Omega Reports Third Quarter 2020 Results
Omega Healthcare Investors reported a net loss of $93.8 million for Q3 2020, equating to $0.40 per share, against revenues of $119.2 million. NAREIT FFO stood at $15.1 million ($0.06 per share), while Adjusted FFO was $191.8 million ($0.82 per share). Q3 revenue was affected by a $143.3 million write-down in non-cash revenue. However, the company collected over 99% of contractual rents and maintained a dividend of $0.67 per share. Going forward, Omega issued $700 million in Senior Notes to enhance its liquidity.
- NAREIT FFO of $15.1 million, showing a positive cash flow.
- Adjusted FFO increased to $191.8 million, maintaining strong operational performance.
- Over 99% rental collection rate during Q3.
- Declaring a quarterly dividend of $0.67 per share.
- Reported a net loss of $93.8 million for the quarter.
- Revenue decreased significantly from $233.2 million in Q3 2019 to $119.2 million in Q3 2020.
- $143.3 million write-off of non-cash revenue impacting overall earnings.
- Provisions for credit losses of $32.1 million.
HUNT VALLEY, Md.--(BUSINESS WIRE)--Omega Healthcare Investors, Inc. (NYSE:OHI) (the “Company” or “Omega”) today announced its results for the quarter ended September 30, 2020. The Company reported a net loss for the quarter of (
Bob Stephenson, Omega’s Chief Financial Officer, stated, “Our Q3 revenue was consistent with our Q2 revenue before adjusting for the previously announced
NAREIT FFO, AFFO and FAD are supplemental non-GAAP financial measures that we believe are useful in evaluating the performance of real estate investment trusts. For more information regarding these non-GAAP measures, see the “Funds From Operations” schedule below and for the revenue reconciliation, the Company’s website at www.omegahealthcare.com.
CEO COMMENTS
Taylor Pickett, Omega’s Chief Executive Officer, stated, “The third quarter was a positive one for the company, with strong third quarter AFFO and FAD, as well as continued excellent rent collections and further improvement in our dividend payout ratio. Our operators continue to perform admirably, protecting residents while quickly flexing their operations in the face of an unprecedented change in both their occupancy and cost structure. This is the first quarter in which our operators’ financial coverage metrics reflect the full impact of COVID-19. The coverage disclosed in the supplemental information on our website includes the benefit of CARES Act support to many of our operators. However, even without this support, average core portfolio EBITDAR coverage for the second quarter of 2020 would still be slightly above one times contractual rents.”
Mr. Pickett continued, “We reiterate that the timely and significant government support provided to the industry throughout the pandemic has been critical. This support has saved lives, allowing operators to fund increased personal protective equipment and labor costs, to protect and care for this particularly vulnerable segment of our society. The efforts of both federal and state governments have highlighted their understanding of the vital role skilled nursing facilities play within the healthcare continuum. We are hopeful that this support will remain forthcoming as the industry continues to battle the impacts of COVID-19.”
Mr. Pickett concluded, “We would once again like to highlight the remarkable efforts of our operators and their heroic employees, who risk their own health and that of their families to bravely protect and care for their residents, and we thank them wholeheartedly for their endeavors. This industry has faced challenging periods in the past and has persevered. We are confident that the industry will come through this as well, and we will continue to support our operators in their efforts.”
2020 RECENT DEVELOPMENTS AND THIRD QUARTER HIGHLIGHTS
In Q4 2020, the Company…
-
issued
$700 million aggregate principal amount of3.375% Senior Notes due 2031. -
declared a
$0.67 per share quarterly common stock dividend. -
anticipate collecting over
99% of contractual rent and mortgage payments for the month of October (when excluding Daybreak, which is transitioning its portfolio pursuant to a forbearance agreement).
In Q3 2020, the Company…
-
collected over
99% of third quarter contractual rent and mortgage payments(when excluding Daybreak). -
sold 6 facilities and a land parcel for
$61 million in cash, recognizing a loss of$0.7 million . -
invested
$22 million in capital renovation and construction-in-progress projects. - revised its revenue recognition accounting treatment related to operators with going concern disclosures.
-
paid a
$0.67 per share quarterly common stock dividend.
In Q2 2020, the Company…
-
collected over
99% of second quarter contractual rent and mortgage payments(when excluding Daybreak). -
sold 7 facilities for
$38 million in cash, generating$13 million in gains. -
completed
$50 million of new investments. -
invested
$31 million in capital renovation and construction-in-progress projects. -
repaid
$300 million in credit facility borrowings. -
paid a
$0.67 per share quarterly common stock dividend.
In Q1 2020, the Company…
- suspended its Dividend Reinvestment and Stock Purchase Plan.
