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Omega Reports Third Quarter 2024 Results and Recent Developments

Completed $834 Million in New Investments Year-to-Date

Increased Full Year Adjusted FFO Guidance

Omega Healthcare Investors, Inc. (NYSE: OHI) (the “Company” or “Omega”) announced today its results for the quarter ended September 30, 2024.

THIRD QUARTER 2024 AND RECENT HIGHLIGHTS

  • Net income for the quarter of $115 million, or $0.42 per common share, compared to $94 million, or $0.37 per common share, for Q3 2023.
  • Nareit Funds From Operations (“Nareit FFO”) for the quarter of $196 million, or $0.71 per common share, on 276 million weighted-average common shares outstanding, compared to $161 million, or $0.63 per common share, on 256 million weighted-average common shares outstanding, for Q3 2023.
  • Adjusted Funds From Operations (“Adjusted FFO” or “AFFO”) for the quarter of $203 million, or $0.74 per common share, compared to $182 million, or $0.71 per common share, for Q3 2023.
  • Funds Available for Distribution (“FAD”) for the quarter of $192 million, or $0.70 per common share, compared to FAD of $174 million, or $0.68 per common share, for Q3 2023.
  • Completed $440 million in Q3 new investments consisting of $390 million in real estate acquisitions, which includes the assumption of a $243 million mortgage loan, and $50 million in real estate loans.
  • Issued 14 million common shares in Q3 for gross proceeds of $530 million.
  • Completed $119 million in new investments in Q4 2024 to date.

Nareit FFO, AFFO and FAD are supplemental non-GAAP financial measures that the Company believes are useful in evaluating the performance of real estate investment trusts (“REITs”). Reconciliations and further information regarding these non-GAAP measures are provided at the end of this press release.

CEO COMMENTS

Taylor Pickett, Omega’s Chief Executive Officer, stated, “We are pleased with our third quarter results, as we continued to grow FAD per share, while also meaningfully de-levering the balance sheet. We have accretively invested approximately $834 million year-to-date and the pipeline continues to be strong. As a result, we are again increasing our 2024 AFFO guidance to be between $2.84 and $2.86 per share from our previous guidance of between $2.78 and $2.84 per share.”

THIRD QUARTER 2024 RESULTS

Revenues – Revenues for the quarter ended September 30, 2024 totaled $276.0 million, an increase of $34.0 million over the same period in 2023. The increase primarily resulted from (i) revenue from new investments completed throughout 2023 and 2024 and (ii) the timing and impact of operator restructurings and transitions. The increase was partially offset by a decrease in revenue from asset sales completed throughout 2023 and 2024.

Expenses – Expenses for the quarter ended September 30, 2024 totaled $163.3 million, a decrease of $31.2 million over the same period in 2023. The decrease primarily resulted from a (i) decrease in impairment on real estate properties, (ii) recovery in provision for credit losses, (iii) decrease in depreciation and amortization expense, and (iv) decrease in interest expense, partially offset by an increase in acquisition, merger and transition related costs.

Other Income and Expense – Other (expense) income for the quarter ended September 30, 2024 totaled ($1.4) million, a decrease of $50.9 million over the same period in 2023. The decrease primarily resulted from (i) a decrease in gain on assets sold and (ii) an increase in other expense – net.

Net Income – Net income for the quarter ended September 30, 2024 totaled $114.9 million, an increase of $21.0 million over the same period in 2023. The net increase primarily resulted from the aforementioned (i) $34.0 million increase in total revenue and (ii) $31.2 million decrease in total expenses, and an $8.2 million increase in income from unconsolidated joint ventures, partially offset by the aforementioned $50.9 million decrease in other income and expense and a $1.6 million increase in income tax expense.

2024 THIRD QUARTER PORTFOLIO AND RECENT ACTIVITY

Operator Updates:

LaVie – As previously disclosed, LaVie Care Centers, LLC (“LaVie”) filed for Chapter 11 bankruptcy protection in June 2024. The Company committed $10 million of debtor-in-possession (“DIP”) financing to LaVie in order to support sufficient liquidity to effectively operate its facilities during bankruptcy, with $4.5 million being drawn in June. No additional draws were made by LaVie on the loan during the third quarter. LaVie paid full monthly contractual rent of $3.0 million from June through October 2024.

