13,221 6,798 14,792
Income from continuing operations
68,197 113,608
177,777 172,051 Income tax expense (591 ) (454 )
(1,691 ) (701 )
Income from unconsolidated joint
venture
551
- 1,183 - Net
income
68,157 113,154 177,269 171,350
Net income attributable to noncontrolling interest
(2,900 ) (5,102 )
(7,572 ) (7,743 ) Net income
available to common stockholders
$ 65,257
$ 108,052 $ 169,697
$ 163,607 Income per common share
available to common stockholders: Basic: Net income available to
common stockholders $ 0.33 $ 0.57 $ 0.86 $
0.87 Diluted: Net income $ 0.33 $ 0.57 $ 0.86
$ 0.86 Dividends declared per common share $
0.63 $ 0.58 $ 1.25 $ 1.15
Weighted-average shares outstanding, basic 197,433
188,981 197,223 188,604
Weighted-average shares outstanding, diluted 206,672
199,157 206,423 198,754
OMEGA HEALTHCARE INVESTORS,
INC.
FUNDS FROM OPERATIONS
Unaudited
(in thousands, except per share
amounts)
Three Months EndedJune 30,
Six Months EndedJune 30, 2017
2016 2017 2016
Net income $ 68,157 $ 113,154 $
177,269 $ 171,350 Add back loss (deduct gain) from real estate
dispositions 622 (13,221 ) (6,798 )
(14,792 ) Sub – total 68,779 99,933 170,471 156,558
Elimination of non-cash items included in net income: Depreciation
and amortization 70,350 65,505 140,343 127,938 Depreciation -
unconsolidated joint venture 1,658 — 3,316 — Add back non-cash
provision for impairments on real estate properties 10,135
6,893 17,773 41,451
Funds from operations (“FFO”) $ 150,922 $
172,331 $ 331,903 $ 325,947
Weighted-average common shares outstanding, basic 197,433 188,981
197,223 188,604 Restricted stock and PRSUs 467 1,254 407 1,215
Omega OP Units 8,772 8,922 8,793
8,935 Weighted-average common shares
outstanding, diluted 206,672 199,157
206,423 198,754
Funds from
operations available per share $ 0.73 $ 0.87 $
1.61 $ 1.64
Adjustments to calculate
adjusted funds from operations: Funds from operations available
to common stockholders $ 150,922 $ 172,331 $ 331,903 $ 325,947
Deduct one-time revenue (1,881 ) — (1,881 ) (235 ) Deduct
prepayment fee income from early termination of mortgages — (5,390
) — (5,390 ) Deduct contractual settlement — — (10,412 ) — Add back
(deduct) provision for uncollectible accounts 2,673 (1,154 ) 5,077
3,970 Add back (deduct) acquisition costs 19 3,504 (22 ) 7,275 Add
back interest refinancing expense 23,539 — 23,539 298 Add back
non-cash stock-based compensation expense 3,734
3,665 7,478 6,443
Adjusted funds from operations (“AFFO”) $ 179,006 $
172,956 $ 355,682 $ 338,308
Adjustments to calculate funds available for distribution:
Non-cash interest expense 2,851 2,179 5,661 4,279 Capitalized
interest (1,906 ) (1,405 ) (3,895 ) (3,125 ) Non-cash revenues
(17,956 ) (19,766 ) (36,085 ) (36,975 )
Funds available for distribution (“FAD”) $ 161,995 $
153,964 $ 321,363 $ 302,487
Funds From Operations (“FFO”), Adjusted FFO and Funds Available
for Distribution (“FAD”) are non-GAAP financial measures. For
purposes of the Securities and Exchange Commission’s Regulation G,
a non-GAAP financial measure is a numerical measure of a company’s
historical or future financial performance, financial position or
cash flows that exclude amounts, or is subject to adjustments that
have the effect of excluding amounts, that are included in the most
directly comparable financial measure calculated and presented in
accordance with GAAP in the statement of operations, balance sheet
or statement of cash flows (or equivalent statements) of the
company, or include amounts, or is subject to adjustments that have
the effect of including amounts, that are excluded from the most
directly comparable financial measure so calculated and presented.
As used in this press release, GAAP refers to generally accepted
accounting principles in the United States of America. Pursuant to
the requirements of Regulation G, the Company has provided
reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures.
The Company calculates and reports FFO in accordance with the
definition and interpretive guidelines issued by the National
Association of Real Estate Investment Trusts ("NAREIT"), and
consequently, FFO is defined as net income (computed in accordance
with GAAP), adjusted for the effects of asset dispositions and
certain non-cash items, primarily depreciation and amortization and
impairments on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated
to reflect funds from operations on the same basis. The Company
believes that FFO, Adjusted FFO and FAD are important supplemental
measures of its operating performance. Because the historical cost
accounting convention used for real estate assets requires
depreciation (except on land), such accounting presentation implies
that the value of real estate assets diminishes predictably over
time, while real estate values instead have historically risen or
fallen with market conditions. The term FFO was designed by the
real estate industry to address this issue. FFO described herein is
not necessarily comparable to FFO of other real estate investment
trusts, or REITs, that do not use the same definition or
implementation guidelines or interpret the standards differently
from the Company.
