What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-04 · 354 added, 354 removed, 548 unchanged (56% of the section changed)

13 unchanged sentences

Investments in unconsolidated joint ventures

Assets held for sale – net

Assets held for sale

Total investments

4 unchanged sentences

LIABILITIES AND EQUITY

Revolving line of credit

Term loans – net

Revolving credit facility

Secured borrowings

4 unchanged sentences

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

Common stock $ .10 par value authorized – 350,000 shares, issued and outstanding – 233,386 shares as of March 31, 2021 and 231,199 as of December 31, 2020

Common stock – additional paid-in capital

Common stock $ .10 par value authorized – 350,000 shares, issued and outstanding – 237,570 shares as of June 30, 2021 and 231,199 as of December 31, 2020

Additional paid-in capital

Cumulative net earnings

11 unchanged sentences

Three Months Ended

Six Months Ended

Rental income

10 unchanged sentences

Recovery on direct financing leases

(Recovery) provision for credit losses

Provision for credit losses

Interest expense

17 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income (loss):

8 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2021 and 2020

Three Months Ended June 30, 2021 and 2020

(in thousands, except per share amounts)

4 unchanged sentences

Income (Loss)

Balance at December 31, 2020

Balance at March 31, 2021

( 5,074,432 )

Stock related compensation

Vesting/exercising of equity compensation plan, net of tax withholdings

Dividend reinvestment and stock purchase plan

Equity Shelf Program

Vesting/exercising of Omega OP Units

Issuance of common stock

Common dividends declared ($ 0.67 per share)

Vesting/exercising of Omega OP Units

Conversion and redemption of Omega OP Units to common stock

Omega OP Units distributions

Comprehensive income:

Foreign currency translation

Cash flow hedges

Total comprehensive income

Other comprehensive loss

Balance at June 30, 2021

( 5,232,692 )

Balance at March 31, 2020

( 4,458,207 )

Stock related compensation

Issuance of common stock

Common dividends declared ($ 0.67 per share)

Vesting/exercising of Omega OP Units

Conversion and redemption of Omega OP Units to common stock

Omega OP Units distributions

Other comprehensive loss

Balance at June 30, 2020

( 4,610,828 )

See notes to consolidated financial statements.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Six Months Ended June 30, 2021 and 2020

(in thousands, except per share amounts)

Comprehensive

Stockholders’

Noncontrolling

Dividends Paid

Balance at December 31, 2020

( 4,916,097 )

Stock related compensation

Issuance of common stock

Common dividends declared ($ 1.34 per share)

Vesting/exercising of Omega OP units

Conversion and redemption of Omega OP Units to common stock

Omega OP Units distributions

Other comprehensive income

Balance at June 30, 2021

( 5,232,692 )

Balance at December 31, 2019

( 4,303,546 )

Cumulative effect of accounting change

1 unchanged sentence

Stock related compensation

Vesting/exercising of equity compensation plan, net of tax withholdings

Dividend reinvestment and stock purchase plan

Equity Shelf Program

Vesting/exercising of Omega OP Units

Issuance of common stock

Common dividends declared ($ 1.34 per share)

Vesting/exercising of Omega OP units

Conversion and redemption of Omega OP Units to common stock

Omega OP Units distributions

Comprehensive income:

Foreign currency translation

Cash flow hedges

Total comprehensive income

Balance at March 31, 2020

Other comprehensive loss

Balance at June 30, 2020

( 4,610,828 )

9 unchanged sentences

Provision for rental income

(Recovery) provision for credit losses

Provision for credit losses

Amortization of deferred financing costs and loss on debt extinguishment

5 unchanged sentences

Interest paid-in-kind

Loss (income) from unconsolidated joint ventures

Income from unconsolidated joint ventures

Change in operating assets and liabilities – net:

20 unchanged sentences

Cash flows from financing activities

Proceeds from credit facility borrowings

Payments on credit facility borrowings

Proceeds from long-term borrowings

Payments of long-term borrowings

( 1,989,561 )

Receipts of other long-term borrowings

Payments of other long-term borrowings

Payments of financing related costs

Receipts from dividend reinvestment plan

Payments for exercised options and restricted stock

Taxes paid on vested restricted stock

Net proceeds from issuance of common stock

1 unchanged sentence

Distributions to Omega OP Unit Holders

Net cash provided by financing activities

Net cash used in financing activities

Effect of foreign currency translation on cash, cash equivalents and restricted cash

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

June 30, 2021

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

14 unchanged sentences

Omega has exclusive control over Omega OP’s day-to-day management pursuant to the partnership agreement governing Omega OP.

As of March 31, 2021, Parent owned approximately 97 % of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and other investors owned approximately 3 % of the outstanding Omega OP Units.

As of June 30, 2021, Parent owned approximately 97 % of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and other investors owned approximately 3 % of the outstanding Omega OP Units.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and notes required by U.S.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by U.S.

generally accepted accounting principles (“GAAP”) for complete financial statements.

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The results of operations for the interim periods reported herein are not necessarily indicative of results to be expected for the full year.

These unaudited consolidated financial statements should be read in conjunction with the financial statements and the footnotes thereto included in our latest Annual Report on Form 10-K filed with the SEC on February 22, 2021.

Omega’s consolidated financial statements include the accounts of (i) Parent, (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.

Risks and Uncertainties

The Company is subject to certain risks and uncertainties affecting the healthcare industry, including those stemming from the novel coronavirus (“COVID-19”) global pandemic described below, which has disproportionately impacted the senior care sector, as well as, those stemming from healthcare legislation and changing regulation by federal, state and local governments, including those driven by the COVID-19 pandemic.

Reclassification

Certain line items on our Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows have been reclassified to conform to the current period presentation.

Impact of COVID-19

The Company is subject to certain risks and uncertainties affecting the healthcare industry, including those stemming from the novel coronavirus (“COVID-19”) global pandemic described below, which has disproportionately impacted the senior care sector, as well as those stemming from healthcare legislation and changing regulation by federal, state and local governments.

Additionally, we are subject to risks and uncertainties as a result of changes affecting operators of nursing home facilities due to the actions of governmental agencies and insurers to limit the rising cost of healthcare services.

In addition to experiencing outbreaks of positive cases and deaths of residents and employees during the pandemic, our operators have been required to, and continue to, adapt their operations rapidly throughout the pandemic to manage the spread of the COVID-19 virus as well as the implementation of new treatments and vaccines, and to implement new requirements relating to infection control, personal protective equipment (“PPE”), quality of care, visitation protocols, staffing levels, and reporting, among other regulations, throughout the pandemic.

It remains uncertain when and to what extent vaccination programs for COVID-19, which have been implemented in many of our facilities, will continue to mitigate the effects of COVID-19 in our facilities, or how effective existing vaccines will be against variants of the COVID-19 virus;

In addition to experiencing outbreaks of positive cases and deaths of residents and employees during the pandemic, our operators have been required to, and continue to, adapt their operations rapidly throughout the pandemic to manage the spread of the COVID-19 virus as well as the implementation of new treatments and vaccines, and to implement new requirements relating to infection control, staffing levels, personal protective equipment (“PPE”), quality of care, visitation protocols, and reporting, among other regulations, throughout the pandemic while facing staffing shortages that have accelerated during the pandemic and that may impede the delivery of care.

It remains uncertain when and to what extent vaccination programs for COVID-19, which have been implemented in most of our facilities, will continue to mitigate the effects of COVID-19 in our facilities, or how effective existing vaccines will be against variants of the COVID-19 virus;

the impact of these programs will depend in part on the continued speed, distribution, efficacy and delivery of the vaccine in our facilities, as well as participation levels in vaccination programs among the residents and employees of our operators.

In addition to the risks associated with managing the spread of the virus, delivery of the vaccines and care of their patients and residents, many of our operators reported incurring, and may continue to incur, significant cost increases as a result of the COVID-19 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 PPE, testing equipment and processes and supplies, as well as implementation of new infection control protocols and vaccination programs.

In addition, many of our operators have reported experiencing declines, in some cases that are material, in occupancy levels as a result of the pandemic, which declines on average appear to be stabilizing.

We believe these declines may be in part due to COVID-19 related fatalities at our facilities, the delay of SNF placement and/or utilization of alternative care settings for those with lower level of care needs, the suspension and/or postponement of elective hospital procedures, fewer discharges from hospitals to SNFs and higher hospital readmittances from SNFs.

We continue to monitor the impact of occupancy declines at many of our operators, and it remains uncertain whether and when demand and occupancy levels will return to pre-COVID-19 levels.

We believe these increases primarily stem from elevated labor costs, in part due to staffing shortages, including the increased use of overtime and bonus pay and reliance on agency staffing, as well as a significant increase in both the cost and usage of PPE, testing equipment and processes and supplies, as well as implementation of new infection control protocols and vaccination programs.

