Omega Healthcare Investors, Inc. (NYSE:OHI) (the “Company” or
“Omega”) today announced its results of operations for the
three-month period ended June 30, 2015. The Company also reported
for the three-month period ended June 30, 2015 Funds From
Operations (“FFO”) available to common stockholders of $100.7
million or $0.52 per common share and Funds Available For
Distribution (“FAD”) to common stockholders of $136.1 million or
$0.70 per common share.
The $100.7 million of FFO available to common stockholders for
the second quarter of 2015 includes $47.1 million of acquisition
related costs, $2.9 million of non-cash stock-based compensation
expense and a $1.0 million gain related to the early extinguishment
of debt. FFO is presented in accordance with the guidelines for the
calculation and reporting of FFO issued by the National Association
of Real Estate Investment Trusts (“NAREIT”). Adjusted FFO was $0.77
per common share for the three-month period ended June 30, 2015.
FFO and Adjusted FFO are non-GAAP financial measures. Adjusted FFO
is calculated as FFO available to common stockholders excluding the
impact of certain non-cash items and certain items of revenue or
expense, including, but not limited to: acquisition related costs,
interest refinancing costs and stock-based compensation expense.
For more information regarding FFO and Adjusted FFO, see the
“Second Quarter 2015 Results – Funds From Operations” section
below.
GAAP NET INCOME
For the three-month period ended June 30, 2015, the Company
reported net income of $43.5 million, or $0.22 per diluted common
share, on operating revenues of $197.7 million. This compares to
net income of $46.8 million, or $0.37 per diluted common share, on
operating revenues of $121.8 million, for the same period in
2014.
For the six-month period ended June 30, 2015, the Company
reported net income of $86.5 million, or $0.53 per diluted common
share, on operating revenues of $331.1 million. This compares to
net income of $102.6 million, or $0.81 per diluted common share, on
operating revenues of $242.8 million, for the same period in
2014.
The year-to-date decrease in net income compared to the prior
year was primarily due to: (i) $51.8 million in increased
acquisition related costs, (ii) $27.0 million in increased
depreciation and amortization expense, (iii) $14.1 million in
increased interest expense and (iv) $11.3 million in increased
impairments on real estate assets. This impact was partially offset
by increased revenue associated with the new investments completed
in 2014 and the first six months of 2015.
2015 RECENT DEVELOPMENTS AND SECOND
QUARTER HIGHLIGHTS
In Q3 2015, the Company…
- completed the purchase of $112 million
of real estate in Manhattan for the development of a senior housing
community.
- completed $72.3 million of other new
investments.
- increased its quarterly common stock
dividend rate to $0.55 per share.
In Q2 2015, the Company…
- completed the acquisition by merger of
Aviv REIT, Inc. (“Aviv”).
- completed $178 million of new United
Kingdom investments.
- invested $18 million in capital
renovation projects.
- paid off $9 million of secured
long-term debt.
- increased its quarterly common stock
dividend rate to $0.54 per share.
SECOND QUARTER 2015
RESULTS
Operating Revenues and Expenses – Operating revenues for
the three-month period ended June 30, 2015 totaled $197.7 million.
Operating expenses for the three-month period ended June 30, 2015
totaled $123.5 million and were comprised of $59.2 million of
depreciation and amortization expense, $47.1 million of costs
associated with acquisitions, $7.4 million of general and
administrative expense, $6.9 million of provision for impairments
on real estate assets and $2.9 million of stock-based compensation
expense.
Other Income and Expense – Other income and expense for
the three-month period ended June 30, 2015 was a net expense of
$39.1 million, which was primarily comprised of $38.2 million of
interest expense, $1.8 million of amortized deferred financing
costs and a $1.0 million adjustment (gain) related to interest
refinancing costs.
Funds From Operations – For the three-month period ended
June 30, 2015, reportable FFO available to common stockholders was
$100.7 million, or $0.52 per common share on 194 million
weighted-average common shares outstanding, compared to $79.7
million, or $0.63 per common share on 127 million weighted-average
common shares outstanding, for the same period in 2014.
The $100.7 million of FFO for the three-month period ended June
30, 2015 includes the impact of $47.1 million of acquisition
related costs, $2.9 million of non-cash stock-based compensation
expense and a $1.0 million adjustment (gain) related to interest
refinancing activities.
The $79.7 million of FFO for the three-month period ended June
30, 2014 includes the impact of $2.8 million in provisions for
uncollectible straight-line receivables, $2.6 million of interest
financing costs, $2.3 million of non-cash stock-based compensation
expense and $45 thousand of acquisition related costs.
