Completed $142 Million in New
Investments Completed the Gulf Coast Portfolio Asset Sale
for $318 Million
Omega Healthcare Investors, Inc. (NYSE: OHI) (the “Company” or
“Omega”) announced today its results for the quarter ended March
31, 2022. The Company reported net income for the quarter of $195.2
million or $0.79 per common share. The Company also reported Nareit
Funds From Operations (“Nareit FFO”) for the quarter of $170.7
million or $0.69 per common share, Adjusted Funds From Operations
(“Adjusted FFO” or “AFFO”) of $183.5 million or $0.74 per common
share, and Funds Available for Distribution (“FAD”) of $161.9
million.
Nareit FFO, AFFO and FAD are supplemental non-GAAP financial
measures that the Company believes are useful in evaluating the
performance of real estate investment trusts. For more information
regarding these non-GAAP measures, see the “Non-GAAP Financial
Measures” on the Company’s website at www.omegahealthcare.com.
CEO COMMENTS
Taylor Pickett, Omega’s Chief Executive Officer, stated, “Our
near-term adjusted FFO and FAD financial results were impacted by
the previously announced nonpayment of rent by a few operators,
including a reduction in collateral supporting non-paying
operators. These challenges may continue for the next few quarters
as we work through similar issues with other operators. Separately,
we were able to successfully sell the majority of our legacy Gulf
Coast assets in the quarter for over $300 million in net proceeds.
We continue to believe that the strong appetite for skilled nursing
assets and secular tailwinds continue to exist for this
industry.”
Mr. Pickett continued, “Portfolio occupancy improved as the
quarter progressed, as the impact of the Omicron variant receded.
Nevertheless, many facilities remain unprofitable as low occupancy
and elevated labor costs continue to pressure operating
performance. The incremental federal and state support provided to
this industry through the pandemic has helped a frail and
vulnerable segment of society receive the care they need. We hope
that future support will be sufficient to fund operator obligations
until occupancy returns to a sustainable level.”
Mr. Pickett concluded, “As we have throughout this crisis, we
would like to highlight the incredible efforts of our operators and
their heroic employees, who continue to work tirelessly and bravely
to protect and care for their residents.”
2022 RECENT DEVELOPMENTS AND FIRST
QUARTER HIGHLIGHTS
In Q2 2022, the Company…
- repurchased 3.9 million common shares for $106 million in
April.
- declared a $0.67 per share quarterly cash dividend on common
stock.
In Q1 2022, the Company…
- completed $121 million of real estate acquisitions.
- invested $20 million in capital renovation and
construction-in-progress projects.
- repurchased 981 thousand common shares for $27 million.
- sold 27 facilities for $333 million in cash proceeds,
generating a $114 million gain.
- paid a $0.67 per share quarterly cash dividend on common
stock.
- was included in the Bloomberg Gender-Equality Index for the 3rd
consecutive year.
NET INCOME
The Company reported net income of $195.2 million, or $0.79 per
common share, on revenues of $249.3 million for the quarter ended
March 31, 2022. This compares to net income of $164.4 million, or
$0.69 per common share, on revenues of $273.8 million, for the same
period in 2021.
The year-over-year increase in net income for the quarter ended
March 31, 2022 was primarily due to (i) a $29.7 million decrease in
loss on early extinguishment of debt, (ii) a $25.2 million decrease
in impairment on real estate properties, (iii) a $13.3 million
increase in gain on the sale of assets, (iv) a $2.1 million
decrease in depreciation and amortization expense resulting from
facility sales and (v) a $1.2 million decrease in general and
administrative (“G&A”) expenses. The increase in net income was
partially offset by (i) a $21.5 million decrease in rental income
primarily driven by three operators on a cash basis that failed to
make contractual payments in 2022, (ii) a $10.2 million decrease in
income from unconsolidated joint ventures resulting from prior year
facility sales, (iii) a $3.1 million decrease in mortgage interest
income as a result of one operator failing to make contractual
payments on a non-accrual mortgage loan in 2022, (iv) a $2.8
million increase in provision for credit losses and (v) a $1.5
million increase in stock-based compensation expense.