-
sold six facilities for
$18 million in cash proceeds generating$2 million in gains. -
completed
$19 million of new investments. -
invested
$39 million in capital renovation and construction-in-progress projects. -
borrowed
$300 million on credit facility for liquidity. -
paid a
$0.67 per share quarterly common stock dividend.
NET INCOME
For the quarter ended September 30, 2020, the Company reported a net loss of (
For the nine months ended September 30, 2020, the Company reported net income of
The year-to-date decrease in net income was primarily due to (i) a
THIRD QUARTER 2020 RESULTS
Operating Revenues – Revenues for the quarter ended September 30, 2020 totaled
Revenue Recognition Accounting Treatment for Operators with Going Concern Disclosures – As announced on September 24, 2020, the Company revised its method of accounting for lease-related revenues of operators that have informed the Company of substantial doubt regarding their ability to continue as a going concern. Starting with the quarter ending September 30, 2020, the Company began recording revenue for such operators on a cash-basis accounting method rather than a straight-line accounting method. The Company, after consulting with its independent auditors, determined that such disclosures required this change in revenue recognition treatment.
As a result of the accounting treatment change, for the three-month period ended September 30, 2020, the Company recorded a reduction in revenue related to the write-down of primarily straight-line receivables and lease inducements of approximately
Operating Expenses – Expenses for the quarter ended September 30, 2020 totaled
Other Income and Expense – Other income and expense for the quarter ended September 30, 2020 was a net expense of
Funds From Operations – For the quarter ended September 30, 2020, NAREIT FFO was
The
The
Adjusted FFO was
2020 THIRD QUARTER PORTFOLIO AND RECENT ACTIVITY
Q3 Portfolio Activity:
Asset Sales and Impairments:
Impairments and Assets Held for Sale – During the third quarter of 2020, the Company recorded a net impairment charge of
As of September 30, 2020, the Company had 13 properties classified as assets held for sale, totaling approximately
FINANCING ACTIVITIES
Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan – On March 23, 2020, the Company suspended its Dividend Reinvestment and Common Stock Purchase Plan until further notice.
|
|
|
Equity Shelf (At-the-Market) Program for 2020 |
|||||||||
|
|
|
(in thousands, except price per share) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Year To Date |
||||
Number of shares |
|
|
49 |
|
|
- |
|
|
- |
|
|
49 |
Average price per share |
|
$ |
41.05 |
|
$ |
- |
|
$ |
- |
|
$ |
41.05 |
Gross proceeds |
|
$ |
2,000 |
|
$ |
- |
|
$ |
- |
|
$ |
2,000 |
|
|
|
Dividend Reinvestment and Common Stock Purchase Plan for 2020 |
|||||||||
|
|
|
(in thousands, except price per share) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Year To Date |
||||
Number of shares |
|
|
90 |
|
|
- |
|
|
- |
|
|
90 |
Average price per share |
|
$ |
41.80 |
|
$ |
- |
|
$ |
- |
|
$ |
41.80 |
Gross proceeds |
|
$ |
3,747 |
|
$ |
- |
|
$ |
- |
|
$ |
3,747 |
Post Q3 Financing Activity:
BALANCE SHEET AND LIQUIDITY
As of September 30, 2020, the Company had
CFO COMMENTS
Bob Stephenson, Omega’s Chief Financial Officer, commented, “On September 24, we announced our decision to no longer record lease-related revenue on a straight-line basis for operators that have recently reported a substantial doubt regarding their ability to continue as a going concern impacted our reportable revenue and earnings. Lease accounting rules require the write-down of previously recorded straight-line receivables to be recorded against revenue. Our revenue for Q3 was
Mr. Stephenson continued, “In October, we continued to improve our balance sheet with a
DIVIDENDS
On October 22, 2020, the Board of Directors declared a common stock dividend of
2020 GUIDANCE
Given the uncertainty related to the COVID-19 pandemic, its impact on the financial performance of the Company’s operators and the extent of future necessary government support to the operators, 2020 earnings guidance was previously withdrawn.
CONFERENCE CALL
The Company will be conducting a conference call on Friday, October 30, 2020 at 10 a.m. Eastern time to review the Company’s 2020 third quarter results and current developments. Analysts and investors within the United States interested in participating are invited to call (877) 511-2891. The Canadian toll-free dial-in number is (855) 669-9657. All other international participants may use the dial-in number (412) 902-4140. Ask the operator to be connected to the “Omega Healthcare’s Third Quarter 2020 Earnings Call.”
To listen to the conference call via webcast, log on to www.omegahealthcare.com and click the “earnings call” icon on the Company’s home page. Webcast replays of the call will be available on the Company’s website for two weeks following the call.