Maplewood – In July 2024, Omega reached an agreement with the estate of the deceased principal and CEO of Maplewood Senior Living (“Maplewood”) to transition control of Maplewood, including assumption of Omega’s lease and loan agreements, to key members of the existing Maplewood management team. The agreement was approved by the probate court in August 2024 and is subject to further regulatory approvals. In the third quarter of 2024, Maplewood paid $12.1 million in rent (compared to $11.8 million in the second quarter). In October 2024, Maplewood paid $4.05 million in rent.

Guardian – In April 2024, the Company transitioned its remaining six Guardian facilities to a new operator. Since the transition, Omega has recognized quarterly contractual rent of $2.8 million in the second quarter and $2.9 million in the third quarter. In October 2024, Omega received $1.0 million in contractual rent from the new operator.

New Investments:

The following table presents investment activity for the three and nine months ended September 30, 2024:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

Investment Activity ($000’s)

 

September 30, 2024

 

September 30, 2024

 

 

$ Amount

 

%

 

$ Amount

 

%

Real property (1)

 

$

389,545

 

83.4

%

 

$

517,541

 

65.0

%

Real estate loans receivable

 

 

50,381

 

10.8

%

 

 

197,518

 

24.8

%

Total real property and loan investments

 

 

439,926

 

94.2

%

 

 

715,059

 

89.8

%

Construction-in-progress

 

 

15,266

 

3.3

%

 

 

55,955

 

7.0

%

Capital expenditures

 

 

11,952

 

2.5

%

 

 

25,072

 

3.2

%

Total capital investments

 

 

27,218

 

5.8

%

 

 

81,027

 

10.2

%

Total

 

$

467,144

 

100.0

%

 

$

796,086

 

100.0

%

_______________

(1)

Real property investments include the assumption of a $243.2 million mortgage loan with a fair value of $264.0 million, in connection with the acquisition of the remaining 51% interest in the Cindat JV.

$25 Million in Real Estate Acquisitions – In three separate third quarter transactions, the Company acquired three facilities for aggregate consideration of $24.6 million and leased them to two existing operators and one new operator. The investments have a combined initial annual cash yield of 10.0% with annual escalators of 2.5%.

$365 Million Real Estate Acquisition – On July 24, 2024, the Company acquired the remaining 51% equity interest in the unconsolidated Cindat joint venture (“Cindat JV”) for total cash consideration of $100.9 million and the assumption of a $243.2 million mortgage loan with an estimated fair value of $264.0 million. The mortgage loan bears interest at SONIA plus an applicable margin of 5.38% with a 10.38% interest rate ceiling and can be repaid without a prepayment penalty beginning November 2025. The Company’s 49% ownership interest in the unconsolidated Cindat JV was $97.0 million on the date of the acquisition. With the purchase of the remaining 51% equity and assumption of the mortgage loan, the Company’s total investment in the 63 U.K. facilities is approximately $461.9 million. The 63 facilities acquired are leased to two operators with annual contractual rent of $43.6 million with minimum escalators between 1.0% to 2.0%. The consolidated financial statements for the third quarter reflect the consolidation of the Cindat JV as of the acquisition date with its results from operations included for the partial period from the acquisition date through the end of the quarter.

$50 Million in Real Estate Loans – In three separate third quarter transactions, the Company funded $50.4 million in mortgage and other real estate loans. The loans have a weighted-average interest rate of 10.2%.

$119 Million in Q4 2024 Investments – In October 2024, the Company closed on $119.3 million in new investments, comprised of:

$80 Million in Real Estate Loans – In October 2024, we funded $79.6 million in real estate loans to one existing and two new operators. The loans have a weighted average interest rate of 10.8% and maturity dates ranging from October 2025 through September 2029.

$40 Million Real Estate Acquisition – In October 2024, the Company acquired three facilities in the U.K for $39.7 million and leased the facilities to an existing operator. The investment has an initial annual cash yield of 10.0% with an annual escalator of 2.5%.

