8-K: Current report filing
Published on January 31, 2008
PRESS
RELEASE
OMEGA
ANNOUNCES FOURTH QUARTER 2007 FINANCIAL RESULTS AND
ADJUSTED
FFO OF $0.35 PER SHARE FOR THE FOURTH QUARTER
TIMONIUM,
MARYLAND – January 31, 2008
– Omega Healthcare Investors, Inc. (NYSE:OHI) today announced its results
of operations for the quarter and fiscal year ended December 31,
2007. The Company also reported Funds From Operations (“FFO”)
available to common stockholders for the three and twelve months ended December
31, 2007 of $23.7 million or $0.35 per common share and $93.5 million or $1.42
per common share, respectively. The $23.7 million of FFO available to
common stockholders for the quarter includes $0.5 million of non-cash restricted
stock expense, a $0.2 million reduction in the Company’s non-cash provision for
impairment, a $0.1 million provision for income taxes and $0.1 million of
non-cash consolidation adjustments due to Financial Accounting Standards Board
Interpretation No. 46R, Consolidation of Variable
Interest
Entities (“FIN 46R”). 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 $0.35 per common share for the three months ended December 31, 2007 and
$1.38 for the twelve months ended December 31, 2007. Adjusted FFO is
a non-GAAP financial measure, which excludes the impact of certain non-cash
items (including restricted stock expense, provision for impairments, changes
in
derivative fair values, gains on preferred stock and subordinated note
investments, accretion investment income and provision for uncollectible
accounts receivable), as well as restatement related expenses and provision
for
income taxes. For more information regarding FFO and adjusted FFO,
see “Funds From Operations” section below.
GAAP
NET
INCOME
For
the
three-month period ended December 31, 2007, the Company reported net income
of
$17.3 million, net income available to common stockholders of $14.8 million,
or
$0.22 per diluted common share and operating revenues of $39.6
million. This compares to net income of $13.4 million, net income
available to common stockholders of $10.9 million, or $0.18 per diluted common
share, and operating revenues of $36.1 million for the same period in
2006.
For
the
twelve-month period ended December 31, 2007, the Company reported net income
of
$69.4 million, net income available to common stockholders of $59.5 million,
or
$0.90 per diluted common share and operating revenues of $159.6
million. This compares to net income of $55.7 million, net income
available to common stockholders of $45.8 million, or $0.78 per diluted common
share, and operating revenues of $135.5 million for the same period in
2006.
The
increases in net income, operating revenues and net income available to common
stockholders during the twelve-month period ended December 31, 2007 were due
primarily to new investments completed in late 2006 and early 2007, as well
as,
the impact of an allowance adjustment of $5.0 million, or $0.08 per common
share, with respect to straight-line rent recognition recorded in the first
quarter of 2007.
2007
HIGHLIGHTS AND OTHER
RECENT DEVELOPMENTS
|
·
|
On
January 22, 2008, the Company purchased General Electric Capital
Corporation's $39 million mortgage loan on seven skilled nursing
facilities (“SNFs”) operated by Haven Eldercare, LLC
(“Haven”).
|
|
·
|
On
January 17, 2008, the Company closed on a $5.2 million new investment
yielding 10%.
|
|
·
|
On
January 17, 2008, the Company declared a quarterly common dividend
of
$0.29 per share, an increase of $0.01 per common share compared to
the
prior quarter.
|
|
·
|
On
December 21, 2007, the Company announced that it entered into a closing
agreement with the Internal Revenue Service (“IRS”) resolving the
previously reported related party tenant
issue.
|
|
·
|
On
October 16, 2007, the Company announced the reinstatement of the
optional
cash purchase component of the Company’s Dividend Reinvestment and Common
Stock Purchase Plan (the “Plan”).
|
|
·
|
In
October 2007, the Company declared a quarterly common dividend of
$0.28
per share, an increase of $0.01 per common share compared to the
prior
quarter.
|
FOURTH
QUARTER 2007
RESULTS
Operating
Revenues and Expenses– Operating revenues for the three months ended
December 31, 2007 were $39.6 million. Operating expenses for the
three months ended December 31, 2007 totaled $12.1 million, comprised of $9.3
million of depreciation and amortization expense, $2.5 million of general and
administrative expenses, a non-cash provision for impairment adjustment of
$0.2
million and $0.5 million of restricted stock expense.
Other
Income and
Expense– Other income and expense for the three months ended December 31,
2007 was a net expense of $10.5 million and was primarily comprised of $10.1
million of interest expense and $0.5 million of deferred financing amortization
costs.
Funds
From
Operations– For the three months ended December 31, 2007, reportable FFO
available to common stockholders was $23.7 million, or $0.35 per common share,
compared to $19.2 million, or $0.32 per common share, for the same period in
2006. The $23.7 million of FFO for the quarter ended December 31,
2007 includes a $0.1 million provision for income taxes, a non-cash provision
for impairment adjustment of $0.2 million and $0.5 million of non-cash
restricted stock expense.
The
$19.2
million of FFO for the three months ended December 31, 2006, includes a $3.6
million non-cash gain on preferred stock and subordinated note investments,
$1.2
million of 2006 restatement related expenses, a non-cash $0.8 million provision
for uncollectible accounts receivable, a $0.6 million non-cash decrease in
the
fair value of a derivative, a $0.6 million provision for income taxes, a $0.4
million non-cash provision for impairment, $0.3 million of non-cash restricted
stock expense and $0.1 million in non-cash accretion investment
income.
