Omega Healthcare Investors, Inc. (NYSE:OHI) (the “Company” or
“Omega”) today announced its results of operations for the quarter
ended March 31, 2019. The Company reported net income of $72.2
million or $0.34 per common share. The Company also reported Funds
From Operations (“FFO”) for the quarter of $144.1 million or $0.67
per common share, Adjusted Funds From Operations (“AFFO” or
“Adjusted FFO”) of $161.3 million or $0.76 per common share, and
Funds Available For Distribution (“FAD”) of $145.2 million.
Adjusted FFO excludes a few one-time non-cash revenue and
expense items from FFO. FFO, AFFO and FAD are non-GAAP financial
measures. For more information regarding these non-GAAP measures,
see the “Funds From Operations” schedule below and the Company’s
website at www.omegahealthcare.com.
GAAP NET INCOME
For the quarter ended March 31, 2019, the Company reported net
income of $72.2 million, or $0.34 per common share, on operating
revenues of $223.7 million. This compares to net income of $87.9
million, or $0.42 per common share, on operating revenues of $220.2
million, for the same period in 2018.
The decrease in net income for the quarter ended March 31, 2019
compared to the prior year was primarily due to (i) a $17.5 million
reduction in gains on the sale of assets, (ii) an increase of $2.9
million of costs related to the acquisition of MedEquities Realty
Trust (“MedEquities”) and (iii) an increase of $2.8 million of
impairments on direct financing leases and real estate properties.
The decrease in net income was partially offset by a $6.6 million
net reduction in provisions for uncollectible accounts.
CEO COMMENTS
Taylor Pickett, Omega’s Chief Executive Officer, stated, “We had
a solid first quarter. We announced our pending acquisition of
MedEquities, resolved the sale and transition of our legacy Orianna
assets and began to see our general and administrative expenses
tick down as legal costs began to moderate. We also announced that
we had provided one of our operators, Daybreak, near-term liquidity
relief via a $2.5 million rent deferral in each of the first two
quarters of 2019. During the first quarter, they paid in accordance
with these terms and we began to see an improvement in their
patient quality mix in the first few months of 2019. We continue to
work closely with Daybreak to maximize rents and ensure they
protect the value of our real estate assets. While our operators
continue to battle a challenging operating environment, a number of
positive factors lead us to believe this environment will improve
in the near future. The implementation of the Patient Driven
Payment Model (“PDPM”) and the recently announced 2.5% increase in
Medicare reimbursement, both starting in October, will augment the
improving census driven by a multi-decade demographic
tailwind.”
Mr. Pickett continued, “With the MedEquities closing imminent,
the acquisition pipeline beginning to pick up and our flagship
Manhattan senior housing development, Inspīr at Carnegie Hill, due
to open at the end of the year, we are optimistic for the future
and believe we will be able to take advantage of our preeminent
platform to continue to grow our portfolio and increase shareholder
value.”
2019 RECENT DEVELOPMENTS AND FIRST
QUARTER HIGHLIGHTS
In Q2 2019, the Company…
- declared a $0.66 per share quarterly
common stock dividend.
In Q1 2019, the Company…
- entered into a definitive merger
agreement to acquire MedEquities Realty Trust, Inc.
- finalized the Orianna portfolio
restructuring.
- invested $42 million in capital
renovation and construction-in-progress projects.
- paid a $0.66 per share quarterly common
stock dividend.
FIRST QUARTER 2019
RESULTS
Operating Revenues and Expenses – Operating revenues for
the quarter ended March 31, 2019 totaled $223.7 million, which
included $15.8 million of non-cash revenue, $4.0 million of real
estate tax and ground rents, and a $1.2 million provision for
uncollectible straight-line revenue.
Operating expenses for the quarter ended March 31, 2019 totaled
$101.5 million, consisting of $70.9 million of depreciation and
amortization expense, $11.8 million of general and administrative
(“G&A”) expense, $7.7 million of impairments on direct
financing leases related to finalizing the sale of 15 Orianna
facilities, $4.1 million of real estate tax and ground lease
expense, $4.1 million of stock-based compensation expense and $2.9
million of merger related costs. For more information on impairment
charges, see the “2019 First Quarter and Recent Portfolio Activity
– Asset Impairments and Dispositions” section below.