FIRST QUARTER 2022
RESULTS
Revenues – Revenues for the quarter ended March 31, 2022
totaled $249.3 million, which included $23.1 million of
straight-line and other non-cash revenue, $1.2 million of
non-recurring revenue and $3.5 million of real estate tax and
ground rents, which were partially offset by a $3.2 million
write-off of straight-line and other non-cash revenue.
Expenses – Expenses for the quarter ended March 31, 2022
totaled $167.7 million, primarily consisting of $82.8 million of
depreciation and amortization expense, $55.0 million of interest
expense, $9.2 million of G&A expense, $6.9 million of
stock-based compensation expense, $4.0 million of real estate tax
and ground lease expense, $3.5 million of impairment on real estate
properties, $3.2 million of amortized deferred financing costs and
a $1.8 million provision for credit losses.
Other Income and Expense – Other income for the quarter
ended March 31, 2022 totaled $113.2 million, which included $113.6
million of gain on assets sold.
Funds From Operations – Nareit FFO for the quarter ended
March 31, 2022 was $170.7 million, or $0.69 per common share, on
247.6 million weighted-average common shares outstanding, compared
to $170.2 million, or $0.71 per common share, on 239.9 million
weighted-average common shares outstanding, for the same period in
2021.
The $170.7 million of Nareit FFO includes $6.9 million of
non-cash stock-based compensation expense, a $3.2 million write-off
of straight-line and other non-cash revenue, a $2.6 million
non-cash provision for credit losses and $1.5 million of
acquisition, merger and transition costs, which were partially
offset by $1.2 million of non-recurring revenue.
The $170.2 million of Nareit FFO for the quarter ended March 31,
2021 included a $29.7 million loss on debt extinguishment, $5.4
million of non-cash stock-based compensation expense, a $2.8
million write-off of non-cash straight-line revenue, and $1.8
million of acquisition, merger and transition related costs offset
by $5.0 million of non-recurring revenue, a $1.0 million recovery
for credit losses and a $0.6 million recovery on direct financing
leases.
Adjusted FFO was $183.5 million, or $0.74 per common share, for
the quarter ended March 31, 2022, compared to $203.8 million, or
$0.85 per common share, for the same quarter in 2021. For further
information, see the “Funds From Operations” schedule below and on
the Company’s website.
FINANCING ACTIVITIES
$500 Million Stock Repurchase Program – As previously
announced, in January 2022, the Board of Directors authorized a
program allowing the repurchase of up to $500 million of Omega’s
outstanding common stock through March 2025. The timing and amount
of stock repurchases is at the discretion of management; however,
management is under no obligation to repurchase any amount of
stock. During the first quarter of 2022, the Company repurchased
981 thousand shares at an average price of $27.84 per share,
totaling $27.3 million.
Dividend Reinvestment and Common Stock Purchase Plan –
During the quarter ended March 31, 2022, the Company sold 80
thousand shares of its common stock under its Dividend Reinvestment
and Common Stock Purchase Plan. Aggregate gross proceeds from these
sales generated $2.3 million.
2022 FIRST QUARTER PORTFOLIO AND RECENT
ACTIVITY
$142 Million of New Investments – In the first quarter of
2022, the Company completed approximately $121.5 million of
acquisitions and $20.0 million in capital renovations and new
construction projects consisting of the following:
$100 Million Real Estate Acquisition –
On March 23, 2022, the Company acquired 27 care homes in the United
Kingdom (“U.K.”) (similar to assisted living facilities in the
United States (“U.S.”)) for approximately $100.0 million.
Concurrent with the acquisition, the Company entered a master lease
for the facilities with a new operator with an initial annual cash
yield of 8.0% with 2.5% annual escalators.
$5 Million Real Estate Acquisition –
On March 16, 2022, the Company acquired one care home in the U.K.
for approximately $5.0 million. Concurrent with the acquisition, we
entered a master lease for the facility with a new operator with an
initial annual cash yield of 8.0% with 2.5% annual escalators.
