I was a little baffled on how to get to the $2.45-$2.50 of management FFO, but was able to reach midpoint assuming $200mm of acquisitions, $30mm of capex investment, $20mm of mortgage funding, and only about $50mm of equity. Rest is assumed to be funded using the new line and $200mm term loan. Also, it looks like most of the $237mm of 4Q'12 acquisitions closed late in the quarter, so almost all the incremental income falls into 2013. Overall, a solid year and tenants seem to have survived the Medicare cuts without too much drama, albeit with skinnier lease coverage. OHI dividends grew 9% in 2012; should be able to easily repeat that in 2013 based on initial guidance.
Keep in mind that guidance includes about $0.26 of non-cash revenue and about $0.06 of add-back for recurring management stock comp. So my core FAD is currently estimated at $2.15. Still leaves lots of room to cover a larger dividend.
Stock reacting well to fresh guidance and muted share issuance.
re: "Still leaves lots of room to cover a larger dividend." Exactly. I will be stunned if it isn't raised once or twice more in the next year. As for "Medicare cuts", there haven't been any that I know of. There was the one time adjustment after the over-payment the prior year. But no cuts.
For anyone who doens't know, Medicare covers 90 days in a long term care facility, at best. And at least in my state, the facilities only have to accept a limited number of Medicaid patients. So the "cuts" - if there are any - will probably have a modest impact on profitability of the facilities. And the facilities then raise their rates on the rest of the patients who are paying w/o needing Medicare or Medicaid. There is a shortage of facilities - they will be able to raise their rates as much as they want to as the baby boomers overload the system. I highly recommend that anyone over 50 load up on long term care insurance. If you don't, you might end up in a facility that you don't want to be in.
OHI is going to have no problem getting to 30. Maybe $35 by 2014. Just my opinion.