The Company adopted a new lease accounting standard effective
January 1, 2019. As a result, operating revenues increased $4.0
million (offset by an increase in operating expenses of $4.1
million) related to real estate taxes and ground lease income.
As part of the Company’s constant effort to improve the
effectiveness and efficiency of its operations, on February 15,
2019, the Company implemented an internal realignment resulting in
the closing of its Chicago office and the elimination of certain
positions. As a result, the Company recorded in G&A
approximately $1.0 million in restructuring related expenses.
Other Income and Expense – Other income and expense for
the quarter ended March 31, 2019 was a net expense of $50.0
million, primarily consisting of $48.1 million of interest expense
and $2.2 million of amortized deferred financing costs offset by
$0.3 million in unrealized gain on warrants (included in Interest
income and other – net).
Funds From Operations – For the quarter ended March 31,
2019, FFO was $144.1 million, or $0.67 per common share, on 214
million weighted-average common shares outstanding, compared to
$147.4 million, or $0.71 per common share on 208 million
weighted-average common shares outstanding, for the same period in
2018.
The $144.1 million of FFO for the quarter ended March 31, 2019
includes $7.7 million in impairments on direct financing leases,
$4.1 million of non-cash stock-based compensation expense, $2.9
million of merger related costs, a $1.2 million write-off of
non-cash revenue, a $1.1 million one-time lease termination
payment, $1.0 million of restructuring costs and $1.0 million of
one-time revenue.
The $147.4 million of FFO for the quarter ended March 31, 2018
included the impact of $7.8 million in provisions for uncollectible
accounts, $4.1 million of non-cash stock-based compensation expense
and a $2.0 million purchase option buyout.
Adjusted FFO was $161.3 million, or $0.76 per common share, for
the quarter ended March 31, 2019, compared to $161.3 million, or
$0.78 per common share, for the same quarter in 2018. For further
information see the “Funds From Operations” schedule.
FINANCING ACTIVITIES
Equity Shelf Program and Dividend Reinvestment and Common
Stock Purchase Plan – During the quarter ended March 31, 2019,
the Company sold 3.1 million shares of its common stock, generating
$110.6 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 thousands, except price per share)
Equity Shelf(At-the-Market)Program
DividendReinvestment andCommon
StockPurchase Plan
Q1 2019 Number of shares 2,221 892 Average price per share $
35.26 $ 36.19 Gross proceeds $ 78,325 $ 32,286
2019 FIRST QUARTER AND RECENT PORTFOLIO
ACTIVITY
$42 Million of New Investments – In the first quarter of
2019, the Company invested $41.8 million under its capital
renovation and construction-in-progress programs.
Orianna – On January 11, 2019, 15 Orianna facilities were
sold for $176 million of consideration, comprised of $146 million
in cash (received by the estate trust) and a $30 million seller
note held by the Company. The Company received $25 million to repay
the debtor-in-possession revolving credit and term loan facility.
During the first quarter, the Company received $86.7 million from
the estate trust. The estate trust currently holds cash and
accounts receivable which will be liquidated with a portion of the
proceeds paying various estate expenses with the balance to be paid
to the Company. In the first quarter of 2019, the Company recorded
a $7.7 million impairment charge related to the finalization of the
Orianna portfolio based on the estimated collectability of the
remaining accounts receivable owed to the Company held in the
estate trust.
MedEquities Merger – As previously announced, on January
2, 2019, the Company entered into a definitive merger agreement
under which Omega will acquire all of the outstanding shares of
MedEquities Realty Trust, Inc. (NYSE:MRT). The transaction
represents an enterprise value of approximately $600 million for
MedEquities and further diversifies Omega’s assets and operators.
The meeting of MedEquities stockholders to approve the merger will
be held on May 15, 2019, and we expect to complete the acquisition
shortly thereafter.
Under the terms of the merger agreement, each outstanding share
of MedEquities common stock will be exchanged for 0.235 of a share
of Omega common stock plus $2.00 in cash.