* * * * * *
Omega is a real estate investment trust 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 US, as well as in the UK.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding Omega’s or its tenants', operators', borrowers' or managers' expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, 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 and occupancy levels; (ii) the impact of novel coronavirus (“COVID-19”) on our business and the business of our operators, including without limitation, the extent and duration of the COVID-19 pandemic, increased costs experienced by operators of SNFs and assisted living facilities (“ALFs”) in connection therewith, and the extent to which continued government support may be available to operators to offset such costs and the conditions related thereto; (iii) 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; (iv) Omega’s ability to re-lease, otherwise transition or sell underperforming assets on a timely basis and on terms that allow Omega to realize the carrying value of these assets; (v) the availability and cost of capital to us; (vi) changes in Omega’s credit ratings and the ratings of its debt securities; (vii) competition in the financing of healthcare facilities; (viii) competition in the long-term healthcare industry and shifts in the perception of various types of long-term care facilities, including SNFs and ALFs; (ix) additional regulatory and other changes in the healthcare sector; (x) changes in the financial position of our operators; (xi) the effect of economic and market conditions generally, and particularly in the healthcare industry; (xii) changes in interest rates; (xiii) the timing, amount and yield of any additional investments; (xiv) changes in tax laws and regulations affecting real estate investment trusts (“REITs”); (xv) the potential impact of changes in the SNF and ALF market or local real estate conditions on the Company’s ability to dispose of assets held for sale for the anticipated proceeds or on a timely basis, or to redeploy the proceeds therefrom on favorable terms; (xvi) Omega’s ability to maintain its status as a REIT; (xvii) the effect of other factors affecting our business or the businesses of our operators that are beyond our or their control, including natural disasters, other health crises or pandemics and governmental action; particularly in the healthcare industry, and (xviii) other factors identified in Omega’s filings with the SEC. 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, |
||||
|
|
2020 |
|
2019 |
||||
|
|
(Unaudited) |
|
|
|
|||
ASSETS |
|
|
|
|
|
|
||
Real estate properties |
|
|
|
|
|
|
||
Real estate investments |
|
$ |
8,779,962 |
|
|
$ |
8,985,994 |
|
Less accumulated depreciation |
|
|
(1,974,038 |
) |
|
|
(1,787,425 |
) |
Real estate investments – net |
|
|
6,805,924 |
|
|
|
7,198,569 |
|
Investments in direct financing leases – net |
|
|
10,858 |
|
|
|
11,488 |
|
Mortgage notes receivable – net |
|
|
892,539 |
|
|
|
773,563 |
|
|
|
|
7,709,321 |
|
|
|
7,983,620 |
|
Other investments – net |
|
|
464,503 |
|
|
|
419,228 |
|
Investments in unconsolidated joint ventures |
|
|
196,214 |
|
|
|
199,884 |
|
Assets held for sale – net |
|
|
35,921 |
|
|
|
4,922 |
|
Total investments |
|
|
8,405,959 |
|
|
|
8,607,654 |
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
35,951 |
|
|
|
24,117 |
|
Restricted cash |
|
|
4,164 |
|
|
|
9,263 |
|
Contractual receivables – net |
|
|
10,757 |
|
|
|
27,122 |
|
Other receivables and lease inducements |
|
|
226,413 |
|
|
|
381,091 |
|
Goodwill |
|
|
644,084 |
|
|
|
644,415 |
|
Other assets |
|
|
71,261 |
|
|
|
102,462 |
|
Total assets |
|
$ |
9,398,589 |
|
|
$ |
9,796,124 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
Revolving line of credit |
|
$ |
170,667 |
|
|
$ |
125,000 |
|
Term loans – net |
|
|
802,334 |
|
|
|
804,738 |
|
Secured borrowings |
|
|
371,351 |
|
|
|
389,680 |
|
Senior notes and other unsecured borrowings – net |