In addition, many of our operators have reported experiencing declines, in some cases that are material, in occupancy levels as a result of the pandemic.

While these declines on average appear to be stabilizing and even marginally improving in recent months, it remains unclear when demand and occupancy levels will return to pre-COVID-19 levels.

We believe these occupancy declines may be in part due to staffing shortages, which in some cases have required operators to limit admissions, as well as COVID-19 related fatalities at our facilities, the delay of SNF placement and/or utilization of alternative care settings for those with lower level of care needs, the suspension and/or postponement of elective hospital procedures, fewer discharges from hospitals to SNFs and higher hospital readmittances from SNFs.

We continue to monitor the impact of occupancy declines at many of our operators, and it remains uncertain whether and when demand, staffing and occupancy levels will return to pre-COVID-19 levels.

While substantial government support has been allocated to SNFs and to a lesser extent to ALFs, further government support will likely be needed to continue to offset these impacts and it is unclear whether and to what extent such government support has been and will continue to be sufficient and timely to offset these impacts.

3 unchanged sentences

Due to these uncertainties, 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.

Variable Interest Entities

GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”).

A VIE is broadly defined as an entity with one or more of the following characteristics:

(a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support;

(b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity;

or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

Our variable interests in VIEs may be in the form of equity ownership, leases, guarantees and/or loans with our operators.

We analyze our agreements and investments to determine whether our operators or unconsolidated joint ventures are VIEs and, if so, whether we are the primary beneficiary.

We consolidate a VIE when we determine that we are its primary beneficiary.

We identify the primary beneficiary of a VIE as the enterprise that has both:

(i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance;

and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity.

Factors considered in determining whether we are the primary beneficiary of an entity include:

(i) our voting rights, if any;

(ii) our involvement in day-to-day capital and operating decisions;

(iii) our risk and reward sharing;

(iv) the financial condition of the operator or joint venture and (iv) our representation on the VIE’s board of directors.

We perform this analysis on an ongoing basis.

As of March 31, 2021, we have not consolidated any VIEs, as we do not have the power to direct the activities of any VIEs that most significantly impact their economic performance and we do not have the obligation to absorb losses or receive benefits of the VIEs that could be significant to the entities.

Real Estate Investments and Depreciation

The costs of significant improvements, renovations and replacements, including interest are capitalized.

In addition, we capitalize leasehold improvements when certain criteria are met, including when we supervise construction and will own the improvement.

Expenditures for maintenance and repairs are charged to operations as they are incurred.

Depreciation is computed on a straight-line basis over the estimated useful lives ranging from 20 to 40 years for buildings, eight to 15 years for site improvements, and three to 10 years for furniture and equipment.

Leasehold interests are amortized over the shorter of the estimated useful life or term of the lease.

Business Combinations

We record the purchase of properties to net tangible and identified intangible assets acquired and liabilities assumed at fair value.

Transaction costs are expensed as incurred as part of a business combination.

In making estimates of fair value for purposes of recording the purchase, we utilize a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data.

We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing and leasing activities as well as other critical valuation metrics such as current capitalization rates and discount rates used to estimate the fair value of the tangible and intangible assets acquired (Level 3).

When liabilities are assumed as part of a transaction, we consider information obtained about the liabilities and use similar valuation metrics (Level 3).

In some instances when debt is assumed and an identifiable active market for similar debt is present, we use market interest rates for similar debt to estimate the fair value of the debt assumed (Level 2).

The Company determines fair value as follows:

● Land is determined based on third party appraisals which typically include market comparables.

● Buildings and site improvements acquired are valued using a combination of discounted cash flow projections that assume certain future revenues and costs and consider capitalization and discount rates using current market conditions as well as the residual approach.

● Furniture and fixtures are determined based on third party appraisals which typically utilize a replacement cost approach.

● Mortgages and other investments are valued using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings.

● Investments in joint ventures are valued based on the fair value of the joint ventures’ assets and liabilities.

Differences, if any, between the Company’s basis and the joint venture’s basis are generally amortized over the lives of the related assets and liabilities, and such amortization is included in the Company’s share of earnings of the joint venture.

● Intangible assets and liabilities acquired are valued using a combination of discounted cash flow projections as well as other valuation techniques based on current market conditions for the intangible asset or liability being acquired.

When evaluating below market leases we consider extension options controlled by the lessee in our evaluation.

● Other assets acquired and liabilities assumed are typically valued at stated amounts, which approximate fair value on the date of the acquisition.

● Assumed debt balances are valued by discounting the remaining contractual cash flows using a current market rate of interest.

● Goodwill represents the purchase price in excess of the fair value of assets acquired and liabilities assumed.

Goodwill is not amortized.

Asset Acquisitions

For asset acquisitions, assets acquired and liabilities assumed are recognized by allocating the cost of the acquisition, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis.

The fair value of the assets acquired and liabilities assumed in an asset acquisition are determined in a consistent manner with the immediately preceding “Business Combinations” section.

Real Estate Investment Impairment

Management evaluates our real estate investments for impairment indicators at each reporting period, including the evaluation of our assets’ useful lives.

The judgment regarding the existence of impairment indicators is based on factors such as, but not limited to, market conditions, operator performance including the current payment status of contractual obligations and expectations of the ability to meet future contractual obligations, legal structure, as well as our intent with respect to holding or disposing of the asset.

If indicators of impairment are present, management evaluates the carrying value of the related real estate investments in relation to management’s estimate of future undiscounted cash flows of the underlying facilities.

The estimated future undiscounted cash flows are generally based on the related lease which relates to one or more properties and may include cash flows from the eventual disposition of the asset.

In some instances, there may be various potential outcomes for a real estate investment and its potential future cash flows.

In these instances, the undiscounted future cash flows used to assess the recoverability are probability-weighted based on management’s best estimates as of the date of evaluation.

Provisions for impairment losses related to long-lived assets are recognized when expected future undiscounted cash flows based on our intended use of the property are determined to be less than the carrying values of the assets.

An adjustment is made to the net carrying value of the real estate investments for the excess of carrying value over fair value.

The fair value of the real estate investment is determined based on current market conditions and consider matters such as rental rates and occupancies for comparable properties, recent sales data for comparable properties, and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers.

Additionally, our evaluation of fair value may consider valuing the property as a nursing home or other healthcare facility as well as alternative uses.

All impairments are taken as a period cost at that time, and depreciation is adjusted going forward to reflect the new value assigned to the asset.

Management’s impairment evaluation process, and when applicable, impairment calculations involve estimation of the future cash flows from management’s intended use of the property as well as the fair value of the property.

Changes in the facts and circumstances that drive management’s assumptions may result in an impairment to our assets in a future period that could be material to our results of operations.

Lease Accounting

Lessor Accounting

As a lessor, our leased real estate properties are leased under provisions of single or master leases with initial terms typically ranging from 5 to 15 years , plus renewal options.

As of March 31, 2021, we have determined that all but one of our leases should be accounted for as operating leases.

One lease is accounted for as a direct financing lease.

Under the terms of the leases, the lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties.

For leases accounted for as operating leases, we retain ownership of the asset and record depreciation expense (see “Business Combinations”, “Asset Acquisitions” and “Real Estate Investments and Depreciation” above for additional information regarding our investment in real estate leased under operating lease agreements).

Substantially all of our operating leases contain provisions for specified annual increases over the rents of the prior year and are generally computed in one of three methods depending on the specific provisions of each lease as follows:

(i) a specific annual increase over the prior year’s rent, generally between 2.0 % and 3.0 %;

(ii) an increase based on the change in pre-determined formulas from year to year (e.g., increases in the Consumer Price Index);

or (iii) specific dollar increases over prior years.

Rental income from operating leases is generally recognized on a straight-line basis over the lease term when we have determined that the collectibility of substantially all of the lease payments is probable.

We assess the probability of collecting substantially all payments due under our leases on several factors, including, among other things, payment history, the financial strength of the lessee and/or borrower and any guarantors, historical operations and operating trends, current and future economic conditions, and expectations of performance (which includes known substantial doubt about an operator’s ability to continue as a going concern).

If our evaluation of these factors indicates it is probable that we will be unable to collect substantially all rents, we recognize a charge to rental income and limit our rental income to the lesser of lease income on a straight-line basis plus variable rents when they become accruable or cash collected.

If we change our conclusion regarding the probability of collecting rent payments required by a lessee, we may recognize an adjustment to rental income in the period we make a change to our prior conclusion, potentially resulting in increased volatility of rental income.

For leases accounted for as direct financing leases, we record the present value of the future minimum lease payments (utilizing a constant interest rate over the term of the lease agreement) as a receivable and record interest income based on the contractual terms of the lease agreement.