Asset Impairments and Dispositions – During the first
quarter of 2019, 16 assets were sold (one previously classified as
assets held for sale and 15 classified as a direct financing lease)
for $87.1 million in cash and a $30 million seller note. The
Company recorded an impairment charge on direct financing leases as
previously described.
As of March 31, 2019, the Company had two facilities classified
as assets held for sale totaling approximately $0.6 million. The
Company expects to sell these facilities over the next few
quarters.
DIVIDENDS
On April 15, 2019, the Board of Directors declared a common
stock dividend of $0.66 per share, to be paid May 15, 2019 to
common stockholders of record as of the close of business on April
30, 2019.
2019 ADJUSTED FFO GUIDANCE
AFFIRMED
The Company affirmed its 2019 Adjusted FFO guidance to be
between $3.00 and $3.12 per diluted share.
Bob Stephenson, Omega’s CFO commented, “Our 2019 guidance
assumes that the MedEquities merger will be completed in mid-May.
We expect to redeploy most of the cash proceeds received in the
first quarter from the Orianna transaction throughout the remainder
of 2019; however, the timing is unpredictable.” Mr. Stephenson
continued, “As I stated in February, we may continue to issue
equity under our ATM to further de-lever, which may significantly
impact our guidance. To clarify our longer-term expected operating
performance, we have reiterated our fourth quarter 2019 estimated
guidance to be between $0.78 and $0.81 per share along with our
annual guidance.”
The following table presents a reconciliation of Omega’s
guidance regarding Adjusted FFO to projected GAAP earnings.
2019 Q4 Pro FormaAdjusted FFO
GuidanceRange(per diluted commonshare)
2019 Annual AdjustedFFOGuidance Range(per
diluted commonshare)
Net Income $0.42 - $0.45 $1.49 - $1.61 Depreciation 0.34 1.37
Depreciation – unconsolidated joint venture 0.00 0.02 Unrealized
gain on warrants 0.00 (0.00) Gain on assets sold – net 0.00
(0.00) FFO $0.76 - $0.79 $2.88 - $3.00 Adjustments: One-time
revenue items 0.00 0.00 One-time termination payment 0.00 0.00
Interest – refinancing costs 0.00 0.00 Restructuring expenses 0.00
0.01 Impairment on direct financing leases 0.00 0.03 Stock-based
compensation expense 0.02 0.08 Adjusted FFO $0.78 -
$0.81 $3.00 - $3.12
Note: All per share numbers rounded to 2
decimals.
The Company's Adjusted FFO guidance for 2019 assumes the
MedEquities merger is completed in the second quarter, $125 million
of planned capital renovation projects with 2019 estimated
in-service dates, and proceeds from potential asset disposition
opportunities will be redeployed with cash yields between 9% –
9.5%. It also excludes the impact of gains and losses from the sale
of assets, certain revenue and expense items, interest refinancing
expense, capital transactions, acquisition costs, and additional
provisions for uncollectible accounts, if any.
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 of collection of rental
obligations from operators on a cash basis, 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. The Company may, from time to time,
update its publicly announced Adjusted FFO guidance, but it is not
obligated to do so.
CONFERENCE CALL
The Company will be conducting a conference call on Wednesday,
May 8, 2019 at 10 a.m. Eastern to review the Company’s 2019 first
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 First Quarter 2019 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 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
US, as well as in the UK.
Additional Information and Where to Find It
In connection with the proposed transaction with MedEquities
(the “Merger”), Omega has filed a registration statement on Form
S-4 (File No. 333-229594) with the SEC. The registration statement
includes a copy of the merger agreement and constitutes the proxy
statement of MedEquities and the prospectus of Omega. MedEquities
and Omega may also file other documents with the SEC in connection
with the proposed Merger. This document is not a substitute for the
proxy statement/prospectus or registration statement or any other
document that MedEquities or Omega may file with the SEC. Investors
are urged to read the registration statement, the proxy
statement/prospectus and any other relevant documents when they are
available, as well as any amendments or supplements to these
documents, carefully and in their entirety.