|
|
3,828,609 |
|
|
|
3,816,722 |
|
Accrued expenses and other liabilities |
|
|
277,596 |
|
|
|
312,040 |
|
Deferred income taxes |
|
|
9,618 |
|
|
|
11,350 |
|
Total liabilities |
|
|
5,460,175 |
|
|
|
5,459,530 |
|
|
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
Common stock $.10 par value authorized – 350,000 shares, issued and outstanding – 226,980 shares as of September 30, 2020 and 226,631 as of December 31, 2019 |
|
|
22,698 |
|
|
|
22,663 |
|
Common stock – additional paid-in capital |
|
|
6,001,092 |
|
|
|
5,992,733 |
|
Cumulative net earnings |
|
|
2,533,339 |
|
|
|
2,463,436 |
|
Cumulative dividends paid |
|
|
(4,763,468 |
) |
|
|
(4,303,546 |
) |
Accumulated other comprehensive loss |
|
|
(49,101 |
) |
|
|
(39,858 |
) |
Total stockholders’ equity |
|
|
3,744,560 |
|
|
|
4,135,428 |
|
Noncontrolling interest |
|
|
193,854 |
|
|
|
201,166 |
|
Total equity |
|
|
3,938,414 |
|
|
|
4,336,594 |
|
Total liabilities and equity |
|
$ |
9,398,589 |
|
|
$ |
9,796,124 |
|
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, |
||||||||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||||||
Operating revenues |
|
|
|
|
|
|
|
|
||||||||
Rental income |
$ |
81,207 |
|
$ |
198,977 |
|
$ |
516,735 |
|
$ |
578,993 |
|
||||
Real estate tax and ground lease income |
|
2,019 |
|
|
3,493 |
|
|
9,523 |
|
|
10,471 |
|
||||
Income from direct financing leases |
|
258 |
|
|
258 |
|
|
775 |
|
|
777 |
|
||||
Mortgage interest income |
|
24,013 |
|
|
19,796 |
|
|
65,378 |
|
|
56,762 |
|
||||
Other investment income |
|
11,286 |
|
|
9,989 |
|
|
32,870 |
|
|
33,036 |
|
||||
Miscellaneous income |
|
394 |
|
|
682 |
|
|
3,315 |
|
|
2,123 |
|
||||
Total operating revenues |
|
119,177 |
|
|
233,195 |
|
|
628,596 |
|
|
682,162 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
81,072 |
|
|
76,696 |
|
|
247,301 |
|
|
221,185 |
|
||||
General and administrative |
|
9,328 |
|
|
10,499 |
|
|
29,238 |
|
|
31,873 |
|
||||
Real estate tax and ground lease expense |
|
2,489 |
|
|
4,263 |
|
|
10,534 |
|
|
12,699 |
|
||||
Stock-based compensation |
|
5,122 |
|
|
2,921 |
|
|
14,380 |
|
|
11,031 |
|
||||
Acquisition and merger related costs |
|
36 |
|
|
887 |
|
|
62 |
|
|
5,072 |
|
||||
Impairment on real estate properties |
|
28,105 |
|
|
3,836 |
|
|
43,732 |
|
|
9,545 |
|
||||
(Recovery) impairment on direct financing leases |
|
(324 |
) |
|
— |
|
|
(1,076 |
) |
|
7,700 |
|
||||
Provision for credit losses |
|
32,076 |
|
|
— |
|
|
33,577 |
|
|
— |
|
||||
Total operating expenses |
|
157,904 |
|
|
99,102 |
|
|
377,748 |
|
|
299,105 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other operating (loss) income |
|
|
|
|
|
|
|
|
||||||||
(Loss) gain on assets sold – net |
|
(749 |
) |
|
53,067 |
|
|
13,932 |
|
|
52,803 |
|
||||
Operating (loss) income |
|
(39,476 |
) |
|
187,160 |
|
|
264,780 |
|
|
435,860 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
||||||||
Interest income and other – net |
|
(82 |
) |
|
(25 |
) |
|
(675 |
) |
|
121 |
|
||||
Interest expense |
|
(51,800 |
) |
|
(49,878 |
) |
|
(157,332 |
) |
|
(146,358 |
) |
||||
Interest – amortization of deferred financing costs |
|
(2,462 |
) |
|
(2,277 |
) |
|
(7,384 |
) |
|
(6,753 |
) |
||||
Interest - refinancing costs |
|
(896 |
) |
|
— |
|
|
(896 |
) |
|
— |
|
||||
Realized gain (loss) on foreign exchange |
|
19 |
|
|
23 |
|
|
(50 |
) |
|
(146 |
) |
||||
Total other expense |
|
(55,221 |
) |
|
(52,157 |
) |
|
(166,337 |
) |
|
(153,136 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) Income before income tax expense and income from unconsolidated joint ventures |
|
(94,697 |
) |
|
135,003 |
|
|
98,443 |
|
|
282,724 |
|
||||
Income tax expense |
|
(763 |
) |
|
(483 |
) |
|
(2,626 |
) |
|
(1,951 |
) |
||||
Income from unconsolidated joint ventures |
|
1,692 |
|
|
8,428 |
|
|
4,654 |
|
|
10,028 |
|
||||
Net (loss) income |
|
(93,768 |
) |
|
142,948 |
|
|
100,471 |
|
|
290,801 |
|
||||
Net loss (income) attributable to noncontrolling interest |