When
excluding the above mentioned items in 2007 and 2006, adjusted FFO was $24.1
million, or $0.35 per common share for the three months ended December 31,
2007,
compared to $19.4 million, or $0.32 per common share, for the same period in
2006. For further information, see the attached “Funds From
Operations” schedule and notes.
2007
ANNUAL
RESULTS
Operating
Revenues and Expenses– Operating revenues for the twelve months ended
December 31, 2007 were $159.6 million. Operating expenses for the
twelve months ended December 31, 2007 totaled $48.5 million, comprised of $36.0
million of depreciation and amortization expense, $9.7 million of general and
administrative expenses, a non-cash provision for impairment of $1.4 million
and
$1.4 million of restricted stock compensation expense.
Other
Income and
Expense– Other income and expense for the twelve months ended December
31, 2007 was a net expense of $43.8 million and was primarily comprised of
$42.1
million of interest expense and $2.0 million of deferred financing amortization
costs.
Provision
for
Income Taxes– On December 21, 2007, the Company announced that it has
entered into a closing agreement with the IRS resolving the previously reported
related party tenant issues associated with preferred stock issued to Omega
by
Advocat, Inc. in 2000. Based on this closing agreement, the Company
has paid approximately $5.6 million in penalty taxes and interest to the IRS
relating to tax years 2002 through 2006. The Company had previously
accrued the $5.6 million of income tax liabilities as of December 31,
2006.
As
a
result of entering into the closing agreement and the Company’s previously
announced 2006 Advocat restructuring agreement, the Company has been advised
by
tax counsel that it will not receive any non-qualified related party tenant
income from Advocat in future fiscal years. Accordingly, the Company
does not expect to incur tax expense associated with related party tenant income
in periods commencing after January 1, 2007.
Funds
From
Operations– For the twelve months ended December 31, 2007, reportable FFO
available to common stockholders was $93.5 million, or $1.42 per common share,
compared to $76.7 million, or $1.31 per common share, for the same period in
2006. The $93.5 million of FFO for the year includes an adjustment to
the allowance for straight-line revenue of $5.0 million (resulted in an increase
in first quarter 2007 revenue of $5.0 million), $0.3 million of non-cash FIN
46R
consolidation adjustments, $7 thousand reduction in non-cash provision for
income taxes, $1.4 million of non-cash provision for impairments and $1.4
million of non-cash restricted stock compensation expense.
The
$76.7
million of FFO for the twelve months ended December 31, 2006, includes $4.5
million of non-cash restricted stock expense associated with the Company’s
issuance of restricted stock and unit grants to executive officers during 2004,
$2.7 million of non-cash interest expense relating to the write-off of deferred
financing costs associated with the termination of an old credit facility,
$0.8
million of non-cash interest expense associated with the tender offer and
purchase of approximately 20.7% of the Company’s then remaining $100 million
aggregate principal amount of 2007 Notes, a $2.7 million accounting gain on
the
sale of an equity security, a $3.6 million non-cash gain on preferred stock
and
subordinated note investments, a $9.1 million non-cash increase in the fair
value of a derivative, $1.3 million of non-cash accretion investment income,
a
$2.3 million provision for income taxes, $1.2 million of restatement related
expenses, a $0.5 million non-cash provision for impairment and a non-cash $0.9
million provision for uncollectible accounts receivable.
When
excluding the above mentioned non-cash or non-recurring items in 2007 and 2006,
adjusted FFO was $91.0 million, or $1.38 per common share for the twelve months
ended December 31, 2007, compared to $73.1 million, or $1.24 per common share,
for the same period in 2006. For further information, see the
attached “Funds From Operations” schedule and notes.
PORTFOLIO
DEVELOPMENTS
Haven
Eldercare,
LLC – On
January 22, 2008, the Company completed a transaction with General Electric
Capital Corporation to purchase an existing $39 million mortgage due October
2012 on seven Haven SNFs. The Company has an existing $23 million second
mortgage on these seven facilities. The Company now has a $62 million
combined mortgage on the seven facilities. The Company also has a
purchase option on the seven facilities that would allow the Company to acquire
the fee simple interest in the facilities. If the Company exercises
the purchase option, the seven facilities would be combined with an existing
eight facility master lease. The borrowers and guarantors under the
mortgage, and the lessee, sublessees and guarantors in respect of the master
lease are all debtors-in-possession in chapter 11 proceedings being jointly
administered in the United States Bankruptcy Court for the District of
Connecticut, New Haven Division.
Alpha
Health Care
Properties, LLC – On
January 17, 2008, the Company purchased one SNF for $5.2 million from an
unrelated third party and leased the facility to Alpha Health Care Properties,
LLC (“Alpha”), an existing tenant of the Company. The facility was
added to Alpha’s existing master lease and will generate an additional $0.5
million of annual rent.
Litchfield
Investment Company, LLC – On
July 31, 2007, the Company completed a transaction with Litchfield Investment
Company, LLC and its affiliates to purchase five skilled nursing facilities
for
a total investment of approximately $40 million. The facilities total
645 beds and are located in Alabama (1), Georgia (2), Kentucky (1) and Tennessee
(1). The Company also provided a $2.5 million loan in the form of a
subordinated note as part of the transaction that was paid-off during the fourth
quarter. Simultaneously with the closing of the purchase transaction,
the five facilities were combined into an Amended and Restated Master Lease
containing 13 other facilities between the Company and an existing operator,
Home Quality Management. The Amended and Restated Master Lease was
extended until July 31, 2017.