Certain direct financing leases include annual rent escalators, see “Lessor Accounting for Direct Financing Lease Income” below for further discussion regarding the recording of interest income on our direct financing leases.

Lessee Accounting

As a lessee, the Company is party to ground and/or facility leases which are classified as operating leases.

(i) a specific annual increase over the prior year’s rent, generally between 1.0 % and 3.0 %;

(ii) an increase based on the change in pre-determined formulas from year to year (e.g., increases in the Consumer Price Index);

or (iii) specific dollar increases over prior years.

The initial terms of our ground leases range between 10 years and 100 years .

Our office leases have initial terms of approximately 10 years .

Certain leases have options to extend , terminate or purchase the asset and have been considered in our analysis of the lease term and the measurement of the right-of-use assets and lease liabilities.

The discount rate utilized in forming the basis of our right of use assets and lease liabilities approximates our cost of debt.

We have not recognized a right of use asset and/or lease liability for leases with terms of 12 months or less and without an option to purchase the underlying asset.

Our right of use assets and lease liabilities are included in other assets and accrued expenses and other liabilities, respectively, on our Consolidated Balance Sheets.

On a monthly basis, we remeasure our lease liabilities at the present value of the future lease payments using the discount rate determined at lease commencement.

Rental expense from operating leases is generally recognized on a straight-line basis over the lease term.

Mortgages, Other Investments and Direct Financing Leases (collectively, our “loans”) and Allowance for Credit Losses

Mortgage Interest Income and Other Investment Income

Mortgage interest income and other investment income is recognized as earned over the terms of the related mortgage notes or other investment.

Interest income is recorded on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method.

In applying the effective interest method, the effective yield on a loan is determined based on its contractual payment terms, adjusted for prepayment terms.

Lessor Accounting for Direct Financing Lease Income

We record direct financing lease income on a constant interest rate basis over the term of the lease.

Costs related to originating direct financing leases are deferred and amortized on a straight-line basis as a reduction to income from direct financing leases over the term of the direct financing leases.

Allowance for Credit Losses

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 changed 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 new approach requires the calculation of expected lifetime credit losses and is applied to financial assets measured at amortized cost, including loans, as well as certain off-balance sheet credit exposures such as unfunded loan commitments.

The allowance for credit loss on the loans is a valuation amount that is deducted from the amortized cost basis of the loans not held at fair value to present the net amount expected to be collected over the contractual term of the loans.

The allowance for credit losses on loans is measured using relevant information about past events, including historical credit loss experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the remaining cash flows over the contractual term of the loans.

Changes to the allowance for credit losses on loans resulting from quarterly evaluations are recorded through provision for credit losses on the Consolidated Statements of Operations.

The Company’s unfunded lending commitments are calculated using the same as the methodology for the loans over the contractual term of the commitment.

The loss estimate is recorded in accrued expenses and other liabilities on the Consolidated Balance Sheets with quarterly changes to the liability recorded through provision for credit losses on the Consolidated Statements of Operations.

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 .

We elected to disaggregate our financial assets within the scope of Topic 326 based on the type of financial instrument.

These segments were further disaggregated based on our internal credit ratings.

We assess our internal credit ratings on a quarterly basis.

Our internal credit ratings consider several factors including the collateral and/or security, the performance of borrowers underlying facilities, if applicable, available credit support (e.g., guarantees), borrowings with third parties, and other ancillary business ventures and real estate operations of the borrower.

Our internal ratings range between 1 and 7.

An internal rating of 1 reflects the lowest likelihood of loss and a 7 reflects the highest likelihood of loss.

We have a limited history of incurred losses and consequently have elected to employ external data to perform our expected credit loss calculation.

We have elected a probability of default (“PD”) and loss given default (“LGD”) methodology.

Our model’s historic inputs consider PD and LGD data for residential care facilities published by the Federal Housing Administration along with Standards & Poor’s one-year global corporate default rates.

Our historical loss rates revert to historical averages after 36 periods.

Our model’s current conditions and supportable forecasts consider internal credit ratings, current and projected U.S.

unemployment rates published by the United States Bureau of Labor Statistics and the Federal Reserve Bank of St.

Louis and the weighted average life to maturity of the underlying financial asset.

As of March 31, 2021, $ 10.4 million of contractual interest receivable is recorded in contractual receivables – net on our Consolidated Balance Sheets.

We have elected the practical expedient to exclude interest receivable from our allowance for credit losses.

We write-off interest receivable to provision for credit losses in the period we determine the interest is no longer considered collectible.

Our assessment of collectibility considers several factors, including, among other things, payment history, the financial strength of the borrower and any guarantors, historical operations and operating trends, current and future economic conditions, expectations of performance (which includes known substantial doubt about an operator’s ability to continue as a going concern) and the value of the underlying collateral of the agreement, if any.

Periodically, the Company may identify an individual loan for impairment.

A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreements.

Consistent with this definition, all loans on non-accrual status may be deemed impaired.

To the extent circumstances improve and the risk of collectibility is diminished, we will return these loans to full accrual status.

When we identify a loan impairment, the loan is written down to the present value of the expected future cash flows.

In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral.

We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the sale of the collateral.

Contractual Receivables and Other Receivables and Lease Inducements

Contractual receivables relate to the amounts currently owed to us under the terms of our lease and loan agreements.

Effective yield interest receivables relate to the difference between the interest income recognized on an effective yield basis over the term of the loan agreement and the interest currently due to us according to the contractual agreement.

Straight-line rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement.

Lease inducements result from value provided by us to the lessee, at the inception, modification, or renewal of the lease, and are amortized as a reduction of rental revenue over the non-cancellable lease term.

A summary of our net receivables by type is as follows:

(in thousands)

Contractual receivables – net

Effective yield interest receivables

Straight-line rent receivables

Lease inducements

Other receivables and lease inducements

During the first quarter of 2021, we wrote-off approximately $ 2.7 million of straight-line rent receivables to rental income as a result of transitioning one facility and placing one operator on a cash basis due to changes in our evaluation of the collectibility of future rent payments due under the lease agreement.

Earnings Per Share

The computation of basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the relevant period.

Diluted EPS is computed using the treasury stock method, which is net income divided by the total weighted-average number of common outstanding shares plus the effect of dilutive common equivalent shares during the respective period.

Dilutive common shares reflect the assumed issuance of additional common shares pursuant to certain of our share-based compensation plans, including restricted stock and profit interest units, performance restricted stock and profit interest units, the assumed issuance of additional shares related to Omega OP Units held by outside investors.

Noncontrolling Interests

Noncontrolling interests is the portion of equity not attributable to the respective reporting entity.

We present the portion of any equity that we do not own in consolidated entities as noncontrolling interests and classify those interests as a component of total equity, separate from total stockholders’ equity or owners’ equity on our Consolidated Balance Sheets.

We include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Operations.

As our ownership of a controlled subsidiary increases or decreases, any difference between the aggregate consideration paid to acquire the noncontrolling interests and our noncontrolling interest balance is recorded as a component of equity in additional paid-in capital, so long as we maintain a controlling ownership interest.

The noncontrolling interest for Omega represents the outstanding Omega OP Units held by outside investors and interests in a consolidated real estate joint venture not fully owned by Omega.

Foreign Operations

dollar (“USD”) is the functional currency for our consolidated subsidiaries operating in the U.S.

The functional currency for our consolidated subsidiaries operating in the U.K.

is the British Pound (“GBP”).

For our consolidated subsidiaries whose functional currency is not the USD, we translate their financial statements into the USD.

We translate assets and liabilities at the exchange rate in effect as of the financial statement date.

Revenue and expense accounts are translated using an average exchange rate for the period.

Gains and losses resulting from translation are included in accumulated other comprehensive income (“AOCI”), as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interests, if applicable.

We and certain of our consolidated subsidiaries may have intercompany and third-party debt that is not denominated in the entity’s functional currency.

When the debt is remeasured against the functional currency of the entity, a gain or loss can result.

The resulting adjustment is reflected in results of operations, unless it is intercompany debt that is deemed to be long-term in nature in which case the adjustments are included in AOCI and a proportionate amount of gain or loss is allocated to noncontrolling interests, if applicable.

Derivative Instruments

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During our normal course of business, we may use certain types of derivative instruments for the purpose of managing interest rate and currency risk.

As a matter of policy, we do not use derivatives for trading or speculative purposes.

To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge.

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Changes in the fair value of derivative instruments that are not designated in hedging relationships or that do not meet the criteria of hedge accounting are recognized in earnings.

For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in AOCI as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest, if applicable.

For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in accumulated other comprehensive income (“AOCI”) as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest, if applicable.

We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions.