Investors may obtain free copies of the registration statement,
the proxy statement/prospectus, and all other relevant documents
filed by Omega and MedEquities with the SEC through the website
maintained by the SEC at www.sec.gov, or by contacting MedEquities
at 3100 West End Avenue, Suite 1000, Nashville, Tennessee 37203,
Attn: Tripp Sullivan, (615) 760-1104, or Omega at Omega Healthcare
Investors, Inc. 303 International Circle, Suite 200 Hunt Valley,
Maryland 21030, Attn: Matthew Gourmand, Senior VP of Investor
Relations, (410) 427-1714.
Participants in the Solicitation
Omega, MedEquities and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from MedEquities’ stockholders in respect of the proposed
Merger. Information regarding Omega’s directors and executive
officers can be found in Omega’s definitive proxy statement filed
with the SEC on April 24, 2019 and its Form 10-K filed with the SEC
on February 26, 2019, as well as its other filings with the SEC.
Information regarding the directors and executive officers of
MedEquities can be found in its Form 10-K/A filed with the SEC on
April 29, 2019, as well as its other filings with the SEC.
Additional information regarding the interests of such potential
participants is included in the registration statement on Form S-4
filed by Omega and other relevant documents to be filed with the
SEC in connection with the proposed Merger. These documents are
available free of charge on the SEC’s website and from Omega and
MedEquities, as applicable, using the sources indicated above.
No Offer or Solicitation
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to buy, sell or
solicit any securities or any proxy, vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be deemed to be made
except by means of a prospectus meeting the requirements of Section
10 of the Securities Act of 1933, as amended.
Forward-Looking Statements
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, facility transitions, 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’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 healthcare reform and regulation, including cost
containment measures and changes in reimbursement policies,
procedures and rates; (iii) the ability of operators and borrowers
to maintain the financial strength and liquidity necessary to
satisfy their respective rent and debt obligations; (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 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; (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 and the impact of changes in tax
laws and regulations affecting REITs; (ix) Omega’s ability to sell
assets held for sale or complete potential asset sales on a timely
basis and on terms that allow Omega to realize the carrying value
of these assets; (x) Omega’s ability to re-lease, otherwise
transition or sell underperforming 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; (xiii)
changes in interest rates; and (xiv) other factors identified in
Omega’s filings with the SEC. 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.
In addition, the proposed acquisition of MedEquities presents
additional factors that could cause Omega’s results to differ
materially from those reflected in the forward-looking statements.
Important risk factors related to the MedEquities transaction that
may cause such a difference include, without limitation, risks and
uncertainties related to (i) the risk that the conditions to
closing of the Merger may not be satisfied including, without
limitation, the MedEquities stockholder approval; (ii) the ability
of Omega to integrate the acquired business successfully and to
achieve anticipated cost savings and other synergies; (iii) the
possibility that other anticipated benefits of the proposed Merger
will not be realized, including, without limitation, anticipated
revenues, expenses, earnings and other financial results; (iv)
potential litigation relating to the proposed Merger that could be
instituted; (v) the ability to meet expectations regarding the
timing and closing of the Merger; and (vi) possible disruptions
