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Omega Reports Fourth Quarter 2020 Results and Recent Developments

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  Completed a $510 Million Acquisition in January 2021

    Completed $98 Million in New Investments in Q4

       Issued $153 Million of Equity in Q4

      Issued $700 Million 3.375% Notes due 2031 in Q4

Omega Healthcare Investors, Inc. (NYSE: OHI) (the "Company" or "Omega") today announced its results for the quarter and the year ended December 31, 2020. The Company reported net income for the quarter of $63.1 million or $0.27 per common share. The Company also reported NAREIT Funds From Operations ("NAREIT FFO") for the quarter of $173.3 million or $0.73 per common share, Adjusted Funds From Operations ("AFFO" or "Adjusted FFO") of $192.5 million or $0.81 per common share, and Funds Available for Distribution ("FAD") of $182.9 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 "Funds From Operations" on the Companys website at www.omegahealthcare.com .

CEO COMMENTS

Taylor Pickett, Omegas Chief Executive Officer, stated, "We are pleased to finish an unprecedented year with strong quarterly AFFO and FAD, as well as continued excellent rent collections. Furthermore, we are excited to announce a new relationship with Brookdale, a leading operator of senior living communities, through our acquisition of 24 facilities for $510 million from Healthpeak Properties in January. We also took advantage of strong capital markets in the quarter to issue both debt and equity to enhance our balance sheet and fund acquisitions."

Mr. Pickett continued, "Our operators continue to perform admirably in protecting residents. Despite a meaningful spike in COVID cases within communities nationwide during the holidays, through their enhanced infection control protocols and the continued diligence of their staff, many of our operators were able to significantly limit the increase in cases within our facilities. The efforts of both federal and state governments, including to grant priority access to vaccines for residents and staff, have highlighted their understanding of the vital role skilled nursing and assisted living facilities play within the healthcare continuum. With both occupancy and facility costs meaningfully impacted by the pandemic, we are hopeful that this support will remain forthcoming as the industry continues to focus on protecting their frail and vulnerable residents."

Mr. Pickett concluded, "We would once again like to highlight the remarkable efforts of our operators and their heroic employees, who risk their own health and that of their families to bravely protect and care for their residents, and we thank them wholeheartedly for their endeavors."

2021 RECENT DEVELOPMENTS AND 2020 FOURTH QUARTER HIGHLIGHTS

In Q1 2021, the Company&

  • declared a $0.67 per share quarterly common stock dividend.

  • sold 5 held for sale assets for $76 million in cash proceeds, generating a $71 million gain.

  • completed a $510 million acquisition.

  • collected over 99% of contractual rent and mortgage payments for the month of January (when excluding Daybreak, which is transitioning its portfolio pursuant to a forbearance agreement).

  • was included in the 2021 Bloomberg Gender-Equality Index.

In Q4 2020, the Company&

  • collected over 99% of fourth quarter contractual rent and mortgage payments (when excluding Daybreak).

  • issued $700 million aggregate principal amount of 3.375% Senior Notes due 2031.

  • issued $153 million in equity through its equity shelf program.

  • sold 16 facilities for $64 million in cash proceeds, generating $5 million in gains.

  • completed $78 million of new investments.

  • invested $19 million in capital renovation and construction-in-progress projects.

  • announced the reinstatement of its dividend reinvestment and stock purchase plan.

  • paid a $0.67 per share quarterly common stock dividend.

In Q3 2020, the Company&

  • collected over 99% of third quarter contractual rent and mortgage payments (when excluding Daybreak).

  • sold 6 facilities and a land parcel for $61 million in cash, recognizing a loss of $0.7 million.

  • invested $22 million in capital renovation and construction-in-progress projects.

  • revised its revenue recognition accounting treatment related to operators with going concern disclosures.

  • paid a $0.67 per share quarterly common stock dividend.

In Q2 2020, the Company &

  • collected over 99% of second quarter contractual rent and mortgage payments (when excluding Daybreak).

  • sold 7 facilities for $38 million in cash, generating $13 million in gains.

  • completed $50 million of new investments.

  • invested $31 million in capital renovation and construction-in-progress projects.

  • repaid $300 million in credit facility borrowings.

  • paid a $0.67 per share quarterly common stock dividend.

In Q1 2020, the Company &

  • suspended its dividend reinvestment and stock purchase plan.

  • sold six facilities for $18 million in cash proceeds generating $2 million in gains.

  • completed $19 million of new investments.

  • invested $39 million in capital renovation and construction-in-progress projects.

  • borrowed $300 million on credit facility for potential liquidity needs.

  • paid a $0.67 per share quarterly common stock dividend.