|
2,477 |
|
|
(4,208 |
) |
|
(2,540 |
) |
|
(9,218 |
) |
||||
Net (loss) income available to common stockholders |
$ |
(91,291 |
) |
$ |
138,740 |
|
$ |
97,931 |
|
$ |
281,583 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share available to common stockholders: |
|
|
|
|
|
|
|
|
||||||||
Basic: |
|
|
|
|
|
|
|
|
||||||||
Net (loss) income available to common stockholders |
$ |
(0.40 |
) |
$ |
0.64 |
|
$ |
0.43 |
|
$ |
1.33 |
|
||||
Diluted: |
|
|
|
|
|
|
|
|
||||||||
Net (loss) income |
$ |
(0.40 |
) |
$ |
0.63 |
|
$ |
0.43 |
|
$ |
1.32 |
|
||||
Dividends declared per common share |
$ |
0.67 |
|
$ |
0.66 |
|
$ |
2.01 |
|
$ |
1.98 |
|
||||
OMEGA HEALTHCARE INVESTORS, INC. |
||||||||||||||||
FUNDS FROM OPERATIONS |
||||||||||||||||
Unaudited |
||||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
(93,768 |
) |
|
$ |
142,948 |
|
|
$ |
100,471 |
|
|
$ |
290,801 |
|
Add back loss (deduct gain) from real estate dispositions |
|
|
749 |
|
|
|
(53,067 |
) |
|
|
(13,932 |
) |
|
|
(52,803 |
) |
Deduct gain from real estate dispositions of unconsolidated joint ventures |
|
|
(4,483 |
) |
|
|
(9,345 |
) |
|
|
(6,438 |
) |
|
|
(9,345 |
) |
Sub-total |
|
|
(97,502 |
) |
|
|
80,536 |
|
|
|
80,101 |
|
|
|
228,653 |
|
Elimination of non-cash items included in net income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
81,072 |
|
|
|
76,696 |
|
|
|
247,301 |
|
|
|
221,185 |
|
Depreciation - unconsolidated joint ventures |
|
|
3,379 |
|
|
|
1,841 |
|
|
|
10,561 |
|
|
|
4,888 |
|
Add back non-cash provision for impairments on real estate properties |
|
|
28,105 |
|
|
|
3,836 |
|
|
|
43,732 |
|
|
|
9,545 |
|
Add back unrealized loss on warrants |
|
|
87 |
|
|
|
184 |
|
|
|
927 |
|
|
|
170 |
|
NAREIT funds from operations (“NAREIT FFO”) |
|
$ |
15,141 |
|
|
$ |
163,093 |
|
|
$ |
382,622 |
|
|
$ |
464,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding, basic |
|
|
227,507 |
|
|
|
217,818 |
|
|
|
227,393 |
|
|
|
211,315 |
|
Restricted stock and PRSUs |
|
|
904 |
|
|
|
1,754 |
|
|
|
1,065 |
|
|
|
1,678 |
|
Net forward share contract |
|
|
— |
|
|
|
319 |
|
|
|
— |
|
|
|
106 |
|
Omega OP Units |
|
|
6,168 |
|
|
|
6,622 |
|
|
|
6,078 |
|
|
|
7,072 |
|
Weighted-average common shares outstanding, diluted |
|
|
234,579 |
|
|
|
226,513 |
|
|
|
234,536 |
|
|
|
220,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NAREIT funds from operations available per share |
|
$ |
0.06 |
|
|
$ |
0.72 |
|
|
$ |
1.63 |
|
|
$ |
2.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments to calculate adjusted funds from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NAREIT FFO |
|
$ |
15,141 |
|
|
$ |
163,093 |
|
|
$ |
382,622 |
|
|
$ |
464,441 |
|
Add back |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Uncollectible accounts receivable (1) |
|
|
143,296 |
|
|
|
3,011 |
|
|
|
144,501 |
|
|
|
10,970 |
|
Provision for credit losses |
|
|
32,076 |
|
|
|
— |
|
|
|
33,577 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
5,122 |
|
|
|
2,921 |
|
|
|
14,380 |
|
|
|
11,031 |
|
Interest refinancing expense |
|
|
896 |
|
|
|
— |
|
|
|
896 |
|
|
|
— |
|
Severance |
|
|
853 |
|
|
|
— |
|
|
|
853 |
|
|
|
— |
|
Acquisition costs |
|
|
36 |
|
|
|
887 |
|
|
|
62 |
|
|
|
5,072 |
|
Restructuring costs |
|
|
— |
|
|
|
622 |
|
|
|
— |
|
|
|
1,662 |
|
Non-recurring lease termination payment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,118 |
|
Deduct |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-recurring revenue |
|
|
(8,113 |
) |
|
|
— |
|
|
|
(11,941 |
) |
|
|
(972 |
) |
(Recovery) impairment for direct financing leases |
|
|
(324 |
) |
|
|
— |
|
|
|
(1,076 |
) |
|
|
7,700 |
|
Add back unconsolidated JV related |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Uncollectible accounts receivable |
|
|
1,584 |
|
|
|
— |
|
|
|
1,584 |
|
|
|
— |
|
Interest refinancing expense |
|
|
1,227 |
|
|
|
2,014 |
|
|
|
2,425 |
|
|
|
2,014 |
|
Adjusted funds from operations (“AFFO”) |