Through October 30, 2024, the Company has completed $834.3 million in new investments in 2024, excluding investments in construction-in-progress and capital expenditures.

Asset Sales and Impairments:

$24 Million in Asset Sales – In the third quarter of 2024, the Company sold six facilities for $23.9 million in cash, recognizing a loss of $0.2 million.

Impairments – During the third quarter of 2024, the Company recorded an $8.6 million net impairment charge to reduce the net book value of five facilities to their estimated fair value.

Assets Held for Sale – As of September 30, 2024, the Company had 15 facilities classified as assets held for sale, totaling $76.0 million in net book value.

OPERATOR COVERAGE DATA

The following tables present operator revenue mix, census and coverage data based on information provided by the Company’s operators for the indicated periods. The Company has not independently verified this information, and is providing this data for informational purposes only.

 

 

 

 

 

 

 

 

Operator Revenue Mix (1)

 

 

 

Medicare /

Private /

 

 

Medicaid

Insurance

Other

Three-months ended June 30, 2024

 

53.2

%

28.9

%

17.9

%

Three-months ended March 31, 2024

 

52.7

%

30.0

%

17.3

%

Three-months ended December 31, 2023

 

55.3

%

28.0

%

16.7

%

Three-months ended September 30, 2023

 

55.5

%

28.0

%

16.5

%

Three-months ended June 30, 2023

 

54.0

%

30.0

%

16.0

%

_______________

(1)

Excludes all facilities considered non-core and does not include federal stimulus revenue. For non-core definition, see Third Quarter 2024 Financial Supplemental posted in the “Quarterly Supplements” section of Omega’s website.

 

 

 

 

 

 

 

 

 

 

Coverage Data

 

 

 

Before

After

 

 

Occupancy (2)

Management

Management

Operator Census and Coverage (1)

 

 

Fees (3)

Fees (4)

Twelve-months ended June 30, 2024

 

80.9

%

1.85x

1.49x

Twelve-months ended March 31, 2024

 

80.2

%

1.78x

1.42x

Twelve-months ended December 31, 2023

 

79.6

%

1.69x

1.33x

Twelve-months ended September 30, 2023

 

79.1

%

1.63x

1.28x

Twelve-months ended June 30, 2023

 

78.6

%

1.50x

1.15x

_______________

(1)

Excludes facilities considered non-core. For information regarding non-core facilities, see the most recent Quarterly Supplement posted on the Company’s website.

(2)

Based on available (operating) beds.

(3)

Represents EBITDARM of our operators, defined as earnings before interest, taxes, depreciation, amortization, Rent costs and management fees for the applicable period, divided by the total Rent payable to the Company by its operators during such period. “Rent” refers to the total monthly contractual rent and mortgage interest due under the Company’s lease and mortgage agreements over the applicable period.

(4)

Represents EBITDAR of our operators, defined as earnings before interest, taxes, depreciation, amortization, and Rent (as defined in footnote 3) expense for the applicable period, divided by the total Rent payable to the Company by its operators during such period. Assumes a management fee of 4%.

FINANCING ACTIVITIES

Dividend Reinvestment and Common Stock Purchase Plan and ATM Program – The following is a summary of the 2024 quarterly Common Stock Purchase Plan and ATM Program through September 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment and Common Stock Purchase Plan for 2024

 

(in thousands, except price per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

Q3

 

Total

Number of shares

 

29

 

 

413

 

 

2,575

 

 

3,017

Average price per share

$

30.44

 

$

31.52

 

$

35.13

 

$

34.59

Gross proceeds

$

882

 

$

13,015

 

$

90,469

 

$

104,366

 

 

 

 

 

 

 

 

 

 

 

 

 

ATM Program for 2024

 

(in thousands, except price per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

Q3

 

Total

Number of shares

 

1,041

 

 

7,212

 

 

11,630

 

 

19,883

Average price per share

$

31.02

 

$

32.16

 

$

37.81

 

$

35.40

Gross proceeds

$

32,295

 

$

231,920

 

$

439,685

 

$

703,900

BALANCE SHEET AND LIQUIDITY

As of September 30, 2024, the Company had $4.9 billion in outstanding indebtedness with a weighted-average annual interest rate of 4.6%. The Company’s indebtedness consisted of an aggregate principal amount of $4.2 billion of senior unsecured notes, $478.5 million of unsecured term loans and $250.2 million of secured debt. As of September 30, 2024, total cash and cash equivalents were $342.4 million, and the Company had $1.45 billion of undrawn capacity under its unsecured revolving credit facility.