Adjusted FFO was $149.7 million, or $0.77 per common share, for
the three months ended June 30, 2015, compared to $87.4 million, or
$0.69 per common share, for the same period in 2014. The Company
had 67 million additional weighted-average shares outstanding for
the three months ended June 30, 2015 compared to the same period in
2014. For further information see the “Funds From Operations”
section below.
ACQUISITION OF AVIV AND IMPLEMENTATION
OF UPREIT STRUCTURE
On April 1, 2015, the Company completed its acquisition by
merger of Aviv. In the Aviv transaction, the Company acquired 348
properties in 31 states, operated by 38 third-party operators. The
Company issued approximately 43.7 million shares of common stock in
the transaction.
Prior to April 1, 2015, the Company restructured the manner in
which it holds its assets by converting to an umbrella partnership
real estate investment trust (“UPREIT”) structure. As a result of
this organizational restructuring and after giving effect to the
Aviv merger, substantially all of the Company’s assets are held by
an operating partnership (the “Operating Partnership”) that is a
subsidiary of the Company.
The Company’s results for the six-month period ended June 30,
2015 do not reflect the operations of Aviv for the three-month
period ended March 31, 2015, and accordingly are not indicative of
the Company’s results for future periods.
FINANCING ACTIVITIES
Amendment to the 2014 Credit Facilities – On April 1,
2015, the Company amended its 2014 Credit Facilities (defined
below). Among other modifications to the 2014 Credit Facilities,
the amendments increased the amount of the 2014 Credit Facilities
to a total of $1.65 billion, consisting of a $1.25 billion senior
unsecured revolving credit facility, a $200 million senior
unsecured term loan facility, and a $200 million senior unsecured
acquisition term loan facility (collectively, the “2014 Credit
Facilities”). The amended facility includes an accordion feature
permitting the Company to increase the amount of the 2014 Credit
Facilities to $1.9 billion and to allocate the $250 million
increase to the existing revolver or term loan facilities or
additional tranches thereunder as it may elect, subject to various
conditions set forth in its existing credit facility.
The $1.25 billion revolving credit facility matures on June 27,
2018, subject to a one-time option for the Company to extend such
maturity date for one year. The $200 million senior unsecured term
loan facility matures on June 27, 2019 and the $200 million senior
unsecured acquisition term loan facility matures on June 27, 2017.
The Company has the option to extend the acquisition term loan
facility maturity date twice, the first extension until June 27,
2018 and the second extension until June 27, 2019.
As of June 30, 2015, the Company had $351 million of outstanding
borrowings under its $1.25 billion revolver and $500 million of
outstanding term loan borrowings under its various term loan
facilities on a consolidated basis, including the Operating
Partnership Term Loan Facility described below.
$100 Million Operating Partnership Term Loan Facility –
On April 1, 2015, the Operating Partnership entered into a $100
million senior unsecured term loan facility (the “Operating
Partnership Term Loan Facility”), with the entire amount advanced
on April 1, 2015. The Operating Partnership Term Loan Facility
matures on June 27, 2017, subject to the right of the Operating
Partnership to extend such maturity date twice, the first extension
until June 27, 2018 and the second extension until June 27,
2019.
$9 Million HUD Mortgage Payoffs – On April 30, 2015, the
Company paid approximately $9.1 million to retire one mortgage loan
guaranteed by the Department of Housing and Urban Development
(“HUD”). The loan had an interest rate of 4.35% per annum with a
March 1, 2041 maturity. The payoff resulted in a $1.0 million gain
on the extinguishment of the debt due to the write-off of the $1.5
million fair market value adjustment recorded at the time the loan
was assumed offset by a prepayment fee of approximately $0.5
million.
Equity Shelf Program and Dividend Reinvestment and Common
Stock Purchase Plan – During the first two quarters of 2015,
the Company sold the following shares of its common stock under its
Equity Shelf Program and its Dividend Reinvestment and Common Stock
Purchase Plan:
Equity Shelf (At-The-Market) Program for 2015 (in thousands,
except price per share) Q1 Q2
Year To
Date
Number of shares - - - Average price per share $ - $ - $ -
Gross proceeds $ - $ - $ -
Dividend Reinvestment and
Common Stock Purchase Program for 2015 (in thousands, except
price per share) Q1 Q2 Year To
Date Number of shares 135 678 813 Average price per share $
40.13 $ 36.46 $ 37.07 Gross proceeds $ 5,423 $ 24,703 $ 30,126
2015 RECENT DEVELOPMENTS AND PORTFOLIO
ACTIVITY
$184 Million in New Investments in July 2015 – In July
2015, the Company completed five separate transactions totaling
approximately $184 million of new investments. The new investments
consisted of the following:
$28.5 Million
Acquisition – On July 30, 2015, the Company completed a
purchase/leaseback of one skilled nursing facility (“SNF”) for
approximately $28.5 million. The 300 bed SNF, located in Virginia,
was leased to the new operator with an initial annual yield of
9.25%.