NET INCOME

The Company reported net income of $63.1 million, or $0.27 per common share, on revenues of $263.8 million for the quarter ended December 31, 2020. This compares to net income of $61.1 million, or $0.27 per common share, on revenues of $246.7 million, for the same period in 2019.

The Company reported net income of $163.5 million, or $0.70 per common share, on revenues of $892.4 million for the year ended December 31, 2020. This compares to net income of $351.9 million, or $1.58 per common share, on revenues of $928.8 million, for the same period in 2019.

The year-over-year decrease in net income was primarily due to (i) a $135.5 million write-off of non-cash revenue (primarily straight-line revenue), (ii) a $36.6 million reduction in gains on the sale of assets, (iii) $38.0 million in provision for credit losses, (iv) a $28.2 million increase in depreciation and amortization expense from new investments, (v) a net increase of $16.2 million of impairments on direct financing leases and real estate properties, (vi) a $14.2 million increase in interest expense and (vii) a $13.3 million increase in loss on debt extinguishment. The decrease in net income was offset by (i) a $60.3 million increase in rental income from the $735 million Encore portfolio acquisition completed on October 31, 2019, (ii) a $17.8 million increase in rental income from the $655 million MedEquities Realty Trust, Inc. ("MedEquities") merger on May 17, 2019, (iii) a $13.8 million increase of non-recurring revenue, and (iv) a $3.1 million decrease of acquisition, merger and transition related costs.

FOURTH QUARTER 2020 RESULTS

Revenues Revenues for the quarter ended December 31, 2020 totaled $263.8 million, which included $11.9 million of non-cash revenue, $3.1 million of real estate tax and ground rents, $4.3 million of non-recurring revenue, and a $2.1 million write-off of non-cash revenue (primarily straight-line revenue).

Expenses Expenses for the quarter ended December 31, 2020 totaled $192.5 million, consisting of $82.6 million of depreciation and amortization expense, $56.0 million of interest expense, $28.8 million of impairment on real estate properties, $10.4 million of general and administrative ("G&A") expense, $4.4 million of stock-based compensation expense, $4.4 million in provision for credit losses, $3.2 million of real estate tax and ground lease expense, $2.7 million of amortized deferred financing costs, $2.0 million of acquisition, merger and transition related costs offset by a $2.0 million recovery on direct financing leases.

Other Income and Expense Other income and expense for the quarter ended December 31, 2020 was a net expense of $7.4 million, primarily consisting of $12.4 million charge related to debt extinguishment offset by a $5.2 million gain on assets sold.

Funds From Operations NAREIT FFO for the quarter ended December 31, 2020 was $173.3 million, or $0.73 per common share, on 237 million weighted-average common shares outstanding, compared to $175.5 million, or $0.77 per common share, on 228 million weighted-average common shares outstanding, for the same period in 2019.

The $173.3 million of NAREIT FFO includes $12.4 million in loss on debt extinguishment, $4.4 million of non-cash stock-based compensation expense, $4.4 million in provision for credit losses, a $2.1 million write-off of non-cash revenue (primarily straight-line revenue), $2.0 million of acquisition, merger and transition related costs offset by $4.3 million of non-recurring revenue and a $2.0 million recovery on direct financing leases.

The $175.5 million of NAREIT FFO for the quarter ended December 31, 2019 includes $3.8 million of non-cash stock-based compensation expense, $0.2 million write-off of non-cash revenue (primarily straight-line revenue) and $0.2 million of impairment on direct financing leases offset by $1.4 million of non-recurring revenue.

Adjusted FFO was $192.5 million, or $0.81 per common share, for the quarter ended December 31, 2020, compared to $178.3 million, or $0.78 per common share, for the same quarter in 2019. For further information, see the "Funds From Operations" schedule below and on the Companys website.

2020 ANNUAL RESULTS

Revenues and Expenses Revenues for the year ended December 31, 2020 totaled $892.4 million, which included $40.7 million of non-cash revenue, $12.6 million of real estate tax and ground rents, $16.2 million of non-recurring revenue offset by a write-off of $146.6 million in uncollectible accounts (primarily straight-line revenue) due to placing four operators on a cash basis for purposes of revenue recordation resulting from substantial doubt about their ability to continue as going concerns.

Expenses for the year ended December 31, 2020 totaled $734.9 million, consisting of $329.9 million of depreciation and amortization expense, $213.3 million of interest expense, $72.5 million of impairment on real estate properties, $39.6 million of G&A expense, $38.0 million in provision for credit losses based on a new accounting standard adopted January 1, 2020, $18.8 million of stock-based compensation expense, $13.8 million of real estate tax and ground lease expense, $10.1 million of amortized deferred financing costs, $2.0 million in acquisition, merger and transition related costs offset by a $3.1 million recovery on direct financing leases.