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If it is determined that a derivative ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and record the appropriate adjustment to earnings based on the current fair value of the derivative.

As a matter of policy, we do not use derivatives for trading or speculative purposes.

At March 31, 2021 and December 31, 2020, $ 0.7 million and $ 1.0 million, respectively, of qualifying cash flow hedges were recorded at fair value in accrued expenses and other liabilities on our Consolidated Balance Sheets.

At March 31, 2021 and December 31, 2020, $ 52.6 and $ 17.0 million, respectively, of qualifying cash flow hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

Net investment hedge

We are exposed to fluctuations in the GBP against its functional currency, the USD, relating to our investments in healthcare-related real estate located in the U.K.

For derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported in AOCI as a part of the cumulative translation adjustment in our Consolidated Balance Sheets.

At June 30, 2021 and December 31, 2020, $ 0.5 million and $ 1.0 million, respectively, of qualifying cash flow hedges were recorded at fair value in accrued expenses and other liabilities on our Consolidated Balance Sheets.

At June 30, 2021 and December 31, 2020, $ 34.1 million and $ 17.0 million, respectively, of qualifying cash flow hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

Net investment hedges

We are exposed to fluctuations in the British Pound (“GBP”) against its functional currency, the U.S.

Dollar (“USD”), relating to our investments in healthcare-related real estate located in the U.K.

For derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported in AOCI as part of the cumulative translation adjustment in our Consolidated Balance Sheets.

For nonderivative financial instruments that are designated and qualify as net investment hedges, the foreign currency transaction gain or loss on the nonderivative financial instrument is reported in AOCI as a part of the cumulative translation adjustment in our Consolidated Balance Sheets.

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From the issuance date of our GBP borrowings through the prepayment date in March 2021, we used a nonderivative, GBP-denominated term loan and line of credit totaling £ 174 million to hedge a portion of our net investments in foreign operations.

During March 2021 and concurrent with the prepayment of our GBP-denominated term loan and line of credit, we entered into four foreign currency forwards that mature on March 8, 2024 to hedge a portion of our net investments in foreign operations, effectively replacing the terminated net investment hedge.

At March 31, 2021, $ 0.9 million of qualifying net investment hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

Reclassification

Certain line items on our Consolidated Statements of Operations and Consolidated Statements of Changes in Equity have been reclassified to conform to the current period presentation.

During March 2021 and concurrent with the prepayment of our GBP-denominated term loan and line of credit, we entered into four foreign currency forwards that mature on March 8, 2024 to hedge a portion of our net investments in foreign real estate, effectively replacing the terminated net investment hedge.

At June 30, 2021, $ 0.3 million of qualifying net investment hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

NOTE 2 – PROPERTIES AND INVESTMENTS

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Real estate investments – net

At March 31, 2021, our leased real estate properties included 734 SNFs, 133 ALFs, 35 specialty facilities and two medical office buildings.

Three Months Ended March 31,

At June 30, 2021, our leased real estate properties included 728 SNFs, 132 ALFs, 35 specialty facilities and two medical office buildings.

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Rental income – operating leases

Variable lease income – operating leases

Total lease income

The following table summarizes the significant asset acquisitions that occurred during the first three months of 2021:

Total rental income

The following table summarizes the significant asset acquisitions that occurred during the first six months of 2021:

(in millions)

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The acquisition involved the assumption of an in-place master lease with Brookdale Senior Living Inc.

During the second quarter of 2021, we acquired one parcel of land (not reflected in the table above) for approximately $ 10.4 million.

Asset Sales and Impairments

During the first quarter of 2021, we sold 24 facilities subject to operating leases for approximately $ 188.3 million in net cash proceeds, recognizing a net gain of approximately $ 100.3 million.

In addition, we recorded impairments on four facilities of approximately $ 28.7 million ( three were subsequently reclassified to assets held for sale).

In addition, we recorded impairments on four facilities of approximately $ 28.7 million ( three were subsequently reclassified to assets held for sale in the first quarter of 2021).

During the second quarter of 2021, we sold six facilities subject to operating leases for approximately $ 12.9 million in net cash proceeds, recognizing a net gain of approximately $ 4.1 million.

In addition, we recorded impairments on three facilities of approximately $ 8.8 million (all three were subsequently reclassified to assets held for sale in the second quarter of 2021).

Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators.

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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).

NOTE 3 – CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS

A summary of our net receivables by type is as follows:

(in thousands)

Contractual receivables – net

Effective yield interest receivables

Straight-line rent receivables

Lease inducements

Other receivables and lease inducements

During the first and second quarters of 2021, we wrote-off approximately $ 2.7 million and $ 17.4 million, respectively, of straight-line rent receivables to rental income as a result of transitioning one facility and placing two operators on a cash basis due to changes in our evaluation of the collectibility of future rent payments due under the lease agreements.

Based on our evaluation of the collectibility of future rent payments due under the lease agreements for the two operators discussed above, we do not believe it is probable that we will be able to collect substantially all rents due.

These two operators generated approximately 3 % of our total revenues (excluding the impact of straight-line rent receivable write-offs in 2021) for the six months ended June 30, 2021 and 2020.

For the six months ended June 30, 2021, we have been unable to collect approximately $ 3.5 million of contractual rents due from these operators.

We have applied $ 2.5 million of one of the operator’s security deposit funds against their uncollected receivables, which represents one month of contractual rent under the lease agreement.

We have subordinated debt to a third party with an outstanding principal balance of $ 20 million that matures in December 2021 (see Note 13 – Borrowing Arrangements in our Annual Report on Form 10-K for the year ended December 31, 2020).

However, that indebtedness (interest and, under some circumstances, principal) is subject to offset if contractual rent is not paid when due by one of the subject operators.

NOTE 4 – MORTGAGE NOTES RECEIVABLE

As of March 31, 2021, mortgage notes receivable relate to nine fixed rate mortgage notes on 63 facilities.

As of June 30, 2021, mortgage notes receivable relate to seven fixed rate mortgage notes on 63 facilities.

The mortgage notes are secured by first mortgage liens on the borrowers’ underlying real estate and personal property.

The mortgage notes receivable relate to facilities located in eight states that are operated by seven independent healthcare operating companies.

The mortgage notes receivable relate to facilities located in seven states that are operated by six independent healthcare operating companies.

We monitor compliance with the terms of our mortgages and when necessary have initiated collection, foreclosure and other proceedings with respect to certain outstanding mortgage notes.

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Total mortgages — net

(1) Approximates the weighted average interest rate on 47 facilities as of March 31, 2021.

Two notes totaling approximately $ 30.7 million are construction mortgages with maturities in 2021 .

Two mortgage notes totaling $ 43.2 million mature in 2021 and the remaining loan balance matures in 2029 .

(2) Other mortgages outstanding have a weighted average interest rate of 9.41 % per annum as of March 31, 2021 and maturity dates through 2028 .

(1) Approximates the weighted average interest rate on 46 facilities as of June 30, 2021.

As of June 30, 2021, the carrying amount includes two mortgages that mature in 2021, a construction mortgage with an outstanding principal balance of $ 13.9 million and a facility mortgage with an outstanding principal balance of $ 21.3 million, with the remaining loan balance maturing in 2029.

During the second quarter of 2021, one construction mortgage with an original maturity date of 2021 was extended to 2029 and converted into a facility mortgage.

(2) Other mortgages outstanding have a weighted average interest rate of 9.38 % per annum as of June 30, 2021 and maturity dates ranging from 2023 through 2032 .

NOTE 5 – OTHER INVESTMENTS

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Total other investments — net

(1) Approximate weighted average interest rate as of March 31, 2021.

(2) Other investment notes have a weighted average interest rate of 8.26 % as of March 31, 2021 and maturity dates through 2028 .

(1) Approximate weighted average interest rate as of June 30, 2021.

(2) Other investment notes have a weighted average interest rate of 8.37 % as of June 30, 2021 and maturity dates ranging from 2021 through 2028 .

Other investment notes due 2024

On March 6, 2018, we amended certain terms of our $ 48.0 million secured term loan with Genesis.

On March 6, 2018, we amended certain terms of our $ 48.0 million secured term loan with Genesis Healthcare, Inc.

The $ 48.0 million term loan bears interest at a fixed rate of 14 % per annum, of which 9 % per annum is paid-in-kind and was initially scheduled to mature on July 29, 2020 .

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This term loan (and the $ 16.0 million term loan discussed below) is secured by a first priority lien on and security interest in certain collateral of Genesis.

As of March 31, 2021, approximately $ 66.7 million is outstanding on this term loan.

As of June 30, 2021, approximately $ 68.2 million is outstanding on this term loan.

Also on March 6, 2018, we provided Genesis an additional $ 16.0 million secured term loan bearing interest at a fixed rate of 10 % per annum, of which 5 % per annum is paid-in-kind, and was initially scheduled to mature on July 29, 2020 .