$111.7 Million Real
Estate Acquisitions – On July 24, 2015, the Company
purchased five buildings on the Upper East Side of Manhattan for
approximately $111.7 million and leased them to an existing
operator of the Company. The Company and its operator plan to
co-develop the sites into a 201,000 square-foot senior living
facility. The properties were added to the operator’s existing
master lease. During the construction phase, the Company will earn
a 5% annual cash yield on the land. Upon certification of
occupancy, the Company’s annual yield will be 7% in year one and 8%
in year two with annual 2.5% escalators thereafter.
$18.0 Million
Acquisition – On July 1, 2015, the Company purchased a three
facility campus from an unrelated third party for approximately
$18.0 million and leased them to an existing operator of the
Company. The 161 bed campus (consisting of a skilled nursing,
memory care and assisted living facility) located in the state of
Washington, was added to the operator’s existing master lease with
a blended initial annual yield of 8.3%.
$15.0 Million
Acquisition – On July 1, 2015, the Company purchased six
SNFs from an unrelated third party for approximately $15.0 million
and leased them to an existing operator of the Company. The SNFs,
all located in Nebraska, totaling 530 beds, were added to the
operator’s existing master lease with an initial annual yield of
9.0%.
$10.8 Million
Acquisition – On July 1, 2015, the Company purchased one
assisted living facility (“ALF”) and one memory care facility for
approximately $10.8 million and leased them to a new operator of
the Company. The facilities, located in Georgia, totaling 125 beds,
were leased to the operator via a master lease with an initial
annual yield of 8.0%.
Aviv Acquisition/Merger – On April 1, 2015, the Company
acquired Aviv by merger, acquiring 348 properties in 31 states,
operated by 38 third-party operators, in addition to the assumption
of several mortgages and other notes. The transaction was
structured as stock for stock swap with each share of Aviv being
exchanged for 0.9 shares of Omega. In connection with the Aviv
merger, Omega exchanged approximately 48.6 million Aviv shares for
approximately 43.7 million shares of Omega and exchanged
approximately 9.2 million partnership units of Omega Healthcare
Property Limited Partnership (“Omega OP Units”) for 10.2 million
Aviv Healthcare Property Limited Partnership units. In addition to
the shares and units exchanged, Omega assumed the legacy Aviv stock
compensation plans as well as debt and other liabilities. Based on
the closing price of Omega’s common stock on April, 1, 2015, the
estimated fair value of the consideration exchanged or assumed was
approximately $3.8 billion.
$196 Million of New Investments in Q2 2015 – During the
three months ended June 30, 2015, the Company completed $196
million of combined new investments and capital renovations.
$178 Million
Acquisition in the United Kingdom – On May 1, 2015, the
Company completed a $178 million purchase/leaseback transaction for
23 Care Homes located in the United Kingdom and operated by
Healthcare Homes Holding Limited (“Healthcare Homes”). As part of
the transaction, the Company acquired title to the 23 Care Homes
with 1,018 registered beds and leased them back to Healthcare Homes
pursuant to a 12-year master lease agreement with an initial annual
cash yield of 7%, and annual escalators of 2.5%. The Care Homes,
comparable to U.S. ALFs, are located throughout the East Anglia
region (north of London) of the United Kingdom. Healthcare Homes is
headquartered in Colchester (Essex County), England.
$18 Million Q2 Capital
Renovations – The Company also invested $18 million under
its capital renovation program in the second quarter of 2015.
Facility Sales, Closures and Impairments – For the
three-month period ended June 30, 2015, the Company sold four
facilities (two classified as held-for-sale) for total cash
proceeds of $26.6 million, generating an $8.8 million gain. Two of
the facilities sold resulted from purchase options exercised by the
tenant.
DIVIDENDS
On July 15, 2015, the Board of Directors declared a common stock
dividend of $0.55 per share, increasing the quarter common dividend
by $0.01 per share over the prior quarter to be paid August 17,
2015 to common stockholders of record as of the close of business
on July 31, 2015.