Other Income and Expense Other income and expense for the year ended December 31, 2020 was net income of $4.9 million primarily consisting of $13.3 million in charges on debt extinguishment offset by $19.1 million of gains on assets sold.

Funds From Operations NAREIT FFO for the year ended December 31, 2020 was $555.9 million, or $2.36 per common share, on 235 million weighted-average common shares outstanding, compared to $640.0 million, or $2.88 per common share on 222 million weighted-average common shares outstanding, for the same period in 2019.

The $555.9 million of NAREIT FFO includes $146.6 million write-off of non-cash revenue (primarily straight-line revenue), $39.6 million of provision for credit losses, $18.8 million of non-cash stock-based compensation expense, $15.8 million of loss on debt extinguishment, $2.0 million of acquisition, merger and transition related costs, and $0.9 million in severance expense offset by $16.2 million of non-recurring revenue and a $3.1 million recovery on direct financing leases.

The $640.0 million of NAREIT FFO for the year ended December 31, 2019 includes $14.9 million of non-cash stock-based compensation expense, a $11.1 million write-off of non-cash revenue (primarily straight-line revenue), $7.9 million of impairments on direct financing leases, $5.1 million of merger costs related to the May 2019 acquisition of MedEquities, $2.0 million of loss on debt extinguishment related to an unconsolidated joint venture, $1.7 million of restructuring costs and a $1.1 million one-time lease termination payment offset by $2.4 million of non-recurring revenue.

Adjusted FFO was $760.4 million, or $3.23 per common share, for the year ended December 31, 2020, compared to $681.4 million, or $3.07 per common share, for 2019. For further information, see the "Funds From Operations" schedule below and the Companys website.

FINANCING ACTIVITIES

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan The Company reinstated its Dividend Reinvestment and Common Stock Purchase Plan on December 17, 2020 after temporarily suspending it on March 23, 2020. During the quarter ended December 31, 2020, the Company sold 4.2 million shares of its common stock, generating $153.1 million of gross proceeds, under its Equity Shelf Program:

 

 

Equity Shelf (At-the-Market) Program for 2020

 

 

(in thousands, except price per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

Number of shares

 

 

49

 

 

-

 

 

-

 

 

4,172

 

 

4,221

Average price per share

 

$

41.05

 

$

-

 

$

-

 

$

36.69

 

$

36.74

Gross proceeds

 

$

2,000

 

$

-

 

$

-

 

$

153,069

 

$

155,069

 

 

Dividend Reinvestment and Common Stock Purchase Plan for 2020

 

 

(in thousands, except price per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

Number of shares

 

 

90

 

 

-

 

 

-

 

 

-

 

 

90

Average price per share

 

$

41.80

 

$

-

 

$

-

 

$

-

 

$

41.80

Gross proceeds

 

$

3,747

 

$

-

 

$

-

 

$

-

 

$

3,747

$700 Million Senior Notes On October 9, 2020, the Company issued $700 million aggregate principal amount of its 3.375% Senior Notes due 2031. The notes were sold at a public offering price of 98.249% of their face value before the underwriters discount. The Companys net proceeds from the offering were used to partially repay outstanding borrowings under the Companys revolving credit facility and term loans.

In conjunction with the repayments on the term loans, the Company settled several interest-rate swaps with an aggregate notional value of $275 million and paid the Companys swap counterparties approximately $11 million. The settlements of the swaps were recorded as interest refinancing costs on the Companys income statement.

2021 RECENT AND 2020 FOURTH QUARTER PORTFOLIO

Q1 2021 Portfolio Activity:

$510 Million Acquisition On January 20, 2021, the Company acquired 24 senior living facilities from Healthpeak Properties, Inc. (NYSE: PEAK) for $510 million. The acquisition included the assumption of an in-place master lease with Brookdale Senior Living (NYSE: BKD). The master lease has 2021 contractual rent of $43.5 million with a 2.4% annual escalator, and includes 24 facilities representing 2,552 operating units located in Arizona (1), California (1), Florida (1), Illinois (1), New Jersey (1), Oregon (6), Pennsylvania (1), Tennessee (1), Texas (6), Virginia (1), and Washington (4).