Advocat
– The Company
continuously evaluates the payment history and financial strength of its
operators and has historically established an allowance for straight-line rent
adjustments for operators that do not meet the Company’s internal revenue
requirements. The Company considers factors such as payment history,
the operator’s financial condition as well as current and future anticipated
operating trends when evaluating whether to establish contra revenue
reserves.
The
Company has reviewed Advocat’s financial statements annually and noted that
since 2000 the opinion of Advocat’s external auditors contained a “going
concern” qualification. During the first quarter of 2007, the Company
reviewed Advocat’s 2006 annual report and noted that Advocat’s auditor’s opinion
no longer contained a going concern qualification. In addition, the
Company also reviewed Advocat’s financial statements and noted significant
improvements in its financial condition since 2000. As a result, the
Company determined that it should reverse approximately $5.0 million of
straight-line allowance previously established. The change in
estimate resulted in an additional $0.08 per share of income from continuing
operations and net income for the first quarter of 2007.
Asset
Sales – During
the third quarter of 2007, the Company agreed to restructure a five facility
master lease with one of its existing tenants whereby the Company and tenant
have agreed to sell three facilities and reduce the annual rent on the master
lease by $0.4 million. On November 30, 2007, two of the facilities
were sold for approximately $2.8 million in cash proceeds which generated an
accounting gain of $0.4 million. In addition, the Company has
recorded a $1.4 million provision for impairment on the third facility to reduce
its carrying value to its estimated fair value. The third facility is
currently under contract to be sold with an anticipated first quarter 2008
closing.
On
December 22, 2006, Residential Care VIII, LLC, a subsidiary of American Senior
Communities, LLC, notified the Company of its intent to exercise its option
to
purchase two facilities. The two facilities were classified on the
Company’s December 31, 2006 consolidated balance sheet as assets held for sale
with a net book value of approximately $1.9 million. On January 31,
2007, the Company received gross cash proceeds of approximately $3.6 million
and
recorded an accounting gain of approximately $1.7 million.
In
two
additional separate transactions during the first quarter of 2007, the Company
sold two facilities for their approximate net book value, generating cash
proceeds of approximately $0.8 million.
2007
FINANCING
ACTIVITIES
7.130
Million
Common Stock Offering–
As previously
announced, on April 3, 2007, the Company closed
an underwritten public
offering of 7,130,000 shares of Omega common stock at $16.75 per share, less
underwriting discounts.
The
sale
included 930,000 shares sold in connection with the exercise of an
over-allotment option granted to the underwriters. The Company
received approximately $113 million in net proceeds from the sale of the shares,
after deducting underwriting discounts and before estimated offering
expenses.
Increase
in
Credit Facility –
Pursuant to
Section 2.01 of the Company’s Credit Agreement, dated as of
March 31, 2006, as amended, (the “Credit Agreement”), the Company was permitted
under certain circumstances to increase its available borrowing base under
the
Credit Agreement from $200 million up to an aggregate of $300
million. Effective February 22, 2007, the Company exercised its right
to increase its available borrowing base under the Credit Agreement from $200
million to $255 million and the Company consented to add 18 of its properties
to
the borrowing base assets under the Credit Agreement.
DIVIDENDS
Common
Dividends
– On January 17, 2008, the Company’s Board of Directors announced a
common stock dividend of $0.29 per share, to be paid February 15, 2008 to common
stockholders of record on January 31, 2008. At the date of this
release, the Company had approximately 68.6 million outstanding common
shares.
Series
D
Preferred Dividends – On January 17, 2008, the Company’s Board of
Directors declared its regular quarterly dividend for the Series D preferred
stock, payable February 15, 2008 to preferred stockholders of record on January
31, 2008. Series D preferred stockholders of record on January 31,
2008 will be paid dividends in the approximate amount of $0.52344 per preferred
share, on February 15, 2008. The liquidation preference for the
Company’s Series D preferred stock is $25.00 per share. Regular
quarterly preferred dividends represent dividends for the period November 1,
2007 through January 31, 2008.
Dividend
Reinvestment and Common Stock Purchase Plan – On October
16, 2007, the
Company announced the reinstatement of the optional cash purchase component
of
the Plan, effective immediately for investments beginning November 15,
2007. The Company also announced that the per share purchase discount
for both optional cash purchases and dividend reinvestments was reset to
1%.
2008
ADJUSTED FFO
GUIDANCE
The
Company currently expects its 2008 adjusted FFO to be between $1.41 and $1.43
per diluted share.
The
Company's adjusted FFO guidance for 2008 excludes the future impacts of
acquisitions, gains and losses from the sale of assets, additional divestitures,
certain revenue and expense items, capital transactions and restricted stock
amortization expense. A reconciliation of the adjusted FFO guidance to the
Company's projected GAAP earnings is provided on a schedule attached to this
press release. The Company may, from time to time, update its
publicly announced adjusted FFO guidance, but it is not obligated to do
so.
The
Company's adjusted FFO guidance is based on a number of assumptions, which
are
subject to change and many of which are outside the control of the
Company. If actual results vary from these assumptions, the Company's
expectations may change. There can be no assurance that the Company
will achieve its projected results.