2015 FAD AND ADJUSTED FFO GUIDANCE
REVISED
The Company revised its previously announced 2015 annual FAD
available to common stockholders to be between $2.77 and $2.81 per
diluted share and its 2015 annual Adjusted FFO available to common
stockholders to be between $3.04 and $3.06 per diluted share. The
table below outlines Omega’s 2015 quarterly guidance for both FAD
and Adjusted FFO available to common stockholders:
2015 Adjusted FFO and FAD Guidance Range per diluted common
share (1) Q1(2) Q2 Q3 Q4(3) Full Year
Adjusted
FFO
$ 0.71 $ 0.77 $ 0.77 - $0.78 $ 0.79 - $0.80 $ 3.04 - $3.06 FAD $
0.65 $ 0.70 $ 0.70 - $0.72 $ 0.72 - $0.74 $ 2.77 - $2.81
2014 Actual Adjusted FFO and FAD per diluted common share Q1 Q2 Q3
Q4 Full Year
Adjusted
FFO
$ 0.71 $ 0.69 $ 0.73 $ 0.72 $ 2.85 FAD $ 0.65 $ 0.63 $ 0.67 $ 0.66
$ 2.61
(1) Assumes $650 million of new investments and planned capital
renovation projects for 2015, including $65 million of new
investments and capital renovations closed and/or completed in the
first quarter of 2015 by Aviv. At April 1, 2015, after reflecting
operating partnership units and other dilutive securities, there
were approximately 194 million fully diluted common shares
outstanding. Omega's guidance is based on a number of assumptions,
which are subject to change and many of which are outside Omega’s
control. If actual results vary from these assumptions, Omega's
expectations may change. Without limiting the generality of the
foregoing, the timing and completion of acquisitions, divestitures
and capital and financing transactions may cause actual results to
vary materially from our current expectations. There can be no
assurance that Omega will achieve its projected results.
(2) Based on approximately 135 million fully diluted weighted
average common shares outstanding.
(3) Assumes refinancing $575 million 6.75% notes due 2022.
CONFERENCE CALL
The Company will be conducting a conference call on Tuesday,
August 4, 2015, at 10 a.m. Eastern to review the Company’s 2015
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 can
use the dial-in number (412) 902-4140. Ask the operator to be
connected to the “Omega Healthcare’s Second Quarter 2015 Earnings
Call.”
To listen to the conference call via webcast, log on to
www.omegahealthcare.com and click the “earnings call” icon on the
Company’s home page. Webcast replays of the call will be available
on the Company’s website for two weeks following the call.
* * * * * *
Omega is a real estate investment trust investing in and
providing financing to the long-term care industry. As of June 30,
2015, Omega has a portfolio of investments that includes over 900
properties located in 41 states and the United Kingdom and operated
by 84 different operators.
________________________
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements regarding Omega’s or its tenants’,
operators’, borrowers’ or managers’ expected future financial
condition, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing opportunities
and plans, capital markets transactions, business strategy,
budgets, projected costs, operating metrics, capital expenditures,
competitive positions, acquisitions, investment opportunities,
dispositions, merger integration, growth opportunities, expected
lease income, continued qualification as a REIT, plans and
objectives of management for future operations and statements that
include words such as “anticipate,” “if,” “believe,” “plan,”
“estimate,” “expect,” “intend,” “may,” “could,” “should,” “will”
and other similar expressions are forward-looking statements. These
forward-looking statements are inherently uncertain, and actual
results may differ from Omega’s expectations. Omega does not
undertake a duty to update these forward-looking statements, which
speak only as of the date on which they are made.
Omega’s actual results may differ materially from those
reflected in such forward-looking statements as a result of a
variety of factors, including, among other things: (i)
uncertainties relating to the business operations of the operators
of Omega’s properties, including those relating to reimbursement by
third-party payors, regulatory matters and occupancy levels; (ii)
regulatory and other changes in the healthcare sector; (iii)
changes in the financial position of Omega’s operators; (iv) the
ability of any of Omega’s operators in bankruptcy to reject
unexpired lease obligations, modify the terms of Omega’s mortgages
and impede the ability of to collect unpaid rent or interest during
the pendency of a bankruptcy proceeding and retain security
deposits for the debtor's obligations; (v) the availability and
cost of capital; (vi) changes in Omega’s credit ratings and the
ratings of its debt securities; (vii) competition in the financing
of healthcare facilities; (viii) Omega’s ability to maintain its
status as a REIT; (ix) Omega’s ability to manage, re-lease or sell
any owned and operated facilities; (x) Omega’s ability to sell
closed or foreclosed assets on a timely basis and on terms that
allow Omega to realize the carrying value of these assets; (xi) the
effect of economic and market conditions generally, and
particularly in the healthcare industry; (xii) risks relating to
the integration of Aviv’s operations and employees into Omega and
the possibility that the anticipated synergies and other benefits
of the combination with Aviv will not be realized or will not be
realized within the expected timeframe; and (xiii) other factors
identified in Omega’s filings with the Securities and Exchange
Commission. Statements regarding future events and developments and
Omega’s future performance, as well as management's expectations,
beliefs, plans, estimates or projections relating to the future,
are forward looking statements. Omega undertakes no obligation to
update any forward-looking statements contained in this
announcement.