Q4 2020 Portfolio Activity:

$98 Million of New Investments In the fourth quarter of 2020, the Company completed approximately $78.4 million of new investments and $19.4 million in capital renovations and new construction projects consisting of the following:

$78.4 Million Acquisition On November 1, 2020, the Company acquired six skilled nursing facilities ("SNFs") and one assisted living facility ("ALF") located in Virginia from an unrelated third party for approximately $78.4 million. The seven facilities with 876 beds were added to an existing operators master lease with an initial annual cash yield of 9.5% with 2.0% annual escalators.

$19.4 Million of New Investments In the fourth quarter of 2020, the Company invested $19.4 million under its capital renovation and construction-in-progress programs.

Asset Sales and Impairments:

$64 Million in Asset Sales In the fourth quarter of 2020, the Company sold 16 facilities for $63.7 million in cash, recognizing a gain of approximately $5.2 million. Twelve of the assets were previously classified as held for sale.

Impairments and Assets Held for Sale During the fourth quarter of 2020, the Company recorded a net impairment charge of $28.8 million to reduce the net book values on seven properties to their estimated fair values or expected selling prices.

As of December 31, 2020, the Company had 22 properties classified as assets held for sale, totaling approximately $81.5 million. On February 2, 2021, the Company sold 5 of the 22 held for sale assets (valued at $5.2 million at December 31, 2020) for $75.8 million in cash and expects to recognize a Q1 2021 gain of approximately $70.6 million from this sale.

BALANCE SHEET AND LIQUIDITY

As of December 31, 2020, the Company had $5.2 billion of outstanding indebtedness with a weighted-average annual interest rate of 4.2%. The Companys indebtedness consisted of an aggregate principal amount of $4.6 billion of senior unsecured notes, $186.7 million of unsecured term loans, $369.5 million of secured debt and £74.0 million (USD equivalent $101.2 million) of borrowings outstanding under its unsecured revolving credit facility. Total cash and cash equivalents were $163.5 million as of December 31, 2020, and the Company had $1.1 billion of undrawn capacity on its unsecured credit facility revolver.

CFO COMMENTS

Bob Stephenson, Omegas Chief Financial Officer, commented, "In October, we continued to improve our balance sheet with a $700 million senior unsecured notes offering. We were able to repay approximately $700 million of variable rate debt maturing in the next two years with 10-year fixed-rate paper, reducing our December 31st variable rate debt balance to approximately $240 million. The 3.375% coupon was the lowest 10-year coupon ever issued by Omega."

Mr. Stephenson continued, "Our bond deal was leverage-neutral and allowed us to repay all of our US dollar LIBOR-based revolving credit facility debt. In addition, we continued to lower our leverage in the fourth quarter with ATM share issuances and increased our balance sheet cash to help finance the Brookdale portfolio acquisition from Healthpeak in January 2021."

DIVIDENDS

On January 28, 2021, the Board of Directors declared a common stock dividend of $0.67 per share, to be paid February 16, 2021 to common stockholders of record as of the close of business on February 8, 2021.

TAX TREATMENT FOR 2020 DIVIDENDS

On February 14, 2020, May 15, 2020, August 14, 2020 and November 16, 2020, the Company paid dividends to its common stockholders in the per share amounts of $0.67 for stockholders of record on January 31, 2020, April 30, 2020, July 31, 2020 and November 2, 2020, respectively. The Company has determined the tax treatment for the dividends is as follows:

 

 

 

 

 

 

 

Dividend Payment Date

 

% Taxable as Ordinary Income

 

% Taxable as Return of Capital

 

% Taxable as Capital Gain

February 14, 2020

 

73.1865%

 

24.3812%

 

2.4323%

May 15, 2020

 

73.1865%

 

24.3812%

 

2.4323%

August 14, 2020

 

73.1865%

 

24.3812%

 

2.4323%

November 16, 2020

 

73.1865%

 

24.3812%

 

2.4323%

ESG

As previously reported, on January 27, 2021, Omega was named one of 380 companies across 11 sectors included in the 2021 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 ("ESG") 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.

2021 GUIDANCE

Given the continued uncertainty related to the COVID-19 pandemic, its impact on the financial performance of the Companys operators and the extent of future necessary government support to the operators, the Company will not be providing 2021 earnings guidance.

CONFERENCE CALL

The Company will be conducting a conference call on Friday, February 5, 2021 at 10 a.m. Eastern time to review the Companys 2020 fourth 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 may use the dial-in number (412) 902-4140. Ask the operator to be connected to the "Omega Healthcares Fourth Quarter 2020 Earnings Call."

To listen to the conference call via webcast, log on to www.omegahealthcare.com and click the "earnings call" icon on the Companys home page. Webcast replays of the call will be available on the Companys 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.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the federal securities laws. All statements regarding Omegas 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.

