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Item 2. Management’s Discussion and Analysis

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements and Factors Affecting Future Results
 The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this document, including statements regarding potential future changes in reimbursement. This document contains “forward-looking statements” within the meaning of the federal securities laws. These statements relate to our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements other than statements of historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology including, but not limited to, terms such as “may,” “will,” “anticipates,” “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. These statements are based on information available on the date of this filing and only speak as to the date hereof and no obligation to update such forward-looking statements should be assumed. Our actual results may differ materially from those reflected in the forward-looking statements contained herein as a result of a variety of factors, including, among other things: 
 (i) those items discussed under “Risk Factors” in Part I, Item 1A to our annual report on Form 10-K ; 

 (ii) uncertainties relating to the business operations of the operators of our assets, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; 

 (iii) the impact of the 2019 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 and decreased occupancy levels experienced by operators of skilled nursing facilities (“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; 

 (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) our ability to re-lease, otherwise transition, or sell underperforming assets or assets held for sale on a timely basis and on terms that allow us to realize the carrying value of these assets; 

 (vi) the availability and cost of capital to us; 

 (vii) changes in our credit ratings and the ratings of our debt securities; 

 (viii) competition in the financing of healthcare facilities; 

 (ix) competition in long-term healthcare industry and shifts in the perception of various types of long-term care facilities, including SNFs and ALFs; 

 (x) additional regulatory and other changes in the healthcare sector; 

 (xi) changes in the financial position of our operators; 

 (xii) the effect of economic and market conditions generally and, particularly, in the healthcare industry; 

 (xiii) changes in interest rates; 

 (xiv) the timing, amount and yield of any additional investments; 

 (xv) changes in tax laws and regulations affecting real estate investment trusts (“REITs”); 

 (xvi) the potential impact of changes in the SNF and ALF markets or local real estate conditions on our 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; 

 (xvii) our ability to maintain our status as a REIT; and 

 (xviii) 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. 

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 Overview
 Omega Healthcare Investors, Inc. (“Omega”) was formed as a real estate investment trust (“REIT”) and incorporated in the State of Maryland on March 31, 1992. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega’s assets are owned directly or indirectly by, and all of Omega’s operations are conducted directly or indirectly through, its operating partnership subsidiary, OHI Healthcare Properties Limited Partnership (“Omega OP”). Omega OP was formed as a limited partnership and organized in the State of Delaware on October 24, 2014. Unless stated otherwise or the context otherwise requires, the terms the “Company,” “we,” “our” and “us” means Omega and Omega OP, collectively.
 Omega has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom (“U.K.”). Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities (“SNFs”) and assisted living facilities (“ALFs”), and to a lesser extent, independent living facilities (“ILFs”), rehabilitation and acute care facilities (“specialty facilities”) and medical office buildings (“MOBs”). Our core portfolio consists of long-term leases and mortgage agreements. All of our leases are “triple-net” leases, which require the operators (we use the term “operator” to refer to our tenants and mortgagors and their affiliates who manage and/or operate our properties) to pay all property-related expenses. Our mortgage revenue derives from fixed rate mortgage loans, which are secured by first mortgage liens on the underlying real estate and personal property of the mortgagor. Our other investment income derives from fixed and variable rate loans to our operators and/or their principals to fund working capital and capital expenditures. These loans, which may be either unsecured or secured by the collateral of the borrower, are classified as other investments.
 Omega OP is governed by the Second Amended and Restated Agreement of Limited Partnership of OHI Healthcare Properties Limited Partnership, dated as of April 1, 2015 (the “Partnership Agreement”). Omega has exclusive control over Omega OP’s day-to-day management pursuant to the Partnership Agreement. As of June 30, 2020, Omega owned approximately 97% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and investors owned approximately 3% of the Omega OP Units.
 Omega’s consolidated financial statements include the accounts of (i) Omega, (ii) Omega OP, (iii) all direct and indirect wholly owned subsidiaries of Omega and (iv) other entities in which Omega or Omega OP has a majority voting interest and control. All intercompany transactions and balances have been eliminated in consolidation, and Omega’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests. Omega OP’s consolidated financial statements include the accounts of (i) Omega OP, (ii) all direct and indirect wholly owned subsidiaries of Omega OP and (iii) other entities in which Omega OP has a majority voting interest and control. All intercompany transactions and balances have been eliminated in consolidation. Omega OP’s net earnings are reduced by the portion of net earnings attributable to the noncontrolling interest. 
 As of June 30, 2020, our portfolio of real estate investments consisted of 981 healthcare facilities, located in 40 states and the U.K. and operated by 69 third-party operators. Our investment in these facilities, net of impairments and allowances, totaled approximately $9.8 billion at June 30, 2020, with approximately 97% of our real estate investments related to healthcare facilities. Our portfolio is made up of 767 SNFs, 114 ALFs, 28 specialty facilities, two medical office buildings, fixed rate mortgages on 57 SNFs, three ALFs and four specialty facilities and six facilities that are held for sale. At June 30, 2020, we also held other investments of approximately $434.7 million, consisting primarily of secured loans to third-party operators of our facilities and $195.5 million of investments in five unconsolidated joint ventures.
 As of June 30, 2020 and December 31, 2019, we do not have any material properties or operators with facilities that are not materially occupied.