OMEGA HEALTHCARE INVESTORS,
INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share
amounts)
June 30, December 31,
2015 2014 (Unaudited)
ASSETS Real estate properties Land and buildings $ 6,513,674
$ 3,223,785 Less accumulated depreciation (898,734 )
(821,712 ) Real estate properties – net 5,614,940 2,402,073
Investments in direct financing leases 571,377 539,232 Mortgage
notes receivable 682,255 648,079
6,868,572 3,589,384 Other investments 82,955
48,952 6,951,527 3,638,336 Assets held for sale – net
15,903 12,792 Total investments
6,967,430 3,651,128 Cash and cash equivalents 25,154 4,489
Restricted cash 21,545 29,076 Accounts receivable – net 189,037
168,176 Goodwill 543,093 — Other assets 67,417
68,776 Total assets $ 7,813,676 $
3,921,645
LIABILITIES AND EQUITY Revolving
line of credit $ 351,000 $ 85,000 Term loans 500,000 200,000
Secured borrowings 263,068 251,454 Unsecured borrowings – net
2,333,856 1,842,049 Accrued expenses and other liabilities 271,584
141,815 Deferred income taxes 16,852 —
Total liabilities 3,736,360
2,520,318 Equity:
Common stock $.10 par value authorized –
350,000 shares, issued and outstanding – 183,321 shares as of June
30, 2015 and 127,606 as of December 31, 2014
18,332
12,761
Common stock – additional paid-in capital 4,503,180 2,136,234
Cumulative net earnings 1,232,478 1,147,998 Cumulative dividends
paid (2,047,257 ) (1,895,666 ) Accumulated other comprehensive
income 2,839 — Total
stockholders’ equity 3,709,572 1,401,327 Noncontrolling interest
367,744 — Total equity
4,077,316 1,401,327 Total liabilities
and equity $ 7,813,676 $ 3,921,645
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, 2015
2014 2015
2014 Revenue Rental
income $ 163,112 $ 96,242 $ 264,076 $ 192,160 Income from direct
financing leases 15,020 14,146 29,366 28,230 Mortgage interest
income 17,562 9,923 34,141 19,249 Other investment income – net
2,017 1,489 3,548
3,162 Total operating revenues 197,711 121,800 331,131
242,801
Expenses Depreciation and amortization 59,156
31,301 89,766 62,745 General and administrative 7,435 4,012 11,839
8,246 Stock-based compensation 2,873 2,285 4,483 4,548 Acquisition
costs 47,084 45 51,952 140 Impairment loss on real estate
properties 6,916 1,558 12,898 1,558 Provisions for uncollectible
mortgages, notes and accounts receivable (7 ) 2,761
(9
)
2,745
Total operating expenses 123,457 41,962 170,929 79,982
Income before other income and expense 74,254
79,838 160,202 162,819 Other income
(expense) Interest income 7 17 200 25 Interest expense (38,248
) (29,447 ) (70,607 ) (56,528 ) Interest – amortization of deferred
financing costs (1,826 ) (946 ) (3,179 ) (1,868 ) Interest –
refinancing gain (costs) 1,016 (2,645 )
(8,361 ) (4,685 ) Total other expense (39,051 ) (33,021 )
(81,947 ) (63,056 )
Income before gain on assets sold
35,203 46,817 78,255 99,763 Gain on
assets sold – net 8,802 - 8,802
2,883
Income from continuing operations
before income taxes 44,005 46,817 87,057
102,646 Income taxes (539 )
- (539 ) -
Net income
43,466 46,817 86,518 102,646 Net
income attributable to noncontrolling interest
(2,038 ) - (2,038
) - Net income available to common
stockholders $ 41,428 $
46,817 $ 84,480 $
102,646 Income per common share available
to common stockholders: Basic: Net income available to
common stockholders $ 0.23 $ 0.37 $ 0.53 $
0.82
Diluted: Net income $ 0.22 $ 0.37
$ 0.53 $ 0.81 Dividends declared and paid per
common share $ 0.18 $ 0.50 $ 1.07 $ 0.99
Weighted-average shares outstanding, basic
182,697 126,474 158,521
125,467 Weighted-average shares outstanding, diluted
194,482 127,436 164,644
126,130
OMEGA HEALTHCARE INVESTORS,
INC.