Omegas 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 Omegas properties, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; (ii) the impact of novel coronavirus ("COVID-19") on our business and the business of our operators, including without limitation, the extent and duration of the COVID-19 pandemic, increased costs experienced by operators of SNFs and "ALFs" in connection therewith, the ability of operators to comply with new infection control and vaccine protocols, 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 Omegas operators in bankruptcy to reject unexpired lease obligations, modify the terms of Omegas 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 debtors obligations, and other costs and uncertainties associated with operator bankruptcies; (iv) Omegas 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; (v) the availability and cost of capital to us; (vi) changes in Omegas 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 our 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 Companys 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) Omegas ability to maintain its status as a REIT; (xvii) the effect of other factors affecting our business or the businesses of our operators that are beyond our or their control, including natural disasters, other health crises or pandemics and governmental action, particularly in the healthcare industry, and (xviii) other factors identified in Omegas filings with the SEC. Statements regarding future events and developments and Omegas future performance, as well as managements 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)

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2020

 

2019

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Real estate properties

 

 

 

 

 

 

Real estate investments

 

$

8,702,154

 

 

$

8,985,994

 

Less accumulated depreciation

 

 

(1,996,914

)

 

 

(1,787,425

)

Real estate investments net

 

 

6,705,240

 

 

 

7,198,569

 

Investments in direct financing leases net

 

 

10,764

 

 

 

11,488

 

Mortgage notes receivable net

 

 

885,313

 

 

 

773,563

 

 

 

 

7,601,317

 

 

 

7,983,620

 

Other investments net

 

 

467,442

 

 

 

419,228

 

Investments in unconsolidated joint ventures

 

 

200,638

 

 

 

199,884

 

Assets held for sale net

 

 

81,452

 

 

 

4,922

 

Total investments

 

 

8,350,849

 

 

 

8,607,654

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

163,535

 

 

 

24,117

 

Restricted cash

 

 

4,023

 

 

 

9,263

 

Contractual receivables net

 

 

10,408

 

 

 

27,122

 

Other receivables and lease inducements

 

 

234,666

 

 

 

381,091

 

Goodwill

 

 

651,737

 

 

 

644,415

 

Other assets

 

 

82,231

 

 

 

102,462

 

Total assets

 

$

9,497,449

 

 

$

9,796,124

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Revolving line of credit

 

$

101,158

 

 

$

125,000

 

Term loans net

 

 

186,349

 

 

 

804,738

 

Secured borrowings

 

 

369,524

 

 

 

389,680

 

Senior notes and other unsecured borrowings net

 

 

4,512,221

 

 

 

3,816,722

 

Accrued expenses and other liabilities

 

 

280,824

 

 

 

312,040

 

Deferred income taxes

 

 

10,766

 

 

 

11,350

 

Total liabilities

 

 

5,460,842

 

 

 

5,459,530

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Preferred stock $1.00 par value authorized 20,000 shares, unissued

 

 

 

 

 

 

Common stock $.10 par value authorized 350,000 shares, issued and outstanding 231,199 shares as of December 31, 2020 and 226,631 as of December 31, 2019

 

 

23,119

 

 

 

22,663

 

Common stock additional paid-in capital

 

 

6,152,887

 

 

 

5,992,733

 

Cumulative net earnings

 

 

2,594,735

 

 

 

2,463,436

 

Cumulative dividends paid

 

 

(4,916,097

)

 

 

(4,303,546

)

Accumulated other comprehensive loss

 

 

(12,768

)

 

 

(39,858

)

Total stockholders equity

 

 

3,841,876

 

 

 

4,135,428

 

Noncontrolling interest

 

 

194,731

 

 

 

201,166

 

Total equity

 

 

4,036,607

 

 

 

4,336,594

 

Total liabilities and equity

 

$

9,497,449

 

 

$

9,796,124

 

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

December 31,

 

 

December 31,

 

 

2020

 

2019

 

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

224,080

 

 

$

212,175

 

 

 

$

740,815

 

 

$

791,168

 

Real estate tax and ground lease income

 

 

3,089

 

 

 

2,437

 

 

 

 

12,612

 

 

 

12,908

 

Income from direct financing leases

 

 

258

 

 

 

259

 

 

 

 

1,033

 

 

 

1,036

 

Mortgage interest income

 

 

24,044

 

 

 

19,780

 

 

 

 

89,422

 

 

 

76,542

 

Other investment income

 

 

11,994

 

 

 

10,364

 

 

 

 

44,864

 

 

 

43,400

 

Miscellaneous income

 

 

320

 

 

 

1,653

 

 

 

 

3,635

 

 

 

3,776

 

Total revenues

 

 

263,785

 

 

 

246,668

 