Adjusted FFO is calculated as FFO excluding the impact of
non-cash stock-based compensation and certain revenue and expense
items identified above. FAD is calculated as Adjusted FFO less
non-cash interest expense and non-cash revenue, such as
straight-line rent. The Company believes these measures provide an
enhanced measure of the operating performance of the Company’s core
portfolio as a REIT. The Company’s computation of Adjusted FFO and
FAD are not comparable to the NAREIT definition of FFO or to
similar measures reported by other REITs, but the Company believes
that they are appropriate measures for this Company.
The Company uses these non-GAAP measures among the criteria to
measure the operating performance of its business. The Company also
uses Adjusted FFO among the performance metrics for
performance-based compensation of officers. The Company further
believes that by excluding the effect of depreciation,
amortization, impairments on real estate assets and gains or losses
from sales of real estate, all of which are based on historical
costs and which may be of limited relevance in evaluating current
performance, FFO can facilitate comparisons of operating
performance between periods and between other REITs. The Company
offers these measures to assist the users of its financial
statements in analyzing its operating performance and not as
measures of liquidity or cash flow. These non-GAAP measures are not
measures of financial performance under GAAP and should not be
considered as measures of liquidity, alternatives to net income or
indicators of any other performance measure determined in
accordance with GAAP. Investors and potential investors in the
Company’s securities should not rely on these non-GAAP measures as
substitutes for any GAAP measure, including net income.
The following tables present selected
portfolio information, including operator and geographic
concentrations, and revenue maturities for the period ended June
30, 2017:
As of June 30, 2017 As of
June 30, 2017 Balance Sheet Data
Total # of
Properties (2)
Total
Investment
($000’s)
% of
Investment
# of Operating
Properties(4)
# of Operating
Beds
Real Estate Investments (1) 887 $ 7,749,399
86 % 883 88,265 Direct Financing Leases 53
582,307 7 % 52 5,187 Mortgage Notes Receivable 52
659,514 7 % 51 5,366 Total
Investments 992 $ 8,991,220 100 % 986 98,818
Investment Data
Total # of
Properties (2)
Total
Investment
($000’s)
% of
Investment
# of
Operating
Properties(4)
# of
Operating
Beds
Investment
per Bed
($000’s)
Skilled Nursing Facilities/Transitional Care (1)
859
$
7,542,468
84
%
858
90,841
$ 83 Senior Housing (1) (3) 133
1,448,752 16 % 128 7,977 $ 182 992 $
8,991,220 100 % 986 98,818 $ 91
(1) Total Investment includes a $19.2 million lease
inducement and excludes $18.9 million (seven properties) classified
as assets held for sale. (2) Total # of Properties excludes seven
properties classified as assets held for sale. (3) Includes ALFs,
memory care and independent living facilities. (4) Total # of
Operating Properties excludes facilities which are non-operating,
closed and/or not currently providing patient services.
Revenue Composition ($000's)
Revenue by Investment Type Three Months Ended Six Months
Ended June 30, 2017 June 30, 2017 Rental Property $
193,997 82 % $ 386,534 83 % Direct Financing Leases 15,462 7 %
31,108 7 % Mortgage Notes 16,297 7 % 32,253 7 %
Other Investment Income and Miscellaneous
Income - net
10,041 4 % 17,646
3 % $ 235,797 100 % $ 467,541 100 %
Revenue by Facility Type Three Months Ended
Six Months Ended June 30, 2017 June 30, 2017 Skilled
Nursing Facilities/Transitional Care $ 199,258 85 % $ 398,722 85 %
Senior Housing 26,498 11 % 51,173 11 % Other 10,041
4 % 17,646 4 % $ 235,797
100 % $ 467,541 100 %
Operator Concentration by Investment ($000’s) As of June 30,
2017
Total # of
Properties (1)
Total Investment (2)
% of
Investment
Ciena Healthcare 71 $ 930,434 10.3 %
New Ark Investment, Inc. 54 599,691 6.7 % Maplewood Real Estate
Holdings, LLC 13 556,769 6.1 % Signature Holdings II, LLC 62
551,011 6.1 % Saber Health Group 45 491,466 5.5 % CommuniCare
Health Services, Inc. 35 393,156 4.4 % Daybreak Venture, LLC 48
337,565 3.8 % Genesis Healthcare 50 337,545 3.8 % Health &
Hospital Corporation 44 304,711 3.4 % Diversicare Healthcare
Services 35 277,980 3.1 % Remaining 67 Operators 535
4,210,892 46.8 % 992 $ 8,991,220 100.0 %
(1) Total # of Properties excludes seven properties
classified as assets held for sale. (2) Total Investment includes a
$19.2 million lease inducement and excludes $18.9 million (seven
properties) classified as assets held for sale.
