Omega Reports Second Quarter 2020 Results

·19-min read

Completed $50 Million in New Investments

Omega Healthcare Investors, Inc. (NYSE: OHI) (the "Company" or "Omega") today announced its results for the quarter ended June 30, 2020. The Company reported net income of $102.0 million or $0.43 per common share. The Company also reported NAREIT Funds From Operations ("NAREIT FFO") for the quarter of $186.5 million or $0.80 per common share, Adjusted Funds From Operations ("AFFO" or "Adjusted FFO") of $189.8 million or $0.81 per common share, and Funds Available for Distribution ("FAD") of $179.1 million.

NAREIT FFO, AFFO and FAD are supplemental non-GAAP financial measures that we believe are useful in evaluating the performance of real estate investment trusts. For more information regarding these non-GAAP measures, see the "Funds From Operations" schedule below and the Companys website at www.omegahealthcare.com .

CEO COMMENTS

Taylor Pickett, Omegas Chief Executive Officer, stated, "While we are pleased to announce strong second quarter results, the pandemic continues to evolve and therefore our primary focus remains helping our tenants wherever possible. Our operators continue to perform admirably in the face of further growth in cases within many regions, as they seek to provide ongoing quality care to residents, while implementing prudent protocols to limit the exposure of facilities to the virus. Both occupancy and facility costs have been meaningfully impacted by COVID-19 and, while we have seen a moderating deterioration of operating metrics, it is too soon to conclude that we have reached a floor in operator financial performance. In the face of these challenges, the federal government and many states have been proactive in providing vital financial support to the industry. Their efforts are saving lives and highlight the importance of protecting this vulnerable segment of our society. The industry continues to work closely with the government to ensure further necessary access to testing, equipment and financial support."

Mr. Pickett continued, "The government efforts highlight the important role skilled nursing facilities play within the healthcare continuum. Despite the current challenges, as the lowest cost post-acute provider within the healthcare sector, with its needs-based nature, constrained supply and growing demand, we believe the attractive elements of this asset class will remain intact once this pandemic has been resolved."

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. Although their efforts are too often overlooked, we are aware of the sacrifices they are making and want to thank them wholeheartedly for their endeavors."

2020 RECENT DEVELOPMENTS AND SECOND QUARTER HIGHLIGHTS

In Q3 2020, the Company&

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

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

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 liquidity.

  • authorized $200 million stock repurchase program.

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

NET INCOME

For the quarter ended June 30, 2020, the Company reported net income of $102.0 million, or $0.43 per common share, on revenues of $256.4 million. This compares to net income of $75.7 million, or $0.34 per common share, on revenues of $225.3 million, for the same period in 2019.

For the six months ended June 30, 2020, the Company reported net income of $194.2 million, or $0.83 per common share, on revenues of $509.4 million. This compares to net income of $147.9 million, or $0.68 per common share, on revenues of $449.0 million, for the same period in 2019.

The year-to-date increase in net income was primarily due to (i) $60.5 million in revenue from incremental new investments, (ii) a $14.9 million increase in gains on the sale of assets, and (iii) a $4.2 million decrease in merger related costs. The increase in net income was partially offset by (i) a $21.7 million increase in depreciation and amortization expense from new investments, (ii) a $9.1 million increase in interest expense, and (iii) and a $1.5 million increase in impairments on direct financing leases and real estate properties.

SECOND QUARTER 2020 RESULTS

Operating Revenues and Expenses Revenues for the quarter ended June 30, 2020 totaled $256.4 million, which included $9.7 million of non-cash revenue, $4.1 million of real estate tax and ground rents, $3.2 million of one-time revenue, offset by a $1.2 million provision for uncollectible straight-line revenue.

Expenses for the quarter ended June 30, 2020 totaled $112.7 million, consisting of $83.6 million of depreciation and amortization expense, $12.0 million of impairment on real estate properties, $9.0 million of general and administrative ("G&A") expense, $4.6 million of stock-based compensation expense, $4.0 million of real estate tax and ground lease expense and an $0.8 million recovery on direct financing leases.

Other Income and Expense Other income and expense for the quarter ended June 30, 2020 was a net expense of $55.1 million, primarily consisting of $52.8 million of interest expense and $2.5 million of amortized deferred financing costs.