 

 

 

892,381

 

 

 

928,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

82,623

 

 

 

80,498

 

 

 

 

329,924

 

 

 

301,683

 

General and administrative

 

 

10,381

 

 

 

9,917

 

 

 

 

39,619

 

 

 

41,790

 

Real estate tax and ground lease expense

 

 

3,230

 

 

 

3,442

 

 

 

 

13,764

 

 

 

16,141

 

Stock-based compensation expense

 

 

4,442

 

 

 

3,840

 

 

 

 

18,822

 

 

 

14,871

 

Acquisition, merger and transition related costs

 

 

1,956

 

 

 

43

 

 

 

 

2,018

 

 

 

5,115

 

Impairment on real estate properties

 

 

28,762

 

 

 

35,719

 

 

 

 

72,494

 

 

 

45,264

 

(Recovery) impairment on direct financing leases

 

 

(2,003

)

 

 

217

 

 

 

 

(3,079

)

 

 

7,917

 

Provision for credit losses

 

 

4,420

 

 

 

 

 

 

 

37,997

 

 

 

 

Interest expense

 

 

55,981

 

 

 

52,793

 

 

 

 

213,313

 

 

 

199,151

 

Interest amortization of deferred financing costs

 

 

2,692

 

 

 

2,811

 

 

 

 

10,076

 

 

 

9,564

 

Total expenses

 

 

192,484

 

 

 

189,280

 

 

 

 

734,948

 

 

 

641,496

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and investment (expense) income

 

 

(282

)

 

 

735

 

 

 

 

(957

)

 

 

856

 

Loss on debt extinguishment

 

 

(12,444

)

 

 

 

 

 

 

(13,340

)

 

 

 

Realized gain (loss) on foreign exchange

 

 

128

 

 

 

104

 

 

 

 

78

 

 

 

(42

)

Gain on assets sold - net

 

 

5,181

 

 

 

2,893

 

 

 

 

19,113

 

 

 

55,696

 

Total other (expense) income

 

 

(7,417

)

 

 

3,732

 

 

 

 

4,894

 

 

 

56,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense & income from unconsolidated joint ventures

 

 

63,884

 

 

 

61,120

 

 

 

 

162,327

 

 

 

343,844

 

Income tax expense

 

 

(2,299

)

 

 

(893

)

 

 

 

(4,925

)

 

 

(2,844

)

Income from unconsolidated joint ventures

 

 

1,489

 

 

 

919

 

 

 

 

6,143

 

 

 

10,947

 

Net income

 

 

63,074

 

 

 

61,146

 

 

 

 

163,545

 

 

 

351,947

 

Net income attributable to noncontrolling interest

 

 

(1,678

)

 

 

(1,606

)

 

 

 

(4,218

)

 

 

(10,824

)

Net income available to common stockholders

 

$

61,396

 

 

$

59,540

 

 

 

$

159,327

 

 

$

341,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share available to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

0.27

 

 

$

0.27

 

 

 

$

0.70

 

 

$

1.60

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.27

 

 

$

0.27

 

 

 

$

0.70

 

 

$

1.58

 

Dividends declared per common share

 

$

0.67

 

 

$

0.67

 

 

 

$

2.68

 

 

$

2.65

 

OMEGA HEALTHCARE INVESTORS, INC.

FUNDS FROM OPERATIONS

Unaudited

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

63,074

 

 

$

61,146

 

 

$

163,545

 

 

$

351,947

 

Deduct gain from real estate dispositions

 

 

(5,181

)

 

 

(2,893

)

 

 

(19,113

)

 

 

(55,696

)

Add back loss (deduct gain) from real estate dispositions of unconsolidated joint ventures

 

 

544

 

 

 

 

 

 

(5,894

)

 

 

(9,345

)

Sub-total

 

 

58,437

 

 

 

58,253

 

 

 

138,538

 

 

 

286,906

 

Elimination of non-cash items included in net income:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

82,623

 

 

 

80,498

 

 

 

329,924

 

 

 

301,683

 

Depreciation - unconsolidated joint ventures

 

 

3,439

 

 

 

1,625

 

 

 

14,000

 

 

 

6,513

 

Add back non-cash provision for impairments on real estate properties

 

 

28,762

 

 

 

35,719

 

 

 

72,494

 

 

 

45,264

 

Add back unrealized loss (gain) on warrants

 

 

61

 

 

 

(580

)

 

 

988

 

 

 

(410

)

NAREIT funds from operations ("NAREIT FFO")

 

$

173,322

 

 

$

175,515

 

 

$

555,944

 

 

$

639,956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

228,785

 

 

 