The maturity date of this loan was extended during the first quarter of 2021 to January 1, 2024 .

As of March 31, 2021, approximately $ 18.6 million is outstanding on this term loan.

As of June 30, 2021, approximately $ 18.9 million is outstanding on this term loan.

NOTE 6 – ALLOWANCE FOR CREDIT LOSSES

A rollforward of our allowance for credit losses is as follows:

We elected to disaggregate our financial assets within the scope of Accounting Standards Codification 326 based on the type of financial instrument.

These segments were further disaggregated based on our internal credit ratings.

We assess our internal credit ratings on a quarterly basis.

Our internal ratings range between 1 and 7.

An internal rating of 1 reflects the lowest likelihood of loss and a 7 reflects the highest likelihood of loss.

We have a limited history of incurred losses and consequently have elected to employ external data to perform our expected credit loss calculation.

We have elected a probability of default (“PD”) and loss given default (“LGD”) methodology.

Our historical loss rates revert to historical averages after 36 periods.

Our model’s current conditions and supportable forecasts consider internal credit ratings, current and projected U.S.

unemployment rates published by the U.S.

Bureau of Labor Statistics and the Federal Reserve Bank of St.

Louis and the weighted average life to maturity of the underlying financial asset.

As of June 30, 2021, $ 10.2 million of contractual interest receivable is recorded in contractual receivables – net and $ 11.6 million of effective yield interest receivables is recorded in other receivables and lease inducements on our Consolidated Balance Sheets, both of which are excluded from our allowance for credit losses.

Periodically, the Company may identify an individual loan for impairment.

Consistent with this definition, all loans on non-accrual status may be deemed impaired.

To the extent circumstances improve and the risk of collectibility is diminished, we will return these loans to full accrual status.

When we identify a loan impairment, the loan is written down to the present value of the expected future cash flows.

In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral.

A rollforward of our allowance for credit losses for the six months ended June 30, 2021 is as follows:

Financial Statement Line Item

Allowance for Credit Loss as of December 31, 2020

(Recovery) Provision for Credit Loss for the period ended March 31, 2021

Write-offs charged against allowance for the period ended March 31, 2021

Allowance for Credit Loss as of March 31, 2021

Provision (recovery) for Credit Loss for the three months ended June 30, 2021

Write-offs charged against allowance for the three months ended June 30, 2021

Provision (recovery) for Credit Loss for the six months ended June 30, 2021

Write-offs charged against allowance for the six months ended June 30, 2021

Allowance for Credit Loss as of June 30, 2021

(in thousands)

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Off-Balance Sheet Note Commitments

(1) This provision primarily relates to a $ 4.5 million reserve recorded on a term loan during the second quarter of 2021.

A rollforward of our allowance for credit losses for the six months ended June 30, 2020 is as follows:

Financial Statement Line Item

Allowance for Credit Loss at December 31, 2019

Allowance for Credit Loss on January 1, 2020

Provision (recovery) for Credit Loss for the three months ended June 30, 2020

Write-offs charged against allowance for the three months ended June 30, 2020

Provision (recovery) for Credit Loss for the six months ended June 30, 2020

Write-offs charged against allowance for the six months ended June 30, 2020

Allowance for Credit Loss as of June 30, 2020

(in thousands)

Mortgage Notes Receivable

Investment in Direct Financing Leases

Other Investments

Off-Balance Sheet Commitments

A summary of our amortized cost basis by year of origination and credit quality indicator is as follows:

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Revolving Loans

Balance as of March 31, 2021

Balance as of June 30, 2021

(in thousands)

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NOTE 7 – VARIABLE INTEREST ENTITIES

As of March 31, 2021 and December 31, 2020, Agemo Holdings, LLC (“Agemo”) and Maplewood Real Estate Holdings, LLC (“Maplewood”) are both VIEs.

Below is a summary of our assets, liabilities and collateral associated with these operators as of March 31, 2021 and December 31, 2020:

March 31, 2021

As of June 30, 2021 and December 31, 2020, Agemo Holdings, LLC (“Agemo”) and Maplewood Real Estate Holdings, LLC (“Maplewood”) are both variable interest entities (“VIEs”).

As of June 30, 2021, we have not consolidated any VIEs, as we have concluded that we are not the primary beneficiary.

This conclusion is based on the fact that we do not have the power to direct the activities of any VIEs that most significantly impact their economic performance and we do not have the obligation to absorb losses or receive benefits of the VIEs that could be significant to the entities.

Below is a summary of our assets, liabilities and collateral associated with these operators as of June 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

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Contingent liability

Total Liabilities

Letters of credit

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Other collateral

Total Collateral

Maximum exposure to loss

In determining our maximum exposure to loss from the VIE, we considered the underlying carrying value of the real estate subject to leases with the operator and other collateral, if any, supporting our other investments, which may include accounts receivable, security deposits, letters of credit or personal guarantees, if any, as well as other liabilities recognized with respect to these operators.

The table below reflects our total revenues from Agemo and Maplewood for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

In May 2018, we reached an out-of-court restructuring agreement with Agemo that, among other terms, provided for the deferral of rent up to $ 6.3 million per annum through April 2021.

During the second quarter of 2021, the Agemo lease was amended to allow for the deferral of four additional months of rent, representing $ 2.1 million, through August 2021.

As a result of concerns of our ability to collect all future rent payments, the Company had begun recognizing rental income related to Agemo on a cash basis in September 2020 and had written off all remaining contractual rent receivables, straight-line rent receivables, and lease inducements.

Our conclusion on collectibility was based on information the Company received from Agemo regarding substantial doubt as to their ability to continue as a going concern.

The table below reflects our total revenues from Agemo and Maplewood for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Rental income

Other investment income

(1) For the three months ended March 31, 2021 and 2020, we received cash from Agemo of approximately $ 14.0 million and $ 13.7 million, respectively, pursuant to our lease and other investment agreements.

For the three months ended March 31, 2021 and 2020, we received cash rental income and other investment income from Maplewood of approximately $ 19.3 million and $ 16.8 million, respectively.

(1) For the three months ended June 30, 2021 and 2020, we received cash from Agemo of approximately $ 14.0 million and $ 13.1 million, respectively, pursuant to our lease and other investment agreements.

For the six months ended June 30, 2021 and 2020, we received cash from Agemo of approximately $ 28.0 million and $ 26.8 million, respectively, pursuant to our lease and other investment agreements.

For the three months ended June 30, 2021 and 2020, we received cash from Maplewood of approximately $ 19.7 million and $ 17.2 million, respectively, pursuant to our lease and other investment agreements.

For the six months ended June 30, 2021 and 2020, we received cash from Maplewood of approximately $ 39.0 million and $ 33.9 million, respectively, pursuant to our lease and other investment agreements.

NOTE 8 – INVESTMENTS IN JOINT VENTURES

Unconsolidated Joint Ventures

Omega owns an interest in the following entities that are accounted for under the equity method (dollars in thousands):

Omega owns an interest in a number of joint ventures that are accounted for under the equity method.

These entities and their subsidiaries are not consolidated by the Company because it does not control, through voting rights or other means, the joint venture.

The following is a summary of our investments in unconsolidated joint ventures (dollars in thousands):

Carrying Amount

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OH CHS SNP, Inc.

(1) These entities and their subsidiaries are not consolidated by the Company because it does not control, through voting rights or other means, the joint venture.

(1) Our initial investment includes our transaction costs, if any.

(2) During the first quarter of 2021, this joint venture sold 16 SNFs to an unrelated third party for approximately $ 328 million in net proceeds and recognized a gain on sale of approximately $ 102.2 million ( $ 14.9 million of which represents the Company’s share of the gain).

During the first quarter of 2021, this joint venture also sold 5 SNFs to Second Spring II LLC for approximately $ 70.8 million in net proceeds.

(4) We acquired approximately a 15 % interest in Second Spring II LLC for approximately $ 10.3 million.

During the first quarter of 2021, this joint venture acquired 5 SNFs from Second Spring Healthcare Investments for approximately $ 70.8 million.

The following table reflects our income (loss) from unconsolidated joint ventures for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

During the first quarter of 2021, this joint venture also sold five SNFs to Second Spring II LLC for approximately $ 70.8 million in net proceeds.

(3) We acquired a 15 % interest in Second Spring II LLC for approximately $ 10.3 million.

During the first quarter of 2021, this joint venture acquired five SNFs from Second Spring Healthcare Investments for approximately $ 70.8 million.

During the second quarter of 2021, this joint venture sold four SNFs to an unrelated third party for approximately $ 50 million in net proceeds and recognized a loss on sale of approximately $ 0.3 million ( $ 0.1 million of which represents the Company’s share of the loss).