Funds From Operations For the quarter ended June 30, 2020, NAREIT FFO was $186.5 million, or $0.80 per common share, on 235 million weighted-average common shares outstanding, compared to $157.2 million, or $0.71 per common share, on 220 million weighted-average common shares outstanding, for the same period in 2019.

The $186.5 million of NAREIT FFO for the quarter ended June 30, 2020 includes $4.6 million of non-cash stock-based compensation expense, $1.2 million of interest refinancing cost related to an unconsolidated joint venture, a $1.2 million write-off of non-cash straight-line revenue and $0.3 million for merger related costs offset by $3.2 million of one-time revenue and an $0.8 million recovery on direct financing leases.

The $157.2 million of FFO for the quarter ended June 30, 2019 includes a $6.7 million write-off of non-cash revenue (primarily straight-line revenue), $4.0 million of non-cash stock-based compensation expense and $1.2 million of acquisition costs.

Adjusted FFO was $189.8 million, or $0.81 per common share, for the quarter ended June 30, 2020, compared to $169.2 million, or $0.77 per common share, for the same quarter in 2019. For further information see the "Funds From Operations" schedule below and the Companys website.

2020 SECOND QUARTER PORTFOLIO AND RECENT ACTIVITY

Q2 Portfolio Activity:

$81 Million of New Investments in Q2 2020 In the second quarter of 2020, the Company completed approximately $50 million of new investments and invested $31 million in capital renovations and new construction projects consisting of the following:

$7 Million Acquisition On June 30, 2020, the Company acquired one skilled nursing facility ("SNF") located in Ohio from an unrelated third party for approximately $6.9 million. The 112-bed facility was added to an existing operators master lease with an initial annual cash yield of 9.5% with 2.0% annual escalators.

$43 Million Mortgage Loan On June 30, 2020, the Company entered into a $43.2 million first mortgage loan with an existing operator of the Company. The loan is secured by two SNFs with 375 beds located in Ohio. The loan bears an annual interest rate of 9.5%.

$31 Million of New Investments In the second quarter of 2020, the Company invested $31.5 million under its capital renovation and construction-in-progress programs.

Asset Sales and Impairments:

$38 Million in Assets Sales In the second quarter of 2020, the Company sold 7 properties for $38.0 million in cash, recognizing a gain of approximately $12.8 million.

Impairments and Assets Held for Sale During the second quarter of 2020, the Company recorded an impairment charge of $12.0 million to reduce the net book values on 10 properties to their estimated fair values or expected selling prices.

As of June 30, 2020, the Company had six properties classified as assets held for sale totaling approximately $70.5 million.

FINANCING ACTIVITIES

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan On March 23, 2020, the Company suspended its Dividend Reinvestment and Common Stock Purchase Plan until further notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

(in thousands, except price per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

 

Year To Date

Number of shares

 

 

49

 

 

-

 

 

 

49

Average price per share

 

$

41.05

 

$

-

 

 

$

41.05

Gross proceeds

 

$

2,000

 

$

-

 

 

$

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment and Common Stock Purchase Plan for 2020

 

 

 

(in thousands, except price per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

 

Year To Date

Number of shares

 

 

90

 

 

-

 

 

 

90

Average price per share

 

$

41.80

 

$

-

 

 

$

41.80

Gross proceeds

 

$

3,747

 

$

-

 

 

$

3,747

BALANCE SHEET AND LIQUIDITY

As of June 30, 2020, the Company had $5.3 billion of outstanding indebtedness with a weighted average interest rate of 4.1%. The Companys indebtedness consisted of an aggregate principal amount of $3.9 billion of senior unsecured notes, $798.6 million of unsecured term loans, $386.0 million of secured debt and $216.4 million of borrowings outstanding under its revolving credit facility. Total cash and cash equivalents were $37.0 million as of June 30, 2020, and the Company has $1.0 billion of undrawn capacity on its unsecured credit facility revolver.

DIVIDENDS

On July 15, 2020, the Board of Directors declared a common stock dividend of $0.67 per share, to be paid August 14, 2020 to common stockholders of record as of the close of business on July 31, 2020.