DIVIDENDS

On October 25, 2024, the Board of Directors declared a quarterly cash dividend of $0.67 per share, to be paid November 15, 2024, to common stockholders of record as of the close of business on November 4, 2024.

2024 AFFO GUIDANCE INCREASED

The Company increased its expected 2024 Adjusted FFO range to be between $2.84 to $2.86 per diluted share from the previous range of $2.78 to $2.84 per diluted share.

The Company’s revised Adjusted FFO guidance for 2024 includes the annual impact of $834 million in new investments completed through October 2024, $31 million in asset sales related to a portion of the $76 million in facilities classified as held for sale, fourth quarter G&A expense of approximately $11.5 million to $13.5 million, no material changes in market interest rates, and no additional operators are placed on a cash-basis for revenue recognition. The revised guidance assumes the $119 million in new investments completed in October are funded with equity issuances. The guidance excludes any additional acquisitions and asset sales, certain revenue and expense items, interest refinancing expenses, acquisition costs, capital market activity and additional provisions for credit losses, if any.

The Company's guidance is based on several assumptions including those noted above, 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 of collection of rental obligations from operators on a cash basis, the timing and completion of acquisitions, divestitures, restructurings and capital and financing transactions may cause actual results to vary materially from our current expectations. There can be no assurance that the Company will achieve its projected results. The Company may, from time to time, update its publicly announced Adjusted FFO guidance, but it is not obligated to do so.

The Company does not provide a reconciliation for its Adjusted FFO guidance to GAAP net income because it is unable to determine meaningful or accurate estimates of reconciling items without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amounts of various items that would impact future net income. This includes, but is not limited to, changes in the provision for credit losses, real estate impairments, acquisition, merger and transition related costs, straight-line write-offs, gain/loss on assets sold, etc. In particular, the Company is unable to predict with reasonable certainty the amount of change in the provision for credit losses in future periods, which is often a significant reconciling adjustment.

ADDITIONAL INFORMATION

Additional information regarding the Company can be found in its Third Quarter 2024 Financial Supplemental posted under “Financial Info” in the Investors section of Omega’s website. The information contained on, or that may be accessed through, Omega’s website, including the information contained in the aforementioned supplemental, is not incorporated by any reference into, and is not part of, this document.

CONFERENCE CALL

The Company will be conducting a conference call on Thursday, October 31, 2024, at 10 a.m. Eastern time to review the Company’s 2024 third quarter results and current developments. Analysts and investors within the U.S. interested in participating are invited to call (877) 407-9124. The international toll-free dial-in number is (201) 689-8584. Ask the operator to be connected to the “Omega Healthcare’s Third Quarter 2024 Earnings Call.”

To listen to the conference call via webcast, log on to www.omegahealthcare.com and click the “Omega Healthcare Investors, Inc. 3Q Earnings Call” hyper-link on the “Investors” page of Omega’s website. Webcast replays of the call will be available on Omega’s website for a minimum of two weeks following the call. Additionally, a copy of the earnings release will be available in the “Financial Info” section and “SEC Filings” section on the “Investors” page of Omega’s website.

Omega is a REIT that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure. The assets span all regions within the U.S., as well as in the U.K.

Forward-Looking Statements and Cautionary Language

This press release includes forward-looking statements within the meaning of the federal securities laws. 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, facility transitions, growth opportunities, expected lease income, continued qualification as a REIT, plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from Omega's expectations.