$8 Million Real Estate Acquisition –
On January 31, 2022, the Company acquired one care home in the U.K.
for approximately $8.2 million. The facility was added to an
existing operator’s master lease with an initial annual cash yield
of 8.0% with 2.5% annual escalators.
$8 Million Real Estate Acquisition –
On January 1, 2022, the Company acquired a Maryland skilled nursing
facility (“SNF”) for $8.2 million and amended an existing
operator’s master lease, with an initial term expiring on December
31, 2032, to include the acquired facility. The initial annual
yield for the additional facility is 9.5% and includes annual
escalators of 2.5%.
$20 Million of Capital Investments –
In the first quarter of 2022, the Company invested $20.0 million
under its capital renovation and construction-in-progress
programs.
Operator Collectibility Updates – In January 2022, an
operator representing 3.4% of the Company’s first quarter 2022
contractual annualized rent and mortgage interest revenue did not
pay its contractual amounts due under its lease agreement. This
operator continued to pay contractual interest amounts due under
its $20.0 million revolving credit facility during the first
quarter of 2022. In March 2022, the lease with this operator was
amended to allow for a short-term rent deferral for January through
March 2022. The deferred rent balance accrues interest monthly at a
rate of 5% per annum. This operator resumed paying the contractual
amount due under its lease agreement in April 2022. The operator is
required to repay the deferred rent balance and accrued interest by
December 31, 2022. In April 2022, this operator borrowed an
additional $1.8 million under its revolving credit facility. Omega
holds a $1.0 million letter of credit and a $150 thousand security
deposit from this operator.
In March 2022, another operator representing 2.4% of the
Company’s first quarter 2022 contractual annualized rent and
mortgage interest revenue did not pay its March contractual amounts
due under its lease agreement. In April 2022, the lease with this
operator was amended to allow the operator to apply its $2.0
million security deposit to its March 2022 contractual rental
payment and to allow for a short-term rent deferral for April, with
regular rental payments required to resume in May.
Guardian Portfolio Restructuring – In the first quarter
of 2022, the Company re-leased eight facilities to other operators
and sold two facilities, all of which were previously leased to
Guardian, as part of on-going restructuring activities. In February
2022, Guardian sold three facilities, previously subject to the
Omega mortgage loan and made a partial paydown of $21.7 million
against the mortgage loan. The remaining restructuring activities
to be completed include the sale of seven facilities leased to
Guardian. All seven of these facilities are included in assets held
for sale as of March 31, 2022. In April 2022, the Company agreed to
a formal restructuring agreement, master lease amendment and
mortgage loan amendment with Guardian. As part of the restructuring
agreement and amendments, Omega and Guardian agreed, among other
terms, to (i) allow Guardian to defer $18.0 million of aggregate
rent and interest, effective retrospectively, from October 1, 2021
through April 1, 2022, with repayment required after September 30,
2024 based on certain financial metrics and in full by the lease
termination date and (ii) reduce the combined rent and mortgage
interest to an aggregate $24.0 million following the closing of the
seven facility sales previously discussed. In April 2022, Guardian
made a partial payment after exhausting the maximum allowable
deferral of $18.0 million under the restructuring agreement.
Guardian is required to make contractual rent and interest payments
going forward under the restructuring agreements.
Asset Sales and
Impairments:
$333 Million in Asset Sales – In the first quarter of
2022, the Company sold 27 facilities for $332.6 million in cash,
recognizing a gain of approximately $113.6 million. The proceeds
and gain primarily relate to the March 31, 2022 sale of 22
facilities that were previously leased and operated by Gulf Coast
Health Care LLC (together with certain affiliates “Gulf Coast”).
The net cash proceeds from the Gulf Coast sale, including related
costs accrued for as of the end of the first quarter, were $304.0
million and we recognized a net gain of approximately $113.5
million.
Impairments and Assets Held for Sale – During the first
quarter of 2022, the Company recorded a $3.5 million net impairment
charge to reduce the net book value of two SNFs to their estimated
fair value.
As of March 31, 2022, the Company had 26 facilities classified
as assets held for sale, totaling approximately $92.8 million in
net book value.