|
$ |
191,794 |
|
|
$ |
172,548 |
|
|
$ |
567,883 |
|
|
$ |
503,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments to calculate funds available for distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash interest expense |
|
$ |
2,440 |
|
|
$ |
2,253 |
|
|
$ |
7,316 |
|
|
$ |
6,679 |
|
Capitalized interest |
|
|
(2,608 |
) |
|
|
(3,281 |
) |
|
|
(9,708 |
) |
|
|
(10,535 |
) |
Non-cash revenues |
|
|
(8,288 |
) |
|
|
(14,956 |
) |
|
|
(28,786 |
) |
|
|
(46,765 |
) |
Funds available for distribution (“FAD”) |
|
$ |
183,338 |
|
|
$ |
156,564 |
|
|
$ |
536,705 |
|
|
$ |
452,415 |
|
| ______________________ | ||||||||||||||||
| (1) Straight-line accounts receivable write-off recorded as a reduction to Rental income. | ||||||||||||||||
NAREIT Funds From Operations (“NAREIT FFO”), Adjusted FFO and Funds Available for Distribution (“FAD”) are non-GAAP financial measures. For purposes of the Securities and Exchange Commission’s Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that exclude 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 income statement, balance sheet or statement of cash flows (or equivalent statements) of the company, or include 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 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. 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 and merger related costs, provisions for uncollectible accounts, provisions for current expected credit losses, etc.). FAD is calculated as Adjusted FFO less non-cash interest expense and non-cash revenue, such as straight-line rent. The Company believes these measures provide an enhanced measure of the operating performance of the Company’s core portfolio as a REIT. 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 and between other REITs. The Company offers these measures to assist the users of its financial statements in analyzing its operating performance and not as measures of liquidity or cash flow. These non-GAAP measures are not measures of financial performance under GAAP and should not be considered as measures of liquidity, alternatives to net income or indicators of any other performance measure determined in accordance with GAAP. Investors and potential investors in the Company’s securities should not rely on these non-GAAP measures as substitutes for any GAAP measure, including net income.
The following tables present selected portfolio information, including operator and geographic concentrations, and lease and loan maturities:
|
|
As of September 30, 2020 |
|
As of September 30, 2020 |
||||||||
|
|
|
|
Total |
|
|
|
# of |
|
# of |
||
Balance Sheet Data |
|
Total # of |
|
Investment |
|
% of |
|
Operating |
|
Operating |
||
|
|
Properties |
|
( |
|
Investment |
|
Properties (2) |
|
Beds (2) |
||
Real estate investments (1) |
|
899 |
|
$ |
8,790,820 |
|
91 |
% |
|
900 |
|
90,145 |
Mortgage notes receivable |
|
64 |
|
|
892,539 |
|
9 |
% |
|
57 |
|
6,173 |
|
|
963 |
|
$ |
9,683,359 |
|
100 |
% |
|
957 |
|
96,318 |
Assets held for sale |
|
13 |
|
|
35,921 |
|
|
|
|
|
|
|
Total investments |
|
976 |
|
$ |
9,719,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
# of |
# of |
Investment |
|||||||
Investment Data |
|
Total # of |
Investment |
% of |
|
Operating |
Operating |
per Bed |
|||||||
|
|
Properties |
( |
Investment |
|
Properties (2) |
Beds (2) |
( |
|||||||
SNFs/Transitional care |
|
833 |
|
$ |
8,060,204 |
|
83 |
% |
|
829 |
|
88,288 |
|
$ |
91 |
Senior housing (3) |
|
130 |
|
|
1,623,155 |
|
17 |
% |
|
128 |
|
8,030 |
|
$ |
202 |
|
|
963 |
|
$ |
9,683,359 |
|
100 |
% |
|
957 |
|
96,318 |
|
$ |
101 |
Assets held for sale |
|
13 |
|
|
35,921 |
|
|
|
|
|
|
|
|
|
|
Total investments |
|
976 |
|
$ |
9,719,280 |
|
|
|
|
|
|
|
|
|
|
| ______________________ | |||||||||||||||
(1) Includes one asset under a direct financing lease totaling
(2) Excludes facilities which are non-operating, closed and/or not currently providing patient services.