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 While the COVID-19 pandemic did not materially impact our rental revenue for the first two quarters of 2020 and we have collected substantially all of our contractual rents due during this time and in July 2020, the COVID-19 pandemic continues to have a significant impact on our operators. As of July 30, 2020, our operators reported 6,133 total confirmed cases of COVID-19 in our facilities which includes cases involving employees and residents, including patients known to be positive at the time of admission from a hospital or healthcare center. The total cases are within 415 facilities as of July 30, 2020, or 43.3%, of our 959 operating facilities as of June 30, 2020. The total confirmed cases reported by our operators may not be adjusted downward for recoveries, discharges or deaths, and may be significantly lower than or different from actual cases based on the availability of testing and the lag time involved in testing and reporting, as well as the accuracy of reporting. We have not independently validated such facility virus incidence information and can provide no assurance regarding its accuracy or that there have not been any changes since the time the information was obtained from our operators; we also undertake no duty to update this information.
 Many of our operators have reported incurring significant cost increases as a result of the pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay, as well as a significant increase in both the cost and usage of personal protective equipment (“PPE”) and supplies. In terms of occupancy levels, many of our operators have reported experiencing declines, in part due to the elimination or suspension of elective hospital procedures, fewer discharges from hospitals to SNFs and higher hospital readmittances from SNFs. While government relief measures at the federal and state levels, including expanded Medicaid reimbursements, have offered meaningful support to offset a portion of these cost increases and impacts to our SNF operators, we cannot at this time estimate the net impact going forward to these operators, and we cannot estimate the extent to which ALF operators will receive governmental relief.
 There are a number of uncertainties we face as we consider the potential impact of COVID-19 on our business, including how long census disruption and elevated COVID-19 costs will last and the extent to which funding support from the federal government and the states will continue to offset these incremental costs. We also do not know the number of Omega facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19, and while we have requested reporting from operators of their numbers of cases, and the federal government has required additional reporting by operators, we may not receive accurate information on the number of cases, it may be inconsistent across operators, and we may experience a lag in reporting. We expect that heightened clinical protocols for infection control within facilities, additional testing of employees and residents and the monitoring of employees, guests and others entering facilities will continue for some period; however, we do not know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring. In addition, we do not know how and when the implementation of new treatments or vaccines will impact our operators and their populations.
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 As such, while we continue to believe that longer term demographics will drive increasing demand for needs-based skilled nursing care, we expect the uncertainties to our business described above to persist at least for the near term until we can gain more visibility into the costs our operators will experience and for how long, and the level of additional governmental support that will be available to them, as well as the potential support our operators may request from us.
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 Given this uncertainty, we have taken several steps to enhance our capital position as a precautionary measure, including a partial draw on our $1.25 billion revolving credit facility in the amount of $300 million during the first quarter of 2020 which was subsequently repaid in the second quarter of 2020, as well as entering into $400 million (notional amount) of 10-year interest rate swaps at an average swap rate of 0.8675% that expire in 2024, which provides us with some cost certainty for the refinancing of our senior notes maturing in 2023. We believe the availability under our credit facility and hedging strategy support our liquidity and provide flexibility to manage the potential impact to our business. Accordingly, we have maintained our dividend level of $0.67 per share for the first and second quarters of 2020. We will continue to evaluate any additional steps that may be needed to maintain adequate liquidity. 
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 Taxation
 Omega is a REIT for United States federal income tax purposes, and Omega OP is a pass through entity for United States federal income tax purposes.
 Since our inception, Omega has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code (“Code”). A REIT is generally not subject to federal income tax on that portion of its REIT taxable income which is distributed to its stockholders, provided that at least 90% of such taxable income is distributed each tax year and certain other requirements are met, including asset and income tests. So long as we qualify as a REIT under the Code, we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions.
 If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on its taxable income at regular corporate rates and dividends paid to our stockholders will not be deductible by us in computing taxable income. Further, we would not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied, unless the Internal Revenue Service grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect our net income; however, we believe we are organized and operate in such a manner as to qualify for treatment as a REIT. We test our compliance within the REIT taxation rules to ensure that we are in compliance with the REIT rules on a quarterly and annual basis. We review our distributions and projected distributions each year to ensure we have met and will continue to meet the annual REIT distribution requirements. In 2020, we expect to pay dividends in excess of our taxable income.
 Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more taxable REIT subsidiaries (“TRSs”). We have elected for certain of our active subsidiaries to be treated as TRSs. Our domestic TRSs are subject to federal, state and local income taxes at the applicable corporate rates. Our foreign TSRs are subject to foreign income taxes. As of June 30, 2020, one of our TRSs that is subject to federal, state and local income taxes at the applicable corporate rates had a net operating loss carry-forward of approximately $5.7 million. Up to 100% of the net operating loss carry-forwards arising in taxable years ending prior to January 1, 2018, may be used to reduce taxable income for any taxable year during the eligible carry-forward period. Changes made by the Tax Cuts and Jobs Act of 2017 (the “2017 Act”) limited the amount of net operating loss (“NOL”) carry-forward arising in tax years ending subsequent to December 31, 2018, to reduce 80% of taxable income for any taxable year during the eligible carry-forward period. Our NOL carry-forward was fully reserved as of June 30, 2020, with a valuation allowance due to uncertainties regarding realization. Under current law, our NOL carryforwards generated up through December 31, 2017 may be carried forward for no more than 20 years, and our net operating loss carryforward generated in our taxable years ended December 31, 2019 and December 31, 2018 may be carried forward indefinitely. However, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) modified the NOL carryback rules and deferred the application for the NOL carry-forward rules.
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 The CARES Act signed into law on March 27, 2020 modified the NOL carryforward rules applicable to certain of the NOL carryforwards possessed by our TRSs. First, the CARES Act defers the application of 80% of taxable income limitation, which was added to the Code by the 2017 Act, to our TRSs until their taxable years ended December 31, 2021, in addition to modifying the computation of the 80% limitation. Additionally, the CARES Act permits the carryback of NOLs generated by our TRSs in 2018, 2019, and 2020 for up to five years to offset taxable income reported in any of those prior tax years and recover income taxes paid in such prior tax years. Other provisions of the CARES Act may also impact the computation of taxable income by any of our TRSs or Omega and Omega OP. The modifications to the NOL carryback rules do not permit the carryback of a NOL by a REIT and, thus, will not impact Omega. We do not anticipate that such changes will impact materially the computation of Omega’s taxable income, or the taxable income of any Omega entity, including our TRSs. We also do not expect that Omega or any Omega entity, including our TRSs, will realize a material tax benefit as a result of the changes to the provisions of the Code made by the CARES Act. 
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 For the three months ended June 30, 2020 and 2019, we recorded approximately $0.2 million and $0.3 million, respectively, of state and local income tax provisions. For the six months ended June 30, 2020 and 2019, we recorded approximately $0.6 million and $0.4 million, respectively, of state and local income tax provisions. For the three months ended June 30, 2020 and 2019, we recorded approximately $0.7 million and $0.5 million, respectively, of tax provisions for foreign income taxes. For the six months ended June 30, 2020 and 2019, we recorded approximately $1.3 million and $1.1 million, respectively, of tax provisions for foreign income taxes. The expenses were included in income tax expense on our Consolidated Statements of Operations.
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 Government Regulation and Reimbursement 
 The healthcare industry is heavily regulated. Our operators are subject to extensive and complex federal, state and local healthcare laws and regulations. These laws and regulations are subject to frequent and substantial changes resulting from the adoption of new legislation, rules and regulations, and administrative and judicial interpretations of existing law. The ultimate timing or effect of these changes, which may be applied retroactively, cannot be predicted. Changes in laws and regulations impacting our operators, in addition to regulatory non-compliance by our operators, can have a significant effect on the operations and financial condition of our operators, which in turn may adversely impact us. There is the potential that we may be subject directly to healthcare laws and regulations because of the broad nature of some of these regulations, such as the Anti-kickback Statute and False Claims Act, among others. 
 Additionally, emergency legislation, including the CARES Act enacted on March 27, 2020 and discussed below, and temporary changes to regulations and reimbursement issued by the current administration in response to the COVID-19 pandemic continue to have a significant impact on the operations and financial condition of our operators. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, as well as the difference in how the pandemic may impact SNFs in contrast to ALFs, all of which developments and impacts are uncertain and difficult to predict. Due to the speed with which the situation is changing, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material. 
 The following is a discussion of certain laws and regulations generally applicable to our operators, and in certain cases, to us.
 Healthcare Reform . A substantial amount of rules and regulations have been issued under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the “Healthcare Reform Law”). The current administration has brought several Congressional efforts to repeal and replace the Affordable Care Act. We expect additional rules, regulations and judicial interpretations in response to legal and other constitutional challenges to be issued that may materially affect our operators’ financial condition and operations. Even if the Healthcare Reform Law is not ultimately amended or repealed, the current administration or Congress could propose changes impacting implementation of the Healthcare Reform Law. The ultimate composition and timing of any legislation enacted under the current administration that would impact the current implementation of the Healthcare Reform Law remains uncertain. Given the complexity of the Healthcare Reform Law and the substantial requirements for regulation thereunder, the impact of the Healthcare Reform Law on our operators or their ability to meet their obligations to us cannot be predicted, whether in its current form or as amended, repealed or interpreted.
 Reform Requirements for Long-Term Care Facilities . As part of the Healthcare Reform Law, the Centers for Medicare and Medicaid Services (“CMS”) issued a final rule on October 4, 2016 modifying the conditions of participation in Medicare and Medicaid for SNFs. The extensive changes included provisions related to staff training, discharge planning, infection prevention and control programs, and pharmacy services, among others. While many of the regulations have become effective, the implementation and enforcement of some provisions, particularly with respect to the Quality Assurance Program Improvement (“QAPI”) and compliance and ethics related requirements of the Phase 3 regulations did not become effective until November 28, 2019. 
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 Reimbursement Generally . A significant portion of our operators’ revenue is derived from government-funded reimbursement programs, consisting primarily of Medicare and Medicaid. As federal and state governments continue to focus on healthcare reform initiatives, efforts to reduce costs by government payors will likely continue, which may result in reductions in reimbursement at both the federal and state levels. Additionally, new and evolving payor and provider programs, including but not limited to Medicare Advantage, dual eligible, value-based purchasing and bundled payments, could adversely impact our tenants’ and operators’ liquidity, financial condition or results of operations. Significant limits on the scope of services reimbursed and/or reductions of reimbursement rates could have a material adverse effect on our operators’ results of operations and financial condition, which could adversely affect our operators’ ability to meet their obligations to us. 
 Changes Related to COVID-19. SNFs have continued to be impacted by the Bipartisan Budget Act of 2018, which extended Medicare sequestration and Medicare reimbursement cuts to providers and plans by 2% across the board through 2027. However, the CARES Act temporarily suspends Medicare sequestration for the period of May 1 through December 31, 2020, resulting in an increase in fee-for-service Medicare payments by approximately 2% as compared to what providers would have otherwise received during this period. In exchange for this temporary suspension, the CARES Act also extends the mandatory sequestration policy by an additional one year, i.e., through 2030. On March 18, 2020, the Families First Coronavirus Response Act was enacted, which provides a temporary 6.2% increase to each qualifying state and territory’s Medicaid Federal Medical Assistance Percentage (“FMAP”) effective January 1, 2020. The temporary FMAP increase will extend through the last day of the calendar quarter in which the COVID-19 public health emergency declared by the U.S. Department of Health and Human Services (“HHS”), including any extensions, terminates. As part of the requirements for receiving the temporary FMAP increase, states must cover testing services and treatments for COVID-19 and may not impose deductibles, copayments, coinsurance or other cost sharing charges for any quarter in which the temporary increased FMAP is claimed. HHS announced on July 23, 2020 that the public health emergency, which was currently set to expire on July 31, 2020, would be extended until October 31, 2020. In addition to maintaining the increased FMAP, this extension also allows the temporary Section 1135 waivers, including suspension of the three-day prior hospital stay coverage requirement and the relaxation of telehealth restrictions, to continue.
 Additionally, the CARES Act allocates $100 billion to a Public Health and Social Services Emergency Fund to “reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.” Nursing facility operators participating in Medicare and Medicaid may be eligible to receive compensation for costs incurred in the course of providing medical services, such as those related to obtaining PPE, COVID-19 related testing supplies, and increased staffing or training, provided that such costs are not compensated by another source. While “lost revenue” is not defined in the CARES Act, it is anticipated that it could include lost revenue due to a decrease in resident census or a change in the margin of services provided to residents. The Secretary of the HHS has broad authority and discretion to determine payment eligibility and the amount of such payments. Further, Congress appropriated $75 billion for healthcare providers through the Paycheck Protection Program and Health Care Enhancement Act. HHS is distributing this money through the Provider Relief Fund, and these payments do not need to be repaid. As of June 2020, HHS had announced distributions of congressional relief funds to healthcare providers, including approximately $50 billion to participants in the Medicare program equivalent to 2% of their annual revenue, as well as $15 billion in funding to providers that participate in Medicaid and the Children's Health Insurance Program (up to 2% of their annual revenues) but that had not received funding in the initial rounds. The ultimate allocation of these distributions to healthcare providers may differ from the methodology initially announced by HHS, in which distributions would be based on prior Medicare reimbursements or historical net patient revenue. In addition, distributions may be conditioned on and subject to operators meeting certain compliance obligations.
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 In July 2020, CMS announced that it will devote $5 billion of the Provider Relief Fund authorized by the CARES Act to qualified Medicare-certified long term care facilities to address critical needs in nursing homes, such as the hiring of additional staff, implementing infection control “mentorship” programs with subject matter experts, increased testing, and providing additional technology services to residents who are unable to receive visitors. This new funding is in addition to the $4.9 billion previously announced to offset revenue losses and assist nursing homes with additional costs related to responding to the COVID-19 public health emergency and the shipments of PPE provided to nursing homes by the Federal Emergency Management Agency. CMS additionally announced that it will begin requiring, rather than recommending, that all nursing homes in states with a 5% positivity rate or greater test all nursing home staff each week, although no final rule has been promulgated and the requirement may ultimately be modified.
 While we believe that to date, the payouts under the Provider Relief Fund and Public Health and Social Services Emergency Fund have primarily benefited Medicare providers, with more limited funding for Medicaid providers and for senior housing operators, we cannot predict the extent to which any of our operators will receive such funds, what the financial impact of receiving such funds would be on their operations, and whether operators will be able to meet the compliance requirements associated with the funds. 
 The CARES Act additionally provided payroll tax relief for employers allowing them to defer payment of employer Social Security taxes that are otherwise owed for wage payments made after March 27, 2020 through the end of the calendar year. Instead of depositing these taxes on a next-day or semi-weekly basis, the deposit due date for 50% of the taxes is deferred to December 31, 2021, with the remaining 50% deferred until December 31, 2022. 
 In an effort to increase cash flow to providers impacted by COVID-19, CMS had temporarily expanded the Accelerated and Advance Payment Programs on March 28, 2020. CMS is authorized to provide accelerated or advance payments during the period of the public health emergency to any Medicare provider or supplier who submits a request to the appropriate Medicare Administrative Contractor (“MAC”) and meets the required qualifications. Traditionally repayment of these advance/accelerated payments is set to begin at 90 days, however CMS has extended the repayment of these accelerated/advance payments to begin 120 days after the date of issuance of the payment. However, CMS announced on April 26, 2020 that it would not be accepting any new applications for the Advance Payment Program and would be reevaluating all pending and new applications for Accelerated Payments in consideration of the direct payments made available to providers through the HHS Provider Relief Fund. 
 We cannot predict the impact of these programs on the business or financial condition of any of our operators. In addition to COVID-19 reimbursement changes, the current administration announced several quality of care related initiatives on April 30, 2020 related to addressing the COVID-19 pandemic in long-term care facilities. One of the initiatives is the formation of the Coronavirus Commission for Safety and Quality in Nursing Homes, a special task force created for the purpose of addressing the rising death toll of residents in nursing homes. The task force is composed of leading industry experts, doctors and scientists, resident and patient advocates, family members, infection and prevention control specialists, and state and local authorities. A second announcement was made which advised that the Federal Emergency Management Agency would begin shipping two weeks’ worth of PPE to each of the nation’s 15,400 nursing homes, with all nursing homes receiving a total of 14 days’ worth of PPE no later than July 4, 2020. The current administration additionally released an interim final regulation regarding the requirement for nursing home operators to report COVID-19-related data directly to the Centers for Disease Control and Prevention in addition to CMS. Nursing home providers will be required to report infections and death data at least weekly to federal authorities, and by 5 p.m. the next day to residents and family members. An additional announcement was made that CMS will provide states with $81 million from the CARES Act to increase their inspections of nursing homes. To ensure effective oversight is achieved, CMS will allocate the CARES Act funding based on performance-based metrics. On July 10, 2020, CMS announced plans to deploy Quality Improvement Organizations across the U.S. to provide immediate assistance to nursing homes in the COVID-19 hotspot areas as identified by the White House Coronavirus Task Force. CMS subsequently announced on July 14, 2020 a large-scale procurement of rapid point-of-care diagnostic testing supplies to be distributed to nursing homes in the COVID-19 hotspots areas. However, due to the lower sensitivity and specificity of these test devices, not all state public health departments allow for their use, and many have requirements in place for using these tests appropriately. This initiative is a one-time procurement of devices and tests targeted toward facilitating on-site testing among nursing home residents and staff. Following initial distribution of testing supplies from CMS, nursing homes will be able to procure additional tests directly from the respective manufacturers. 