from the proposed Merger that could harm the businesses of Omega
and/or MedEquities. These risks, as well as other risks associated
with the proposed acquisition of MedEquities, are more fully
discussed in the registration statement on Form S-4 that Omega has
filed with the SEC in connection with the proposed transaction, as
may be amended and supplemented. We caution you that the foregoing
list of important factors may not contain all of 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 31,2019
December 31,2018 (Unaudited)
ASSETS Real estate properties Real estate investments $
7,818,209 $ 7,746,410 Less accumulated depreciation
(1,631,673 ) (1,562,619 ) Real estate
investments – net 6,186,536 6,183,791 Investments in direct
financing leases – net 11,707 132,262 Mortgage notes receivable –
net 703,739 710,858
6,901,982 7,026,911 Other investments – net 474,066 504,626
Investment in unconsolidated joint venture 29,919 31,045 Assets
held for sale – net 645 989
Total investments 7,406,612 7,563,571 Cash and cash
equivalents 40,028 10,300 Restricted cash 1,372 1,371 Contractual
receivables – net 33,346 33,826 Other receivables and lease
inducements 338,177 313,551 Goodwill 644,190 643,950 Other assets
56,341 24,308 Total
assets $ 8,520,066 $ 8,590,877
LIABILITIES AND EQUITY Revolving line of credit $ 195,000 $
313,000 Term loans – net 901,345 898,726 Secured borrowing 2,275 —
Senior notes and other unsecured borrowings – net 3,330,400
3,328,896 Accrued expenses and other liabilities 271,902 272,172
Deferred income taxes 13,502
13,599 Total liabilities 4,714,424
4,826,393 Equity:
Common stock $.10 par value authorized –
350,000 shares, issued and outstanding – 207,001 shares as of March
31, 2019 and 202,346 as of December 31, 2018
20,700
20,235
Common stock – additional paid-in capital 5,240,714 5,074,544
Cumulative net earnings 2,200,213 2,130,511 Cumulative dividends
paid (3,875,884 ) (3,739,197 ) Accumulated other comprehensive loss
(39,941 ) (41,652 ) Total stockholders’
equity 3,545,802 3,444,441 Noncontrolling interest 259,840
320,043 Total equity
3,805,642 3,764,484 Total
liabilities and equity $ 8,520,066 $ 8,590,877
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited
(in thousands, except per share
amounts)
Three Months EndedMarch 31,
2019 2018 Revenue
Rental income $ 188,204 $ 193,949 Real estate tax and ground lease
income 3,973 - Income from direct financing leases 260 613 Mortgage
interest income 18,134 16,579 Other investment income 11,914 8,527
Miscellaneous income 1,203 531 Total
operating revenues 223,688 220,199
Expenses
Depreciation and amortization 70,852 70,361 General and
administrative 11,826 12,419 Real estate tax and ground lease
expense 4,119 - Stock-based compensation 4,070 4,056 Acquisition
costs 2,949 - Impairment on real estate properties - 4,914
Impairment on direct financing leases 7,700 - Provision for
uncollectible accounts - 7,814 Total
operating expenses 101,516 99,564
Other operating
income Gain on assets sold – net 3 17,500
Operating income
122,175
138,135 Other income (expense) Interest income
and other – net 337 585 Interest expense (48,100 ) (48,011 )
Interest – amortization of deferred financing costs (2,238 ) (2,243
) Realized gain on foreign exchange 26 59
Total other expense (49,975 ) (49,610 )
Income
from continuing operations 72,200 88,525 Income
tax expense
(675
)
(543 ) Income (loss) from unconsolidated joint venture
657
(49 )
Net income 72,182 87,933
Net income attributable to noncontrolling interest
(2,480 ) (3,713 ) Net income
available to common stockholders $ 69,702
$ 84,220 Earnings per common share
available to common stockholders: Basic: Net income available
to common stockholders $ 0.34 $ 0.42 Diluted: Net
income $ 0.34 $ 0.42 Dividends declared per
common share $ 0.66 $ 0.66 Weighted-average
shares outstanding, basic 204,558 198,911
Weighted-average shares outstanding, diluted 213,523
207,816
OMEGA HEALTHCARE
INVESTORS, INC. FUNDS FROM OPERATIONS Unaudited
(in thousands, except per share
amounts)
Three Months EndedMarch 31,
2019 2018 Net income $
72,182 $ 87,933 Deduct gain from real estate dispositions (3