TAX
TREATMENT FOR 2007
DIVIDENDS
Preferred
D
Dividends –The Company has determined that 100% of all dividends on
Series D Preferred Stock in 2007 should be treated for tax purposes as an
ordinary dividend.
Common
Dividends
– On February 15, 2007, May 15, 2007, August 15, 2007 and November 15,
2007, the Company paid
dividends to its common stockholders in the per
share amounts of $0.26, $0.27, $0.27 and $0.28, for stockholders of record
on
January 31, 2007, April 30, 2007, July 31, 2007 and October 31, 2007,
respectively. The
Company has determined that 29.13% of the common dividends paid in 2007 should
be treated for tax purposes as a return of capital, with the balance of 70.87%
treated as an ordinary dividend.
ANNUAL
MEETING
As
previously announced on January 17, 2008, the Company's 2008 Annual Meeting
of
Stockholders will be held on Thursday, May 22, 2008, at 10:00 a.m., local time,
at the Holiday Inn Select, Baltimore-North, 2004 Greenspring Drive, Timonium,
Maryland. Stockholders of record as of the close of business on April 14, 2008
will be entitled to receive notice of and to participate at the 2008 Annual
Meeting of Stockholders.
CONFERENCE
CALL
The
Company will be conducting a conference call on Thursday, January 31, 2008,
at
10 a.m. EST to review the Company’s 2007 fourth quarter and year end results and
current developments. 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 December 31, 2007, the Company
owned or held mortgages on 236 SNFs and assisted living facilities with
approximately 27,247 beds located in 27 states and operated by 28 third-party
healthcare operating companies.
FOR
FURTHER INFORMATION, CONTACT
Bob
Stephenson, CFO at (410) 427-1700
________________________
This
announcement includes forward-looking statements. 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, including without limitation, changes in Medicare
reimbursement; (iii) changes in the financial position of the Company’s
operators; (iv) the ability of 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) competition in the financing
of
healthcare facilities; (vii) the Company’s ability to maintain its status as a
real estate investment trust; and (viii) 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.
OMEGA
HEALTHCARE INVESTORS, INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands)
|
December
31,
|
December
31,
|
|||||||
|
2007
|
2006
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
ASSETS
|
||||||||
|
Real
estate properties
|
||||||||
|
Land
and buildings at
cost
|
$ | 1,274,722 | $ | 1,235,679 | ||||
|
Less
accumulated
depreciation
|
(221,366 | ) | (187,797 | ) | ||||
|
Real
estate properties –
net
|
1,053,356 | 1,047,882 | ||||||
|
Mortgage
notes receivable –
net
|
31,689 | 31,886 | ||||||
| 1,085,045 | 1,079,768 | |||||||
|
Other
investments – net
|
13,683 | 22,078 | ||||||
| 1,098,728 | 1,101,846 | |||||||
|
Assets
held for sale – net
|
2,870 | 4,663 | ||||||
|
Total
investments
|
1,101,598 | 1,106,509 | ||||||
|
Cash
and cash equivalents
|
1,979 | 729 | ||||||
|
Restricted
cash
|
2,104 | 4,117 | ||||||
|
Accounts
receivable – net
|
64,992 | 51,194 | ||||||
|
Other
assets
|
11,614 | 12,821 | ||||||
|
Total
assets
|
$ | 1,182,287 | $ | 1,175,370 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Revolving
line of credit
|
$ | 48,000 | $ | 150,000 | ||||
|
Unsecured
borrowings
|
485,000 | 485,000 | ||||||
|
Discount
on unsecured borrowings – net
|
(286 | ) | (269 | ) | ||||
|
Other
long–term borrowings
|
40,995 | 41,410 | ||||||
|
Accrued
expenses and other liabilities
|
22,378 | 28,037 | ||||||
|
Income
tax liabilities
|
73 | 5,646 | ||||||
|
Operating
liabilities for owned properties
|
— | 92 | ||||||
|
Total
liabilities
|
596,160 | 709,916 | ||||||
|
Stockholders’
equity:
|
||||||||
|
Preferred
stock issued and
outstanding – 4,740 shares Class D with an aggregate liquidation
preference of $118,488
|
118,488 | 118,488 | ||||||
|
Common
stock $.10 par value
authorized – 100,000 shares: Issued and outstanding – 68,114 shares in
2007 and 59,703 shares in 2006
|
6,811 | 5,970 | ||||||
|
Common
stock and additional paid-in-capital
|
825,925 | 694,207 | ||||||
|
Cumulative
net earnings
|
362,140 | 292,766 | ||||||
|
Cumulative
dividends paid
|