BALANCE SHEET AND
LIQUIDITY
As of March 31, 2022, the Company had $5.68 billion of
outstanding indebtedness with a weighted-average annual interest
rate of 4.02%. The Company’s indebtedness consisted of an aggregate
principal amount of $4.9 billion of senior unsecured notes, a $50.0
million unsecured term loan, $379.9 million of secured debt and
$354.9 million of borrowings outstanding under its unsecured
revolving credit facility. As of March 31, 2022, total cash and
cash equivalents were $491.2 million and the Company had $1.1
billion of undrawn capacity on its unsecured revolving credit
facility.
DIVIDENDS
On April 21, 2022, the Board of Directors declared a quarterly
cash dividend of $0.67 per share, to be paid May 13, 2022, to
common stockholders of record as of the close of business on May 2,
2022.
ESG
On January 26, 2022, Omega, for the third consecutive year, was
named one of 418 companies across 50 industries included in the
Bloomberg Gender-Equality Index (“GEI”). The GEI brings
transparency to gender-related practices and policies at publicly
listed companies, increasing the breadth of environmental, social
and governance data available to investors. The GEI scoring
methodology allows investors to assess company performance and
compare across industry peer groups. The reference index measures
gender equality across five pillars: female leadership and talent
pipeline, equal pay and gender pay parity, inclusive culture,
sexual harassment policies, and pro-women brand.
CONFERENCE CALL
The Company will be conducting a conference call on Tuesday, May
3, 2022, at 10 a.m. Eastern time to review the Company’s 2022 first
quarter results and current developments. Analysts and investors
within the U.S. 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 may use the dial-in
number (412) 902-4140. Ask the operator to be connected to the
“Omega Healthcare’s First Quarter 2022 Earnings Call.”
To listen to the conference call via webcast, log on to
www.omegahealthcare.com and click the “Omega Healthcare
Investors, Inc. 1Q Earnings Call” hyper-link under “Upcoming
Events” in the Investor Relations section on Omega’s website
homepage. Webcast replays of the call will be available on Omega’s
website for a minimum of two weeks following the call.
Additionally, a copy of the earnings release will be available in
the “Featured Documents” and “Press Releases” sections of Omega’s
website.
* * * * * *
Omega is a real estate investment trust that invests in the
long-term healthcare industry, primarily in skilled nursing and
assisted living facilities. Its portfolio of assets is operated by
a diverse group of healthcare companies, predominantly in a
triple-net lease structure. The assets span all regions within the
U.S., as well as in the U.K.
Forward-Looking Statements and Cautionary Language
Novel coronavirus (“COVID-19”) data has been provided by our
operators. We caution that we have not independently validated
facility virus incidence information, it may be reported on an
inconsistent basis by our operators, and we can provide no
assurance regarding its accuracy or that there have not been any
changes since the time the information was obtained from our
operators; we also undertake no duty to update this
information.
This press release includes forward-looking statements within
the meaning of the federal securities laws. 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, facility
transitions, growth opportunities, expected lease income, continued
qualification as a real estate investment trust (“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’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)
the impact of the COVID-19 pandemic on our business and the
business of our operators, including without limitation, the extent
and duration of the COVID-19 pandemic, increased costs, staffing
shortages and decreased occupancy levels experienced by operators
of SNFs and assisted living facilities (“ALFs”) in connection
therewith, the ability of operators to comply with infection
control and vaccine protocols, the long-term impact of vaccinations
on facility infection rates, and the extent to which continued
government support may be available to operators to offset such
costs and the conditions related thereto; (iii) 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 Omega to collect unpaid rent or interest during the
pendency of a bankruptcy proceeding and retain security deposits
for the debtor’s obligations, and other costs and uncertainties
associated with operator bankruptcies; (iv) Omega’s ability to
re-lease, otherwise transition or sell underperforming assets or
assets held for sale on a timely basis and on terms that allow
Omega to realize the carrying value of these assets; (v) the
availability and cost of capital to Omega; (vi) changes in Omega’s
credit ratings and the ratings of its debt securities; (vii)
competition in the financing of healthcare facilities; (viii)
competition in the long-term healthcare industry and shifts in the
perception of various types of long-term care facilities, including
SNFs and ALFs; (ix) additional regulatory and other changes in the
healthcare sector; (x) changes in the financial position of Omega’s
operators; (xi) the effect of economic and market conditions
generally, and particularly in the healthcare industry; (xii)
changes in interest rates; (xiii) the timing, amount and yield of
any additional investments; (xiv) changes in tax laws and
regulations affecting REITs; (xv) 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; (xvi) Omega’s ability to
maintain its status as a REIT; (xvii) the effect of other factors
affecting our business or the businesses of Omega’s operators that
are beyond Omega’s or operators’ control, including natural
disasters, other health crises or pandemics and governmental
action, particularly in the healthcare industry, and (xviii) 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.
We caution you that the foregoing list of important factors may
not contain all the material factors that are important to you.
Accordingly, readers should not place undue reliance on those
statements. All forward-looking statements are based upon
information available to us on the date of this release. We
undertake no obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events or otherwise, except as otherwise required by law.
OMEGA HEALTHCARE INVESTORS,
INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per share
amounts)
March 31,
December 31,
2022
2021
(Unaudited)
ASSETS
Real estate assets
Buildings and improvements
$
7,477,855
$
7,448,126
Land
937,235
916,328
Furniture and equipment
516,410
511,271
Construction in progress
77,633
74,062
Total real estate assets
9,009,133
8,949,787
Less accumulated depreciation
(2,212,183
)
(2,160,696
)
Real estate assets – net
6,796,950
6,789,091
Investments in direct financing leases –
net
10,849
10,873
Mortgage notes receivable – net
819,577
835,086
7,627,376
7,635,050
Other investments – net
506,942
469,884
Investments in unconsolidated joint
ventures
192,238
194,687
Assets held for sale
92,762
261,151
Total investments
8,419,318
8,560,772
Cash and cash equivalents
491,247
20,534
Restricted cash
3,534
3,877
Contractual receivables – net
13,172
11,259
Other receivables and lease
inducements
269,992
251,815
Goodwill
651,024
651,417
Other assets
166,318
138,804
Total assets
$
10,014,605
$
9,638,478
LIABILITIES AND EQUITY
Revolving credit facility
$
354,888
$
—
Secured borrowings
379,644
362,081
Senior notes and other unsecured
borrowings – net
4,893,839
4,891,455
Accrued expenses and other liabilities
256,390
276,716
Total liabilities
5,884,761
5,530,252
Equity:
Preferred stock $1.00 par value authorized
– 20,000 shares, issued and outstanding – none
—
—
Common stock $.10 par value authorized –
350,000 shares, issued and outstanding – 238,206 shares as of March
31, 2022 and 239,061 shares as of December 31, 2021
23,820
23,906
Additional paid-in capital
6,401,207
6,427,566
Cumulative net earnings
3,201,081
3,011,474
Cumulative dividends paid
(5,714,595
)
(5,553,908
)
Accumulated other comprehensive income
(loss)
6,318
(2,200
)
Total stockholders’ equity
3,917,831
3,906,838
Noncontrolling interest
212,013
201,388
Total equity
4,129,844
4,108,226
Total liabilities and equity
$
10,014,605
$
9,638,478
OMEGA HEALTHCARE INVESTORS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
Unaudited
(in thousands, except per share
amounts)
Three Months Ended
March 31,
2022
2021
Revenues
Rental income
$
213,346
$
234,825
Real estate tax and ground lease
income
3,537
2,936
Income from direct financing leases
256
258
Mortgage interest income
20,549
23,625
Other investment income
10,594
11,652
Miscellaneous income
1,033
472
Total revenues
249,315
273,768
Expenses
Depreciation and amortization
82,752
84,849
General and administrative
9,158
10,399
Real estate tax and ground lease
expense
3,970
3,086
Stock-based compensation expense
6,860
5,396
Acquisition, merger and transition related
costs
1,513
1,814
Impairment on real estate properties
3,511
28,689
Recovery on direct financing leases
—
(553
)
Provision (recovery) for credit losses
1,824
(1,024
)
Interest expense
54,952
55,768
Interest – amortization of deferred
financing costs
3,193
2,753
Total expenses
167,733
191,177
Other income (expense)
Other expense – net
(429
)
(435
)
Loss on debt extinguishment
(6
)
(29,670
)
Realized (loss) gain on foreign
exchange
(26
)
666
Gain on assets sold – net
113,637
100,342
Total other income
113,176
70,903
Income before income tax expense and
income from unconsolidated joint ventures
194,758
153,494
Income tax expense
(1,225
)
(958
)
Income from unconsolidated joint
ventures
1,623
11,830
Net income
195,156
164,366
Net income attributable to noncontrolling
interest
(5,549
)
(4,388
)
Net income available to common
stockholders
$
189,607
$
159,978
Earnings per common share available to
common stockholders:
Basic:
Net income available to common
stockholders
$
0.79
$
0.69
Diluted:
Net income
$
0.79
$
0.69
Dividends declared per common share
$
0.67
$
0.67
OMEGA HEALTHCARE INVESTORS,
INC.
FUNDS FROM OPERATIONS
Unaudited
(in thousands, except per share
amounts)
Three Months Ended
March 31,
2022
2021
Net income
$
195,156
$
164,366
Deduct gain from real estate
dispositions
(113,637
)
(100,342
)
Deduct gain from real estate dispositions
of unconsolidated joint ventures
—
(14,924
)
Sub-total
81,519
49,100
Elimination of non-cash items included in
net income:
Depreciation and amortization
82,752
84,849
Depreciation - unconsolidated joint
ventures
2,896
3,361
Add back provision for impairments on real
estate properties
3,511
28,689
Add back provision for impairments on real
estate properties of unconsolidated joint ventures
—
4,178
Add back unrealized loss on warrants
—
72
Nareit funds from operations (“Nareit
FFO”)
$
170,678
$
170,249
Weighted-average common shares
outstanding, basic
239,527
232,572
Restricted stock and PRSUs
963
944
Omega OP Units
7,066
6,391
Weighted-average common shares
outstanding, diluted
247,556
239,907
Nareit funds from operations available
per share
$
0.69
$
0.71
Adjustments to calculate adjusted funds
from operations:
Nareit FFO
$
170,678
$
170,249
Add back:
Stock-based compensation expense
6,860
5,396
Uncollectible accounts receivable (1)
3,151
2,750
Non-cash provision (recovery) for credit
losses
2,555
(1,024
)
Acquisition, merger and transition related
costs
1,513
1,814
Loss on debt extinguishment
6
29,670
Deduct:
Non-recurring revenue
(1,221
)
(5,004
)
Recovery on direct financing leases
—
(553
)
Add back unconsolidated joint venture
related:
Loss on debt extinguishment
—
457
Adjusted funds from operations
(“AFFO”)
$
183,542
$
203,755
Adjustments to calculate funds
available for distribution:
Non-cash interest expense
$
2,164
$
1,880
Capitalized interest
(719
)
(388
)
Non-cash revenue
(23,063
)
(12,070
)
Funds available for distribution
(“FAD”)
$
161,924
$
193,177
_______________________________
(1)
Straight-line accounts receivable
write-off recorded as a reduction to rental income.