Bob Stephenson, Omegas CFO, commented, "Our historical dividend announcement date is the 15 th day in the first month of each quarter, with a payment date approximately one month later or the 15 th day of the mid-quarter month (all dependent on business days). Starting with our next scheduled dividend, we will continue to adhere to our historical mid-quarter payment date; however, we plan to change the dividend announcement date to correspond with pre-scheduled Board and audit committee meeting dates for October and for the 2021 calendar year. This change will extend our dividend announcement date by approximately one week with no impact to the scheduled payment date."

2020 GUIDANCE

Given the 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, 2020 earnings guidance was previously withdrawn.

CONFERENCE CALL

The Company will be conducting a conference call on Thursday, August 6, 2020 at 10 a.m. Eastern time to review the Companys 2020 second quarter results and current developments. Analysts and investors within the United States interested in participating are invited to call (877) 511-2891. The Canadian toll-free dial-in number is (855) 669-9657. All other international participants may use the dial-in number (412) 902-4140. Ask the operator to be connected to the "Omega Healthcares Second 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 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 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 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 2019 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 assisted living facilities ("ALFs") in connection therewith, 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; (xiii) changes in interest rates; (xiii) the timing, amount and yield of any additional investments; (xiv) changes in tax laws and regulations affecting real estate investment trusts ("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)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2020

 

2019

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Real estate properties

 

 

 

 

 

 

Real estate investments

 

$

8,807,944

 

 

$

8,985,994

 

Less accumulated depreciation

 

 

(1,902,587

)

 

 

(1,787,425

)

Real estate investments net

 

 

6,905,357

 

 

 

7,198,569

 

Investments in direct financing leases net

 

 

10,870

 

 

 

11,488

 

Mortgage notes receivable net

 

 

886,029

 

 

 

773,563

 

 

 

 

7,802,256

 

 

 

7,983,620

 

Other investments net

 

 

434,653

 

 

 

419,228

 

Investments in unconsolidated joint ventures

 

 

195,546

 

 

 

199,884

 

Assets held for sale net

 

 

70,516

 

 

 

4,922

 

Total investments

 

 

8,502,971

 

 

 

8,607,654

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

37,022

 

 

 

24,117

 

Restricted cash

 

 

4,543

 

 

 

9,263

 

Contractual receivables net

 

 

27,579

 

 

 

27,122

 

Other receivables and lease inducements

 

 

403,313

 

 

 

381,091

 

Goodwill

 

 

643,491

 

 

 

644,415

 

Other assets

 

 

68,665

 

 

 

102,462

 

Total assets

 

$

9,687,584

 

 

$

9,796,124

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Revolving line of credit

 

$

216,434

 

 

$

125,000

 

Term loans net

 

 

796,349

 

 

 

804,738

 

Secured borrowings

 

 

385,976

 

 

 

389,680

 

Senior notes and other unsecured borrowings net

 

 

3,826,799

 

 

 

3,816,722

 

Accrued expenses and other liabilities

 

 

284,959

 

 

 

312,040

 

Deferred income taxes

 

 

9,675

 

 

 

11,350

 

Total liabilities

 

 

5,520,192

 

 

 

5,459,530

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common stock $.10 par value authorized 350,000 shares, issued and outstanding 226,943 shares as of June 30, 2020 and 226,631 as of December 31, 2019

 

 

22,694

 

 

 

22,663

 

Common stock additional paid-in capital

 

 

5,999,972

 

 

 

5,992,733

 

Cumulative net earnings

 

 

2,624,630

 

 

 

2,463,436

 

Cumulative dividends paid

 

 

(4,610,828

)

 

 

(4,303,546

)

Accumulated other comprehensive loss

 

 

(66,235

)

 

 

(39,858

)

Total stockholders equity

 

 

3,970,233

 

 

 

4,135,428

 

Noncontrolling interest

 

 

197,159

 

 

 

201,166

 

Total equity

 

 

4,167,392

 

 

 

4,336,594

 

Total liabilities and equity

 

$

9,687,584

 

 

$

9,796,124

 

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2020

 

2019

 

 

2020

 

2019

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

217,403

 

 

$

191,812

 

 

 

$

435,528

 

 

$

380,016

 

Real estate tax and ground lease income

 

 

4,129

 

 

 

3,005

 

 

 

 

7,504

 

 

 

6,978

 

Income from direct financing leases

 

 

259

 

 

 

259

 

 

 

 

517

 

 

 

519

 

Mortgage interest income

 

 

21,680

 

 

 

18,832

 

 

 

 

41,365

 

 

 

36,966

 