The following table reflects our income (loss) from unconsolidated joint ventures for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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OH CHS SNP, Inc.

(1) The income from this unconsolidated joint venture includes a $ 14.9 million gain on sale of real estate investments.

(1) The income from this unconsolidated joint venture for the six months ended June 30, 2021 includes a $ 14.9 million gain on sale of real estate investments.

Asset Management Fees

We receive asset management fees from certain joint ventures for services provided.

For each of the three months ended March 31, 2021 and 2020, we recognized approximately $ 0.2 million of asset management fees.

For each of the three months ended June 30, 2021 and 2020, we recognized approximately $ 0.3 million and $ 0.5 million, respectively, of asset management fees.

For each of the six months ended June 30, 2021 and 2020, we recognized approximately $ 0.5 million and $ 0.7 million, respectively, of asset management fees.

These fees are included in miscellaneous income in the accompanying Consolidated Statements of Operations.

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The following is a summary of our assets held for sale:

Properties Held For Sale

Net Book Value

Facilities Held For Sale

Number of Facilities

(in thousands)

December 31, 2020

Properties sold (1)

Properties added (2)

Facilities sold/other (1)

Facilities added (2)

March 31, 2021

Facilities sold/other (1)

Facilities added (2)(3)

June 30, 2021 (3)

(1) In the first quarter of 2021, we sold 21 facilities for approximately $ 187.6 million in net cash proceeds recognizing a net gain on sale of approximately $ 100.3 million.

In the second quarter of 2021, we sold four facilities for approximately $ 3.5 million in net cash proceeds recognizing a net gain on sale of approximately $ 1.9 million.

One facility classified as held for sale at March 31, 2021 was no longer considered held for sale during the second quarter of 2021 and was reclassified to leased property at approximately $ 0.2 million which represents the facility’s carrying value.

(2) In the first quarter of 2021, we recorded approximately $ 16.9 million of impairment expense to reduce three facilities’ book value to their estimated fair value less costs to sell before they were reclassified to assets held for sale.

(3) We plan to sell the facilities classified as assets held for sale at March 31, 2021 within the next twelve months.

NOTE 9 – INTANGIBLES

The following is a summary of our intangibles as of March 31, 2021 and December 31, 2020:

In the second quarter of 2021, we recorded approximately $ 8.8 million of impairment expense to reduce three facilities’ book value to their estimated fair value less costs to sell before they were reclassified to assets held for sale.

(3) Number of facilities excludes one parcel of land.

NOTE 10 – GOODWILL AND OTHER INTANGIBLES

The following is a summary of our goodwill as of June 30, 2021:

(in thousands)

Balance as of December 31, 2020

foreign currency translation

Balance as of June 30, 2021

The following is a summary of our intangibles as of June 30, 2021 and December 31, 2020:

(in thousands)

Above market leases

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The net amortization related to the above and below market leases is included in our Consolidated Statements of Operations as an adjustment to rental income.

For the three months ended March 31, 2021 and 2020, our net amortization related to intangibles was $ 6.2 million and $ 1.3 million, respectively.

For the three months ended June 30, 2021 and 2020, our net amortization related to intangibles was $ 1.1 million and $ 3.5 million, respectively.

For the six months ended June 30, 2021 and 2020, our net amortization related to intangibles was $ 7.3 million and $ 4.8 million, respectively.

The estimated net amortization related to these intangibles for the remainder of 2021 and the subsequent four years is as follows:

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2024 – $ 3.8 million and 2025 – $ 3.6 million.

As of March 31, 2021, the weighted average remaining amortization period of above market lease assets is approximately ten years and below market lease liabilities is approximately eight years .

The following is a summary of our goodwill as of March 31, 2021:

(in thousands)

Balance as of December 31, 2020

foreign currency translation

Balance as of March 31, 2021

As of June 30, 2021, the weighted average remaining amortization period of above market lease assets is approximately ten years and below market lease liabilities is approximately eight years .

NOTE 11 – CONCENTRATION OF RISK

As of March 31, 2021, our portfolio of real estate investments consisted of 974 healthcare facilities, located in 42 states and the U.K.

As of June 30, 2021, our portfolio of real estate investments (including properties associated with mortgages, direct financing leases, and assets held for sale) consisted of 970 healthcare facilities, located in 42 states and the U.K.

and operated by 65 third-party operators.

Our investment in these facilities, net of impairments and allowances, totaled approximately $ 10.2 billion at March 31, 2021, with approximately 97 % of our real estate investments related to healthcare facilities.

Our portfolio is made up of (i) 735 SNFs, 133 ALFs, 35 specialty facilities, two medical office buildings, (ii) fixed rate mortgages on 57 SNFs, three ALFs and three specialty facilities, and (iii) six facilities that are held for sale.

At March 31, 2021, we also held other investments of approximately $ 444.7 million, consisting primarily of secured loans to third-party operators of our facilities and $ 204.6 million of investments in six unconsolidated joint ventures.

At March 31, 2021 we had investments with one operator/or manager that exceeded 10% of our total investments:

Our investment in these facilities, net of impairments and allowances, totaled approximately $ 10.1 billion at June 30, 2021, with approximately 97 % of our real estate investments related to healthcare facilities.

Our portfolio is made up of (i) 729 SNFs, 132 ALFs, 35 specialty facilities, two medical office buildings, (ii) fixed rate mortgages on 58 SNFs, three ALFs and two specialty facilities, and (iii) nine facilities that are held for sale.

At June 30, 2021, we also held other investments of approximately $ 458.7 million, consisting primarily of secured loans to third-party operators of our facilities and $ 197.9 million of investments in six unconsolidated joint ventures.

At June 30, 2021 we had investments with one operator/or manager that exceeded 10% of our total investments:

Consulate Health Care (“Consulate”).

Consulate also generated approximately 9 % and 10 % of our total revenues for the three months ended March 31, 2021 and 2020, respectively.

At March 31, 2021, the three states in which we had our highest concentration of investments were Florida ( 15 %), Texas ( 10 %) and Michigan ( 6 %).

Consulate also generated approximately 10 % of our total revenues for the three and six months ended June 30, 2021 and 2020, respectively.

At June 30, 2021, the three states in which we had our highest concentration of investments were Florida ( 15 %), Texas ( 10 %) and Michigan ( 6 %).

NOTE 12 – STOCKHOLDERS’ EQUITY

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February 16, 2021

$ 500 Million Equity Shelf Program

The table below presents information regarding the shares issued under the Equity Shelf Program for the three months ended March 31, 2020 and 2021:

August 2, 2021

August 13, 2021

Dividend Reinvestment and Common Stock Purchase Plan

The table below presents information regarding the shares issued under the Dividend Reinvestment and Common Stock Purchase Plan for the three and six months ended June 30, 2020 and 2021:

Shares issued

Average Price

Three Months Ended

Gross Proceeds

(in millions)

March 31, 2020

March 31, 2021

Dividend Reinvestment and Common Stock Purchase Plan

The table below presents information regarding the shares issued under the Dividend Reinvestment and Common Stock Purchase Plan for the three months ended March 31, 2020 and 2021:

Three Months Ended

June 30, 2020

Three Months Ended

June 30, 2021

Six Months Ended

June 30, 2020

Six Months Ended

June 30, 2021

At-The-Market Offering Programs

During the third quarter of 2015, Omega entered into Equity Distribution Agreements with several financial institutions to sell $ 500.0 million of shares of common stock from time to time through an “at-the-market” (“ATM”) offering program (the “2015 ATM Program”).

During the second quarter of 2021, we terminated the 2015 ATM Program and entered into a new ATM Equity Offering Sales Agreement pursuant to which shares of common stock having an aggregate gross sales price of up to $ 1.0 billion (the “2021 ATM Program”) may be sold from time to time (i) by Omega through several financial institutions acting as a sales agent or directly to the financial institutions as principals, or (ii) by several financial institutions acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.

Under the 2021 ATM Program, compensation for sales of the shares will not exceed 2 % of the gross sales price per share for shares sold through each financial institution.

The use of forward sales under the 2021 ATM Program generally allows Omega to lock in a price on the sale of shares of common stock when sold by the forward sellers but defer receiving the net proceeds from such sales until the shares of our common stock are issued at settlement on a later date.

We did not utilize the forward provisions under the 2021 ATM Program during the three months ended June 30, 2021.

The table below presents information regarding the shares issued under the 2021 and 2015 ATM Programs for the three and six months ended June 30, 2020 and 2021:

Shares issued

Average Net Price

Gross Proceeds

Three Months Ended

(in millions)

Per Share (1)

(in millions)

March 31, 2020

March 31, 2021

Three Months Ended

June 30, 2020

Three Months Ended

June 30, 2021

Six Months Ended

June 30, 2020

Six Months Ended

June 30, 2021

(1) Represents the average price per share after commissions.