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, occupancy levels and quality of care, including management of infectious diseases; (ii) the timing of our operators’ recovery from staffing shortages, increased costs and decreased occupancy arising from the Novel coronavirus (“COVID-19”) pandemic, and the sufficiency of previous government support and current reimbursement rates to offset such costs and the conditions related thereto; (iii) additional regulatory and other changes in the healthcare sector, including federal minimum staffing requirements for skilled nursing facilities (“SNFs”) that may further exacerbate labor and occupancy challenges for 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 Omega to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor’s obligations, and other costs and uncertainties associated with operator bankruptcies; (v) changes in tax laws and regulations affecting real estate investment trusts (“REITs”), including as the result of any policy changes driven by the current focus on capital providers to the healthcare industry; (vi) Omega’s ability to re-lease, otherwise transition or sell underperforming assets or assets held for sale on a timely basis and on terms that allow Omega to realize the carrying value of these assets or to redeploy the proceeds therefrom on favorable terms, including due to the potential impact of changes in the SNF and assisted living facility (“ALF”) markets or local real estate conditions; (vii) the availability and cost of capital to Omega; (viii) changes in Omega’s credit ratings and the ratings of its debt securities; (ix) competition in the financing of healthcare facilities; (x) competition in the long-term healthcare industry and shifts in the perception of various types of long-term care facilities, including SNFs and ALFs; (xi) changes in the financial position of Omega’s operators; (xii) the effect of economic and market conditions generally, and particularly in the healthcare industry; (xiii) changes in interest rates and the impact of inflation; (xiv) the timing, amount and yield of any additional investments; (xv) Omega’s ability to maintain its status as a REIT; (xvi) the effect of other factors affecting our business or the businesses of Omega’s operators that are beyond Omega’s or operators’ control, including natural disasters, other health crises or pandemics and governmental action, particularly in the healthcare industry, and (xvii) 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.

We caution you that the foregoing list of important factors may not contain all the material factors that are important to you. Accordingly, readers should not place undue reliance on those statements. All forward-looking statements are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2024

 

2023

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Real estate assets

 

 

 

 

 

 

Buildings and improvements

 

$

7,266,469

 

 

$

6,879,034

 

Land

 

 

972,602

 

 

 

867,486

 

Furniture and equipment

 

 

503,499

 

 

 

467,393

 

Construction in progress

 

 

201,360

 

 

 

138,410

 

Total real estate assets

 

 

8,943,930

 

 

 

8,352,323

 

Less accumulated depreciation

 

 

(2,652,372

)

 

 

(2,464,227

)

Real estate assets – net

 

 

6,291,558

 

 

 

5,888,096

 

Investments in direct financing leases – net

 

 

9,450

 

 

 

8,716

 

Real estate loans receivable – net

 

 

1,323,469

 

 

 

1,212,162

 

Investments in unconsolidated joint ventures

 

 

92,598

 

 

 

188,409

 

Assets held for sale

 

 

75,973

 

 

 

81,546

 

Total real estate investments

 

 

7,793,048

 

 

 

7,378,929

 

Non-real estate loans receivable – net

 

 

335,717

 

 

 

275,615

 

Total investments

 

 

8,128,765

 

 

 

7,654,544

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

342,444

 

 

 

442,810

 

Restricted cash

 

 

17,866

 

 

 

1,920

 

Contractual receivables – net

 

 

10,337

 

 

 

11,888

 

Other receivables and lease inducements

 

 

241,399

 

 

 

214,657

 

Goodwill

 

 

644,588

 

 

 

643,897

 

Other assets

 

 

186,472

 

 

 

147,686

 

Total assets

 

$

9,571,871

 

 

$

9,117,402

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Revolving credit facility

 

$

 

 

$

20,397

 

Secured borrowings

 

 

265,239

 

 

 

61,963

 

Senior notes and other unsecured borrowings – net

 

 

4,592,963

 

 

 

4,984,956

 

Accrued expenses and other liabilities

 

 

313,370

 

 

 

287,795

 

Total liabilities

 

 

5,171,572

 

 

 

5,355,111

 

 

 

 

 

 

 

 

Preferred stock $1.00 par value authorized – 20,000 shares, issued and outstanding – none

 

 

 

 

 

 