) (17,500 ) Sub-total 72,179 70,433 Elimination of non-cash
items included in net income: Depreciation and amortization 70,852
70,361 Depreciation - unconsolidated joint venture 1,372 1,657 Add
back non-cash provision for impairments on real estate properties —
4,914 Add back non-cash provision for impairments on real estate
properties of unconsolidated joint venture — 608 Deduct unrealized
gain on warrants (284 ) (581 )
Funds from
operations (“FFO”) $ 144,119 $ 147,392
Weighted-average common shares outstanding, basic 204,558 198,911
Restricted stock and PRSUs 1,688 136 Omega OP Units 7,277
8,769 Weighted-average common shares
outstanding, diluted 213,523 207,816
Funds from operations available per share $ 0.67
$ 0.71
Adjustments to calculate adjusted
funds from operations: Funds from operations $ 144,119 $
147,392 Deduct one-time revenue (972 ) — Add back acquisition costs
2,949 — Add back one-time buy-out of purchase option — 2,000 Add
back one-time termination payment 1,118 — Add back straight-line
revenue write-off 1,229 — Add back impairment for direct financing
leases 7,700 — Add back provision for uncollectible accounts —
7,814 Add back restructuring costs 1,040 — Add back non-cash
stock-based compensation expense 4,070 4,056
Adjusted funds from operations (“AFFO”) $ 161,253
$ 161,262
Adjustments to calculate funds
available for distribution: Non-cash interest expense $ 2,213 $
2,216 Capitalized interest (3,453 ) (2,296 ) Non-cash revenues
(14,773 ) (17,380 )
Funds available for
distribution (“FAD”) $ 145,240 $ 143,802
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 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 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 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. 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 lease and
loan maturities: As of
March 31, 2019 As of March 31, 2019 Balance Sheet Data
Total # ofProperties
TotalInvestment($000’s)
% ofInvestment
# ofOperatingProperties (1)
# ofOperatingBeds (1)
Real Estate Investments 853 $ 7,818,209 92 % 836
83,582 Direct Financing Leases 2 11,707 0 % 2 135 Mortgage
Notes Receivable 53 703,739 8 % 53
5,715 908 $ 8,533,655 100 % 891 89,432 Assets Held For Sale 2
645 Total Investments 910 $ 8,534,300
Investment Data
Total # ofProperties
TotalInvestment($000’s)
% ofInvestment
# ofOperatingProperties(1)
# ofOperatingBeds (1)
Investmentper Bed($000’s)
Skilled Nursing Facilities/Transitional Care
779
$
6,984,762
82
%
767
81,655
$
86
Senior Housing (2) 129 1,548,893 18 % 124
7,777 $ 199 908 $ 8,533,655 100 % 891 89,432 $ 95 Assets
Held For Sale 2 645 Total Investments 910 $ 8,534,300
(1) Excludes facilities which are non-operating, closed
and/or not currently providing patient services. (2) Includes ALFs,
memory care and independent living facilities.
Revenue Composition ($000's)
Revenue by Investment Type Three Months Ended March 31, 2019
Rental Property $ 188,204 84 % Real Estate Tax and Ground Lease
Income 3,973 2 % Direct Financing Leases 260 0 % Mortgage Notes
18,134 8 % Other Investment Income and Miscellaneous Income - net
13,117 6 % $ 223,688 100 %
Revenue
by Facility Type Three Months Ended March 31, 2019 Skilled
Nursing Facilities/Transitional Care $ 179,383 80 % Senior Housing
27,215 12 % Real Estate Tax and Ground Lease Income 3,973 2 % Other
13,117 6 % $ 223,688 100 %
Rent/Interest Concentration by Operator
($000’s)
# ofProperties (1)
2019 Q1AnnualizedContractualRent/Interest
(1)(2)
% of
TotalAnnualizedContractualRent/Interest
Ciena 74 $ 94,787 11.8 % Genesis 59 60,816 7.6 %
Communicare 43 60,216 7.5 % Signature 58 51,138 6.4 % Saber 45
43,779 5.4 % HHC 44 35,939 4.5 % Guardian 35 34,695 4.3 % Maplewood
14 31,517 3.9 % Daybreak 57 29,888 3.7 % Diversicare 34 29,232 3.6
% Remaining Operators (3) 425 331,537 41.3 %
888 $ 803,544 100.0 % (1) Excludes facilities which are
non-operating, closed and/or not currently providing patient
services. (2) Includes mezzanine and term loan interest. (3)
Excludes three facilities due to their bankruptcy status; these
facilities are expected to be transitioned or sold.