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 On June 16, 2020, the U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis announced the launch of an investigation into the COVID-19 response of nursing homes. The Select Subcommittee is seeking information from CMS on the enforcement of health and safety regulations during the crisis, data collection, and provision of life-saving supplies. Additionally, the Select Subcommittee is seeking documents and information from the five largest U.S. for-profit nursing home operators related to COVID-19 cases and deaths, testing, PPE, staffing levels and pay, legal violations, and efforts to prevent further infections, as well as additional transparency regarding the use of federal funds by nursing homes during the pandemic. 
 Medicaid . State budgetary concerns, coupled with the implementation of rules under the Healthcare Reform Law, or prospective changes to the Healthcare Reform Law under the current administration or Congress, may result in additional significant changes in healthcare spending at the state level. Additionally, the need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in Medicaid due to unemployment and declines in family incomes resulting from the COVID-19 pandemic. Since our operators’ profit margins on Medicaid patients are generally relatively low, more than modest reductions in Medicaid reimbursement or an increase in the percentage of Medicaid patients has in the past and may in the future adversely affect our operators’ results of operations and financial condition, which in turn could can adversely impact us.
 In the state of Florida, the average Medicaid reimbursement rate for SNFs decreased 4.5% effective July 1, 2019, resulting from the loss of one-time discretionary funding applied to October 1, 2018 Florida Medicaid reimbursement rates to cover the impact of hold-harmless provisions in the new, price-based Prospective Payment System (“PPS”) enacted by Florida at that time. However, the net impact of this rate decrease was to revert the average rate approximately to the pre-PPS, cost-based level as of September 30, 2018, which we believe operators can generally address with operational adjustments to maintain coverage levels. A smaller discretionary increase effective October 1, 2019 increased the average rate by 0.7%. When the transition hold-harmless provisions expire on September 30, 2021, the PPS rates will no longer be dependent on discretionary funding levels. On June 29, 2020, Florida Governor Ron DeSantis signed a $92.2 billion state budget for FY 2020-2021 into law, which includes a total Medicaid rate increase of $105 million for nursing centers. At June 30, 2020, 14% of our investments were in Florida. 
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 Texas, which represents 9% of our investments as of June 30, 2020, presents a difficult operating environment for SNF operators as a result of lower statewide occupancy levels, as compared to other states, and a Medicaid rate reimbursement that we believe is among the lowest in the United States. Several of our operators have experienced lower operating margins on their SNFs in Texas, as compared to other states, as a result of the foregoing and labor costs. 
 Additionally, in mid-November 2019, CMS proposed the Medicaid Fiscal Accountability Rule (“MFAR”), which would modify and refine the current federal portion of Medicaid funding for two programs commonly referred to as the upper payment limit (“UPL”) and provider taxes. As proposed, MFAR would further regulate and in some cases materially reform, eliminate or prompt the replacement of certain state Medicaid supplemental payment systems and other allowable financing arrangements that currently benefit healthcare providers. We have operators in two states, Indiana and Texas, that participate in UPL programs and operators in 36 states who received provider tax reimbursements as of June 30, 2020. Based on our analysis of MFAR and discussions with our operators and other industry leaders, we believe MFAR as proposed would eliminate the incremental UPL funds and that most, if not all, states are or will be able to become compliant under the revised provider tax program. The proposed MFAR is currently in a comment period and may be changed before a final rule is adopted, or may not be adopted at all. We believe the ultimate potential impact of MFAR on our facilities in Indiana and Texas is uncertain at this time, in part as we expect any reductions in revenues may be at least partially offset by expense reductions. If ultimately implemented, MFAR could reduce reimbursement to our operators in those states affected by the rule, which could ultimately have a material adverse effect on the financial condition of those operators. 
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 Medicare . On July 31, 2020, CMS issued a final rule regarding the government fiscal year (“FY”) 2021 Medicare payment rates and quality payment programs for SNFs, with aggregate payments projected to increase by $750 million, or 2.2%, for FY 2021 compared to FY 2020. This estimated reimbursement increase is attributable to a 2.2% market basket increase factor with a 0.0% reduction for the multifactor productivity adjustment mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (“IMPACT Act”). The annual update is reduced by two percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (“QRP”). The final rule also adopted revised geographic delineations provided by the Office of Management and Budget to identify a provider’s status as an urban or rural facility and to calculate the wage index. The CMS applied a five percent cap on any decreases in a provider’s wage index from FY 2020 to FY 2021.
 Payments to providers are being increasingly tied to quality and efficiency. The Patient Driven Payment Model (“PDPM”), which was designed by CMS to improve the incentives to treat the needs of the whole patient, rather than the volume of services the patient receives, became effective October 1, 2019 (FY 2020). The PDPM replaces the previous SNF prospective payment system that utilized the Resource Utilization Group IV case-mix methodology to classify SNF patients based on the volume of services received with a methodology that instead utilizes the International Statistical Classification of Diseases and Related Health Problems (“ ICD-10”) to classify SNF patients into certain payment groups based on their clinical disease state. In response to industry stakeholder comments, the CMS finalized changes to the ICD-10 code mappings as part of the FY 2021 SNF prospective payment system final rule, effective October 1, 2020. 
 Beginning October 1, 2019, group therapy is defined as a qualified rehabilitation therapist or therapy assistant treating two to six patients at the same time who are performing the same or similar activities. Also effective October 1, 2019, CMS established a 25% cap for concurrent and group therapy. Additional changes to reimbursement for group therapy were included in the Bipartisan Budget Act of 2018, which permanently repealed the therapy caps that applied to Medicare Part B therapy services provided as of January 1, 2018 and reduced the reimbursement rate for Medicare Part B therapy services performed by therapy assistants to 85% of the physician fee schedule beginning January 1, 2022. The former cap amounts were retained as a threshold above which claims must include confirmation that services are medically necessary as justified by appropriate documentation in the medical record. 
 Prior to COVID-19, we believed that certain of our operators could realize efficiencies and cost savings from increased concurrent and group therapy under PDPM and some had reported early positive results. Given the ongoing impacts of COVID-19, many operators are and may continue to be restricted from pursuing concurrent and group therapy and unable to realize these benefits. Additionally, our operators continue to adapt to the reimbursement changes and other payment reforms resulting from the value-based purchasing programs applicable to SNFs under the 2014 Protecting Access to Medicare Act, which became effective on October 1, 2018. These reimbursement changes have had and may in the future have an adverse effect on the operations and financial condition of some operators and could adversely impact the ability of operators to meet their obligations to us. 
 Quality of Care Initiatives . In addition to quality or value based reimbursement reforms, CMS has implemented a number of initiatives focused on the reporting of certain facility specific quality of care indicators that could affect our operators. Since December 2008, CMS has publicly released quality ratings for all of the nursing homes that participate in Medicare or Medicaid under its “Five Star Quality Rating System.” Facility rankings, ranging from five stars (“much above average”) to one star (“much below average”) are updated on a monthly basis. SNFs are required to provide information for the CMS Nursing Home Compare website regarding staffing and quality measures. 
 Recent updates to the Nursing Home Care website and the Five Star Quality Rating System include revisions to the inspection process and the implementation of new quality measures. However, as a result of the COVID-19 pandemic, CMS made changes to, or temporarily suspended the collection and reporting of, certain survey inspection, staffing levels and quality measures, which impacted the information posted on the Nursing Home Compare website and used in the Five Star Quality Rating System calculation. It is possible that these rating changes or any other ranking system could lead to future reimbursement policies that reward or penalize facilities on the basis of the reported quality of care parameters. 
 ​ 

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 Office of the Inspector General Activities . The Office of Inspector General (“OIG”) has provided long-standing guidance for SNFs regarding compliance with federal fraud and abuse laws. More recently, the OIG has conducted increased oversight activities and issued additional guidance regarding its findings related to identified problems with the quality of care and the reporting and investigation of potential abuse or neglect at group homes, nursing homes, and skilled nursing facilities. The OIG has additionally reviewed the staffing levels reported by SNFs as part of its August 2018 and February 2019 Work Plan updates, and included a review of involuntary transfers and discharges from nursing homes in the June 2019 Work Plan updates. Regional Recovery Audit Contractor program auditors along with the OIG and Department of Justice are expected to continue their efforts to evaluate SNF Medicare claims for any excessive therapy charges. 
 Department of Justice . SNFs are under intense scrutiny for ensuring the quality of care being rendered to residents and appropriate billing practices conducted by the facility. The Department of Justice (“DOJ”) launched ten regional Elder Justice Task Forces in 2016 which are coordinating and enhancing efforts to pursue SNFs that provide grossly substandard care to their residents. These Task Forces are composed of representatives from the U.S. Attorneys’ Offices, State Medicaid Fraud Control Units, state and local prosecutors’ offices, HHS, State Adult Protective Services agencies, Long Term Care Ombudsmen programs, and law enforcement. The DOJ has indicated that it is seeking to enhance the work of the Elder Justice Initiative to identify potential criminal charges when they uncover false claims for government reimbursements of care. The DOJ’s civil division has historically used the False Claims Act to pursue nursing homes that bill the federal government for services not rendered or care that is grossly substandard. In March 2020, the DOJ launched a National Nursing Home Initiative to coordinate and enhance civil and criminal enforcement actions against nursing homes with grossly substandard deficiencies such as poor hygiene, lax infection controls, and inadequate nurse staffing levels. On June 1, 2020, the CMS announced the imposition of civil monetary penalties for nursing homes with persistent infection control violations and increased enforcement actions for nursing homes with lower level infection control deficiencies.
 ​ 
 Medicare and Medicaid Program Audits. Governmental agencies and their agents, such as the Medicare Administrative Contractors, fiscal intermediaries and carriers, as well as the OIG, CMS and state Medicaid programs, conduct audits of our operators’ billing practices from time to time. CMS contracts with Recovery Audit Contractors on a contingency basis to conduct post-payment reviews to detect and correct improper payments in the fee-for-service Medicare program, to managed Medicare plans and in the Medicaid program. CMS also employs Medicaid Integrity Contractors to perform post-payment audits of Medicaid claims and identify overpayments. In addition, the state Medicaid agencies and other contractors have increased their review activities. To the extent any of our operators are found out of compliance with any of these laws, regulations or programs, their financial position and results of operations can be adversely impacted, which in turn could adversely impact us.
 Fraud and Abuse . There are various federal and state civil and criminal laws and regulations governing a wide array of healthcare provider referrals, relationships and arrangements, including laws and regulations prohibiting fraud by healthcare providers. Many of these complex laws raise issues that have not been clearly interpreted by the relevant governmental authorities and courts.
 These laws include: (i) federal and state false claims acts, which, among other things, prohibit providers from filing false claims or making false statements to receive payment from Medicare, Medicaid or other federal or state healthcare programs; (ii) federal and state anti-kickback and fee-splitting statutes, including the Medicare and Medicaid Anti-kickback statute, which prohibit the payment or receipt of remuneration to induce referrals or recommendations of healthcare items or services, such as services provided in a SNF; (iii) federal and state physician self-referral laws (commonly referred to as the Stark Law), which generally prohibit referrals by physicians to entities for designated health services (some of which are provided in SNFs) with which the physician or an immediate family member has a financial relationship; (iv) the federal Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services and (v) federal and state privacy laws, including the privacy and security rules contained in the Health Insurance Portability and Accountability Act of 1996, which provide for the privacy and security of personal health information. 

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 Violations of healthcare fraud and abuse laws carry civil, criminal and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement and potential exclusion from Medicare, Medicaid or other federal or state healthcare programs. Additionally, there are criminal provisions that prohibit filing false claims or making false statements to receive payment or certification under Medicare and Medicaid, as well as failing to refund overpayments or improper payments. Violation of the Anti-kickback statute or Stark Law may form the basis for a federal False Claims Act violation. These laws are enforced by a variety of federal, state and local agencies and can also be enforced by private litigants through, among other things, federal and state false claims acts, which allow private litigants to bring qui tam or whistleblower actions, which have become more frequent in recent years. 
 Several of our operators have responded to subpoenas and other requests for information regarding their operations in connection with inquiries by the Department of Justice or other regulatory agencies. In addition, MedEquities Realty Trust, Inc., which we acquired in May 2019, has responded to a Civil Investigative Demand from the Department of Justice in connection with Lakeway Regional Medical Center. See Note 16 – Commitments and Contingencies . 
 Privacy . Our operators are subject to various federal, state and local laws and regulations designed to protect the confidentiality and security of patient health information, including the federal Health Insurance Portability and Accountability Act of 1996, as amended, the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and the corresponding regulations promulgated thereunder (collectively referred to herein as “HIPAA”). The HITECH Act expanded the scope of these provisions by mandating individual notification in instances of breaches of protected health information, providing enhanced penalties for HIPAA violations, and granting enforcement authority to states’ Attorneys General in addition to the HHS Office for Civil Rights (“OCR”). Additionally, in a final rule issued in January 2013, HHS modified the standard for determining whether a breach has occurred by creating a presumption that any non-permitted acquisition, access, use or disclosure of protected health information is a breach unless the covered entity or business associate can demonstrate through a risk assessment that there is a low probability that the information has been compromised. 
 Various states have similar laws and regulations that govern the maintenance and safeguarding of patient records, charts and other information generated in connection with the provision of professional medical services. These laws and regulations require our operators to expend the requisite resources to secure protected health information, including the funding of costs associated with technology upgrades. Operators found in violation of HIPAA or any other privacy law or regulation may face significant monetary penalties. In addition, compliance with an operator’s notification requirements in the event of a breach of unsecured protected health information could cause reputational harm to an operator’s business.
 Licensing and Certification . Our operators and facilities are subject to various federal, state and local licensing and certification laws and regulations, including laws and regulations under Medicare and Medicaid requiring operators of SNFs and ALFs to comply with extensive standards governing operations. Governmental agencies administering these laws and regulations regularly inspect our operators’ facilities and investigate complaints. Our operators and their managers receive notices of observed violations and deficiencies from time to time, and sanctions have been imposed from time to time on facilities operated by them. In addition, many states require certain healthcare providers to obtain a certificate of need, which requires prior approval for the construction, expansion or closure of certain healthcare facilities, which has the potential to impact some of our operators’ abilities to expand or change their businesses.
 Americans with Disabilities Act (the “ADA”) . Our properties must comply with the ADA and any similar state or local laws to the extent that such properties are public accommodations as defined in those statutes. The ADA may require removal of barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Should barriers to access by persons with disabilities be discovered at any of our properties, we may be directly or indirectly responsible for additional costs that may be required to make facilities ADA-compliant. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants. Our commitment to make readily achievable accommodations pursuant to the ADA is ongoing, and we continue to assess our properties and make modifications as appropriate in this respect.

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 Other Laws and Regulations . Additional federal, state and local laws and regulations affect how our operators conduct their operations, including laws and regulations protecting consumers against deceptive practices and otherwise generally affecting our operators’ management of their property and equipment and the conduct of their operations (including laws and regulations involving fire, health and safety; staffing; quality of services, including care and food service; residents’ rights, including abuse and neglect laws; and the health standards set by the federal Occupational Safety and Health Administration). It is anticipated that our operators will continue to face additional federal and state regulatory requirements related to the operation of their facilities in response to the COVID-19 pandemic.
 General and Professional Liability. Although arbitration agreements have been effective in limiting general and professional liabilities for SNF and long term care providers, there have been numerous lawsuits in recent years challenging the validity of arbitration agreements in long term care settings. On July 16, 2019, CMS issued a final rule lifting the prohibition on pre-dispute arbitration agreements offered to residents at the time of admission provided that certain requirements are met. The rule prohibits providers from requiring residents to sign binding arbitration agreements as a condition for receiving care and requires that the agreements specifically grant residents the explicit right to rescind the agreement within thirty calendar days of signing. In addition, certain states have enacted protections from certain types of liability in connection with the provision of COVID-19 related services provided by SNFs and other healthcare providers.
 Critical Accounting Policies and Estimates
 Our financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States, and a summary of our significant accounting policies is included in Note 2 – Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2019. Our preparation of the financial statements requires us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and accompanying footnotes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the consolidated financial statements. We have described our most critical accounting policies in our 2019 Annual Report on Form 10-K for the year ended December 31, 2019, in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 There have been no changes to our critical accounting policies or estimates since December 31, 2019, except for the changes that resulted from the adoption of the new credit loss accounting standard on January 1, 2020, as discussed in detail in Note 1 – Basis of Presentation and Significant Accounting Policies, section “Accounting Pronouncements Adopted in 2020” of these unaudited consolidated financial statements under Part 1, Item 1 of this report and the accompanying discussion of the credit loss accounting guidance below. See also Note 2 – Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2019. 
 Accounting Pronouncements Adopted in 2020
 In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 specifically excludes from its scope receivables arising from operating leases accounted for under Topic 842. We adopted ASU 2016-13 on January 1, 2020 using the modified retrospective approach and we recorded an initial $28.8 million allowance for expected credit losses with a corresponding adjustment to equity. 

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 Transition Impact of Adopting Topic 326
 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 
 ​ 
 ​ 
 Pre-adoption balance as of 
 ​ 
 Impact of adopting 
 ​ 
 Post-adoption balance as of 
 
 Financial Statement Line Item 
 ​ 
 December 31, 2019 
 ​ 
 Topic 326 
 ​ 
 January 1, 2020 
 
 ​ 
 ​ 
 (in thousands) 
 
 Mortgage Notes Receivable
 $
 773,563 
 $
 (21,386) 
 $
 752,177 
 
 Investment in Direct Financing Leases
 ​ 
 11,488 
 ​ 
 (611) 
 ​ 
 10,877 
 
 Other Investments
 ​ 
 419,228 
 ​ 
 (6,688) 
 ​ 
 412,540 
 
 Off-Balance Sheet Commitments
 ​ 
 20,777 
 ​ 
 (100) 
 ​ 
 20,677 
 
 Total
 $
 1,225,056 
 $
 (28,785) 
 $
 1,196,271 
 

 ​ 
 Results of Operations
 The following is our discussion of the consolidated results of operations, financial position and liquidity and capital resources, which should be read in conjunction with our unaudited consolidated financial statements and accompanying notes.
 Three Months Ended June 30, 2020 and 2019
 Operating Revenues
 Our operating revenues for the three months ended June 30, 2020 totaled $256.4 million, an increase of approximately $31.1 million over the same period in 2019. The $31.1 million increase was primarily the result of (i) a $7.0 million increase in rental income resulting from the May 17, 2019, merger with MedEquities Realty Trust, Inc. (the “MedEquities Merger”), $18.1 million of rental income from the October 31, 2019, $735 million acquisition of 60 SNFs (the “Encore Portfolio Acquisition”) and $2.3 million of additional rental income from other facility acquisitions, facilities placed in service, facility transitions and lease amendments in 2019 and 2020, offset by decreases in rental income resulting from facility sales and rent from cash basis operators, (ii) a $2.8 million increase in mortgage income primarily related to mortgages acquired in the MedEquities Merger and new loans or notes and additional funding to existing operators made throughout 2019 and 2020 and (iii) a $1.8 million increase in miscellaneous income which is primarily related to an operator’s late fees.
 Operating Expenses
 Operating expenses for the three months ended June 30, 2020 totaled $112.7 million, an increase of approximately $14.2 million over the same period in 2019. The $14.2 million increase was primarily due to: (i) a $9.9 million increase in depreciation expense primarily resulting from facilities acquired in the MedEquities Merger, the Encore Portfolio Acquisition and other facility acquisitions and (ii) a $6.3 million increase in impairment on real estate properties related to ten facilities to reduce their book values to their estimated fair value less costs to sell or fair value. These increases were partially offset by (i) a $1.0 million decrease in acquisition and merger related costs from the MedEquities Merger and (ii) a $0.8 million recovery related to our direct financing leases upon final liquidation of the Orianna Health Systems Distribution Trust. 
 Other Income (Expense)
 For the three months ended June 30, 2020, total other expenses were $55.1 million, an increase of approximately $4.1 million over the same period in 2019. The increase was mainly due to a $4.4 million increase in interest expense primarily related to increased debt balances resulting from our investments made during 2019, which includes the HUD debt assumed in the fourth quarter of 2019 from the Encore Portfolio Acquisition, partially offset by a $0.3 million increase in interest income and other - net primarily related to the change in the fair value of warrants we hold to potentially acquire shares of another public company.