Common stock $0.10 par value authorized – 350,000 shares, issued and outstanding – 268,231 shares as of September 30, 2024 and 245,282 shares as of December 31, 2023

 

 

26,823

 

 

 

24,528

 

Additional paid-in capital

 

 

7,480,051

 

 

 

6,671,198

 

Cumulative net earnings

 

 

3,973,566

 

 

 

3,680,581

 

Cumulative dividends paid

 

 

(7,335,238

)

 

 

(6,831,061

)

Accumulated other comprehensive income

 

 

62,738

 

 

 

29,338

 

Total stockholders’ equity

 

 

4,207,940

 

 

 

3,574,584

 

Noncontrolling interest

 

 

192,359

 

 

 

187,707

 

Total equity

 

 

4,400,299

 

 

 

3,762,291

 

Total liabilities and equity

 

$

9,571,871

 

 

$

9,117,402

 

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2024

 

2023

 

 

2024

 

2023

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

227,773

 

 

$

206,159

 

 

 

$

641,379

 

 

$

606,781

 

Real estate tax and ground lease income

 

 

3,712

 

 

 

4,043

 

 

 

 

11,342

 

 

 

12,107

 

Real estate loans interest income

 

 

33,621

 

 

 

24,898

 

 

 

 

93,318

 

 

 

72,274

 

Non-real estate loans interest income

 

 

6,320

 

 

 

5,725

 

 

 

 

20,501

 

 

 

16,001

 

Miscellaneous income

 

 

4,602

 

 

 

1,207

 

 

 

 

5,532

 

 

 

3,258

 

Total revenues

 

 

276,028

 

 

 

242,032

 

 

 

 

772,072

 

 

 

710,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

77,245

 

 

 

80,798

 

 

 

 

226,036

 

 

 

244,008

 

General and administrative

 

 

12,165

 

 

 

11,031

 

 

 

 

36,412

 

 

 

35,299

 

Real estate tax and ground lease expense

 

 

4,079

 

 

 

4,392

 

 

 

 

12,645

 

 

 

13,180

 

Stock-based compensation expense

 

 

9,083

 

 

 

8,756

 

 

 

 

27,498

 

 

 

26,306

 

Acquisition, merger and transition related costs

 

 

6,437

 

 

 

121

 

 

 

 

10,820

 

 

 

1,183

 

Impairment on real estate properties

 

 

8,620

 

 

 

27,890

 

 

 

 

22,094

 

 

 

87,992

 

(Recovery) provision for credit losses

 

 

(9,061

)

 

 

2,733

 

 

 

 

(14,763

)

 

 

11,643

 

Interest expense

 

 

52,777

 

 

 

55,290

 

 

 

 

157,525

 

 

 

166,108

 

Interest – amortization of deferred financing costs

 

 

1,913

 

 

 

3,488

 

 

 

 

8,951

 

 

 

9,992

 

Total expenses

 

 

163,258

 

 

 

194,499

 

 

 

 

487,218

 

 

 

595,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income – net

 

 

(1,044

)

 

 

5,402

 

 

 

 

7,595

 

 

 

9,151

 

Loss on debt extinguishment

 

 

(137

)

 

 

 

 

 

 

(1,633

)

 

 

(6

)

(Loss) gain on assets sold – net

 

 

(238

)

 

 

44,076

 

 

 

 

11,282

 

 

 

69,956

 

Total other (expense) income

 

 

(1,419

)

 

 

49,478

 

 

 

 

17,244

 

 

 

79,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense and income (loss) from unconsolidated joint ventures

 

 

111,351

 

 

 

97,011

 

 

 

 

302,098

 

 

 

193,811

 

Income tax expense

 

 

(3,316

)

 

 

(1,758

)

 

 

 

(7,877

)

 

 

(2,092

)

Income (loss) from unconsolidated joint ventures

 

 

6,879

 

 

 

(1,345

)

 

 

 

7,118

 

 

 

555

 

Net income

 

 

114,914

 

 

 

93,908

 

 

 

 

301,339

 

 

 

192,274

 

Net income attributable to noncontrolling interest

 

 

(3,152

)

 

 

(2,527

)

 

 

 

(8,354

)

 

 

(5,095

)

Net income available to common stockholders

 

$

111,762

 

 

$

91,381

 

 

 

$

292,985

 

 

$

187,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share available to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

0.43

 

 

$

0.37

 

 

 

$

1.16

 

 

$

0.78

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

0.42

 

 

$

0.37

 

 

 

$

1.14

 

 

$

0.78

 

Dividends declared per common share

 

$

0.67

 

 

$

0.67

 

 

 

$

2.01

 

 

$

2.01

 

OMEGA HEALTHCARE INVESTORS, INC.