Geographic
Concentration by Investment ($000’s)
Total # ofProperties (1)
TotalInvestment (1)
% of TotalInvestment
Florida 94 $ 851,675 10.0 % Texas 114 830,656 9.7 %
Michigan 53 693,818 8.1 % Indiana 66 596,962 7.0 % Ohio 58 591,963
6.9 % Pennsylvania 47 499,745 5.9 % California 54 497,585 5.8 %
Virginia 19 281,534 3.3 % Tennessee 34 280,635 3.3 % Connecticut 6
277,267 3.3 % Remaining 31 states (2) 308 2,729,002
32.0 % 853 8,130,842 95.3 % United Kingdom 55
402,813 4.7 % 908 $ 8,533,655 100.0 % (1)
Excludes two properties with total investment of $0.6 million
classified as assets held for sale. (2) Includes Inspīr Carnegie
Hill (f/k/a 2nd Avenue) development project.
Rent and Loan Maturities ($000's) As of March 31,
2019 Operating Lease Expirations
& Loan Maturities
Year Lease Rent Interest
Lease andInterest Rent
% of
TotalAnnualizedContractualRent/Interest
2019 $ - $ - $ - 0.0 % 2020 5,459 3,585
9,044 1.1 % 2021 4,826 - 4,826 0.6 % 2022 37,836 - 37,836 4.7 %
2023 16,290 - 16,290 2.0 % Notes: Based on annualized 1st
quarter 2019 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 ended:
Operator Revenue Mix (1) Medicaid
Medicare /Insurance
Private / Other Three-months ended December
31, 2018 54.8% 33.3% 11.9% Three-months ended September 30, 2018
53.9% 33.7% 12.4% Three-months ended June 30, 2018 52.7% 34.8%
12.5% Three-months ended March 31, 2018 51.3% 36.4% 12.3%
Three-months ended December 31, 2017 52.9% 34.6% 12.5% (1)
Excludes all facilities considered non-core.
Operator Census and Coverage (1)
Coverage Data Occupancy (2)
BeforeManagementFees
AfterManagementFees
Twelve-months ended December 31, 2018 82.8% 1.67x 1.32x
Twelve-months ended September 30, 2018 82.3% 1.67x 1.32x
Twelve-months ended June 30, 2018 82.5% 1.70x 1.34x Twelve-months
ended March 31, 2018 82.4% 1.69x 1.33x Twelve-months ended December
31, 2017 82.3% 1.71x 1.34x
(1) Excludes all facilities considered
non-core.(2) Based on available (operating) beds.
The following table presents a debt maturity schedule
as of March 31, 2019:
Debt Maturities ($000’s)
Unsecured Debt
Year
Line of Credit andTerm Loans (1)
SeniorNotes/Other (2)
Sub Notes (3)
Total DebtMaturities
2019 $ - $ - $ - $ - 2020 - - - - 2021 195,000 -
20,000 215,000 2022 905,310 - - 905,310 2023 - 700,000 - 700,000
2024 - 400,000 - 400,000 Thereafter -
2,250,000 - 2,250,000 $ 1,100,310
$ 3,350,000 $ 20,000 $ 4,470,310 (1)
The $195 million Line of Credit borrowings
exclude $3.5 million net deferred financing costs and can be
extended into 2022. The $905 million is comprised of a: $425
million term loan, £100 million term loan (equivalent to $130
million), $100 million term loan to Omega’s operating partnership
and $250 million term loan (excludes $4.0 million net deferred
financing costs related to the term loans). Excludes a $2 million
secured term loan related to the Company’s consolidated joint
venture.
(2) Excludes net discounts and deferred financing costs. (3)
Excludes $0.2 million of fair market valuation adjustments.
The following table presents investment activity:
Investment Activity ($000's) Three
Months Ended March 31, 2019 Funding by Investment Type $ Amount
% Construction-in-Progress $ 27,225 57.2 % Capital
Expenditures 14,545 30.6 % Other 5,799 12.2 % Total $
47,569 100.0 %
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version on businesswire.com: https://www.businesswire.com/news/home/20190507006091/en/
Matthew Gourmand, SVP, Investor RelationsorBob Stephenson,
CFO(410) 427-1700
Omega Healthcare Investors (NYSE:OHI)
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