(684,170 | ) | (602,910 | ) | ||||
|
Cumulative
dividends – redemption
|
(43,067 | ) | (43,067 | ) | ||||
|
Total
stockholders’
equity
|
586,127 | 465,454 | ||||||
|
Total
liabilities and
stockholders’ equity
|
$ | 1,182,287 | $ | 1,175,370 | ||||
OMEGA
HEALTHCARE INVESTORS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
Unaudited
(in
thousands, except per share amounts)
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Revenues
|
||||||||||||||||
|
Rental
income
|
$ | 37,969 | $ | 34,248 | $ | 152,061 | $ | 126,892 | ||||||||
|
Mortgage
interest
income
|
992 | 1,010 | 3,888 | 4,402 | ||||||||||||
|
Other
investment income –
net
|
485 | 809 | 2,821 | 3,687 | ||||||||||||
|
Miscellaneous
|
148 | 49 | 788 | 532 | ||||||||||||
|
Total
operating
revenues
|
39,594 | 36,116 | 159,558 | 135,513 | ||||||||||||
|
Expenses
|
||||||||||||||||
|
Depreciation
and
amortization
|
9,288 | 8,781 | 36,028 | 32,070 | ||||||||||||
|
General
and
administrative
|
2,461 | 3,120 | 9,661 | 9,227 | ||||||||||||
|
Restricted
stock
expense
|
545 | 293 | 1,425 | 4,517 | ||||||||||||
|
Provision
for impairment on real
estate properties
|
(220 | ) | - | 1,416 | - | |||||||||||
|
Provision
for uncollectible
mortgages, notes and accountsreceivable
|
- | 765 | - | 792 | ||||||||||||
|
Total
operating
expenses
|
12,074 | 12,959 | 48,530 | 46,606 | ||||||||||||
|
Income
before other income and
expense
|
27,520 | 23,157 | 111,028 | 88,907 | ||||||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Interest
and other investment
income
|
123 | 42 | 257 | 413 | ||||||||||||
|
Interest
|
(10,146 | ) | (11,928 | ) | (42,134 | ) | (42,174 | ) | ||||||||
|
Interest
–
amortization
of
deferred financing costs
|
(499 | ) | (439 | ) | (1,958 | ) | (1,952 | ) | ||||||||
|
Interest
–
refinancing
costs
|
- | - | - | (3,485 | ) | |||||||||||
|
Gain
on sale of equity
securities
|
- | - | - | 2,709 | ||||||||||||
|
Gain
on investment
restructuring
|
- | 3,567 | - | 3,567 | ||||||||||||
|
Change
in fair value of
derivatives
|
- | (593 | ) | - | 9,079 | |||||||||||
|
Total
other
expense
|
(10,522 | ) | (9,351 | ) | (43,835 | ) | (31,843 | ) | ||||||||
|
Income
before gain on assets
sold
|
16,998 | 13,806 | 67,193 | 57,064 | ||||||||||||
|
Gain
from assets sold,
net
|
398 | - | 398 | 1,188 | ||||||||||||
|
Income
from continuing operations before income taxes
|
17,396 | 13,806 | 67,591 | 58,252 | ||||||||||||
|
Provision
for income
taxes
|
(125 | ) | (608 | ) | 7 | (2,347 | ) | |||||||||
|
Income
from continuing
operations
|
17,271 | 13,198 | 67,598 | 55,905 | ||||||||||||
|
Discontinued
operations
|
45 | 211 | 1,776 | (208 | ) | |||||||||||
|
Net
income
|
17,316 | 13,409 | 69,374 | 55,697 | ||||||||||||
|
Preferred
stock
dividends
|
(2,481 | ) | (2,481 | ) | (9,923 | ) | (9,923 | ) | ||||||||
|
Net
income available to
common
|
$ | 14,835 | $ | 10,928 | $ | 59,451 | $ | 45,774 | ||||||||
|
Income
per common share:
|
||||||||||||||||
|
Basic:
|
||||||||||||||||
|
Income
from continuing
operations
|
$ | 0.22 | $ | 0.18 | $ | 0.88 | $ | 0.78 | ||||||||
|
Net
income
|
$ | 0.22 | $ | 0.18 | $ | 0.90 | $ | 0.78 | ||||||||
|
Diluted:
|
||||||||||||||||
|
Income
from continuing
operations
|
$ | 0.22 | $ | 0.18 | $ | 0.88 | $ | 0.78 | ||||||||
|
Net
income
|
$ | 0.22 | $ | 0.18 | $ | 0.90 | $ | 0.78 | ||||||||
|
Dividends
declared and paid per common
share
|
$ | 0.28 | $ | 0.25 | $ | 1.08 | $ | 0.96 | ||||||||
|
Weighted-average
shares outstanding,
basic
|
68,148 | 59,980 | 65,858 | 58,651 | ||||||||||||
|
Weighted-average
shares outstanding,
diluted
|
68,200 | 60,109 | 65,886 | 58,745 | ||||||||||||
|
Components
of other comprehensive income:
|
||||||||||||||||
|
Net
income
|
$ | 17,316 | $ | 13,409 | $ | 69,374 | $ | 55,697 | ||||||||
|
Unrealized
gain on common stock
investment
|
- | - | - | 1,580 | ||||||||||||
|
Reclassification
adjustment for gains on common stock investment
|
- | - | - | (1,740 | ) | |||||||||||
|
Reclassification
adjustment for gains on preferred stock investment
|
- | (1,091 | ) | - | (1,091 | ) | ||||||||||
|
Unrealized
loss on preferred stock
investment
|
- | (40 | ) | - | (803 | ) | ||||||||||
|
Total
comprehensive
income
|
$ | 17,316 | $ | 12,278 | $ | 69,374 | $ | 53,643 | ||||||||
OMEGA
HEALTHCARE INVESTORS, INC.