FUNDS FROM OPERATIONS
Unaudited
(in thousands, except per share
amounts)
Three Months Ended Six Months Ended
June 30, June 30, 2015
2014 2015
2014 Net income $ 43,466 $
46,817 $ 86,518 $ 102,646 Deduct gain from real estate dispositions
(8,802 ) — (8,802 ) (2,883 ) Sub
– total 34,664 46,817 77,716 99,763 Elimination of non-cash items
included in net income: Depreciation and amortization 59,156 31,301
89,766 62,745 Add back non-cash provision for impairments on real
estate properties 6,916 1,558
12,898
1,558
Funds from operations available to common
stockholders $ 100,736 $ 79,676 $ 180,380
$ 164,066 Weighted-average common shares outstanding,
basic 182,697 126,474 158,521 125,467 Restricted stock and PRSUs
2,796 962 1,628 663 Omega OP Units 8,989 —
4,495 — Weighted-average common
shares outstanding, diluted 194,482 127,436
164,644 126,130
Funds
from operations per share available to common stockholders $
0.52 $ 0.63
$
1.10
$
1.30
Adjustments to calculate adjusted funds from
operations: Funds from operations available to common
stockholders $ 100,736 $ 79,676 $ 180,380 $ 164,066 Deduct non-cash
provision for uncollectible accounts receivable, mortgages and
notes (7 ) 2,761
(9
)
2,745
(Deduct)/add back interest refinancing expense (1,016 ) 2,645 8,361
4,685 Add back acquisition costs 47,084 45 51,952 140 Add back
non-cash stock-based compensation expense 2,873
2,285 4,483 4,548
Adjusted funds from operations available to common
stockholders $ 149,670 $ 87,412
$
245,167
$
176,184
Adjustments to calculate funds available for
distribution: Non-cash interest expense 1,857 994 3,277 1,972
Capitalized interest (403 )
— (423 ) — Non-cash revenues (14,990 )
(8,663 ) (24,377 ) (17,207 )
Funds
available for distribution $ 136,134 $ 79,743 $
223,644 $ 160,949
Funds From Operations (“FFO”), Adjusted FFO and Adjusted 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 excludes 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 statement
of operations, balance sheet or statement of cash flows (or
equivalent statements) of the company, or includes amounts, or is
subject to adjustments that have the effect of including amounts,
that are excluded from the most directly comparable financial
measure so calculated and presented. As used in this press release,
GAAP refers to generally accepted accounting principles in the
United States of America. Pursuant to the requirements of
Regulation G, the Company has provided reconciliations of the
non-GAAP financial measures to the most directly comparable GAAP
financial measures.
The Company calculates and reports FFO in accordance with the
definition and interpretive guidelines issued by the National
Association of Real Estate Investment Trusts ("NAREIT"), and
consequently, FFO is defined as net income available to common
stockholders, adjusted for the effects of asset dispositions and
certain non-cash items, primarily depreciation and amortization and
impairments on real estate assets. The Company believes that FFO,
Adjusted FFO and FAD are important supplemental measures of its
operating performance. Because the historical cost accounting
convention used for real estate assets requires depreciation
(except on land), such accounting presentation implies that the
value of real estate assets diminishes predictably over time, while
real estate values instead have historically risen or fallen with
market conditions. The term FFO was designed by the real estate
industry to address this issue. FFO described herein is not
necessarily comparable to FFO of other real estate investment
trusts, or REITs, that do not use the same definition or
implementation guidelines or interpret the standards differently
from the Company.
The Company uses FFO, Adjusted FFO and FAD among the criteria to
measure the operating performance of its business. The Company
further believes that by excluding the effect of depreciation,
amortization, impairments on real estate assets and gains or losses
from sales of real estate, all of which are based on historical
costs and which may be of limited relevance in evaluating current
performance, FFO can facilitate comparisons of operating
performance between periods and between other REITs. The Company
offers these measures to assist the users of its financial
statements in analyzing its operating performance and not as
measures of liquidity or cash flow. FFO, Adjusted FFO and FAD 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 this measure as a
substitute for any GAAP measure, including net income.
Adjusted FFO is calculated as FFO available to common
stockholders excluding the impact of non-cash stock-based
compensation and certain revenue and expense items identified
above. FAD is calculated as Adjusted FFO less non-cash interest
expense and non-cash revenue, such as straight-line rent. The
Company believes these measures provide an enhanced measure of the
operating performance of the Company’s core portfolio as a REIT.
FAD is calculated as Adjusted FFO less non-cash interest expense
and non-cash revenue, such as straight-line rent. The Company’s
computation of adjusted FFO and FAD are not comparable to the
NAREIT definition of FFO or to similar measures reported by other
REITs, but the Company believes that they are appropriate measures
for this Company.
2015 FAD AND ADJUSTED FFO GUIDANCE
RECONCILIATION
The following table presents a reconciliation of Omega’s
guidance regarding Adjusted FFO and FAD to projected GAAP earnings.
Omega may, from time to time, update its publicly announced FAD and
Adjusted FFO guidance, but it is not obligated to do so.
