Omega Reports First Quarter 2021 Results and Recent Developments

Omega Healthcare Investors, Inc. (NYSE: OHI) (the “Company” or “Omega”) announced today its results for the quarter ended March 31, 2021. The Company reported net income for the quarter of $164.4 million or $0.69 per common share. The Company also reported Nareit Funds From Operations (“Nareit FFO”) for the quarter of $170.2 million or $0.71 per common share, Adjusted Funds From Operations (“AFFO” or “Adjusted FFO”) of $203.8 million or $0.85 per common share, and Funds Available for Distribution (“FAD”) of $193.2 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 Company’s website at www.omegahealthcare.com.

CEO COMMENTS

Taylor Pickett, Omega’s Chief Executive Officer, stated, “We are pleased with our start to 2021, closing on nearly $600 million of acquisitions and reporting strong quarterly AFFO and FAD, as well as continued excellent rent collections. Furthermore, we were able to take advantage of robust capital markets to issue both debt and equity, enabling us to extend our debt maturities, fund acquisitions, and enhance our balance sheet. In addition, we are excited to announce that Maplewood’s flagship property, Inspīr Carnegie Hill in Manhattan, opened its doors to its first residents in March.”

Mr. Pickett continued, “The ongoing diligence of our operators, augmented by the continued roll-out of the vaccine, has led to a decline in COVID cases reported at our facilities of over 90% from the height of the pandemic. As a result, we started to see a modest improvement in occupancy in February and March. Nevertheless, with occupancy still well below pre-COVID levels and with Medicare mix moderating, many operators continue to be reliant on government financial support. Throughout this crisis, the efforts of both federal and state governments have highlighted their understanding of the vital role skilled nursing and assisted living facilities play within the healthcare continuum. We are hopeful that this support will continue to be provided as the industry remains focused on protecting its 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 FIRST QUARTER HIGHLIGHTS

In Q2 2021, the Company…

• collected over 99% of contractual rent and mortgage payments for the month of April.
• closed a new $1.45 billion unsecured credit facility.
• closed a new $50 million term loan to an Omega operating partnership subsidiary.
• declared a $0.67 per share quarterly cash dividend on common stock.

In Q1 2021, the Company…

• collected over 99% of contractual rent and mortgage payments.
• issued $700 million aggregate principal amount of 3.250% Senior Notes due 2033.
• repurchased $350 million aggregate principal amount of 4.375% Senior Notes due 2023.
• completed $595 million of new acquisitions.
• sold 24 facilities for $188 million in cash proceeds, generating a $100 million gain.
• invested $17 million in capital renovation and construction-in-progress projects.
• paid a $0.67 per share quarterly cash dividend on common stock.
• was included in the 2021 Bloomberg Gender-Equality Index.

NET INCOME

The Company reported net income of $164.4 million, or $0.69 per common share, on revenues of $273.8 million for the quarter ended March 31, 2021. This compares to net income of $92.3 million, or $0.39 per common share, on revenues of $253.0 million, for the same period in 2020. The year-over-year increase in net income was primarily due to (i) a $98.5 million increase in gain on the sale of assets, (ii) $20.7 million in revenue from incremental new investments completed and (iii) a $10.3 million increase in income from unconsolidated joint ventures. The increase in net income was partially offset by (i) a $29.7 million increase in loss on early extinguishment of debt, (ii) $24.5 million of incremental impairments on real estate properties and direct financing leases, and (iii) a $3.0 million increase in interest expense.

FIRST QUARTER 2021 RESULTS

Revenues – Revenues for the quarter ended March 31, 2021 totaled $273.8 million, which included $12.1 million of non-cash revenue, $5.0 million of non-recurring revenue, $2.9 million of real estate tax and ground rents, and a $2.7 million write-off of non-cash straight-line revenue.

Expenses – Expenses for the quarter ended March 31, 2021 totaled $191.2 million, consisting of $84.8 million of depreciation and amortization expense, $55.8 million of interest expense, $28.7 million of impairment on real estate properties, $10.4 million of general and administrative (“G&A”) expense, $5.4 million of stock-based compensation expense, $3.1 million of real estate tax and ground lease expense, $2.8 million of amortized deferred financing costs, $1.8 million of acquisition, merger and transition related costs offset by a $1.0 million recovery for estimated current expected credit losses (“CECL”) and a $0.6 million recovery on direct financing leases.

Other Income and Expense – Other income and expense for the quarter ended March 31, 2021 totaled $70.9 million, which included $100.3 million of gain on assets sold offset by $29.7 million in charges related to the early extinguishment of debt obligations.

Funds From Operations – Nareit FFO for the quarter ended March 31, 2021 was $170.2 million, or $0.71 per common share, on 240 million weighted-average common shares outstanding, compared to $181.0 million, or $0.77 per common share, on 235 million weighted-average common shares outstanding, for the same period in 2020.

The $170.2 million of Nareit FFO includes $29.7 million in loss on early extinguishment of debt, $5.4 million of non-cash stock-based compensation expense, a $2.7 million write-off of non-cash straight-line revenue, and $1.8 million of acquisition, merger and transition related costs offset by $5.0 million of non-recurring revenue, a $1.0 million recovery for credit losses and a $0.6 million recovery on direct financing leases.

The $181.0 million of Nareit FFO for the quarter ended March 31, 2020 includes $4.6 million of non-cash stock-based compensation expense and a $1.5 million provision for CECL offset by $0.7 million of one-time revenue and a $0.2 million adjustment for merger related costs.

Adjusted FFO was $203.8 million, or $0.85 per common share, for the quarter ended March 31, 2021, compared to $186.2 million, or $0.79 per common share, for the same quarter in 2020. For further information, see the “Funds From Operations” schedule below and on the Company’s website.

FINANCING ACTIVITIES

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan – During the quarter ended March 31, 2021, the Company sold 2.0 million shares of its common stock, generating $76.8 million of gross proceeds, under its Equity Shelf Program and its Dividend Reinvestment and Common Stock Purchase Plan:

		Equity Shelf			Dividend
		(At-the-			Reinvestment and
		Market)			Common Stock
(in thousands, except price per share)		Program			Purchase Plan
		Q1 2021
Number of shares			1,617			416
Average price per share		$	37.95		$	37.23
Gross proceeds		$	61,355		$	15,491

$700 Million Senior Notes – On March 10, 2021, the Company issued $700 million aggregate principal amount of its 3.250% Senior Notes due 2033. The notes were sold at a public offering price of 99.304% of their face value before the underwriters’ discount. The Company’s net proceeds from the offering were used to repay $350 million 4.375% Senior Notes due 2023 and partially repay borrowings under the Company’s then outstanding revolving credit facility and term loans.

Repurchase of $350 Million Senior Notes due 2023 – On March 18, 2021, the Company repurchased and retired $350 million aggregate principal amount of its 4.375% Senior Notes due 2023 pursuant to a cash tender offer. As a result of the notes retirement, the Company recorded approximately $30 million in early extinguishment of debt charges.

$1.45 Billion Credit Facility – On April 30, 2021, the Company closed a new four-year $1.45 billion senior unsecured credit facility (“Credit Facility”). The Credit Facility replaced a $1.25 billion senior unsecured credit facility that was scheduled to mature on May 25, 2021.

$50 Million OP Term Loan Facility – On April 30, 2021, the Company closed a new four-year $50 million senior unsecured term loan facility (“OP Term Loan Facility”) to its operating partnership subsidiary. The OP Term Loan Facility replaced a $50 million senior unsecured term loan facility that was scheduled to mature on May 25, 2022.

2021 FIRST QUARTER PORTFOLIO AND RECENT ACTIVITY

Q1 2021 Portfolio Activity:

$611 Million of New Investments – In the first quarter of 2021, the Company completed approximately $594.5 million of acquisitions and $16.8 million in capital renovations and new construction projects consisting of the following:

$511 Million Acquisition – On January 20, 2021, the Company acquired 24 senior living facilities from Healthpeak Properties, Inc. (NYSE: PEAK) for $511.3 million including closing costs. The acquisition included the assumption of an in-place master lease with Brookdale Senior Living (NYSE: BKD). The master lease provides for 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).

$83 Million Acquisition – On February 25, 2021, the Company acquired six skilled nursing facilities (“SNFs”) located in Florida from an unrelated third party for ap