Accumulated Other Comprehensive Income (Loss)

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As of and for the

Three Months Ended

Six Months Ended

(in thousands)

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Beginning balance

Unrealized gain (loss)

Unrealized (loss) gain

Realized gain (loss) (1)

Ending balance

Net investment hedge:

Net investment hedges:

Beginning balance

Unrealized (loss) gain

Unrealized gain (loss)

Ending balance

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NOTE 13 – TAXES

Omega and Omega OP, including their wholly owned subsidiaries were organized, have operated, and intend to continue to operate in a manner that enables Omega to qualify for taxation as a REIT under Sections 856 through 860 of the Code.

Omega was organized, has operated, and intends to continue to operate in a manner that enables Omega to qualify for taxation as a REIT under Sections 856 through 860 of the Code.

On a quarterly and annual basis, we perform several analyses to test our compliance within the REIT taxation rules.

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In 2020, 2019, and 2018, we distributed dividends in excess of our taxable income.

We currently own stock in an entity that has elected to be taxed as a REIT.

This subsidiary entity is required to individually satisfy all of the rules for qualification as a REIT.

We have elected to treat certain of our active subsidiaries as TRSs.

Our domestic TRSs are subject to federal, state and local income taxes at the applicable corporate rates.

Our foreign TRSs are subject to foreign income taxes.

As of March 31, 2021, one of our TRSs that is subject to income taxes at the applicable corporate rates had a net operating loss (“NOL”) carry-forward of approximately $ 6.5 million.

Our NOL carry-forward was fully reserved as of March 31, 2021, with a valuation allowance due to uncertainties regarding realization.

Under current law, NOL carry-forwards generated up through December 31, 2017 may be carried forward for no more than 20 years, and NOL carry-forwards generated in our taxable years ended December 31, 2018 and after may be carried forward indefinitely.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) modified the NOL carryback rules to limit recovery of taxes paid in prior tax periods.

We do not anticipate that such changes will materially impact 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.

For the three months ended March 31, 2021 and 2020, we recorded approximately $ 0.3 million and $ 0.4 million, respectively, of state and local income tax provisions.

For the three months ended March 31, 2021 and 2020, we recorded approximately $ 0.7 million and $ 0.6 million, respectively, of tax provisions for foreign income taxes.

The expenses were included in income tax expense on our Consolidated Statements of Operations.

We currently own stock in entities that have elected to be taxed as a REIT.

These subsidiary REITs are required to individually satisfy all of the rules for qualification as a REIT.

We have elected to treat certain of our active subsidiaries as taxable REIT subsidiaries (“TRSs”).

Our domestic TRSs are subject to income taxes at the applicable corporate rates.

Our foreign TRSs are subject to foreign income taxes and may be subject to current-year income inclusion relating to ownership of a controlled foreign corporation for U.S.

income tax purposes.

As of June 30, 2021, one of our TRSs that is subject to income taxes at the applicable corporate rates had a net operating loss (“NOL”) carry-forward of approximately $ 6.5 million.

Our NOL carry-forward was fully reserved as of June 30, 2021, with a valuation allowance due to uncertainties regarding realization.

The following is a summary of our provision for income taxes:

Three Months Ended

Six Months Ended

(in millions)

Provision for federal, state and local income taxes

Provision for foreign income taxes

Total provision for income taxes (1)

(1) The above amounts do not include gross receipts or franchise taxes payable to certain states and municipalities.

NOTE 14 – STOCK-BASED COMPENSATION

The following is a summary of our stock-based compensation expense for the three months ended March 31, 2021 and 2020, respectively.

The following is a summary of our stock-based compensation expense for the three and six months ended June 30, 2021 and 2020, respectively.

Three Months Ended

Six Months Ended

(in thousands)

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We granted 22,051 time-based restricted stock units (“RSUs”) and 142,719 time-based profits interest units (“PIUs”) during the first quarter of 2021 to certain officers and key employees, and those units vest on December 31, 2023 ( three years after the grant date), subject to continued employment and vesting in certain other events.

We also granted 1,232,178 performance based PIUs during the first quarter of 2021 to certain officers and key employees, which are earned based on the level of performance over the performance period (normally three years) and vest quarterly in the fourth year, subject to continued employment and vesting in certain other events.

We also granted 1,232,178 performance based PIUs during the first quarter of 2021 to certain officers and key employees, which are earned based on the level of performance over the performance period (normally three years ) and vest quarterly in the four th year, subject to continued employment and vesting in certain other events.

NOTE 15 – BORROWING ACTIVITIES AND ARRANGEMENTS

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Term loan (3)

Total secured borrowings

Unsecured borrowings

Revolving line of credit (4)(5)

Sterling term loan (5)(6)

Omega OP term loan (7)

Deferred financing costs – net

Total term loans – net

Senior Notes:

Revolving borrowings:

2017 Revolving credit facility (4)

Revolving credit facility (4)

Total revolving borrowings

Senior notes and other unsecured borrowings:

2023 notes (4)(5)

2024 notes (4)

2025 notes (4)

2026 notes (4)

2027 notes (4)

2028 notes (4)

2029 notes (4)

2031 notes (4)

2033 notes (4)(6)

Subordinated debt (2)

Discount – net

Sterling term loan (4)(7)

2017 OP term loan (8)

OP term loan (8)

Deferred financing costs – net

Discount – net

Total senior notes and other unsecured borrowings – net

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Total secured and unsecured borrowings – net (9)(10)

(1) Reflects the weighted average annual contractual interest rate on the mortgages at March 31, 2021.

Secured by real estate assets with a net carrying value of $ 564.5 million as of March 31, 2021.

(1) Reflects the weighted average annual contractual interest rate on the mortgages at June 30, 2021.

Secured by real estate assets with a net carrying value of $ 558.0 million as of June 30, 2021.

(2) Wholly owned subsidiaries of Omega OP are the obligor on these borrowings.

(3) Borrowing is the debt of a consolidated joint venture.

(4) On April 30, 2021, the Revolving line of credit (which was scheduled to mature on May 25, 2021 ) was terminated and replaced with a new four-year $ 1.45 billion senior unsecured credit facility (“Credit Facility”).

(4) Guaranteed by Omega OP.

(6) Actual borrowing is in British Pounds Sterling and remeasured to USD.

The Sterling term loan was settled in March 2021 using proceeds from the 3.250 % 2033 Senior Notes offering.

(7) Omega OP is the obligor on this borrowing.

On April 30, 2021, the Omega OP term loan facility (which was scheduled to mature on May 25, 2022 ) was terminated and replaced with a new four-year $ 50 million senior unsecured term loan facility (“OP Term Loan Facility”).

(5) In March 2021, we used a portion of the proceeds from the 2033 Senior Notes offering to fund the tender offer to purchase $ 350 million of the 4.375 % Senior Notes due 2023 .

In connection with this transaction, we recorded approximately $ 29.7 million in related fees, premiums, and expenses which were recorded as Loss on debt extinguishment in our Consolidated Statement of Operations.

(9) We used the proceeds from this offering to pay down outstanding borrowings on the Revolving Line of Credit, repay the Sterling term loan, and fund the tender offer to purchase $ 350 million of the 4.375 % Senior Notes due 2023 and the payment of accrued interest and related fees, premiums and expenses.

(6) We used the proceeds from this offering to pay down outstanding borrowings on the 2017 Revolving Credit Facility, repay the Sterling term loan, and fund the tender offer to purchase $ 350 million of the 4.375 % Senior Notes due 2023 and the payment of accrued interest and related fees, premiums and expenses.

(7) Actual borrowing is in GBP and remeasured to USD.

The Sterling term loan was settled in March 2021 using proceeds from the 3.250 % 2033 Senior Notes offering.

(8) Omega OP is the obligor on this borrowing.

(9) All borrowings are direct borrowings of Parent unless otherwise noted.

(10) Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants.

As of June 30, 2021 and December 31, 2020, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings.

Unsecured Borrowings

Revolving Credit Facility

On April 30, 2021, Omega entered into a credit agreement (the “2021 Omega Credit Agreement”) providing us with a new $ 1.45 billion senior unsecured multicurrency revolving credit facility (the “Revolving Credit Facility”), replacing our previous $ 1.25 billion senior unsecured 2017 multicurrency revolving credit facility (the “2017 Revolving Credit Facility”).

The 2021 Omega Credit Agreement contains an accordion feature permitting us, subject to compliance with customary conditions, to increase the maximum aggregate commitments thereunder to $ 2.5 billion, by requesting an increase in the aggregate commitments under the Revolving Credit Facility or by adding term loan tranches.