Other investment income

 

 

10,932

 

 

 

11,133

 

 

 

 

21,584

 

 

 

23,047

 

Miscellaneous income

 

 

1,992

 

 

 

238

 

 

 

 

2,921

 

 

 

1,441

 

Total operating revenues

 

 

256,395

 

 

 

225,279

 

 

 

 

509,419

 

 

 

448,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

83,586

 

 

 

73,637

 

 

 

 

166,229

 

 

 

144,489

 

General and administrative

 

 

8,983

 

 

 

9,548

 

 

 

 

19,910

 

 

 

21,374

 

Real estate tax and ground lease expense

 

 

4,018

 

 

 

4,317

 

 

 

 

8,045

 

 

 

8,436

 

Stock-based compensation

 

 

4,623

 

 

 

4,040

 

 

 

 

9,258

 

 

 

8,110

 

Acquisition and merger related costs

 

 

251

 

 

 

1,236

 

 

 

 

26

 

 

 

4,185

 

Impairment on real estate properties

 

 

11,988

 

 

 

5,709

 

 

 

 

15,627

 

 

 

5,709

 

(Recovery) impairment on direct financing leases

 

 

(752

)

 

 

 

 

 

 

(752

)

 

 

7,700

 

Provision for credit losses

 

 

15

 

 

 

 

 

 

 

1,501

 

 

 

 

Total operating expenses

 

 

112,712

 

 

 

98,487

 

 

 

 

219,844

 

 

 

200,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on assets sold net

 

 

12,843

 

 

 

(267

)

 

 

 

14,681

 

 

 

(264

)

Operating income

 

 

156,526

 

 

 

126,525

 

 

 

 

304,256

 

 

 

248,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and other net

 

 

141

 

 

 

(191

)

 

 

 

(593

)

 

 

146

 

Interest expense

 

 

(52,791

)

 

 

(48,380

)

 

 

 

(105,532

)

 

 

(96,480

)

Interest amortization of deferred financing costs

 

 

(2,461

)

 

 

(2,238

)

 

 

 

(4,922

)

 

 

(4,476

)

Realized gain (loss) on foreign exchange

 

 

1

 

 

 

(195

)

 

 

 

(69

)

 

 

(169

)

Total other expense

 

 

(55,110

)

 

 

(51,004

)

 

 

 

(111,116

)

 

 

(100,979

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense and income from unconsolidated joint ventures

 

 

101,416

 

 

 

75,521

 

 

 

 

193,140

 

 

 

147,721

 

Income tax expense

 

 

(858

)

 

 

(793

)

 

 

 

(1,863

)

 

 

(1,468

)

Income from unconsolidated joint ventures

 

 

1,402

 

 

 

943

 

 

 

 

2,962

 

 

 

1,600

 

Net income

 

 

101,960

 

 

 

75,671

 

 

 

 

194,239

 

 

 

147,853

 

Net income attributable to noncontrolling interest

 

 

(2,653

)

 

 

(2,530

)

 

 

 

(5,017

)

 

 

(5,010

)

Net income available to common stockholders

 

$

99,307

 

 

$

73,141

 

 

 

$

189,222

 

 

$

142,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share available to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

0.44

 

 

$

0.35

 

 

 

$

0.83

 

 

$

0.69

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.43

 

 

$

0.34

 

 

 

$

0.83

 

 

$

0.68

 

Dividends declared per common share

 

$

0.67

 

 

$

0.66

 

 

 

$

1.34

 

 

$

1.32

 

Weighted-average shares outstanding, basic

 

 

227,411

 

 

 

211,569

 

 

 

 

227,336

 

 

 

208,064

 

Weighted-average shares outstanding, diluted

 

 

234,523

 

 

 

220,479

 

 

 

 

234,515

 

 

 

217,002

 

OMEGA HEALTHCARE INVESTORS, INC.