Nareit FFO, Adjusted FFO and FAD Reconciliation

Unaudited

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2024

 

2023

 

2024

 

2023

Net income (1)

 

$

114,914

 

 

$

93,908

 

 

$

301,339

 

 

$

192,274

 

Add back loss (deduct gain) from real estate dispositions

 

 

238

 

 

 

(44,076

)

 

 

(11,282

)

 

 

(69,956

)

Deduct gain from real estate dispositions of unconsolidated joint ventures

 

 

(6,260

)

 

 

 

 

 

(6,260

)

 

 

 

Sub-total

 

 

108,892

 

 

 

49,832

 

 

 

283,797

 

 

 

122,318

 

Elimination of non-cash items included in net income:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

77,245

 

 

 

80,798

 

 

 

226,036

 

 

 

244,008

 

Depreciation - unconsolidated joint ventures

 

 

1,317

 

 

 

2,514

 

 

 

6,384

 

 

 

7,941

 

Add back provision for impairments on real estate properties

 

 

8,620

 

 

 

27,890

 

 

 

22,094

 

 

 

87,992

 

Nareit funds from operations (“Nareit FFO”)

 

$

196,074

 

 

$

161,034

 

 

$

538,311

 

 

$

462,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

262,720

 

 

 

245,033

 

 

 

252,719

 

 

 

238,740

 

Restricted stock and PRSUs

 

 

5,088

 

 

 

3,825

 

 

 

4,476

 

 

 

2,701

 

Omega OP Units

 

 

7,749

 

 

 

7,097

 

 

 

7,590

 

 

 

6,974

 

Weighted-average common shares outstanding, diluted

 

 

275,557

 

 

 

255,955

 

 

 

264,785

 

 

 

248,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nareit funds from operations available per share

 

$

0.71

 

 

$

0.63

 

 

$

2.03

 

 

$

1.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to calculate adjusted funds from operations

 

 

 

 

 

 

 

 

 

 

 

 

Nareit FFO

 

$

196,074

 

 

$

161,034

 

 

$

538,311

 

 

$

462,259

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

9,083

 

 

 

8,756

 

 

 

27,498

 

 

 

26,306

 

Acquisition, merger and transition related costs

 

 

6,437

 

 

 

121

 

 

 

10,820

 

 

 

1,183

 

Non-recurring expense

 

 

3,084

 

 

 

 

 

 

3,316

 

 

 

1,893

 

Uncollectible accounts receivable (2)

 

 

1,136

 

 

 

7,232

 

 

 

1,136

 

 

 

20,633

 

Non-recognized cash interest

 

 

307

 

 

 

1,753

 

 

 

914

 

 

 

6,171

 

Loss on debt extinguishment

 

 

137

 

 

 

 

 

 

1,633

 

 

 

6

 

Unconsolidated JV related non-recurring loss

 

 

 

 

 

1,834

 

 

 

 

 

 

1,656

 

Deduct:

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash (recovery) provision for credit losses

 

 

(7,879

)

 

 

3,916

 

 

 

(11,228

)

 

 

17,884

 

Non-recurring revenue

 

 

(5,305

)

 

 

(2,466

)

 

 

(8,243

)

 

 

(12,781

)

Adjusted funds from operations (“AFFO”) (1)(3)

 

$

203,074

 

 

$

182,180

 

 

$

564,157

 

 

$

525,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to calculate funds available for distribution

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash expense(4)

 

$

3,333

 

 

$

2,459

 

 

$

9,280

 

 

$

6,905

 

Capitalized interest

 

 