219,668

 

 

 

227,741

 

 

 

213,404

 

Restricted stock and PRSUs

 

 

1,761

 

 

 

1,977

 

 

 

1,239

 

 

 

1,753

 

Net forward share contract

 

 

 

 

 

397

 

 

 

 

 

 

179

 

Omega OP Units

 

 

6,263

 

 

 

5,938

6,124

6,789

Weighted-average common shares outstanding, diluted

236,809

227,980

235,104

222,125

NAREIT funds from operations available per share

$

0.73

$

0.77

$

2.36

$

2.88

Adjustments to calculate adjusted funds from operations:

NAREIT FFO

$

173,322

$

175,515

$

555,944

$

639,956

Add back

Uncollectible accounts receivable (1)

2,107

150

146,608

11,120

Provision for credit losses

4,420

37,997

Stock-based compensation expense

4,442

3,840

18,822

14,871

Loss on debt extinguishment

12,444

13,340

Severance

853

Acquisition, merger and transition related costs

1,956

43

2,018

5,115

Restructuring costs

21

1,683

Non-recurring lease termination payment

1,118

Deduct

Non-recurring revenue

(4,260

)

(1,437

)

(16,201

)

(2,409

)

(Recovery) impairment for direct financing leases

(2,003

)

217

(3,079

)

7,917

Add back unconsolidated JV related

Uncollectible accounts receivable

1,584

Loss on debt extinguishment

68

2,493

2,014

Adjusted funds from operations ("AFFO")

$

192,496

$

178,349

$

760,379

$

681,385

Adjustments to calculate funds available for distribution:

Non-cash interest expense

$

2,670

$

2,788

$

9,986

$

9,467

Capitalized interest

(321

)

(3,341

)

(10,029

)

(13,876

)

Non-cash revenues

(11,923

)

(14,096

)

(40,709

)

(60,861

)

Funds available for distribution ("FAD")

$

182,922

$

163,700

$

719,627

$

616,115

________________________

(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. 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, provisions for uncollectible accounts, provisions for current expected credit losses, 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 December 31, 2020

Total

# of

# of

Balance Sheet Data

Total # of

Investment

% of

Operating

Operating

Properties

($000’s)

Investment

Properties (2)

Beds (2)

Real estate investments (1)

883

$

8,712,918

91

%

892

89,609

Mortgage notes receivable

62

885,313

9

%

57

6,173

945

$

9,598,231

100

%

949

95,782

Assets held for sale

22

81,452

Total investments

967

$

9,679,683

As of December 31, 2020

Total

# of

# of

Investment

Investment Data

Total # of

Investment

% of

Operating

Operating

per Bed

Properties

($000’s)

Investment

Properties (2)

Beds (2)

($000’s)

SNFs/Transitional care

813

$

7,975,076

83

%

820

87,694

$

91

Senior housing (3)

132

1,623,155

17

%

129

8,088

$

201

945

$

9,598,231

100

%

949

95,782

$

100

Assets held for sale

22

81,452

Total investments

967

$

9,679,683

________________________

(1)

Includes one asset 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 Composition ($000’s)

Revenue by Investment Type

Three Months Ended

Year Ended

December 31, 2020

December 31, 2020

Rental property (1)

$

224,338

85

%

$

741,848

84

%

Real estate tax and ground lease income

3,089

1

%

12,612

1

%

Mortgage notes

24,044

9

%

89,422

10

%

Other investment income and miscellaneous income - net

12,314

5

%

48,499

5

%

$

263,785

100

%

$

892,381

100

%

Revenue by Facility Type

Three Months Ended

Year Ended

December 31, 2020

December 31, 2020

SNFs/Transitional care

$

211,197

80

%

$

710,255

80

%

Senior housing

37,185

14

%

121,015

14

%

Real estate tax and ground lease income

3,089

1

%

12,612

1

%

Other

12,314

5

%

48,499

5

%

$

263,785

100

%

$

892,381

100

%

________________________

(1)

Includes one asset under a direct financing lease totaling $0.3 million and $1.0 million for the three and twelve months ended December 31, 2020, respectively.