FUNDS
FROM OPERATIONS
Unaudited
(In
thousands, except per share amounts)
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
income available to common stockholders
|
$ | 14,835 | $ | 10,928 | $ | 59,451 | $ | 45,774 | ||||||||
|
Deduct
gain from real estate
dispositions(1)
|
(398 | ) | (547 | ) | (1,994 | ) | (1,354 | ) | ||||||||
|
Sub-total
|
14,437 | 10,381 | 57,457 | 44,420 | ||||||||||||
|
Elimination
of non-cash items
included in net income:
|
||||||||||||||||
|
Depreciation
and
amortization(1)
|
9,288 | 8,831 | 36,056 | 32,263 | ||||||||||||
|
Funds
from operations available to common stockholders
|
$ | 23,725 | $ | 19,212 | $ | 93,513 | $ | 76,683 | ||||||||
|
Weighted-average
common shares outstanding, basic
|
68,148 | 59,980 | 65,858 | 58,651 | ||||||||||||
|
Effect
of restricted stock
awards
|
38 | 106 | 12 | 74 | ||||||||||||
|
Assumed
exercise of stock
options
|
14 | 23 | 16 | 20 | ||||||||||||
|
Weighted-average
common shares outstanding, diluted
|
68,200 | 60,109 | 65,886 | 58,745 | ||||||||||||
|
Fund
from operations per share available to common stockholders
|
$ | 0.35 | $ | 0.32 | $ | 1.42 | $ | 1.31 | ||||||||
|
Adjusted
funds from operations:
|
||||||||||||||||
|
Funds
from operations available
to common stockholders
|
$ | 23,725 | $ | 19,212 | $ | 93,513 | $ | 76,683 | ||||||||
|
Deduct
gain from sale of Sun
common stock
|
— | — | — | (2,709 | ) | |||||||||||
|
Deduct
Advocat straight line
valuation allowance adjustment
|
— | — | (5,040 | ) | — | |||||||||||
|
Deduct/add
non-cash (increase)
decrease in fair value of Advocat derivative
|
— | 593 | — | (9,079 | ) | |||||||||||
|
Deduct
Advocat non-cash
accretion investment income
|
— | (125 | ) | — | (1,280 | ) | ||||||||||
|
Deduct
Advocat non-cash gain on
investment restructuring
|
— | (3,567 | ) | — | (3,567 | ) | ||||||||||
|
Deduct
FIN 46
adjustment
|
(66 | ) | — | (296 | ) | — | ||||||||||
|
Deduct/add
back non-cash
provision for income taxes
|
125 | 608 | (7 | ) | 2,347 | |||||||||||
|
Deduct/add
back non-cash
provision for impairments on real estate properties(1)
|
(220 | ) | 420 | 1,416 | 541 | |||||||||||
|
Add
back non-cash provisions for
uncollectible mortgages, notes and accounts receivable
|
— | 765 | — | 944 | ||||||||||||
|
Add
back non-cash restricted
stock expense
|
545 | 293 | 1,425 | 4,517 | ||||||||||||
|
Add
back one-time non-cash
interest refinancing expense
|
— | — | — | 3,485 | ||||||||||||
|
Add
back restatement related
expenses
|
— | 1,234 | — | 1,234 | ||||||||||||
|
Adjusted
funds from operations available to common stockholders
|
$ | 24,109 | $ | 19,433 | $ | 91,011 | $ | 73,116 | ||||||||
(1)
Includes
amounts
in discontinued operations
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
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. The Company believes that FFO is an important
supplemental measure 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 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.
In
February 2004, NAREIT informed its member companies that it was adopting the
position of the SEC with respect to asset impairment charges and would no longer
recommend that impairment write-downs be excluded from FFO. In the
tables included in this press release, the Company has applied this
interpretation and has not excluded asset impairment charges in calculating
its
FFO. As a result, its FFO may not be comparable to similar measures
reported in previous disclosures. According to NAREIT, there is
inconsistency among NAREIT member companies as to the adoption of this
interpretation of FFO. Therefore, a comparison of the Company’s FFO
results to another company's FFO results may not be meaningful.
The
Company uses FFO as one of several criteria to measure the operating performance
of its business. The Company further believes that by excluding the
effect of depreciation, amortization 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
this
measure to assist the users of its financial statements in analyzing its
performance; however, this is not a measure of financial performance under
GAAP
and should not be considered a measure of liquidity, an alternative to net
income or an indicator 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 less non-cash
stock-based compensation and one-time revenue and expense items. The
Company believes that adjusted FFO provides an enhanced measure of the operating
performance of the Company’s core portfolio as a REIT. The Company's
computation of adjusted FFO is not comparable to the NAREIT definition of FFO
or
to similar measures reported by other REITs, but the Company believes it is
an
appropriate measure for this Company.
The
following table presents a reconciliation of our guidance regarding 2008 FFO
and
Adjusted FFO to net income available to common stockholders:
|
2008
Projected
|
||||||||||||
|
Per
diluted share:
|
||||||||||||
|
Net
income available to common stockholders
|
$ | 0.86 | − | $ | 0.88 | |||||||
|
Adjustments:
|
||||||||||||
|
Depreciation
and
amortization
|
0.52 | − | 0.52 | |||||||||
|
Funds
from operations available to common stockholders
|
$ | 1.38 | − | $ | 1.40 | |||||||
|
Adjustments:
|
||||||||||||
|
Restricted
stock
expense
|
0.03 | − | 0.03 | |||||||||
|
Adjusted
funds from operations available to common stockholders
|
$ | 1.41 | − | $ | 1.43 | |||||||
The
following table summarizes the results of operations of assets included in
discontinued operations during the three and twelve months ended December 31,
2007 and 2006, respectively.