The Revolving Credit Facility bears interest at LIBOR (or in the case of loans denominated in GBP, the Sterling overnight index average reference rate plus an adjustment of 0.1193 % per annum) plus an applicable percentage (with a range of 95 to 185 basis points) based on our credit ratings.

The Revolving Credit Facility matures on April 30, 2025, subject to Omega’s option to extend such maturity date for two six-month periods.

The Revolving Credit Facility may be drawn in Euros, GBP, Canadian Dollars (collectively, “Alternative Currencies”) or USD, with a $ 1.15 billion tranche available in USD and a $ 300 million tranche available in Alternative Currencies.

For purposes of the Revolving Credit Facility, references to LIBOR include the Canadian dealer offered rates for amounts offered in Canadian Dollars and any other Alternative Currency rate approved in accordance with the terms of the 2021 Omega Credit Agreement for amounts offered in any other non-London interbank offered rate quoted currency, as applicable.

We incurred $ 12.9 million of deferred costs in connection with the 2021 Omega Credit Agreement.

On April 30, 2021, Omega OP entered into a credit agreement (the “2021 Omega OP Credit Agreement”) providing it with a new $ 50 million senior unsecured term loan facility (the “OP Term Loan”).

The OP Term Loan replaces the $ 50 million senior unsecured term loan obtained in 2017 (the “2017 OP Term Loan”) and the related credit agreement.

The OP Term Loan bears interest at LIBOR plus an applicable percentage (with a range of 85 to 185 basis points) based on our credit ratings.

The OP Term Loan matures on April 30, 2025 , subject to Omega OP’s option to extend such maturity date for two , six-month periods.

We incurred $ 0.4 million of deferred costs in connection with the 2021 Omega OP Credit Agreement.

$ 400 Million Forward Starting Swaps

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In March 2021, in conjunction with the issuance of $ 700 million aggregate principal amount of our 3.25 % Senior Notes due 2033 , we discontinued hedge accounting for these five forward starting swaps.

Amounts reported in Accumulated Other Comprehensive Income related to these discontinued cash flow hedging relationships will be reclassified to interest expense over a ten year term.

Amounts reported in AOCI related to these discontinued cash flow hedging relationships will be reclassified to interest expense over a ten-year term.

Simultaneously, we re-designated these swaps in new cash flow hedging relationships of interest rate risk associated with interest payments on another forecasted issuance of long-term debt.

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During March 2021 and concurrent with the settlement of our GBP-denominated term loan and repayment of our GBP-denominated borrowings under our line of credit, we entered into four foreign currency forwards, that mature on March 8, 2024, to hedge a portion of our net investments in foreign operations, effectively replacing the terminated net investment hedge.

For these derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported in Accumulated Other Comprehensive Income as part of the cumulative translation adjustment.

Amounts are reclassified out of Accumulated Other Comprehensive Income into earnings when the hedged net investment is either sold or substantially liquidated.

Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants.

As of March 31, 2021 and December 31, 2020, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings.

For these derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported in AOCI as part of the cumulative translation adjustment.

Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.

NOTE 16 – FINANCIAL INSTRUMENTS

The net carrying amount of cash and cash equivalents, restricted cash, contractual receivables, other assets and accrued expenses and other liabilities reported in the Consolidated Balance Sheets approximates fair value because of the short maturity of these instruments (Level 1).

At March 31, 2021 and December 31, 2020, the net carrying amounts and fair values of our other financial instruments were as follows:

March 31, 2021

At June 30, 2021 and December 31, 2020, the net carrying amounts and fair values of our other financial instruments were as follows:

June 30, 2021

December 31, 2020

3 unchanged sentences

Other investments – net

Revolving line of credit

2017 Revolving credit facility

Revolving credit facility

Sterling term loan

Omega OP term loan

2017 OP term loan

4.375 % notes due 2023 – net

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The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).

● Revolving line of credit, secured borrowing and term loans:

● Revolving line of credit, secured borrowing and term loan:

The fair value of our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using the current market rates (Level 3).

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These derivative actions are currently stayed pending certain developments in the Securities Class Action.

In 2018, Stourbridge Investments LLC, a purported stockholder of the Company, filed a derivative action purportedly on behalf of the Company in the United States District Court for the Southern District of New York, alleging violations of Section 14(a) of the Exchange Act and state-law claims including breach of fiduciary duty.

In 2018, Stourbridge Investments LLC, a purported stockholder of the Company, filed a derivative action purportedly on behalf of the Company in the U.S.

District Court for the Southern District of New York, alleging violations of Section 14(a) of the Exchange Act and state-law claims including breach of fiduciary duty.

The complaint alleges, among other things, that the named defendants are responsible for the Company’s failure to disclose the financial condition of Orianna Health Systems, the alleged non-disclosures that are also the subject of the Securities Class Action described above.

The plaintiff did not make a demand on the Company to bring the action prior to filing it, but rather alleges that demand would have been futile.

The case has been stayed pending the entry of judgement or a voluntary dismissal with prejudice in the Securities Class Action.

The case has been stayed pending the entry of judgment or a voluntary dismissal with prejudice in the Securities Class Action.

In 2019, purported stockholder Phillip Swan by his counsel, and stockholders Tom Bradley and Sarah Smith by their counsel, filed derivative actions in the Baltimore City Circuit Court of Maryland, purportedly on behalf of the Company, asserting claims for breach of fiduciary duty, waste of corporate assets and unjust enrichment against the named defendants.

5 unchanged sentences

Wojcik also did not make a demand on the Company prior to filing suit.

The case has been stayed pending the entry of judgement or a voluntary dismissal with prejudice in the Securities Class Action.

The case has been stayed pending the entry of judgment or a voluntary dismissal with prejudice in the Securities Class Action.

The Company believes that the claims asserted against it in these lawsuits are without merit and intends to vigorously defend against them.

14 unchanged sentences

In connection with certain facility transitions, we have agreed to indemnify certain operators in certain events.

As of March 31, 2021, our maximum funding commitment under these indemnification agreements was approximately $ 8.1 million.

As of June 30, 2021, our maximum funding commitment under these indemnification agreements was approximately $ 8.6 million.

Claims under these indemnification agreements may be made within 18 months to 72 months of the transition date.

3 unchanged sentences

We expect the funding of these commitments to be completed over the next several years.

Our remaining commitments at March 31, 2021, are outlined in the table below (in thousands):

Our remaining commitments at June 30, 2021, are outlined in the table below (in thousands):

Total commitments

6 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share amounts)

10 unchanged sentences

NOTE 19 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

The following are supplemental disclosures to the consolidated statements of cash flows for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following are supplemental disclosures to the consolidated statements of cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

(in thousands)

6 unchanged sentences

Taxes paid during the period

Non cash investing activities

Non cash proceeds from sale of real estate investments

Non cash placement of mortgages

Non cash proceeds from other investments

Non cash financing activities

Non cash borrowing of other long-term borrowings

Change in fair value of cash flow hedges

1 unchanged sentence

NOTE 20 – SUBSEQUENT EVENTS

On April 30, 2021, the Company closed a new four-year $ 1.45 billion senior unsecured credit facility (“Credit Facility”).

The Credit Facility replaced a $ 1.25 billion senior unsecured credit facility that was scheduled to mature on May 25, 2021 .

On April 30, 2021, the Company closed a new four-year $ 50 million senior unsecured term loan facility (“OP Term Loan Facility”) to its operating partnership subsidiary.

The OP Term Loan Facility replaced a $ 50 million senior unsecured term loan facility that was scheduled to mature on May 25, 2022 .

On July 1, 2021, we financed six SNFs in Ohio and amended an existing $ 6.4 million mortgage to include the six facilities in a consolidated $ 72.4 million mortgage for eight Ohio facilities bearing interest at an initial rate of 10.5 % per annum.

In conjunction with this transaction, we also acquired three Maryland facilities that were previously subject to a mortgage issued by Omega bearing interest at 13.75 % per annum with a principal balance of $ 36.0 million.

The purchase price for these three facilities was equal to the remaining mortgage principal amount, and the three acquired Maryland facilities were subsequently leased back to the seller for a term expiring on December 31, 2032, assuming Omega exercises the options under the agreement.

The base rent in the initial year is approximately $ 5.0 million and includes annual escalators of 2.5 % .

On July 1, 2021, we also entered into a $ 12.0 million revolving credit facility agreement with this operator for working capital expenses for the eight Ohio facilities discussed above with a maturity date of June 30, 2022 .

The credit facility bears interest at 10 % per annum.

On July 14, 2021, we acquired two U.K.

facilities for $ 9.5 million and entered into a lease with an existing operator with an initial term expiring on April 23, 2027.

The base rent in the initial year is approximately $ 0.8 million and includes annual escalators of 2.5 %.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements