Omega Announces First Quarter 2013 Financial Results; Adjusted FFO of $0.63 Per Share for the First

Omega Announces First Quarter 2013 Financial Results; Adjusted FFO of $0.63 Per Share for the First Quarter

HUNT VALLEY, Md.--(BUSINESS WIRE)-- Omega Healthcare Investors, Inc. (NYS: OHI) (the "Company" or "Omega") today announced its results of operations for the three- month period ended March 31, 2013. The Company also reported Funds From Operations ("FFO") available to common stockholders for the three-month period ended March 31, 2013 of $70.1 million or $0.62 per common share. The $70.1 million of FFO available to common stockholders for the first quarter of 2013 includes $1.5 million of non-cash stock-based compensation expense and $0.1 million of acquisition related costs. 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"). Normalized or Adjusted FFO was $0.63 per common share for the three-month period ended March 31, 2013. FFO and Adjusted FFO are non-GAAP financial measures. Normalized or 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: acquisitions and stock-based compensation expense. For more information regarding FFO and Adjusted FFO, see the "First Quarter 2013 Results - Funds From Operations" section below.

GAAP NET INCOME


For the three-month period ended March 31, 2013, the Company reported net income available to common stockholders of $38.1 million, or $0.34 per diluted common share, on operating revenues of $101.8 million. This compares to net income available to common stockholders of $26.1 million, or $0.25 per diluted common share, on operating revenues of $84.5 million, for the same period in 2012.

The increase in net income was primarily due to: (i) additional rental income and mortgage interest income associated with approximately $510 million of new investments made throughout 2012 and (ii) a first quarter 2012 $7.1 million decrease in interest refinancing costs associated with the tender and redemption of all of the Company's outstanding $175 million 7% Senior Notes due 2016. These increases to net income were partially offset by increased expenses primarily associated with the 2012 new investments, including: (i) $4.8 million in increased depreciation expense and (ii) $2.7 million in increased interest expense.

FIRST QUARTER 2013 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS

  • In May 2013, the Company completed $25 million of new investments.

  • In April 2013, the Company increased its quarterly common stock dividend to $0.46 per share.

  • In Q1 2013, the Company completed $10 million of capital renovation projects.

  • In Q1 2013, the Company refinanced $59 million of long-term debt.

  • In Q1 2013, the Company established a $250 million Equity Shelf Program for a continuous at-the-market offering of common stock.

  • In Q1 2013, Moody's Investor Service raised the Company's senior unsecured debt rating to Ba1.

FIRST QUARTER 2013 RESULTS

Operating Revenues and Expenses - Operating revenues for the three-month period ended March 31, 2013 were $101.8 million. Operating expenses for the three-month period ended March 31, 2013 totaled $37.3 million and were comprised of $32.0 million of depreciation and amortization expense, $3.7 million of general and administrative expense, $1.5 million of stock-based compensation expense and $0.1 million of expense associated with acquisitions.

Other Income and Expense - Other income and expense for the three-month period ended March 31, 2013 was a net expense of $26.4 million, which was comprised of $25.7 million of interest expense and $0.7 million of amortized deferred financing costs.

Funds From Operations - For the three-month period ended March 31, 2013, reportable FFO available to common stockholders was $70.1 million, or $0.62 per common share on 114 million weighted-average common shares outstanding, compared to $48.2 million, or $0.46 per common share on 104 million weighted-average common shares outstanding, for the same period in 2012.

The $70.1 million of FFO for the three-month period ended March 31, 2013 includes $1.5 million of stock-based compensation expense and $0.1 million of expense associated with December 2012 acquisitions.

The $48.2 million of FFO for the three-month period ended March 31, 2012 includes $7.1 million of interest refinancing costs, $1.5 million of stock-based compensation expense and $0.1 million of expense associated with December 2011 acquisitions.

Adjusted FFO was $71.7 million, or $0.63 per common share, for the three months ended March 31, 2013, compared to $56.9 million, or $0.55 per common share, for the same period in 2012. The Company had 9.5 million additional weighted-average shares for the three months ended March 31, 2013 compared to the same period in 2012. For further information see "Funds From Operations" below.

FINANCING ACTIVITIES

$59 Million HUD Mortgage Debt Refinancing - On March 26, 2013, the Company refinanced approximately $59 million of debt related to 12 mortgage loans guaranteed by the Department of Housing and Urban Development ("HUD"). The 12 HUD mortgage loans had a blended interest rate of 5.55% per annum with maturities in July 2044. The refinanced interest rate is approximately 3.06% per annum with no change in the maturity dates on the loans.