|
Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Revenues
|
||||||||||||||||
|
Rental
income
|
$ | 45 | $ | 140 | $ | 212 | $ | 552 | ||||||||
|
Other
income
|
— | — | — | — | ||||||||||||
|
Subtotal
revenues
|
45 | 140 | 212 | 552 | ||||||||||||
|
Expenses
|
||||||||||||||||
|
Depreciation
and
amortization
|
— | 50 | 28 | 193 | ||||||||||||
|
General
and
administrative
|
— | 6 | 3 | 40 | ||||||||||||
|
Provision
for uncollectible
accounts receivable
|
— | — | — | 152 | ||||||||||||
|
Provision
for
impairment
|
— | 420 | — | 541 | ||||||||||||
|
Subtotal
expenses
|
— | 476 | 31 | 926 | ||||||||||||
|
Gain
(loss) before gain on sale of assets
|
45 | (336 | ) | 181 | (374 | ) | ||||||||||
|
Gain
on assets sold – net
|
— | 547 | 1,595 | 166 | ||||||||||||
|
Discontinued
operations
|
$ | 45 | $ | 211 | $ | 1,776 | $ | (208 | ) | |||||||
The
following tables present selected portfolio information, including operator
and
geographic concentrations, and revenue maturities for the period ending December
31, 2007.
|
Portfolio
Composition ($000's)
|
||||||||||||||||||||
|
Balance
Sheet Data
|
#
of Properties
|
#
Beds
|
Investment
|
%
Investment
|
||||||||||||||||
|
Real
Property(1)(2)
|
227 | 26,127 | $ | 1,296,792 | 98 | % | ||||||||||||||
|
Loans
Receivable(3)
|
9 | 1,120 | 31,689 | 2 | % | |||||||||||||||
| 236 | 27,247 | $ | 1,328,481 | 100 | % | |||||||||||||||
|
Investment
Data
|
#
of Properties
|
#
Beds
|
Investment
|
%
Investment
|
Investment
per Bed
|
|||||||||||||||
|
Skilled
Nursing Facilities (1)(3)
|
228 | 26,661 | $ | 1,274,723 | 96 | % | $ | 48 | ||||||||||||
|
Assisted
Living Facilities
|
6 | 416 | 30,323 | 2 | % | 73 | ||||||||||||||
|
Rehab
Hospitals
|
2 | 170 | 23,435 | 2 | % | 138 | ||||||||||||||
| 236 | 27,247 | $ | 1,328,481 | 100 | % | $ | 49 | |||||||||||||
|
(1)
Includes three held for sale facilities and includes $19.2 million
for
lease inducement.
(2)
Includes 7 buildings worth $61.8 million resulting from a FIN 46
Consolidation.
(3)
Includes $1.3 million of unamortized principal.
|
||||||||||||||||||||
|
Revenue
Composition ($000's)
|
||||||||||||||||
|
Revenue
by Investment Type
|
Three
Months Ended
|
Year
Ended
|
||||||||||||||
|
December
31, 2007
|
December
31, 2007
|
|||||||||||||||
|
Rental
Property (1)
|
$ | 37,969 | 96 | % | $ | 152,061 | 96 | % | ||||||||
|
Mortgage
Notes
|
992 | 3 | % | 3,888 | 2 | % | ||||||||||
|
Other
Investment Income
|
485 | 1 | % | 2,821 | 2 | % | ||||||||||
| $ | 39,446 | 100 | % | $ | 158,770 | 100 | % | |||||||||
|
Revenue
by Facility Type
|
Three
Months Ended
|
Year
Ended
|
||||||||||||||
|
December
31, 2007
|
December
31, 2007
|
|||||||||||||||
|
Assisted
Living Facilities
|
$ | 596 | 2 | % | $ | 2,075 | 1 | % | ||||||||
|
Skilled
Nursing Facilities (1)
|
38,365 | 97 | % | 153,874 | 97 | % | ||||||||||
|
Other
|
485 | 1 | % | 2,821 | 2 | % | ||||||||||
| $ | 39,446 | 100 | % | $ | 158,770 | 100 | % | |||||||||
|
(1)
Revenue includes $0.8 million and $3.2 million reduction for lease
inducements for the three- and twelve-months periods ending December
31,
2007, respectively.
|
||||||||||||||||
|
Operator
Concentration ($000's)
|
||||||||||||
|
Concentration
by Investment
|
#
of Properties
|
Investment
|
%
Investment
|
|||||||||
|
Sun
Healthcare Group, Inc.
|
42 | $ | 233,323 | 18 | % | |||||||
|
Communicare.
|
19 | 196,737 | 15 | % | ||||||||
|
Advocat,
Inc.
|
40 | 144,958 | 11 | % | ||||||||
|
HQM
|
18 | 137,490 | 10 | % | ||||||||
|
Haven
|
15 | 118,186 | 9 | % | ||||||||
|
Guardian
(1)
|
17 | 105,171 | 8 | % | ||||||||
|
Remaining
Operators
|
85 | 392,616 | 29 | % | ||||||||
| 236 | $ | 1,328,481 | 100 | % | ||||||||
|
(1)
Investment amount includes a $19.2 million lease
inducement.