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 Six Months Ended June 30, 2020 and 2019
 Operating Revenues
 Our operating revenues for the six months ended June 30, 2020 totaled $509.4 million, an increase of approximately $60.5 million over the same period in 2019. The $60.5 million increase was primarily the result of (i) a $17.8 million increase in rental income resulting from, the MedEquities Merger on May 17, 2019, $36.3 million of rental income from the Encore Portfolio Acquisition on October 31, 2019 and $21.4 million of additional rental income from other facility acquisitions, facilities placed in service, facility transitions and lease amendments in 2019 and 2020, offset by decreases in rental income resulting from facility sales and rent from cash basis operators, (ii) a $4.4 million increase in mortgage income primarily related to mortgages acquired in the MedEquities Merger and new loans or notes and additional funding to existing operators made throughout 2019 and 2020 and (iii) a $1.5 million increase in miscellaneous income which is primarily related to an operator’s late fees. 
 Operating Expenses
 Operating expenses for the six months ended June 30, 2020 totaled $219.8 million, an increase of approximately $19.8 million over the same period in 2019. The $19.8 million increase was primarily due to: (i) a $21.7 million increase in depreciation expense primarily resulting from facilities acquired in the MedEquities Merger, the Encore Portfolio Acquisition and other facility acquisitions, (ii) a $9.9 million increase in impairment on real estate properties related to 13 facilities to reduce their book values to their estimated fair value less costs to sell or fair value and (iii) a $1.5 million increase related to our provision for credit losses. These increases were partially offset by (i) a $8.5 million decrease in impairments on our direct financing leases and (ii) a $4.2 million decrease in acquisition and merger related costs from the MedEquities Merger. 
 Other Income (Expense)
 For the six months ended June 30, 2020, total other expenses were $111.1 million, an increase of approximately $10.1 million over the same period in 2019. The increase was due to a (i) $9.1 million increase in interest expense primarily related to increased debt balances resulting from our investments made during 2019, which includes the HUD debt assumed in the fourth quarter of 2019 from the Encore Portfolio Acquisition and (ii) a $0.7 million increase in interest income and other - net primarily related to the change in the fair value of warrants we hold to potentially acquire shares of another public company.
 National Association of Real Estate Investment Trusts Funds From Operations
 Our funds from operations (“Nareit FFO”) for the three months ended June 30, 2020 was $186.5 million compared to $157.2 million for the same period in 2019. Our Nareit FFO for the six months ended June 30, 2020 was $367.5 million compared to $301.3 million for the same period in 2019. 
 We calculate and report Nareit FFO in accordance with the definition of Funds from Operations 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 impairment 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 are calculated to reflect funds from operations on the same basis. We believe that Nareit FFO is an important supplemental measure of our 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. Nareit FFO was designed by the real estate industry to address this issue. Nareit FFO herein is not necessarily comparable to Nareit FFO of other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us.

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 Nareit FFO is a non-GAAP financial measure. We use Nareit FFO as one of several criteria to measure the operating performance of our business. We further believe that by excluding the effect of depreciation, amortization, impairment 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, Nareit FFO can facilitate comparisons of operating performance between periods and between other REITs. We offer this measure to assist the users of our financial statements in evaluating our financial performance under GAAP, and Nareit FFO 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 our securities should not rely on this measure as a substitute for any GAAP measure, including net income.
 The following table presents our Nareit FFO results for the three and six months ended June 30, 2020 and 2019:
 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 
 ​ 
 ​ 
 Three Months Ended 
 ​ 
 Six Months Ended 
 
 ​ 
 ​ 
 June 30, 
 ​ 
 June 30, 
 
 ​ 
 
 2020 
 
 2019 
 ​ 
 2020 
 
 2019 
 
 
 ​ 
 ​ 
 (in thousands) 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 
 Net income 
 ​ 
 $
 101,960 
 ​ 
 $
 75,671 
 ​ 
 $
 194,239 
 ​ 
 $
 147,853 
 
 (Deduct gain) add back loss from real estate dispositions
 ​ 
 ​ 
 (12,843) 
 ​ 
 ​ 
 267 
 ​ 
 ​ 
 (14,681) 
 ​ 
 ​ 
 264 
 
 Deduct gain from real estate dispositions - unconsolidated joint ventures
 ​ 
 
 (1,838) 
 ​ 
 
 — 
 ​ 
 
 (1,955) 
 ​ 
 
 — 
 
 ​ 
 ​ 
 
 87,279 
 ​ 
 
 75,938 
 ​ 
 
 177,603 
 ​ 
 
 148,117 
 
 Elimination of non-cash items included in net income:
 ​ 
 
 ​ 
 ​ 
 
 
 ​ 
 
 ​ 
 ​ 
 
 
 
 Depreciation and amortization
 ​ 
 
 83,586 
 ​ 
 
 73,637 
 ​ 
 
 166,229 
 ​ 
 
 144,489 
 
 Depreciation – unconsolidated joint ventures
 ​ 
 
 3,550 
 ​ 
 
 1,675 
 ​ 
 
 7,182 
 ​ 
 
 3,047 
 
 Add back impairments on real estate properties
 ​ 
 ​ 
 11,988 
 ​ 
 ​ 
 5,709 
 ​ 
 ​ 
 15,627 
 ​ 
 ​ 
 5,709 
 
 Add back (deduct) unrealized loss (gain) on warrants
 ​ 
 
 65 
 ​ 
 ​ 
 270 
 ​ 
 ​ 
 840 
 ​ 
 ​ 
 (14) 
 
 Nareit FFO (a) 
 ​ 
 $
 186,468 
 ​ 
 $
 157,229 
 ​ 
 $
 367,481 
 ​ 
 $
 301,348 
 

 

 (a) Includes amounts allocated to Omega stockholders and Omega OP Unit holders. 

 
 Portfolio and Recent Developments
 The following tables summarize the significant asset acquisitions that occurred during the first six months of 2020:
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 ​ 
 
 
 ​ 
 
 Number of 
 ​ 
 ​ 
 
 ​ 
 Total 
 ​ 
 ​ 
 ​ 
 
 ​ 
 Building & Site 
 
 ​ 
 Furniture 
 
 Initial 
 
 
 ​ 
 ​ 
 Facilities 
 ​ 
 Country/ 
 ​ 
 Investment 
 
 ​ 
 Land 
 
 ​ 
 Improvements 
 
 ​ 
 & Fixtures 
 ​ 
 Annual 
 ​ 
 
 Period 
 
 SNF 
 ALF 
 Specialty 
 MOB 
 
 State 
 
 ​ 
 (in millions) 
 
 Cash Yield (1) 
 ​ 
 
 Q1
 
 — 
 2 
 — 
 — 
 ​ 
 UK
 ​ 
 $
 12.1
 ​ 
 $
 3.6
 ​ 
 $
 8.0 
 ​ 
 $
 0.5
 ​ 
 8.00 
 %
 
 Q1
 
 1 
 — 
 — 
 — 
 ​ 
 IN
 ​ 
 ​ 
 7.0 
 ​ 
 ​ 
 0.7
 ​ 
 ​ 
 5.8
 ​ 
 ​ 
 0.5
 
 9.50 
 %
 
 Q2
 
 1 
 — 
 — 
 — 
 ​ 
 OH
 ​ 
 ​ 
 6.9 
 ​ 
 ​ 
 0.8
 ​ 
 ​ 
 5.5
 ​ 
 ​ 
 0.6
 
 9.50 
 %
 
 Total
 
 2 
 2 
 — 
 — 
 
 
 ​ 
 $
 26.0
 
 $ 
 5.1
 ​ 
 $
 19.3
 ​ 
 $
 1.6
 
 
 ​ 
 

 

 (1) The initial annual cash yield reflects the initial cash rent divided by the purchase price. 

 ​ 
 On May 1, 2020, we amended our initial $415 million amortizing master mortgage (the “Master Mortgage”) with Ciena Healthcare (“Ciena”) to (i) increase the interest rate on the Master Mortgage to 10.67% per annum and (ii) add an additional $83.5 million mortgage note related to eight SNFs and one ALF located in Michigan. These nine facilities were formerly leased to Ciena and were sold to Ciena in a noncash transaction that closed on May 1, 2020 and we retained the first mortgage. In connection with this sale, we recorded a loss of $3.6 million related to the write-off of the nine facilities’ straight-line rent receivable. The mortgage note matures on June 30, 2029 and bears an initial annual interest rate of 10.31% which increases each year by 2%. As of June 30, 2020, the outstanding principal balance of this mortgage note is approximately $83.4 million. 