Geographic Concentration by Investment ($000’s)
Total # of
Properties (1)
Total Investment (2)
% of
Investment
Ohio 87 $ 845,682 9.4 % Florida 95
792,506 8.8 % Texas 109 787,328 8.8 % Michigan 49 620,621 6.9 %
California 54 496,420 5.5 % Pennsylvania 43 469,185 5.2 % Indiana
59 406,510 4.5 % Tennessee 41 345,478 3.8 % Virginia 17 305,770 3.4
% South Carolina 23 272,966 3.0 % Remaining 32 states (3) 362
3,256,048 36.3 % 939 8,598,514
95.6 % United Kingdom 53 392,706
4.4 % 992 $ 8,991,220 100.0 %
(1) Total # of Properties excludes seven properties
classified as assets held for sale. (2) Total Investment includes a
$19.2 million lease inducement and excludes $18.9 million (seven
properties) classified as assets held for sale. (3) # of states and
Total Investment includes New York City 2nd Avenue development
project.
Revenue Maturities
($000's) As of June 30, 2017 Operating Lease Expirations
& Loan Maturities
Year
2017 Lease
Revenue
2017
Interest
Revenue
2017 Lease
and Interest
Revenue
%
2017 $ 7,377 $ 415 $
7,792 0.9 % 2018 28,357 1,649 30,006 3.5 % 2019 2,990
664 3,654 0.4 % 2020 5,596 8,171 13,767 1.6 % 2021 10,607 956
11,563 1.4 % 2022 64,466 2,943 67,409 7.9 % Note: Based on
annualized 2nd quarter 2017 contractual revenues.
The following tables present operator
revenue mix, census and coverage data based on information provided
by our operators as of March 31, 2017:
Operator Revenue Mix As of March
31, 2017 Medicaid
Medicare /
Insurance
Private / Other
Three-months ended March 31, 2017 51.0% 37.3% 11.7% Three-months
ended December 31, 2016 52.6% 35.8% 11.6% Three-months ended
September 30, 2016 53.0% 35.8% 11.2% Three-months ended June 30,
2016 51.8% 37.5% 10.7% Three-months ended March 31, 2016 51.8%
38.6% 9.6%
Operator Census and Coverage
Coverage Data Occupancy (1)
BeforeManagementFees
AfterManagementFees
Twelve-months ended March 31, 2017 82.5% 1.69x 1.33x
Twelve-months ended December 31, 2016 82.2% 1.69x 1.33x
Twelve-months ended September 30, 2016 82.1% 1.68x 1.31x
Twelve-months ended June 30, 2016 82.1% 1.72x 1.34x Twelve-months
ended March 31, 2016 82.2% 1.75x 1.37x
(1) Based on available (operating)
beds.
The following table presents a debt
maturity schedule as of June 30, 2017:
Debt
Maturities
($000’s)
Secured Debt Unsecured Debt Year
HUD
Mortgages (1)
Line of Credit
and Term Loans (2)(3)
Senior
Notes/Other (4)
Sub Notes (5)
Total Debt
Maturities
2017 $ - $ - $ - $ - $ -
2018 - - - - - 2019 - - - - - 2020 - - - - - 2021 - 1,250,000 -
20,000 1,270,000 2022 - 905,250 - - 905,250 Thereafter
54,316 - 3,350,000
- 3,404,316 $ 54,316
$ 2,155,250 $ 3,350,000 $ 20,000
$ 5,579,566
(1) Mortgages guaranteed by HUD (excluding net deferred
financing costs of $0.6 million). (2) Reflected at 100% borrowing
capacity. (3) $1.25 billion excludes a $700 million accordion
feature and $6.2 million net deferred financing costs. The $905
million is comprised of a: $425 million U.S. Dollar term loan, £100
million term loan (equivalent to $130.3 million in US dollars),
$100 million term loan to Omega’s operating partnership and $250
million 2015 term loan (excludes $6.0 million net deferred
financing costs) assuming the exercise of existing extension
rights. (4) Excludes net discounts, deferred financing costs and a
$1.5 million promissory note. (5) Excludes $0.4 million of fair
market valuation adjustments.
The following table presents investment
activity for the three– and six– month period ended June 30,
2017:
Investment Activity
($000's) Three Months Ended Six Months Ended June 30, 2017
June 30, 2017 Funding by Investment Type $ Amount
% $ Amount % Real
Property $ 123,403 67.8 % $ 130,977
59.6 % Construction-in-Progress 28,423 15.6 % 42,096 19.2 % Capital
Expenditures 16,784 9.2 % 30,649 14.0 % Investment in Direct
Financing Leases 2,538 1.4 % 4,767 2.2 % Mortgages 11,000
6.0 % 11,000 5.0 %
Total $ 182,148 100.0 % $ 219,489 100.0 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726006288/en/
Omega Healthcare Investors, Inc.Bob Stephenson, CFO,
410-427-1700
Omega Healthcare Investors (NYSE:OHI)
Historical Stock Chart
From Apr 2024 to May 2024
Omega Healthcare Investors (NYSE:OHI)
Historical Stock Chart
From May 2023 to May 2024