(3) Includes ALFs, memory care and independent living facilities. |
|||||||||||||||
Revenue Composition (
Revenue by Investment Type |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
September 30, 2020 |
|
September 30, 2020 |
||||||||
Rental property (1) |
|
$ |
81,465 |
|
68 |
% |
|
$ |
517,510 |
|
82 |
% |
Real estate tax and ground lease income |
|
|
2,019 |
|
2 |
% |
|
|
9,523 |
|
2 |
% |
Mortgage notes |
|
|
24,013 |
|
20 |
% |
|
|
65,378 |
|
10 |
% |
Other investment income and miscellaneous income - net |
|
|
11,680 |
|
10 |
% |
|
|
36,185 |
|
6 |
% |
|
|
$ |
119,177 |
|
100 |
% |
|
$ |
628,596 |
|
100 |
% |
Revenue by Facility Type |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
September 30, 2020 |
|
September 30, 2020 |
||||||||
SNFs/Transitional care |
|
$ |
77,437 |
|
64 |
% |
|
$ |
499,058 |
|
79 |
% |
Senior housing |
|
|
28,041 |
|
24 |
% |
|
|
83,830 |
|
13 |
% |
Real estate tax and ground lease income |
|
|
2,019 |
|
2 |
% |
|
|
9,523 |
|
2 |
% |
Other |
|
|
11,680 |
|
10 |
% |
|
|
36,185 |
|
6 |
% |
|
|
$ |
119,177 |
|
100 |
% |
|
$ |
628,596 |
|
100 |
% |
| ______________________ | ||
(1) |
3rd quarter revenue includes one asset under a direct financing lease totaling |
|
|
|
|
2020 Q3 |
% of Total |
||||
|
|
|
Annualized |
Annualized |
||||
|
|
# of |
Contractual |
Contractual |
||||
Rent/Interest Concentration by Operator ( |
|
Properties (1) |
Rent/Interest (1)(2) |
Rent/Interest |
||||
Ciena |
|
69 |
|
$ |
98,769 |
|
10.5 |
% |
Consulate |
|
80 |
|
|
86,248 |
|
9.2 |
% |
Genesis |
|
52 |
|
|
62,127 |
|
6.6 |
% |
CommuniCare |
|
44 |
|
|
61,204 |
|
6.5 |
% |
Maplewood (3) |
|
15 |
|
|
58,701 |
|
6.2 |
% |
Agemo |
|
55 |
|
|
51,153 |
|
5.4 |
% |
Saber |
|
47 |
|
|
47,896 |
|
5.1 |
% |
HHC |
|
44 |
|
|
36,902 |
|
3.9 |
% |
Guardian |
|
35 |
|
|
36,075 |
|
3.8 |
% |
Gulf Coast |
|
23 |
|
|
28,915 |
|
3.1 |
% |
Remaining Operators (4) |
|
492 |
|
|
374,317 |
|
39.7 |
% |
|
|
956 |
|
$ |
942,307 |
|
100.0 |
% |
| ______________________ | ||||||||
(1) Excludes properties which are non-operating, closed and/or not currently providing patient services.
(2) Includes mezzanine and term loan interest.
(3) Includes Inspīr Carnegie Hill (f/k/a 2nd Avenue) revenue which is contractually effective 1/1/2020.
(4) Excludes one multi-tenant medical office building. |
||||||||
|
|
Total # of |
Total |
% of Total |
||||
Geographic Concentration by Investment ( |
|
Properties (1) |
Investment (1)(2)(3) |
Investment |
||||
Florida |
|
129 |
|
$ |
1,402,138 |
|
14.4 |
% |
Texas |
|
117 |
|
|
899,786 |
|
9.3 |
% |
Michigan |
|
50 |
|
|
667,169 |
|
6.9 |
% |
Indiana |
|
70 |
|
|
639,590 |
|
6.6 |
% |
Ohio |
|
53 |
|
|
606,049 |
|
6.2 |
% |
Pennsylvania |
|
55 |
|
|
589,702 |
|
6.1 |
% |
California |
|
57 |
|
|
578,237 |
|
6.0 |
% |
North Carolina |
|
41 |
|
|
349,896 |
|
3.6 |
% |
Virginia |
|
22 |
|
|
332,790 |
|
3.4 |
% |
New York (3) |
|
1 |
|
|
330,327 |
|
3.4 |
% |
Remaining 30 states |
|
311 |
|
|
2,894,865 |
|
29.8 |
% |
|
|
906 |
|
|
9,290,549 |
|
95.7 |
% |
United Kingdom |
|
57 |
|
|
417,702 |
|
4.3 |
% |
|
|
963 |
|
$ |
9,708,251 |
|
100.0 |
% |
| ______________________ | ||||||||
(1) Excludes 13 properties with total investment of |
||||||||
(2) Excludes |
||||||||
(3) Includes Inspīr Carnegie Hill development project. |
||||||||
Operating Lease Expirations & Loan Maturities ( |
|
As of September 30, 2020 |
||||||||||
Year |
|
Lease (Rent) |
Interest Income |
Lease (Rent) and
|
% of Total
|
|||||||
2020 |
|
$ |
1,493 |
|
$ |
52 |
|
$ |
1,545 |
|
0.2 |
% |
2021 |
|
|
3,543 |
|
|
5,956 |
|
|
9,499 |
|
1.0 |
% |
2022 |
|
|
37,150 |
|
|
274 |
|
|
37,424 |
|
4.0 |
% |
2023 |
|
|
5,036 |
|
|
905 |
|
|
5,941 |
|
0.6 |
% |
2024 |
|
|
36,070 |
|
|
2,943 |
|
|
39,013 |
|
4.1 |
% |
| ______________________ | ||||||||||||
(1) Based on annualized 3rd quarter 2020 contractual rent and interest. |
||||||||||||
The following tables present operator revenue mix, census and coverage data based on information provided by our operators for the indicated periods ended. We have not independently verified this information, and we are providing this data for informational purposes only.