(1,933

)

 

 

(1,117

)

 

 

(5,209

)

 

 

(3,016

)

Non-cash revenue

 

 

(12,092

)

 

 

(9,889

)

 

 

(31,307

)

 

 

(35,608

)

Funds available for distribution (“FAD”) (1)(3)

 

$

192,382

 

 

$

173,633

 

 

$

536,921

 

 

$

493,491

 

_______________

(1)

The three and nine months ended September 30, 2024 include the application of $1.1 million and $1.7 million, respectively, of security deposits (letters of credit and cash deposits) in revenue. The three and nine months ended September 30, 2023 include the application of $5.9 million and $11.4 million, respectively, of security deposits (letters of credit and cash deposits) in revenue.

(2)

The nine months ended September 30, 2023 includes a $12.5 million lease inducement write-off recorded as a reduction to rental income related to the Maplewood option termination fee. All other amounts represent straight-line accounts receivable write-offs also recorded as a reduction to rental income.

(3)

Adjusted funds from operations per share and funds available for distribution per share can be calculated using weighted-average common shares outstanding, diluted, as shown above.

(4)

For the three and nine months ended September 30, 2024, Non-cash expense is not adjusted to include $1.9 million of amortization related to the above market loan assumed as part of the Cindat JV acquisition.

Nareit Funds From Operations (“Nareit FFO”), Adjusted FFO and Funds Available for Distribution (“FAD”) are non-GAAP financial measures. As used in this press release, GAAP refers to generally accepted accounting principles in the United States of America. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

The Company calculates and reports Nareit FFO in accordance with the definition and interpretive guidelines issued by the National Association of Real Estate Investment Trusts (“Nareit”), and consequently, Nareit FFO is defined as net income (computed in accordance with GAAP), adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairments on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures and changes in the fair value of warrants. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. Revenue recognized based on the application of security deposits and letters of credit or based on the ability to offset against other financial instruments is included within Nareit FFO. The Company believes that Nareit FFO, Adjusted FFO and FAD are important supplemental measures of its operating performance. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time, while real estate values instead have historically risen or fallen with market conditions. The term funds from operations was designed by the real estate industry to address this issue. Funds from operations described herein is not necessarily comparable to funds from operations of other real estate investment trusts, or REITs, that do not use the same definition or implementation guidelines or interpret the standards differently from the Company.

Adjusted FFO is calculated as Nareit FFO excluding the impact of non-cash stock-based compensation and certain revenue and expense items (e.g., acquisition, merger and transition related costs, write-off of straight-line accounts receivable, recoveries and provisions for credit losses (excluding certain cash recoveries on impaired loans), cash interest received but not included in revenue, non-recognized cash interest, severance, legal reserve expenses, etc.). FAD is calculated as Adjusted FFO less non-cash expense, such as the amortization of deferred financing costs, and non-cash revenue, such as straight-line rent. FAD includes the non-cash amortization of premiums associated with the fair value of debt assumed in acquisitions. The Company believes these measures provide an enhanced measure of the operating performance of the Company’s core portfolio as a REIT. The Company’s computation of Adjusted FFO and FAD may not be comparable to the Nareit definition of funds from operations or to similar measures reported by other REITs, but the Company believes that they are appropriate measures for this Company.

The Company uses these non-GAAP measures among the criteria to measure the operating performance of its business. The Company also uses FAD among the performance metrics for performance-based compensation of officers. The Company further believes that by excluding the effect of depreciation, amortization, impairments on real estate assets and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, funds from operations can facilitate comparisons of operating performance between periods. The Company offers these measures to assist the users of its financial statements in analyzing its operating performance. These non-GAAP measures are not measures of financial performance under GAAP and should not be considered as measures of liquidity or cash flow, alternatives to net income or indicators of any other performance measure determined in accordance with GAAP. Investors and potential investors in the Company’s securities should not rely on these non-GAAP measures as substitutes for any GAAP measure, including net income.

Contacts

Andrew Dorsey, VP, Corporate Strategy & Investor Relations

or

David Griffin, Director, Corporate Strategy & Investor Relations at (410) 427-1700

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