$250 Million Equity Shelf - On March 18, 2013, the Company entered into separate Equity Distribution Agreements (collectively, the "2013 Agreements") with several financial institutions, each as a sales agent and/or principal (collectively, the "Managers") to establish a $250 million Equity Shelf Program. Under the terms of the 2013 Agreements, the Company may sell shares of its common stock, from time to time, through or to the Managers having an aggregate gross sales price of up to $250 million. Sales of the shares will be made by means of ordinary brokers' transactions on the New York Stock Exchange at market prices, or as otherwise agreed with the applicable Manager. The Company will pay each Manager compensation for sales of the shares equal to 2% of the gross sales price per share of shares sold through such Manager.

For the three months ended March 31, 2013, the Company sold 1.5 million shares under the 2013 Agreements, at an average price of $29.41 per share, generating gross proceeds of approximately $42.8 million, before $0.9 million in commissions. Approximately 0.6 million of those shares ($18.0 million of gross proceeds) were sold in March 2013 with settlement dates in April 2013.

Termination of $245 Million Equity Shelf Program - Also on March 18, 2013, the Company terminated its $245 million Equity Shelf Program (the "2012 Agreements").

For the three months ended March 31, 2013, the Company sold approximately 1.0 million shares under the 2012 Agreements at an average price of $28.29 per share, generating gross proceeds of approximately $27.8 million, before $0.6 million in commissions. Since inception of the 2012 Agreements, the Company sold a total of 3.6 million shares of common stock generating total gross proceeds of $91.4 million, before $1.9 million in commissions.

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan- During the three-month period ended March 31, 2013, the Company sold the following shares of its common stock under its Equity Shelf Programs and its Dividend Reinvestment and Common Stock Purchase Plan:

Equity Shelf (At-The-Market) Programs for 2013

(in thousands, except price per share)

Q1

Total

Number of shares

2,440

Average price per share

$

28.95

Gross proceeds

$

70,643

Dividend Reinvestment and Common Stock Purchase Program for 2013

(in thousands, except price per share)

Q1

Total

Number of shares

1,315

Average price per share

$

27.63

Gross proceeds

$

36,343

2013 PORTFOLIO AND RECENT DEVELOPMENTS

$25 Million Mezzanine Loan - On May 2, 2013, the Company invested in a $24.7 million mezzanine loan with a third party. The loan bears interest at 12% per annum and matures in December 2017.

$10 Million of Capital Renovation Projects in Q1 2013 - For the three-month period ending March 31, 2013, the Company invested $10 million under its capital renovation program.

DIVIDENDS

On April 16, 2013,the Company's Board of Directors announced a common stock dividend of $0.46 per share, increasing the quarterly common dividend by $0.01 per share over the prior quarter, to be paid May 15, 2013 to common stockholders of record on April 30, 2013.

2013 ADJUSTED FFO AND ADJUSTED FAD GUIDANCE CONFIRMED

The Company confirmed its 2013 Adjusted FFO available to common stockholders to be between $2.45 and $2.50 per diluted share and its 2013 Adjusted Funds Available For Distribution ("FAD") available to common stockholders to be between $2.20 and $2.25 per diluted share.

The Company's Adjusted FFO and Adjusted FAD guidance for 2013 includes approximately $200 million of new investments (including capital renovation projects); however, it excludes the impact of gains and losses from the sale of assets, additional divestitures, certain revenue and expense items, interest refinancing expense, capital transactions and stock-based compensation expense. A reconciliation of the Adjusted FFO and FAD guidance to the Company's projected GAAP earnings is provided on schedules attached to this press release. The Company may, from time to time, update its publicly announced Adjusted FFO and FAD guidance, but it is not obligated to do so.

The Company's Adjusted FFO and FAD guidance is based on a number of assumptions, which are subject to change and many of which are outside the Company's control. If actual results vary from these assumptions, the Company's expectations may change. Without limiting the generality of the foregoing, the timing and completion of acquisitions, divestitures, capital and financing transactions, and variations in restricted stock amortization expense may cause actual results to vary materially from our current expectations. There can be no assurance that the Company will achieve its projected results.

CONFERENCE CALL

The Company will be conducting a conference call on Wednesday, May 8, 2013, at 10 a.m. Eastern to review the Company's 2013 first quarter results and current developments. Analysts and investors within the United States interested in participating are invited to call (888) 317-6016. The Canadian toll-free dial-in number is (855) 669-9657. All other international participants can use the dial-in number (412) 317-6016. Ask the operator to be connected to the "Omega Healthcare First Quarter 2013 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.

The Company is a real estate investment trust investing in and providing financing to the long-term care industry. At March 31, 2013, the Company owned or held mortgages on 477 skilled nursing facilities, assisted living facilities and other specialty hospitals with approximately 55,150 licensed beds (52,977 available beds) located in 33 states and operated by 46 third-party healthcare operating companies.