Nareit Funds From Operations (“Nareit 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 income
statement, 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 Nareit FFO in accordance with
the definition and interpretive guidelines issued by the National
Association of Real Estate Investment Trusts (“Nareit”), and
consequently, Nareit 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 and
changes in the fair value of warrants. Adjustments for
unconsolidated partnerships and joint ventures will be calculated
to reflect funds from operations on the same basis. Revenue
recognized based on the application of security deposits and
letters of credit or based on the ability to offset against other
financial instruments is included within Nareit FFO. The Company
believes that Nareit 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
funds from operations was designed by the real estate industry to
address this issue. Funds from operations described herein is not
necessarily comparable to funds from operations 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 Nareit FFO excluding the impact of
non-cash stock-based compensation and certain revenue and expense
items (e.g., acquisition, merger and transition related costs,
write-off of straight-line accounts receivable, recoveries and
provisions for credit losses (excluding certain cash recoveries on
impaired loans), severance, etc.). 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 may not be comparable to the Nareit definition of funds from
operations 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 FAD 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, funds from
operations 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 lease and
loan maturities:
As of March 31, 2022
Total
# of
# of
Balance Sheet Data
Total # of
Investment
% of
Operating
Operating
Facilities
($000’s)
Investment
Facilities (2)
Beds (2)
Real estate investments (1)
876
$
9,019,982
92
%
861
85,913
Mortgage notes receivable
60
819,577
8
%
55
6,082
936
$
9,839,559
100
%
916
91,995
Assets held for sale
26
92,762
22
1,701
Total investments
962
$
9,932,321
938
93,696
As of March 31, 2022
Total
# of
# of
Investment
Investment Data
Total # of
Investment
% of
Operating
Operating
per Bed
Facilities
($000’s)
Investment
Facilities (2)
Beds (2)
($000’s)
SNFs/Transitional care (1)
751
$
7,468,630
76
%
735
79,669
$
94
Senior housing (3)
185
2,370,929
24
%
181
12,326
$
192
936
$
9,839,559
100
%
916
91,995
$
107
Assets held for sale
26
92,762
22
1,701
Total investments
962
$
9,932,321
938
93,696
__________________________________
(1)
Includes one facility under a direct
financing lease totaling $10.8 million.
(2)
Excludes facilities which are
non-operating, closed and/or not currently providing patient
services.
(3)
Includes ALFs, memory care and independent
living facilities.
Revenue by Investment Type
(000's)
Three Months Ended
March 31, 2022
Rental property
$
213,602
85.7
%
Real estate tax and ground lease
income
3,537
1.4
%
Mortgage notes
20,549
8.2
%
Other investment income and miscellaneous
income - net
11,627
4.7
%
$
249,315
100.0
%
Revenue by Facility Type
(000's)
Three Months Ended
March 31, 2022
SNFs/Transitional care
$
184,307
73.9
%
Senior housing
49,844
20.0
%
Real estate tax and ground lease
income
3,537
1.4
%
Other
11,627
4.7
%
$
249,315
100.0
%
As of
2022 Q1
% of Total
March 31, 2022
Annualized
Annualized
Rent/Interest Concentration by Operator
($000’s)
# of
Contractual
Contractual
Facilities (1)
Rent/Interest (1)(2)
Rent/Interest
LaVie (f/k/a Consulate)
86
$
97,347
9.8
%
Ciena
61
97,014
9.8
%
Maplewood
17
67,518
6.8
%
Communicare
44
66,433
6.7
%
Genesis
44
58,139
5.9
%
Agemo
51
53,275
5.4
%
Saber
50
53,232
5.4
%
Brookdale
24
45,090
4.6
%
HHC
44
38,139
3.9
%
Nexion
45
33,821
3.4
%
Remaining Operators (3)
471
378,691
38.3
%
937
$
988,699
100.0
%
__________________________________
(1)
Excludes facilities which are
non-operating, closed and/or not currently providing patient
services.
(2)
Includes mezzanine and term loan
interest.
(3)
Excludes one multi-tenant medical office
building.
As of March 31, 2022
Geographic Concentration by Investment
($000’s)
Total # of
Total
% of Total
Facilities (1)
Investment (1)(2)
Investment
Florida
115
$
1,320,583
13.3
%
Texas
113
991,825
10.0
%
Michigan
46
651,183
6.6
%
Indiana
70
647,097
6.5
%
California
51
564,738
5.7
%
Ohio
43
562,161
5.7
%
Pennsylvania
46
504,382
5.1
%
Virginia
28
422,593
4.3
%
New York
1
336,876
3.4
%
North Carolina
39
328,231
3.3
%
Remaining 32 states
296
3,039,843
30.7
%
848
9,369,512
94.6
%
United Kingdom
88
534,904
5.4
%
936
$
9,904,416
100.0
%
___________________________________
(1)
Excludes 26 facilities with total
investment of approximately $92.8 million classified as assets held
for sale.