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 In June 2020, we entered into a loan agreement with subsidiaries of Ciena to provide $43.2 million of mortgage notes related to two SNFs located in Ohio. The mortgage notes mature on June 30, 2021 and bear an initial annual interest rate of 9.5%. As of June 30, 2020, the outstanding principal balance of these mortgage notes is approximately $43.2 million. As of June 30, 2020, our total outstanding mortgages notes receivable with Ciena total $665.4 million. 
 On April 17, 2020, we provided a $17.6 million unsecured loan to a subsidiary of Second Spring Healthcare Investments (an entity in which we have an approximate 15% ownership interest). The loan bears interest at the greater of the prime interest rate or 3-month LIBOR plus 2.75% per annum and is due on demand. As of June 30, 2020, the loan bears interest at 3.25% per annum and has a total outstanding balance of $17.6 million. 
 ​ 
 Other Recent Development
 During the third quarter of 2020, we amended our master lease with Maplewood Real Estate Holdings, LLC (“Maplewood”), an operator of primarily senior housing facilities, and provided a new credit facility to Maplewood. The new credit facility expanded Maplewood’s borrowing capacity by approximately $100 million to $220 million, in part to provide Maplewood additional liquidity in view of expected ongoing delays and costs associated with COVID-19. Maplewood refinanced existing notes and certain other funded obligations to us of approximately $120 million in aggregate via borrowings from the new credit facility.
 ​ 
 Asset Held for Sale
 As of June 30, 2020, we have six facilities, totaling $70.5 million classified as assets held for sale. We expect to sell these facilities over the next twelve months.
 Asset Sales, Impairments, Contractual Receivables and Other Receivables and Lease Inducements 
 Asset Sales
 During the first quarter of 2020, we sold six facilities subject to operating leases for approximately $18.1 million in net cash proceeds recognizing a net gain of approximately $1.8 million. 
 During the second quarter of 2020, we sold 15 facilities subject to operating leases and one facility subject to a direct financing lease for approximately $38.0 million in net cash proceeds recognizing a net gain of approximately $12.8 million. 
 Impairments
 During the first quarter of 2020, we recorded impairments on real estate properties of approximately $3.6 million on three facilities. During the second quarter of 2020, we recorded impairments on real estate properties of approximately $12.0 million on 10 facilities. Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators. We reduced the net book value of the impaired facilities to their estimated fair values. To estimate the fair value of the facilities, we utilized a market approach which considered binding sale agreements (a Level 1 input) and/or non-binding offers from unrelated third parties and/or broker quotes (a Level 3 input).
 On May 26, 2020, we executed an Agreement of Purchase and Sale to sell an acute care hospital located in Nevada to an unrelated third-party for $56.5 million. Pursuant to the Agreement of Purchase and Sale, the sale remains subject to a 60-day due diligence period which expired in July 2020. During the second quarter of 2020, we recorded an impairment of approximately $2.2 million (which is included in the $12.0 million above) related to this facility to reduce its net book value to its fair value less costs to sell of approximately $55.3 million and reclassified the facility to assets held for sale. In July of 2020, we agreed with the third-party buyer to lower the purchase price to approximately $49.0 million. The reduction in the purchase price will result in an additional impairment and/or loss on sale of approximately $7.4 million during the third quarter of 2020. 

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 ​ 
 Contractual Receivables and Other Receivables and Lease Inducements
 As of June 30, 2020, we have approximately $27.6 million of contractual receivables outstanding. Of the $27.6 million of contractual receivables outstanding, approximately $18.2 million relates to Agemo Holdings LLC (“Agemo,” an entity formed in May 2018 to silo our leases and loans formerly held by Signature Healthcare). In addition to the contractual receivables, we have approximately $60.0 million of straight-line rent receivables and/or lease inducements associated with Agemo as of June 30, 2020. In May 2018, we reached an out-of-court restructuring agreement with Agemo that provided for the deferral of rent, the extension of the maturity of our lease and loans, and a working capital loan. If Agemo’s operations deteriorate and they are unable to meet their contractual obligations to us, we may be required to account for rental income from them on a cash basis and reserve approximately $78.2 million of contractual receivables, straight-line rent receivables and lease inducements. For the three months ended June 30, 2020 and 2019, we recorded rental income of approximately $14.8 million and $15.6 million, respectively, and other investment income of $1.3 million and $1.1 million, respectively, from Agemo. For the six months ended June 30, 2020 and 2019, we recorded rental income of approximately $30.1 million and $30.3 million, respectively, and other investment income of $2.5 million and $2.1 million, respectively, from Agemo. 
 In addition, we have accounted for Daybreak Venture LLC (“Daybreak”) on a cash basis of accounting since 2017. See “Daybreak” below. We have previously written-off our contractual rents receivable, straight-line rents receivable and lease inducements, and therefore, we have no net receivables or inducements related to Daybreak as of June 30, 2020. For the three and six months ended June 30, 2020, we did not record any rental income from Daybreak. For the three and six months ended June 30, 2019, we recorded rental income of approximately $5.8 million and $11.1 million, respectively, from Daybreak. 
 Daybreak
 In July of 2020, we executed a Forbearance and Transition Agreement with Daybreak which, among other things, sets forth the parties’ plan to sell or re-lease the Daybreak portfolio, which plan contemplates the potential sale of 28 facilities currently leased to Daybreak to a non-Omega party for $100 million, and the Company’s agreement to forbear from exercising certain default remedies during the transition period. Consistent with the terms of the Forbearance and Transition Agreement with Daybreak, we have transitioned seven Daybreak facilities to existing operators during the first half of 2020 and one additional facility transitioned from Daybreak to an existing operator in July 2020. During the fourth quarter of 2019, we transitioned two Daybreak facilities to an existing operator. The total annual contractual rent from the 10 transitioned facilities is approximately $4.3 million. In addition, we expect to transition an additional eight facilities to a new operator and/or existing operator during the third and fourth quarters of 2020 and expect annual contractual rent on these facilities of approximately $2.0 million. 
 ​ 
 During the first six months of 2020, Daybreak did not pay rent to us and we recorded impairments of approximately $11.0 million on nine Daybreak facilities that we plan to sell. As of June 30, 2020, the 28 facilities contemplated to be sold under the Forbearance and Transition Agreement have a net book value of approximately $147 million. As of August 7, 2020, we have not entered into a definitive agreement for the sale of these facilities. We evaluated the facilities for impairment as of June 30, 2020 and concluded that the facilities were not currently impaired, as we believe our projected probability-weighted cash flows exceeded the current net book value of the 28 facilities. In projecting the probability-weighted cash flows, we considered the potential sale of the facilities for $100 million and the potential transition of the facilities to other operators to the extent that the sale to the third party does not ultimately close. As of June 30, 2020, we estimated a lower probability of such contemplated sale due to lack of a definitive sale agreement and evidence of buyer financing. To the extent that our assessment of the probability of a potential sale increases in the future, we may be required to record an impairment of approximately $47 million on the 28 facilities to reduce the net book value of the 28 facilities to their estimated fair value or fair value less cost to sell and/or record a loss on the sale. 