FUNDS FROM OPERATIONS

Unaudited

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

101,960

 

 

$

75,671

 

 

$

194,239

 

 

$

147,853

 

(Deduct gain) add back loss from real estate dispositions

 

 

(12,843

)

 

 

267

 

 

 

(14,681

)

 

 

264

 

Deduct gain from real estate dispositions of unconsolidated joint ventures

 

 

(1,838

)

 

 

 

 

 

(1,955

)

 

 

 

Sub-total

 

 

87,279

 

 

 

75,938

 

 

 

177,603

 

 

 

148,117

 

Elimination of non-cash items included in net income:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

83,586

 

 

 

73,637

 

 

 

166,229

 

 

 

144,489

 

Depreciation - unconsolidated joint ventures

 

 

3,550

 

 

 

1,675

 

 

 

7,182

 

 

 

3,047

 

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

 

 

11,988

 

 

 

5,709

 

 

 

15,627

 

 

 

5,709

 

Add back (deduct) unrealized loss (gain) on warrants

 

 

65

 

 

 

270

 

 

 

840

 

 

 

(14

)

NAREIT funds from operations ("NAREIT FFO")

 

$

186,468

 

 

$

157,229

 

 

$

367,481

 

 

$

301,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

227,411

 

 

 

211,569

 

 

 

227,336

 

 

 

208,064

 

Restricted stock and PRSUs

 

 

1,030

 

 

 

1,592

 

 

 

1,146

 

 

 

1,640

 

Omega OP Units

 

 

6,082

 

 

 

7,318

 

 

 

6,033

...

7,298

Weighted-average common shares outstanding, diluted

234,523

220,479

234,515

217,002

NAREIT funds from operations available per share

$

0.80

$

0.71

$

1.57

$

1.39

Adjustments to calculate adjusted funds from operations:

NAREIT FFO

$

186,468

$

157,229

$

367,481

$

301,348

Deduct one-time revenue

(3,162

)

(3,828

)

(972

)

Add back acquisition costs

251

1,236

26

4,185

Add back one-time termination payment

1,118

Add back interest refinancing cost - unconsolidated joint ventures

1,198

1,198

(Deduct) add back (recovery) impairment for direct financing leases

(752

)

(752

)

7,700

Add back provision for credit losses

15

1,501

Add back uncollectible accounts

1,205

6,730

1,205

7,959

Add back restructuring costs

1,040

Add back non-cash stock-based compensation expense

4,623

4,040

9,258

8,110

Adjusted funds from operations ("AFFO")

$

189,846

$

169,235

$

376,089

$

330,488

Adjustments to calculate funds available for distribution:

Non-cash interest expense

$

2,438

$

2,213

$

4,876

$

4,426

Capitalized interest

(3,454

)

(3,801

)

(7,100

)

(7,254

)

Non-cash revenues

(9,735

)

(17,036

)

(20,498

)

(31,809

)

Funds available for distribution ("FAD")

$

179,095

$

150,611

$

353,367

$

295,851

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 and merger related costs, provisions for uncollectible accounts, provisions for current expected credit losses, 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 June 30, 2020

As of June 30, 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)

911

$

8,818,814

91

%

902

90,375

Mortgage notes receivable

64

886,029

9

%

57

6,234

975

$

9,704,843

100

%

959

96,609

Assets held for sale

6

70,516

Total investments

981

$

9,775,359

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

845

$

8,112,755

84

%

831

88,579

$

92

Senior housing (3)

130

1,592,088

16

%

128

8,030

$

198

975

$

9,704,843

100

%

959

96,609

$

100

Assets held for sale

6

70,516

Total investments

981

$

9,775,359

____________________

(1)

Includes one asset under a direct financing lease totaling $10.9 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

Six Months Ended

June 30, 2020

June 30, 2020

Rental property (1)

$

217,662

85

%

$

436,045

86

%

Real estate tax and ground lease income

4,129

2

%

7,504

1

%

Mortgage notes

21,680

8

%

41,365

8

%

Other investment income and miscellaneous income - net

12,924

5

%

24,505

5

%

$

256,395

100

%

$

509,419

100

%

Revenue by Facility Type

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2020

SNFs/Transitional care

$

211,547

82

%

$

421,621

83

%

Senior housing

27,795

11

%

55,789

11

%

Real estate tax and ground lease income

4,129

2

%

7,504

1

%

Other

12,924

5

%

24,505

5

%

$

256,395

100

%

$

509,419

100

%

____________________

(1)

Includes one asset under a direct financing lease totaling $0.3 million.