(2)
Excludes $64.9 million of allowance for
credit losses.
As of March 31, 2022
Operating Lease Expirations
& Loan Maturities ($000's) (1)
Lease (Rent)
Interest Income
Lease (Rent) and Interest
Income
% of Total Annualized Contractual
Rent/Interest
2022
$
—
$
26
$
26
0.0
%
2023
3,684
453
4,137
0.4
%
2024
4,188
7,447
11,635
1.2
%
2025
5,123
5,119
10,242
1.0
%
2026
41,803
—
41,803
4.2
%
____________________________
(1)
Based on annualized 1st quarter 2022
contractual rent and interest.
The following tables present operator revenue mix, census and
coverage data based on information provided by our operators for
the indicated periods. We have not independently verified this
information, and we are providing this data for informational
purposes only.
Operator Revenue Mix (1)
Medicare /
Private /
Medicaid
Insurance
Other
Three-months ended December 31, 2021
54.3
%
32.2
%
13.5
%
Three-months ended September 30, 2021
53.1
%
33.3
%
13.6
%
Three-months ended June 30, 2021
53.2
%
33.5
%
13.3
%
Three-months ended March 31, 2021
50.6
%
38.2
%
11.2
%
Three-months ended December 31, 2020
51.0
%
38.1
%
10.9
%
________________________________
(1)
Excludes all facilities considered
non-core and does not include federal stimulus revenue.
Coverage Data
Before
After
Occupancy (2)
Management
Management
Operator Census and Coverage
(1)
Fees (3)
Fees (4)
Twelve-months ended December 31, 2021
74.5
%
1.48x
1.14x
Twelve-months ended September 30, 2021
74.2
%
1.52x
1.18x
Twelve-months ended June 30, 2021
74.2
%
1.63x
1.28x
Twelve-months ended March 31, 2021
75.3
%
1.80x
1.44x
Twelve-months ended December 31, 2020
78.1
%
1.86x
1.50x
_______________________________
(1)
Excludes facilities considered
non-core.
(2)
Based on available (operating) beds.
(3)
Represents EBITDARM of our operators,
defined as earnings before interest, taxes, depreciation,
amortization, Rent expense and management fees for the applicable
period, divided by the total Rent payable to the Company by its
operators during such period. “Rent” refers to the total monthly
rent and mortgage interest due under the Company’s lease and
mortgage agreements over the applicable period.
(4)
Represents EBITDAR of our operators,
defined as earnings before interest, taxes, depreciation,
amortization, and Rent (as defined in footnote 3) expense for the
applicable period, divided by the total Rent payable to the Company
by its operators during such period. Assumes a management fee of
4%.
The following table presents a debt maturity schedule as of
March 31, 2022:
Unsecured Debt
Debt Maturities
($000’s)
Revolving Credit Facility and OP
Term Loan (1)
Senior Notes (1)
Secured Debt (1)
Total Debt Maturities
2022
$
—
$
—
$
2,275
$
2,275
2023
—
350,000
—
350,000
2024
—
400,000
19,750
419,750
2025
404,888
400,000
—
804,888
2026
—
600,000
—
600,000
2027
—
700,000
—
700,000
Thereafter
2,450,000
357,910
2,807,910
$
404,888
$
4,900,000
$
379,935
$
5,684,823
____________________
(1)
Excludes issuance and deferred financing
costs.
The following table presents real estate investment
activity:
Three Months Ended
Real Estate Investment Activity
($000's)
March 31, 2022
$ Amount
%
Real property
$
121,497
85.8
%
Construction-in-progress
5,303
3.8
%
Capital expenditures
14,731
10.4
%
Mortgages
—
—
%
Other
—
—
%
Total
$
141,531
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005699/en/
FOR FURTHER INFORMATION, CONTACT Matthew Gourmand, SVP,
Corporate Strategy & Investor Relations or Bob Stephenson, CFO
at (410) 427-1700
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