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 Accordingly, we remain in ongoing discussions with several other Texas-based operators about selling and/or leasing the remaining facilities. Any such transitions, will of course, be subject to third-party operator due diligence, regulatory approvals, legal documentation and the cooperation of Daybreak. 
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 While the ultimate outcome and timing of this process is difficult to ascertain, we continue to believe we will receive Daybreak portfolio rent or rent equivalents of between $15 million to $17 million annually after the restructuring of the portfolio is completed. However, our ability to complete the restructuring and secure the approvals necessary to do so and the ultimate rental income following any potential transition of select Daybreak facilities to other operators, may be less favorable than expected, and there can be no assurance whether or when such benefits or transition will occur. If we are unable to complete the restructuring of the Daybreak portfolio on the terms we expect, we could be required to impair our remaining assets currently leased to Daybreak in addition to the potential impairment charge noted above. 
 ​ 
 We continue to closely monitor the performance of all of our operators, as well as industry trends and developments generally.
 Liquidity and Capital Resources
 At June 30, 2020, we had total assets of $9.7 billion, total equity of $4.2 billion and debt of $5.3 billion, representing approximately 55.8% of total capitalization.
 Financing Activities and Borrowing Arrangements
 Subordinated Debt 
 In connection with a 2010 acquisition, we assumed five separate $4.0 million subordinated notes bearing interest at 9% per annum that mature on December 21, 2021. Interest on these notes is due quarterly with the principal balance due at maturity. These subordinated notes may be prepaid at any time without penalty. To the extent that the operator of the facilities fails to pay rent when due to us under our existing master lease, we have the right to offset the amounts owed to us against the amounts we owe to the lender under the notes. In the fourth quarter of 2019, we had recorded a reserve of $6.5 million in connection with the operator’s failure to pay rent, and we began offsetting certain interest and principal amounts payable by us against this reserve. During the second quarter of 2020, expressly subject to our reservation of rights under the terms of the notes and related agreement, we reversed this reserve, and ceased offsetting amounts against our note payments, as a result of the operator’s payment of all current and past due rent. 
 ​ 
 $400 Million Forward Starting Swaps 
 On March 27, 2020, we entered into five forward starting swaps totaling $400 million. We designated the forward starting swaps as cash flow hedges of interest rate risk associated with interest payments on a forecasted issuance of long-term debt, initially expected to occur within the next five years. The swaps are effective on August 1, 2023 and expire on August 1, 2033 and were issued at a fixed rate of approximately 0.8675%. We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of 46 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments).
 ​ 
 Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of June 30, 2020 and December 31, 2019, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings. Omega OP, the guarantor of Parent’s outstanding senior notes, does not directly own any substantive assets other than its interest in non-guarantor subsidiaries.
 $200 Million Stock Repurchase Program 
 On March 20, 2020, Omega’s Board of Directors authorized the repurchase of up to $200 million of its outstanding common stock from time to time over the twelve months ending March 20, 2021. We are authorized to repurchase shares of our common stock in open market and privately negotiated transactions or in any other manner as determined by Omega’s management and in accordance with applicable law. The timing and amount of stock repurchases will be determined, in management’s discretion, based on a variety of factors, including but not limited to market conditions, other capital management needs and opportunities, and corporate and regulatory considerations. Omega has no obligation to repurchase any amount of its common stock, and such repurchases, if any, may be discontinued at any time. Omega did not repurchase any of its outstanding common stock during the six months ended June 30, 2020. 
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 $500 Million Equity Shelf Program
 For the three months ended June 30, 2020, no shares were issued under our $500 Million Equity Shelf Program. For the three months ended June 30, 2019, we issued approximately 0.7 million shares of our common stock at an average price of $35.90 per share, net of issuance costs, generating net proceeds of $26.3 million under our $500 Million Equity Shelf Program. For the six months ended June 30, 2020 and 2019, we issued approximately 49 thousand and 3.0 million, respectively, shares of our common stock at an average price of $36.18 per share and $34.82 per share, respectively, net of issuance costs, generating net proceeds of $1.8 million and $102.9 million, respectively, under our $500 Million Equity Shelf Program. 
 Dividend Reinvestment and Common Stock Purchase Plan
 On March 23, 2020, we announced that we suspended our Dividend Reinvestment and Common Stock Purchase Plan. For the three months ended June 30, 2020, no shares were issued under our Dividend Reinvestment and Common Stock Purchase Plan. For the three months ended June 30, 2019, we issued approximately 0.6 million shares of our common stock at an average price of $37.02 per share through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $21.8 million. For the six months ended June 30, 2020 and 2019, we issued approximately 90 thousand and 1.5 million, respectively, shares of our common stock at an average price of $41.80 per share and $36.52 per share, respectively, through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $3.7 million and $54.1 million, respectively. 
 Commitments
 We have committed to fund the construction of new leased and mortgaged facilities, capital improvements and other commitments. We expect the funding of these commitments to be completed over the next several years. Our remaining commitments at June 30, 2020, are outlined in the table below (in thousands):
 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 ​ 

 
 ​ 
 ​ 
 ​ 
 ​ 
 
 Total commitments
 
 $
 673,634 
 ​ 
 ​ 
 
 Amounts funded to date (1) 
 ​ 
 
 (547,886) 
 ​ 
 ​ 
 
 Remaining commitments
 ​ 
 $
 125,748 
 ​ 
 ​ 
 

 

 (1) Includes finance costs. 

 
 Dividends
 In order to qualify as a REIT, we are required to distribute dividends (other than capital gain dividends) to our stockholders in an amount at least equal to (A) the sum of (i) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain), and (ii) 90% of the net income (after tax), if any, from foreclosure property, minus (B) the sum of certain items of non-cash income. In addition, if we dispose of any built-in gain asset during a recognition period, we will be required to distribute at least 90% of the built-in gain (after tax), if any, recognized on the disposition of such asset. Such distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for such year and paid on or before the first regular dividend payment after such declaration. In addition, such distributions are required to be made pro rata, with no preference to any share of stock as compared with other shares of the same class, and with no preference to one class of stock as compared with another class except to the extent that such class is entitled to such a preference. To the extent that we do not distribute all of our net capital gain or do distribute at least 90%, but less than 100% of our “REIT taxable income” as adjusted, we will be subject to tax thereon at regular ordinary and capital gain corporate tax rates.

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 For the six months ended June 30, 2020, we paid dividends of approximately $307.2 million to our common stockholders. On the 14 th of February 2020, we paid dividends of $0.67 per outstanding common share to common stockholders of record as of the last business day of January 2020. On the 15 th of May 2020, we paid dividends of $0.67 per outstanding common share to common stockholders of record as of the last business day of April 2020. For the six months ended June 30, 2020, Omega OP paid distributions of approximately $11.9 million to holders of Omega OP Units other than Omega. The Omega OP Unit holders received the same distributions per unit as those paid to the common stockholders of Omega.
 Liquidity
 We believe our liquidity and various sources of available capital, including cash from operations, our existing availability under our credit facilities, existing equity sales programs, facility sales and expected proceeds from mortgage and other investment payoffs are adequate to finance operations, meet recurring debt service requirements and fund future investments through the next twelve months.
 We regularly review our liquidity needs, the adequacy of cash flow from operations, and other expected liquidity sources to meet these needs. We believe our principal short-term liquidity needs are to fund:
 ● normal recurring expenses; 

 ● debt service payments; 

 ● capital improvement programs; 

 ● common stock dividends; and 

 ● growth through acquisitions of additional properties. 

 
 The primary source of liquidity is our cash flows from operations. Operating cash flows have historically been determined by: (i) the number of facilities we lease or have mortgages on; (ii) rental and mortgage rates; (iii) our debt service obligations; (iv) general and administrative expenses and (v) our operators’ ability to pay amounts owed. The timing, source and amount of cash flows provided by or used in financing activities and in investing activities are sensitive to the capital markets environment, especially to changes in interest rates. Changes in the capital markets environment may impact the availability of cost-effective capital and affect our plans for acquisition and disposition activity.
 Cash, cash equivalents and restricted cash totaled $41.5 million as of June 30, 2020, an increase of $8.2 million as compared to the balance at December 31, 2019. The following is a discussion of changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities, which are presented in our Consolidated Statements of Cash Flows.
 Operating Activities – Operating activities generated $329.4 million of net cash flow for the six months ended June 30, 2020, as compared to $265.4 million for the same period in 2019, an increase of $64.0 million, which is primarily due to facility acquisitions and transitions, acquired mortgages and other investments. 
 ​ 
 Investing Activities – Net cash flow from investing activities was an outflow of $96.7 million for the six months ended June 30, 2020, as compared to an outflow of $15.0 million for the same period in 2019. The $81.7 million change in cash used in investing activities related primarily to (i) an $83.0 million change in mortgages – net, (ii) a $73.8 million decrease in proceeds from sale of direct financing lease and related trust, (iii) a $56.1 million change in other investments – net and (iv) a $19.5 million increase in real estate acquisitions. Offsetting these changes were: (i) a $59.6 million outflow of cash to complete the MedEquities Merger in the second quarter of 2019, (ii) a $47.1 million increase in proceeds from the sales of real estate investments, (iii) a $28.3 million decrease in investment in construction in progress and (iv) a $24.5 million acquisition related deposit in the second quarter of 2019.
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 Financing Activities – Net cash flow from financing activities was an outflow of $224.1 million for the six months ended June 30, 2020, as compared to an outflow of $227.8 million for the same period in 2019. The $3.7 million change in cash used in financing activities was primarily related to a $194.6 million change in our credit facility borrowings – net offset by (i) a $101.1 million decrease in cash proceeds from the issuance of common stock in 2020, as compared to the same period in 2019, (ii) a $50.4 million decrease in net proceeds from our dividend reinvestment plan in 2020, as compared to the same period in 2019, (iii) a $33.4 million increase in dividends paid and (iv) a $6.0 million change in other long-term borrowings – net. 
 ​ 
 Item 3 – Quantitative and Qualitative Disclosures about Market Risk
 During the quarter ended June 30, 2020, there were no material changes in our primary market risk exposures or how those exposures are managed from the information disclosed under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2019.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
OMEGA HEALTHCARE INVESTORS INC 10-Q

Item 2. Management’s Discussion and Analysis