|
|
|
Medicare / |
|
|||
Operator Revenue Mix (1) |
|
Medicaid |
Insurance |
Private / Other |
|||
Three-months ended June 30, 2020 |
|
52.4 |
% |
36.4 |
% |
11.2 |
% |
Three-months ended March 31, 2020 |
|
52.6 |
% |
35.7 |
% |
11.7 |
% |
Three-months ended December 31, 2019 |
|
52.7 |
% |
34.6 |
% |
12.7 |
% |
Three-months ended September 30, 2019 |
|
53.4 |
% |
33.4 |
% |
13.2 |
% |
Three-months ended June 30, 2019 |
|
54.2 |
% |
33.3 |
% |
12.5 |
% |
| ______________________ | |||||||
| (1) Excludes all facilities considered non-core. | |||||||
Operator Census and Coverage (1) |
|
|
Coverage Data |
||
|
|
|
Before |
After |
|
|
|
Occupancy (2) |
Management |
Management |
|
|
|
|
Fees (3) |
Fees (4) |
|
|
|
|
|
|
|
Twelve-months ended June 30, 2020 |
|
82.2 |
% |
1.84x |
1.48x |
Twelve-months ended March 31, 2020 |
|
83.6 |
% |
1.68x |
1.32x |
Twelve-months ended December 31, 2019 |
|
83.6 |
% |
1.64x |
1.29x |
Twelve-months ended September 30, 2019 |
|
83.4 |
% |
1.66x |
1.30x |
Twelve-months ended June 30, 2019 |
|
83.3 |
% |
1.66x |
1.30x |
| ______________________ | ||
(1) |
Excludes all properties considered non-core. |
|
(2) |
Based on available (operating) beds. |
|
(3) |
Represents EBITDARM of our operators, defined as earnings before interest, taxes, depreciation, amortization, Rent expense 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 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 |
|
The following table presents a debt maturity schedule as of September 30, 2020:
Debt Maturities ( |
|
Unsecured Debt |
|
|
|
|
|
|
|||||||
Year |
|
Line of Credit and
|
Senior
|
Sub Notes (3) |
|
Secured Debt |
Total Debt
|
||||||||
2020 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
2021 |
|
|
170,667 |
|
|
— |
|
|
20,000 |
|
|
2,275 |
|
|
192,942 |
2022 |
|
|
804,280 |
|
|
— |
|
|
— |
|
|
— |
|
|
804,280 |
2023 |
|
|
— |
|
|
700,000 |
|
|
— |
|
|
— |
|
|
700,000 |
2024 |
|
|
— |
|
|
400,000 |
|
|
— |
|
|
— |
|
|
400,000 |
2025 |
|
|
— |
|
|
400,000 |
|
|
— |
|
|
— |
|
|
400,000 |
Thereafter |
|
|
— |
|
|
2,350,000 |
|
|
— |
|
|
369,076 |
|
|
2,719,076 |
|
|
$ |
974,947 |
|
$ |
3,850,000 |
|
$ |
20,000 |
|
$ |
371,351 |
|
$ |
5,216,298 |
| ______________________ | ||
(1) |
The Line of Credit and Term Loans exclude |
|
(2) |
Excludes net discounts and deferred financing costs. |
|
(3) |
Excludes |
|
(4) |
On October 7, 2020, the Company issued |
|
The following table presents investment activity:
Investment Activity ( |
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
September 30, 2020 |
|
September 30, 2020 |
||||||||
Funding by Investment Type |
|
$ Amount |
|
% |
|
$ Amount |
|
% |
||||
Real property |
|
$ |
— |
|
— |
% |
|
$ |
25,906 |
|
16.0 |
% |
Construction-in-progress |
|
|
12,633 |
|
56.7 |
% |
|
|
52,231 |
|
32.2 |
% |
Capital expenditures |
|
|
9,653 |
|
43.3 |
% |
|
|
41,012 |
|
25.3 |
% |
Mortgages |
|
|
— |
|
— |
% |
|
|
43,150 |
|
26.5 |
% |
Other |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
Total |
|
$ |
22,286 |
|
100.0 |
% |
|
$ |
162,299 |
|
100.0 |
% |