2015 Quarterly Adjusted FFO and FAD Guidance Range per
diluted common share Q1 Q2 Q3 Q4 Full
Year Net Income $ 0.32 $ 0.22 $ 0.39 - $0.41 $ 0.35 - $0.36 $ 1.28
- $1.31 Depreciation 0.23 0.30 0.31 0.32 1.16 Gain on assets sold -
(0.05 ) - - (0.05 ) Real estate impairment 0.04
0.04 - - 0.08
FFO $ 0.59 $ 0.52 $ 0.70 - $0.72 $ 0.67 - $0.68 $ 2.48 -
$2.51 Adjustments: Transaction costs 0.04 0.24 0.06 - 0.35 Interest
– refinancing costs 0.07 (0.01 ) - 0.11 0.16 Stock-based
compensation expense 0.01 0.01
0.01 0.01 0.05 Adjusted FFO $
0.71 $ 0.77 $ 0.77 - $0.78 $ 0.79 - $0.80 $ 3.04 - $3.06 Non-cash
interest expense 0.01 0.01 0.01 0.01 0.04 Non-cash revenue
(0.07 ) (0.08 ) (0.08 ) (0.08 ) (0.29 )
FAD $ 0.65 $ 0.70 $ 0.70 - $0.72 $ 0.72 - $0.74 $ 2.77 - $2.81
Note: All per share numbers rounded to 2
decimals. This table should be read in conjunction with the notes
to the preceding table under “2015 FAD and Adjusted FFO Guidance”
section above.
The following tables present selected portfolio information,
including operator and geographic concentrations, and revenue
maturities for the period ended June 30, 2015, and do not give
effect to the acquisition of Aviv by merger:
As of June 30, 2015 As of June 30, 2015
Balance
Sheet Data Total # of Properties (2) Total Investment
($000’s)
% of Investment # of Operating Properties # of
Operating Beds Real Property(1)(2) 820 $ 6,532,874 84
% 809 80,451 Direct Financing Leases 58 571,377 7 % 56 5,643
Loans Receivable 58 682,255 9 % 58
6,097 Total Investments 936 $ 7,786,506 100 % 923 92,191
Investment Data Total # of Properties (2)
Total Investment
($000’s)
% of Investment # of Operating Properties # of
Operating Beds Investment per Bed ($000’s) Skilled Nursing
Facilities/Transitional Care (1)(2) 843 $ 6,866,966
88 % 831 86,715 $ 79 Senior Housing 93
919,540 12 % 92 5,476 168 936 $
7,786,506 100 % 923 92,191 $ 84
(1) Total investment includes a $19.2 million lease inducement
and excludes $15.9 million of properties classified as
held-for-sale.(2) Total # of properties includes properties
classified as held-for-sale, closed and/or are being used for
activities other than patient services.
Revenue Composition ($000's)
Revenue by
Investment Type Three Months Ended Six Months Ended June 30,
2015 June 30, 2015 Rental Property (1) $ 163,112 82 % $ 264,076 80
% Capital Lease 15,020 8 % 29,366 9 % Mortgage Notes 17,562 9 %
34,141 10 % Other Investment Income- net 2,017 1 %
3,548 1 % $ 197,711 100 % $ 331,131 100 %
Revenue by
Facility Type Three Months Ended Six Months Ended June 30, 2015
June 30, 2015 Skilled Nursing Facilities/Transitional Care
(1) $ 179,249 91 % $ 304,945 92 % Senior Housing 16,445 8 % 22,638
7 % Other 2,017 1 % 3,548 1 % $
197,711 100 % $ 331,131 100 %
(1) 2nd quarter revenue includes $0.8 million reduction for
lease inducement and $1.6 million year-to-date.
Note: the Company’s results for the six-month period ended June
30, 2015 do not reflect the operations of Aviv for the three-month
period ended March 31, 2015, and accordingly are not indicative of
the Company’s results for future periods.
Operator Concentration by Investment ($000's) As of
June 30, 2015 Total # of Properties (1) Total Investment (2)
% of Investment New Ark Investment, Inc. 59 $ 579,130 7 %
Ciena Healthcare 31 418,689 5 % Maplewood Real Estate Holdings, LLC
10 365,220 5 % Genesis Healthcare 59 358,027 5 % CommuniCare Health
Services, Inc. 36 357,349 5 % Daybreak Venture, LLC 54 348,952 4 %
Laurel 27 308,047 4 % Health & Hospital Corporation 44 304,719
4 % Saber Health Group 30 281,782 4 % Diversicare Healthcare
Services 36 272,069 3 % Remaining 74 Operators 550 4,192,522
54 % 936 $ 7,786,506 100 % (1) Total # of properties
includes properties classified as held-for-sale, closed and/or are
being used for activities other than patient services.
(2) Total investment includes a $19.2
million lease inducement and excludes $15.9 million of properties
classified as held-for-sale.