|
||||||||||||
|
Geographic
Concentration ($000's)
|
||||||||||||
|
Concentration
by Region
|
#
of Properties
|
Investment
|
%
Investment
|
|||||||||
|
South
(1)
|
114 | $ | 561,477 | 42 | % | |||||||
|
Midwest
|
51 | 335,417 | 25 | % | ||||||||
|
Northeast
|
37 | 260,104 | 20 | % | ||||||||
|
West
|
34 | 171,483 | 13 | % | ||||||||
| 236 | $ | 1,328,481 | 100 | % | ||||||||
|
Concentration
by State
|
#
of Properties
|
Investment
|
%
Investment
|
|||||||||
|
Ohio
|
37 | $ | 282,604 | 21 | % | |||||||
|
Florida
|
25 | 171,850 | 13 | % | ||||||||
|
Pennsylvania
|
17 | 110,225 | 8 | % | ||||||||
|
Texas
|
21 | 82,457 | 6 | % | ||||||||
|
California
|
15 | 59,718 | 5 | % | ||||||||
|
Remaining
States (1)
|
121 | 621,627 | 47 | % | ||||||||
| 236 | $ | 1,328,481 | 100 | % | ||||||||
|
(1)
Investment amount includes $19.2 million for a lease
inducement.
|
||||||||||||
|
Revenue
Maturities ($000's)
|
|||||||||||||||||
|
Operating
Lease Expirations & Loan Maturities
|
Year
|
Current
Lease Revenue (1)
|
Current
Interest Revenue (1)
|
Lease
and Interest Revenue
|
%
|
||||||||||||
|
2008
|
1,001 | - | 1,001 | 1 | % | ||||||||||||
|
2009
|
- | - | - | 0 | % | ||||||||||||
|
2010
|
11,494 | 1,438 | 12,932 | 8 | % | ||||||||||||
|
2011
|
11,676 | 163 | 11,839 | 8 | % | ||||||||||||
|
2012
|
14,449 | - | 14,449 | 10 | % | ||||||||||||
|
Thereafter
|
109,008 | 2,118 | 111,126 | 73 | % | ||||||||||||
| $ | 147,628 | $ | 3,719 | $ | 151,347 | 100 | % | ||||||||||
|
(1)
Based on 2008 contractual rents and interest (assumes no annual
escalators)
|
|||||||||||||||||
|
Selected
Facility Data
|
|||||||||||||||||
|
TTM
ending 9/30/07
|
Coverage
Data
|
||||||||||||||||
|
%
Payor Mix
|
Before
|
After
|
|||||||||||||||
|
Census
|
Private
|
Medicare
|
Mgmt.
Fees
|
Mgmt.
Fees
|
|||||||||||||
|
All
Healthcare Facilities
|
82.5%
|
11.3 | % | 13.9 | % | 2.2 | x | 1.8 | x | ||||||||
The
following tables present selected financial information, including leverage
and
interest coverage ratios, as well as a debt maturity schedule for the period
ending December 31, 2007.
|
Current
Capitalization ($000's)
|
||||||||
|
Outstanding
Balance
|
%
|
|||||||
|
Borrowings
Under Bank Lines
|
$ | 48,000 | 4 | % | ||||
|
Long-Term
Debt Obligations (1)
|
525,995 | 45 | % | |||||
|
Stockholder's
Equity
|
586,127 | 51 | % | |||||
|
Total
Book Capitalization
|
$ | 1,160,122 | 100.0 | % | ||||
|
(1)
Excludes net discount of $0.3 million on unsecured
borrowings. Includes $39.0 million of additional debt due to required
FIN 46R consolidation.
|
||||||||
|
Leverage
& Performance Ratios
|
||||||||
|
Debt
/ Total Book Cap
|
49.5 | % | ||||||
|
Debt
/ Total Market Cap
|
32.2 | % | ||||||
|
Interest
Coverage:
|
||||||||
|
4th
quarter 2007
|
3.5 | x | ||||||
|
Debt
Maturities ($000's)
|
Secured
Debt
|
||||||||||||||||||||
|
Year
|
Lines
of Credit (1)
|
Haven
FIN-46 Consolidation
|
Other
|
Senior
Notes
|
Total
|
||||||||||||||||
|
2008
|
$ | - | $ | - | $ | 435 | $ | - | $ | 435 | |||||||||||
|
2009
|
- | - | 465 | - | 465 | ||||||||||||||||
|
2010
|
255,000 | - | 495 | - | 255,495 | ||||||||||||||||
|
2011
|
- | - | 290 | - | 290 | ||||||||||||||||
|
Thereafter
|
- | 39,000 | 310 | 485,000 | 524,310 | ||||||||||||||||
| $ | 255,000 | $ | 39,000 | $ | 1,995 | $ | 485,000 | $ | 780,995 | ||||||||||||
|
(1)
Reflected at 100% capacity.
|
|||||||||||||||||||||
The
following table presents investment activity for the three- and twelve-month
periods ending December 31, 2007.
|
Investment
Activity ($000's)
|
||||||||||||||||
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
December
31, 2007
|
December
31, 2007
|
|||||||||||||||
|
$
Amount
|
%
|
$
Amount
|
%
|
|||||||||||||
|
Funding
by Investment Type:
|
||||||||||||||||
|
Real
Property
|
$ | - | - | $ | 39,500 | 86 | % | |||||||||
|
Mortgages
|
- | - | 345 | 1 | % | |||||||||||
|
Other
|
2,014 | 100 | % | 6,187 | 13 | % | ||||||||||
|
Total
|
$ | 2,014 | 100 | % | $ | 46,032 | 100 | % | ||||||||