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TheStreet Open House

Omega Announces Third Quarter 2013 Financial Results; Adjusted FFO Of $0.63 Per Share For The Third Quarter

The $56.7 million of FFO for the three-month period ended September 30, 2012 includes the impact of $1.5 million of stock-based compensation expense and $0.5 million of expense associated with acquisitions.

Adjusted FFO was $74.2 million, or $0.63 per common share, for the three months ended September 30, 2013, compared to $58.7 million, or $0.54 per common share, for the same period in 2012. The Company had 8.8 million additional weighted-average shares outstanding for the three months ended September 30, 2013 compared to the same period in 2012. For further information see “Funds From Operations” below.

FINANCING ACTIVITIES

2.875 Million Common Stock Offering – On October 5, 2013, the Company completed an underwritten public offering of 2.875 million shares of its common stock at $30.00 per share before underwriting discounts and expenses. The Company’s total net proceeds from the offering were approximately $84.5 million, after deducting underwriting discounts and commissions and other estimated offering expenses.

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan – During the nine-month period ended September 30, 2013, the Company sold the following shares of its common stock under its Equity Shelf Programs and its Dividend Reinvestment and Common Stock Purchase Plan:

 
Equity Shelf (At-The-Market) Program for 2013
(in thousands, except price per share)
               
Q1 Q2 Q3 Year

Total

Total

Total

To Date

 
Number of shares 2,440 839 2,149 5,428
Average price per share $ 28.95 $ 35.74 $ 29.42 $ 30.19
Gross proceeds $ 70,643 $ 29,999 $ 63,221 $ 163,863
 
 
Dividend Reinvestment and Common Stock Purchase Program for 2013
(in thousands, except price per share)
               
Q1 Q2 Q3 Year

Total

Total

Total

To Date

 
Number of shares 1,315 147 215 1,677
Average price per share $ 27.63 $ 35.89 $ 29.03 $ 28.53
Gross proceeds $ 36,343 $ 5,280 $ 6,242 $ 47,865
 

2013 PORTFOLIO AND RECENT DEVELOPMENTS

$33 Million of New Investments in October 2013 – In October 2013, the Company completed two separate acquisitions with two existing operators totaling $33 million. The acquisitions consisted of 1 assisted living facility in Florida totaling 97 beds and 4 SNFs located in Indiana totaling 384 beds. These facilities were added to existing master leases.

Commitment to Enter into a $525 Million Sale/Leaseback Transaction – On September 13, 2013, a wholly owned subsidiary of the Company committed to enter into a $525 million sale/leaseback transaction in connection with the proposed acquisition of Ark Holding Company, Inc. (“Ark Holding”) by 4 West Holdings, Inc. In connection with the closing of the proposed acquisition, a subsidiary of the Company will acquire title to 56 facilities currently operated by Ark Holding and lease them back to Ark Holding pursuant to a 50-year lease, with rental payments yielding 10.7% per annum over the term of the lease. The sale/leaseback transaction will be accounted for as a capital lease for accounting purposes and, consistent with that treatment, the tenant will have the right to purchase the facilities for a nominal price plus closing costs at the end of the lease. In addition, commencing in the 41st year of the lease, the tenant will have the right to prepay the remainder of its obligations thereunder for an amount equal to the sum of unamortized portion of the original $525 million investment by the Company, the net present value of the remaining payments under the lease, and closing costs. In the event the tenant exercises either of these options, the Company would have the right to purchase the properties for fair market value at the time. The sale/leaseback transaction is subject to the satisfaction of all the conditions to the closing of the proposed acquisition of Ark Holding, including obtaining certain consents and licenses, the absence of any event having a material adverse effect on Ark Holding since the date of the agreement, and the issuance of title insurance on the properties. In September 2013, the Company funded a $15.0 million deposit related to this potential transaction which is included in other assets as of September 30, 2013.

Transition of 11 Arkansas Facilities to a New Operator – On August 30, 2013, the Company transitioned 11 Arkansas skilled nursing facilities (“SNFs”) that were leased to Advocat, Inc. to a new unrelated third party operator. The 11 facilities represent 1,084 operating beds. The Company amended its Advocat, master lease to reflect the transition of the 11 facilities to the new operator and recorded a $2.3 million provision for uncollectible straight-line accounts receivable. Simultaneous with the Advocat master lease amendment, the Company entered into a master lease with a new third party operator. The new master lease expires on August 30, 2023 and includes fixed annual rent escalators.

$6.8 Million of Capital Renovation Projects in Q3 2013 – For the three-month period ending September 30, 2013, the Company invested approximately $6.8 million under its capital renovation programs.

DIVIDENDS

On October 15, 2013, the Company’s Board of Directors announced a common stock dividend of $0.48 per share, increasing the quarterly common dividend by $0.01 per share over the prior quarter, to be paid November 15, 2013 to common stockholders of record on October 31, 2013.

2013 ADJUSTED FFO AND ADJUSTED FAD GUIDANCE CONFIRMED

The Company affirmed its 2013 Adjusted FFO available to common stockholders to be between $2.48 and $2.51 per diluted share and its 2013 Adjusted Funds Available For Distribution (“FAD”) available to common stockholders to be between $2.23 and $2.26 per diluted share.

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