Concentration by State Total # of Properties
(1) Total Investment (2) % of Investment Ohio 86 $
800,404 10 % Texas 109 687,968 9 % Florida 96 660,037 9 % Michigan
47 588,073 8 % California 60 514,455 7 % Pennsylvania 44 461,525 6
% Indiana 60 386,522 5 % Arkansas 33 251,415 3 % Connecticut 6
239,025 3 % South Carolina 22 231,084 3 % Mississippi 19 224,096 3
% Kentucky 26 189,226 2 % Massachusetts 16 176,791 2 % Maryland 16
174,077 2 % Missouri 23 159,992 2 % Tennessee 20 155,427 2 %
Remaining 25 States and United Kingdom 253 1,886,389 24 %
936 $ 7,786,506 100 %
(1) Total # of properties includes
properties classified as held-for-sale, closed and/or are being
used for activities other than patient services.
(2) Total investment includes a $19.2
million lease inducement and excludes $15.9 million of properties
classified as held-for-sale.
Revenue Maturities ($000's) As of June
30, 2015 Operating Lease Expirations
& Loan Maturities
Year
2015 Current
Lease
Revenue
2015 Current
Interest
Revenue
2015 Lease and
Interest
Revenue
% 2015 $ 2,394 $ - $ 2,394
0.3 % 2016 3,139 - 3,139 0.4 % 2017 13,829 109 13,938 1.9 %
2018 54,828 1,473 56,301 7.8 % 2019 3,040 - 3,040 0.4 % 2020 7,971
- 7,971 1.1 % Note: Based on 2015 contractual revenues.
The following tables present operator revenue mix, census and
coverage data based on information provided by our operators:
Operator Revenue Mix As of March 31, 2015 Medicaid
Medicare /
Insurance
Private / Other Three-months ended March 31,
2015 (1) 51.0 % 39.7 % 9.3 % Three-months ended December 31, 2014
(1) 53.2 % 37.3 % 9.5 % Three-months ended September 30, 2014 (2)
53.9 % 38.4 % 7.7 % Three-months ended June 30, 2014 (2) 53.0 %
39.2 % 7.8 % Three-months ended March 31, 2014 (2) 53.1 % 39.3 %
7.6 % (1) Includes results for Aviv legacy properties.
(2) Excludes results for Aviv legacy
properties.
Operator Census and Coverage
Coverage Data Occupancy(3) Before
Management Fees
After
Management Fees
Twelve-months ended March 31, 2015 (1) 82.3 % 1.8x 1.4x
Twelve-months ended December 31, 2014 (2) 84.5 % 1.8x 1.4x
Twelve-months ended September 30, 2014 (2) 84.3 % 1.8x 1.4x
Twelve-months ended June 30, 2014 (2) 84.2 % 1.8x 1.4x
Twelve-months ended March 31, 2014 (2) 83.7 % 1.8x 1.4x (1)
Includes results for Aviv legacy properties.
(2) Excludes results for Aviv legacy
properties.
(3) Based on available (operating)
beds.
The following table presents a debt maturity schedule as of June
30, 2015:
Debt Maturities ($000’s) Secured Debt
Unsecured Debt Year HUD Mortgages (1) GE Term Loan
Line of Credit (2)(3) Senior Notes
(4)
Sub Notes
(5)
Total Debt 2015 - - - - - - 2016
- - - - - - 2017 - - 300,000 - - 300,000 2018 - - 1,250,000 - -
1,250,000 2019 - 180,000 200,000 - - 380,000 2020 - - - - - -
Thereafter 80,927 - -
2,325,000 20,000 2,425,927 $ 80,927
180,000 $ 1,750,000 $ 2,325,000 $
20,000 $ 4,355,927 (1) Excludes $2.1 million of fair
market valuation (adjustments).
(2) Reflected at 100% borrowing
capacity.
(3) Comprised of a $200 million
acquisition term loan and $100 million Omega OP term loan due 2017,
$1.25 billion revolver (excluding $250 million accordion) due 2018
and a $200 million term loan due 2019.
(4) Excludes net discount of $11.8
million.
(5) Excludes $0.7 million of fair market
valuation (adjustments).
The following table presents investment activity for the
three-and six-month period ended June 30, 2015:
Investment Activity ($000's) Three Months Ended
Six Months Ended June 30, 2015 June 30, 2015 Funding
by Investment Type: $ Amount % $ Amount
% Real Property $ 177,484 90 % $ 183,784 85 %
Construction-in-Progress 9,639 5 % 15,490 7 % Capital Expenditures
8,857 5 % 17,931 8 % Total $
195,980 100 % $ 217,205 100 %
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version on businesswire.com: http://www.businesswire.com/news/home/20150803006339/en/
Omega Healthcare Investors, Inc.Bob Stephenson,
410-427-1700CFO
Omega Healthcare Investors (NYSE:OHI)
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