This announcement includes forward-looking statements, including without limitation the information under the heading "2013 Adjusted FFO and Adjusted FAD Guidance Confirmed."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 the Company'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 the Company's operators; (iv) the ability of any of the Company's operators in bankruptcy to reject unexpired lease obligations, modify the terms of the Company's mortgages and impede the ability of the Company 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 the Company's credit ratings and the ratings of its debt securities; (vii) competition in the financing of healthcare facilities; (viii) the Company's ability to maintain its status as a real estate investment trust; (ix) the Company's ability to manage, re-leaseor sell any owned and operated facilities; (x) the Company's ability to sell closed or foreclosed assets on a timely basis and on terms that allow the Company to realize the carrying value of these assets; (xi) the effect of economic and market conditions generally, and particularly in the healthcare industry; and (xii) other factors identified in the Company's filings with the Securities and Exchange Commission. Statements regarding future events and developments and the Company's future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements.The Company undertakes no obligation to update any forward-looking statements contained in this announcement.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

March 31,

December 31,

2013

2012

(Unaudited)

ASSETS

Real estate properties

Land and buildings

$

3,046,805

$

3,038,553

Less accumulated depreciation

(612,302

)

(580,373

)

Real estate properties - net

2,434,503

2,458,180

Mortgage notes receivable - net

240,551

238,621

2,675,054

2,696,801

Other investments - net

48,537

47,339

2,723,591

2,744,140

Assets held for sale - net

1,020

1,020

Total investments

2,724,611

2,745,160

Cash and cash equivalents

25,611

1,711

Restricted cash

34,377

36,660

Accounts receivable - net

130,258

125,180

Other assets

89,784

73,294

Total assets

$

3,004,641

$

2,982,005

LIABILITIES AND STOCKHOLDERS' EQUITY

Revolving line of credit

$

200,000

$

258,000

Secured borrowings

365,428

366,538

Unsecured borrowings - net

1,200,266

1,200,394

Accrued expenses and other liabilities

133,193

145,744

Total liabilities

1,898,887

1,970,676

Stockholders' equity:

Common stock $.10 par value authorized - 200,000 shares issued and outstanding 116,153 shares as of March 31, 2013 and 112,393 as of December 31, 2012

11,615

11,239

Common stock - additional paid-in-capital

1,771,374

1,664,855

Cumulative net earnings

792,248

754,128

Cumulative dividends paid

(1,469,483

)

(1,418,893

)

Total stockholders' equity

1,105,754

1,011,329

Total liabilities and stockholders' equity

$

3,004,641

$

2,982,005

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

Three Months Ended

March 31,

2013

2012

Revenue

Rental income

$

93,109

$

75,975

Mortgage interest income

7,346

7,336

Other investment income - net

1,306

1,130

Miscellaneous

-

74

Total operating revenues

101,761

84,515

Expenses

Depreciation and amortization

31,959

27,147

General and administrative

3,745

4,041

Stock-based compensation expense

1,452

1,485

Acquisition costs

134

105

Impairment on real estate properties

-

272

Total operating expenses

37,290

33,050

Income before other income and expense

64,471

51,465

Other income (expense):

Interest income

3

7

Interest expense

(25,672

)

(22,967

)

Interest - amortization of deferred financing costs

(682

)

(629

)

Interest -refinancing costs

-

(7,108

)

Total other expense

(26,351

)

(30,697

)

Income before gain on assets sold

38,120

20,768

Gain on assets sold - net

-

5,316

Net income available to common stockholders

$

38,120

$

26,084

Income per common share available to common stockholders:

Basic:

Net income

$

0.34

$

0.25

Diluted:

Net income

$

0.34

$

0.25

Dividends declared and paid per common share

$

0.45

$

0.41

Weighted-average shares outstanding, basic

112,782

103,754

Weighted-average shares outstanding, diluted

113,522

104,012

OMEGA HEALTHCARE INVESTORS, INC.

FUNDS FROM OPERATIONS

Unaudited

(in thousands, except per share amounts)

Three Months Ended

March 31,

2013

2012

Net income available to common stockholders

$

38,120

$

26,084

Deduct gain from real estate dispositions

(5,316

)

Sub - total

38,120

20,768

Elimination of non-cash items included in net income:

Depreciation and amortization

31,959

27,147

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

272

Funds from operations available to common stockholders

$

70,079

$

48,187

Weighted-average common shares outstanding, basic

112,782

103,754

Restricted stock and PRSUs

714

241

Deferred stock

26

17

Weighted-average common shares outstanding, diluted

113,522

104,012

Funds from operations per share available to common stockholders

$

0.62

$

0.46

Adjusted funds from operations:

Funds from operations available to common stockholders

$

70,079

$

48,187

Add back interest refinancing expense

7,108

Add back acquisition costs

134

105

Add back non-cash stock-based compensation expense

1,452

1,485

Adjusted funds from operations available to common stockholders

$

71,665

$

56,885

This press release includes Funds From Operations, or FFO, which is a non-GAAP financial measure. 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 c