2020 Q2

% of Total

Annualized

Annualized

# of

Contractual

Contractual

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

Properties (1)

Rent/Interest (1)(2)

Rent/Interest

Ciena

69

$

95,628

10.2

%

Consulate

81

85,583

9.1

%

Genesis

52

62,046

6.6

%

CommuniCare

43

61,416

6.6

%

Maplewood (3)

15

57,397

6.1

%

Signature

54

50,171

5.4

%

Saber

47

47,850

5.1

%

HHC

44

36,658

3.9

%

Guardian

35

35,883

3.8

%

Gulf Coast

23

28,820

3.1

%

Remaining Operators (4)

495

375,966

40.1

%

958

$

937,418

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)

Includes Inspīr Carnegie Hill (f/k/a 2nd Avenue) revenue which is contractually effective 1/1/2020.

(4)

Excludes one multi-tenant medical office building.

Total # of

Total

% of Total

Geographic Concentration by Investment ($000’s)

Properties (1)

Investment (1)(2)(3)

Investment

Florida

129

$

1,401,344

14.4

%

Texas

124

903,924

9.3

%

Michigan

50

663,043

6.8

%

Ohio

57

643,448

6.6

%

Indiana

70

639,590

6.6

%

California

59

599,739

6.2

%

Pennsylvania

55

589,701

6.1

%

North Carolina

41

349,834

3.6

%

Virginia

22

332,080

3.4

%

New York (3)

324,797

3.3

%

Remaining 30 states

311

2,884,338

29.6

%

918

9,331,838

95.9

%

United Kingdom

57

398,394

4.1

%

975

$

9,730,232

100.0

%

____________________

(1)

Excludes six properties with total investment of $70.5 million classified as assets held for sale.

(2)

Excludes $25 million reserve for credit losses.

(3)

Includes Inspīr Carnegie Hill development project.

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

As of June 30, 2020

Year

Lease (Rent)

Interest Income

Lease (Rent)
and
Interest Income

% of Total
Annualized
Contractual
Rent/Interest

2020

$

1,493

$

90

$

1,583

0.2

%

2021

4,302

5,875

10,177

1.1

%

2022

36,903

274

37,177

4.0

%

2023

6,507

905

7,412

0.8

%

2024

36,070

2,943

39,013

4.2

%

____________________

(1)

Based on annualized 2nd 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.

Medicare /

Operator Revenue Mix (1)

Medicaid

Insurance

Private / Other

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

%

Three-months ended June 30, 2019

54.2

%

33.3

%

12.5

%

Three-months ended March 31, 2019

53.7

%

34.0

%

12.3

%

____________________

(1)

Excludes all facilities considered non-core.

Operator Census and Coverage (1)

Coverage Data

Before

After

Occupancy (2)

Management

Management

Fees (3)

Fees (4)

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

Twelve-months ended June 30, 2019

83.3

%

1.66x

1.30x

Twelve-months ended March 31, 2019

82.7

%

1.67x

1.31x

____________________

(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 June 30, 2020:

Debt Maturities ($000’s)

Unsecured Debt

Year

Line of Credit and
Term Loans (1)

Senior
Notes/Other (2)

Sub Notes (3)

Secured Debt

Total Debt
Maturities

2020

$

$

$

$

$

2021

216,434

20,000

2,275

238,709

2022

798,560

798,560

2023

700,000

700,000

2024

400,000

400,000

2025

400,000

400,000

Thereafter

2,350,000

383,701

2,733,701

$

1,014,994

$

3,850,000

$

20,000

$

385,976

$

5,270,970

____________________

(1)

The Line of Credit and Term Loans exclude $1.5 million of net deferred financing costs and can be extended into 2022. The $799 million is comprised of a: $350 million term loan, £100 million term loan (equivalent to $124 million), $75 million term loan to Omega’s operating partnership, $250 million term loan and excludes $2.2 million net deferred financing costs.

(2)

Excludes net discounts and deferred financing costs.

(3)

Excludes $0.1 million of fair market valuation adjustments.

The following table presents investment activity:

Investment Activity ($000's)

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2020

Funding by Investment Type

$ Amount

%

$ Amount

%

Real property

$

6,850

8.4

%

$

25,906

18.5

%

Construction-in-progress

15,535

19.1

%

39,598

28.3

%

Capital expenditures

15,941

19.5

%

31,359

22.4

%

Mortgages

43,150

53.0

%

43,150

30.8

%

Other

%

%

Total

$

81,476

100.0

%

$

140,013

100.0

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20200805005913/en/

Contacts

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