As of

2020 Q4

% of Total

December 31, 2020

Annualized

Annualized

Rent/Interest Concentration by Operator ($000’s)

# of

Contractual

Contractual

Properties (1)

Rent/Interest (1)(2)

Rent/Interest

Ciena

65

$

96,732

10.1

%

Consulate

80

86,253

9.0

%

CommuniCare

45

62,786

6.5

%

Genesis

51

61,904

6.4

%

Maplewood

15

59,011

6.1

%

Saber

54

55,382

5.8

%

Agemo

54

51,611

5.4

%

HHC

44

37,391

3.9

%

Guardian

35

36,326

3.8

%

Nexion

45

32,630

3.4

%

Remaining Operators (3)

460

381,268

39.6

%

948

$

961,294

100.0

%

________________________

(1)

Excludes properties 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 December 31, 2020

Geographic Concentration by Investment ($000’s)

Total # of

Total

% of Total

Properties (1)

Investment (1)(2)

Investment

Florida

128

$

1,400,648

14.6

%

Texas

116

858,936

8.9

%

Michigan

49

663,640

6.9

%

Indiana

70

639,590

6.6

%

Pennsylvania

53

567,530

5.9

%

California

52

562,581

5.8

%

Ohio

42

532,815

5.5

%

Virginia

27

397,574

4.1

%

North Carolina

40

345,991

3.6

%

New York

1

332,721

3.5

%

Remaining 30 states

310

2,882,991

30.0

%

888

9,185,017

95.4

%

United Kingdom

57

442,248

4.6

%

945

$

9,627,265

100.0

%

________________________

(1)

Excludes 22 properties with total investment of $81.5 million classified as assets held for sale.

(2)

Excludes $29 million provision for credit losses.

As of December 31, 2020

Operating Lease Expirations & Loan Maturities ($000's) (1)

Lease (Rent)

Interest Income

Lease (Rent) and Interest Income

% of Total Annualized Contractual Rent/Interest

2021

$

3,543

$

2,944

$

6,487

0.7

%

2022

37,641

4,198

41,839

4.4

%

2023

5,295

780

6,075

0.6

%

2024

9,854

2,911

12,765

1.3

%

2025

12,764

5,387

18,151

1.9

%

________________________

(1)

Based on annualized 4th quarter 2020 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. We have not independently verified this information, and we are providing this data for informational purposes only.

Operator Revenue Mix (1)

Medicare /

Medicaid

Insurance

Private / Other

Three-months ended September 30, 2020

51.6

%

37.2

%

11.2

%

Three-months ended June 30, 2020

52.4

%

36.4

%

11.2

%

Three-months ended March 31, 2020

52.6

%

35.7

%

11.7

%

Three-months ended December 31, 2019

52.7

%

34.6

%

12.7

%

Three-months ended September 30, 2019

53.4

%

33.4

%

13.2

%

________________________

(1)

Excludes all facilities considered non-core.

Coverage Data

Before

After

Occupancy (2)

Management

Management

Operator Census and Coverage (1)

Fees (3)

Fees (4)

Twelve-months ended September 30, 2020

80.1

%

1.87x

1.51x

Twelve-months ended June 30, 2020

82.2

%

1.84x

1.48x

Twelve-months ended March 31, 2020

83.6

%

1.68x

1.32x

Twelve-months ended December 31, 2019

83.6

%

1.64x

1.29x

Twelve-months ended September 30, 2019

83.4

%

1.66x

1.30x

________________________

(1)

Excludes all properties 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 December 31, 2020:

Unsecured Debt

Debt Maturities ($000’s)

Line of Credit and Term Loans (1)

Senior Notes/Other (2)

Subordinated
Notes (3)

Secured Debt

Total Debt Maturities

2021

$

101,158

$

$

20,000

$

2,275

$

123,433

2022

186,700

186,700

2023

700,000

700,000

2024

400,000

400,000

2025

400,000

400,000

2026

600,000

600,000

Thereafter

2,450,000

367,249

2,817,249

$

287,858

$

4,550,000

$

20,000

$

369,524

$

5,227,382

________________________

(1)

The Line of Credit and Term Loans borrowings can be extended into 2022. The $187 million is comprised of a: £100 million term loan (equivalent to $137 million), $50 million term loan to Omega’s operating partnership and excludes $0.4 million net deferred financing costs related to the term loans.

(2)

Excludes net discounts and deferred financing costs.

(3)

Excludes $0.1 million of fair market valuation adjustments.

The following table presents investment activity:

Three Months Ended

Year Ended

Investment Activity ($000's)

December 31, 2020

December 31, 2020

$ Amount

%

$ Amount

%

Real property

$

78,434

80.2

%

$

104,340

40.1

%

Construction-in-progress

12,800

13.1

%

65,031

25.0

%

Capital expenditures

6,564

6.7

%

47,576

18.3

%

Mortgages

%

43,150

16.6

%

Other

%

%

Total

$

97,798

100.0

%

$

260,097

100.0

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210204006028/en/

Contacts

Matthew Gourmand, SVP, Corporate Strategy & Investor Relations
or
Bob Stephenson, CFO at (410) 427-1700